Taxation – Page 221 – NewzIntel.com

MIL-OSI Economics: IMF Executive Board Concludes 2024 Article IV Consultation with Bolivia

Source: International Monetary Fund

January 28, 2025

Washington, DC: On March 22^nd, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation1 for Bolivia. This also included a discussion of the findings of the Financial Sector Assessment Program (FSAP) exercise for Bolivia.^[1]

Bolivia’s growth momentum moderated in 2023, to 2.5 percent, from declining natural gas production, less public investment, and financial market turmoil. Price controls, food and fuel subsidies, export restrictions, and strong agricultural production held inflation below 2 percent at year-end. However, the combination of lower natural gas exports, high fuel imports, a large fiscal deficit―increasingly financed by the central bank―and an overvalued exchange rate contributed to a wider current account deficit (estimated at 5 percent of GDP for 2023) and near-depletion of international reserves. Public debt increased to nearly 84 percent of GDP by end-2023. Sovereign spreads rose sharply in early 2023 as the foreign exchange (FX) shortage became apparent and a mid-sized bank (Banco Fassil) failed. Consequently, banks were forced to restrict the withdrawal of FX deposits, heightening financial sector stability risks.

Growth is anticipated to decelerate to 1.6 percent in 2024, holding at around 2.2-2.3 percent in the medium term under the continuation of the current policies. Inflation is forecast to reach 4.5 percent in 2024, stabilizing around 4 percent thereafter. The outlook is however predicated on significantly improved access to external financing, without which the risk of disorderly fiscal and/or exchange rate adjustment is elevated. External factors such as reduced demand, intensified global conflicts disrupting trade routes, commodity price volatility, or a renewed tightening of financial conditions could worsen fiscal and external imbalances, impede growth, and destabilize the domestic financial sector.

Additionally, extreme weather events, like the 2023 droughts and recent floods, pose a risk to Bolivia’s agricultural sector and critical infrastructure. Domestically, a faster decline in hydrocarbon production, higher inflation due to FX scarcity, or confidence shocks could further impact growth, hurt real incomes and exacerbate financial stability risks. Social unrest stemming from inequality and security concerns remains a concern, as evidenced by the prolonged road blockages of early 2024. On the upside, Bolivia could potentially benefit from the global shift towards green energy due to its vast lithium resources, although developing the lithium sector and scaling up domestic production capacity will likely take time.

Executive Board Assessment[2]

Executive Directors agreed with the thrust of the staff appraisal. They welcomed Bolivia’s socioeconomic progress over the past several years but expressed concerns about the difficult financial situation Bolivia currently finds itself in, with low reserves, uncertain fiscal financing, and pressures in parallel exchange markets. Directors stressed the urgency of a shift from current unsustainable policies to avoid a disorderly adjustment that would exert significant social and economic hardship.

Directors called for continued constructive engagement on a sustainable policy mix that is likely to require both fiscal adjustment phased in over the next few years and an up front step devaluation to more quickly address the external imbalance and allow for a build up of reserves. They emphasized the importance of improving the social safety net to shield poorer households from inflation pressures following a realignment of the exchange rate. Directors also emphasized the importance of strengthening fiscal institutions to underpin the credibility of the planned adjustment and to improve central bank governance in support of a shift to a crawling peg and, eventually, to inflation targeting.

Directors recommended a strengthening of the central banks’ capacity to conduct sterilization operations and to lift lending rate caps to improve the allocation of capital and enhance monetary policy transmission. They also underscored the need to improve crisis preparedness and contingency planning in line with FSAP recommendations to safeguard financial stability.

Directors recommended a range of supply side reforms to unlock private investment, boost productivity and enhance competitiveness. These should include phasing out export ceilings and price controls and better prioritizing public investment projects. A stronger regulatory framework for hydrocarbon and lithium exploration could be instrumental in increasing investment in those sectors. Directors also called for enhancing AML/CFT framework and ensuring the timely publication of key macroeconomic data.

Table 1. Bolivia: Selected Economic and Social Indicators, 2022–2026

Population (millions, 2021)	11.8	Poverty rate (percent, 2021)				36.3
Population growth rate (percent, 2021)	1.4	Adult literacy rate (percent, 2021)				94.8
Life expectancy at birth (years, 2021)	72	GDP per capita (US$, 2021)				3,437
Total unemployment rate (2021)	7.0	IMF Quota (SDR, millions)				240.1

	Est.
	2022	2023	2024	2025	2026
Income and prices
Real GDP	3.6	2.5	1.6	2.2	2.2
Nominal GDP	8.9	4.9	6.2	6.5	6.2
CPI inflation (period average)	1.7	2.6	4.5	4.2	3.9
CPI inflation (end of period)	3.1	2.1	4.8	4.0	3.9

Investment and savings 1/
Total investment	15.1	15.9	16.6	16.3	16.0
Of which: Public sector	5.7	5.0	6.0	6.0	6.0
Gross national savings	12.5	8.6	10.5	10.3	10.5
Of which: Public sector	-1.4	-2.0	-1.9	-1.5	-1.2
Combined public sector
Revenues and grants	28.9	28.3	27.6	27.4	27.1
Of which: Hydrocarbon related revenue	6.0	5.4	4.3	3.9	3.5
Expenditure	36.0	35.3	35.5	34.8	34.3
Current	30.3	30.3	29.5	28.8	28.3
Capital 2/	5.7	5.0	6.0	6.0	6.0
Net lending/borrowing (overall balance)	-7.1	-7.0	-7.9	-7.5	-7.2
Of which: Non-hydrocarbon balance	-12.8	-12.2	-12.0	-11.2	-10.5
Total gross NFPS debt 3/	80.4	83.6	86.7	88.9	90.9

External sector
Current account 1/	-0.4	-5.0	-5.7	-5.8	-5.6
Exports of goods and services	32.6	28.5	27.0	26.9	26.5
Of which: Natural gas	6.7	3.8	3.4	3.0	2.7
Imports of goods and services	32.9	34.4	33.6	33.6	32.7
Capital account	0.0	0.0	0.0	0.0	0.0
Financial account (-= net inflow)	-1.5	-0.5	-5.3	-5.8	-5.6
Of which: Direct investment net	-0.8	-0.6	-0.6	-0.9	-0.9
Of which: Other investment, net	-0.3	-0.3	-4.6	-4.7	-5.1
Net errors and omissions	-3.0	0.0	0.0	0.0	0.0
Terms of trade index (percent change)	-1.6	1.2	-0.6	0.0	0.2
Central Bank gross foreign reserves 4/ 5/ 6/
In millions of U.S. dollars	3,796	1,808	1,653	1,555	1,556
In months of imports of goods and services	2.8	1.3	1.1	1.0	1.0
In percent of GDP	8.6	3.9	3.4	3.0	2.8
In percent of ARA	44.5	20.8	18.2	16.2	15.5
Money and credit
Credit to the private sector (percent change)	6.3	-0.4	3.0	4.3	5.1
Credit to the private sector (percent of GDP)	74.2	70.5	68.4	67.0	66.3
Broad money (percent of GDP)	85.2	82.8	81.2	80.0	78.9
*Memorandum items:*
Nominal GDP (in billions of U.S. dollars)	44.3	46.5	49.3	52.5	55.8
Bolivianos/U.S. dollar (end-of-period) 7/	6.9	6.9	…	…	…
REER, period average (percent change) 8/	-0.9	-1.9	…	…	…
Oil prices (in U.S. dollars per barrel)	96.4	80.6	77.7	73.8	70.9
Energy-related subsidies to SOEs (percent of GDP) 9/	4.4	4.0	3.5	2.7	2.4

Sources: Bolivian authorities (MEFP, Ministry of Planning, BCB, INE, UDAPE); IMF; Fund staff calculations.
1/ The discrepancy between the current account and the savings-investment balance reflects methodological differences. For the projection years, the discrepancy is assumed to remain constant in dollar value.
2/ Includes nationalization costs and net lending.
3/ Public debt includes SOE’s borrowing from the BCB (but not from other domestic institutions) and BCB loans to FINPRO and FNDR.
4/ Excludes reserves from the Latin American Reserve Fund (FLAR) and Offshore Liquidity Requirements (RAL).
5/ All foreign assets valued at market prices.
6/ Includes a repurchase line of US$99.2 million maturing in 2025.
7/ Official (buy) exchange rate.
8/ The REER based on authorities’ methodology is different from that of the IMF (see 2018 and 2017 Staff Reports).
9/ Includes the cost of subsidy borne by public enterprises and incentives for hydrocarbon exploration investments in the projection period.

1 Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

[1] The Financial Sector Assessment Program (FSAP), established in 1999, is a comprehensive and in-depth assessment of a country’s financial sector. FSAPs provide input for Article IV consultations and thus enhance Fund surveillance. FSAPs are mandatory for the 47 jurisdictions with systemically important financial sectors and otherwise conducted upon request from member countries. The key findings of an FSAP are summarized in a Financial System Stability Assessment (FSSA).

[2] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.

IMF Communications Department

MEDIA RELATIONS

PRESS OFFICER: Rosa Hernandez

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

MIL OSI Economics –

January 29, 2025

MIL-OSI Security: Leader of drug trafficking ring that used social media to communicate and advertise wares sentenced to 10 years in prison

Source: Office of United States Attorneys

Defendant recruited young people with images of money, exotic cars, and expensive jewelry

Tacoma – The leader of a South Puget Sound drug trafficking organization that sent dangerous drugs as far away as Georgia and Ohio was sentenced today in U.S. District Court in Tacoma to ten years in prison for his multi-state drug trafficking scheme, announced U.S. Attorney Tessa M. Gorman. Joel Adrian Valencia Rosas, 28, of Lakewood, Washington was indicted in December 2023 following a lengthy investigation that uncovered the trafficking of cocaine, fentanyl and marijuana to East Coast locales, and the importation and distribution of fentanyl and cocaine in Western Washington. The drug ring used social media such as Snapchat and Instagram to communicate and recruit new members. At the sentencing hearing U.S. District Judge Tiffany M. Cartwright noted that Mr. Valencia Rosas was glamorizing drug dealing with his social media posts. “He used the lower-level members of the drug ring to take on higher risks… Mr. Valencia Rosas was willing to recruit and sacrifice others to make more money,” Judge Cartwright said.

“The defendants in this case are all young – 18-28 years old. Mr. Valencia Rosas, the ringleader of this trafficking group, actively enticed young people to join his criminal enterprise,” said U.S. Attorney Gorman. “On social media he not only posted the drugs available for sale and their prices, he also attempted to portray the drug trafficking lifestyle as glamorous and lucrative, posting pictures of himself with firearms, flashy vehicles, and cash. In reality, drug trafficking leaves destruction in its wake.”

During this investigation, the Drug Enforcement Administration and partner law enforcement agencies seized nearly 52 kilos of cocaine, more than 23 kilos of fentanyl pills, and 131 kilos of marijuana. One drug shipment seized by law enforcement contained 37 kilos of cocaine and more than a kilo of fentanyl pills. In June 2023, a traffic stop on Interstate 5 resulted in the seizure of 200,000 fentanyl pills that had been hidden in the vehicle.

According to records filed in the case, Valencia Rosas has been trafficking drugs since at least 2018. His posts on social media talked about how much money he would pay for people to work as drug couriers. Even after Snapchat closed his account in December 2022, Valencia Rosas simply moved his recruiting efforts to another social media site: Instagram. He continued posting on his trafficking activities through 2023.

Valencia Rosas has been in custody since his arrest in December 2023.

In asking for an 11-year prison sentence, Assistant United States Attorney Marci Ellsworth wrote to the court, “Valencia Rosas was so successful that he could not traffic the drugs without bringing others into his criminal orbit. He could not move the hundreds of thousands of dollars in cash drug proceeds from Ohio and Georgia without more people, driving cash back to him or flying with it stuffed into their bags… none of those codefendants made money from their involvement in the DTO. Only Valencia Rosas made money, off the backs of his codefendants.”

This prosecution is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.

The investigation was led by the Drug Enforcement Administration (DEA) with assistance from the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) IRS- Criminal Investigations, TNET (Tacoma Narcotics Enforcement Team), TNT (Thurston Narcotics Task Force), Lakewood PD, Puyallup PD, Bonney Lake PD, Kitsap County Sheriff’s Office, Tacoma PD, Pierce County Sheriff’s Department, and Metro Cities SWAT.

The case is being prosecuted by Assistant United States Attorneys Marci L. Ellsworth and Crystal Correa.

MIL Security OSI –

January 29, 2025

MIL-OSI: Finward Bancorp Announces Earnings for the Quarter and Twelve Months Ended December 31, 2024

Source: GlobeNewswire (MIL-OSI)

MUNSTER, Ind., Jan. 28, 2025 (GLOBE NEWSWIRE) — Finward Bancorp (Nasdaq: FNWD) (the “Bancorp”), the holding company for Peoples Bank (the “Bank”), today announced that net income available to common stockholders was $12.1 million, or $2.84 per diluted share, for the twelve months ended December 31, 2024, as compared to $8.4 million, or $1.96 per diluted share, for the corresponding prior year period. For the three months ended December 31, 2024, the Bancorp’s net income totaled $2.1 million, or $0.49 per diluted share, as compared to $606 thousand, or $0.14 per diluted share, for the three months ended September 30, 2024, and as compared to $1.5 million, or $0.35 per diluted share, for the three months ended December 31, 2023. Selected performance metrics are as follows for the periods presented:

Performance Ratios	Quarter ended,					Twelve months ended,
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
	December 31,	September 30,	June 30,	March 31,	December 31,	December 31,	December 31,
	2024	2024	2024	2024	2023	2024	2023
Return on equity	5.39%	1.60%	0.39%	24.97%	4.92%	8.06%	6.28%
Return on assets	0.41%	0.12%	0.03%	1.77%	0.29%	0.58%	0.40%
Tax adjusted net interest margin (Non-GAAP)	2.79%	2.66%	2.67%	2.57%	2.80%	2.68%	2.98%
Noninterest income / average assets	0.72%	0.55%	0.50%	2.57%	0.53%	1.09%	0.52%
Noninterest expense / average assets	2.75%	2.80%	2.79%	2.86%	2.60%	2.80%	2.65%
Efficiency ratio	87.20%	97.32%	98.56%	59.41%	87.49%	81.78%	84.58%

“The Bank ended the year with continued improvement in its overall positioning and increased momentum for 2025,” said Benjamin Bochnowski, chief executive officer. “We improved regulatory capital throughout the year through balance sheet management and earnings and had the benefit of one-time income including our sale leaseback transaction early in the year and a gain on a long-held tax credit investment this past quarter. Net interest margin improved throughout 2024 as expected, based on our earning asset position and reduced funding costs driven by recent Federal Reserve interest rate policy,” he continued. “The Bank charged off a small number of commercial business loans in the 4th quarter, and management will continue to actively manage credit quality,” he concluded.

Highlights of the current period include:

Net Interest Margin – The net interest margin for the three months ended December 31, 2024, was 2.65%, compared to 2.51% for the three months ended September 30, 2024. The tax-adjusted net interest margin (a non-GAAP measure) for the three months ended December 31, 2024, was 2.79%, compared to 2.66% for the three months ended September 30, 2024. The net interest margin for the twelve months ended December 31, 2024, was 2.54%, compared to 2.83% for the twelve months ended December 31, 2023. The tax-adjusted net interest margin (a non-GAAP measure) for the twelve months ended December 31, 2024, was 2.68%, compared to 2.98% for the twelve months ended December 31, 2023. The increased net interest margin for the three months ended December 31, 2024 compared to September 30, 2024 is primarily the result of increased yields on the Bank’s loan portfolio, combined with reduced deposit and borrowing costs as a result of the Federal Reserve’s continued reduction of federal funds rates during the quarter. See Table 1 at the end of this press release for a reconciliation of the tax-adjusted net interest margin to the GAAP net interest margin.

Funding – As of December 31, 2024, deposits totaled $1.8 billion, an increase of $11.8 million or 0.7%, compared to September 30, 2024. As of December 31, 2024, non-interest-bearing deposits totaled $263.3 million, a decrease of $21.8 million or 7.7%, compared to September 30, 2024. Core deposits totaled $1.2 billion at both December 31, 2024, and September 30, 2024. Core deposits include checking, savings, and money market accounts and represented 68.2% of the Bancorp’s total deposits at December 31, 2024. As of December 31, 2024, balances for certificates of deposit totaled $560.3 million, compared to $562.2 million on September 30, 2024, a decrease of $2.0 million or 0.4%. The increase in total portfolio deposits is primarily related to cyclical flows and continued adjustments to deposit pricing. The decrease in non-interest-bearing deposits is primarily attributable to regular outflow of business-related checking deposits at year-end which tend to return in subsequent periods. In addition, as of December 31, 2024, borrowings and repurchase agreements totaled $105.0 million, a decrease of $22.9 million or 17.9%, compared to September 30, 2024. The decrease in short-term borrowings was the result of cyclical inflows and outflows of interest-earning assets and interest-bearing liabilities.
As of December 31, 2024, 72% of our deposits are fully FDIC insured, and another 9% are further backed by the Indiana Public Deposit Insurance Fund. The Bancorp’s liquidity position remains strong with solid core deposit customer relationships, excess cash, debt securities, contractual loan repayments, and access to diversified borrowing sources. As of December 31, 2024, the Bancorp had available liquidity of $687 million including borrowing capacity from the FHLB and Federal Reserve facilities.

Securities Portfolio – Securities available for sale balances decreased by $16.5 million to $333.6 million as of December 31, 2024, compared to $350.0 million as of September 30, 2024. The decrease in securities available for sale was due to a combination of portfolio runoff and an increase of accumulated other comprehensive loss (“AOCL”). AOCL was $58.1 million as of December 31, 2024, compared to $48.2 million on September 30, 2024, a decline of $9.8 million, or 20.4%. The yield on the securities portfolio decreased to 2.34% for the three months ended December 31, 2024, down from 2.37% for the three months ended September 30, 2024. Management did not execute any securities sale transactions during the quarter but will continue to monitor the securities portfolio for additional restructuring opportunities.

Lending – The Bank’s aggregate loan portfolio totaled $1.5 billion on both December 31, 2024, and September 30, 2024. During the three months ended December 31, 2024, the Bank originated $59.2 million in new commercial loans, compared to $70.4 million during the three months ended September 30, 2024, and $47.5 million during the three months ended December 31, 2023. The loan portfolio represents 79.3% of earning assets and is comprised of 63.0% commercial-related credits. At December 31, 2024, the Bancorp’s portfolio loan balances in commercial real estate owner occupied properties totaled $246.6 million or 16.3% of total loan balances and commercial real estate non-owner-occupied properties totaled $305.1 million or 20.2% of total loan balances. Of the $305.1 million in commercial real estate non-owner-occupied properties balances, loans collateralized by office buildings represented $38.5 million or 2.5% of total loan balances.

Gain on Sale of Loans – Gains from the sale of loans totaled $1.1 million for both the twelve months ended December 31, 2024, and 2023. During the twelve months ended December 31, 2024, the Bank originated $36.8 million in new fixed rate mortgage loans for sale, compared to $38.0 million during the twelve months ended December 31, 2023. During the twelve months ended December 31, 2024, the Bank originated $27.4 million in new 1-4 family loans retained in its portfolio, compared to $41.6 million during the twelve months ended December 31, 2023. Total 1-4 family originations for the quarter ended December 31, 2024, totaled $25.4 million, an increase of $5.3 million compared to $20.1 million for the quarter ended September 30, 2024. The retained loans are primarily construction loans and adjustable-rate loans with a fixed-rate period of 7 years or less. The Bank continues to sell longer-duration fixed rate mortgages into the secondary market.

Gain on Tax Credit Investment – During the three months ended December 31, 2024, the Bank successfully concluded a long term, non-controlling interest in a partnership established to facilitate tax credit investments. Upon the termination of the partnership, the Bank recognized a one-time gain of $1.2 million recognized through noninterest income. The proceeds from the dissolution of this tax credit investment will contribute to the Bank’s financial position, thereby supporting ongoing strategic initiatives and operational priorities.

Asset Quality – At December 31, 2024, non-performing loans totaled $13.7 million, compared to $13.8 million at September 30, 2024, a decrease of $68 thousand or 0.5%. The Bank’s ratio of non-performing loans to total loans was 0.91% at December 31, 2024, compared to 0.92% at September 30, 2024. The Bank’s ratio of non-performing assets to total assets was 0.74% at December 31, 2024, compared to 0.73% at September 30, 2024. Management maintains a vigilant oversight of nonperforming loans through proactive relationship management.
The allowance for credit losses (ACL) on loans totaled $16.9 million at December 31, 2024, or 1.12% of total loans receivable, compared to $18.5 million at September 30, 2024, or 1.23% of total loans receivable, a decrease of $1.6 million or 8.7% and is considered adequate by management. The Bank’s unused commitment reserve, included in other liabilities, totaled $2.7 million at December 31, 2024, compared to $3.9 million at September 30, 2024, a decrease of $1.2 million or 30%.

For the quarter ended December 31, 2024, the Bank recorded a net negative provision for credit loss expense totaling $579 thousand based on a decline in individually assessed loans balances, historical loss rate updates, migration of loan and unfunded commitment segment balances, and other factors within the Bank’s ACL modeling. The fourth quarter’s provision expense consisted of a $597 thousand provision for credit losses on loans, and a $1.2 million reversal of provision for credit losses on unused commitments. The decrease in the Bank’s unused commitment reserve was primarily due to reduced unused commitment balances and other factors. For the quarter ended December 31, 2024, net charge-offs, totaled $2.2 million. Most of these charge-offs involved a small number of commercial or multifamily-related loans which were previously monitored and had specific allocations toward individual impairment or contributed to higher expected loss rates within the Bank’s prior ACL balance. For the quarter ended September 30, 2024, the Bank recorded no provision expense and recoveries, net of charge-offs, totaled $186 thousand. The ACL as a percentage of non-performing loans, or coverage ratio, was 123.1% at December 31, 2024 compared to 134.1% at September 30, 2024.

Operating Expenses – Non-interest expense as a percentage of average assets was 2.75% for the quarter ended December 31, 2024, as compared to 2.80% for the quarter ended September 30, 2024. Decreases in non-interest expenses quarter over quarter were primarily attributable to reduced compensation and benefit expenses, and lower occupancy and equipment expenses. The Bank remains focused on identifying additional operating efficiencies and third-party expense reductions. Compensation and benefits expense is up 0.3% for the twelve months ended December 31, 2024, compared to December 31, 2023.

Capital Adequacy – As of December 31, 2024, the Bank’s tier 1 capital to adjusted average assets ratio was 8.46%, an improvement of 0.08% compared to 8.38% at September 30, 2024. The Bank’s capital continues to exceed all applicable regulatory capital requirements as set forth in 12 C.F.R. § 324. The Bancorp’s tangible book value per share was $29.48 at December 31, 2024, down from $31.28 as of September 30, 2024 (a non-GAAP measure). Tangible common equity to total assets was 6.17% at December 31, 2024, down from 6.51% as of September 30, 2024 (a non-GAAP measure). Excluding accumulated other comprehensive losses, tangible book value per share increased to $42.94 as of December 31, 2024, from $42.47 as of September 30, 2024 (a non-GAAP measure). See Table 1 at the end of this press release for a reconciliation of the tangible book value per share, tangible book value per share adjusted for other accumulated comprehensive losses, tangible common equity as a percentage of total assets, and tangible common equity as a percentage of total assets adjusted for accumulated other comprehensive losses to the related GAAP ratios.

Disclosures Regarding Non-GAAP Financial Measures
Reported amounts are presented in accordance with GAAP. In this press release, the Bancorp also provides certain financial measures identified as non-GAAP. The Bancorp’s management believes that the non-GAAP information, which consists of tangible common equity, tangible common equity adjusted for accumulated other comprehensive losses, tangible book value per share, tangible book value per share adjusted for accumulated other comprehensive losses, tangible common equity/total assets, tax-adjusted net interest margin, and efficiency ratio, which can vary from period to period, provides a better comparison of period to period operating performance. The adjusted net interest income and tax-adjusted net interest margin measures recognize the income tax savings when comparing taxable and tax-exempt assets. Interest income and yields on tax-exempt securities and loans are presented using the current federal income tax rate of 21%. Management believes that it is standard practice in the banking industry to present net interest income and net interest margin on a fully tax-equivalent basis and that it may enhance comparability for peer comparison purposes. Additionally, the Bancorp 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 financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Refer to Table 1 – Reconciliation of Non-GAAP Financial Measures at the end of this document for a reconciliation of the non-GAAP measures identified herein and their most comparable GAAP measures.

About Finward Bancorp
Finward Bancorp is a locally managed and independent financial holding company headquartered in Munster, Indiana, whose activities are primarily limited to holding the stock of Peoples Bank. Peoples Bank provides a wide range of personal, business, electronic and wealth management financial services from its 26 locations in Lake and Porter Counties in Northwest Indiana and Chicagoland. Finward Bancorp’s common stock is quoted on The NASDAQ Stock Market, LLC under the symbol FNWD. The website ibankpeoples.com provides information on Peoples Bank’s products and services, and Finward Bancorp’s investor relations.

Forward Looking Statements
This press release may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of the Bancorp. For these statements, the Bancorp claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this communication should be considered in conjunction with the other information available about the Bancorp, including the information in the filings the Bancorp makes with the SEC. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. Forward-looking statements are typically identified by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance.

Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include: the Bank’s ability to demonstrate compliance with the terms of the previously disclosed consent order and memorandum of understanding entered into between the Bank and the Federal Deposit Insurance Corporation (“FDIC”) and Indiana Department of Financial Institutions (“DFI”), or to demonstrate compliance to the satisfaction of the FDIC and/or DFI within prescribed time frames; the Bank’s agreement under the memorandum of understanding to refrain from paying cash dividends without prior regulatory approval; changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates, market liquidity, and capital markets, as well as the magnitude of such changes, which may reduce net interest margins; the aggregate effects of inflation experienced in recent years; further deterioration in the market value of securities held in the Bancorp’s investment securities portfolio, whether as a result of macroeconomic factors or otherwise; customer acceptance of the Bancorp’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 mergers, acquisitions, and divestitures; economic conditions; and the impact, extent, and timing of technological changes, capital management activities, regulatory actions by the Federal Deposit Insurance Corporation and Indiana Department of Financial Institutions, and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Bancorp’s reports (such as the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K) filed with the SEC and available at the SEC’s Internet website (www.sec.gov). All subsequent written and oral forward-looking statements concerning matters attributable to the Bancorp or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. Except as required by law, The Bancorp does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statement is made.

In addition to the above factors, we also caution that the actual amounts and timing of any future common stock dividends or share repurchases will be subject to various factors, including our capital position, financial performance, capital impacts of strategic initiatives, market conditions, and regulatory and accounting considerations, as well as any other factors that our Board of Directors deems relevant in making such a determination. Therefore, there can be no assurance that we will repurchase shares or pay any dividends to holders of our common stock, or as to the amount of any such repurchases or dividends.

Finward Bancorp
Quarterly Financial Report

Performance Ratios	Quarter ended,															Twelve months ended,
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
		2024			2024			2024			2024			2023			2024			2023
Return on equity		5.39	%		1.60	%		0.39	%		24.97	%		4.92	%		8.06	%		6.28	%
Return on assets		0.41	%		0.12	%		0.03	%		1.77	%		0.29	%		0.58	%		0.40	%
Yield on loans		5.27	%		5.22	%		5.11	%		5.02	%		5.09	%		5.15	%		4.92	%
Yield on security investments		2.34	%		2.37	%		2.43	%		2.37	%		2.57	%		2.38	%		2.43	%
Total yield on earning assets		4.74	%		4.70	%		4.64	%		4.52	%		4.64	%		4.67	%		4.45	%
Cost of interest-bearing deposits		2.41	%		2.47	%		2.37	%		2.36	%		2.22	%		2.40	%		1.74	%
Cost of repurchase agreements		3.65	%		4.04	%		3.86	%		3.88	%		3.78	%		3.85	%		3.64	%
Cost of borrowed funds		4.31	%		4.56	%		4.95	%		4.62	%		4.41	%		4.62	%		4.55	%
Total cost of interest-bearing liabilities		2.53	%		2.63	%		2.55	%		2.53	%		2.38	%		2.56	%		1.96	%
Tax adjusted net interest margin (Non-GAAP)		2.79	%		2.66	%		2.67	%		2.57	%		2.80	%		2.68	%		2.98	%
Noninterest income / average assets		0.72	%		0.55	%		0.50	%		2.57	%		0.53	%		1.09	%		0.52	%
Noninterest expense / average assets		2.75	%		2.80	%		2.79	%		2.86	%		2.60	%		2.80	%		2.65	%
Net noninterest margin / average assets		-2.03	%		-2.24	%		-2.29	%		-0.29	%		-2.08	%		-1.71	%		-2.14	%
Efficiency ratio		87.20	%		97.32	%		98.56	%		59.41	%		87.49	%		81.78	%		84.58	%
Effective tax rate		21.30	%		-51.88	%		-6.72	%		9.48	%		-30.85	%		9.85	%		-4.16	%

Non-performing assets to total assets		0.74	%		0.73	%		0.61	%		0.64	%		0.61	%		0.74	%		0.61	%
Non-performing loans to total loans		0.91	%		0.92	%		0.75	%		0.78	%		0.76	%		0.91	%		0.76	%
Allowance for credit losses to non-performing loans		123.10	%		134.12	%		161.17	%		159.12	%		163.90	%		123.10	%		163.90	%
Allowance for credit losses to loans receivable		1.12	%		1.23	%		1.22	%		1.25	%		1.24	%		1.12	%		1.24	%
Foreclosed real estate to total assets		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%

Basic earnings per share	$	0.49		$	0.14		$	0.03		$	2.18		$	0.36		$	2.85		$	1.96
Diluted earnings per share	$	0.49		$	0.14		$	0.03		$	2.17		$	0.35		$	2.84		$	1.96
Stockholders’ equity / total assets		7.35	%		7.69	%		7.16	%		7.32	%		6.99	%		7.35	%		6.99	%
Book value per share	$	35.10		$	36.99		$	34.45		$	35.17		$	34.28		$	35.10		$	34.28
Closing stock price	$	28.11		$	31.98		$	24.52		$	24.60		$	25.24		$	28.11		$	25.24
Price to earnings per share ratio		14.25			56.21			182.60			2.82			17.77			9.87			12.87
Dividends declared per common share	$	0.12		$	0.12		$	0.12		$	0.12		$	0.12		$	0.48		$	1.05

Bank Level Capital
Common equity tier 1 capital to risk-weighted assets		11.32	%		11.10	%		10.94	%		10.89	%		10.43	%		11.32	%		10.43	%
Tier 1 capital to risk-weighted assets		11.32	%		11.10	%		10.94	%		10.89	%		10.43	%		11.32	%		10.43	%
Total capital to risk-weighted assets		12.26	%		12.14	%		11.95	%		11.92	%		11.36	%		12.26	%		11.36	%
Tier 1 capital to adjusted average assets		8.46	%		8.38	%		8.32	%		8.24	%		7.78	%		8.46	%		7.78	%


Non-GAAP Performance Ratios	Quarter ended,															Twelve months ended,
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
		2024			2024			2024			2024			2023			2024			2023
Net interest margin – tax equivalent		2.79	%		2.66	%		2.67	%		2.57	%		2.80	%		2.68	%		2.98	%
Tangible book value per diluted share	$	29.48		$	31.28		$	28.67		$	29.30		$	28.31		$	29.48		$	28.31
Tangible book value per diluted share adjusted for AOCL	$	42.94		$	42.47		$	42.33		$	42.36		$	40.31		$	42.94		$	40.31
Tangible common equity to total assets		6.17	%		6.51	%		5.95	%		6.09	%		5.77	%		6.17	%		5.77	%
Tangible common equity to total assets adjusted for AOCL		8.99	%		8.83	%		8.79	%		8.81	%		8.22	%		8.99	%		8.22	%

(1) Tax adjusted net interest margin represents a non-GAAP financial measure. See the non-GAAP reconciliation table section captioned “Non-GAAP Financial Measures” for further disclosure regarding non-GAAP financial measures

Quarter Ended
(Dollars in thousands)	Average Balances, Interest, and Rates
(unaudited)	December 31, 2024						September 30, 2024
	Average Balance			Interest		Rate (%)	Average Balance			Interest		Rate (%)
ASSETS
Interest bearing deposits in other financial institutions	$	50,271		$	650	5.17	$	54,084		$	665	4.92
Federal funds sold		891			9	4.04		682			9	5.28
Securities available-for-sale		343,411			2,011	2.34		342,451			2,031	2.37
Loans receivable		1,504,233			19,802	5.27		1,506,967			19,660	5.22
Federal Home Loan Bank stock		6,547			123	7.51		6,547			107	6.54
Total interest earning assets		1,905,353		$	22,595	4.74		1,910,731		$	22,472	4.70
Cash and non-interest bearing deposits in other financial institutions		27,360						22,478
Allowance for credit losses		(18,110	)					(18,482	)
Other noninterest bearing assets		154,707						155,997
Total assets	$	2,069,310					$	2,070,724

LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing deposits	$	1,465,198		$	8,811	2.41	$	1,451,414		$	8,946	2.47
Repurchase agreements		43,372			396	3.65		43,074			435	4.04
Borrowed funds		72,536			781	4.31		95,224			1,085	4.56
Total interest bearing liabilities		1,581,106		$	9,988	2.53		1,589,712		$	10,466	2.63
Non-interest bearing deposits		289,467						287,507
Other noninterest bearing liabilities		42,944						41,696
Total liabilities		1,913,517						1,918,915
Total stockholders’ equity		155,793						151,809
Total liabilities and stockholders’ equity	$	2,069,310					$	2,070,724

Net interest income				$	12,607					$	12,006
Return on average assets		0.41	%					0.12	%
Return on average equity		5.39	%					1.60	%
Net interest margin (average earning assets)		2.65	%					2.51	%
Net interest margin (average earning assets) – tax equivalent		2.79	%					2.66	%
Net interest spread		2.21	%					2.07	%
Ratio of interest-earning assets to interest-bearing liabilities	1.21		x				1.20		x


Year-to-Date
(Dollars in thousands)	Average Balances, Interest, and Rates
(unaudited)	December 31, 2024						September 30, 2024
	Average Balance			Interest		Rate (%)	Average Balance			Interest		Rate (%)
ASSETS				`
Interest bearing deposits in other financial institutions	$	51,202		$	2,967	5.79	$	61,107		$	2,317	5.06
Federal funds sold		912			38	4.17		919			29	4.21
Securities available-for-sale		347,048			8,250	2.38		348,269			6,239	2.39
Loans receivable		1,504,206			77,515	5.15		1,504,197			57,713	5.12
Federal Home Loan Bank stock		6,547			408	6.23		6,547			285	5.80
Total interest earning assets		1,909,915		$	89,178	4.67		1,921,039		$	66,583	4.62
Cash and non-interest bearing deposits in other financial institutions		28,730						19,598
Allowance for credit losses		(18,529	)					(18,670	)
Other noninterest bearing assets		155,251						155,433
Total assets	$	2,075,367					$	2,077,400

LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing deposits	$	1,462,039		$	35,161	2.40	$	1,464,682		$	26,350	2.40
Repurchase agreements		41,506			1,600	3.85		40,879			1,204	3.93
Borrowed funds		85,927			3,970	4.62		90,423			3,189	4.70
Total interest bearing liabilities		1,589,472		$	40,731	2.56		1,595,984		$	30,743	2.57
Non-interest bearing deposits		293,508						291,161
Other noninterest bearing liabilities		41,893						41,540
Total liabilities		1,924,873						1,928,685
Total stockholders’ equity		150,494						148,715
Total liabilities and stockholders’ equity	$	2,075,367					$	2,077,400

Net interest income				$	48,447					$	35,840
Return on average assets		0.58	%					0.64	%
Return on average equity		8.06	%					4.50	%
Net interest margin (average earning assets)		2.54	%					2.49	%
Net interest margin (average earning assets) – tax equivalent		2.68	%					2.63	%
Net interest spread		2.11	%					2.05	%
Ratio of interest-earning assets to interest-bearing liabilities	1.20		x				1.20		x

Finward Bancorp
Quarterly Financial Report

Balance Sheet Data
(Dollars in thousands)	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	December 31,			September 30,			June 30,			March 31,			December 31,
		2024			2024			2024			2024			2023
ASSETS

Cash and non-interest bearing deposits in other financial institutions	$	17,883		$	23,071		$	19,061		$	16,418		$	17,942
Interest bearing deposits in other financial institutions		52,047			48,025			63,439			54,755			67,647
Federal funds sold		654			553			707			607			419

Total cash and cash equivalents		70,584			71,649			83,207			71,780			86,008

Securities available-for-sale		333,554			350,027			339,585			346,233			371,374
Loans held-for-sale		1,253			2,567			1,185			667			340
Loans receivable, net of deferred fees and costs		1,508,976			1,508,242			1,506,398			1,508,251			1,512,595
Less: allowance for credit losses		(16,911	)		(18,516	)		(18,330	)		(18,805	)		(18,768	)
Net loans receivable		1,492,065			1,489,726			1,488,068			1,489,446			1,493,827
Federal Home Loan Bank stock		6,547			6,547			6,547			6,547			6,547
Accrued interest receivable		7,721			7,442			7,695			7,583			8,045
Premises and equipment		47,259			47,912			48,696			47,795			38,436
Foreclosed real estate		–			–			–			71			71
Cash value of bank owned life insurance		33,514			33,312			33,107			32,895			32,702
Goodwill		22,395			22,395			22,395			22,395			22,395
Other intangible assets		1,860			2,203			2,555			2,911			3,272
Other assets		43,947			40,882			44,027			43,459			45,262

Total assets	$	2,060,699		$	2,074,662		$	2,077,067		$	2,071,782		$	2,108,279

LIABILITIES AND STOCKHOLDERS’ EQUITY

Deposits:
Non-interest bearing	$	263,324		$	285,157		$	286,784		$	296,959		$	295,594
Interest bearing		1,497,242			1,463,653			1,469,970			1,450,519			1,517,827
Total		1,760,566			1,748,810			1,756,754			1,747,478			1,813,421
Repurchase agreements		40,116			43,038			42,973			41,137			38,124
Borrowed funds		65,000			85,000			85,000			90,000			80,000
Accrued expenses and other liabilities		43,603			38,259			43,709			41,586			29,389

Total liabilities		1,909,285			1,915,107			1,928,436			1,920,201			1,960,934

Commitments and contingencies

Stockholders’ Equity:


Preferred stock, no par or stated value; 10,000,000 shares authorized, none outstanding		–			–			–			–			–
Common stock, no par or stated value; 10,000,000 shares authorized; shares issued and outstanding: December 31, 2024 – 4,313,698 December 31, 2023 – 4,298,773		–			–			–			–			–


Additional paid-in capital		70,034			69,916			69,778			69,727			69,555
Accumulated other comprehensive loss		(58,084	)		(48,241	)		(58,939	)		(56,313	)		(51,613	)
Retained earnings		139,464			137,880			137,792			138,167			129,403

Total stockholders’ equity		151,414			159,555			148,631			151,581			147,345

Total liabilities and stockholders’ equity	$	2,060,699		$	2,074,662		$	2,077,067		$	2,071,782		$	2,108,279

Finward Bancorp
Quarterly Financial Report

Consolidated Statements of Income	Quarter Ended,															Twelve months ended,
(Dollars in thousands)	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
		2024			2024			2024			2024			2023			2024			2023
Interest income:
Loans	$	19,802		$	19,660		$	19,174		$	18,879		$	19,281		$	77,515		$	74,762
Securities & short-term investments		2,793			2,812			2,953			3,105			2,975			11,663			11,021
Total interest income		22,595			22,472			22,127			21,984			22,256			89,178			85,783
Interest expense:
Deposits		8,812			8,946			8,610			8,794			8,180			35,162			25,438
Borrowings		1,176			1,520			1,463			1,410			1,361			5,569			5,790
Total interest expense		9,988			10,466			10,073			10,204			9,541			40,731			31,228
Net interest income		12,607			12,006			12,054			11,780			12,715			48,447			54,555
Provision/(benefit) for credit losses		(579	)		–			76			–			779			(503	)		2,025
Net interest income after provision for credit losses		13,186			12,006			11,978			11,780			11,936			48,950			52,530
Noninterest income:
Fees and service charges		1,439			1,463			1,257			1,153			1,507			5,312			6,024
Wealth management operations		728			731			763			633			672			2,855			2,484
Gain on tax credit investment		1,236			–			–			–			–			1,236			–
Gain on sale of loans held-for-sale, net		328			338			320			152			352			1,138			1,081
Increase in cash value of bank owned life insurance		202			205			212			193			193			812			766
Gain (Loss) on real estate		(212	)		–			15			11,858			–			11,661			–
Loss on sale of securities, net		–			–			–			(531	)		–			(531	)		(48	)
Other		11			130			6			17			11			164			439
Total noninterest income		3,732			2,867			2,573			13,475			2,735			22,647			10,746
Noninterest expense:
Compensation and benefits		6,628			6,963			7,037			7,109			6,290			27,737			27,655
Occupancy and equipment		2,045			2,181			2,116			1,908			1,484			8,250			6,382
Data processing		1,202			1,165			1,135			1,170			1,269			4,672			4,734
Federal deposit insurance premiums		457			435			397			501			492			1,790			2,003
Marketing		220			209			212			158			191			799			840
Professional and Outside Services		1,341			1,251			1,257			1,557			1,420			5,406			4,279
Technology		509			602			507			625			374			2,243			1,654
Other		1,845			1,668			1,756			1,976			1,997			7,245			7,684
Total noninterest expense		14,247			14,474			14,417			15,004			13,517			58,142			55,231
Income before income taxes		2,671			399			134			10,251			1,154			13,455			8,045
Income tax expenses (benefit)		569			(207	)		(9	)		972			(356	)		1,325			(335	)
Net income	$	2,102		$	606		$	143		$	9,279		$	1,510		$	12,130		$	8,380

Earnings per common share:
Basic	$	0.49		$	0.14		$	0.03		$	2.18		$	0.36		$	2.85		$	1.96
Diluted	$	0.49		$	0.14		$	0.03		$	2.17		$	0.35		$	2.84		$	1.96

Finward Bancorp
Quarterly Financial Report

Asset Quality			(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
(Dollars in thousands)			December 31,		September 30,		June 30,		March 31,		December 31,
				2024		2024		2024		2024		2023
Nonaccruing loans			$	13,738	$	13,806	$	11,079	$	11,603	$	9,608
Accruing loans delinquent more than 90 days				–		–		294		215		1,843
Securities in non-accrual				1,419		1,440		1,371		1,442		1,357
Foreclosed real estate				–		–		–		71		71
	Total nonperforming assets		$	15,157	$	15,246	$	12,744	$	13,331	$	12,879

Allowance for credit losses (ACL):
	ACL specific allowances for collateral dependent loans		$	284	$	1,821	$	1,327	$	1,455	$	906
	ACL general allowances for loan portfolio			16,627		16,695		17,003		17,351		17,862
		Total ACL	$	16,911	$	18,516	$	18,330	$	18,806	$	18,768

Bank Level Capital					Minimum Required To Be
(Dollars in thousands)			Minimum Required For		Well Capitalized Under Prompt
	Actual		Capital Adequacy Purposes		Corrective Action Regulations
December 31, 2024	Amount	Ratio	Amount	Ratio	Amount	Ratio
Common equity tier 1 capital to risk-weighted assets	$179,625	11.32%	$71,415	4.50%	$103,154	6.50%
Tier 1 capital to risk-weighted assets	$179,625	11.32%	$95,219	6.00%	$126,959	8.00%
Total capital to risk-weighted assets	$194,500	12.26%	$126,959	8.00%	$158,699	10.00%
Tier 1 capital to adjusted average assets	$179,625	8.46%	$84,854	4.00%	$106,068	5.00%

Table 1 – Reconciliation of the Non-GAAP Performance Measures

(Dollars in thousands)	Quarter Ended,															Twelve months ended,
(unaudited)	December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			December 31, 2024			December 31, 2023
Calculation of tangible common equity
Total stockholder’s equity	$	151,414		$	159,555		$	148,631		$	151,581		$	147,345		$	151,414		$	147,345
Goodwill		(22,395	)		(22,395	)		(22,395	)		(22,395	)		(22,395	)		(22,395	)		(22,395	)
Other intangibles		(1,860	)		(2,203	)		(2,555	)		(2,911	)		(3,272	)		(1,860	)		(3,272	)
Tangible common equity	$	127,159		$	134,957		$	123,681		$	126,275		$	121,678		$	127,159		$	121,678

Calculation of tangible common equity adjusted for accumulated other comprehensive loss
Tangible common equity	$	127,159		$	134,957		$	123,681		$	126,275		$	121,678		$	127,159		$	121,678
Accumulated other comprehensive loss		58,084			48,241			58,939			56,313			51,613			58,084			51,613
Tangible common equity adjusted for accumulated other comprehensive loss	$	185,243		$	183,198		$	182,620		$	182,588		$	173,291		$	185,243		$	173,291

Calculation of tangible book value per share
Tangible common equity	$	127,159		$	134,957		$	123,681		$	126,275		$	121,678		$	127,159		$	121,678
Shares outstanding		4,313,698			4,313,940			4,313,940			4,310,251			4,298,773			4,313,698			4,298,773
Tangible book value per diluted share	$	29.48		$	31.28		$	28.67		$	29.30		$	28.31		$	29.48		$	28.31

Calculation of tangible book value per diluted share adjusted for accumulated other comprehensive loss
Tangible common equity adjusted for accumulated other comprehensive loss	$	185,243		$	183,198		$	182,620		$	182,588		$	173,291		$	185,243		$	173,291
Diluted average common shares outstanding		4,313,698			4,313,940			4,313,940			4,310,251			4,298,773			4,313,698			4,298,773
Tangible book value per diluted share adjusted for accumulated other comprehensive loss	$	42.94		$	42.47		$	42.33		$	42.36		$	40.31		$	42.94		$	40.31

Calculation of tangible common equity to total assets
Tangible common equity	$	127,159		$	134,957		$	123,681		$	126,275		$	121,678		$	127,159		$	121,678
Total assets		2,060,699			2,074,662			2,077,067			2,071,782			2,108,279			2,060,699			2,108,279
Tangible common equity to total assets		6.17	%		6.51	%		5.95	%		6.09	%		5.77	%		6.17	%		5.77	%

Calculation of tangible common equity to total assets adjusted for accumulated other comprehensive loss
Tangible common equity adjusted for accumulated other comprehensive loss	$	185,243		$	183,198		$	182,620		$	182,588		$	173,291		$	185,243		$	173,291
Total assets		2,060,699			2,074,662			2,077,067			2,071,782			2,108,279			2,060,699			2,108,279
Tangible common equity to total assets adjusted for accumulated other comprehensive loss		8.99	%		8.83	%		8.79	%		8.81	%		8.22	%		8.99	%		8.22	%

Calculation of tax adjusted net interest margin
Net interest income	$	12,607		$	12,006		$	12,054		$	11,780		$	12,715		$	48,447		$	54,555
Tax adjusted interest on securities and loans		674			678			677			699			722			2,728			2,956
Adjusted net interest income	$	13,281			12,684			12,731			12,749		$	13,437		$	51,175		$	57,511
Total average earning assets		1,905,353			1,910,731			1,906,998			1,945,501			1,920,127			1,909,915			1,927,455
Tax adjusted net interest margin		2.79	%		2.66	%		2.67	%		2.57	%		2.80	%		2.68	%		2.98	%

Efficiency ratio
Total non-interest expense	$	14,247		$	14,474		$	14,417		$	15,004		$	13,517		$	58,142		$	55,232
Total revenue		16,339			14,873			14,627			25,255			15,450			71,094			65,301
Efficiency ratio		87.20	%		97.32	%		98.56	%		59.41	%		87.49	%		81.78	%		84.58	%

FOR FURTHER INFORMATION
CONTACT SHAREHOLDER SERVICES
(219) 853-7575

The MIL Network –

January 29, 2025

MIL-OSI Security: Former Minneapolis Mayoral Aide and Safari Restaurant Co-Owner Both Plead Guilty in $250 Million Feeding Our Future Fraud Scheme

Source: Office of United States Attorneys

MINNEAPOLIS –Two more defendants pleaded guilty for their roles in the $250 million fraud scheme that exploited a federally-funded child nutrition program during the COVID-19 pandemic, announced Acting U.S. Attorney Lisa D. Kirkpatrick.

According to court documents, from approximately April 2020 through January 2022, Abdulkadir Nur Salah, 38, of Columbia Heights, Minnesota, and Abdi Nur Salah, 37, of St. Paul, Minnesota, knowingly participated in a scheme to defraud a federal child nutrition program designed to provide free meals to children in need. The co-conspirators obtained, misappropriated, and laundered millions of dollars in program funds that were intended as reimbursements for the cost of serving meals to children. The defendants exploited changes in the program intended to ensure underserved children received adequate nutrition during the Covid-19 pandemic. Rather than feed children, the defendants took advantage of the Covid-19 pandemic—and the resulting program changes—to enrich themselves by fraudulently misappropriating millions of dollars in federal child nutrition program funds.

According to court documents, Abdulkadir Nur Salah was co-owner and operator of Safari Restaurant, a site that received more than $16 million in fraudulent Federal Child Nutrition Program funds. Abdi Nur Salah registered Stigma-Free International, a non-profit entity used to carry out the fraud scheme with sites throughout Minnesota, including in Willmar, Mankato, St. Cloud, Waite Park, and St. Paul. Abdi Salah also worked for the City of Minneapolis as a Senior Policy Aide to the Mayor.

As part of their plea agreement entered today, each defendant agreed that a variety of assets and money were derived specifically from their fraud scheme and are thus subject to forfeiture to the United States. For Abdulkadir Salah that includes: $309,993.51 seized from Bell Bank account for Cosmopolitan Business Solutions d/b/a Safari Restaurant; $435,512.44 seized from Bell Bank account for 3017 LLC; $472,889.08 seized from Northeast Bank account for 3017 LLC; real estate property located at 2722 Park Avenue South, Minneapolis, Minnesota. For Abdi Salah, that includes $343,418.98 seized from Star Choice Credit Union account for Stone Bridge Development, LLC; real estate properties located at 8432 Noble Avenue, North Brooklyn Park, Minnesota (known previously as Kelly’s 19th Hole) and 2529 12th Avenue South, Minneapolis, Minnesota.

Both pleaded guilty today in U.S. District Court before Chief Judge Patrick J. Schiltz. Their sentencing hearings will be scheduled at a later date.

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

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

MIL Security OSI –

January 29, 2025

MIL-OSI: First Central Savings Bank Reports Fourth Quarter 2024 net income of $2.0 million ($0.19 EPS), Significant Non-Interest Income Growth Quarter over Quarter, and Special Cash Dividend of $0.15 per share

Source: GlobeNewswire (MIL-OSI)

Performance Highlights

Net Income: Net income for the quarter ended December 31, 2024, was $2.0 million or $0.19 per share, compared to $919 thousand or $0.09 per share, recorded in the prior linked quarter and $1.3 million or $0.12 per share, in the comparable 2023 quarter.
Cash Net Income: Cash net income for the quarter ended December 31, 2024, was $2.2 million or $0.21 per share, compared to $1.9 million or $0.18 per share, recorded in the prior quarter and $1.5 million or $0.14 per share, in the comparable 2023 quarter
Significant Non-Interest Income Growth: Due to an increase in loan sale volume and loan sale premiums received for the quarter ended December 31, 2024, non-interest income increased by $1.0 million or 53.4% from the prior linked quarter and were up $1.5 million or 106.6% from the prior year quarter.
Net Interest Income: The Bank recorded net interest income of $6.9 million for the quarter ended December 31, 2024, compared to $6.8 million in the prior linked quarter and $6.8 million in the comparable 2023 quarter.
Net Interest Margin: The Bank’s net interest margin increased during the quarter ended December 31, 2024, to 2.88% from 2.80% in the quarter ended September 30, 2024.
Financial Performance Metrics: Return on average assets and average stockholders’ equity were 0.82% and 9.08%, respectively, for the quarter ended December 31, 2024, compared to 0.37% and 4.22% on linked quarter basis.
Regulatory Capital: The Bank’s Tier 1 capital ratio was 9.36% and the Total Risk based capital ratio was 14.67% at December 31, 2024, each above the regulatory minimum for a well-capitalized institution.
Special Cash Dividend: The Bank declared a special cash dividend of $0.15 per share to the Bank’s shareholders.
Strong and Stable Liquidity: The Uninsured deposits base remains stable at 18.15% of total deposits. The Bank has significant available funding capacity to provide 236.2% coverage of our uninsured deposits.

GLEN COVE, N.Y., Jan. 28, 2025 (GLOBE NEWSWIRE) — Joseph Pistilli, Chairman of the Board, of First Central Savings Bank (“FCSB”, “the Bank”) today reported continued performance achievements for the quarter ended December 31, 2024.

Cash and GAAP Basis Earnings

The Bank’s cash earnings were $2.2 million, or $0.21 per share, for the quarter ended December 31, 2024, which represents an increase of $325 thousand, or 17.2%, on a linked quarter basis and an increase of $766 thousand, or 52.8%, from the prior year quarter ended December 31, 2023.

On a GAAP basis, net income for the quarter ended December 31, 2024, was $2.0 million, or $0.19 per share, compared with net income of $919 thousand, or $0.09, from the prior linked quarter basis and net income of $1.3 million, or $0.12 per share, for the quarter ended December 31, 2023.

Joseph Pistilli, Chairman of the Board noted, “In the fourth quarter of 2024, First Central continued to build shareholder value by generating strong earnings, primarily due to gains on non-conforming residential loan sales. In addition, we increased our book value from $7.88 per share at December 31, 2023, to $8.20 at December 31, 2024. Due to strong earnings and capital, I am pleased to report that in December 2024 we have once again declared a special cash dividend of $0.15 per share to our shareholders, up from $0.10 per share in the prior year period. We are cautiously optimistic about the credit quality of our loan portfolio, as it relates to the commercial loan sector, specifically to office space and multi-family lending, however, our exposure to this type of lending is limited. I am extremely proud of the management team and the Board of Directors that we have assembled at the Bank and the expertise they have in managing net interest income and asset quality during the current market conditions.”

Paul Hagan, President and Chief Operating Officer, reflected on the Bank’s results, “During the quarter ended December 31, 2024, additional overnight rate cuts from the Federal Reserve enabled the Bank to expand its net interest income and margin. The cost of funds declined by 21 basis points during the fourth quarter of 2024 and we expect additional decreases in our deposit costs going forward. The pace of future deposit cost reductions will be dependent upon additional rate cuts from the Federal Reserve as well as competitor deposit pricing and their increased liquidity needs. We expect overall profitability to improve in the calendar year 2025 due to net interest margin expansion, growth in our loan portfolio, and increased loan sale income, however, we are very aware of potential credit quality deterioration, particularly in commercial and industrial loans that are present within our industry. Management will continue to effectively manage non-interest expenses to improve profitability and provide for any potential credit quality issues.”

Balance Sheet

Total assets as of December 31, 2024, were $964.9 million compared to $963.5 million as of December 31, 2023. The slight increase in total assets was primarily driven by the Bank’s loan originations offset by non-conforming loan sales of $213.6 million during 2024. Total assets for the quarter ended December 31, 2024, decreased by $23.0 million to $964.9 million as the Bank continued to originate commercial and non-conforming loans while continuing to actively sell a portion of the non-conforming loans to the secondary market. The bank sold a quarterly record of $84.4 million of non-conforming loans during the quarter. As of December 31, 2024, the Bank has been able to generate a non-conforming loan pipeline of $145.3 million with a weighted average interest rate of 7.02%.

Total deposits were $829.0 million as of December 31, 2024, an increase of $12.7 million, or 1.6%. from December 31, 2023. The Bank has been successful in growing non-interest-bearing deposits from our retail branches and through non-conforming loan originations. Year over year non-interest-bearing deposits increased by $23.6 million or 22.5% to $128.8 million as of December 31, 2024, representing 15.5% of the total deposit base. With the growth of the deposit base, total borrowings as of December 31, 2024, decreased by $15.0 million or 33.3% to $30.0 million when compared to December 31, 2023.

The Bank’s overall average cost of funds was 3.51% for the quarter ended December 31, 2024, a decrease of 21 basis points from 3.72% from the prior linked quarter. Three Overnight rate cuts by the Federal Reserve totaling 100 bps contributed to the reduction in the cost of funds. Management continues to be pro-active in securing lower rate certificates of deposit in the current interest rate environment to better position the interest-rate-risk profile of the Bank in anticipation of further interest rate reductions in 2025. Management believes this strategy will better protect and enhance future earnings as interest rates continue to decline, and our deposits reprice downward in the future.

Loan Portfolio and Asset Quality

For the twelve-month period ended December 31, 2024, the Bank’s loan portfolio grew by $17.7 million, or 2.1%, with the growth concentrated primarily in non-conforming residential loans. Management continues to employ a strategy of concentrating its loan growth in these products, which provides the Bank with traditionally safe credit quality at acceptable credit spreads, greater liquidity and an enhanced interest-rate-risk profile. Over the past twelve months, originations of the non-conforming product amounted to $274.2 million. At December 31, 2024, the entire non-conforming loan portfolio amounted to $464.6 million, with an average loan balance of $553 thousand and a weighted average loan-to-value ratio of 62.8%.

As a result of the Bank’s robust non-conforming loan generation capabilities, the Bank had been able to generate additional income by strategically originating and selling its non-conforming loans to other financial institutions at premiums. The Bank expects that it will continue to originate, in the near term, for its own portfolio and, in the long term, for others, which will result in a continued increase in interest income while also realizing gains on sales of loans. For the twelve months ended December 31, 2024, the Bank earned $6.4 million in premiums on loans sold, net of FASB 91 fees and costs.

The Bank’s asset quality ratios remained strong. At December 31, 2024, the loan portfolio had non-performing loans of $11.6 million or 1.39% of total loans and 1.21% of total assets. The total allowance for credit losses at December 31, 2024, was $8.8 million, or 1.05% of total loans held for investment.

About First Central Savings Bank

With assets of $964.9 million at December 31, 2024, First Central Savings Bank is a locally owned and operated community savings bank, focusing on highly personalized and efficient services and products responsive to local needs. Management and the Board of Directors are comprised of a select group of successful local businessmen 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, First Central offers a full range of modern financial services. First Central employs a complete suite of consumer and commercial banking products and services, including multi-family and commercial mortgages, ADC and bridge loans, residential loans, middle market business loans and lines of credit. First Central also offers customers 24-hour ATM service with no fees attached, free checking with interest, mobile banking, the most advanced technologies in internet banking for our consumer and business customers, safe deposit boxes and much more. The Bank continues to roll out mobile banking software products as well as our “Zelle” money transfer product to our customers. First Central Savings Bank maintains its corporate office in Glen Cove, New York with an additional six branches throughout Queens New York, one branch in Nassau County, New York, and one branch in Suffolk County, New York.

First Central Savings Bank is a member of the Federal Deposit Insurance Corporation and is an Equal Housing/Equal Opportunity Lender. For further information, call 516-399-6010 or visit the Bank’s state-of-the-art website at www.myfcsb.com.

Forward-Looking Statements

This release may contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and may be identified by the use of such words as “may,” “believe,” “expect,” “anticipate,” “should,” “plan,” “estimate,” “predict,” “continue,” and “potential” or the negative of these terms or other comparable terminology. Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of First Central Savings Bank. Any or all of the forward-looking statements in this release and in any other public statements made by First Central Savings Bank may turn out to be incorrect. They can be affected by inaccurate assumptions First Central Savings Bank might make or by known or unknown risks and uncertainties. Consequently, no forward-looking statement can be guaranteed. First Central Savings Bank 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.

First Central Savings Bank
Statements of Condition – (unaudited)
(dollars in thousands)
	12/31/2024			9/30/2024			12/31/2023

Assets
Cash and cash equivalents	$	49,156		$	40,701		$	50,955
Certificates of deposit		2,000			2,000			2,000
Investments available-for-sale		29,802			31,679			43,057
Investments held-to-maturity		1,000			1,000			1,000

Loans held-for-sale		14,892			83,613			8,126
Loans receivable		838,183			799,076			827,278
Less: allowance for credit losses		(8,787	)		(8,895	)		(8,347	)
Loans, net		829,396			790,181			818,931

Other assets		38,684			38,745			39,466
Total assets	$	964,930		$	987,919		$	963,535


Liabilities and stockholders’ equity
Deposits	$	829,003		$	851,646		$	816,285
FHLB advances and other borrowings		30,000			30,000			45,000
Other liabilities		18,568			18,421			18,318
Total liabilities		877,571			900,067			879,603


Total stockholders’ equity		87,359			87,852			83,932
Total liabilities and stockholders’ equity	$	964,930		$	987,919		$	963,535

First Central Savings Bank
Statements of Income – (unaudited)
(dollars in thousands, except per share data)
							12 Months			12 Months
	Quarter Ended			Quarter Ended			Ended			Ended
	12/31/2024			12/31/2023			12/31/2024			12/31/2023

Total Interest income	$	14,599		$	13,767		$	58,610		$	53,465
Total interest expense		7,673			6,991			31,605			23,466
Net interest income		6,926			6,776			27,005			29,999
Provision (recovery) for credit losses		1			(11	)		1,258			539
Net interest income after provision (recovery) for credit losses		6,925			6,787			25,747			29,460

Net gain on loans sold		2,649			1,023			6,449			3,738
Net gains on sale of securities		–			109			142			109
Other non-interest income		247			270			1,034			1,253
Total non-interest income		2,896			1,402			7,625			5,100

Compensation and benefits		4,355			3,882			15,361			14,108
Occupancy and equipment		912			894			3,672			3,811
Data processing		454			416			1,798			1,658
Federal insurance premium		161			139			666			672
Professional fees		291			301			1,348			1,711
Other		1,116			986			3,867			3,618
Total non-interest expense		7,289			6,618			26,712			25,578

Income before income taxes		2,532			1,571			6,660			8,982
Income tax expense		524			318			1,349			1,847
Net income	$	2,008		$	1,253		$	5,311		$	7,135

Basic earnings per share-GAAP basis	$	0.19		$	0.12		$	0.50		$	0.67
Diluted earnings per share-GAAP basis	$	0.19		$	0.12		$	0.50		$	0.67

Supplementary information:
Net income	$	2,008		$	1,253		$	5,311		$	7,135

Add back non-cash items
Provision (recovery) for credit losses		1			(11	)		1,258			539
Depreciation expense		261			258			1,031			1,027
Tax on add back of non-cash items		(54	)		(50	)		(464	)		(322	)
Cash net income	$	2,216		$	1,450		$	7,136		$	8,379

Basic earnings per share-GAAP basis	$	0.21		$	0.14		$	0.67		$	0.79
Diluted earnings per share-GAAP basis	$	0.21		$	0.14		$	0.67		$	0.79

First Central Savings Bank
Statements of Income – (unaudited)
(dollars in thousands, except per share data)
	Quarter Ended			Quarter Ended			Quarter Ended			Quarter Ended
	12/31/2024			9/30/2024			6/30/2024			3/31/2024

Total Interest income	$	14,599		$	14,972		$	14,854		$	14,185
Total interest expense		7,673			8,210			8,064			7,658
Net interest income		6,926			6,762			6,790			6,527
Provision for credit losses		1			950			117			190
Net interest income after provision for credit losses		6,925			5,812			6,673			6,337

Net gain on loans sold		2,649			1,536			843			1,421
Net gains on sale of securities		–			142			–			–
Other non-interest income		247			210			337			240
Total non-interest income		2,896			1,888			1,180			1,661

Compensation and benefits		4,355			3,663			3,596			3,747
Occupancy and equipment		912			936			918			906
Data processing		454			448			452			444
Federal insurance premium		161			174			166			165
Professional fees		291			360			368			329
Other		1,116			975			907			869
Total non-interest expense		7,289			6,556			6,407			6,460

Income before income taxes		2,532			1,144			1,446			1,538
Income tax expense		524			225			290			310
Net income	$	2,008		$	919		$	1,156		$	1,228

Basic earnings per share-GAAP basis	$	0.19		$	0.09		$	0.11		$	0.12
Diluted earnings per share-GAAP basis	$	0.19		$	0.09		$	0.11		$	0.12

Supplementary information:
Net income	$	2,008		$	919		$	1,156		$	1,228

Add back non-cash items
Provision for credit losses		1			950			117			190
Depreciation expense		261			260			257			253
Tax on add back of non-cash items		(54	)		(238	)		(75	)		(89	)
Cash net income	$	2,216		$	1,891		$	1,455		$	1,582

Basic earnings per share-GAAP basis	$	0.21		$	0.18		$	0.14		$	0.15
Diluted earnings per share-GAAP basis	$	0.21		$	0.18		$	0.14		$	0.15

First Central Savings Bank
Selected Financial Data – (unaudited)
(dollars in thousands, except per share data)
	Quarter Ended			Quarter Ended			Quarter Ended			Quarter Ended
	12/31/2024			9/30/2024			6/30/2024			12/31/2023

Asset quality:
Allowance for credit losses	$	8,787		$	8,895		$	8,721		$	8,347
Allowance for credit losses to total loans (1)		1.05	%		1.11	%		1.04	%		1.01	%

Non-performing loans	$	11,649		$	4,850		$	4,907		$	4,385
Net (recovery) charge-off dollars		(41	)		776			(66	)		(129	)
Non-performing loans/total loans (1)		1.39	%		0.61	%		0.58	%		0.53	%
Non-performing loans/total assets		1.21	%		0.49	%		0.50	%		0.46	%
Allowance for credit losses/non-performing loans		75.43	%		183.40	%		177.73	%		190.35	%

Capital: (dollars in thousands)
Tier 1 capital	$	91,913		$	91,502		$	90,583		$	88,236
Tier 1 leverage ratio		9.36	%		9.26	%		9.16	%		9.23	%
Common equity tier 1 capital ratio		13.42	%		13.20	%		13.35	%		13.19	%
Tier 1 risk based capital ratio		13.42	%		13.20	%		13.35	%		13.19	%
Total risk based capital ratio		14.67	%		14.45	%		14.60	%		14.44	%

Equity data
Common shares outstanding		10,648,345			10,648,345			10,648,345			10,648,345
Stockholders’ equity	$	87,359		$	87,852		$	86,122		$	83,932
Book value per common share		8.20			8.25			8.09			7.88
Tangible common equity		87,359			87,852			86,122			83,932
Tangible book value per common share		8.20			8.25			8.09			7.88

(1) Calculation excludes loans held-for-sale

First Central Savings Bank
Selected Financial Data – (unaudited)
(dollars in thousands)
	Quarter Ended			Quarter Ended				Quarter Ended			Quarter Ended
	12/31/2024			9/30/2024				6/30/2024			12/31/2023

Other: (in thousands)
Average interest-earning assets	$	956,169		$	961,624			$	961,503		$	928,162
Average interest-bearing liabilities		736,731			759,152				765,606			740,574
Average deposits and borrowings		868,871			877,100				879,082			846,091

Profitability:
Return on average assets		0.82	%		0.37	%	(3)		0.47	%		0.52	%
Return on average equity		9.08	%		4.22	%	(3)		5.48	%		6.07	%
Yield on average interest earning assets		6.07	%		6.19	%			6.21	%		5.88	%
Cost of average interest bearing liabilities		4.14	%		4.30	%			4.24	%		3.75	%
Cost of funds		3.51	%		3.72	%			3.69	%		3.28	%
Net interest rate spread (1)		1.93	%		1.89	%			1.98	%		2.14	%
Net interest margin (2)		2.88	%		2.80	%			2.84	%		2.90	%
Non-interest expense to average assets		2.91	%		2.65	%			2.62	%		2.78	%
Efficiency ratio		72.69	%		77.05	%			80.40	%		82.46	%

(1) Net interest rate spread represents the difference between the average yield on average interest-earning assets and the average cost of average interest-bearing liabilities
(2) Net interest margin represents net interest income divided by average interest earning assets
(3) ROA and ROE excluding a $776 thousand charge-off of a C&I loan as of September 30, 2024 would have been 0.61% and 6.95%

Investor and Press Contact:
Joseph Pistilli Chairman of the Board
Ray Ciccone, E.V.P. & Chief Financial Officer
Paul Hagan, President & Chief Operating Officer
516-399-6071

The MIL Network –

January 29, 2025

MIL-OSI Security: Woman Sentenced for Fraud Scheme Involving Claims for Unnecessary Respiratory Tests Submitted with COVID-19 Tests

Source: United States Attorneys General

A California woman was sentenced today to nine years in prison for her role in fraudulently submitting claims to governmental and private insurance programs during the COVID‑19 pandemic for expensive respiratory pathogen panel (RPP) tests that were medically unnecessary and never ordered by health care providers.

According to court documents, Lourdes Navarro, 66, of Glendale, and Imran Shams owned and controlled Matias Clinical Laboratory, doing business as Health Care Providers Laboratory (HCPL). Navarro and Shams conspired to obtain nasal swab specimens that enabled HCPL to test for COVID-19, as well as to obtain testing orders from physicians and other medical professionals. The specimens were collected from, among others, residents and staff at nursing homes, assisted living facilities, rehabilitation facilities, and similar types of facilities, and from students and staff at primary and secondary schools, for the purported purpose of conducting screening tests to identify and isolate individuals infected with COVID-19. However, Navarro and Shams caused HCPL to perform RPP tests on most of the specimens, even though only COVID-19 testing had been ordered and there was no medical justification for conducting RPP tests on asymptomatic individuals who needed only COVID-19 screening tests. Through HCPL, Navarro and Shams billed approximately $369 million for the RPP tests to Medicare, the Health Resources and Services Administration COVID-19 Uninsured Program, and a private health insurance company, and were reimbursed approximately $46.7 million for fraudulent claims.

Navarro was also ordered to forfeit $11,662,939 in funds that the government had previously seized from three bank accounts. The total amount seized and forfeited from Navarro and Shams is $14,518,485. Navarro also was ordered to pay $46,735,400 in restitution.

Navarro pleaded guilty on Oct. 5, 2023, to conspiracy to commit health care fraud and wire fraud. Shams pleaded guilty on Jan. 24, 2023, in the Central District of California to conspiracy to commit health care fraud and concealment of his exclusion from Medicare and was sentenced to 10 years in prison on Jan. 30, 2024. In addition, on May 29, 2024, Shams was sentenced to five years in prison in connection with his 2017 plea in the Eastern District of New York to conspiracy to commit money laundering, conspiracy to pay and receive kickbacks, and defrauding the United States by obstructing the lawful functions of the IRS, of which three years were ordered to run consecutive to the Central District of California sentence.

Supervisory Official Antoinette T. Bacon of the Justice Department’s Criminal Division, Assistant Director in Charge Akil Davis of the FBI Los Angeles Field Office, and Acting Special Agent in Charge Rochelle Wong of the Department of Health and Human Services Office of Inspector General (HHS-OIG) Los Angeles Regional Office made the announcement.

The FBI and HHS-OIG investigated the case.

Trial Attorneys Gary A. Winters and Raymond E. Beckering III of the Criminal Division’s Fraud Section prosecuted the case. Assistant U.S. Attorney Maxwell Coll for the Central District of California handled the financial penalties.

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

MIL Security OSI –

January 29, 2025

MIL-OSI USA: SECURING MISSOURI’S FUTURE: Governor Kehoe Delivers First State of the State Address

Source: US State of Missouri

JANUARY 28, 2025

Jefferson City — JEFFERSON CITY, MO – Today, Governor Mike Kehoe delivered his first State of the State Address to the Missouri General Assembly, outlining his legislative and budget priorities for Fiscal Year 2026 (FY26).

Governor Kehoe opened his first address to the 103rd General Assembly by reflecting on lessons learned to stay humble from his mentor, Dave Sinclair, with a commitment to working with the members of the legislature during his time as governor.

“I said earlier that I will never forget my roots. Well, I’ve sat where you sit. I understand the pressures you face. And I want to work with you—not against you—because I believe we can only secure Missouri’s future if we work together,” said Governor Kehoe.

Governor Kehoe’s speech focused on the policy priorities that have remained a central focus at the start of his administration, beginning with public safety.

“Any efforts we may make to improve the lives of Missourians–whether it be education opportunities, cutting taxes, or expanding childcare–none of it matters if Missourians aren’t safe,” Governor Kehoe said. “Securing Missouri’s future begins with public safety.”

Public Safety

During his speech, Governor Kehoe discussed the actions his administration took on Inauguration Day, signing six executive orders developed based on input from law enforcement to launch the Safer Missouri initiative.

To support law enforcement recruitment and retention efforts, Governor Kehoe’s budget recommends funding to bolster the existing Missouri Blue Scholarship Program for law enforcement basic training and $10 million in new funding to assist local communities who prioritize public safety with equipment and training needs through the Blue Shield Program.

The budget also includes $2.5 million to support the sheriff’s retirement system for another year, and funding for a new crime lab in Cape Girardeau, serving the Missouri State Highway Patrol Troop E region.

As part of the Safer Missouri initiative, Governor Kehoe urged the General Assembly to pass a comprehensive crime bill that includes increasing penalties for crimes like violent rioting and fleeing from law enforcement in a vehicle, cracking down on criminals who participate in reckless stunt driving and street racing, and efforts to increase oversight and accountability of the St. Louis Metropolitan Police Department.

To combat the fentanyl crisis and identify areas of high fentanyl use in schools across the state, Governor Kehoe’s budget includes a $4 million investment for fentanyl testing in wastewater systems at schools. Governor Kehoe also encouraged the legislature to take action on increasing penalties for fentanyl trafficking.

Economic Development

Governor Kehoe emphasized his efforts to make Missouri a welcoming state for business investment. From manufacturers, to retail, to Missouri’s sports teams: businesses who provide jobs and opportunities to Missourians are an important part the state’s economic success.

In order to compete with other states, the Kehoe Administration will focus on reducing taxes and cutting regulations, so families keep more of their own money, and so job creators look at our state to expand and hire more hard-working Missourians.

Governor Kehoe announced that he has directed the Missouri Department of Revenue to work with his staff on a sustainable and comprehensive plan to eliminate the individual income tax once and for all.

And, knowing that infrastructure and economic development go hand in hand, Governor Kehoe’s budget includes a reappropriation of last year’s 100 million dollars for rural road improvements to ensure all of those funds are invested in rural infrastructure.

Governor Kehoe’s speech focused largely on solving the biggest challenge to the child care crisis: addressing the current regulatory environment.

In an effort to make the child care regulations easier to understand and navigate, Governor Kehoe issued Executive Order 25-15, charging the Department of Elementary and Secondary Education-Office of Childhood with a complete re-write of the child care regulations.

The budget also includes $10 million to offer grant funding opportunities to support partnerships between employers, community partners, and the child care industry to make more child care slots available for Missouri families.

In an effort to provide timely payments for the child care providers who partner with the state to provide care, providers will receive payments from the state at the beginning of the month on enrollment, starting in fiscal year 2026.

To build on Missouri’s career and technical education opportunities, Governor Kehoe’s budget includes $15 million in new funding to address equipment, space, and operational needs of career and technical centers across the state, as well as an increase of $5 million on an annual basis to support increased operational costs.

The budget includes increased funding to expand career counseling to more high schools across the state, so that students can talk to school counselors about their future career path, whether that includes college or not.

Governor Kehoe also signed Executive Order 25-16 establishing the Governor’s Workforce of the Future Challenge, instructing DESE to put a plan in place for better coordination among key stakeholders, including K-12 schools, local business and industry, and higher education to improve the state’s career and technical education programs and infrastructure.

Agriculture

Securing the future of agriculture also means investing in the next generation. Governor Kehoe’s budget includes $800,000 in permanent funding for Missouri FFA.

Additionally, the budget includes $55 million in new bonding to support the construction of a 40,000 square foot covered multi-use livestock barn and 80,000 square foot stalling barn to house equine and other livestock at the Missouri State Fair’s new arena, which was previously supported by the legislature and is now under construction.

Education

Governor Kehoe is a proud supporter of education in all of its forms–public schools, private schools, charter schools–as long Missouri’s children are getting a quality education that best meets their needs.

To expand school choice, Governor Kehoe urged the General Assembly to pass voluntary open enrollment in public schools.

Governor Kehoe’s budget also includes $50 million in general revenue funding to bolster the ESA program.

This year, Governor Kehoe’s budget recommends a $200 million increase for the Foundation Formula, the largest increase since the current Formula was created. And, over $370 million to fully fund the state’s commitment for school transportation needs. For teachers, the budget includes $33 million to fund teacher salaries. Additionally, the budget includes $30 million for Small School Grants to support the continued success of our small rural school districts, the heartbeat of their communities.

Governor Kehoe also signed Executive Order 25-14 establishing the School Funding Modernization Task Force to recommend changes to the Foundation Formula to better serve students and families.

Government Improvements
To continue to recruit and retain quality state team members, Governor Kehoe announced a statewide time of service pay plan increase for state employees.

Governor Kehoe also previewed action on DEI programs in state government and support for creating Missouri’s own version of a DOGE initiative. He committed to working with the General Assembly on these efforts in the coming weeks.

During his speech, Governor Kehoe recognized special guests for their achievements and commitment to the people of Missouri:

Special Guests of the Governor

Lizzy Schott
Safer Missouri Initiative Group
Alena Malone
Adeline Thessen
USS Missouri Crew Members

Governor Kehoe emphasized there are safer choices than abortion in Missouri and committed to helping pregnant women know these exist, including the Pregnancy Resource Centers across the state. The budget includes support for alternatives to abortion with $4 million in additional funding to benefit expecting and new mothers, a more than 50% increase to existing services.

Governor Kehoe closed the speech thanking veterans and service members, adding that his proposed budget includes an additional $10 million of general revenue funding to our Missouri Veterans Homes.

“Our work in this building is only possible because of those who came before us: the sacrifices of our brave service men and women,” said Governor Kehoe. “Under the Kehoe Administration, NO veterans home will close due to a lack of state funding.”

To view a full transcript of Governor Kehoe’s speech and special guest bios, please see attachments. To view the FY2026 Budget in Brief, please see attachment.

The FY26 Executive Budget will be available here at 3:00 p.m. To view the executive orders signed by Governor Kehoe, visit this link.

Pictures from today’s events, including special guests, will be available on Flickr. An archived video of the 2025 State of the State is available at mo.gov/live.

###

MIL OSI USA News –

January 29, 2025

MIL-OSI: First Busey Corporation Announces 2024 Fourth Quarter Earnings

Source: GlobeNewswire (MIL-OSI)

CHAMPAIGN, Ill., Jan. 28, 2025 (GLOBE NEWSWIRE) — First Busey Corporation (Nasdaq: BUSE)

Net Income of $28.1 million
Diluted EPS of $0.49

FOURTH QUARTER 2024 HIGHLIGHTS

Adjusted net income¹ of $30.7 million, or $0.53 per diluted common share
Adjusted noninterest income¹ of $35.4 million, or 30.3% of total revenue
Record high quarterly and annual revenue of $17.0 million and $65.0 million, respectively, for the Wealth Management segment
Tangible book value per common share¹ of $17.88 at December 31, 2024, compared to $16.62 at December 31, 2023, a year-over-year increase of 7.6%
Tangible common equity¹ increased to 8.76% of tangible assets at December 31, 2024, compared to 7.75% at December 31, 2023
Received stockholder approvals for the CrossFirst Bankshares, Inc. merger in December 2024, followed by remaining requisite regulatory approvals in January 2025

For additional information, please refer to the 4Q24 Earnings Investor Presentation.

MESSAGE FROM OUR CHAIRMAN & CEO

Fourth Quarter Financial Results

Net income for First Busey Corporation (“Busey,” “Company,” “we,” “us,” or “our”) was $28.1 million for the fourth quarter of 2024, or $0.49 per diluted common share, compared to $32.0 million, or $0.55 per diluted common share, for the third quarter of 2024, and $25.7 million, or $0.46 per diluted common share, for the fourth quarter of 2023. Adjusted net income¹, which excludes the impact of acquisition and restructuring expenses, was $30.7 million, or $0.53 per diluted common share, for the fourth quarter of 2024, compared to $33.5 million, or $0.58 per diluted common share, for the third quarter of 2024 and $29.1 million or $0.52 per diluted common share for the fourth quarter of 2023. Annualized return on average assets and annualized return on average tangible common equity¹ were 0.93% and 10.86%, respectively, for the fourth quarter of 2024. Annualized adjusted return on average assets¹ and annualized adjusted return on average tangible common equity¹ were 1.01% and 11.87%, respectively, for the fourth quarter of 2024.

Taking into account our fourth quarter results, full year 2024 net income and adjusted net income¹ were $113.7 million, or $1.98 per diluted common share, and $119.8 million, or $2.08 per diluted common share, respectively. Return on average assets and adjusted return on average assets¹ were 0.94% and 0.99%, respectively. Return on average tangible common equity¹ and adjusted return on average tangible common equity¹ were 11.65% and 12.28%, respectively.

Full year 2024 net income and adjusted net income¹ include $6.1 million of net securities losses and $7.7 million in gains on the sale of mortgage servicing rights. Net income and adjusted net income¹ for 2024 were further impacted by a one-time deferred tax valuation adjustment of $1.4 million resulting from a change to our Illinois apportionment rate due to recently enacted regulations. Excluding the tax-effected impact of these items, further adjusted net income¹ would have been $120.0 million, equating to adjusted diluted earnings per common share¹ of $2.09.

Pre-provision net revenue¹ was $38.8 million for the fourth quarter of 2024, compared to $41.7 million for the third quarter of 2024 and $32.9 million for the fourth quarter of 2023. Pre-provision net revenue to average assets¹ was 1.28% for the fourth quarter of 2024, compared to 1.38% for the third quarter of 2024, and 1.06% for the fourth quarter of 2023. Adjusted pre-provision net revenue¹ was $42.0 million for the fourth quarter of 2024, compared to $44.1 million for the third quarter of 2024 and $40.2 million for the fourth quarter of 2023. Adjusted pre-provision net revenue to average assets¹ was 1.38% for the fourth quarter of 2024, compared to 1.46% for the third quarter of 2024 and 1.30% for the fourth quarter of 2023.

Taking into account our fourth quarter results, full year 2024 pre-provision net revenue¹ and adjusted pre-provision net revenue¹ were $168.0 million and $167.3 million, respectively. Pre-provision net revenue to average assets¹ and adjusted pre-provision net revenue to average assets¹ were each 1.39%.

Our fee-based businesses continue to add revenue diversification. Total noninterest income was $35.2 million for the fourth quarter of 2024, compared to $35.8 million for the third quarter of 2024 and $31.3 million for the fourth quarter of 2023. Fourth quarter results included $0.2 million in net securities losses. Adjusted noninterest income¹ was $35.4 million, or 30.3% of operating revenue¹, during the fourth quarter of 2024, compared to $35.0 million, or 29.8% of operating revenue¹, for the third quarter of 2024 and $30.5 million, or 28.3% of operating revenue¹, for the fourth quarter of 2023. Wealth management fees and wealth management referral income included in other noninterest income contributed $17.0 million and payment technology solutions contributed $5.1 million to our consolidated noninterest income for the fourth quarter of 2024, representing 62.3% of adjusted noninterest income¹ on a combined basis.

For the full year 2024, total noninterest income was $139.7 million. Wealth management fees and wealth management referral income included in other noninterest income contributed $65.0 million and payment technology solutions contributed $22.0 million to our consolidated noninterest income for 2024, representing 63.0% of adjusted noninterest income¹ on a combined basis.

Busey views certain non-operating items, including acquisition-related expenses and restructuring charges, as adjustments to net income reported under U.S. generally accepted accounting principles (“GAAP”). Non-operating pretax adjustments for acquisition and restructuring expenses¹ were $3.6 million in the fourth quarter of 2024. Busey believes that its non-GAAP measures (which are identified with the endnote labeled as 1) facilitate the assessment of its financial results and peer comparability. For more information and a reconciliation of these non-GAAP measures in tabular form, see “Non-GAAP Financial Information.“

We remain focused on prudently managing our expense base and operating efficiency in the current operating environment. Noninterest expense was $78.2 million in the fourth quarter of 2024, compared to $75.9 million in the third quarter of 2024 and $75.0 million in the fourth quarter of 2023. Adjusted core expense¹, which excludes the amortization of intangible assets and new markets tax credits, acquisition and restructuring expenses, and the provision for unfunded commitments, was $72.6 million in the fourth quarter of 2024, compared to $71.0 million in the third quarter of 2024 and $65.2 million in the fourth quarter of 2023. The year-over-year comparable period growth in adjusted core expense can be attributed primarily to the acquisition of Merchants and Manufacturers Bank Corporation (“M&M”) and general inflationary pressures on compensation and benefits and to a lesser extent certain other expense categories.

Quarterly pre-tax expense synergies resulting from our acquisition of M&M are anticipated to be $1.6 million to $1.7 million per quarter when fully realized. Quarterly run-rate savings are projected to be achieved by the first quarter of 2025. During the fourth quarter of 2024, we achieved approximately 86% of the full quarterly savings.

Planned Partnership with CrossFirst

On August 26, 2024, Busey and CrossFirst Bankshares, Inc. (“CrossFirst”) entered into an agreement and plan of merger (the “merger agreement”) pursuant to which CrossFirst will merge with and into Busey (the “merger”) and CrossFirst’s wholly-owned subsidiary, CrossFirst Bank, will merge with and into Busey Bank. This partnership will create a premier commercial bank in the Midwest, Southwest, and Florida, with 77 full-service locations across 10 states—Arizona, Colorado, Florida, Illinois, Indiana, Kansas, Missouri, New Mexico, Oklahoma, and Texas—and approximately $20 billion in combined assets, $17 billion in total deposits, $14 billion in total loans, and $14 billion in wealth assets under care.

Under the terms of the merger agreement, CrossFirst stockholders will have the right to receive for each share of CrossFirst common stock 0.6675 of a share of Busey’s common stock. Upon completion of the transaction, Busey’s stockholders will own approximately 63.5% of the combined company and CrossFirst’s stockholders will own approximately 36.5% of the combined company, on a fully-diluted basis. Busey common stock will continue to trade on the Nasdaq under the “BUSE” stock ticker symbol.

On December 20, 2024, Busey and CrossFirst stockholders voted to approve the merger. On January 16, 2025, Busey received regulatory approval from the Board of Governors of the Federal Reserve System for the merger. Busey and CrossFirst intend to close the merger on March 1, 2025, subject to the satisfaction of the remaining customary closing conditions. The transaction has also been approved by the Illinois Department of Financial and Professional Regulation and the Kansas Office of the State Bank Commissioner. The combined holding company will continue to operate under the First Busey Corporation name and the combined bank will operate under the Busey Bank name. It is anticipated that CrossFirst Bank will merge with and into Busey Bank in mid-2025. At the time of the bank merger, CrossFirst Bank locations will become banking centers of Busey Bank. In connection with this merger, Busey incurred one-time pretax acquisition-related expenses of $2.4 million during the fourth quarter of 2024 and $3.9 million for the full year.

For further details on the merger, see Busey’s Current Report on Form 8‑K announcing the merger, which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 27, 2024.

Busey’s Conservative Banking Strategy

Busey’s financial strength is built on a long-term conservative operating approach. That focus will not change now or in the future.

The quality of our core deposit franchise is a critical value driver of our institution. Our granular deposit base continues to position us well, with core deposits¹ representing 96.5% of our deposits as of December 31, 2024. Our retail deposit base was comprised of more than 251,000 accounts with an average balance of $22 thousand and an average tenure of 16.9 years as of December 31, 2024. Our commercial deposit base was comprised of more than 32,000 accounts with an average balance of $98 thousand and an average tenure of 12.8 years as of December 31, 2024. We estimate that 30% of our deposits were uninsured and uncollateralized² as of December 31, 2024, and we have sufficient on- and off-balance sheet liquidity to manage deposit fluctuations and the liquidity needs of our customers.

Asset quality remains strong by both Busey’s historical and current industry trends. Non-performing assets increased to $23.3 million during the fourth quarter of 2024, representing 0.19% of total assets. The increase relates to one Commercial Real Estate loan that was classified in the fourth quarter of 2023 and was moved to non-accrual during the fourth quarter of 2024. This loan carries a remaining balance of $15.0 million following a $3.0 million charge-off in the fourth quarter of 2024. Busey’s results for the fourth quarter of 2024 include a $1.3 million provision expense for credit losses and a $0.5 million provision release for unfunded commitments. The allowance for credit losses was $83.4 million as of December 31, 2024, representing 1.08% of total portfolio loans outstanding, and providing coverage of 3.59 times our non-performing loan balance. Including the charge-off for the Commercial Real Estate loan mentioned above, Busey’s net charge-offs totaled $2.9 million for the fourth quarter of 2024. As of December 31, 2024, our commercial real estate loan portfolio of investor-owned office properties within Central Business District³ areas was minimal at $2.0 million. Our credit performance continues to reflect our highly diversified, conservatively underwritten loan portfolio, which has been originated predominantly to established customers with tenured relationships with our company.

The strength of our balance sheet is also reflected in our capital foundation. In the fourth quarter of 2024, our Common Equity Tier 1 ratio⁴ was 14.10% and our Total Capital to Risk Weighted Assets ratio⁴ was 18.53%. Our regulatory capital ratios continue to provide a buffer of more than $610 million above levels required to be designated well-capitalized. Our Tangible Common Equity ratio¹ was 8.76% during the fourth quarter of 2024, compared to 8.96% for the third quarter of 2024 and 7.75% for the fourth quarter of 2023. Busey’s tangible book value per common share¹ was $17.88 at December 31, 2024, compared to $18.19 at September 30, 2024, and $16.62 at December 31, 2023, reflecting a 7.6% year-over-year increase. During the fourth quarter of 2024, we paid a common share dividend of $0.24.

Community Banking

In the last two months of 2024, Busey offered a new, short-term Express Microloan product, created to help small businesses thrive. With a competitive 4.99% fixed interest rate, flexible terms and loans of up to $10,000, existing Busey customers with business checking accounts were invited to apply—allowing them to manage expenses, refinance debt, invest in new opportunities, and enhance operations. Busey originated more than 100 Express Microloans in 60-days, meeting the needs of our small business customers.

As we reflect back on 2024 and look ahead to 2025, we feel confident that we are well positioned to produce quality growth and profitability. The pending CrossFirst transaction fits with our acquisition strategy and we are excited to welcome our CrossFirst colleagues into the Busey family. We are grateful for the opportunities to consistently earn the business of our customers, based on the contributions of our talented associates and the continued support of our loyal stockholders.

		Van A. Dukeman
		Chairman and Chief Executive Officer
		First Busey Corporation

SELECTED FINANCIAL HIGHLIGHTS *(unaudited)*
(dollars in thousands, except per share amounts)

	Three Months Ended									Years Ended
	December 31, 2024			September 30, 2024			December 31, 2023			December 31, 2024			December 31, 2023
EARNINGS & PER SHARE AMOUNTS
Net income	$	28,105		$	32,004		$	25,749		$	113,691		$	122,565
Diluted earnings per common share		0.49			0.55			0.46			1.98			2.18
Cash dividends paid per share		0.24			0.24			0.24			0.96			0.96
Pre-provision net revenue^{1, 2}		38,828			41,744			32,909			167,996			158,502
Operating revenue²		116,995			117,688			107,888			460,671			444,034

Net income by operating segment:
Banking		30,856			33,221			25,164			117,266			123,853
FirsTech		(723	)		(61	)		325			(670	)		830
Wealth Management		5,853			5,618			4,233			22,030			18,804

AVERAGE BALANCES
Cash and cash equivalents	$	776,572		$	502,127		$	608,647		$	555,281		$	330,952
Investment securities		2,597,309			2,666,269			2,995,223			2,726,488			3,188,815
Loans held for sale		6,306			11,539			1,679			8,012			1,885
Portfolio loans		7,738,772			7,869,798			7,736,010			7,804,629			7,759,472
Interest-earning assets		11,048,350			10,942,745			11,235,326			10,999,424			11,181,010
Total assets		12,085,993			12,007,702			12,308,491			12,051,871			12,246,218

Noninterest-bearing deposits		2,724,344			2,706,858			2,827,696			2,738,892			3,018,563
Interest-bearing deposits		7,325,662			7,296,921			7,545,234			7,301,124			7,052,370
Total deposits		10,050,006			10,003,779			10,372,930			10,040,016			10,070,933

Federal funds purchased and securities sold under agreements to repurchase		135,728			132,688			182,735			147,786			200,894
Interest-bearing liabilities		7,763,729			7,731,459			8,054,663			7,763,084			7,825,459
Total liabilities		10,689,054			10,643,325			11,106,074			10,709,447			11,048,707
Stockholders’ equity – common		1,396,939			1,364,377			1,202,417			1,342,424			1,197,511
Tangible common equity²		1,029,539			994,657			846,948			975,823			838,164

PERFORMANCE RATIOS
Pre-provision net revenue to average assets^{1, 2, 3}		1.28	%		1.38	%		1.06	%		1.39	%		1.29	%
Return on average assets³		0.93	%		1.06	%		0.83	%		0.94	%		1.00	%
Return on average common equity³		8.00	%		9.33	%		8.50	%		8.47	%		10.23	%
Return on average tangible common equity^{2, 3}		10.86	%		12.80	%		12.06	%		11.65	%		14.62	%
Net interest margin^2, 4		2.95	%		3.02	%		2.75	%		2.95	%		2.89	%
Efficiency ratio²		64.45	%		62.15	%		66.89	%		61.76	%		61.65	%
Adjusted noninterest income to operating revenue²		30.27	%		29.77	%		28.31	%		29.97	%		27.79	%

NON-GAAP FINANCIAL INFORMATION
Adjusted pre-provision net revenue^1, 2	$	41,958		$	44,104		$	40,223		$	167,317		$	172,290
Adjusted net income²		30,725			33,533			29,123			119,805			126,012
Adjusted diluted earnings per share²		0.53			0.58			0.52			2.08			2.24
Adjusted pre-provision net revenue to average assets^{2, 3}		1.38	%		1.46	%		1.30	%		1.39	%		1.41	%
Adjusted return on average assets^{2, 3}		1.01	%		1.11	%		0.94	%		0.99	%		1.03	%
Adjusted return on average tangible common equity^{2, 3}		11.87	%		13.41	%		13.64	%		12.28	%		15.03	%
Adjusted net interest margin^2, 4		2.92	%		2.97	%		2.74	%		2.92	%		2.87	%
Adjusted efficiency ratio²		61.40	%		60.50	%		62.98	%		61.03	%		60.68	%

___________________________________________

Net interest income plus noninterest income, excluding securities gains and losses, less noninterest expense.
See “Non-GAAP Financial Information” for reconciliation.
For quarterly periods, measures are annualized.
On a tax-equivalent basis, assuming a federal income tax rate of 21%.

CONDENSED CONSOLIDATED BALANCE SHEETS *(unaudited)*
(dollars in thousands, except per share amounts)

	As of
	December 31, 2024			September 30, 2024			December 31, 2023
ASSETS
Cash and cash equivalents	$	697,659		$	553,709		$	719,581
Debt securities available for sale		1,810,221			1,818,117			2,087,571
Debt securities held to maturity		826,630			838,883			872,628
Equity securities		15,862			10,315			9,812
Loans held for sale		3,657			11,523			2,379

Commercial loans		5,552,288			5,631,281			5,635,048
Retail real estate and retail other loans		2,144,799			2,177,816			2,015,986
Portfolio loans		7,697,087			7,809,097			7,651,034

Allowance for credit losses		(83,404	)		(84,981	)		(91,740	)
Restricted bank stock		49,930			6,000			6,000
Premises and equipment, net		118,820			120,279			122,594
Right of use assets		10,608			11,100			11,027
Goodwill and other intangible assets, net		365,975			368,249			353,864
Other assets		533,677			524,548			538,665
Total assets	$	12,046,722		$	11,986,839		$	12,283,415

LIABILITIES & STOCKHOLDERS’ EQUITY
Liabilities
Deposits:
Noninterest-bearing deposits	$	2,719,907		$	2,683,543		$	2,834,655
Interest-bearing checking, savings, and money market deposits		5,771,948			5,739,773			5,637,227
Time deposits		1,490,635			1,519,925			1,819,274
Total deposits		9,982,490			9,943,241			10,291,156

Securities sold under agreements to repurchase		155,610			128,429			187,396
Short-term borrowings		—			—			12,000
Long-term debt		227,723			227,482			240,882
Junior subordinated debt owed to unconsolidated trusts		74,815			74,754			71,993
Lease liabilities		11,040			11,470			11,308
Other liabilities		211,775			198,579			196,699
Total liabilities		10,663,453			10,583,955			11,011,434

Stockholders’ equity
Retained earnings		294,054			279,868			237,197
Accumulated other comprehensive income (loss)		(207,039	)		(170,913	)		(218,803	)
Other stockholders’ equity¹		1,296,254			1,293,929			1,253,587
Total stockholders’ equity		1,383,269			1,402,884			1,271,981
Total liabilities & stockholders’ equity	$	12,046,722		$	11,986,839		$	12,283,415

SHARE AND PER SHARE AMOUNTS
Book value per common share	$	24.31		$	24.67		$	23.02
Tangible book value per common share²	$	17.88		$	18.19		$	16.62
Ending number of common shares outstanding		56,895,981			56,872,241			55,244,119

___________________________________________

Net balance of common stock ($0.001 par value), additional paid-in capital, and treasury stock.
See “Non-GAAP Financial Information” for reconciliation.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME *(unaudited)*
(dollars in thousands, except per share amounts)

	Three Months Ended								Years Ended
	December 31, 2024			September 30, 2024			December 31, 2023		December 31, 2024			December 31, 2023
INTEREST INCOME
Interest and fees on loans	$	106,120		$	111,336		$	101,425	$	426,422		$	385,848
Interest and dividends on investment securities		16,788			18,072			20,634		73,970			82,994
Dividend income on bank stock		557			106			212		848			1,170
Other interest income		7,851			5,092			6,641		22,441			10,531
Total interest income	$	131,316		$	134,606		$	128,912	$	523,681		$	480,543

INTEREST EXPENSE
Deposits	$	44,152		$	46,634		$	45,409	$	178,463		$	123,985
Federal funds purchased and securities sold under agreements to repurchase		915			981			1,431		4,308			5,203
Short-term borrowings		25			26			248		701			12,775
Long-term debt		3,183			3,181			3,475		12,950			14,106
Junior subordinated debt owed to unconsolidated trusts		1,463			1,137			1,004		4,648			3,853
Total interest expense	$	49,738		$	51,959		$	51,567	$	201,070		$	159,922

Net interest income	$	81,578		$	82,647		$	77,345	$	322,611		$	320,621
Provision for credit losses		1,273			2			455		8,590			2,399
Net interest income after provision for credit losses	$	80,305		$	82,645		$	76,890	$	314,021		$	318,222

NONINTEREST INCOME
Wealth management fees	$	16,786		$	15,378		$	13,715	$	63,630		$	57,309
Fees for customer services		7,911			8,168			7,484		30,933			29,044
Payment technology solutions		5,094			5,265			5,420		21,983			21,192
Mortgage revenue		496			355			218		2,075			1,089
Income on bank owned life insurance		1,080			1,189			1,019		5,130			4,701
Realized net gains (losses) on the sale of mortgage servicing rights		—			(18	)		—		7,724			—
Net securities gains (losses)		(196	)		822			761		(6,102	)		(2,199	)
Other noninterest income		4,050			4,686			2,687		14,309			10,078
Total noninterest income	$	35,221		$	35,845		$	31,304	$	139,682		$	121,214

NONINTEREST EXPENSE
Salaries, wages, and employee benefits	$	45,458		$	44,593		$	42,730	$	175,619		$	162,597
Data processing expense		6,564			6,910			6,236		27,124			23,708
Net occupancy expense of premises		4,794			4,633			4,318		18,737			18,214
Furniture and equipment expense		1,650			1,647			1,694		6,805			6,759
Professional fees		4,938			3,118			2,574		12,804			7,147
Amortization of intangible assets		2,471			2,548			2,479		10,057			10,432
Interchange expense		1,305			1,352			1,355		6,001			6,864
FDIC insurance		1,330			1,413			1,167		5,603			5,650
Other noninterest expense		9,657			9,712			12,426		37,649			44,161
Total noninterest expense	$	78,167		$	75,926		$	74,979	$	300,399		$	285,532

Income before income taxes	$	37,359		$	42,564		$	33,215	$	153,304		$	153,904
Income taxes		9,254			10,560			7,466		39,613			31,339
Net income	$	28,105		$	32,004		$	25,749	$	113,691		$	122,565

SHARE AND PER SHARE AMOUNTS
Basic earnings per common share	$	0.49		$	0.56		$	0.46	$	2.01		$	2.21
Diluted earnings per common share	$	0.49		$	0.55		$	0.46	$	1.98		$	2.18
Weighted average number of common shares outstanding, basic		57,061,542			57,033,359			55,403,662		56,610,032			55,432,322
Weighted average number of common shares outstanding, diluted		57,934,812			57,967,848			56,333,033		57,543,001			56,256,148

BALANCE SHEET STRENGTH

Our balance sheet remains a source of strength. Total assets were $12.05 billion as of December 31, 2024, compared to $11.99 billion as of September 30, 2024, and $12.28 billion as of December 31, 2023.

We remain steadfast in our conservative approach to underwriting and disciplined approach to pricing, particularly given our outlook for the economy in the coming quarters, and this approach has impacted loan growth as predicted. Portfolio loans totaled $7.70 billion at December 31, 2024, compared to $7.81 billion at September 30, 2024, and $7.65 billion at December 31, 2023.

Average portfolio loans were $7.74 billion for both the fourth quarter of 2024 and the fourth quarter of 2023, compared to $7.87 billion for the third quarter of 2024. Average interest-earning assets were $11.05 billion for the fourth quarter of 2024, compared to $10.94 billion for the third quarter of 2024, and $11.24 billion for the fourth quarter of 2023.

Total deposits were $9.98 billion at December 31, 2024, compared to $9.94 billion at September 30, 2024, and $10.29 billion at December 31, 2023. Average deposits were $10.05 billion for the fourth quarter of 2024, compared to $10.00 billion for the third quarter of 2024 and $10.37 billion for the fourth quarter of 2023. Deposit fluctuations over the last several quarters were driven by a number of elements, including (1) seasonal factors, including ordinary course public fund flows and fluctuations in the normal course of business operations of certain core commercial customers, (2) the macroeconomic environment, including prevailing interest rates and inflationary pressures, (3) depositors moving some funds to accounts at competitors offering above-market rates, and (4) deposits moving within the Busey ecosystem between deposit accounts and our wealth management group. Core deposits¹ accounted for 96.5% of total deposits as of December 31, 2024. Cost of deposits was 1.75% in the fourth quarter of 2024, which represents a decrease of 10 basis points from the third quarter of 2024. Excluding time deposits, Busey’s cost of deposits was 1.38% in the fourth quarter of 2024, a decrease of 12 basis points from the third quarter of 2024. Busey Bank continues to offer savings account specials to customers with larger account balances, with the intention of migrating maturing CDs to these managed rate products. Spot rates on total deposit costs, including noninterest bearing deposits, decreased by 13 basis points from 1.80% at September 30, 2024, to 1.67% at December 31, 2024. Spot rates on interest bearing deposits decreased by 17 basis points from 2.46% at September 30, 2024, to 2.29% at December 31, 2024.

There were no short term borrowings as of December 31 or September 30, 2024, compared to $12.0 million at December 31, 2023. We had no borrowings from the Federal Home Loan Bank (“FHLB”) at the end of the fourth quarter of 2024, the third quarter of 2024, or the fourth quarter of 2023. We have sufficient on- and off-balance sheet liquidity⁵ to manage deposit fluctuations and the liquidity needs of our customers. As of December 31, 2024, our available sources of on- and off-balance sheet liquidity totaled $6.19 billion. We have executed various deposit campaigns to attract term funding and savings accounts at a lower rate than our marginal cost of funds. New certificate of deposit production in the fourth quarter of 2024 had a weighted average term of 7.6 months at a rate of 3.58%, 128 basis points below our average marginal wholesale equivalent-term funding cost during the quarter. Furthermore, our balance sheet liquidity profile continues to be aided by the cash flows we expect from our relatively short-duration securities portfolio. Those cash flows were approximately $132.5 million in the fourth quarter of 2024. Cash flows from our securities portfolio are expected to be approximately $353.8 million for 2025, with a current book yield of 1.87%, and approximately $288.3 million for 2026, with a current book yield of 2.03%.

ASSET QUALITY

Credit quality continues to be strong. Loans 30-89 days past due totaled $8.1 million as of December 31, 2024, compared to $10.1 million as of September 30, 2024, and $5.8 million as of December 31, 2023. Non-performing loans were $23.2 million as of December 31, 2024, compared to $8.2 million as of September 30, 2024, and $7.8 million as of December 31, 2023. The increase relates to one Commercial Real Estate loan that was classified in the fourth quarter of 2023 and was moved to non-accrual during the fourth quarter of 2024. This loan carries a remaining balance of $15.0 million following a $3.0 million charge-off in the fourth quarter of 2024. Continued disciplined credit management resulted in non-performing loans as a percentage of portfolio loans of 0.30% as of December 31, 2024, compared to 0.11% as of September 30, 2024, and 0.10% as of December 31, 2023. Non-performing assets were 0.19% of total assets for the fourth quarter of 2024, compared to 0.07% for the third quarter of 2024 and 0.06% for the fourth quarter of 2023. Our total classified assets were $85.3 million at December 31, 2024, compared to $89.0 million at September 30, 2024, and $72.3 million at December 31, 2023. Our ratio of classified assets to estimated bank Tier 1 capital⁴ and reserves remains low by historical standards, at 5.6% as of December 31, 2024, compared to 5.9% as of September 30, 2024, and 5.0% as of December 31, 2023.

Net charge-offs were $2.9 million for the fourth quarter of 2024, compared to $0.2 million for the third quarter of 2024, and $0.4 million for the fourth quarter of 2023. The fourth quarter charge-off relates to the Commercial Real Estate loan mentioned above. The allowance as a percentage of portfolio loans was 1.08% as of December 31, 2024, compared to 1.09% as of September 30, 2024, and 1.20% as of December 31, 2023. The ratio was impacted in 2024 by the acquisition of M&M’s Life Equity Loan^® portfolio, as Busey did not record an allowance for credit loss for these loans due to no expected credit loss at default, as permitted under the practical expedient provided within the Accounting Standards Codification 326-20-35-6. The allowance coverage for non-performing loans was 3.59 times as of December 31, 2024, compared to 10.34 times as of September 30, 2024, and 11.74 times as of December 31, 2023.

Busey maintains a well-diversified loan portfolio and, as a matter of policy and practice, limits concentration exposure in any particular loan segment.

ASSET QUALITY *(unaudited)*
(dollars in thousands)

	As of
	December 31, 2024			September 30, 2024			December 31, 2023
Total assets	$	12,046,722		$	11,986,839		$	12,283,415
Portfolio loans		7,697,087			7,809,097			7,651,034
Loans 30 – 89 days past due		8,124			10,141			5,779
Non-performing loans:
Non-accrual loans		22,088			8,192			7,441
Loans 90+ days past due and still accruing		1,149			25			375
Non-performing loans	$	23,237		$	8,217		$	7,816
Non-performing loans, segregated by geography:
Illinois / Indiana	$	19,558		$	3,981		$	3,715
Missouri		3,016			3,530			3,836
Florida		663			706			265
Other non-performing assets		63			64			125
Non-performing assets	$	23,300		$	8,281		$	7,941

Allowance for credit losses	$	83,404		$	84,981		$	91,740

RATIOS
Non-performing loans to portfolio loans		0.30	%		0.11	%		0.10	%
Non-performing assets to total assets		0.19	%		0.07	%		0.06	%
Non-performing assets to portfolio loans and other non-performing assets		0.30	%		0.11	%		0.10	%
Allowance for credit losses to portfolio loans		1.08	%		1.09	%		1.20	%
Coverage ratio of the allowance for credit losses to non-performing loans		3.59	x		10.34	x		11.74	x

NET CHARGE-OFFS (RECOVERIES) AND PROVISION EXPENSE (RELEASE) *(unaudited)*
(dollars in thousands)

	Three Months Ended						Years Ended
	December 31, 2024		September 30, 2024		December 31, 2023		December 31, 2024		December 31, 2023
Net charge-offs (recoveries)	$	2,850	$	247	$	425	$	18,169	$	2,267
Provision expense (release)		1,273		2		455		8,590		2,399

NET INTEREST MARGIN AND NET INTEREST INCOME

Net interest margin¹ was 2.95% for the fourth quarter of 2024, compared to 3.02% for the third quarter of 2024 and 2.75% for the fourth quarter of 2023. Excluding purchase accounting accretion, adjusted net interest margin¹ was 2.92% for the fourth quarter of 2024, compared to 2.97% in the third quarter of 2024 and 2.74% in the fourth quarter of 2023. Net interest income was $81.6 million in the fourth quarter of 2024, compared to $82.6 million in the third quarter of 2024 and $77.3 million in the fourth quarter of 2023.

After raising federal funds rates by a total of 525 basis points between March 2022 and July 2023, the Federal Open Market Committee (“FOMC”) lowered rates by 100 basis points beginning in September 2024. In anticipation of the FOMC pivot to an easing cycle, we limited our exposure to term funding structures and intentionally priced savings specials to encourage maturing CD balances to migrate to managed rate non-maturity products. Beginning in September we began lowering rates on special priced deposit accounts and other managed rate products to benefit from the FOMC rate cuts. In addition, approximately 7% of our deposit portfolio is indexed and immediately repriced with the rate cuts by the FOMC. CD balances comprise only 15% of the total deposit funding base. If rates move lower in 2025, we have the ability to reprice CD balances due to the short duration term structure of the portfolio. Approximately 58% of Busey’s non-maturity deposits are at rack rates with a weighted average rate of 0.01%. We continue to offer CD specials with shorter term structures as well as offering attractive premium savings rates to encourage rotation of maturing CD deposits into nimble pricing products. Components of the 7 basis point decrease in net interest margin¹ during the fourth quarter of 2024 include:

Reduced non-maturity deposit funding costs contributed +9 basis points
Increased cash and securities portfolio yield contributed +6 basis points
Reduced time deposit funding costs contributed +1 basis point
Decreased loan portfolio and held for sale loan yields contributed -20 basis points
Decreased purchase accounting contributed -2 basis points
Increased borrowing expense -1 basis point

Based on our most recent Asset Liability Management Committee (“ALCO”) model, a +100 basis point parallel rate shock is expected to increase net interest income by 2.0% over the subsequent twelve-month period. Busey continues to evaluate and execute off-balance sheet hedging and balance sheet restructuring strategies as well as embedding rate protection in our asset originations to provide stabilization to net interest income in lower rate environments. Time deposit and savings specials have provided funding flows, and we had excess earning cash during the fourth quarter of 2024. Our cumulative interest-bearing non-maturity tightening cycle deposit beta peaked at 41% during the third quarter of 2024. Our total deposit beta for the completed tightening cycle was 34%. Since the onset of the current easing cycle, we have reduced our interest-bearing non-maturity deposit cost of funds by 18 basis points, which represents a 26% easing cycle beta. Deposit betas were calculated based on an average federal funds rate of 4.82% during the fourth quarter of 2024. The average federal funds rate has decreased by 68 basis points since the end of the tightening cycle that concluded in the third quarter of 2024.

NONINTEREST INCOME

Noninterest income was $35.2 million for the fourth quarter of 2024, as compared to $35.8 million for the third quarter of 2024 and $31.3 million for the fourth quarter of 2023. Excluding the impact of net securities gains and losses and immaterial follow-on adjustments from the previously announced mortgage servicing rights sale, adjusted noninterest income¹ was $35.4 million, or 30.3% of operating revenue¹, during the fourth quarter of 2024, $35.0 million, or 29.8% of operating revenue, for the third quarter of 2024, and $30.5 million, or 28.3% of operating revenue, for the fourth quarter of 2023.

Consolidated wealth management fees were $16.8 million for the fourth quarter of 2024, compared to $15.4 million for the third quarter of 2024 and $13.7 million for the fourth quarter of 2023. On a segment basis, Wealth Management generated $17.0 million in revenue during the fourth quarter of 2024, a 22.7% increase over revenue of $13.8 million for the fourth quarter of 2023. Fourth quarter of 2024 results marked a new record high reported quarterly revenue for the Wealth Management operating segment. The Wealth Management operating segment generated net income of $5.9 million in the fourth quarter of 2024, compared to $5.6 million in the third quarter of 2024 and $4.2 million in the fourth quarter of 2023. Busey’s Wealth Management division ended the fourth quarter of 2024 with $13.83 billion in assets under care, compared to $13.69 billion at the end of the third quarter of 2024 and $12.14 billion at the end of the fourth quarter of 2023. Our portfolio management team continues to focus on long-term returns and managing risk in the face of volatile markets and has outperformed its blended benchmark⁶ over the last three and five years.

Payment technology solutions revenue was $5.1 million for the fourth quarter of 2024, compared to $5.3 million for the third quarter of 2024 and $5.4 million for the fourth quarter of 2023. Excluding intracompany eliminations, the FirsTech operating segment generated revenue of $5.4 million during the fourth quarter of 2024, compared to $5.6 million in the third quarter of 2024 and $5.8 million in the fourth quarter of 2023.

Wealth management fees, wealth management referral income included in other noninterest income, and payment technology solutions represented 62.3% of adjusted noninterest income¹ for the fourth quarter of 2024.

Fees for customer services were $7.9 million for the fourth quarter of 2024, compared to $8.2 million in the third quarter of 2024 and $7.5 million in the fourth quarter of 2023.

Other noninterest income was $4.1 million in the fourth quarter of 2024, compared to $4.7 million in the third quarter of 2024 and $2.7 million in the fourth quarter of 2023. The third quarter of 2024 benefited from $0.8 million in revenue associated with certain wealth management activities that was reported as other noninterest income; in comparison, other noninterest income from wealth management activities was $0.2 million for the fourth quarter of 2024 and $0.1 million for the fourth quarter of 2023. Compared to the prior quarter, we also saw decreases in venture capital income and swap origination fee income, which were mostly offset by increases in commercial loan sales gains. When compared with the fourth quarter of 2023, increases in other noninterest income were primarily attributable to increases in commercial loan sales gains and venture capital income, as well as the addition of Life Equity Loan^® servicing income beginning in the second quarter of 2024.

OPERATING EFFICIENCY

Noninterest expense was $78.2 million in the fourth quarter of 2024, compared to $75.9 million in the third quarter of 2024 and $75.0 million for the fourth quarter of 2023. The efficiency ratio¹ was 64.5% for the fourth quarter of 2024, compared to 62.1% for the third quarter of 2024, and 66.9% for the fourth quarter of 2023. Adjusted core expense¹ was $72.6 million in the fourth quarter of 2024, compared to $71.0 million in the third quarter of 2024 and $65.2 million in the fourth quarter of 2023. The adjusted core efficiency ratio¹ was 61.8% for the fourth quarter of 2024, compared to 60.2% for the third quarter of 2024, and 60.1% for the fourth quarter of 2023. We expect to continue to prudently manage our expenses and to realize the full extent of M&M acquisition synergies in 2025.

Noteworthy components of noninterest expense are as follows:

Salaries, wages, and employee benefits expenses were $45.5 million in the fourth quarter of 2024, compared to $44.6 million in the third quarter of 2024 and $42.7 million in the fourth quarter of 2023. Busey recorded $0.2 million of non-operating salaries, wages, and employee benefit expenses in the fourth quarter of 2024, compared to $0.1 million in the third quarter of 2024 and $3.8 million in the fourth quarter of 2023. Our associate-base consisted of 1,509 full-time equivalents as of December 31, 2024, compared to 1,510 as of September 30, 2024, and 1,479 as of December 31, 2023. The increase in our associate-base in 2024 was largely due to the M&M acquisition.
Data processing expense was $6.6 million in the fourth quarter of 2024, compared to $6.9 million in the third quarter of 2024 and $6.2 million in the fourth quarter of 2023. Busey has continued to make investments in technology enhancements and has also experienced inflation-driven price increases.
Professional fees were $4.9 million in the fourth quarter of 2024, compared to $3.1 million in the third quarter of 2024 and $2.6 million in the fourth quarter of 2023. Busey recorded $3.0 million of non-operating professional fees in the fourth quarter of 2024, as compared to $1.4 million in the third quarter of 2024 and $0.4 million in the fourth quarter of 2023. Fourth quarter of 2024 non-operating professional fees consisted of $1.9 million related to merger activities and $1.1 million in restructuring activities related to corporate strategy advisement.
Other noninterest expense was $9.7 million for both the third and fourth quarters of 2024, compared to $12.4 million in the fourth quarter of 2023. Busey recorded $0.3 million of non-operating costs in other noninterest expense in the fourth quarter of 2024, compared to $0.4 million in the third quarter of 2024 and $0.1 million in the fourth quarter of 2023. In connection with Busey’s adoption of ASU 2023-02 on January 1, 2024, Busey began recording amortization of New Markets Tax Credits as income tax expense instead of other operating expense, which resulted in a decrease to other operating expenses of $2.3 million compared to the fourth quarter of 2023. Other items contributing to the fluctuations in other noninterest expense included the provision for unfunded commitments, mortgage servicing rights valuation expenses, fixed asset impairment, marketing, business development, and expenses related to recruiting and onboarding.

Busey’s effective tax rate for the fourth quarter of 2024 was 24.8%, which was lower than the combined federal and state statutory rate of approximately 28.0% due to the impact of tax exempt interest income, such as municipal bond interest, bank owned life insurance income, and investments in various federal and state tax credits. Busey’s effective tax rate for the full year 2024 was 25.8%. In the second quarter of 2024, Busey recorded a one-time deferred tax valuation adjustment of $1.4 million resulting from a change to our Illinois apportionment rate due to recently enacted regulations. These newly enacted regulations are expected to lower our tax obligation in future periods. Excluding the impact of the one-time deferred tax valuation adjustment, our effective tax rate for the full year 2024 would have been 24.9%.

Effective tax rates were higher in 2024, compared to 2023, due to the adoption of ASU 2023-02 in January 2024. Upon adoption of ASU 2023-02 Busey elected to use the proportional amortization method of accounting for equity investments made primarily for the purpose of receiving income tax credits. The proportional amortization method results in the cost of the investment being amortized in proportion to the income tax credits and other income tax benefits received, with the amortization of the investment and the income tax credits being presented net in the income statement as a component of income tax expense as opposed to being presented on a gross basis on the income statement as a component of noninterest expense and income tax expense.

CAPITAL STRENGTH

Busey’s strong capital levels, coupled with its earnings, have allowed the Company to provide a steady return to its stockholders through dividends. On January 31, 2025, Busey will pay a cash dividend of $0.25 per common share to stockholders of record as of January 24, 2025, which represents a 4.2% increase from the previous quarterly dividend of $0.24 per share. Busey has consistently paid dividends to its common stockholders since the bank holding company was organized in 1980.

As of December 31, 2024, Busey continued to exceed the capital adequacy requirements necessary to be considered “well-capitalized” under applicable regulatory guidelines. Busey’s Common Equity Tier 1 ratio is estimated⁴ to be 14.10% at December 31, 2024, compared to 13.78% at September 30, 2024, and 13.09% at December 31, 2023. Our Total Capital to Risk Weighted Assets ratio is estimated⁴ to be 18.53% at December 31, 2024, compared to 18.19% at September 30, 2024, and 17.44% at December 31, 2023.

Busey’s tangible common equity¹ was $1.02 billion at December 31, 2024, compared to $1.04 billion at September 30, 2024, and $925.0 million at December 31, 2023. Tangible common equity¹ represented 8.76% of tangible assets at December 31, 2024, compared to 8.96% at September 30, 2024, and 7.75% at December 31, 2023. Busey’s tangible book value per common share¹ was $17.88 at December 31, 2024, compared to $18.19 at September 30, 2024, and $16.62 at December 31, 2023, reflecting a 7.6% year-over-year increase. The ratios of tangible common equity to tangible assets¹ and tangible book value per common share have been impacted by the fair value adjustment of Busey’s securities portfolio as a result of the current rate environment, which is reflected in the accumulated other comprehensive income (loss) component of stockholder’s equity.

FOURTH QUARTER EARNINGS INVESTOR PRESENTATION

For additional information on Busey’s financial condition and operating results, please refer to the Q4 2024 Earnings Investor Presentation furnished via Form 8-K on January 28, 2025, in connection with this earnings release.

CORPORATE PROFILE

As of December 31, 2024, First Busey Corporation (Nasdaq: BUSE) was an $12.05 billion financial holding company headquartered in Champaign, Illinois.

Busey Bank, a wholly-owned bank subsidiary of First Busey Corporation, had total assets of $12.01 billion as of December 31, 2024, and is headquartered in Champaign, Illinois. Busey Bank currently has 62 banking centers, with 21 in Central Illinois markets, 17 in suburban Chicago markets, 20 in the St. Louis Metropolitan Statistical Area, three in Southwest Florida, and one in Indianapolis. More information about Busey Bank can be found at busey.com.

Through Busey’s Wealth Management division, the Company provides a full range of asset management, investment, brokerage, fiduciary, philanthropic advisory, tax preparation, and farm management services to individuals, businesses, and foundations. Assets under care totaled $13.83 billion as of December 31, 2024. More information about Busey’s Wealth Management services can be found at busey.com/wealth-management.

Busey Bank’s wholly-owned subsidiary, FirsTech, specializes in the evolving financial technology needs of small and medium-sized businesses, highly regulated enterprise industries, and financial institutions. FirsTech provides comprehensive and innovative payment technology solutions, including online, mobile, and voice-recognition bill payments; money and data movement; merchant services; direct debit services; lockbox remittance processing for payments made by mail; and walk-in payments at retail agents. Additionally, FirsTech simplifies client workflows through integrations enabling support with billing, reconciliation, bill reminders, and treasury services. More information about FirsTech can be found at firstechpayments.com.

For the first time, Busey was named among the World’s Best Banks for 2024 by Forbes, earning a spot on the list among 68 U.S. banks and 403 banks worldwide. Additionally, Busey Bank was honored to be named among America’s Best Banks by Forbes magazine for the third consecutive year. Ranked 40th overall in 2024, Busey was the second-ranked bank headquartered in Illinois of the six banks that made this year’s list and the highest-ranked bank of those with more than $10 billion in assets. Busey is humbled to be named among the 2024 Best Banks to Work For by American Banker, the 2024 Best Places to Work in Money Management by Pensions and Investments, the 2024 Best Places to Work in Illinois by Daily Herald Business Ledger, the 2024 Best Places to Work in Indiana by the Indiana Chamber of Commerce, and the 2024 Best Companies to Work For in Florida by Florida Trend magazine. We are honored to be consistently recognized globally, nationally and locally for our engaged culture of integrity and commitment to community development.

For more information about us, visit busey.com.

Category: Financial
Source: First Busey Corporation

Contacts:

Jeffrey D. Jones, Chief Financial Officer
217-365-4130

NON-GAAP FINANCIAL INFORMATION

This earnings release contains certain financial information determined by methods other than GAAP. Management uses these non-GAAP measures, together with the related GAAP measures, in analysis of Busey’s performance and in making business decisions, as well as for comparison to Busey’s peers. Busey believes the adjusted measures are useful for investors and management to understand the effects of certain non-core and non-recurring noninterest items and provide additional perspective on Busey’s performance over time.

Below is a reconciliation to what management believes to be the most directly comparable GAAP financial measures—specifically, net interest income, total noninterest income, net security gains and losses, and total noninterest expense in the case of pre-provision net revenue, adjusted pre-provision net revenue, pre-provision net revenue to average assets, and adjusted pre-provision net revenue to average assets; net income in the case of adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, average tangible common equity, return on average tangible common equity, adjusted return on average tangible common equity; net income and net security gains and losses in the case of further adjusted net income and further adjusted diluted earnings per share; net interest income in the case of adjusted net interest income and adjusted net interest margin; net interest income, total noninterest income, and total noninterest expense in the case of adjusted noninterest income, adjusted noninterest expense, noninterest expense excluding non-operating adjustments, adjusted core expense, efficiency ratio, adjusted efficiency ratio, and adjusted core efficiency ratio; net interest income, total noninterest income, net securities gains and losses, and net gains and losses on the sale of mortgage servicing rights in the case of operating revenue and adjusted noninterest income to operating revenue; total assets and goodwill and other intangible assets in the case of tangible assets; total stockholders’ equity in the case of tangible book value per common share; total assets and total stockholders’ equity in the case of tangible common equity and tangible common equity to tangible assets; and total deposits in the case of core deposits and core deposits to total deposits.

These non-GAAP disclosures have inherent limitations and are not audited. They should not be considered in isolation or as a substitute for operating results reported in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Tax effected numbers included in these non-GAAP disclosures are based on estimated statutory rates, estimated federal income tax rates, or effective tax rates, as noted with the tables below.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited)

Pre-Provision Net Revenue and Related Measures

		Three Months Ended									Years Ended
(dollars in thousands)		December 31, 2024			September 30, 2024			December 31, 2023			December 31, 2024			December 31, 2023
Net interest income (GAAP)		$	81,578		$	82,647		$	77,345		$	322,611		$	320,621
Total noninterest income (GAAP)			35,221			35,845			31,304			139,682			121,214
Net security (gains) losses (GAAP)			196			(822	)		(761	)		6,102			2,199
Total noninterest expense (GAAP)			(78,167	)		(75,926	)		(74,979	)		(300,399	)		(285,532	)
Pre-provision net revenue (Non-GAAP)	[a]		38,828			41,744			32,909			167,996			158,502
Acquisition and restructuring expenses			3,585			1,935			4,237			8,140			4,328
Provision for unfunded commitments			(455	)		407			818			(1,095	)		461
Amortization of New Markets Tax Credits			—			—			2,259			—			8,999
Realized (gain) loss on the sale of mortgage service rights			—			18			—			(7,724	)		—
Adjusted pre-provision net revenue (Non-GAAP)	[b]	$	41,958		$	44,104		$	40,223		$	167,317		$	172,290

Average total assets (GAAP)	[c]		12,085,993			12,007,702			12,308,491			12,051,871			12,246,218

Pre-provision net revenue to average total assets (Non-GAAP)¹	[a÷c]		1.28	%		1.38	%		1.06	%		1.39	%		1.29	%
Adjusted pre-provision net revenue to average total assets (Non-GAAP)¹	[b÷c]		1.38	%		1.46	%		1.30	%		1.39	%		1.41	%

___________________________________________

For quarterly periods, measures are annualized.


Adjusted Net Income, Average Tangible Common Equity, and Related Ratios

		Three Months Ended									Years Ended
(dollars in thousands, except per share amounts)		December 31, 2024			September 30, 2024			December 31, 2023			December 31, 2024			December 31, 2023
Net income (GAAP)	[a]	$	28,105		$	32,004		$	25,749		$	113,691		$	122,565
Acquisition expenses:
Salaries, wages, and employee benefits			247			73			—			1,457			—
Data processing			14			90			—			548			—
Professional fees, occupancy, furniture and fixtures, and other			2,208			1,772			266			4,896			357
Restructuring expenses:
Salaries, wages, and employee benefits			—			—			3,760			123			3,760
Professional fees, occupancy, furniture and fixtures, and other			1,116			—			211			1,116			211
Acquisition and restructuring expenses			3,585			1,935			4,237			8,140			4,328
Related tax benefit¹			(965	)		(406	)		(863	)		(2,026	)		(881	)
Adjusted net income (Non-GAAP)	[b]	$	30,725		$	33,533		$	29,123		$	119,805		$	126,012

Weighted average number of common shares outstanding, diluted (GAAP)	[c]		57,934,812			57,967,848			56,333,033			57,543,001			56,256,148
Diluted earnings per common share (GAAP)	[a÷c]	$	0.49		$	0.55		$	0.46		$	1.98		$	2.18
Adjusted diluted earnings per common share (Non-GAAP)	[b÷c]	$	0.53		$	0.58		$	0.52		$	2.08		$	2.24

Average total assets (GAAP)	[d]		12,085,993			12,007,702			12,308,491			12,051,871			12,246,218
Return on average assets (GAAP)²	[a÷d]		0.93	%		1.06	%		0.83	%		0.94	%		1.00	%
Adjusted return on average assets (Non-GAAP)²	[b÷d]		1.01	%		1.11	%		0.94	%		0.99	%		1.03	%

Average common equity (GAAP)		$	1,396,939		$	1,364,377		$	1,202,417		$	1,342,424		$	1,197,511
Average goodwill and other intangible assets, net			(367,400	)		(369,720	)		(355,469	)		(366,601	)		(359,347	)
Average tangible common equity (Non-GAAP)	[e]	$	1,029,539		$	994,657		$	846,948		$	975,823		$	838,164

Return on average tangible common equity (Non-GAAP)²	[a÷e]		10.86	%		12.80	%		12.06	%		11.65	%		14.62	%
Adjusted return on average tangible common equity (Non-GAAP)²	[b÷e]		11.87	%		13.41	%		13.64	%		12.28	%		15.03	%

___________________________________________

Year-to-date tax benefits were calculated by multiplying year-to-date acquisition and restructuring expenses by tax rates of 24.9% and 20.4% for the years ended December 31, 2024 and 2023, respectively. Quarterly tax benefits were calculated as the year-to-date tax benefit amounts less the sum of amounts applied to previous quarters during the year, equating to tax rates of 26.9%, 21.0%, and 20.4% for the three months ended December 31, 2024, September 30, 2024, and December 31, 2023, respectively.
For quarterly periods, measures are annualized.

Further Adjusted Net Income and Related Measures

		Three Months Ended									Years Ended
(dollars in thousands, except per share amounts)		December 31, 2024			September 30, 2024			December 31, 2023			December 31, 2024			December 31, 2023
Adjusted net income (Non-GAAP)¹		$	30,725		$	33,533		$	29,123		$	119,805		$	126,012
Further non-GAAP adjustments:
Net securities (gains) losses			196			(822	)		(761	)		6,102			2,199
Realized net (gains) losses on the sale of mortgage servicing rights			—			18			—			(7,724	)		—
Tax effect for further non-GAAP adjustments²			(49	)		199			171			419			(448	)
Tax effected further non-GAAP adjustments³			147			(605	)		(590	)		(1,203	)		1,751
Further adjusted net income (Non-GAAP)³	[a]	$	30,872		$	32,928		$	28,533		$	118,602		$	127,763
One-time deferred tax valuation adjustment⁴			—			—			—			1,446			—
Further adjusted net income, excluding one-time deferred tax valuation adjustment (Non-GAAP)³	[b]	$	30,872		$	32,928		$	28,533		$	120,048		$	127,763

Weighted average number of common shares outstanding, diluted	[c]		57,934,812			57,967,848			56,333,033			57,543,001			56,256,148

Further adjusted diluted earnings per common share (Non-GAAP)³	[a÷c]	$	0.53		$	0.57		$	0.51		$	2.06		$	2.27
Further adjusted diluted earnings per common share, excluding one-time deferred tax valuation adjustment (Non-GAAP)³	[b÷c]	$	0.53		$	0.57		$	0.51		$	2.09		$	2.27

___________________________________________

Adjusted net income is a non-GAAP measure. See the previous table for a reconciliation to the nearest GAAP measure.
Tax effects for further non-GAAP adjustments were calculated by multiplying further non-GAAP adjustments by the effective income tax rate for each period. Effective income tax rates that were used to calculate the tax effect were 24.8%, 24.8%, and 22.5% for the three months ended December 31, 2024, September 30, 2024, and December 31, 2023, respectively, and were 25.8% and 20.4% for the years ended December 31, 2024 and 2023, respectively.
Tax-effected measure.
An estimated one-time deferred tax valuation adjustment of $1.4 million resulted from a change to our Illinois apportionment rate due to recently enacted regulations.

Tax-Equivalent Net Interest Income, Adjusted Net Interest Income, Net Interest Margin, and Adjusted Net Interest Margin

		Three Months Ended									Years Ended
(dollars in thousands)		December 31, 2024			September 30, 2024			December 31, 2023			December 31, 2024			December 31, 2023
Net interest income (GAAP)		$	81,578		$	82,647		$	77,345		$	322,611		$	320,621
Tax-equivalent adjustment¹			446			396			501			1,693			2,173
Tax-equivalent net interest income (Non-GAAP)	[a]		82,024			83,043			77,846			324,304			322,794
Purchase accounting accretion related to business combinations			(812	)		(1,338	)		(384	)		(3,166	)		(1,477	)
Adjusted net interest income (Non-GAAP)	[b]	$	81,212		$	81,705		$	77,462		$	321,138		$	321,317

Average interest-earning assets (GAAP)	[c]		11,048,350			10,942,745			11,235,326			10,999,424			11,181,010

Net interest margin (Non-GAAP)²	[a÷c]		2.95	%		3.02	%		2.75	%		2.95	%		2.89	%
Adjusted net interest margin (Non-GAAP)²	[b÷c]		2.92	%		2.97	%		2.74	%		2.92	%		2.87	%

___________________________________________

Tax-equivalent adjustments were calculated using an estimated federal income tax rate of 21%, applied to non-taxable interest income on investments and loans.
For quarterly periods, measures are annualized.

Adjusted Noninterest Income, Revenue Measures, Adjusted Noninterest Expense, Adjusted Core Expense, and Efficiency Ratios

		Three Months Ended									Years Ended
(dollars in thousands)		December 31, 2024			September 30, 2024			December 31, 2023			December 31, 2024			December 31, 2023
Net interest income (GAAP)	[a]	$	81,578		$	82,647		$	77,345		$	322,611		$	320,621
Tax-equivalent adjustment¹			446			396			501			1,693			2,173
Tax-equivalent net interest income (Non-GAAP)	[b]		82,024			83,043			77,846			324,304			322,794

Total noninterest income (GAAP)			35,221			35,845			31,304			139,682			121,214
Net security (gains) losses (GAAP)			196			(822	)		(761	)		6,102			2,199
Noninterest income excluding net securities gains and losses (Non-GAAP)	[c]		35,417			35,023			30,543			145,784			123,413
Realized net (gains) losses on the sale of mortgage servicing rights (GAAP)			—			18			—			(7,724	)		—
Adjusted noninterest income (Non-GAAP)	[d]	$	35,417		$	35,041		$	30,543		$	138,060		$	123,413

Tax-equivalent revenue (Non-GAAP)	[e = b+c]	$	117,441		$	118,066		$	108,389		$	470,088		$	446,207
Adjusted tax-equivalent revenue (Non-GAAP)	[f = b+d]		117,441			118,084			108,389			462,364			446,207
Operating revenue (Non-GAAP)	[g = a+d]		116,995			117,688			107,888			460,671			444,034

Adjusted noninterest income to operating revenue (Non-GAAP)	[d÷g]		30.27	%		29.77	%		28.31	%		29.97	%		27.79	%

Total noninterest expense (GAAP)		$	78,167		$	75,926		$	74,979		$	300,399		$	285,532
Amortization of intangible assets (GAAP)	[h]		(2,471	)		(2,548	)		(2,479	)		(10,057	)		(10,432	)
Noninterest expense excluding amortization of intangible assets (Non-GAAP)	[i]		75,696			73,378			72,500			290,342			275,100
Non-operating adjustments:
Salaries, wages, and employee benefits			(247	)		(73	)		(3,760	)		(1,580	)		(3,760	)
Data processing			(14	)		(90	)		—			(548	)		—
Professional fees, occupancy, furniture and fixtures, and other			(3,324	)		(1,772	)		(477	)		(6,012	)		(568	)
Adjusted noninterest expense (Non-GAAP)	[j]		72,111			71,443			68,263			282,202			270,772
Provision for unfunded commitments			455			(407	)		(818	)		1,095			(461	)
Amortization of New Markets Tax Credits			—			—			(2,259	)		—			(8,999	)
Adjusted core expense (Non-GAAP)	[k]	$	72,566		$	71,036		$	65,186		$	283,297		$	261,312

Noninterest expense, excluding non-operating adjustments (Non-GAAP)	[j-h]	$	74,582		$	73,991		$	70,742		$	292,259		$	281,204

Efficiency ratio (Non-GAAP)	[i÷e]		64.45	%		62.15	%		66.89	%		61.76	%		61.65	%
Adjusted efficiency ratio (Non-GAAP)	[j÷f]		61.40	%		60.50	%		62.98	%		61.03	%		60.68	%
Adjusted core efficiency ratio (Non-GAAP)	[k÷f]		61.79	%		60.16	%		60.14	%		61.27	%		58.56	%

___________________________________________

Tax-equivalent adjustments were calculated using an estimated federal income tax rate of 21%, applied to non-taxable interest income on investments and loans.

Tangible Book Value and Tangible Book Value Per Common Share

		As of
(dollars in thousands, except per share amounts)		December 31, 2024			September 30, 2024			December 31, 2023
Total stockholders’ equity (GAAP)		$	1,383,269		$	1,402,884		$	1,271,981
Goodwill and other intangible assets, net (GAAP)			(365,975	)		(368,249	)		(353,864	)
Tangible book value (Non-GAAP)	[a]	$	1,017,294		$	1,034,635		$	918,117

Ending number of common shares outstanding (GAAP)	[b]		56,895,981			56,872,241			55,244,119

Tangible book value per common share (Non-GAAP)	[a÷b]	$	17.88		$	18.19		$	16.62

Tangible Assets, Tangible Common Equity, and Tangible Common Equity to Tangible Assets

		As of
(dollars in thousands)		December 31, 2024			September 30, 2024			December 31, 2023
Total assets (GAAP)		$	12,046,722		$	11,986,839		$	12,283,415
Goodwill and other intangible assets, net (GAAP)			(365,975	)		(368,249	)		(353,864	)
Tax effect of other intangible assets¹			6,379			7,178			6,888
Tangible assets (Non-GAAP)²	[a]	$	11,687,126		$	11,625,768		$	11,936,439

Total stockholders’ equity (GAAP)		$	1,383,269		$	1,402,884		$	1,271,981
Goodwill and other intangible assets, net (GAAP)			(365,975	)		(368,249	)		(353,864	)
Tax effect of other intangible assets¹			6,379			7,178			6,888
Tangible common equity (Non-GAAP)²	[b]	$	1,023,673		$	1,041,813		$	925,005

Tangible common equity to tangible assets (Non-GAAP)²	[b÷a]		8.76	%		8.96	%		7.75	%

___________________________________________

Net of estimated deferred tax liability, calculated using an estimated tax rate of 26.73% as of December 31, 2024, and 28% as of September 30, 2024, and December 31, 2023.
Tax-effected measure.

Core Deposits and Related Ratios

		As of
(dollars in thousands)		December 31, 2024			September 30, 2024			December 31, 2023
Portfolio loans (GAAP)	[a]	$	7,697,087		$	7,809,097		$	7,651,034

Total deposits (GAAP)	[b]	$	9,982,490		$	9,943,241		$	10,291,156
Brokered deposits, excluding brokered time deposits of $250,000 or more			(13,090	)		(13,089	)		(6,001	)
Time deposits of $250,000 or more			(334,503	)		(338,808	)		(386,286	)
Core deposits (Non-GAAP)	[c]	$	9,634,897		$	9,591,344		$	9,898,869

RATIOS
Core deposits to total deposits (Non-GAAP)	[c÷b]		96.52	%		96.46	%		96.19	%
Portfolio loans to core deposits (Non-GAAP)	[a÷c]		79.89	%		81.42	%		77.29	%

FORWARD-LOOKING STATEMENTS

This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to Busey’s financial condition, results of operations, plans, objectives, future performance, and business. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of Busey’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should,” “position,” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and Busey undertakes no obligation to update any statement in light of new information or future events.

A number of factors, many of which are beyond Busey’s ability to control or predict, could cause actual results to differ materially from those in any forward-looking statements. These factors include, among others, the following: (1) risks related to the proposed transaction with CrossFirst, including (i) the possibility that the proposed transaction will not close when expected or at all because conditions to the closing are not satisfied on a timely basis or at all; (ii) the possibility that the anticipated benefits of the proposed transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Busey and CrossFirst do business; (iii) the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (iv) diversion of management’s attention from ongoing business operations and opportunities; (v) the possibility that Busey may be unable to achieve expected synergies and operating efficiencies in the merger within the expected timeframes or at all, and to successfully integrate CrossFirst’s operations with those of Busey or that such integration may be more difficult, time consuming or costly than expected; (vi) revenues following the proposed transaction may be lower than expected; and (vii) stockholder litigation that could prevent or delay the closing of the proposed transaction or otherwise negatively impact our business and operations; (2) the strength of the local, state, national, and international economies and financial markets (including effects of inflationary pressures and supply chain constraints); (3) effects on the U.S. economy resulting from the implementation of policies proposed by the new presidential administration, including tariffs, mass deportations, and tax regulations; (4) the economic impact of any future terrorist threats or attacks, widespread disease or pandemics, or other adverse external events that could cause economic deterioration or instability in credit markets (including Russia’s invasion of Ukraine and the conflict in the Middle East); (5) changes in state and federal laws, regulations, and governmental policies concerning Busey’s general business (including changes in response to the failures of other banks or as a result changes in policies implemented by the new presidential administration); (6) changes in accounting policies and practices; (7) changes in interest rates and prepayment rates of Busey’s assets (including the impact of sustained elevated interest rates); (8) increased competition in the financial services sector (including from non-bank competitors such as credit unions and fintech companies) and the inability to attract new customers; (9) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (10) the loss of key executives or associates; (11) changes in consumer spending; (12) unexpected outcomes of existing or new litigation, investigations, or inquiries involving Busey (including with respect to Busey’s Illinois franchise taxes); (13) fluctuations in the value of securities held in Busey’s securities portfolio; (14) concentrations within Busey’s loan portfolio (including commercial real estate loans), large loans to certain borrowers, and large deposits from certain clients; (15) the concentration of large deposits from certain clients who have balances above current FDIC insurance limits and may withdraw deposits to diversify their exposure; (16) the level of non-performing assets on Busey’s balance sheets; (17) interruptions involving information technology and communications systems or third-party servicers; (18) breaches or failures of information security controls or cybersecurity-related incidents; and (19) the economic impact of exceptional weather occurrences such as tornadoes, hurricanes, floods, blizzards, and droughts. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Additional information concerning Busey and its business, including additional factors that could materially affect Busey’s financial results, is included in Busey’s filings with the Securities and Exchange Commission.

END NOTES

1	Represents a non-GAAP financial measure. For a reconciliation to the most directly comparable financial measure calculated and presented in accordance with Generally Accepted Accounting Principles (“GAAP”), see “Non-GAAP Financial Information.”
2	Estimated uninsured and uncollateralized deposits consist of account balances in excess of the $250 thousand FDIC insurance limit, less intercompany accounts and collateralized accounts (including preferred deposits).
3	Central Business District areas within Busey’s footprint include downtown St. Louis, downtown Indianapolis, and downtown Chicago.
4	Capital amounts and ratios for the fourth quarter of 2024 are not yet finalized and are subject to change.
5	On- and off-balance sheet liquidity is comprised of cash and cash equivalents, debt securities excluding those pledged as collateral, brokered deposits, and Busey’s borrowing capacity through its revolving credit facility, the FHLB, the Federal Reserve Bank, and federal funds purchased lines.
6	The blended benchmark consists of 60% MSCI All Country World Index and 40% Bloomberg Intermediate US Government/Credit Total Return Index.

The MIL Network –

January 29, 2025

MIL-OSI: Provident Financial Services, Inc. Announces Fourth Quarter and Full Year Earnings, Declaration of Quarterly Cash Dividend and Annual Meeting Date

Source: GlobeNewswire (MIL-OSI)

ISELIN, N.J., Jan. 28, 2025 (GLOBE NEWSWIRE) — Provident Financial Services, Inc. (NYSE:PFS) (the “Company”) reported net income of $48.5 million, or $0.37 per basic and diluted share for the three months ended December 31, 2024, compared to $46.4 million, or $0.36 per basic and diluted share, for the three months ended September 30, 2024 and $27.3 million, or $0.36 per basic and diluted share, for the three months ended December 31, 2023. For the year ended December 31, 2024, net income totaled $115.5 million, or $1.05 per basic and diluted share, compared to $128.4 million, or $1.72 per basic and $1.71 per diluted share, for the year ended December 31, 2023.

The Company’s earnings for the three months and year ended December 31, 2024 reflect the impact of the May 16, 2024 merger with Lakeland Bancorp, Inc. (“Lakeland”), which added $10.91 billion to total assets, $7.91 billion to loans, and $8.62 billion to deposits, net of purchase accounting adjustments. The merger with Lakeland significantly impacted provisions for credit losses in 2024 due to the initial Current Expected Credit Loss (“CECL”) provisions recorded on acquired loans in the second quarter. Transaction costs related to our merger with Lakeland totaled $20.2 million and $56.9 million, for the three months and year ended December 31, 2024, respectively, compared with transaction costs of $2.5 million and $7.8 million for the respective 2023 periods. Additionally, the Company realized a $2.8 million loss related to the sale of subordinated debt issued by Lakeland from the Provident investment portfolio, during the second quarter of 2024.

Anthony J. Labozzetta, President and Chief Executive Officer commented, “Provident had an eventful 2024 marked by solid financial performance and defined by the completion of our merger with Lakeland. We have maintained excellent asset quality, grown our deposits, and benefited from our expanding fee-based businesses. With core systems conversion and integration now completed, we look forward to further improving our performance across all business lines in 2025.”

Performance Highlights for the Fourth Quarter of 2024

Adjusted for transaction costs related to the merger with Lakeland, net of tax, the Company’s annualized adjusted returns on average assets, average equity and average tangible equity⁽¹⁾ were 1.05%, 9.53% and 15.39% for the quarter ended December 31, 2024, compared to 0.95%, 8.62% and 14.53% for the quarter ended September 30, 2024. A reconciliation between GAAP and the above non-GAAP ratios is shown on page 13 of the earnings release.
The Company’s annualized adjusted pre-tax, pre-provision returns on average assets, average equity and average tangible equity⁽²⁾ were 1.53%, 13.91% and 20.31% for the quarter ended December 31, 2024, compared to 1.48%, 13.48% and 19.77% for the quarter ended September 30, 2024. A reconciliation between GAAP and the above non-GAAP ratios is shown on page 13 of the earnings release.
Net interest margin decreased three basis points to 3.28% for the quarter ended December 31, 2024, from 3.31% for the trailing quarter, mainly due to a reduction in net accretion of purchase accounting adjustments related to the Lakeland merger. However, the core net interest margin, which excludes the impact of purchase accounting accretion and amortization, increased four basis points from the trailing quarter to 2.85%. The average yield on total loans decreased 22 basis points to 5.99% for the quarter ended December 31, 2024, compared to the trailing quarter, while the average cost of deposits, including non-interest-bearing deposits, decreased 11 basis points to 2.25% for the quarter ended December 31, 2024.
Wealth management and insurance agency income increased 12% and 19%, respectively, versus the same period in 2023.
Asset quality improved in the quarter, as non-performing loans to total loans as of December 31, 2024 decreased to 0.39% from 0.47% as of September 30, 2024, while non-performing assets to total assets as of December 31, 2024 decreased to 0.34% from 0.41% as of September 30, 2024.
The Company recorded a $7.8 million provision for credit losses on loans for the quarter ended December 31, 2024, compared to a $9.6 million provision for the trailing quarter. The decrease in the provision for credit losses on loans for the quarter was primarily attributable to the reclassification of $151.3 million to the held for sale portfolio, partially offset by modest deterioration in the economic forecast within our CECL model.
Total deposits increased $247.6 million to $18.62 billion as of December 31, 2024 compared to September 30, 2024.
In December of 2024, $151.3 million of the Bank’s commercial loan portfolio was reclassified from loans held for investment into the held for sale portfolio as a result of a decision to exit the non-relationship equipment lease financing business.
As of December 31, 2024, the Company’s loan pipeline, consisting of work-in-process and loans approved pending closing, totaled $1.79 billion, with a weighted average interest rate of 6.91%.
At December 31, 2024, CRE loans related to office properties totaled $884.1 million, compared to $921.1 million at September 30, 2024. CRE loans secured by office properties constitutes 4.6% of total loans and have an average loan size of $1.9 million, with seven relationships greater than $10.0 million. There were four loans totaling $9.1 million on non-accrual as of December 31, 2024.
As of December 31, 2024, multi-family CRE loans secured by New York City properties totaled $244.5 million, compared to $226.6 million as of September 30, 2024. This portfolio constitutes only 1.3% of total loans and has an average loan size of $2.8 million. Loans that are collateralized by rent stabilized apartments comprise less than 0.80% of the total loan portfolio and are all performing.

Declaration of Quarterly Dividend

The Company’s Board of Directors declared a quarterly cash dividend of $0.24 per common share payable on February 28, 2025, to stockholders of record as of the close of business on February 14, 2025.

Annual Meeting Date Set

The Annual Meeting of Stockholders will be held on April 24, 2025 at 10:00 a.m. Eastern Time as a virtual meeting. February 28, 2025 has been established as the record date for the determination of stockholders entitled to vote at the Annual Meeting.

Results of Operations

Three months ended December 31, 2024 compared to the three months ended September 30, 2024

For the three months ended December 31, 2024, net income was $48.5 million, or $0.37 per basic and diluted share, compared to net income of $46.4 million, or $0.36 per basic and diluted share, for the three months ended September 30, 2024.

Net Interest Income and Net Interest Margin

Net interest income decreased $2.0 million to $181.7 million for the three months ended December 31, 2024, from $183.7 million for the trailing quarter. The decrease in net interest income was primarily due to a decrease in net accretion of purchase accounting adjustments in the loan portfolio related to the Lakeland merger.

The Company’s net interest margin decreased three basis points to 3.28% for the quarter ended December 31, 2024, from 3.31% for the trailing quarter. The average yield on interest-earning assets for the quarter ended December 31, 2024 decreased 18 basis points to 5.66%, compared to the trailing quarter. The average cost of interest-bearing liabilities for the quarter ended December 31, 2024 decreased 16 basis points to 3.03%, compared to the trailing quarter. The average cost of interest-bearing deposits for the quarter ended December 31, 2024 decreased 15 basis points to 2.81%, compared to 2.96% for the trailing quarter. The average cost of total deposits, including non-interest-bearing deposits, was 2.25% for the quarter ended December 31, 2024, compared to 2.36% for the trailing quarter. The average cost of borrowed funds for the quarter ended December 31, 2024 was 3.64%, compared to 3.73% for the quarter ended September 30, 2024. The net accretion of purchase accounting adjustments contributed 43 basis points to the net interest margin for the quarter ended December 31, 2024, compared with 50 basis points in the trailing quarter. The reduction in purchase accounting accretion was largely due to the prepayment of certain loans that resulted in accelerated amortization of acquisition premiums and a decrease in accelerated accretion related to prepayments of loans with acquisition discounts.

Provision for Credit Losses on Loans

For the quarter ended December 31, 2024, the Company recorded a $7.8 million provision for credit losses related to loans, compared with a provision for credit losses on loans of $9.6 million for the quarter ended September 30, 2024. The decrease in the provision for credit losses on loans for the quarter was primarily attributable to the reclassification of $151.3 million of commercial loans to the held for sale portfolio, partially offset by modest deterioration in the economic forecast within our CECL model for the current quarter as compared to the prior quarter. For the three months ended December 31, 2024, net charge-offs totaled $5.5 million, or an annualized 12 basis points of average loans, compared to net charge-offs of $6.8 million, or an annualized 14 basis points of average loans for the trailing quarter.

Non-Interest Income and Expense

For the three months ended December 31, 2024, non-interest income totaled $24.2 million, a decrease of $2.7 million, compared to the trailing quarter. Bank owned life insurance (“BOLI”) income decreased $2.0 million compared to the trailing quarter, to $2.3 million for the three months ended December 31, 2024, primarily due to a reduction in benefit claims. Insurance agency income decreased $342,000 to $3.3 million for the three months ended December 31, 2024, compared to $3.6 million for the trailing quarter, largely due to a seasonal decrease in business activity. Additionally, other income decreased $181,000 to $1.3 million for the three months ended December 31, 2024, compared to the trailing quarter, while fees and commissions decreased $129,000 to $9.7 million for the three months ended December 31, 2024, compared to the trailing quarter.

Non-interest expense totaled $134.3 million for the three months ended December 31, 2024, a decrease of $1.7 million, compared to $136.0 million for the trailing quarter. Compensation and benefits expense decreased $3.5 million to $59.9 million for the three months ended December 31, 2024, compared to $63.5 million for the trailing quarter mainly due to decreases in salary expense and payroll tax expense. Amortization of intangibles decreased $2.7 million to $9.5 million for the three months ended December 31, 2024 primarily due to a current quarter adjustment to the rate of core deposit intangible amortization related to Lakeland, as a result of lower projected attrition on core deposits. FDIC insurance decreased $769,000 to $3.4 million for the three months ended December 31, 2024, compared to $4.2 million for the trailing quarter, primarily due to a decreases in the assessment rate and average assets. Additionally, data processing expense decreased $600,000 to $9.9 million for the three months ended December 31, 2024, compared to the trailing quarter, largely due to a decrease in core system expenses. Partially offsetting these decreases, merger-related expenses increased $4.6 million to $20.2 million for the three months ended December 31, 2024, compared to the trailing quarter, while other operating expenses increased $1.6 million to $17.4 million for the three months ended December 31, 2024, compared to the trailing quarter largely due to a $1.4 million charge for contingent litigation reserves.

The Company’s annualized adjusted non-interest expense as a percentage of average assets⁽⁴⁾ was 1.90% for the quarter ended December 31, 2024, compared to 1.98% for the trailing quarter. The efficiency ratio (adjusted non-interest expense divided by the sum of net interest income and non-interest income)⁽⁵⁾ was 55.43% for the three months ended December 31, 2024, compared to 57.20% for the trailing quarter.

Income Tax Expense

For the three months ended December 31, 2024, the Company’s income tax expense was $14.2 million with an effective tax rate of 22.6%, compared with income tax expense of $18.9 million with an effective tax rate of 28.9% for the trailing quarter. The decrease in tax expense and the effective tax rate for the three months ended December 31, 2024, compared with the trailing quarter was largely due to a $4.2 million tax benefit related to the revaluation of deferred tax assets to reflect the imposition by the State of New Jersey of a 2.5% Corporate Transit Fee, effective January 1, 2024.

Three months ended December 31, 2024 compared to the three months ended December 31, 2023

For the three months ended December 31, 2024, net income was $48.5 million, or $0.37 per basic and diluted share, compared to net income of $27.3 million, or $0.36 per basic and diluted share, for the three months ended December 31, 2023. The Company’s earnings for the quarter ended December 31, 2024 reflected the impact of the May 16, 2024 merger with Lakeland. The results of operations included transaction costs related to the merger with Lakeland totaling $20.2 million and $2.5 million for the three months ended December 31, 2024 and 2023, respectively.

Net Interest Income and Net Interest Margin

Net interest income increased $85.9 million to $181.7 million for the three months ended December 31, 2024, from $95.8 million for same period in 2023. Net interest income for the quarter ended December 31, 2024 compared to the same period in 2023 was favorably impacted by the net assets acquired from Lakeland, combined with favorable repricing of adjustable rate loans, higher market rates on new loan originations and the originations of higher-yielding loans, partially offset by unfavorable repricing of deposits.

The Company’s net interest margin increased 36 basis points to 3.28% for the quarter ended December 31, 2024, from 2.92% for the same period last year. The average yield on interest-earning assets for the quarter ended December 31, 2024 increased 62 basis points to 5.66%, compared to 5.04% for the quarter ended December 31, 2023. The average cost of interest-bearing liabilities increased 32 basis points for the quarter ended December 31, 2024 to 3.03%, compared to 2.71% for the fourth quarter of 2023. The average cost of interest-bearing deposits for the quarter ended December 31, 2024 was 2.81%, compared to 2.47% for the same period last year. The average cost of total deposits, including non-interest-bearing deposits, was 2.25% for the quarter ended December 31, 2024, compared with 1.95% for the quarter ended December 31, 2023. The average cost of borrowed funds for the quarter ended December 31, 2024 was 3.64%, compared to 3.71% for the same period last year.

Provision for Credit Losses on Loans

For the quarter ended December 31, 2024, the Company recorded a $7.8 million provision for credit losses related to loans, compared with a $500,000 provision for credit losses on loans for the quarter ended December 31, 2023. The increase in the provision for credit losses on loans was largely a function of the period-over-period deterioration in the economic forecast and an increase in loans from the Lakeland acquisition.

Non-Interest Income and Expense

Non-interest income totaled $24.2 million for the quarter ended December 31, 2024, an increase of $5.2 million, compared to the same period in 2023. Fee income increased $3.6 million to $9.7 million for the three months ended December 31, 2024, compared to the same period in 2023, primarily resulting from the Lakeland merger. Wealth management income increased $812,000 to $7.7 million for the three months ended December 31, 2024, compared to the same period in 2023, primarily due to an increase in the average market value of assets under management, while BOLI income increased $617,000 to $2.3 million for the three months ended December 31, 2024, compared to the same period in 2023 largely due to an increase in income related to the addition of Lakeland’s BOLI. Insurance agency income increased $530,000 to $3.3 million, for the three months ended December 31, 2024, compared to the same period in 2023, largely due to strong retention revenue and new business activity. Partially offsetting these increases to non-interest income, other income decreased $330,000 to $1.3 million for the three months ended December 31, 2024, compared to the quarter ended December 31, 2023, primarily due to a decrease in net gains on the sale of SBA loans.

Non-interest expense totaled $134.3 million for the three months ended December 31, 2024, an increase of $58.5 million, compared to $75.9 million for the three months ended December 31, 2023. Compensation and benefits expense increased $21.2 million to $59.9 million for three months ended December 31, 2024, compared to $38.8 million for the same period in 2023. The increase in compensation and benefits expense was primarily attributable to the addition of Lakeland. Additionally, merger-related expense increased $17.7 million to $20.2 million for the three months ended December 31, 2024, compared to the same period in 2023. Amortization of intangibles increased $8.8 million to $9.5 million for the three months ended December 31, 2024, compared to $721,000 for the same period in 2023, largely due to core deposit intangible amortization related to the addition of Lakeland. Net occupancy expenses increased $4.8 million to $12.6 million for the three months ended December 31, 2024, compared to the same period in 2023, primarily due to an increase in depreciation and maintenance expenses related to the addition of Lakeland. Data processing expense increased $3.4 million to $9.9 million for the three months ended December 31, 2024, compared to the same period in 2023, largely due to additional software and hardware expenses related to the addition of Lakeland, while other operating expenses increased $1.7 million to $17.4 million for the three months ended December 31, 2024, compared to the same period in 2023, largely due to an increase in professional service expenses.

The Company’s annualized adjusted non-interest expense as a percentage of average assets⁽⁴⁾ was 1.90% for the quarter ended December 31, 2024, compared to 1.98% for the same period in 2023. The efficiency ratio (adjusted non-interest expense divided by the sum of net interest income and non-interest income)⁽⁵⁾ was 55.43% for the three months ended December 31, 2024 compared to 61.32% for the same respective period in 2023.

Income Tax Expense

For the three months ended December 31, 2024, the Company’s income tax expense was $14.2 million with an effective tax rate of 22.6%, compared with $12.5 million with an effective tax rate of 31.3% for the three months ended December 31, 2023. The increase in tax expense for the three months ended December 31, 2024, compared with the three months ended December 31, 2023, was primarily due to an increase in taxable income, which was partially offset by a $4.2 million tax benefit related to the revaluation of deferred tax assets to reflect the imposition by the State of New Jersey of a 2.5% Corporate Transit Fee, effective January 1, 2024. The decrease in the effective tax rate for the three months ended December 31, 2024, compared with the three months ended December 31, 2023 was primarily due to the aforementioned $4.2 million tax benefit related to the revaluation of deferred tax assets.

Year ended December 31, 2024 compared to the year ended December 31, 2023

For the year ended December 31, 2024, net income totaled $115.5 million, or $1.05 per basic and diluted share, compared to net income of $128.4 million, or $1.71 per basic and diluted share, for the year ended December 31, 2023.

Net Interest Income and Net Interest Margin

Net interest income increased $201.2 million to $600.6 million for the year ended December 31, 2024, from $399.5 million for 2023. Net interest income for the year ended December 31, 2024 was favorably impacted by the net assets acquired from Lakeland, combined with the favorable repricing of adjustable rate loans and higher market rates on new loan originations, partially offset by the unfavorable repricing of both deposits and borrowings.

For the year ended December 31, 2024, the net interest margin increased 10 basis points to 3.26%, compared to 3.16% for 2023. The weighted average yield on interest earning assets increased 81 basis points to 5.68% for the year ended December 31, 2024, compared to 4.87% for 2023, while the weighted average cost of interest-bearing liabilities increased 81 basis points to 3.05% for the year ended December 31, 2024, compared to 2.24% last year. The average cost of interest-bearing deposits increased 84 basis points to 2.83% for the year ended December 31, 2024, compared to 1.99% in the prior year. Average non-interest-bearing demand deposits increased $792.0 million to $3.12 billion for the year ended December 31, 2024, compared with $2.33 billion for 2023. The average cost of total deposits, including non-interest-bearing deposits, was 2.26% for the year ended December 31, 2024, compared with 1.54% for 2023. The average cost of borrowings for the year ended December 31, 2024 was 3.71%, compared to 3.41% in the prior year.

Provision for Credit Losses on Loans

For the year ended December 31, 2024, the Company recorded an $83.6 million provision for credit losses related to loans, compared with a provision for credit losses of $28.2 million for 2023. The increased provision for credit losses on loans for the year ended December 31, 2024 was primarily attributable to an initial CECL provision for credit losses on loans of $60.1 million recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations, partially offset by some economic forecast improvement over the current twelve-month period within our CECL model, compared to last year.

Non-Interest Income and Expense

For the year ended December 31, 2024, non-interest income totaled $94.1 million, an increase of $14.3 million, compared to 2023. Fee income increased $9.7 million to $34.1 million for the year ended December 31, 2024, compared to 2023, primarily due to the addition of Lakeland. BOLI income increased $5.2 million to $11.7 million for the year ended December 31, 2024, compared to 2023, primarily due to an increase in benefit claims, combined with an increase in income related to the addition of Lakeland’s BOLI, while wealth management income increased $2.9 million to $30.5 million for the year ended December 31, 2024, compared to 2023, mainly due to an increase in the average market value of assets under management during the period. Additionally, insurance agency income increased $2.3 million to $16.2 million for the year ended December 31, 2024, compared to $13.9 million for 2023, largely due to increases in contingent commissions, retention revenue and new business activity. Partially offsetting these increases in non-interest income, net gains on securities transactions decreased $3.0 million for the year ended December 31, 2024, primarily due to a $2.8 million loss related to the sale from the Provident investment portfolio of subordinated debt issued by Lakeland. Additionally, other income decreased $2.8 million to $4.5 million for the year ended December 31, 2024, compared to $7.3 million for 2023, primarily due to a $2.0 million gain from the sale of a foreclosed commercial property recorded in the prior year, combined with a decrease in gains on sales of SBA loans in the current year.

Non-interest expense totaled $457.5 million for the year ended December 31, 2024, an increase of $182.2 million, compared to $275.3 million for 2023. Compensation and benefits expense increased $69.8 million to $218.3 million for the year ended December 31, 2024, compared to $148.5 million for 2023. The increase in compensation and benefits expense was primarily attributable to the addition of Lakeland. Merger-related expenses increased $49.0 million to $56.9 million for the year ended December 31, 2024, compared to $7.8 million for 2023. Amortization of intangibles increased $26.0 million to $28.9 million for the year ended December 31, 2024, compared to $3.0 million for 2023, largely due to core deposit intangible amortization related to the addition of Lakeland. Net occupancy expense increased $12.7 million to $45.0 million for the year ended December 31, 2024, compared to 2023, primarily due to increases in depreciation and maintenance expense related to the addition of Lakeland, while data processing expense increased $12.6 million to $35.6 million for the year ended December 31, 2024, compared to $23.0 million for 2023, primarily due to additional software and hardware expenses related to the addition of Lakeland. Other operating expenses increased $7.3 million to $54.7 million for the year ended December 31, 2024, compared to $47.4 million for 2023, primarily due to increases in consulting and other professional service expenses, while FDIC insurance increased $4.4 million to $13.0 million for the year ended December 31, 2024, primarily due to the addition of Lakeland.

Income Tax Expense

For the year ended December 31, 2024, the Company’s income tax expense was $34.1 million with an effective tax rate of 22.8%, compared with $47.4 million with an effective tax rate of 27.0% for 2023. The decrease in tax expense for the year ended December 31, 2024, compared with last year was largely due to a $10.0 million tax benefit related to the revaluation of deferred tax assets to reflect the imposition by the State of New Jersey of a 2.5% Corporate Transit Fee, effective January 1, 2024, combined with a decrease in taxable income as a result of the initial CECL provision for credit losses on loans of $60.1 million recorded in accordance with GAAP requirements for accounting for business combinations and additional expenses from the Lakeland merger.

Asset Quality

The Company’s total non-performing loans at December 31, 2024 were $72.1 million, or 0.39% of total loans, compared to $89.9 million or 0.47% of total loans at September 30, 2024 and $49.6 million, or 0.46% of total loans at December 31, 2023. The $17.9 million decrease in non-performing loans at December 31, 2024, compared to the trailing quarter, consisted of a $24.3 million decrease in non-performing commercial loans and a $676,000 decrease in non-performing residential loans, partially offset by a $6.9 million increase in non-performing commercial mortgage loans and a $223,000 increase in non-performing consumer loans. As of December 31, 2024, impaired loans totaled $55.4 million with related specific reserves of $7.5 million, compared with impaired loans totaling $74.0 million with related specific reserves of $7.2 million as of September 30, 2024. As of December 31, 2023, impaired loans totaled $42.3 million with related specific reserves of $2.9 million.

At December 31, 2024, the Company’s allowance for credit losses related to the loan portfolio was 1.04% of total loans, compared to 1.02% and 0.99% at September 30, 2024 and December 31, 2023, respectively. The allowance for credit losses increased $88.0 million to $193.4 million at December 31, 2024, from $107.2 million at December 31, 2023. The increase in the allowance for credit losses on loans at December 31, 2024 compared to December 31, 2023 was due to an $83.6 million provision for credit losses on loans, which included an initial CECL provision of $60.1 million on loans acquired from Lakeland, and a $17.2 million allowance recorded through goodwill related to Purchased Credit Deteriorated loans acquired from Lakeland, partially offset by net charge-offs of $14.6 million.

The following table sets forth accruing past due loans and non-accrual loans on the dates indicated, as well as certain asset quality ratios.

	December 31, 2024				September 30, 2024				December 31, 2023
	Number of Loans	Principal Balance of Loans			Number of Loans	Principal Balance of Loans			Number of Loans	Principal Balance of Loans
	(Dollars in thousands)
Accruing past due loans:
30 to 59 days past due:
Commercial mortgage loans	7	$	8,538		2	$	430		1	$	825
Multi-family mortgage loans	—		—		—		—		1		3,815
Construction loans	—		—		—		—		—		—
Residential mortgage loans	22		6,388		23		5,020		13		3,429
Total mortgage loans	29		14,926		25		5,450		15		8,069
Commercial loans	23		4,248		14		1,952		6		998
Consumer loans	47		3,152		53		4,073		31		875
Total 30 to 59 days past due	99	$	22,326		92	$	11,475		52	$	9,942

60 to 89 days past due:
Commercial mortgage loans	4	$	3,954		1	$	641		—	$	—
Multi-family mortgage loans	—		—		—		—		1		1,635
Construction loans	—		—		—		—		—		—
Residential mortgage loans	17		5,049		11		1,991		8		1,208
Total mortgage loans	21		9,003		12		2,632		9		2,843
Commercial loans	9		2,377		9		1,240		3		198
Consumer loans	15		856		10		606		5		275
Total 60 to 89 days past due	45		12,236		31		4,478		17		3,316
Total accruing past due loans	144	$	34,562		123	$	15,953		69	$	13,258

Non-accrual:
Commercial mortgage loans	17	$	20,883		17	$	13,969		7	$	5,151
Multi-family mortgage loans	6		7,498		6		7,578		1		744
Construction loans	2		13,246		2		13,151		1		771
Residential mortgage loans	23		4,535		24		5,211		7		853
Total mortgage loans	48		46,162		49		39,909		16		7,519
Commercial loans	65		24,243		69		48,592		26		41,487
Consumer loans	23		1,656		32		1,433		10		633
Total non-accrual loans	136	$	72,061		150	$	89,934		52	$	49,639

Non-performing loans to total loans			0.39	%			0.47	%			0.46	%
Allowance for loan losses to total non-performing loans			268.43	%			217.09	%			215.96	%
Allowance for loan losses to total loans			1.04	%			1.02	%			0.99	%

At December 31, 2024 and December 31, 2023, the Company held foreclosed assets of $9.5 million and $11.7 million, respectively. During the year ended December 31, 2024, there were four properties sold with an aggregate carrying value of $861,000 and one write-down of a foreclosed commercial property of $1.3 million. Foreclosed assets at December 31, 2024 consisted primarily of commercial real estate. Total non-performing assets at December 31, 2024 increased $20.2 million to $81.5 million, or 0.34% of total assets, from $61.3 million, or 0.43% of total assets at December 31, 2023.

Balance Sheet Summary

Total assets at December 31, 2024 were $24.05 billion, a $13.78 billion increase from December 31, 2023. The increase in total assets was primarily due to the addition of Lakeland.

The Company’s loans held for investment portfolio totaled $18.66 billion at December 31, 2024 and $10.87 billion at December 31, 2023. The loan portfolio consists of the following:

		December 31, 2024			September 30, 2024			December 31, 2023
		(Dollars in thousands)
Mortgage loans:
Commercial		$	7,228,078		$	7,342,456		$	4,512,411
Multi-family			3,382,933			3,226,918			1,812,500
Construction			823,503			873,509			653,246
Residential			2,014,844			2,032,671			1,164,956
	Total mortgage loans		13,449,358			13,475,554			8,143,113
Commercial loans			4,604,367			4,710,601			2,440,621
Consumer loans			613,819			623,709			299,164
	Total gross loans		18,667,544			18,809,864			10,882,898
Premiums on purchased loans			1,338			1,362			1,474
Net deferred fees and unearned discounts			(9,512	)		(16,617	)		(12,456	)
	Total loans	$	18,659,370		$	18,794,609		$	10,871,916

As part of the merger with Lakeland, we acquired $7.91 billion in loans, net of purchase accounting adjustments. For the year ended December 31, 2024, the Company experienced net increases of $1.57 billion in multi-family loans, $2.16 billion in commercial loans and $2.72 billion in commercial mortgage loans, partially offset by net decreases of $170.3 million in construction loans and net decreases in residential mortgage and consumer loans of $849.9 million and $314.7 million, respectively. Commercial loans, consisting of commercial real estate, multi-family, commercial and construction loans, represented 85.9% of the loan portfolio at December 31, 2024, compared to 86.5% at December 31, 2023.

For the year ended December 31, 2024, loan funding, including advances on lines of credit, totaled $4.73 billion, compared with $3.34 billion for the same period in 2023.

At December 31, 2024, the Company’s unfunded loan commitments totaled $2.73 billion, including commitments of $1.62 billion in commercial loans, $608.1 million in construction loans and $85.1 million in commercial mortgage loans. Unfunded loan commitments at September 30, 2024 and December 31, 2023 totaled $2.97 billion and $2.09 billion, respectively.

The loan pipeline, consisting of work-in-process and loans approved pending closing, totaled $1.79 billion at December 31, 2024, compared to $1.98 billion at September 30, 2024 and $1.70 billion at December 31, 2023.

Total investment securities were $3.21 billion at December 31, 2024, a $2.26 billion increase from December 31, 2023. This increase was primarily due to the addition of Lakeland.

Total deposits increased $10.56 billion during the year ended December 31, 2024, to $18.62 billion. Total savings and demand deposit accounts increased $6.26 billion to $15.46 billion at December 31, 2024, while total time deposits increased $2.07 billion to $3.17 billion at December 31, 2024. The increase in savings and demand deposits was largely attributable to a $3.13 billion increase in interest-bearing demand deposits, a $1.59 billion increase in non-interest-bearing demand deposits, a $1.04 billion increase in money market deposits and a $504.0 million increase in savings deposits. The increase in time deposits consisted of a $1.98 billion increase in retail time deposits and a $91.1 million increase in brokered time deposits.

Borrowed funds increased $1.34 billion during the year ended December 31, 2024, to $2.02 billion. The increase in borrowings was largely due to the addition of Lakeland. Borrowed funds represented 8.4% of total assets at December 31, 2024, an decrease from 13.9% at December 31, 2023.

Stockholders’ equity increased $1.60 billion during the year ended December 31, 2024, to $2.60 billion, primarily due to common stock issued for the purchase of Lakeland, net income earned for the period and a slight improvement in unrealized losses on available for sale debt securities, partially offset by cash dividends paid to stockholders. For the year ended December 31, 2024, common stock repurchases totaled 89,569 shares at an average cost of $14.90 per share, all of which were made in connection with withholding to cover income taxes on the vesting of stock-based compensation. At December 31, 2024, approximately 3.1 million shares remained eligible for repurchase under the current stock repurchase authorization. Book value per share and tangible book value per share⁽⁶⁾ at December 31, 2024 were $19.93 and $13.66, respectively, compared with $22.38 and $16.32, respectively, at December 31, 2023.

About the Company

Provident Financial Services, Inc. is the holding company for Provident Bank, a community-oriented bank offering “commitment you can count on” since 1839. Provident Bank provides a comprehensive array of financial products and services through its network of branches throughout New Jersey, Bucks, Lehigh and Northampton counties in Pennsylvania, as well as Orange, Queens and Nassau Counties in New York. The Bank also provides fiduciary and wealth management services through its wholly owned subsidiary, Beacon Trust Company and insurance services through its wholly owned subsidiary, Provident Protection Plus, Inc.

Post Earnings Conference Call

Representatives of the Company will hold a conference call for investors on Wednesday, January 29, 2025 at 10:00 a.m. Eastern Time to discuss the Company’s financial results for the quarter and year ended December 31, 2024. The call may be accessed by dialing 1-888-412-4131 (United States Toll Free) and 1-646-960-0134 (United States Local). Speakers will need to enter conference ID code (3610756) before being met by a live operator. Internet access to the call is also available (listen only) at provident.bank by going to Investor Relations and clicking on “Webcast.”

Forward Looking Statements

Certain statements contained herein are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “estimate,” “project,” “intend,” “anticipate,” “continue,” or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those set forth in Item 1A of the Company’s Annual Report on Form 10-K, as supplemented by its Quarterly Reports on Form 10-Q, and those related to the economic environment, particularly in the market areas in which the Company operates, inflation and unemployment, competitive products and pricing, real estate values, fiscal and monetary policies of the U.S. Government, the effects of the recent turmoil in the banking industry, changes in accounting policies and practices that may be adopted by the regulatory agencies and the accounting standards setters, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, potential goodwill impairment, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets, the availability of and costs associated with sources of liquidity, the ability to complete, or any delays in completing, the pending merger between the Company and Lakeland; any failure to realize the anticipated benefits of the transaction when expected or at all; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected conditions, factors or events; potential adverse reactions or changes to business, employee, customer and/or counterparty relationships, including those resulting from the completion of the merger and integration of the companies; and the impact of a potential shutdown of the federal government.

The Company cautions readers not to place undue reliance on any such forward-looking statements which speak only as of the date they are made. The Company advises readers that the factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not assume any duty, and does not undertake, to update any forward-looking statements to reflect events or circumstances after the date of this statement.

Footnotes

⁽¹⁾ Annualized adjusted pre-tax, pre-provision return on average assets, annualized return on average tangible equity, tangible book value per share, annualized adjusted non-interest expense as a percentage of average assets and the efficiency ratio are non-GAAP financial measures. Please refer to the Notes following the Consolidated Financial Highlights which contain the reconciliation of GAAP to non-GAAP financial measures and the associated calculations.

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Financial Highlights
(Dollars in Thousands, except share data) (Unaudited)

	At or for the Three months ended									At or for the Year ended
	December 31,			September 30,			December 31,			December 31,			December 31,
		2024			2024			2023			2024			2023
Statement of Income
Net interest income	$	181,737		$	183,701		$	95,788		$	600,614		$	399,454
Provision for credit losses		8,880			9,299			(863	)		87,564			28,168
Non-interest income		24,175			26,855			18,968			94,113			79,829
Non-interest expense		134,323			136,002			75,851			457,548			275,336
Income before income tax expense		62,709			65,255			39,768			149,615			175,779
Net income		48,524			46,405			27,312			115,525			128,398
Diluted earnings per share	$	0.37		$	0.36		$	0.36		$	1.05		$	1.71
Interest rate spread		2.63	%		2.65	%		2.33	%		2.63	%		2.63	%
Net interest margin		3.28	%		3.31	%		2.92	%		3.26	%		3.16	%

Profitability
Annualized return on average assets		0.81	%		0.76	%		0.77	%		0.57	%		0.92	%
Annualized adjusted return on average assets ⁽¹⁾		1.05	%		0.95	%		0.83	%		0.78	%		0.97	%
Annualized return on average equity		7.36	%		6.94	%		6.60	%		5.07	%		7.81	%
Annualized adjusted return on average equity ⁽¹⁾		9.53	%		8.62	%		7.10	%		6.95	%		8.22	%
Annualized return on average tangible equity ⁽³⁾		12.21	%		12.06	%		9.32	%		8.58	%		11.01	%
Annualized adjusted return on average tangible equity ⁽¹⁾		15.39	%		14.53	%		9.99	%		11.29	%		11.54	%
Annualized adjusted non-interest expense to average assets ⁽⁴⁾		1.90	%		1.98	%		1.98	%		1.97	%		1.90	%
Efficiency ratio ⁽⁴⁾		55.43	%		57.20	%		61.32	%		57.67	%		55.19	%

Asset Quality
Non-accrual loans				$	89,934					$	72,061		$	49,639
90+ and still accruing					—						—			—
Non-performing loans					88,061						72,061			49,639
Foreclosed assets					9,801						9,473			11,651
Non-performing assets					97,862						81,534			61,290
Non-performing loans to total loans					0.47	%					0.39	%		0.46	%
Non-performing assets to total assets					0.41	%					0.34	%		0.43	%
Allowance for loan losses				$	191,175					$	193,432		$	107,200
Allowance for loan losses to total non-performing loans					217.09	%					268.43	%		215.96	%
Allowance for loan losses to total loans					1.02	%					1.04	%		0.99	%
Net loan charge-offs	$	5,493			6,756		$	4,010		$	14,560		$	8,129
Annualized net loan charge offs to average total loans		0.12	%		0.14	%		0.16	%		0.09	%		0.08	%

Average Balance Sheet Data
Assets	$	23,908,514		$	24,248,038		$	14,114,626		$	20,382,148		$	13,915,467
Loans, net		18,487,443			18,531,939			10,660,201			15,600,431			10,367,620
Earning assets		21,760,458			21,809,226			12,823,541			18,403,149			12,637,224
Savings and demand deposits		15,581,608			15,394,715			9,210,315			13,103,803			9,358,290
Borrowings		1,711,806			2,125,149			1,873,822			1,983,674			1,636,572
Interest-bearing liabilities		17,093,382			17,304,569			10,020,726			14,596,325			9,671,794
Stockholders’ equity		2,624,019			2,660,470			1,642,854			2,279,525			1,644,529
Average yield on interest-earning assets		5.66	%		5.84	%		5.04	%		5.68	%		4.87	%
Average cost of interest-bearing liabilities		3.03	%		3.19	%		2.71	%		3.05	%		2.24	%

Notes and Reconciliation of GAAP and Non-GAAP Financial Measures
(Dollars in Thousands, except share data)

The Company has presented the following non-GAAP (U.S. Generally Accepted Accounting Principles) financial measures because it believes that these measures provide useful and comparative information to assess trends in the Company’s results of operations and financial condition. Presentation of these non-GAAP financial measures is consistent with how the Company evaluates its performance internally and these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Company’s industry. Investors should recognize that the Company’s presentation of these non-GAAP financial measures might not be comparable to similarly-titled measures of other companies. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures and the Company strongly encourages a review of its condensed consolidated financial statements in their entirety.

(1) Annualized Adjusted Return on Average Assets, Equity and Tangible Equity
	Three Months Ended									Year Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2024			2024			2023			2024			2023
Net Income	$	48,524		$	46,405		$	27,312		$	115,525		$	128,398
Merger-related transaction costs		20,184			15,567			2,477			56,867			7,826
Less: income tax expense		(5,819	)		(4,306	)		(465	)		(14,010	)		(1,480	)
Annualized adjusted net income	$	62,889		$	57,666		$	29,324		$	158,382		$	134,744
Less: Amortization of Intangibles (net of tax)	$	6,649		$	8,551		$	504		$	20,226		$	2,064
Annualized adjusted net income for annualized adjusted return on average tangible equity	$	69,538		$	66,216		$	29,828		$	178,607		$	136,808

Annualized Adjusted Return on Average Assets		1.05	%		0.95	%		0.83	%		0.78	%		0.97	%
Annualized Adjusted Return on Average Equity		9.53	%		8.62	%		7.10	%		6.95	%		8.22	%
Annualized Adjusted Return on Average Tangible Equity		15.39	%		14.53	%		9.99	%		11.29	%		11.54	%

(2) Annualized adjusted pre-tax, pre-provision (“PTPP”) returns on average assets, average equity and average tangible equity
	Three Months Ended									Year Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
		2024			2024			2023			2024			2023
Net income	$	48,524		$	46,405		$	27,312		$	115,525		$	128,398
Adjustments to net income:
Provision charge (benefit) for credit losses		8,880			9,299			(863	)		87,564			28,168
Net loss on Lakeland bond sale		—			—			—			2,839			—
Merger-related transaction costs		20,184			15,567			2,477			56,867			7,826
Contingent litigation reserves		—			—			3,000			—			3,000
Income tax expense		14,185			18,850			12,456			34,090			47,381
Adjusted PTPP income	$	91,773		$	90,121		$	44,382		$	296,885		$	214,773

Annualized Adjusted PTPP income	$	365,097		$	358,525		$	176,081		$	296,885		$	214,773
Average assets	$	23,908,514		$	24,248,038		$	14,114,626		$	20,382,148		$	13,915,467
Average equity	$	2,624,019		$	2,660,470		$	1,642,854		$	2,279,525		$	1,644,529
Average tangible equity	$	1,797,994		$	1,813,327		$	1,184,444		$	1,581,339		$	1,185,026

Annualized Adjusted PTPP return on average assets		1.53	%		1.48	%		1.25	%		1.46	%		1.54	%
Annualized PTPP return on average equity		13.91	%		13.48	%		10.72	%		13.02	%		13.06	%
Annualized PTPP return on average tangible equity		20.31	%		19.77	%		14.87	%		18.77	%		18.12	%

(3) Annualized Return on Average Tangible Equity
	Three Months Ended									Year Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
		2024			2024			2023			2024			2023
Total average stockholders’ equity	$	2,624,019		$	2,660,470		$	1,642,854		$	2,279,525		$	1,644,529
Less: total average intangible assets		826,025			847,143			458,410			698,186			459,503
Total average tangible stockholders’ equity	$	1,797,994		$	1,813,327		$	1,184,444		$	1,581,339		$	1,185,026

Net income	$	48,524		$	46,405		$	27,312		$	115,525		$	128,398
Less: Amortization of Intangibles, net of tax		6,649			8,551			504			20,226			2,064
Total net income (loss)	$	55,173		$	54,956		$	27,816		$	135,751		$	130,462

Annualized return on average tangible equity (net income/total average tangible stockholders’ equity)		12.21	%		12.06	%		9.32	%		8.58	%		11.01	%

(4) Annualized Adjusted Non-Interest Expense to Average Assets
	Three Months Ended									Year Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
		2024			2024			2023			2024			2023
Reported non-interest expense	$	134,323		$	136,002		$	75,851		$	457,548		$	275,336
Adjustments to non-interest expense:
Merger-related transaction costs		20,184			15,567			2,477			56,867			7,826
Contingent litigation reserves		—			—			3,000			—			3,000
Adjusted non-interest expense	$	114,139		$	120,435		$	70,374		$	400,681		$	264,510

Annualized adjusted non-interest expense	$	454,075		$	479,122		$	279,201		$	400,681		$	264,510
Average assets	$	23,908,514		$	24,248,038		$	14,114,626		$	20,382,148		$	13,915,467
Annualized adjusted non-interest expense/average assets		1.90	%		1.98	%		1.98	%		1.97	%		1.90	%

(5) Efficiency Ratio Calculation
	Three Months Ended									Year Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
		2024			2024			2023			2024			2023
Net interest income	$	181,737		$	183,701		$	95,788		$	600,614		$	399,454
Non-interest income		24,175			26,855			18,968			94,113			79,829
Adjustments to non-interest income:
Net loss (gain) on securities transactions		14			(2	)		7			2,986			(30	)
Adjusted non-interest income		24,189			26,853			18,975			97,099			79,799
Total income	$	205,912		$	210,554		$	114,756		$	694,727		$	479,283

Adjusted non-interest expense	$	114,139		$	120,435		$	70,374		$	400,681		$	264,510

Efficiency ratio (adjusted non-interest expense/income)		55.43	%		57.20	%		61.32	%		57.67	%		55.19	%

(6) Book and Tangible Book Value per Share
										December 31,			December 31,
											2024			2023
Total stockholders’ equity										$	2,601,207		$	1,690,596
Less: total intangible assets											819,230			457,942
Total tangible stockholders’ equity										$	1,781,977		$	1,232,654

Shares outstanding											130,489,493			75,537,186

Book value per share (total stockholders’ equity/shares outstanding)										$	19.93		$	22.38
Tangible book value per share (total tangible stockholders’ equity/shares outstanding)										$	13.66		$	16.32

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
December 31, 2024 (Unaudited) and December 31, 2023
(Dollars in Thousands)

Assets	December 31, 2024			December 31, 2023
Cash and due from banks	$	166,914		$	180,241
Short-term investments		25			14
Total cash and cash equivalents		166,939			180,255
Available for sale debt securities, at fair value		2,768,915			1,690,112
Held to maturity debt securities, (net of $14,000 allowance as of December 31, 2024 (unaudited) and $31,000 allowance as of December 31, 2023)		327,623			363,080
Equity securities, at fair value		19,762			1,270
Federal Home Loan Bank stock		112,115			79,217
Loans held for sale		162,453			1,785
Loans held for investment		18,659,370			10,871,916
Less allowance for credit losses		193,432			107,200
Net loans		18,628,391			10,766,501
Foreclosed assets, net		9,473			11,651
Banking premises and equipment, net		119,622			70,998
Accrued interest receivable		91,160			58,966
Intangible assets		819,230			457,942
Bank-owned life insurance		405,893			243,050
Other assets		582,702			287,768
Total assets	$	24,051,825		$	14,210,810

Liabilities and Stockholders’ Equity
Deposits:
Demand deposits	$	13,775,991		$	8,020,889
Savings deposits		1,679,667			1,175,683
Certificates of deposit of $250,000 or more		789,342			218,549
Other time deposits		2,378,813			877,393
Total deposits		18,623,813			10,292,514
Mortgage escrow deposits		42,247			36,838
Borrowed funds		2,020,435			1,970,033
Subordinated debentures		401,608			10,695
Other liabilities		362,515			210,134
Total liabilities		21,450,618			12,520,214

Stockholders’ equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued		—			—
Common stock, $0.01 par value, 200,000,000 shares authorized, 137,565,966 shares issued and 130,489,493 shares outstanding as of December 31, 2024 and 75,537,186 outstanding as of December 31, 2023.		1,376			832
Additional paid-in capital		1,834,495			989,058
Retained earnings		989,111			974,542
Accumulated other comprehensive loss		(135,355	)		(141,115	)
Treasury stock		(88,420	)		(127,825	)
Unallocated common stock held by the Employee Stock Ownership Plan		—			(4,896	)
Common Stock acquired by the Directors’ Deferred Fee Plan		—			(2,694	)
Deferred Compensation – Directors’ Deferred Fee Plan		—			2,694
Total stockholders’ equity		2,601,207			1,690,596
Total liabilities and stockholders’ equity	$	24,051,825		$	14,210,810

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three months ended December 31, 2024, September 30, 2024 (Unaudited) and December 31, 2023, and year ended December 31, 2024 (Unaudited) and 2023
(Dollars in Thousands, except per share data)

	Three Months Ended								Year Ended
	December 31,			September 30,		December 31,			December 31,			December 31,
		2024			2024		2023			2024			2023
Interest and dividend income:
Real estate secured loans	$	194,236		$	197,857	$	109,112		$	655,868		$	408,942
Commercial loans		75,978			81,183		34,939			251,793			128,854
Consumer loans		10,815			12,947		5,020			36,635			18,439
Available for sale debt securities, equity securities and Federal Home Loan Bank stock		27,197			25,974		12,042			85,895			46,790
Held to maturity debt securities		2,125			2,136		2,303			8,885			9,362
Deposits, federal funds sold and other short-term investments		1,596			2,425		755			7,062			3,433
Total interest income		311,947			322,522		164,171			1,046,138			615,820

Interest expense:
Deposits		105,922			110,009		50,579			349,523			159,459
Borrowed funds		15,652			19,923		17,527			73,523			55,856
Subordinated debt		8,636			8,889		277			22,478			1,051
Total interest expense		130,210			138,821		68,383			445,524			216,366
Net interest income		181,737			183,701		95,788			600,614			399,454
Provision charge (benefit) for credit losses		8,880			9,299		(863	)		87,564			28,168
Net interest income after provision for credit losses		172,857			174,402		96,651			513,050			371,286

Non-interest income:
Fees		9,687			9,816		6,102			34,114			24,396
Wealth management income		7,655			7,620		6,843			30,533			27,669
Insurance agency income		3,289			3,631		2,759			16,201			13,934
Bank-owned life insurance		2,261			4,308		1,644			11,709			6,482
Net (loss) gain on securities transactions		(14	)		2		(7	)		(2,986	)		30
Other income		1,297			1,478		1,627			4,542			7,318
Total non-interest income		24,175			26,855		18,968			94,113			79,829

Non-interest expense:
Compensation and employee benefits		59,937			63,468		38,773			218,341			148,497
Net occupancy expense		12,562			12,790		7,797			45,014			32,271
Data processing expense		9,881			10,481		6,457			35,579			22,993
FDIC Insurance		3,411			4,180		2,890			12,964			8,578
Amortization of intangibles		9,511			12,231		721			28,931			2,952
Advertising and promotion expense		1,485			1,524		1,100			5,146			4,822
Merger-related expenses		20,184			15,567		2,477			56,867			7,826
Other operating expenses		17,352			15,761		15,636			54,706			47,397
Total non-interest expense		134,323			136,002		75,851			457,548			275,336
Income before income tax expense		62,709			65,255		39,768			149,615			175,779
Income tax expense		14,185			18,850		12,456			34,090			47,381
Net income	$	48,524		$	46,405	$	27,312		$	115,525		$	128,398

Basic earnings per share	$	0.37		$	0.36	$	0.36		$	1.05		$	1.72
Average basic shares outstanding		130,067,244			129,941,845		74,995,705			109,668,911			74,844,489

Diluted earnings per share	$	0.37		$	0.36	$	0.36		$	1.05		$	1.71
Average diluted shares outstanding		130,163,872			130,004,870		75,041,545			109,712,732			74,873,256

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Quarterly Average Balances
(Dollars in Thousands) (Unaudited)

	December 31, 2024						September 30, 2024						December 31, 2023
	Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost
Interest-Earning Assets:
Deposits	$	117,998	$	1,596	5.38	%	$	179,313	$	2,425	5.38	%	$	54,998	$	745	5.37	%
Federal funds sold and other short-term investments		—		—	—	%		—		—	—	%		838		10	4.39	%
Available for sale debt securities		2,720,065		25,063	3.69	%		2,644,262		24,884	3.72	%		1,647,906		9,858	2.39	%
Held to maturity debt securities, net ⁽¹⁾		328,147		2,125	2.59	%		342,217		2,136	2.50	%		364,433		2,303	2.53	%
Equity securities, at fair value		19,920		—	—	%		19,654		—	—	%		1,016		—	—	%
Federal Home Loan Bank stock		86,885		2,134	9.82	%		91,841		1,090	4.75	%		94,149		2,184	9.28	%
Net loans: ⁽²⁾
Total mortgage loans		13,287,942		194,236	5.75	%		13,363,265		197,857	5.83	%		8,028,300		109,112	5.34	%
Total commercial loans		4,587,048		75,978	6.54	%		4,546,088		81,183	7.05	%		2,329,430		34,939	5.90	%
Total consumer loans		612,453		10,815	7.02	%		622,586		12,947	8.27	%		302,471		5,020	6.58	%
Total net loans		18,487,443		281,029	5.99	%		18,531,939		291,987	6.21	%		10,660,201		149,071	5.50	%
Total interest-earning assets	$	21,760,458	$	311,947	5.66	%	$	21,809,226	$	322,522	5.84	%	$	12,823,541	$	164,171	5.04	%

Non-Interest Earning Assets:
Cash and due from banks		159,151						341,505						111,610
Other assets		1,988,905						2,097,307						1,179,475
Total assets	$	23,908,514					$	24,248,038					$	14,114,626

Interest-Bearing Liabilities:
Demand deposits	$	10,115,827	$	71,265	2.80	%	$	9,942,053	$	74,864	3.00	%	$	5,856,916	$	39,648	2.69	%
Savings deposits		1,677,725		968	0.23	%		1,711,502		1006	0.23	%		1,183,857		602	0.20	%
Time deposits		3,187,172		33,689	4.21	%		3,112,598		34,139	4.36	%		1,095,468		10,329	3.74	%
Total Deposits		14,980,724		105,922	2.81	%		14,766,153		110,009	2.96	%		8,136,241		50,579	2.47	%
Borrowed funds		1,711,806		15,652	3.64	%		2,125,149		19,923	3.73	%		1,873,822		17,527	3.71	%
Subordinated debentures		400,852		8,636	8.57	%		413,267		8,889	8.56	%		10,663		277	10.27	%
Total interest-bearing liabilities		17,093,382		130,210	3.03	%		17,304,569		138,821	3.19	%		10,020,726		68,383	2.71	%

Non-Interest Bearing Liabilities:
Non-interest bearing deposits		3,788,056						3,741,160						2,169,542
Other non-interest bearing liabilities		403,057						541,839						281,504
Total non-interest bearing liabilities		4,191,113						4,282,999						2,451,046
Total liabilities		21,284,495						21,587,568						12,471,772
Stockholders’ equity		2,624,019						2,660,470						1,642,854
Total liabilities and stockholders’ equity	$	23,908,514					$	24,248,038					$	14,114,626

Net interest income			$	181,737					$	183,701					$	95,788
Net interest rate spread					2.63	%					2.65	%					2.33	%
Net interest-earning assets	$	4,667,076					$	4,504,657					$	2,802,815
Net interest margin ⁽³⁾					3.28	%					3.31	%					2.92	%
Ratio of interest-earning assets to total interest-bearing liabilities	1.27x						1.26x						1.28x


(1	)	Average outstanding balance amounts shown are amortized cost, net of allowance for credit losses.
(2	)	Average outstanding balances are net of the allowance for loan losses, deferred loan fees and expenses, loan premiums and discounts and include non-accrual loans.
(3	)	Annualized net interest income divided by average interest-earning assets.

The following table summarizes the quarterly net interest margin for the previous five quarters.

	12/31/24		9/30/24		6/30/24		3/31/24		12/31/23
	4th Qtr.		3rd Qtr.		2nd Qtr.		1st Qtr.		4th Qtr.
Interest-Earning Assets:
Securities	3.78	%	3.69	%	3.40	%	2.87	%	2.79	%
Net loans	5.99	%	6.21	%	6.05	%	5.51	%	5.50	%
Total interest-earning assets	5.66	%	5.84	%	5.67	%	5.06	%	5.04	%

Interest-Bearing Liabilities:
Total deposits	2.81	%	2.96	%	2.84	%	2.60	%	2.47	%
Total borrowings	3.64	%	3.73	%	3.83	%	3.60	%	3.71	%
Total interest-bearing liabilities	3.03	%	3.19	%	3.09	%	2.80	%	2.71	%

Interest rate spread	2.63	%	2.65	%	2.58	%	2.26	%	2.33	%
Net interest margin	3.28	%	3.31	%	3.21	%	2.87	%	2.92	%

Ratio of interest-earning assets to interest-bearing liabilities	1.27x		1.26x		1.25x		1.28x		1.28x

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Average Year to Date Balances
(Dollars in Thousands) (Unaudited)

	December 31, 2024						December 31, 2023
	Average				Average		Average				Average
	Balance		Interest		Yield/Cost		Balance		Interest		Yield/Cost
Interest-Earning Assets:
Deposits	$	36,932	$	7,062	5.23	%	$	65,991	$	3,421	5.18	%
Federal funds sold and other short-term investments		—		—	—	%		255		12	4.55	%
Available for sale debt securities		2,323,158		77,617	3.32	%		1,745,105		40,678	2.33	%
Held to maturity debt securities, net ⁽¹⁾		344,903		8,885	2.58	%		375,436		9,362	2.49	%
Equity securities, at fair value		12,367		—	—	%		1,020		—	—	%
Federal Home Loan Bank stock		85,358		8,278	9.70	%		81,797		6,112	7.47	%
Net loans: ⁽²⁾
Total mortgage loans		11,333,540		655,868	5.79	%		7,813,764		408,942	5.23	%
Total commercial loans		3,768,388		251,793	6.68	%		2,251,175		128,854	5.72	%
Total consumer loans		498,503		36,635	7.35	%		302,681		18,439	6.09	%
Total net loans		15,600,431		944,296	6.05	%		10,367,620		556,235	5.37	%
Total interest-earning assets	$	18,403,149	$	1,046,138	5.68	%	$	12,637,224	$	615,820	4.87	%

Non-Interest Earning Assets:
Cash and due from banks		233,829						119,232
Other assets		1,745,170						1,159,011
Total assets	$	20,382,148					$	13,915,467

Interest-Bearing Liabilities:
Demand deposits	$	8,480,380	$	245,874	2.90	%	$	5,747,671	$	125,471	2.18	%
Savings deposits		1,502,852		3,443	0.23	%		1,282,062		2,184	0.17	%
Time deposits		2,367,144		100,206	4.23	%		994,901		31,804	3.20	%
Total deposits		12,350,376		349,523	2.83	%		8,024,634		159,459	1.99	%
Borrowed funds		1,983,674		73,523	3.71	%		1,636,572		55,856	3.41	%
Subordinated debentures		262,275		22,478	8.57	%		10,588		1,051	9.92	%
Total interest-bearing liabilities	$	14,596,325	$	445,524	3.05	%	$	9,671,794	$	216,366	2.24	%

Non-Interest Bearing Liabilities:
Non-interest bearing deposits		3,120,571						2,328,557
Other non-interest bearing liabilities		385,727						270,587
Total non-interest bearing liabilities		3,506,298						2,599,144
Total liabilities		18,102,623						12,270,938
Stockholders’ equity		2,279,525						1,644,529
Total liabilities and stockholders’ equity	$	20,382,148					$	13,915,467

Net interest income			$	600,614					$	399,454
Net interest rate spread					2.63	%					2.63	%
Net interest-earning assets	$	3,806,824					$	2,965,430
Net interest margin ⁽³⁾					3.26	%					3.16	%
Ratio of interest-earning assets to total interest-bearing liabilities	1.26x						1.31x


(1) Average outstanding balance amounts shown are amortized cost, net of allowance for credit losses.
(2) Average outstanding balance are net of the allowance for loan losses, deferred loan fees and expenses, loan premium and discounts and include non-accrual loans.
(3) Annualized net interest income divided by average interest-earning assets.

The following table summarizes the year-to-date net interest margin for the previous three years.

	Year Ended
	December 31, 2024		December 31, 2023		December 31, 2022
Interest-Earning Assets:
Securities	3.43	%	2.62	%	1.86	%
Net loans	6.05	%	5.37	%	4.26	%
Total interest-earning assets	5.68	%	4.87	%	3.76	%

Interest-Bearing Liabilities:
Total deposits	2.83	%	1.99	%	0.47	%
Total borrowings	3.71	%	3.41	%	1.23	%
Total interest-bearing liabilities	3.05	%	2.24	%	0.54	%

Interest rate spread	2.63	%	2.63	%	3.22	%
Net interest margin	3.26	%	3.16	%	3.37	%

Ratio of interest-earning assets to interest-bearing liabilities	1.26x		1.31x		1.38x

The MIL Network –

January 29, 2025

MIL-OSI USA: Woman Sentenced for Fraud Scheme Involving Claims for Unnecessary Respiratory Tests Submitted with COVID-19 Tests

Source: US State of California

A California woman was sentenced today to nine years in prison for her role in fraudulently submitting claims to governmental and private insurance programs during the COVID‑19 pandemic for expensive respiratory pathogen panel (RPP) tests that were medically unnecessary and never ordered by health care providers.

According to court documents, Lourdes Navarro, 66, of Glendale, and Imran Shams owned and controlled Matias Clinical Laboratory, doing business as Health Care Providers Laboratory (HCPL). Navarro and Shams conspired to obtain nasal swab specimens that enabled HCPL to test for COVID-19, as well as to obtain testing orders from physicians and other medical professionals. The specimens were collected from, among others, residents and staff at nursing homes, assisted living facilities, rehabilitation facilities, and similar types of facilities, and from students and staff at primary and secondary schools, for the purported purpose of conducting screening tests to identify and isolate individuals infected with COVID-19. However, Navarro and Shams caused HCPL to perform RPP tests on most of the specimens, even though only COVID-19 testing had been ordered and there was no medical justification for conducting RPP tests on asymptomatic individuals who needed only COVID-19 screening tests. Through HCPL, Navarro and Shams billed approximately $369 million for the RPP tests to Medicare, the Health Resources and Services Administration COVID-19 Uninsured Program, and a private health insurance company, and were reimbursed approximately $46.7 million for fraudulent claims.

Navarro was also ordered to forfeit $11,662,939 in funds that the government had previously seized from three bank accounts. The total amount seized and forfeited from Navarro and Shams is $14,518,485. Navarro also was ordered to pay $46,735,400 in restitution.

Navarro pleaded guilty on Oct. 5, 2023, to conspiracy to commit health care fraud and wire fraud. Shams pleaded guilty on Jan. 24, 2023, in the Central District of California to conspiracy to commit health care fraud and concealment of his exclusion from Medicare and was sentenced to 10 years in prison on Jan. 30, 2024. In addition, on May 29, 2024, Shams was sentenced to five years in prison in connection with his 2017 plea in the Eastern District of New York to conspiracy to commit money laundering, conspiracy to pay and receive kickbacks, and defrauding the United States by obstructing the lawful functions of the IRS, of which three years were ordered to run consecutive to the Central District of California sentence.

Supervisory Official Antoinette T. Bacon of the Justice Department’s Criminal Division, Assistant Director in Charge Akil Davis of the FBI Los Angeles Field Office, and Acting Special Agent in Charge Rochelle Wong of the Department of Health and Human Services Office of Inspector General (HHS-OIG) Los Angeles Regional Office made the announcement.

The FBI and HHS-OIG investigated the case.

Trial Attorneys Gary A. Winters and Raymond E. Beckering III of the Criminal Division’s Fraud Section prosecuted the case. Assistant U.S. Attorney Maxwell Coll for the Central District of California handled the financial penalties.

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

MIL OSI USA News –

January 29, 2025

MIL-OSI Security: Maryland Life Insurance Broker Convicted in $20-Million Insurance Fraud Scheme

Source: Office of United States Attorneys

Baltimore, Maryland – After a seven-day trial, a federal jury found James William Wilson, Jr., 77, of Owings Mills, Maryland, guilty of 13 counts of fraud, three counts of money laundering, two counts of filing false tax returns, and one count of aggravated identity theft.

Erek L. Barron, U.S. Attorney for the District of Maryland, announced the verdict with Acting Deputy Assistant Attorney General Stuart M. Goldberg, Department of Justice Tax Division, and Special Agent in Charge Kareem Carter, Internal Revenue Service-Criminal Investigation Division, Washington Field Office.

According to court documents and evidence presented at trial, Wilson defrauded life-insurance companies by securing more than 40 life-insurance policies. Wilson’s scheme included mispresenting policy applicants’ health, wealth, and existing life-insurance coverage. The total death benefits from these policies exceeded $20 million.

Additionally, Wilson defrauded individual investors to receive funds that he used to pay premiums on the fraudulently obtained life-insurance policies. Wilson concealed the fraud by transferring the proceeds to multiple bank accounts, including accounts in the name of trusts. He then filed false individual income-tax returns for 2018 and 2019, which concealed the fraudulent proceeds from each year, approximately $5.7 million and $2 million, respectively.

Wilson is scheduled to be sentenced at 9:30 a.m., on May 1, 2025, and faces a maximum penalty of 20 years in prison for each count of conspiracy, wire fraud, mail fraud, and money laundering; and three years in prison for each count of filing a false tax return. He also faces two years in prison for one count of aggravated identity theft. A federal district court judge determines sentencing after considering the U.S. Sentencing Guidelines and other statutory factors.

In addition, Wilson’s wife, Maureen, 76, has also been charged with fraud, conspiracy, money laundering, and filing false tax returns for 2018 and 2019. Her trial is scheduled for March 3, 2025.

IRS-Criminal Investigation investigated the case, with assistance from the Maryland Insurance Administration and the Maryland Office of The Attorney General.

U.S. Attorney Barron commended the IRS-Criminal Investigation Division for their work on the case. Mr. Barron also thanked Assistant U.S. Attorneys Matthew P. Phelps and Philip Motsay and Trial Attorneys Shawn Noud and Richard Kelley, who prosecuted the federal case.

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

# # #

MIL Security OSI –

January 29, 2025

MIL-OSI Security: Former Colorado Springs Man Sentenced For Defrauding Taxpayer Funded COVID-19 Relief Program

Source: Office of United States Attorneys

DENVER – The United States Attorney’s Office for the District of Colorado announces that Charles Lacona, Jr., 67, formerly of Colorado Springs, was sentenced to 24 months in federal prison and ordered to pay $549,274.14 in restitution after being found guilty by a federal jury on two counts of wire fraud and one count of money laundering related to fraudulent COVID-19 related funds he received through the Paycheck Protection Program (PPP).

According to the facts established at trial, between April 2020 and April 2021, Lacona devised and participated in a scheme to defraud a lender of $513,732.50 in PPP loans. Lacona inflated payroll costs and gross receipts, made false statements and certifications, and submitted fabricated tax documents and payroll reports. During that same period, Lacona unsuccessfully applied for additional emergency government assistance through the Economic Injury Disaster Loan (EIDL) program. Lacona used some of the fraudulently obtained funds to purchase a Cadillac CT6 for $67,704.13.

“Theft of taxpayer dollars will not be tolerated,” said Acting United States Attorney J. Bishop Grewell. “This sentence sends a message that people who defrauded the United States Government will be held accountable for their actions.”

“IRS Criminal Investigation is committed to holding accountable those who exploited the COVID-19 pandemic relief programs,” said Amanda Prestegard, Special Agent In Charge, Denver Field Office. “Investigating those who defrauded programs meant for hard working Americans will remain a top priority for our agency.”

United States District Court Judge Daniel D. Domenico presided over the trial. IRS Criminal Investigation handled the investigation. Assistant United States Attorneys Craig Fansler and Nicole Cassidy handled the prosecution.

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

On July 11, 2023, the Attorney General selected the District of Colorado’s U.S. Attorney’s Office to head one of five national COVID-19 Fraud Strike Force Teams. The Department of Justice established the Strike Force to enhance existing efforts to combat and prevent COVID-19 related financial fraud. The Strike Force combines law enforcement and prosecutorial resources and focuses on large-scale, multistate pandemic relief fraud perpetrated by criminal organizations and transnational actors, as well as those who committed multiple instances of pandemic relief fraud. The Strike Force uses prosecutor-led and data analyst-driven teams to identify and bring to justice those who stole pandemic relief funds. Additional information regarding the Strike Force may be found at https://www.justice.gov/opa/pr/justice-department-announces-results-nationwide-covid-19-fraud-enforcement-action.

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

MIL Security OSI –

January 29, 2025

MIL-OSI: CNB Financial Corporation Reports Fourth Quarter and Full-Year 2024 Results

Source: GlobeNewswire (MIL-OSI)

CLEARFIELD, Pa., Jan. 28, 2025 (GLOBE NEWSWIRE) — CNB Financial Corporation (“Corporation”) (NASDAQ: CCNE), the parent company of CNB Bank, today announced its earnings for the three and twelve months ended December 31, 2024.

Executive Summary

Net income available to common shareholders (“earnings”) was $14.0 million, or $0.66 per diluted share, for the three months ended December 31, 2024, compared to earnings of $12.9 million, or $0.61 per diluted share, for the three months ended September 30, 2024. The quarterly increase was a result of an increase in net interest income combined with a reduction in non-interest expense, partially offset by a decrease in non-interest income, as discussed in more detail below. The increase in fourth quarter 2024 earnings and diluted earnings per share when compared to earnings of $12.9 million, or $0.62 per diluted share, in the quarter ended December 31, 2023 was primarily due to increases in both net interest income and non-interest income, coupled with a decrease in non-interest expense, partially offset by an increase in the provision for credit losses.
Earnings were $50.3 million, or $2.39 per diluted share, for the twelve months ended December 31, 2024, compared to earnings of $53.7 million, or $2.55 per diluted share, for the twelve months ended December 31, 2023. The decrease in earnings and diluted earnings per share comparing the twelve months ended December 31, 2024 to the twelve months ended December 31, 2023 was primarily due to the rise in deposit costs year over year, as discussed in more detail below.
At December 31, 2024, loans totaled $4.5 billion excluding the balances of syndicated loans. This adjusted total of $4.5 billion in loans represented a quarterly increase of $6.6 million, or 0.15% (0.58% annualized), compared to the same adjusted total loans measured as of September 30, 2024, and a year-over-year increase of $169.4 million, or 3.88%, compared to the same adjusted total loans measured as of December 31, 2023. The increase in loans for the quarter ended December 31, 2024 compared to the quarter ended September 30, 2024 was primarily driven by commercial and residential real estate growth across our regions, including growth in CNB’s Private Banking division. This growth was partially offset by a larger volume of loan payoffs during the quarter. The year-over-year growth in loans as of December 31, 2024 compared to loans as of December 31, 2023 resulted primarily from growth in commercial and residential real estate loans in the Corporation’s more recent expansion markets of Cleveland, OH and Roanoke, VA. Additional growth occurred in commercial and residential real estate loans in the Columbus, OH market, commercial industrial loans in the Erie, PA market, and residential real estate loans in CNB Bank’s Private Banking division.
- At December 31, 2024, the Corporation’s balance sheet reflected an increase in syndicated lending balances of $10.4 million compared to September 30, 2024. The increase in syndicated lending balances was the result of the Corporation identifying loans with the combination of meeting the Corporation’s traditionally disciplined high credit quality standards, and with favorable yields versus investment alternatives. Year over year, the Corporation’s balance sheet reported a decrease in syndicated lending balances of $28.8 million compared to December 31, 2023, resulting from scheduled paydowns or early payoffs of certain syndicated loans. The syndicated loan portfolio totaled $79.9 million, or 1.73% of total loans, at December 31, 2024, compared to $69.5 million, or 1.51% of total loans, at September 30, 2024 and $108.7 million, or 2.43% of total loans, at December 31, 2023. The Corporation closely manages the level and composition of its syndicated loan portfolio to ensure it continues to provide a high credit quality, profitable use of excess liquidity to complement the Corporation’s loan growth from its in-market customer relationships.
At December 31, 2024, total deposits were $5.4 billion, reflecting a quarterly increase of $154.4 million, or 2.96% (11.78% annualized), compared to September 30, 2024, and a year-over-year increase of $372.6 million, or 7.45%, compared to total deposits measured as of December 31, 2023. The increase in deposit balances compared to September 30, 2024 was primarily attributable to an increase in retail and business savings and retail time deposits. Additional deposit and liquidity profile details were as follows:
- At December 31, 2024, the total estimated uninsured deposits for CNB Bank were approximately $1.5 billion, or approximately 27.71% of total CNB Bank deposits. However, when excluding $101.9 million of affiliate company deposits and $429.0 million of pledged-investment collateralized deposits, the adjusted amount and percentage of total estimated uninsured deposits was approximately $986.0 million, or approximately 18.01% of total CNB Bank deposits as of December 31, 2024.
  - The level of adjusted uninsured deposits at December 31, 2024 was relatively unchanged compared to the level at September 30, 2024, when the total estimated uninsured deposits for CNB Bank were approximately $1.5 billion, or approximately 28.50% of total CNB Bank deposits. Excluding $103.1 million of affiliate company deposits and $462.7 million of pledged-investment collateralized deposits, the adjusted amount and percentage of total estimated uninsured deposits was approximately $950.6 million, or approximately 17.87% of total CNB Bank deposits as of September 30, 2024.
- At December 31, 2024, the average deposit balance per account for CNB Bank was approximately $34 thousand, which has remained consistently at this level for an extended period. CNB Bank has experienced increases in the volume of business deposits, as well as retail customer household deposits, including those that continue to be added after the 2023 launches of (i) CNB Bank’s “At Ease” account, a service for U.S. service member and veteran families, and (ii) CNB Bank’s women-focused banking division, Impressia Bank.
- At December 31, 2024, the Corporation had $375.0 million of cash equivalents held in CNB Bank’s interest-bearing deposit account at the Federal Reserve. These excess funds, when combined with collective contingent liquidity resources of $4.6 billion including (i) available borrowing capacity from the Federal Home Bank of Pittsburgh (“FHLB”) and the Federal Reserve, and (ii) available unused commitments from brokered deposit sources and other third-party funding channels, including previously established lines of credit from correspondent banks, resulted in the total on-hand and contingent liquidity sources for the Corporation as of December 31, 2024 to be approximately 5.0 times the estimated amount of adjusted uninsured deposit balances discussed above.
At December 31, 2024, September 30, 2024 and December 31, 2023, the Corporation had no outstanding short-term borrowings from the FHLB or the Federal Reserve’s Discount Window.
At December 31, 2024, the Corporation’s pre-tax net unrealized losses on available-for-sale and held-to-maturity securities totaled $74.8 million, or 12.25% of total shareholders’ equity, compared to $62.5 million, or 10.30% of total shareholders’ equity, at September 30, 2024 and $82.2 million, or 14.40% of total shareholders’ equity, at December 31, 2023. The change in unrealized losses during the fourth quarter 2024 was primarily due to changes in the yield curve compared to the third quarter of 2024, coupled with the Corporation’s scheduled bond maturities, which were all realized at par. Importantly, all regulatory capital ratios for the Corporation would still exceed regulatory “well-capitalized” levels as of December 31, 2024, September 30, 2024, and December 31, 2023 if the net unrealized losses at the respective dates were fully recognized. Additionally, the Corporation maintained approximately $100.7 million of liquid funds at its holding company, which more than covers the $74.8 million in unrealized losses on investments held primarily in its wholly-owned banking subsidiary, as an immediately available source of contingent capital to be down-streamed to CNB Bank, if necessary.
Total nonperforming assets were approximately $59.5 million, or 0.96% of total assets, as of December 31, 2024, compared to $42.0 million, or 0.70% of total assets, as of September 30, 2024, and $31.8 million, or 0.55% of total assets, as of December 31, 2023. The increase in nonperforming assets for the three months ended December 31, 2024 compared to the three months ended September 30, 2024 was primarily due to one commercial multifamily relationship totaling $20.4 million with a specific reserve balance of $885 thousand. Management does not believe there is a risk of significant additional loss exposure beyond the specific reserves related to this loan relationship and is actively working with the borrower and their real estate broker to facilitate the sale of the property. The increase in non-performing assets at December 31, 2024 compared to December 31, 2023 was due to the loan relationship discussed above, as well as certain commercial and industrial and owner-occupied commercial real estate relationships as previously disclosed in the second quarter of 2024 and a commercial relationship (consisting of various loan types) in the third quarter of 2024. For the three months ended December 31, 2024, net loan charge-offs were $2.1 million, or 0.19% (annualized) of average total loans and loans held for sale, compared to $1.2 million, or 0.11% (annualized) of average total loans and loans held for sale, during the three months ended September 30, 2024, and $1.2 million, or 0.11% (annualized) of average total loans and loans held for sale, during the three months ended December 31, 2023. The increase in net loan charge-offs during the quarter ended December 31, 2024 was primarily related to (i) an owner-occupied commercial real estate relationship with a charge-off of $750 thousand (remaining balance of approximately $3.8 million with specific reserves of $1.4 million), and (ii) a nonowner-occupied commercial real estate relationship for $625 thousand (no remaining balance).
Pre-provision net revenue (“PPNR”), a non-GAAP measure, was $21.6 million for the three months ended December 31, 2024, compared to $19.7 million and $18.4 million for the three months ended September 30, 2024 and December 31, 2023, respectively.¹ The fourth quarter 2024 PPNR, when compared to the third quarter of 2024, reflected increases in net interest income and reductions in non-interest expense, partially offset by a reduction in quarterly non-interest income. The increase in PPNR for the three months ended December 31, 2024, compared to the three months ended December 31, 2023 was primarily attributable to the increases in net interest income and non-interest income. PPNR was $76.6 million for the twelve months ended December 31, 2024 compared to $77.8 million for the twelve months ended December 31, 2023.¹ The decrease in PPNR for the twelve months ended December 31, 2024 compared to the twelve months ended December 31, 2023 was primarily attributable to the significant year-over-year increase in deposit costs, coupled with increases in certain personnel costs (primarily from new offices and personnel added in the recently added expansion markets of Cleveland, OH and Roanoke, VA). Also, the Corporation incurred additional technology expenses for the recently completed full implementation of certain franchise-wide business development and customer relationship management applications.

¹ This release contains references to certain financial measures that are not defined under U.S. Generally Accepted Accounting Principles (“GAAP”). Management believes that these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented. A reconciliation of these non-GAAP financial measures is provided in the “Reconciliation of Non-GAAP Financial Measures” section.

Commenting on the Corporation’s positive quarterly results, Michael Peduzzi, President and CEO of both the Corporation and CNB Bank, stated, “CNB’s performance for the fourth quarter of 2024 continued the favorable trend of increased earnings for each of the most recent three quarters. This favorable earnings trend is the result of a continued implementation of the fundamental strategic initiatives that we continue to focus on – deepening existing customer relationships while adding new clients in both interest-earning and fee-based activities, remaining committed to our traditionally disciplined loan and investment underwriting standards, employing risk-based and market-relevant loan and deposit pricing, and continuing solid risk measurement and management practices. While we remain confident in the continued growth and increasing profitability of our current multi-state core franchise, we are very excited by the prospect of expanding our business development model across all of our financial services, and realizing even greater back-office efficiencies of operating scale, with our recently announced plan to add over $2 billion in assets with our intended acquisition of ESSA Bancorp, Inc. (“ESSA Bancorp”) and its banking subsidiary, ESSA Bank & Trust, based primarily in northeastern Pennsylvania (collectively, “ESSA”).

With full consideration of the impact of the prospective merger and the additional skilled employees and resources from both internal leadership development efforts and the ESSA employee base, we remain intently focused on achieving qualitative growth across our commercial, retail, and wealth management activities, while controlling the growth in staffing levels and overhead costs. Our collective Board and employee team is committed to our core strategic principles, including a focus on delivering increasing profitable and desirable financial services, while striving to most effectively realize the accretive value of our prospective acquisition, for the mutually beneficial and sustainable success of our valued investors and growing client base across our expanding franchise.”

Other Balance Sheet Highlights

Book value per common share was $26.34 at December 31, 2024, reflecting an increase from $26.13 at September 30, 2024 and $24.57 at December 31, 2023. Tangible book value per common share, a non-GAAP measure, was $24.24 as of December 31, 2024, reflecting an increase of $0.21, or 3.48% (annualized) from $24.03 as of September 30, 2024 and a year-over-year increase of $1.78, or 7.93%, from $22.46 as of December 31, 2023.¹ The increases in book value per common share and tangible book value per common share from September 30, 2024 to December 31, 2024 were primarily due to a $10.2 million increase in retained earnings, partially offset by a $6.3 million increased in accumulated other comprehensive loss primarily from the after-tax impact of temporary unrealized valuation changes in the Corporation’s available-for-sale investment portfolio for the fourth quarter of 2024. The increases in book value per common share and tangible book value per common share from December 31, 2023 to December 31, 2024 were primarily due to (i) a $35.4 million increase in retained earnings over the twelve months ended December 31, 2024, (ii) the Corporation’s repurchase of 23,988 common shares at a weighted average price of $18.38 in the second quarter of 2024, and (iii) a $2.5 million decrease in accumulated other comprehensive loss primarily from the after-tax impact of temporary unrealized valuation changes in the Corporation’s available-for-sale investment portfolio for the past twelve months.

Loan Portfolio Profile

As part of its lending policy and risk management activities, the Corporation tracks lending exposure by industry classification and type to determine potential risks associated with industry concentrations, and if any concentration risk issues could lead to additional credit loss exposure. In the current post-pandemic and relatively inflationary economic environment, the Corporation has continued to evaluate its exposure to the office, hospitality, and multifamily industries within its commercial real estate portfolio. Even given the Corporation’s historically sound underwriting protocols and high credit quality standards for borrowers in the commercial real estate industry segments, the Corporation monitors numerous relevant sensitivity elements, including occupancy, loan-to-value, absorption and cap rates, debt service coverage and covenant compliance, and developer/lessor financial strength both in the project and globally. At December 31, 2024, the Corporation had the following key metrics related to its office, hospitality and multifamily portfolios:
- Commercial office loans:
  - There were 112 outstanding loans, totaling $113.7 million, or 2.47% of total Corporation loans outstanding;
  - There were no nonaccrual commercial office loans at December 31, 2024;
  - There were no past due commercial office loans at December 31, 2024; and
  - The average outstanding balance per commercial office loan was $1.0 million.
- Commercial hospitality loans:
  - There were 170 outstanding loans, totaling $321.6 million, or 6.98% of total Corporation loans outstanding;
  - There were no nonaccrual commercial hospitality loans at December 31, 2024;
  - There were no past due commercial hospitality loans at December 31, 2024; and
  - The average outstanding balance per commercial hospitality loan was $1.9 million.
- Commercial multifamily loans:
  - There were 225 outstanding loans, totaling $367.6 million, or 7.98% of total Corporation loans outstanding;
  - There were two nonaccrual commercial multifamily loan that totaled $20.7 million, or 5.62% of total multifamily loans outstanding. As previously discussed, one customer relationship did have a specific reserve of $885 thousand, while the other customer relationship did not have a related specific loss reserve at December 31, 2024;
  - There were three past due commercial multifamily loans that totaled $21.1 million, or 5.75% of total commercial multifamily loans outstanding at December 31, 2024; and
  - The average outstanding balance per commercial multifamily loan was $1.6 million.

The Corporation had no commercial office, hospitality or multifamily loan relationships considered by the banking regulators to be high volatility commercial real estate (“HVCRE”) credits.

Performance Ratios

Annualized return on average equity was 9.79% for the three months ended December 31, 2024, compared to 9.28% and 9.97% for the three months ended September 30, 2024 and December 31, 2023, respectively. Return on average equity was 9.21% for the twelve months ended December 31, 2024 compared to 10.54% for the twelve months ended December 31, 2023.
Annualized return on average tangible common equity, a non-GAAP measure, was 10.90% for the three months ended December 31, 2024, compared to 10.33% and 11.27% for the three months ended September 30, 2024 and December 31, 2023, respectively.¹ Return on average tangible common equity, a non-GAAP measure, was 10.25% for the twelve months ended December 31, 2024 compared to 11.98% for the twelve months ended December 31, 2023.¹
The Corporation’s efficiency ratio was 63.68% for the three months ended December 31, 2024, compared to 66.34% and 67.66% for the three months ended September 30, 2024 and December 31, 2023, respectively. The efficiency ratio on a fully tax-equivalent basis, a non-GAAP measure, was 63.02% for the three months ended December 31, 2024, compared to 65.58% and 66.93% for the three months ended September 30, 2024 and December 31, 2023, respectively.¹ The decrease for the three months ended December 31, 2024 compared to the three months ended September 30, 2024 was primarily driven by an increase in net interest income, coupled with lower non-interest expenses, primarily due to decreases in salaries and benefits, as discussed in more detail below.
The Corporation’s efficiency ratio was 66.20% for the twelve months ended December 31, 2024, compared to 65.13% for the twelve months ended December 31, 2023. The efficiency ratio on a fully tax-equivalent basis, a non-GAAP ratio, was 65.47% for the twelve months ended December 31, 2024, compared to 64.45% the twelve months ended December 31, 2023.¹

Revenue

Total revenue (net interest income plus non-interest income) was $59.4 million for the three months ended December 31, 2024, an increase when compared to $58.5 million and $56.8 million for the three months ended September 30, 2024 and December 31, 2023, respectively.
- Net interest income was $49.0 million for the three months ended December 31, 2024, compared to $47.5 million and $47.7 million for the three months ended September 30, 2024 and December 31, 2023, respectively. When comparing the fourth quarter of 2024 to the third quarter of 2024, the increase in net interest income of $1.6 million, or 3.28% (13.05% annualized), was primarily driven by targeted interest-bearing deposit rate decreases as a result of the Federal Reserve rate decreases since mid-September 2024.
- Net interest margin was 3.44%, 3.43% and 3.54% for the three months ended December 31, 2024, September 30, 2024 and December 31, 2023, respectively. Net interest margin on a fully tax-equivalent basis, a non-GAAP measure, was 3.43%, 3.42% and 3.51% for the three months ended December 31, 2024, September 30, 2024 and December 31, 2023, respectively.¹
  - The yield on earning assets of 5.84% for the three months ended December 31, 2024 decreased 14 basis points from September 30, 2024 and increased 2 basis points from December 31, 2023. The decrease in yield compared to September 30, 2024 was attributable to the net impact of declining interest rates on floating-rate loans as a result of the Federal Reserve decreases to the Prime rate (upon which the majority of the Corporation’s floating rate loans are indexed).
  - The cost of interest-bearing liabilities of 3.03% for the three months ended December 31, 2024 decreased 18 basis points from September 30, 2024 and increased 14 basis points from December 31, 2023. When comparing the fourth quarter of 2024 to the third quarter of 2024, the decrease in the cost of interest-bearing liabilities is primarily the result of the Corporation’s targeted interest-bearing deposit rate decreases in response to the Federal Reserve rate decreases since mid-September 2024.
Total revenue was $226.6 million for the twelve months ended December 31, 2024 compared to $223.2 million for the twelve months ended December 31, 2023.
- Net interest income was $187.5 million for the twelve months ended December 31, 2024 compared to $189.8 million for the twelve months ended December 31, 2023. When comparing the twelve months ended December 31, 2024 to the twelve months ended December 31, 2023, the decrease in net interest income of $2.4 million, or 1.24%, was due to an increase in the Corporation’s interest expense, as a result of targeted interest-bearing deposit rate increases to ensure both deposit growth and retention, more than offsetting the interest income growth from both year-over-year loan growth and the impact of higher interest rates for much of the 2024 year resulting in greater income on loans, coupled with a higher average balance of earnings on excess liquidity maintained as interest-bearing deposits with the Federal Reserve.
- Net interest margin was 3.41% and 3.63% for the twelve months ended December 31, 2024 and 2023, respectively. Net interest margin on a fully tax-equivalent basis, a non-GAAP measure, was 3.39% and 3.61% for the twelve months ended December 31, 2024 and 2023, respectively.¹
  - The yield on earning assets of 5.88% for the twelve months ended December 31, 2024 increased 31 basis points from the twelve months ended December 31, 2023. The increase in yield compared to December 31, 2023 was attributable to the net benefit of higher interest rates on both variable-rate loans and new loan production.
  - The cost of interest-bearing liabilities of 3.11% for the twelve months ended December 31, 2024 increased 62 basis points from the twelve months ended December 31, 2023 primarily as a result of the Corporation’s targeted interest-bearing deposit rate increases for deposit retention and growth initiatives given the competitive environment resulting from the numerous Federal Reserve rate hikes since the first quarter of 2022 that did not start to have some easing measures until late in 2024.
Total non-interest income was $10.3 million for the three months ended December 31, 2024 compared to $11.0 million and $9.1 million for the three months ended September 30, 2024 and December 31, 2023, respectively. The three months ended December 31, 2024 included increases in net realized and unrealized losses on equity securities compared to the three months ended September 30, 2024. The increase in fourth quarter 2024 non-interest income compared to the three months ended December 31, 2023 was primarily due to increased wealth and asset management fees and higher pass-through income from small business investment companies (“SBICs”), partially offset by an increase in net realized and unrealized losses on equity securities.
Total non-interest income was $39.1 million for the twelve months ended December 31, 2024 compared to $33.3 million for the twelve months ended December 31, 2023. This increase was primarily due to higher pass-through income from SBICs coupled with an increase in net realized and unrealized gains on equity securities and an increase in wealth and asset management fees.

Non-Interest Expense

For the three months ended December 31, 2024 total non-interest expense was $37.8 million, compared to $38.8 million and $38.5 million for the three months ended September 30, 2024 and December 31, 2023, respectively. The decrease of $979 thousand, or 2.52%, from the three months ended September 30, 2024, was primarily due to a decrease in salaries and benefits. The decrease in salaries and benefits resulted primarily from a decrease in incentive compensation accruals (which are based on various components of the Corporation’s financial performance for the year), coupled with the timing of retirement plan contribution accruals and lower supplemental executive retirement plan accruals with the departure of an executive during the fourth quarter, as previously disclosed. The $645 thousand decrease in non-interest expense compared to the three months ended December 31, 2023 was primarily due to lower salaries and benefits driven by reduced incentive compensation accruals, along with a decrease in quarterly advertising expense. These decreases were partially offset by higher card processing and interchange expenses resulting from fourth quarter 2023 accrual adjustments related to changes in the Corporation’s cardholder rewards program.
For the twelve months ended December 31, 2024 total non-interest expense was $150.0 million, compared to $145.3 million for the twelve months ended December 31, 2023. The increase of $4.7 million, or 3.21%, from the twelve months ended December 31, 2023 was primarily a result of an increase in salaries and benefits and technology expenses The increase in salaries and benefits was driven by an increase in personnel costs related to annual merit increases and growth in the Corporation’s staff and new offices in its expansion markets (Cleveland, OH and Roanoke, VA), while the increase in technology was primarily due to usage and licensing increases in year-over-year investments in applications aimed at enhancing both customer online banking capabilities, customer call center communications, and in-branch technology delivery channels.

Income Taxes

Income tax expense for the three months ended December 31, 2024 was $3.6 million, representing a 19.14% effective tax rate, compared to $3.3 million, representing an 19.31% effective tax rate, for the three months ended September 30, 2024 and $3.2 million, representing a 18.45% effective tax rate, for the three months ended December 31, 2023. Income tax expense for the twelve months ended December 31, 2024 was $12.8 million, representing an 18.98% effective tax rate compared to $13.8 million, representing a 19.22% effective tax rate, for the twelve months ended December 31, 2023.

Asset Quality

Based upon the addition of one larger nonaccrual loan relationship in the fourth quarter of 2024 as discussed above, total nonperforming assets were approximately $59.5 million, or 0.96% of total assets, as of December 31, 2024, compared to $42.0 million, or 0.70% of total assets, as of September 30, 2024, and $31.8 million, or 0.55% of total assets, as of December 31, 2023.
The allowance for credit losses measured as a percentage of total loans was 1.03% as of December 31, 2024 compared to 1.02% as of September 30, 2024 and 1.03% as of December 31, 2023. In addition, the allowance for credit losses as a percentage of nonaccrual loans was 84.08% as of December 31, 2024, compared to 117.03% and 154.63% as of September 30, 2024 and December 31, 2023, respectively. The change in the allowance for credit losses as a percentage of nonaccrual loans was primarily attributable to the levels of nonperforming assets, as discussed above.
The provision for credit losses was $2.9 million for the three months ended December 31, 2024, compared to $2.4 million and $1.2 million for the three months ended September 30, 2024 and December 31, 2023, respectively. The $549 thousand increase in the provision expense for the fourth quarter of 2024 compared to the third quarter of 2024 was primarily a result of increased net loan charge-offs in the fourth quarter of 2024. The $1.7 million increase in the provision expense for the three months ended December 31, 2024 compared to the three months ended December 31, 2023 was primarily due to both required provisioning to cover loan portfolio growth, and the increased net loan charge-offs in the fourth quarter of 2024 compared to the fourth quarter of 2023.
As discussed in more detail above, for the three months ended December 31, 2024, net loan charge-offs were $2.1 million, or 0.19% (annualized) of average total loans and loans held for sale, compared to $1.2 million, or 0.11% (annualized) of average total loans and loans held for sale, during the three months ended September 30, 2024, and $1.2 million, or 0.11% (annualized) of average total loans and loans held for sale, during the three months ended December 31, 2023.
For the twelve months ended December 31, 2024, net loan charge-offs were $7.5 million, or 0.17%, of average total loans and loans held for sale, compared to $3.4 million, or 0.08%, of average total loans and loans held for sale, during the twelve months ended December 31, 2023, with a couple of the larger charge-offs occurring in the first and second quarters of 2024, as previously disclosed in those periods.

Capital

As of December 31, 2024, the Corporation’s total shareholders’ equity was $610.7 million, representing an increase of $4.3 million, or 0.71% (2.84% annualized), from September 30, 2024 and an increase of $39.4 million, or 6.91%, from December 31, 2023. The changes resulted from an increase in the Corporation’s retained earnings (net income, partially offset by the common and preferred stock dividends paid) and a decrease in accumulated other comprehensive loss primarily from the after-tax impact of temporary unrealized valuation changes in the Corporation’s available-for-sale investment portfolio. The additions to shareholders equity from retained earnings were also partially offset by the Corporation’s repurchase of some of its common stock.
Regulatory capital ratios for the Corporation continue to exceed regulatory “well-capitalized” levels as of December 31, 2024, consistent with prior periods.
As of December 31, 2024, the Corporation’s ratio of common shareholders’ equity to total assets was 8.93% compared to 9.12% at September 30, 2024 and 8.93% at December 31, 2023. As of December 31, 2024, the Corporation’s ratio of tangible common equity to tangible assets, a non-GAAP measure, was 8.28% compared to 8.45% at September 30, 2024 and 8.22% at December 31, 2023. The decrease in the December 31, 2024 ratio compared to September 30, 2024 was primarily the result of an increase in accumulated other comprehensive loss, partially offset by an increase in retained earnings, as discussed above.¹

Recent Events

On January 10, 2025, the Corporation announced that the Corporation and CNB Bank entered into a definitive merger agreement (the “Merger Agreement”) with ESSA in an all-stock transaction. Under the terms of the Merger Agreement, each outstanding share of ESSA Bancorp common stock will be converted into the right to receive 0.8547 shares of the Corporation’s common stock. The transaction is currently expected to close in the third quarter of 2025, subject to customary closing conditions, including the receipt of regulatory approvals, and approval by the shareholders of ESSA Bancorp and the Corporation.

About CNB Financial Corporation

CNB Financial Corporation is a financial holding company with consolidated assets of approximately $6.2 billion. CNB Financial Corporation conducts business primarily through its principal subsidiary, CNB Bank. CNB Bank is a full-service bank engaging in a full range of banking activities and services, including trust and wealth management services, for individual, business, governmental, and institutional customers. CNB Bank operations include a private banking division, one drive-up office, one mobile office, and 55 full-service offices in Pennsylvania, Ohio, New York, and Virginia. CNB Bank, headquartered in Clearfield, Pennsylvania, with offices in Central and North Central Pennsylvania, serves as the multi-brand parent to various divisions. These divisions include ERIEBANK, based in Erie, Pennsylvania, with offices in Northwest Pennsylvania and Northeast Ohio; FCBank, based in Worthington, Ohio, with offices in Central Ohio; BankOnBuffalo, based in Buffalo, New York, with offices in Western New York; Ridge View Bank, based in Roanoke, Virginia, with offices in the Southwest Virginia region; and Impressia Bank, a division focused on banking opportunities for women, which operates in CNB Bank’s primary market areas. Additional information about CNB Financial Corporation may be found at www.CNBBank.bank.

Forward-Looking Statements

This press release includes 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 Corporation’s financial condition, liquidity, results of operations, future performance and business. These forward-looking statements are intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that are not historical facts. Forward-looking statements include statements with respect to beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors (some of which are beyond the Corporation’s control). Forward-looking statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would” and “could.” The Corporation’s actual results may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Such known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, include, but are not limited to, (i) adverse changes or conditions in capital and financial markets, including actual or potential stresses in the banking industry; (ii) changes in interest rates; (iii) the credit risks of lending activities, including our ability to estimate credit losses and the allowance for credit losses, as well as the effects of changes in the level of, and trends in, loan delinquencies and write-offs; (iv) effectiveness of our data security controls in the face of cyber attacks and any reputational risks following a cybersecurity incident; (v) changes in general business, industry or economic conditions or competition; (vi) changes in any applicable law, rule, regulation, policy, guideline or practice governing or affecting financial holding companies and their subsidiaries or with respect to tax or accounting principles or otherwise; (vii) governmental approvals of the Corporation’s pending merger with ESSA may not be obtained, or adverse regulatory conditions may be imposed in connection with governmental approvals of the merger; (viii) the Corporation’s shareholders and/or the shareholders of ESSA may fail to approve the merger; (ix) higher than expected costs or other difficulties related to integration of combined or merged businesses; (x) the effects of business combinations and other acquisition transactions, including the inability to realize our loan and investment portfolios; (xi) changes in the quality or composition of our loan and investment portfolios; (xii) adequacy of loan loss reserves; (xiii) increased competition; (xiv) loss of certain key officers; (xv) deposit attrition; (xvi) rapidly changing technology; (xvii) unanticipated regulatory or judicial proceedings and liabilities and other costs; (xviii) changes in the cost of funds, demand for loan products or demand for financial services; and (xix) other economic, competitive, governmental or technological factors affecting our operations, markets, products, services and prices. Such developments could have an adverse impact on the Corporation’s financial position and results of operations. For more information about factors that could cause actual results to differ from those discussed in the forward-looking statements, please refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of and the forward-looking statement disclaimers in the Corporation’s annual and quarterly reports filed with the Securities and Exchange Commission.

The forward-looking statements are based upon management’s beliefs and assumptions and are made as of the date of this press release. Factors or events that could cause the Corporation’s actual results to differ may emerge from time to time, and it is not possible for the Corporation to predict all of them. The Corporation undertakes no obligation to publicly update or revise any forward-looking statements included in this press release or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise, except to the extent required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this press release might not occur and you should not put undue reliance on any forward-looking statements.


CNB FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands, except per share data)

	Three Months Ended									Twelve Months Ended
	December 31, 2024			September 30, 2024			December 31, 2023			December 31, 2024			December 31, 2023
Income Statement
Interest and fees on loans	$	74,164		$	75,725		$	73,014		$	293,544		$	273,223
Interest and dividends on securities and cash and cash equivalents		9,514			7,510			6,194			31,926			20,473
Interest expense		(34,634	)		(35,749	)		(31,514	)		(138,001	)		(103,867	)
Net interest income		49,044			47,486			47,694			187,469			189,829
Provision for credit losses		2,930			2,381			1,242			9,222			5,993
Net interest income after provision for credit losses		46,114			45,105			46,452			178,247			183,836
Non-interest income
Wealth and asset management fees		1,976			2,060			1,684			7,845			7,251
Service charges on deposit accounts		1,712			1,790			1,803			6,990			7,372
Other service charges and fees		770			796			727			2,973			3,010
Net realized gains (losses) on available-for-sale securities		83			(9	)		—			74			52
Net realized and unrealized gains (losses) on equity securities		(13	)		656			543			754			(387	)
Mortgage banking		93			197			160			673			676
Bank owned life insurance		784			775			734			3,110			2,945
Card processing and interchange income		2,222			2,241			2,082			8,666			8,301
Other non-interest income		2,694			2,467			1,404			8,029			4,115
Total non-interest income		10,321			10,973			9,137			39,114			33,335
Non-interest expenses
Salaries and benefits		18,501			19,572			19,200			74,536			71,062
Net occupancy expense of premises		3,816			3,701			3,719			14,737			14,509
Technology expense		5,743			5,417			5,525			21,805			20,202
Advertising expense		684			623			1,048			2,545			3,133
State and local taxes		1,090			1,256			1,018			4,726			4,126
Legal, professional, and examination fees		986			940			1,247			4,217			4,414
FDIC insurance premiums		864			846			978			3,718			3,879
Card processing and interchange expenses		1,325			1,193			756			4,575			5,025
Other non-interest expense		4,796			5,236			4,959			19,143			18,992
Total non-interest expenses		37,805			38,784			38,450			150,002			145,342
Income before income taxes		18,630			17,294			17,139			67,359			71,829
Income tax expense		3,566			3,340			3,162			12,784			13,809
Net income		15,064			13,954			13,977			54,575			58,020
Preferred stock dividends		1,076			1,076			1,076			4,302			4,302
Net income available to common shareholders	$	13,988		$	12,878		$	12,901		$	50,273		$	53,718

Ending shares outstanding		20,987,992			20,994,730			20,896,439			20,987,992			20,896,439
Average diluted common shares outstanding		20,929,885			20,911,862			20,841,528			20,900,037			20,944,376
Diluted earnings per common share	$	0.66		$	0.61		$	0.62		$	2.39		$	2.55
Cash dividends per common share	$	0.180		$	0.180		$	0.175		$	0.710		$	0.700
Dividend payout ratio		27	%		30	%		28	%		30	%		27	%


CNB FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands, except per share data)

	Three Months Ended									Twelve Months Ended
	December 31, 2024			September 30, 2024			December 31, 2023			December 31, 2024			December 31, 2023
Average Balances
Total loans and loans held for sale	$	4,556,770		$	4,536,702		$	4,463,644		$	4,491,304		$	4,396,341
Investment securities		744,149			722,577			730,050			733,055			760,976
Total earning assets		5,674,794			5,503,832			5,343,817			5,499,187			5,232,117
Total assets		6,085,277			5,907,115			5,719,313			5,894,958			5,601,371
Noninterest-bearing deposits		832,168			795,771			759,781			781,780			793,713
Interest-bearing deposits		4,442,150			4,319,606			4,217,771			4,328,430			4,037,554
Shareholders’ equity		612,184			597,984			556,245			592,550			550,333
Tangible common shareholders’ equity (non-GAAP)⁽¹⁾		510,308			496,091			454,294			490,647			448,355

Average Yields (annualized)
Total loans and loans held for sale		6.50	%		6.66	%		6.51	%		6.55	%		6.23	%
Investment securities		2.40	%		2.19	%		1.96	%		2.19	%		1.96	%
Total earning assets		5.84	%		5.98	%		5.82	%		5.88	%		5.57	%
Interest-bearing deposits		3.00	%		3.19	%		2.86	%		3.08	%		2.42	%
Interest-bearing liabilities		3.03	%		3.21	%		2.89	%		3.11	%		2.49	%

Performance Ratios (annualized)
Return on average assets		0.98	%		0.94	%		0.97	%		0.93	%		1.04	%
Return on average equity		9.79	%		9.28	%		9.97	%		9.21	%		10.54	%
Return on average tangible common equity (non-GAAP)⁽¹⁾		10.90	%		10.33	%		11.27	%		10.25	%		11.98	%
Net interest margin, fully tax equivalent basis (non-GAAP)⁽¹⁾		3.43	%		3.42	%		3.51	%		3.39	%		3.61	%
Efficiency Ratio, fully tax equivalent basis (non-GAAP)⁽¹⁾		63.02	%		65.58	%		66.93	%		65.47	%		64.45	%

Net Loan Charge-Offs
CNB Bank net loan charge-offs	$	1,719		$	837		$	747		$	5,782		$	1,702
Holiday Financial net loan charge-offs		425			383			487			1,730			1,739
Total Corporation net loan charge-offs	$	2,144		$	1,220		$	1,234		$	7,512		$	3,441
Annualized net loan charge-offs / average total loans and loans held for sale		0.19	%		0.11	%		0.11	%		0.17	%		0.08	%


CNB FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands, except per share data)

	December 31, 2024			September 30, 2024			December 31, 2023
Ending Balance Sheet
Cash and due from banks	$	63,771		$	75,214		$	54,789
Interest-bearing deposits with Federal Reserve		375,009			281,972			164,385
Interest-bearing deposits with other financial institutions		4,255			3,723			2,872
Total cash and cash equivalents		443,035			360,909			222,046
Debt securities available-for-sale, at fair value		468,546			378,965			341,955
Debt securities held-to-maturity, at amortized cost		306,081			328,152			388,968
Equity securities		10,456			10,389			9,301
Loans held for sale		762			768			675
Loans receivable
Syndicated loans		79,882			69,470			108,710
Loans		4,529,074			4,522,438			4,359,718
Total loans receivable		4,608,956			4,591,908			4,468,476
Less: allowance for credit losses		(47,357	)		(46,644	)		(45,832	)
Net loans receivable		4,561,599			4,545,264			4,422,644
Goodwill and other intangibles		43,874			43,874			43,874
Core deposit intangible		206			223			280
Other assets		357,451			346,300			323,214
Total Assets	$	6,192,010		$	6,014,844		$	5,752,957

Noninterest-bearing demand deposits	$	819,680		$	841,292		$	728,881
Interest-bearing demand deposits		706,796			681,056			803,093
Savings		3,122,028			3,040,769			2,960,282
Certificates of deposit		722,860			653,832			506,494
Total deposits		5,371,364			5,216,949			4,998,750
Subordinated debentures		20,620			20,620			20,620
Subordinated notes, net of issuance costs		84,570			84,495			84,267
Other liabilities		104,761			86,417			78,073
Total liabilities		5,581,315			5,408,481			5,181,710
Common stock		—			—			—
Preferred stock		57,785			57,785			57,785
Additional paid in capital		219,876			219,304			220,495
Retained earnings		381,296			371,086			345,935
Treasury stock		(4,689	)		(4,516	)		(6,890	)
Accumulated other comprehensive loss		(43,573	)		(37,296	)		(46,078	)
Total shareholders’ equity		610,695			606,363			571,247
Total liabilities and shareholders’ equity	$	6,192,010		$	6,014,844		$	5,752,957

Book value per common share	$	26.34		$	26.13		$	24.57
Tangible book value per common share (non-GAAP)⁽¹⁾	$	24.24		$	24.03		$	22.46


CNB FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands, except per share data)

	December 31, 2024			September 30, 2024			December 31, 2023
Capital Ratios
Tangible common equity / tangible assets (non-GAAP)⁽¹⁾		8.28	%		8.45	%		8.22	%
Tier 1 leverage ratio⁽²⁾		10.43	%		10.59	%		10.54	%
Common equity tier 1 ratio⁽²⁾		11.76	%		11.64	%		11.49	%
Tier 1 risk-based ratio⁽²⁾		13.41	%		13.30	%		13.20	%
Total risk-based ratio⁽²⁾		16.16	%		16.06	%		15.99	%

Asset Quality Detail
Nonaccrual loans	$	56,323		$	39,855		$	29,639
Loans 90+ days past due and accruing		653			666			55
Total nonperforming loans		56,976			40,521			29,694
Other real estate owned		2,509			1,514			2,111
Total nonperforming assets	$	59,485		$	42,035		$	31,805

Asset Quality Ratios
Nonperforming assets / Total loans + OREO		1.29	%		0.92	%		0.71	%
Nonperforming assets / Total assets		0.96	%		0.70	%		0.55	%
Ratio of allowance for credit losses on loans to nonaccrual loans		84.08	%		117.03	%		154.63	%
Allowance for credit losses / Total loans		1.03	%		1.02	%		1.03	%


Consolidated Financial Data Notes:
⁽¹⁾Management uses non-GAAP financial information in its analysis of the Corporation’s performance. Management believes that these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented. The Corporation’s management believes that investors may use these non-GAAP measures to analyze the Corporation’s financial performance without the impact of unusual items or events that may obscure trends in the Corporation’s underlying performance. This non-GAAP data should be considered in addition to results prepared in accordance with GAAP, and is not a substitute for, or superior to, GAAP results. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in these measures and that different companies might calculate these measures differently. A reconciliation of these non-GAAP financial measures is provided below (dollars in thousands, except per share data).
⁽²⁾Capital ratios as of December 31, 2024 are estimated pending final regulatory filings.


CNB FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands, except per share data)

	Average Balances, Income and Interest Rates on a Taxable Equivalent Basis
	Three Months Ended,
	December 31, 2024							September 30, 2024							December 31, 2023
	Average Balance			Annual Rate		Interest Inc./Exp.		Average Balance			Annual Rate		Interest Inc./Exp.		Average Balance			Annual Rate		Interest Inc./Exp.
ASSETS:
Securities:
Taxable^{(1) (4)}	$	711,286		2.36	%	$	4,487	$	690,098		2.14	%	$	3,980	$	694,369		1.89	%	$	3,626
Tax-exempt^{(1) (2) (4)}		25,489		2.67			184		25,368		2.57			178		27,590		2.55			198
Equity securities^{(1) (2)}		7,374		5.77			107		7,111		5.71			102		8,091		5.54			113
Total securities⁽⁴⁾		744,149		2.40			4,778		722,577		2.19			4,260		730,050		1.96			3,937
Loans receivable:
Commercial^{(2) (3)}		1,458,902		6.77			24,824		1,457,192		7.02			25,708		1,467,452		7.07			26,165
Mortgage and loans held for sale^{(2) (3)}		2,965,914		6.12			45,633		2,947,787		6.25			46,278		2,860,619		5.99			43,166
Consumer⁽³⁾		131,954		11.93			3,956		131,723		11.93			3,950		135,573		11.38			3,890
Total loans receivable⁽³⁾		4,556,770		6.50			74,413		4,536,702		6.66			75,936		4,463,644		6.51			73,221
Interest-bearing deposits with the Federal Reserve and other financial institutions		373,875		5.08			4,771		244,553		5.33			3,279		150,123		6.06			2,292
Total earning assets		5,674,794		5.84		$	83,962		5,503,832		5.98		$	83,475		5,343,817		5.82		$	79,450
Noninterest-bearing assets:
Cash and due from banks		59,445							58,472							55,815
Premises and equipment		124,398							118,404							109,469
Other assets		273,326							272,377							256,253
Allowance for credit losses		(46,686	)						(45,970	)						(46,041	)
Total non interest-bearing assets		410,483							403,283							375,496
TOTAL ASSETS	$	6,085,277						$	5,907,115						$	5,719,313
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Demand—interest-bearing	$	686,359		0.83	%	$	1,437	$	682,690		0.86	%	$	1,477	$	778,488		0.55	%	$	1,081
Savings		3,068,451		3.26			25,139		3,076,351		3.55			27,461		2,920,026		3.36			24,712
Time		687,340		4.02			6,953		560,565		4.03			5,684		519,257		3.50			4,587
Total interest-bearing deposits		4,442,150		3.00			33,529		4,319,606		3.19			34,622		4,217,771		2.86			30,380
Short-term borrowings		—		0.00			—		—		0.00			—		0		0.00			0
Finance lease liabilities		212		3.75			2		236		5.06			3		305		3.90			3
Subordinated notes and debentures		105,153		4.17			1,103		105,077		4.26			1,124		104,849		4.28			1,131
Total interest-bearing liabilities		4,547,515		3.03		$	34,634		4,424,919		3.21		$	35,749		4,322,925		2.89		$	31,514
Demand—noninterest-bearing		832,168							795,771							759,781
Other liabilities		93,410							88,441							80,362
Total Liabilities		5,473,093							5,309,131							5,163,068
Shareholders’ equity		612,184							597,984							556,245
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	6,085,277						$	5,907,115						$	5,719,313
Interest income/Earning assets				5.84	%	$	83,962				5.98	%	$	83,475				5.82	%	$	79,450
Interest expense/Interest-bearing liabilities				3.03			34,634				3.21			35,749				2.89			31,514
Net interest spread				2.81	%	$	49,328				2.77	%	$	47,726				2.93	%	$	47,936
Interest income/Earning assets				5.84	%		83,962				5.98	%		83,475				5.82	%		79,450
Interest expense/Earning assets				2.41			34,634				2.56			35,749				2.31			31,514
Net interest margin (fully tax-equivalent)				3.43	%	$	49,328				3.42	%	$	47,726				3.51	%	$	47,936

_____________________________________
⁽¹⁾Includes unamortized discounts and premiums.
⁽²⁾Average yields are stated on a fully taxable equivalent basis (calculated using statutory rates of 21%) resulting from tax-free municipal securities in the investment portfolio and tax-free municipal loans in the commercial loan portfolio. The taxable equivalent adjustment to net interest income for the three months ended December 31, 2024, September 30, 2024 and December 31, 2023 was $284 thousand, $240 thousand and $242 thousand, respectively.
⁽³⁾Average loans receivable outstanding includes the average balance outstanding of all nonaccrual loans. Loans receivable consist of the average of total loans receivable less average unearned income. In addition, loans receivable interest income consists of loans receivable fees, including PPP deferred processing fees.
⁽⁴⁾Average balance is computed using the fair value of AFS securities and amortized cost of HTM securities. Average yield has been computed using amortized cost average balance for AFS and HTM securities. The adjustment to the average balance for securities in the calculation of average yield for the three months ended December 31, 2024, September 30, 2024 and December 31, 2023 was $(47.0) million, $(51.1) million and $(68.5) million, respectively.


CNB FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands, except per share data)

	Average Balances, Income and Interest Rates on a Taxable Equivalent Basis
	Twelve Months Ended,
	December 31, 2024							December 31, 2023
	Average Balance			Annual Rate		Interest Inc./Exp.		Average Balance			Annual Rate		Interest Inc./Exp.
ASSETS:
Securities:
Taxable^{(1) (4)}	$	700,078		2.14	%	$	16,059	$	720,818		1.89	%	$	14,766
Tax-exempt^{(1) (2) (4)}		25,919		2.60			731		30,153		2.59			844
Equity securities^{(1) (2)}		7,058		5.71			403		10,005		5.09			509
Total securities⁽⁴⁾		733,055		2.19			17,193		760,976		1.96			16,119
Loans receivable:
Commercial^{(2) (3)}		1,440,667		6.88			99,184		1,501,202		6.63			99,587
Mortgage and loans held for sale^{(2) (3)}		2,920,537		6.15			179,645		2,765,484		5.77			159,606
Consumer⁽³⁾		130,100		11.95			15,547		129,655		11.47			14,868
Total loans receivable⁽³⁾		4,491,304		6.55			294,376		4,396,341		6.23			274,061
Interest-bearing deposits with the Federal Reserve and other financial institutions		274,828		5.41			14,856		74,800		6.03			4,513
Total earning assets		5,499,187		5.88		$	326,425		5,232,117		5.57		$	294,693
Noninterest-bearing assets:
Cash and due from banks		56,295							54,824
Premises and equipment		116,341							107,635
Other assets		269,167							251,725
Allowance for credit losses		(46,032	)						(44,930	)
Total non interest-bearing assets		395,771							369,254
TOTAL ASSETS	$	5,894,958						$	5,601,371
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Demand—interest-bearing	$	705,488		0.77	%	$	5,451	$	853,632		0.54	%	$	4,626
Savings		3,052,031		3.46			105,675		2,666,905		2.92			77,782
Time		570,911		3.92			22,367		517,017		2.97			15,362
Total interest-bearing deposits		4,328,430		3.08			133,493		4,037,554		2.42			97,770
Short-term borrowings		—		0.00			—		35,224		5.07			1,787
Finance lease liabilities		247		4.45			11		339		4.42			15
Subordinated notes and debentures		105,039		4.28			4,497		104,735		4.10			4,295
Total interest-bearing liabilities		4,433,716		3.11		$	138,001		4,177,852		2.49		$	103,867
Demand—noninterest-bearing		781,780							793,713
Other liabilities		86,912							79,473
Total Liabilities		5,302,408							5,051,038
Shareholders’ equity		592,550							550,333
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	5,894,958						$	5,601,371
Interest income/Earning assets				5.88	%	$	326,425				5.57	%	$	294,693
Interest expense/Interest-bearing liabilities				3.11			138,001				2.49			103,867
Net interest spread				2.77	%	$	188,424				3.08	%	$	190,826
Interest income/Earning assets				5.88	%		326,425				5.57	%		294,693
Interest expense/Earning assets				2.49			138,001				1.96			103,867
Net interest margin (fully tax-equivalent)				3.39	%	$	188,424				3.61	%	$	190,826

_____________________________________
⁽¹⁾Includes unamortized discounts and premiums.
⁽²⁾Average yields are stated on a fully taxable equivalent basis (calculated using statutory rates of 21%) resulting from tax-free municipal securities in the investment portfolio and tax-free municipal loans in the commercial loan portfolio. The taxable equivalent adjustment to net interest income for the twelve months ended December 31, 2024 and 2023, was $955 thousand and $997 thousand, respectively.
⁽³⁾Average loans receivable outstanding includes the average balance outstanding of all nonaccrual loans. Loans receivable consist of the average of total loans receivable less average unearned income. In addition, loans receivable interest income consists of loans receivable fees, including PPP deferred processing fees.
⁽⁴⁾Average balance is computed using the fair value of AFS securities and amortized cost of HTM securities. Average yield has been computed using amortized cost average balance for AFS and HTM securities. The adjustment to the average balance for securities in the calculation of average yield for the twelve months ended December 31, 2024 and 2023 was $(53.1) million and $(61.1) million, respectively.


CNB FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands, except per share data)

Reconciliation of Non-GAAP Financial Measures

	December 31, 2024			September 30, 2024			December 31, 2023
Calculation of tangible book value per common share and tangible common equity / tangible assets (non-GAAP):
Shareholders’ equity	$	610,695		$	606,363		$	571,247
Less: preferred equity		57,785			57,785			57,785
Common shareholders’ equity		552,910			548,578			513,462
Less: goodwill and other intangibles		43,874			43,874			43,874
Less: core deposit intangible		206			223			280
Tangible common equity (non-GAAP)	$	508,830		$	504,481		$	469,308

Total assets	$	6,192,010		$	6,014,844		$	5,752,957
Less: goodwill and other intangibles		43,874			43,874			43,874
Less: core deposit intangible		206			223			280
Tangible assets (non-GAAP)	$	6,147,930		$	5,970,747		$	5,708,803

Ending shares outstanding		20,987,992			20,994,730			20,896,439

Book value per common share (GAAP)	$	26.34		$	26.13		$	24.57
Tangible book value per common share (non-GAAP)	$	24.24		$	24.03		$	22.46

Common shareholders’ equity / Total assets (GAAP)		8.93	%		9.12	%		8.93	%
Tangible common equity / Tangible assets (non-GAAP)		8.28	%		8.45	%		8.22	%


CNB FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands, except per share data)

Reconciliation of Non-GAAP Financial Measures

	Three Months Ended									Twelve Months Ended
	December 31, 2024			September 30, 2024			December 31, 2023			December 31, 2024			December 31, 2023
Calculation of net interest margin:
Interest income	$	83,678		$	83,235		$	79,208		$	325,470		$	293,696
Interest expense		34,634			35,749			31,514			138,001			103,867
Net interest income	$	49,044		$	47,486		$	47,694		$	187,469		$	189,829

Average total earning assets	$	5,674,794		$	5,503,832		$	5,343,817		$	5,499,187		$	5,232,117

Net interest margin (GAAP) (annualized)		3.44	%		3.43	%		3.54	%		3.41	%		3.63	%

Calculation of net interest margin (fully tax equivalent basis) (non-GAAP):
Interest income	$	83,678		$	83,235		$	79,208		$	325,470		$	293,696
Tax equivalent adjustment (non-GAAP)		284			240			242			955			997
Adjusted interest income (fully tax equivalent basis) (non-GAAP)		83,962			83,475			79,450			326,425			294,693
Interest expense		34,634			35,749			31,514			138,001			103,867
Net interest income (fully tax equivalent basis) (non-GAAP)	$	49,328		$	47,726		$	47,936		$	188,424		$	190,826

Average total earning assets	$	5,674,794		$	5,503,832		$	5,343,817		$	5,499,187		$	5,232,117
Less: average mark to market adjustment on investments (non-GAAP)		(46,988	)		(51,075	)		(68,546	)		(53,087	)		(61,089	)
Adjusted average total earning assets, net of mark to market (non-GAAP)	$	5,721,782		$	5,554,907		$	5,412,363		$	5,552,274		$	5,293,206

Net interest margin, fully tax equivalent basis (non-GAAP) (annualized)		3.43	%		3.42	%		3.51	%		3.39	%		3.61	%


CNB FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands, except per share data)

Reconciliation of Non-GAAP Financial Measures

	Three Months Ended						Twelve Months Ended
	December 31, 2024		September 30, 2024		December 31, 2023		December 31, 2024		December 31, 2023
Calculation of PPNR (non-GAAP):⁽¹⁾
Net interest income	$	49,044	$	47,486	$	47,694	$	187,469	$	189,829
Add: Non-interest income		10,321		10,973		9,137		39,114		33,335
Less: Non-interest expense		37,805		38,784		38,450		150,002		145,342
PPNR (non-GAAP)	$	21,560	$	19,675	$	18,381	$	76,581	$	77,822

⁽¹⁾Management believes that this is an important metric as it illustrates the underlying performance of the Corporation, it enables investors and others to assess the Corporation’s ability to generate capital to cover credit losses through the credit cycle and provides consistent reporting with a key metric used by bank regulatory agencies.

	Three Months Ended									Twelve Months Ended
	December 31, 2024			September 30, 2024			December 31, 2023			December 31, 2024			December 31, 2023
Calculation of efficiency ratio:
Non-interest expense	$	37,805		$	38,784		$	38,450		$	150,002		$	145,342

Non-interest income	$	10,321		$	10,973		$	9,137		$	39,114		$	33,335
Net interest income		49,044			47,486			47,694			187,469			189,829
Total revenue	$	59,365		$	58,459		$	56,831		$	226,583		$	223,164
Efficiency ratio		63.68	%		66.34	%		67.66	%		66.20	%		65.13	%

Calculation of efficiency ratio (fully tax equivalent basis) (non-GAAP):
Non-interest expense	$	37,805		$	38,784		$	38,450		$	150,002		$	145,342
Less: core deposit intangible amortization		16			18			19			73			84
Adjusted non-interest expense (non-GAAP)	$	37,789		$	38,766		$	38,431		$	149,929		$	145,258

Non-interest income	$	10,321		$	10,973		$	9,137		$	39,114		$	33,335

Net interest income	$	49,044		$	47,486		$	47,694		$	187,469		$	189,829
Less: tax exempt investment and loan income, net of TEFRA (non-GAAP)		1,508			1,473			1,383			5,635			5,425
Add: tax exempt investment and loan income (fully tax equivalent basis) (non-GAAP)		2,111			2,123			1,968			8,068			7,635
Adjusted net interest income (fully tax equivalent basis) (non-GAAP)		49,647			48,136			48,279			189,902			192,039
Adjusted net revenue (fully tax equivalent basis) (non-GAAP)	$	59,968		$	59,109		$	57,416		$	229,016		$	225,374

Efficiency ratio (fully tax equivalent basis) (non-GAAP)		63.02	%		65.58	%		66.93	%		65.47	%		64.45	%


CNB FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands, except per share data)

Reconciliation of Non-GAAP Financial Measures

	Three Months Ended									Twelve Months Ended
	December 31, 2024			September 30, 2024			December 31, 2023			December 31, 2024			December 31, 2023
Calculation of return on average tangible common equity (non-GAAP):
Net income	$	15,064		$	13,954		$	13,977		$	54,575		$	58,020
Less: preferred stock dividends		1,076			1,076			1,076			4,302			4,302
Net income available to common shareholders	$	13,988		$	12,878		$	12,901		$	50,273		$	53,718

Average shareholders’ equity	$	612,184		$	597,984		$	556,245		$	592,550		$	550,333
Less: average goodwill & intangibles		44,091			44,108			44,166			44,118			44,193
Less: average preferred equity		57,785			57,785			57,785			57,785			57,785
Tangible common shareholders’ equity (non-GAAP)	$	510,308		$	496,091		$	454,294		$	490,647		$	448,355

Return on average equity (GAAP) (annualized)		9.79	%		9.28	%		9.97	%		9.21	%		10.54	%
Return on average common equity (GAAP) (annualized)		10.04	%		9.48	%		10.27	%		9.40	%		10.91	%
Return on average tangible common equity (non-GAAP) (annualized)		10.90	%		10.33	%		11.27	%		10.25	%		11.98	%

The MIL Network –

January 29, 2025

MIL-OSI: Western New England Bancorp, Inc. Reports Results for Three Months and Year Ended December 31, 2024 and Declares Quarterly Cash Dividend

Source: GlobeNewswire (MIL-OSI)

WESTFIELD, Mass., Jan. 28, 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 and twelve months ended December 31, 2024. For the three months ended December 31, 2024, the Company reported net income of $3.3 million, or $0.16 per diluted share, compared to net income of $2.5 million, or $0.12 per diluted share, for the three months ended December 31, 2023. On a linked quarter basis, net income was $3.3 million, or $0.16 per diluted share, for the three months ended December 31, 2024, as compared to net income of $1.9 million, or $0.09 per diluted share, for the three months ended September 30, 2024. For the twelve months ended December 31, 2024, net income was $11.7 million, or $0.56 per diluted share, compared to net income of $15.1 million, or $0.70 per diluted share, for the twelve months ended December 31, 2023.

The Company also announced that the 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 February 26, 2025 to shareholders of record on February 12, 2025.

James C. Hagan, President and Chief Executive Officer, commented, “I am pleased to report the results for the fourth quarter of 2024. Our strong, diversified, core deposit base was integral in effectively managing our funding costs over the last two years during a rising rate environment. Our disciplined approach to managing our funding costs resulted in an increase in net interest income for the second consecutive quarter in 2024.

As we continue to manage the balance sheet, we remain focused on identifying initiatives to mitigate top line pressures and improve efficiencies over the Company’s long-term. In 2024, total deposits increased $118.9 million, or 5.6%, and core deposits represented 68.9% of total deposits as compared to 2023. The loan-to-deposit ratio decreased to 91.5%. 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.

Our asset quality remains strong, with nonaccrual loans at 0.26% of total loans, and classified loans, which we define as special mention and substandard loans, at 1.9% of total loans as of December 31, 2024. Our loan portfolio continues to perform well and we continue to proactively identify and manage credit risk within the loan portfolio, consistent with our prudent credit culture.

The Company is considered to be well-capitalized and we remain disciplined in our capital management strategies. During the twelve months ended December 31, 2024, we repurchased 934,282 shares of the Company’s common stock at an average price per share of $7.94. We continue to believe that buying back shares represents a prudent use of the Company’s capital. We are pleased to be able to continue to return value to shareholders through share repurchases. Although the banking environment has been challenged, our capital management strategies have been critical to sustaining growth in book value per share, which increased to $11.30, while tangible book value per share, a non-GAAP financial measure, increased $0.33, or 3.2%, to $10.63 at December 31, 2024.”

Hagan concluded, “Over the last few years, the banking industry as a whole experienced challenging headwinds, however, our team remains focused on serving our customers and supporting our community. Our commitment to strong capital and liquidity levels gives us a strong 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 loans increased $42.9 million, or 2.1%, from $2.0 billion at December 31, 2023 to $2.1 billion at December 31, 2024. Residential real estate loans, including home equity loans, increased $53.5 million, or 7.4%, commercial real estate loans decreased $4.0 million, or 0.4%, commercial and industrial loans decreased $5.7 million, or 2.7%, and consumer loans decreased $1.1 million, or 19.8%.

Total deposits increased $118.9 million, or 5.6%, from $2.1 billion at December 31, 2023 to $2.3 billion at December 31, 2024. Core deposits, which the Company defines as all deposits except time deposits, increased $26.7 million, or 1.7%, from $1.5 billion, or 71.5% of total deposits, at December 31, 2023, to $1.6 billion, or 68.9% of total deposits, at December 31, 2024. Time deposits increased $92.2 million, or 15.1%, from $611.4 million at December 31, 2023 to $703.6 million at December 31, 2024. Brokered time deposits, which are included in time deposits, totaled $1.7 million at December 31, 2024 and at December 31, 2023. The loan-to-deposit ratio decreased from 94.6% at December 31, 2023 to 91.5% at December 31, 2024.

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 December 31, 2024, the Company had $1.1 billion in immediately available liquidity, compared to $643.6 million in uninsured deposits, or 28.4% of total deposits, representing a coverage ratio of 171.8%.

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 December 31, 2024, the allowance for credit losses was $19.5 million, or 0.94% of total loans and 362.9% of nonperforming loans, compared to $20.3 million, or 1.00% of total loans and 315.6% of nonperforming loans, at December 31, 2023. At December 31, 2024, nonperforming loans totaled $5.4 million, or 0.26% of total loans, compared to $6.4 million, or 0.32% of total loans, at December 31, 2023. Total delinquent loans decreased $1.0 million, or 16.7%, from $6.0 million, or 0.30% of total loans, at December 31, 2023 to $5.0 million, or 0.24% of total loans, at December 31, 2024. At December 31, 2024 and December 31, 2023, the Company did not have any other real estate owned.

Net Interest Margin

The net interest margin was 2.41% for the three months ended December 31, 2024, compared to 2.40% for the three months ended September 30, 2024. The net interest margin, on a tax-equivalent basis, was 2.43% for the three months ended December 31, 2024, compared to 2.42% for the three months ended September 30, 2024.

Stock Repurchase Program

On May 22, 2024, the Board of Directors authorized a new stock repurchase plan (the “2024 Plan”) under which the Company may repurchase up to 1.0 million shares, or approximately 4.6%, of the Company’s then-outstanding shares of common stock.

During the three months ended December 31, 2024, the Company repurchased 220,000 shares of common stock under the 2024 Plan, with an average price per share of $9.00. During the twelve months ended December 31, 2024, the Company repurchased 934,282 shares of common stock under the 2024 Plan and the previously existing share repurchase plan, as applicable, with an average price per share of $7.94. As of December 31, 2024, there were 472,318 shares of common stock available for repurchase under 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 the 2024 Plan have been and will continue to be 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 the 2024 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

The Company’s book value per share was $11.30 at December 31, 2024, compared to $10.96 at December 31, 2023, while tangible book value per share, a non-GAAP financial measure, increased $0.33, or 3.2%, from $10.30 at December 31, 2023 to $10.63 at December 31, 2024. See pages 20-22 for the related tangible book value calculation and a reconciliation of GAAP to non-GAAP financial measures.

Net Income for the Three Months Ended December 31, 2024 Compared to the Three Months Ended September 30, 2024

The Company reported an increase in net income of $1.4 million, or 72.7%, from $1.9 million, or $0.09 per diluted share, for the three months ended September 30, 2024, to $3.3 million, or $0.16 per diluted share, for the three months ended December 31, 2024. Net interest income increased $545,000, or 3.7%, the provision for credit losses decreased $1.7 million, non-interest income increased $113,000, or 3.6%, and non-interest expense increased $520,000, or 3.6%. Return on average assets and return on average equity were 0.49% and 5.48%, respectively, for the three months ended December 31, 2024, compared to 0.29% and 3.19%, respectively, for the three months ended September 30, 2024.

Net Interest Income and Net Interest Margin

On a sequential quarter basis, net interest income, our primary driver of revenues, increased $545,000, or 3.7%, to $15.3 million for the three months ended December 31, 2024, from $14.7 million for the three months ended September 30, 2024. The increase in net interest income was primarily due to an increase in interest income of $746,000, or 2.7%, partially offset by an increase in interest expense of $201,000, or 1.5%.

The net interest margin was 2.41% for the three months ended December 31, 2024, compared to 2.40% for the three months ended September 30, 2024. The net interest margin, on a tax-equivalent basis, was 2.43% for the three months ended December 31, 2024, compared to 2.42% for the three months ended September 30, 2024. During the three months ended December 31, 2024 and during the three months ended September 30, 2024, the Company had a fair value hedge which contributed to an increase in the net interest margin of one basis point for the three months ended December 31, 2024, compared to an increase of seven basis points during the three months ended September 30, 2024. Excluding the interest income attributed to the fair value hedge, the net interest margin increased seven basis points from 2.33% for the three months ended September 30, 2024 to 2.40% for the three months ended December 31, 2024, respectively. The fair value hedge matured in October of 2024.

The average yield on interest-earning assets, without the impact of tax-equivalent adjustments, was 4.52% for the three months ended December 31, 2024, compared to 4.54% for the three months ended September 30, 2024. Excluding the impact of the fair value hedge discussed above, the average yield on interest-earnings assets, without the impact of tax-equivalent adjustments, increased four basis points to 4.51% during the three months ended December 31, 2024, compared to 4.47% during the three months ended September 30, 2024. The average loan yield, without the impact of tax-equivalent adjustments, was 4.86% for the three months ended December 31, 2024, compared to 4.90% for the three months ended September 30, 2024. Excluding the impact of the fair value hedge discussed above, the average yield on loans, without the impact of tax-equivalent adjustments, increased two basis points to 4.84% during the three months ended December 31, 2024, compared to 4.82% during the three months ended September 30, 2024. During the three months ended December 31, 2024, average interest-earning assets increased $75.8 million, or 3.1% to $2.5 billion, primarily due to an increase in average loans of $24.2 million, or 1.2%, an increase in average short-term investments, consisting of cash and cash equivalents, of $44.8 million, or 139.7%, and an increase in average securities of $6.8 million, or 1.9%.

The average cost of total funds, including non-interest bearing accounts and borrowings, decreased four basis points from 2.24% for the three months ended September 30, 2024 to 2.20% for the three months ended December 31, 2024. The average cost of core deposits, which the Company defines as all deposits except time deposits, increased five basis points to 0.98% for the three months ended December 31, 2024, from 0.93% for the three months ended September 30, 2024. The average cost of time deposits decreased 13 basis points from 4.44% for the three months ended September 30, 2024, to 4.31% for the three months ended December 31, 2024. The average cost of borrowings, including subordinated debt, decreased one basis point from 5.05% for the three months ended September 30, 2024 to 5.04% for the three months ended December 31, 2024. Average demand deposits, an interest-free source of funds, increased $20.0 million, or 3.6%, from $559.2 million, or 25.7% of total average deposits, for the three months ended September 30, 2024, to $579.2 million, or 25.6% of total average deposits, for the three months ended December 31, 2024.

Provision for (Reversal of) Credit Losses

During the three months ended December 31, 2024, the Company recorded a reversal of credit losses of $762,000, compared to a provision for credit losses of $941,000 during the three months ended September 30, 2024. The provision for credit losses includes a reversal of credit losses on loans of $553,000 and a reversal of credit losses on unfunded loan commitments of $209,000. The reversal of credit losses on loans was due to changes in the economic environment and related adjustments to the quantitative components of the CECL methodology as well as changes in the loan portfolio mix. The provision for credit losses was 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 and the economic outlook from the Federal Reserve’s actions to control inflation. The decrease in reserves on unfunded loan commitments was due to an decrease in commercial real estate unfunded loan commitments of $19.5 million, or 10.0%, from $195.3 million at September 30, 2024 to $175.8 million at December 31, 2024. Management continues to monitor macroeconomic variables related to increasing interest rates, inflation and the concerns of an economic downturn, and believes it is appropriately reserved for the current economic environment.

During the three months ended December 31, 2024, the Company recorded net recoveries of $128,000, compared to net charge-offs of $98,000 for the three months ended September 30, 2024.

Non-Interest Income

On a sequential quarter basis, non-interest income increased $113,000, or 3.6%, to $3.3 million for the three months ended December 31, 2024, from $3.1 million for the three months ended September 30, 2024. During the three months ended December 31, 2024, service charges and fees on deposits decreased $40,000, or 1.7%, to $2.3 million from the three months ended September 30, 2024. Income from bank-owned life insurance (“BOLI”) increased $16,000, or 3.4%, from the three months ended September 30, 2024 to $486,000 for the three months ended December 31, 2024. During the three months ended December 31, 2024, the Company reported $187,000 in other income from loan-level swap fees on commercial loans, compared to $74,000 during the three months ended September 30, 2024. During the three months ended December 31, 2024, the Company reported a loss of $11,000 from mortgage banking activities, compared to income from mortgage banking activities of $246,000, during the three months ended September 30, 2024. During the three months ended December 31, 2024, the Company reported unrealized losses on marketable equity securities of $9,000, compared to unrealized gains of $10,000, during the three months ended September 30, 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 September 30, 2024.

Non-Interest Expense

For the three months ended December 31, 2024, non-interest expense increased $520,000, or 3.6%, to $14.9 million from $14.4 million for the three months ended September 30, 2024. Salaries and related benefits increased $317,000, or 3.9%, primarily related to incentive compensation accrual adjustments due to revised payout estimates and an increase in health insurance benefits. FDIC insurance expense increased $51,000, or 15.1%, occupancy expense increased $39,000, or 3.2%, primarily due to snow removal costs of $47,000, advertising expense increased $39,000, or 14.4%, data processing expense increased $31,000, or 3.6%, software expenses increased $30,000, or 4.9%, furniture and equipment expense increased $22,000, or 4.6%, and other non-interest expense increased $116,000, or 8.8%. These increases were partially offset by a decrease in professional fees of $69,000, or 12.8%, and a decrease in debit card processing and ATM network costs of $56,000, or 8.6%.

For the three months ended December 31, 2024 and the three months ended September 30, 2024, the efficiency ratio was 80.6%. For the three months ended December 31, 2024, the adjusted efficiency ratio, a non-GAAP financial measure, was 81.9% compared to 80.7% for the three months ended September 30, 2024. The increase in the adjusted efficiency ratio was driven by higher expenses during the three months ended December 31, 2024. See pages 20-22 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 December 31, 2024 was $1.1 million, with an effective tax rate of 24.6%, compared to $618,000, with an effective tax rate of 24.5%, for the three months ended September 30, 2024.

Net Income for the Three Months Ended December 31, 2024 Compared to the Three Months Ended December 31, 2023

The Company reported net income of $3.3 million, or $0.16 per diluted share, for the three months ended December 31, 2024, compared to net income of $2.5 million, or $0.12 per diluted share, for the three months ended December 31, 2023. Net interest income decreased $903,000, or 5.6%, provision for credit losses decreased $1.2 million, non-interest income increased $540,000, or 19.9%, and non-interest expense increased $141,000, or 1.0%, during the same period. Return on average assets and return on average equity were 0.49% and 5.48%, respectively, for the three months ended December 31, 2024, compared to 0.39% and 4.31%, respectively, for the three months ended December 31, 2023.

Net Interest Income and Net Interest Margin

Net interest income decreased $903,000, or 5.6%, to $15.3 million, for the three months ended December 31, 2024, from $16.2 million for the three months ended December 31, 2023. The decrease in net interest income was due to an increase in interest expense of $2.7 million, or 25.7%, partially offset by an increase in interest and dividend income of $1.8 million, or 6.8%. During the three months ended December 31, 2024 and the three months ended December 31, 2023, the Company had a fair value hedge which contributed $74,000 to interest income during the three months ended December 31, 2024, compared to $459,000 during the three months ended December 31, 2023. The fair value hedge matured in October of 2024. The increase in interest expense was a result of competitive pricing on deposits due to the continued high interest rate environment and the unfavorable shift in the deposit mix from low cost core deposits to high cost time deposits.

The net interest margin was 2.41% for the three months ended December 31, 2024, compared to 2.64% for the three months ended December 31, 2023. The net interest margin, on a tax-equivalent basis, was 2.43% for the three months ended December 31, 2024, compared to 2.66% for the three months ended December 31, 2023. The decrease in the net interest margin was primarily due to an increase in the average cost of interest-bearing liabilities and the unfavorable shift in the deposit mix from low cost core deposits to high cost time deposits, which was partially offset by an increase in the average yield on interest-earning assets. During the three months ended December 31, 2024, the Company had a fair value hedge which contributed to an increase in the net interest margin of one basis point, compared to an increase of eight basis points during the three months ended December 31, 2023. The fair value hedge matured in October of 2024.

The average yield on interest-earning assets, without the impact of tax-equivalent adjustments, was 4.52% for the three months ended December 31, 2024, compared to 4.38% for the three months ended December 31, 2023. The average loan yield, without the impact of tax-equivalent adjustments, was 4.86% for the three months ended December 31, 2024, compared to 4.71% for the three months ended December 31, 2023. During the three months ended December 31, 2024, average interest-earning assets increased $89.9 million, or 3.7%, to $2.5 billion, primarily due to an increase in average loans of $45.7 million, or 2.3%, an increase in average short-term investments, consisting of cash and cash equivalents, of $34.0 million, or 79.3%, an increase in average securities of $6.4 million, or 1.8%, and an increase in average other investments of $3.8 million, or 31.4%.

The average cost of total funds, including non-interest bearing accounts and borrowings, increased 39 basis points from 1.81% for the three months ended December 31, 2023, to 2.20% for the three months ended December 31, 2024. The average cost of core deposits, which the Company defines as all deposits except time deposits, increased 22 basis points to 0.98% for the three months ended December 31, 2024, from 0.76% for the three months ended December 31, 2023. The average cost of time deposits increased 53 basis points from 3.78% for the three months ended December 31, 2023 to 4.31% for the three months ended December 31, 2024. The average cost of borrowings, including subordinated debt, increased 21 basis points from 4.83% for the three months ended December 31, 2023 to 5.04% for the three months ended December 31, 2024. Average demand deposits, an interest-free source of funds, decreased $9.6 million, or 1.6%, from $588.7 million, or 27.0% of total average deposits, for the three months ended December 31, 2023, to $579.2 million, or 25.6% of total average deposits, for the three months ended December 31, 2024.

Provision for (Reversal of) Credit Losses

During the three months ended December 31, 2024, the Company recorded a reversal of credit losses of $762,000, compared to a provision for credit losses of $486,000 during the three months ended December 31, 2023. The decrease was primarily due to a decrease in unfunded commercial real estate loan commitments, as well as changes in the economic environment and related adjustments to the quantitative components of the CECL methodology. The provision for credit losses was 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 and the economic outlook from the Federal Reserve’s actions to control inflation. Management continues to monitor macroeconomic variables related to increasing interest rates, inflation and the concerns of an economic downturn, and believes it is appropriately reserved for the current economic environment.

The Company recorded net recoveries of $128,000 for the three months ended December 31, 2024, as compared to net charge-offs of $136,000 for the three months ended December 31, 2023.

Non-Interest Income

Non-interest income increased $540,000, or 19.9%, from $2.7 million for the three months ended December 31, 2023, to $3.3 million for the three months ended December 31, 2024. Service charges and fees on deposits increased $18,000, or 0.8%, and income from BOLI increased $54,000, or 12.5%, from the three months ended December 31, 2023 to the three months ended December 31, 2024. 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 December 31, 2023. During the three months ended December 31, 2024, the Company reported a loss of $11,000 from mortgage banking activities and did not have comparable loss during the three months ended December 31, 2023. During the three months ended December 31, 2024 and the three months ended December 31, 2023, the Company reported $9,000 and $1,000, respectively, in unrealized losses on marketable equity securities. During the three months ended December 31, 2024, the Company reported a gain on non-marketable equity investments of $300,000 and did not have comparable non-interest income during the three months ended December 31, 2023.

Non-Interest Expense

For the three months ended December 31, 2024, non-interest expense increased $141,000, or 1.0%, to $14.9 million from $14.8 million for the three months ended December 31, 2023. During the three months ended December 31, 2023, the Company reached an agreement-in-principle to settle purported class action lawsuits concerning the Company’s deposit products and related disclosures, specifically involving overdraft fees and insufficient funds fees. This agreement-in-principle reflects our business decision to avoid the costs, uncertainties and distractions of further litigation. Excluding the legal settlement accrual of $510,000 during the three months ended December 31, 2023, non-interest expense increased $651,000, or 4.6%, from $14.3 million for the three months ended December 31, 2023 to $14.9 million for the three months ended December 31, 2024.

Salaries and related benefits increased $690,000, or 8.9%, to $8.4 million, primarily related to incentive compensation accrual adjustments due to revised payout estimates and annual merit increases. Data processing expense increased $112,000, or 14.2%, occupancy expense increased $58,000, or 4.8%, FDIC insurance expense increased $51,000, or 15.1%, software related expenses increased $44,000, or 7.4%, debit card processing and ATM network costs increased $34,000, or 6.0%, and furniture and equipment related expenses increased $11,000, or 2.2%. These increases were partially offset by a decrease in professional fees of $203,000, or 30.1%, a decrease in advertising expense of $67,000, or 17.8%, and a decrease in other non-interest expense of $589,000, or 29.1%. Excluding the $510,000 legal settlement accrual, other non-interest expense decreased $79,000, or 5.2%.

For the three months ended December 31, 2024, the efficiency ratio was 80.6%, compared to 78.3% for the three months ended December 31, 2023. For the three months ended December 31, 2024, the adjusted efficiency ratio, a non-GAAP financial measure, was 81.9% compared to 78.3% for the three months ended December 31, 2023. The increase in the efficiency ratio and the non-GAAP adjusted efficiency ratio was primarily driven by lower revenues during the three months ended December 31, 2024, compared to the three months ended December 31, 2023. See pages 20-22 for the related adjusted efficiency ratio calculation and a reconciliation of GAAP to non-GAAP financial measures.

Income Tax Provision

For the three months ended December 31, 2024, income tax expense was $1.1 million, with an effective tax rate of 24.6%, compared to $1.1 million, with an effective tax rate of 30.6%, for the three months ended December 31, 2023. For the three months ended December 31, 2023, the effective tax rate was negatively impacted by discrete items totaling $285,000.

Net Income for the Twelve Months Ended December 31, 2024 Compared to the Twelve Months Ended December 31, 2023

For the twelve months ended December 31, 2024, the Company reported net income of $11.7 million, or $0.56 per diluted share, compared to $15.1 million, or $0.70 per diluted share, for the twelve months ended December 31, 2023. Net interest income decreased $8.1 million, or 11.9%, provision for credit losses decreased $1.5 million, non-interest income increased $2.0 million, or 18.4%, and non-interest expense increased $78,000, or 0.1%, during the same period in 2023. Return on average assets and return on average equity were 0.45% and 4.93% for the twelve months ended December 31, 2024, respectively, compared to 0.59% and 6.47% for the twelve months ended December 31, 2023, respectively.

Net Interest Income and Net Interest Margin

During the twelve months ended December 31, 2024, net interest income decreased $8.1 million, or 11.9%, to $59.8 million, compared to $67.9 million for the twelve months ended December 31, 2023. The decrease in net interest income was primarily due to an increase in interest expense of $16.8 million, or 50.6%, partially offset by an increase in interest and dividend income of $8.7 million, or 8.6%.

The net interest margin for the twelve months ended December 31, 2024 was 2.45%, compared to 2.82% for the twelve months ended December 31, 2023. The net interest margin, on a tax-equivalent basis, was 2.47% for the twelve months ended December 31, 2024, compared to 2.84% for the twelve months ended December 31, 2023.

The average yield on interest-earning assets, without the impact of tax-equivalent adjustments, increased 30 basis points from 4.20% for the twelve months ended December 31, 2023 to 4.50% for the twelve months ended December 31, 2024. The average yield on loans, without the impact of tax-equivalent adjustments, increased 32 basis points from 4.54% for the twelve months ended December 31, 2023 to 4.86% for the twelve months ended December 31, 2024. During the twelve months ended December 31, 2024, average interest-earning assets increased $33.5 million, or 1.4%, to $2.4 billion, compared to the twelve months ended December 31, 2023, primarily due to an increase in average loans of $29.0 million, or 1.4%, an increase in average short-term investments, consisting of cash and cash equivalents, of $12.8 million, or 62.5%, and an increase in average other investments of $2.2 million, or 18.1%, partially offset by a decrease in average securities of $10.6 million, or 2.9%.

During the twelve months ended December 31, 2024, the average cost of funds, including non-interest-bearing demand accounts and borrowings, increased 70 basis points from 1.44% for the twelve months ended December 31, 2023 to 2.14%. For the twelve months ended December 31, 2024, the average cost of core deposits, including non-interest-bearing demand deposits, increased 24 basis points from 0.65% for the twelve months ended December 31, 2023, to 0.89%. The average cost of time deposits increased 129 basis points from 3.03% for the twelve months ended December 31, 2023 to 4.32% for the twelve months ended December 31, 2024. The average cost of borrowings, which include borrowings and subordinated debt, increased 16 basis points from 4.84% for the twelve months ended December 31, 2023 to 5.00% for the twelve months ended December 31, 2024.

For the twelve months ended December 31, 2024, average demand deposits, an interest-free source of funds, decreased $41.4 million, or 6.9%, from $602.7 million, or 27.8% of total average deposits, for the twelve months ended December 31, 2023, to $561.3 million, or 25.8% of total average deposits.

Provision for (Reversal of) Credit Losses

During the twelve months ended December 31, 2024, the Company recorded a reversal of credit losses of $665,000, compared to a provision for credit losses of $872,000 during the twelve months ended December 31, 2023. The decrease in reserves was primarily due to changes in the economic environment and related adjustments to the quantitative components of the CECL methodology. During the twelve months ended December 31, 2024, the Company recorded net recoveries of $87,000, compared to net charge-offs of $2.0 million for the twelve months ended December 31, 2023. The charge-offs during the twelve months ended December 31, 2023 were related to one commercial relationship acquired in October 2016 from Chicopee Bancorp, Inc. Specifically, the Company recorded a $1.9 million charge-off on the acquired commercial relationship, which represented the non-accretable credit mark that was required to be grossed-up to the loan’s amortized cost basis with a corresponding increase to the allowance for credit losses under the CECL implementation.

The decrease in the provision for credit losses was primarily due to changes in the loan mix as well as economic environment and related adjustments to the quantitative components of the CECL methodology. The provision for credit losses was 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 and the economic outlook from the Federal Reserve’s actions to control inflation. Management continues to monitor macroeconomic variables related to increasing interest rates, inflation and the concerns of an economic downturn, and believes it is appropriately reserved for the current economic environment.

Non-Interest Income

For the twelve months ended December 31, 2024, non-interest income increased $2.0 million, or 18.4%, from $10.9 million for the twelve months ended December 31, 2023 to $12.9 million. During the twelve months ended December 31, 2023, the Company recorded a non-recurring final termination expense of $1.1 million related to the defined benefit pension plan termination. During the twelve months ended, December 31, 2023, the Company also recorded a non-taxable gain of $778,000 on BOLI death benefits and did not have a comparable gain during the twelve months ended December 31, 2024. Excluding the defined benefit pension plan termination expense and the BOLI death benefit, non-interest income increased $1.6 million, or 14.6%.

During the twelve months ended December 31, 2024, service charges and fees increased $346,000, or 3.9%, and income from BOLI increased $91,000, or 5.0%, from $1.8 million for the twelve months ended December 31, 2023 to $1.9 million. During the twelve months ended December 31, 2024, the Company recorded other income from loan-level swap fees on commercial loans of $261,000 and did not have comparable income during the twelve months ended December 31, 2023. During the twelve months ended December 31, 2024, the Company reported a gain of $1.3 million on non-marketable equity investments, compared to a gain of $590,000 during the twelve months ended December 31, 2023. During the twelve months ended December 31, 2024, the Company reported a loss on the disposal of premises and equipment of $6,000, compared to a loss of $3,000 during the twelve months ended December 31, 2023. During the twelve months ended December 31, 2023, the Company also reported unrealized losses on marketable equity securities of $1,000, compared to unrealized gains on marketable equity securities of $13,000 during the twelve months ended December 31, 2024.

Non-Interest Expense

For the twelve months ended December 31, 2024, non-interest expense increased $78,000, or 0.1%, to $58.4 million from the twelve months ended December 31, 2023. During the twelve months ended December 31, 2023, the Company reached an agreement-in-principle to settle purported class action lawsuits concerning the Company’s deposit products and related disclosures, specifically involving overdraft fees and insufficient funds fees. This agreement-in-principle reflects our business decision to avoid the costs, uncertainties and distractions of further litigation. Excluding the legal settlement accrual of $510,000, non-interest expense increased $588,000, or 1.0%, from $57.8 million for the twelve months ended December 31, 2023 to $58.4 million for the twelve months ended December 31, 2024.

During the same period, salaries and related benefits increased $472,000, or 1.5%, software expenses increased $208,000, or 9.0%, data processing expense increased $320,000, or 10.1%, debit card processing and ATM network costs increased $298,000, or 13.9%, occupancy expense increased $146,000, or 3.0%, due to higher repair and maintenance costs, real estate taxes, and depreciation expense. FDIC insurance expense increased $139,000, or 10.5%. These increases were partially offset by a decrease in professional fees of $571,000, or 20.9%, which is comprised of legal fees, audit and other professional fees. During the three months ended December 31, 2023, professional fees included legal fees related to the settlement of the purported class action lawsuits. Advertising expense decreased $226,000, or 15.1%, and other non-interest expense, excluding the $510,000 legal settlement accrual, decreased $199,000, or 3.5%.

For the twelve months ended December 31, 2024, the efficiency ratio was 80.4%, compared to 74.0% for the twelve months ended December 31, 2023. For the twelve months ended December 31, 2024, the adjusted efficiency ratio, a non-GAAP financial measure, was 81.8%, compared to 74.3% for the twelve months ended December 31, 2023. See pages 20-22 for the related efficiency ratio calculations and a reconciliation of GAAP to non-GAAP financial measures.

Income Tax Provision

For the twelve months ended December 31, 2024, income tax expense was $3.3 million, with an effective tax rate of 22.0%, compared to $4.5 million, with an effective tax rate of 23.1%, for twelve months ended December 31, 2023. The decrease in income tax expense for the twelve months ended December 31, 2024 compared to the twelve months December 31, 2023 was due to lower income before taxes in 2024.

Balance Sheet

At December 31, 2024, total assets were $2.7 billion, an increase of $88.5 million, or 3.5%, from December 31, 2023. The increase in total assets was primarily due to an increase in total loans of $42.9 million, or 2.1%, an increase in cash and cash equivalents of $37.6 million, or 130.4%, and an increase in investment securities of $5.5 million, or 1.5%.

Investments

At December 31, 2024, the investment securities portfolio totaled $366.1 million, or 13.8% of total assets, compared to $360.7 million, or 14.1% of total assets, at December 31, 2023. At December 31, 2024, the Company’s available-for-sale securities portfolio, recorded at fair market value, increased $23.6 million, or 17.2%, from $137.1 million at December 31, 2023 to $160.7 million. The held-to-maturity securities portfolio, recorded at amortized cost, decreased $18.4 million, or 8.2%, from $223.4 million at December 31, 2023 to $205.0 million at December 31, 2024.

At December 31, 2024, the Company reported unrealized losses on the available-for-sale securities portfolio of $31.2 million, or 16.2% of the amortized cost basis of the available-for-sale securities portfolio, compared to unrealized losses of $29.2 million, or 17.5% of the amortized cost basis of the available-for-sale securities at December 31, 2023. At December 31, 2024, the Company reported unrealized losses on the held-to-maturity securities portfolio of $39.4 million, or 19.2% of the amortized cost basis of the held-to-maturity securities portfolio, compared to $35.7 million, or 16.0% of the amortized cost basis of the held-to-maturity securities portfolio at December 31, 2023.

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 $4.6 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 December 31, 2024 and December 31, 2023, 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 loans increased $42.9 million, or 2.1%, from December 31, 2023, to $2.1 billion at December 31, 2024. The increase in total loans was due to an increase in residential real estate loans, including home equity loans, of $53.5 million, or 7.4%, partially offset by a decrease in commercial real estate loans of $4.0 million, or 0.4%, a decrease in commercial and industrial loans of $5.7 million, or 2.7% and a decrease in consumer loans of $1.1 million, or 19.8%. During the twelve months ended December 31, 2024, the Company sold $20.1 million in fixed rate residential loans to the secondary market with servicing retained.

The following table presents the summary of the loan portfolio by the major classification of the loan at the periods indicated:

	December 31, 2024		December 31, 2023
	(Dollars in thousands)

Commercial real estate loans:
Non-owner occupied	$	880,828	$	881,643
Owner-occupied		194,904		198,108
Total commercial real estate loans		1,075,732		1,079,751

Residential real estate loans:
Residential		653,802		612,315
Home equity		121,857		109,839
Total residential real estate loans		775,659		722,154

Commercial and industrial loans		211,656		217,447

Consumer loans		4,391		5,472
Total gross loans		2,067,438		2,024,824
Unamortized premiums and net deferred loans fees and costs		2,751		2,493
Total loans	$	2,070,189	$	2,027,317

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 $5.0 million, or 0.24% of total loans, at December 31, 2024, compared to $6.0 million, or 0.30% of total loans at December 31, 2023. At December 31, 2024, nonperforming loans totaled $5.4 million, or 0.26% of total loans, compared to $6.4 million, or 0.32% of total loans, at December 31, 2023. At December 31, 2024 and December 31, 2023, there were no loans 90 or more days past due and still accruing interest. Total nonperforming assets totaled $5.4 million, or 0.20% of total assets, at December 31, 2024, compared to $6.4 million, or 0.25% of total assets, at December 31, 2023. At December 31, 2024 and December 31, 2023, the Company did not have any other real estate owned. At December 31, 2024, the allowance for credit losses was $19.5 million, or 0.94% of total loans and 362.9% of nonperforming loans, compared to $20.3 million, or 1.00% of total loans and 315.6% of nonperforming loans, at December 31, 2023. Total classified loans, defined as special mention and substandard loans, decreased $1.1 million, or 2.8%, from $39.5 million, or 1.9% of total loans, at December 31, 2023 to $38.4 million, or 1.9% of total loans, at December 31, 2024. Our commercial real estate portfolio is comprised of diversified property types and primarily within our geographic footprint. At December 31, 2024, the commercial real estate portfolio totaled $1.1 billion, and represented 52.0% of total loans. Of the $1.1 billion, $880.8 million, or 81.9%, was categorized as non-owner occupied commercial real estate and represented 325.2% 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

Total deposits increased $118.9 million, or 5.6%, from $2.1 billion at December 31, 2023 to $2.3 billion at December 31, 2024. Core deposits, which the Company defines as all deposits except time deposits, increased $26.7 million, or 1.7%, from $1.5 billion, or 71.5% of total deposits, at December 31, 2023, to $1.6 billion, or 68.9% of total deposits, at December 31, 2024. Non-interest-bearing deposits decreased $14.0 million, or 2.4%, to $565.6 million, and represent 25.0% of total deposits, money market accounts increased $27.1 million, or 4.3%, to $661.5 million, savings accounts decreased $5.8 million, or 3.1%, to $181.6 million and interest-bearing checking accounts increased $19.3 million, or 14.7%, to $150.3 million.

Time deposits increased $92.2 million, or 15.1%, from $611.4 million at December 31, 2023 to $703.6 million at December 31, 2024. Brokered time deposits, which are included in time deposits, totaled $1.7 million at December 31, 2024 and at December 31, 2023. The Company has experienced growth and movement in both money market accounts and time deposits as a result of relationship pricing, the current interest rate environment, and customer behaviors, 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 customer relationship base by competing for and retaining deposits in our local market. At December 31, 2024, the Bank’s uninsured deposits represented 28.4% of total deposits, compared to 26.8% at December 31, 2023.

The table below is a summary of our deposit balances for the periods noted:

	December 31, 2024		September 30, 2024		December 31, 2023
	(Dollars in thousands)
Core Deposits:
Demand accounts	$	565,620	$	568,685	$	579,595
Interest-bearing accounts		150,348		140,332		131,031
Savings accounts		181,618		179,214		187,405
Money market accounts		661,478		635,824		634,361
Total Core Deposits	$	1,559,064	$	1,524,055	$	1,532,392
Time Deposits:		703,583		700,151		611,352
Total Deposits:	$	2,262,647	$	2,224,206	$	2,143,744

FHLB and Subordinated Debt

At December 31, 2024, total borrowings decreased $33.4 million, or 21.3%, from $156.5 million at December 31, 2023 to $123.1 million. At December 31, 2024, short-term borrowings decreased $10.7 million, or 66.5%, to $5.4 million, compared to $16.1 million at December 31, 2023. Long-term borrowings decreased $22.6 million, or 18.8%, from $120.6 million at December 31, 2023 to $98.0 million at December 31, 2024. At December 31, 2024 and December 31, 2023, borrowings also consisted of $19.8 million and $19.7 million, respectively, in fixed-to-floating rate subordinated notes.

The Company utilized the Bank Term Funding Program (“BTFP”), which was created in March 2023 to enhance banking system liquidity by allowing institutions to pledge certain securities at par value and borrow at a rate of ten basis points over the one-year overnight index swap rate. The BTFP was available to federally insured depository institutions in the U.S., with advances having a term of up to one year with no prepayment penalties. The BTFP ceased extending new advances in March 2024. At December 31, 2023, the Company’s outstanding balance under the BTFP was $90.0 million. There was no outstanding balance under the BTFP at December 31, 2024.

As of December 31, 2024, the Company had $461.6 million of additional borrowing capacity at the Federal Home Loan Bank, $382.9 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 December 31, 2024, shareholders’ equity was $235.9 million, or 8.9% of total assets, compared to $237.4 million, or 9.3% of total assets, at December 31, 2023. The change was primarily attributable to an increase in accumulated other comprehensive loss of $1.5 million, cash dividends paid of $5.9 million, repurchase of shares at a cost of $7.8 million, partially offset by net income of $11.7 million. At December 31, 2024, total shares outstanding were 20,875,713. 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.

	December 31, 2024				December 31, 2023
	Company		Bank		Company		Bank
Total Capital (to Risk Weighted Assets)	14.38	%	13.65	%	14.67	%	13.94	%
Tier 1 Capital (to Risk Weighted Assets)	12.37	%	12.64	%	12.59	%	12.88	%
Common Equity Tier 1 Capital (to Risk Weighted Assets)	12.37	%	12.64	%	12.59	%	12.88	%
Tier 1 Leverage Ratio (to Adjusted Average Assets)	9.14	%	9.34	%	9.40	%	9.62	%

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 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															Twelve Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,
	2024			2024			2024			2024			2023			2024			2023
INTEREST AND DIVIDEND INCOME:
Loans	$	25,183		$	25,134		$	24,340		$	24,241		$	23,939		$	98,898		$	91,169
Securities		2,273			2,121			2,141			2,114			2,094			8,649			8,370
Other investments		214			189			148			136			140			687			558
Short-term investments		916			396			173			113			597			1,598			1,021
Total interest and dividend income		28,586			27,840			26,802			26,604			26,770			109,832			101,118

INTEREST EXPENSE:
Deposits		11,443			11,165			10,335			9,293			8,773			42,236			26,649
Short-term borrowings		60			71			186			283			123			600			1,589
Long-term debt		1,557			1,622			1,557			1,428			1,444			6,164			3,957
Subordinated debt		253			254			254			254			254			1,015			1,014
Total interest expense		13,313			13,112			12,332			11,258			10,594			50,015			33,209

Net interest and dividend income		15,273			14,728			14,470			15,346			16,176			59,817			67,909

(REVERSAL OF) PROVISION FOR CREDIT LOSSES		(762	)		941			(294	)		(550	)		486			(665	)		872

Net interest and dividend income after (reversal of) provision for credit losses		16,035			13,787			14,764			15,896			15,690			60,482			67,037

NON-INTEREST INCOME:
Service charges and fees on deposits		2,301			2,341			2,341			2,219			2,283			9,202			8,856
Income from bank-owned life insurance		486			470			502			453			432			1,911			1,820
Unrealized (loss) gain on marketable equity securities		(9	)		10			4			8			(1	)		13			(1	)
(Loss) gain on sale of mortgages		(11	)		246			–			–			–			235			–
Gain on non-marketable equity investments		300			–			987			–			–			1,287			590
Loss on disposal of premises and equipment		–			–			–			(6	)		–			(6	)		(3	)
Loss on defined benefit plan termination		–			–			–			–			–			–			(1,143	)
Gain on bank-owned life insurance death benefit		–			–			–			–			–			–			778
Other income		187			74			–			–			–			261			–
Total non-interest income		3,254			3,141			3,834			2,674			2,714			12,903			10,897

NON-INTEREST EXPENSE:
Salaries and employees benefits		8,429			8,112			7,901			8,244			7,739			32,686			32,214
Occupancy		1,256			1,217			1,218			1,363			1,198			5,054			4,908
Furniture and equipment		505			483			483			484			494			1,955			1,954
Data processing		900			869			846			862			788			3,477			3,157
Software		642			612			566			699			598			2,519			2,311
Debit/ATM card processing expense		593			649			643			552			559			2,437			2,139
Professional fees		471			540			581			569			674			2,161			2,732
FDIC insurance		389			338			323			410			338			1,460			1,321
Advertising		310			271			339			349			377			1,269			1,495
Other		1,431			1,315			1,414			1,250			2,020			5,410			6,119
Total non-interest expense		14,926			14,406			14,314			14,782			14,785			58,428			58,350

INCOME BEFORE INCOME TAXES		4,363			2,522			4,284			3,788			3,619			14,957			19,584

INCOME TAX PROVISION		1,075			618			771			827			1,108			3,291			4,516
NET INCOME	$	3,288		$	1,904		$	3,513		$	2,961		$	2,511		$	11,666		$	15,068

Basic earnings per share	$	0.16		$	0.09		$	0.17		$	0.14		$	0.12		$	0.56		$	0.70
Weighted average shares outstanding		20,561,749			20,804,162			21,056,173			21,180,968			21,253,452			20,899,573			21,535,888
Diluted earnings per share	$	0.16		$	0.09		$	0.17		$	0.14		$	0.12		$	0.56		$	0.70
Weighted average diluted shares outstanding		20,701,276			20,933,833			21,163,762			21,271,323			21,400,664			21,016,358			21,610,329

Other Data:
Return on average assets (1)		0.49	%		0.29	%		0.55	%		0.47	%		0.39	%		0.45	%		0.59	%
Return on average equity (1)		5.48	%		3.19	%		6.03	%		5.04	%		4.31	%		4.93	%		6.47	%
Efficiency ratio		80.56	%		80.62	%		78.20	%		82.03	%		78.27	%		80.35	%		74.04	%
Adjusted efficiency ratio (2)		81.85	%		80.67	%		82.68	%		82.04	%		78.26	%		81.80	%		74.25	%
Net interest margin		2.41	%		2.40	%		2.42	%		2.57	%		2.64	%		2.45	%		2.82	%
Net interest margin, on a fully tax-equivalent basis		2.43	%		2.42	%		2.44	%		2.59	%		2.66	%		2.47	%		2.84	%
(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, loss on disposal of premises and equipment, loss on defined benefit plan termination and gain on bank-owned life insurance death benefit.

WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Dollars in thousands) (Unaudited)

	December 31,			September 30,			June 30,			March 31,			December 31,
	2024			2024			2024			2024			2023
Cash and cash equivalents	$	66,450		$	72,802		$	53,458		$	22,613		$	28,840
Securities available-for-sale, at fair value		160,704			155,889			135,089			138,362			137,115
Securities held to maturity, at amortized cost		205,036			213,266			217,632			221,242			223,370
Marketable equity securities, at fair value		397			252			233			222			196
Federal Home Loan Bank of Boston and other restricted stock – at cost		5,818			7,143			7,143			3,105			3,707

Loans		2,070,189			2,049,002			2,026,226			2,025,566			2,027,317
Allowance for credit losses		(19,529	)		(19,955	)		(19,444	)		(19,884	)		(20,267	)
Net loans		2,050,660			2,029,047			2,006,782			2,005,682			2,007,050

Bank-owned life insurance		77,056			76,570			76,100			75,598			75,145
Goodwill		12,487			12,487			12,487			12,487			12,487
Core deposit intangible		1,438			1,531			1,625			1,719			1,813
Other assets		73,044			71,492			75,521			76,206			74,848
TOTAL ASSETS	$	2,653,090		$	2,640,479		$	2,586,070		$	2,557,236		$	2,564,571

Total deposits	$	2,262,647		$	2,224,206		$	2,171,809		$	2,143,747		$	2,143,744
Short-term borrowings		5,390			4,390			6,570			11,470			16,100
Long-term debt		98,000			128,277			128,277			120,646			120,646
Subordinated debt		19,751			19,741			19,731			19,722			19,712
Securities pending settlement		8,622			2,513			102			–			–
Other liabilities		22,770			20,697			23,104			25,855			26,960
TOTAL LIABILITIES		2,417,180			2,399,824			2,349,593			2,321,440			2,327,162

TOTAL SHAREHOLDERS’ EQUITY		235,910			240,655			236,477			235,796			237,409
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,653,090		$	2,640,479		$	2,586,070		$	2,557,236		$	2,564,571

WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES Other Data (Dollars in thousands, except per share data) (Unaudited)

	Three Months Ended
	December 31,	September 30,	June 30,	March 31,	December 31,
	2024	2024	2024	2024	2023
Shares outstanding at end of period	20,875,713	21,113,408	21,357,849	21,627,690	21,666,807

Operating results:
Net interest income	$ 15,273	$ 14,728	$ 14,470	$ 15,346	$ 16,176
(Reversal of) provision for credit losses	(762)	941	(294)	(550)	486
Non-interest income	3,254	3,141	3,834	2,674	2,714
Non-interest expense	14,926	14,406	14,314	14,782	14,785
Income before income provision for income taxes	4,363	2,522	4,284	3,788	3,619
Income tax provision	1,075	618	771	827	1,108
Net income	3,288	1,904	3,513	2,961	2,511

Performance Ratios:
Net interest margin	2.41%	2.40%	2.42%	2.57%	2.64%
Net interest margin, on a fully tax-equivalent basis	2.43%	2.42%	2.44%	2.59%	2.66%
Interest rate spread	1.63%	1.60%	1.66%	1.85%	1.96%
Interest rate spread, on a fully tax-equivalent basis	1.65%	1.62%	1.67%	1.86%	1.98%
Return on average assets	0.49%	0.29%	0.55%	0.47%	0.39%
Return on average equity	5.48%	3.19%	6.03%	5.04%	4.31%
Efficiency ratio (GAAP)	80.56%	80.62%	78.20%	82.03%	78.27%
Adjusted efficiency ratio (non-GAAP) ⁽¹⁾	81.85%	80.67%	82.68%	82.04%	78.26%

Per Common Share Data:
Basic earnings per share	$ 0.16	$ 0.09	$ 0.17	$ 0.14	$ 0.12
Earnings per diluted share	0.16	0.09	0.17	0.14	0.12
Cash dividend declared	0.07	0.07	0.07	0.07	0.07
Book value per share	11.30	11.40	11.07	10.90	10.96
Tangible book value per share (non-GAAP) ⁽²⁾	10.63	10.73	10.41	10.25	10.30

Asset Quality:
30-89 day delinquent loans	$ 3,694	$ 3,059	$ 3,270	$ 3,000	$ 4,605
90 days or more delinquent loans	1,301	1,253	2,280	1,716	1,394
Total delinquent loans	4,995	4,312	5,550	4,716	5,999
Total delinquent loans as a percentage of total loans	0.24%	0.21%	0.27%	0.23%	0.30%
Nonperforming loans	$ 5,381	$ 4,873	$ 5,845	$ 5,837	$ 6,421
Nonperforming loans as a percentage of total loans	0.26%	0.24%	0.29%	0.29%	0.32%
Nonperforming assets as a percentage of total assets	0.20%	0.18%	0.23%	0.23%	0.25%
Allowance for credit losses as a percentage of nonperforming loans	362.93%	409.50%	332.66%	340.65%	315.64%
Allowance for credit losses as a percentage of total loans	0.94%	0.97%	0.96%	0.98%	1.00%
Net loan (recoveries) charge-offs	$ (128)	$ 98	$ 10	$ (67)	$ 136
Net loan (recoveries) charge-offs as a percentage of average loans	(0.01)%	0.00%	0.00%	0.00%	0.01%

____________________________

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, loss on disposal of premises and equipment, loss on defined benefit plan termination and gain on bank-owned life insurance death benefit.
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 December 31, 2024, September 30, 2024 and December 31, 2023 and reflects the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated.

	Three Months Ended
	December 31, 2024								September 30, 2024							December 31, 2023
	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)	$	2,062,822		$	25,311		4.88	%	$	2,038,593	$	25,253		4.93	%	$	2,017,089	$	24,052		4.73	%
Securities(2)		361,476			2,273		2.50			354,696		2,121		2.38			355,078		2,094		2.34
Other investments		15,924			214		5.35			15,904		189		4.73			12,119		140		4.58
Short-term investments(3)		76,795			916		4.75			32,043		396		4.92			42,826		597		5.53
Total interest-earning assets		2,517,017			28,714		4.54			2,441,236		27,959		4.56			2,427,112		26,883		4.39
Total non-interest-earning assets		155,538								153,585							158,435
Total assets	$	2,672,555							$	2,594,821						$	2,585,547

LIABILITIES AND EQUITY:
Interest-bearing liabilities
Interest-bearing checking accounts	$	149,231			264		0.70		$	131,133		271		0.82		$	139,894		260		0.74
Savings accounts		179,122			38		0.08			179,844		38		0.08			187,047		39		0.08
Money market accounts		654,965			3,553		2.16			621,340		3,172		2.03			657,407		2,716		1.64
Time deposit accounts		700,324			7,588		4.31			688,797		7,684		4.44			603,860		5,758		3.78
Total interest-bearing deposits		1,683,642			11,443		2.70			1,621,114		11,165		2.74			1,588,208		8,773		2.19
Borrowings		147,748			1,870		5.04			153,317		1,947		5.05			149,585		1,821		4.83
Interest-bearing liabilities		1,831,390			13,313		2.89			1,774,431		13,112		2.94			1,737,793		10,594		2.42
Non-interest-bearing deposits		579,168								559,224							588,748
Other non-interest-bearing liabilities		23,380								23,466							27,847
Total non-interest-bearing liabilities		602,548								582,690							616,595
Total liabilities		2,433,938								2,357,121							2,354,388
Total equity		238,617								237,700							231,159
Total liabilities and equity	$	2,672,555							$	2,594,821						$	2,585,547
Less: Tax-equivalent adjustment(2)					(128	)						(119	)						(113	)
Net interest and dividend income				$	15,273						$	14,728						$	16,176
Net interest rate spread(4)							1.63	%						1.60	%						1.96	%
Net interest rate spread, on a tax-equivalent basis(5)							1.65	%						1.62	%						1.98	%
Net interest margin(6)							2.41	%						2.40	%						2.64	%
Net interest margin, on a tax-equivalent basis(7)							2.43	%						2.42	%						2.66	%
Ratio of average interest-earning assets to average interest-bearing liabilities							137.44	%						137.58	%						139.67	%

The following tables set forth the information relating to our average balances and net interest income for the twelve months ended December 31, 2024 and 2023 and reflect the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated.

	Twelve Months Ended December 31,
	2024							2023
	Average Balance		Interest			Average Yield/ Cost		Average Balance		Interest			Average Yield/ Cost
	Average Balance		Interest			Average Yield/ Cost		Average Balance		Interest			Average Yield/ Cost
	(Dollars in thousands)
ASSETS:
Interest-earning assets
Loans(1)(2)	$	2,035,149	$	99,369		4.88	%	$	2,006,166	$	91,640		4.57	%
Securities(2)		357,631		8,649		2.42			368,201		8,371		2.27
Other investments		14,669		687		4.68			12,425		558		4.49
Short-term investments(3)		33,254		1,598		4.81			20,459		1,021		4.99
Total interest-earning assets		2,440,703		110,303		4.52			2,407,251		101,590		4.22
Total non-interest-earning assets		155,056							155,511
Total assets	$	2,595,759						$	2,562,762

LIABILITIES AND EQUITY:
Interest-bearing liabilities
Interest-bearing checking accounts	$	136,861		1,022		0.75	%	$	142,005		1,041		0.73	%
Savings accounts		182,678		166		0.09			202,354		181		0.09
Money market accounts		631,197		12,242		1.94			697,621		9,529		1.37
Time deposit accounts		666,917		28,806		4.32			524,827		15,898		3.03
Total interest-bearing deposits		1,617,653		42,236		2.61			1,566,807		26,649		1.70
Short-term borrowings and long-term debt		155,560		7,779		5.00			135,532		6,560		4.84
Total interest-bearing liabilities		1,773,213		50,015		2.82			1,702,339		33,209		1.95
Non-interest-bearing deposits		561,264							602,652
Other non-interest-bearing liabilities		24,541							24,885
Total non-interest-bearing liabilities		585,805							627,537

Total liabilities		2,359,018							2,329,876
Total equity		236,741							232,886
Total liabilities and equity	$	2,595,759						$	2,562,762
Less: Tax-equivalent adjustment (2)				(471	)						(472	)
Net interest and dividend income			$	59,817						$	67,909
Net interest rate spread (4)						1.68	%						2.25	%
Net interest rate spread, on a tax-equivalent basis (5)						1.70	%						2.27	%
Net interest margin (6)						2.45	%						2.82	%
Net interest margin, on a tax-equivalent basis (7)						2.47	%						2.84	%
Ratio of average interest-earning assets to average interest-bearing liabilities						137.64	%						141.41	%

(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 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
	12/31/2024			9/30/2024			6/30/2024			3/31/2024			12/31/2023
	(Dollars in thousands)

Loan interest (no tax adjustment)	$	25,183		$	25,134		$	24,340		$	24,241		$	23,939
Tax-equivalent adjustment		128			119			114			110			113
Loan interest (tax-equivalent basis)	$	25,311		$	25,253		$	24,454		$	24,351		$	24,052

Net interest income (no tax adjustment)	$	15,273		$	14,728		$	14,470		$	15,346		$	16,176
Tax equivalent adjustment		128			119			114			110			113
Net interest income (tax-equivalent basis)	$	15,401		$	14,847		$	14,584		$	15,456		$	16,289

Net interest income (no tax adjustment)	$	15,273		$	14,728		$	14,470		$	15,346		$	16,176
Less:
Fair value hedge interest income		74			434			447			443			459
Adjusted net interest income (non-GAAP)	$	15,199		$	14,294		$	14,023		$	14,903		$	15,717

Average interest-earning assets	$	2,517,017		$	2,441,236		$	2,400,633		$	2,403,086		$	2,427,112
Net interest margin (no tax adjustment)		2.41	%		2.40	%		2.42	%		2.57	%		2.64	%
Net interest margin, tax-equivalent		2.43	%		2.42	%		2.44	%		2.59	%		2.66	%
Adjusted net interest margin, excluding fair value hedge interest income (non-GAAP)		2.40	%		2.33	%		2.35	%		2.50	%		2.57	%

Book Value per Share (GAAP)	$	11.30		$	11.40		$	11.07		$	10.90		$	10.96
Non-GAAP adjustments:
Goodwill		(0.60	)		(0.59	)		(0.58	)		(0.58	)		(0.58	)
Core deposit intangible		(0.07	)		(0.08	)		(0.08	)		(0.07	)		(0.08	)
Tangible Book Value per Share (non-GAAP)	$	10.63		$	10.73		$	10.41		$	10.25		$	10.30

	For the quarter ended
	12/31/2024			9/30/2024			6/30/2024			3/31/2024			12/31/2023
	(Dollars in thousands)

Efficiency Ratio:
Non-interest Expense (GAAP)	$	14,926		$	14,406		$	14,314		$	14,782		$	14,785

Net Interest Income (GAAP)	$	15,273		$	14,728		$	14,470		$	15,346		$	16,176

Non-interest Income (GAAP)	$	3,254		$	3,141		$	3,834		$	2,674		$	2,714
Non-GAAP adjustments:
Unrealized losses (gains) on marketable equity securities		9			(10	)		(4	)		(8	)		1
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)	$	2,963		$	3,131		$	2,843		$	2,672		$	2,715
Total Revenue for Adjusted Efficiency Ratio (non-GAAP)	$	18,236		$	17,859		$	17,313		$	18,018		$	18,891

Efficiency Ratio (GAAP)		80.56	%		80.62	%		78.20	%		82.03	%		78.27	%

Adjusted Efficiency Ratio (Non-interest Expense (GAAP)/Total Revenue for Adjusted Efficiency Ratio (non-GAAP))		81.85	%		80.67	%		82.68	%		82.04	%		78.26	%

	For the twelve months ended
	12/31/2024	12/31/2023
	(Dollars in thousands)

Loan income (no tax adjustment)	$ 98,898	$ 91,169
Tax-equivalent adjustment	471	472
Loan income (tax-equivalent basis)	$ 99,369	$ 91,641

Net interest income (no tax adjustment)	$ 59,817	$ 67,909
Tax equivalent adjustment	471	472
Net interest income (tax-equivalent basis)	$ 60,288	$ 68,381

Net interest income (no tax adjustment)	$ 59,817	$ 67,909
Less:
Fair value hedge interest income	1,398	1,085
Adjusted net interest income (non-GAAP)	$ 58,419	$ 66,824

Average interest-earning assets	$ 2,440,703	$ 2,407,251
Net interest margin (no tax adjustment)	2.45%	2.82%
Net interest margin, tax-equivalent	2.47%	2.84%
Adjusted net interest margin, excluding fair value hedge interest income (non-GAAP)	2.39%	2.77%

Adjusted Efficiency Ratio:
Non-interest Expense (GAAP)	$ 58,428	$ 58,350

Net Interest Income (GAAP)	$ 59,817	$ 67,909

Non-interest Income (GAAP)	$ 12,903	$ 10,897
Non-GAAP adjustments:
Unrealized gains on marketable equity securities	(13)	1
Loss on disposal of premises and equipment, net	6	3
Gain on bank-owned life insurance	–	(778)
Gain on non-marketable equity investments	(1,287)	(590)
Loss on defined benefit plan curtailment	–	1,143
Non-interest Income for Adjusted Efficiency Ratio (non-GAAP)	$ 11,609	$ 10,676
Total Revenue for Adjusted Efficiency Ratio (non-GAAP)	$ 71,426	$ 78,585

Efficiency Ratio (GAAP)	80.35%	74.04%

Adjusted Efficiency Ratio (Non-interest Expense (GAAP)/Total Revenue for Adjusted Efficiency Ratio (non-GAAP))	81.80%	74.25%

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 –

January 29, 2025

MIL-OSI: Enterprise Bancorp, Inc. Announces Fourth Quarter Financial Results

Source: GlobeNewswire (MIL-OSI)

Filed by Enterprise Bancorp, Inc.
pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934

Subject Company: Enterprise Bancorp, Inc.
SEC File No.: 001-33912
Date: January 28, 2025

LOWELL, Mass., Jan. 28, 2025 (GLOBE NEWSWIRE) — Enterprise Bancorp, Inc. (“Enterprise”) (NASDAQ: EBTC), parent of Enterprise Bank, announced its financial results for the three months ended December 31, 2024. Net income amounted to $10.7 million, or $0.86 per diluted common share, for the three months ended December 31, 2024, compared to $10.0 million, or $0.80 per diluted common share, for the three months ended September 30, 2024 and $7.9 million, or $0.64 per diluted common share, for the three months ended December 31, 2023.

On December 9, 2024, Enterprise and Enterprise Bank announced the signing of a definitive merger agreement with Independent Bank Corp. (“Independent”) and its wholly owned subsidiary, Rockland Trust Company (“Rockland Trust”), pursuant to which Enterprise will merge with and into Independent and Enterprise Bank will merge into Rockland Trust. The proposed merger is expected to close in the second half of 2025, subject to customary closing conditions, including regulatory approvals and approval of Enterprise shareholders. No vote of Independent Bank Corp. shareholders is required.

Selected financial results at or for the quarter ended December 31, 2024, compared to September 30, 2024, were as follows:

The returns on average assets and average equity were 0.89% and 11.82%, respectively.
Tax-equivalent net interest margin (non-GAAP) (“net interest margin”) was 3.29%, an increase of 7 basis points.
Total loans amounted to $3.98 billion, an increase of 3.2%.
Total deposits were relatively unchanged and amounted to $4.19 billion.
Wealth assets under management and administration amounted to $1.54 billion, an increase of 1.4%.

Chief Executive Officer Steven Larochelle commented, “As we continue to work toward the upcoming completion of the proposed merger with Rockland Trust, I am pleased to announce that our team continued to deliver strong results in the fourth quarter. Loan growth was once again robust at 3.2% for the quarter while operating results were positively impacted by margin expansion as we benefited from the impact of Federal Reserve Bank interest rate cuts coupled with the flattening of the yield curve.”

Executive Chairman & Founder George Duncan stated, “The news of our anticipated merger with Rockland Trust has been well received by our shareholders, customers and communities. The planning of our integration with them is going well and the anticipated synergies and cultural alignment of our two banks are being confirmed.”

Mr. Duncan added, “I congratulate Steve, and the whole team, for another very successful quarter and year. This was our third straight year of 12% loan growth, and I believe this is a testament to our relationship-based sales and service culture partnered with our strong commitment to community outreach and involvement.”

Net Interest Income

Net interest income for the three months ended December 31, 2024, amounted to $38.5 million, an increase of $2.0 million, or 5%, compared to the three months ended December 31, 2023. The increase was due primarily to an increase in loan interest income of $7.8 million, partially offset by an increase in deposit interest expense of $3.7 million and a decrease in income on other interest-earning assets of $1.5 million.

The increase in interest income during the fourth quarter of 2024, compared to the prior year quarter, was due primarily to loan growth and higher loan yields, while the increase in interest expense during the period was attributed primarily to an increase in certificates of deposit balances and higher market rates on deposits.

Net Interest Margin

Net interest margin for the three months ended December 31, 2024, September 30, 2024 and December 31, 2023, amounted to 3.29%, 3.22% and 3.29%, respectively.

Three months ended – December 31, 2024, compared to December 31, 2023

Net interest margin was positively impacted by loan growth and an increase in loan yields, offset by increases in average funding liabilities and funding costs as well as a decrease in the average balance of other interest-earning assets.

The increase in interest-earning asset yields of 27 basis points was due primarily to loan repricing and originations at higher interest rates while the increase in funding costs of 29 basis points was driven by higher market rates and growth in certificate of deposit balances.

Three months ended – December 31, 2024, compared to September 30, 2024

The increase in net interest margin was due primarily to loan growth and a decrease in funding costs, partially offset by decreases in interest-earning asset yields and the average balance of other interest-earning assets.

The decreases in funding costs of 10 basis points and interest-earning asset yields of 3 basis points were driven primarily by the 100 basis point reduction in the federal funds rate from September 2024 through December 2024. In addition, the decrease in other interest-earning assets resulted mainly from funding loan growth during the period.

Provision for Credit Losses

The provision for credit losses for the three-month periods ended December 31, 2024 and December 31, 2023, are presented below:

	Three months ended						Increase / (Decrease)
(Dollars in thousands)	December 31, 2024			December 31, 2023			Increase / (Decrease)
Provision for credit losses on loans – collectively evaluated	$	1,939		$	1,132		$	807
Provision for credit losses on loans – individually evaluated		(1,874	)		(27	)		(1,847	)
Provision for credit losses on loans		65			1,105			(1,040	)

Provision for unfunded commitments		(171	)		1,388			(1,559	)

Provision for credit losses	$	(106	)	$	2,493		$	(2,599	)

The decrease in the provision for credit losses of $2.6 million was due to net decreases in reserves on individually evaluated loans of $1.8 million and unfunded commitments of $1.6 million, partially offset by an increase in reserves on collectively evaluated loans of $807 thousand which was due primarily to loan growth.

The decrease in reserves on individually evaluated loans was due primarily to two commercial relationships that experienced improvement in their collateral valuation during the period and the decrease in reserves for unfunded commitments resulted primarily by a decrease in off-balance sheet commitments that required a reserve.

Non-Interest Income

Non-interest income for the three months ended December 31, 2024, amounted to $5.6 million, an increase of $69 thousand, or 1%, compared to the three months ended December 31, 2023. The increase was due primarily to increases in wealth management fees, income on bank-owned life insurance and other income, partially offset by a decrease in gains on equity securities.

Non-Interest Expense

Non-interest expense for the three months ended December 31, 2024, amounted to $29.8 million, an increase of $1.6 million, or 6%, compared to the three months ended December 31, 2023. The increase was due primarily to increases in salaries and employee benefits expense of $808 thousand and merger-related expenses of $1.1 million.

Income Taxes

The effective tax rate for the three months ended December 31, 2024, amounted to 25.4%, compared to 30.3% for the three months ended December 31, 2023. The decrease was due primarily to annual book to tax return adjustments in the prior year quarter.

Balance Sheet

Total assets amounted to $4.83 billion at December 31, 2024, compared to $4.47 billion at December 31, 2023, an increase of 8%.

Total investment securities at fair value amounted to $593.6 million at December 31, 2024, compared to $668.2 million at December 31, 2023. The decrease of 11% during the year ended December 31, 2024, was largely attributable to principal pay-downs, calls and maturities. In addition, unrealized losses on debt securities amounted to $101.8 million at December 31, 2024, compared to $102.9 million at December 31, 2023, a decrease of 1%.

Total loans amounted to $3.98 billion at December 31, 2024, compared to $3.57 billion at December 31, 2023. The increase of 12% during the year ended December 31, 2024, was due primarily to increases in commercial real estate and construction loans of $203.1 million and $94.9 million, respectively.

Total deposits amounted to $4.19 billion at December 31, 2024, compared to $3.98 billion at December 31, 2023. The increase of 5% during the year ended December 31, 2024, was due primarily to increases in money market and certificate of deposit balances of $51.5 million and $164.1 million, respectively.

Total borrowed funds amounted to $153.1 million at December 31, 2024, compared to $25.8 million at December 31, 2023. The increase of $127.4 million during the year ended December 31, 2024, the majority of which occurred at the end of December, resulted primarily from an increase in short-term advances used to support strong loan growth. Average borrowed funds during the fourth quarter of 2024 amounted to $37.8 million.

Total shareholders’ equity amounted to $360.7 million at December 31, 2024, compared to $329.1 million at December 31, 2023. The increase of 10% during the year ended December 31, 2024, was due primarily to an increase in retained earnings of $26.9 million.

Credit Quality

Selected credit quality metrics at December 31, 2024, compared to December 31, 2023, were as follows:

The allowance for credit losses (“ACL”) for loans amounted to $63.5 million, or 1.59% of total loans, compared to $59.0 million, or 1.65% of total loans. The decrease in the ACL for loans to total loan ratio was due primarily to a decrease in reserves on individually evaluated loans and a decrease in qualitative factors within our ACL model.
The reserve for unfunded commitments (included in other liabilities) amounted to $4.4 million, compared to $7.1 million. The decrease was driven primarily by a decrease in off-balance sheet commitments that required a reserve.
Non-performing loans amounted to $26.7 million, or 0.67% of total loans, compared to $11.4 million, or 0.32% of total loans. The increase resulted primarily from two individually evaluated commercial construction loans which were placed on non-accrual.

Net charge-offs for the year ended December 31, 2024, amounted to $206 thousand, or 0.01% of average total loans, compared to $105 thousand, or 0.00% of average total loans, for the year ended December 31, 2023.

Wealth Management

Wealth assets under management and administration, which are not carried as assets on the Company’s consolidated balance sheets, amounted to $1.54 billion at December 31, 2024, an increase of $215.8 million, or 16%, compared to December 31, 2023, and resulted primarily from an increase in market values.

About Enterprise Bancorp, Inc.

Enterprise Bancorp, Inc. is a Massachusetts corporation that conducts substantially all its operations through Enterprise Bank and Trust Company, commonly referred to as Enterprise Bank, and has reported 141 consecutive profitable quarters. Enterprise Bank is principally engaged in the business of attracting deposits from the general public and investing in commercial loans and investment securities. Through Enterprise Bank and its subsidiaries, the Company offers a range of commercial, residential and consumer loan products, deposit products and cash management services, electronic and digital banking options, as well as wealth management, and trust services. The Company’s headquarters and Enterprise Bank’s main office are located at 222 Merrimack Street in Lowell, Massachusetts. The Company’s primary market area is the Northern Middlesex, Northern Essex, and Northern Worcester counties of Massachusetts and the Southern Hillsborough and Southern Rockingham counties in New Hampshire. Enterprise Bank has 27 full-service branches located in the Massachusetts communities of Acton, Andover, Billerica (2), Chelmsford (2), Dracut, Fitchburg, Lawrence, Leominster, Lexington, Lowell (2), Methuen, North Andover, Tewksbury (2), Tyngsborough and Westford and in the New Hampshire communities of Derry, Hudson, Londonderry, Nashua (2), Pelham, Salem and Windham.

Forward-Looking Statements

This earnings release contains statements about future events that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by references to a future period or periods or by the use of the words “believe,” “expect,” “anticipate,” “intend,” “upcoming,” “estimate,” “assume,” “will,” “should,” “could,” “plan,” and other similar terms or expressions. Forward-looking statements should not be relied on because they involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of the Company. These risks, uncertainties, and other factors may cause the actual results, performance, and achievements of the Company to be materially different from the anticipated future results, performance or achievements expressed in, or implied by, the forward-looking statements. Factors that could cause such differences include, but are not limited to, (i) disruption from the proposed merger with Independent; (ii) the risk that the proposed merger with Independent may not be completed in a timely manner or at all; (iii) the occurrence of any event, change, or other circumstances that could give rise to the termination of the proposed merger with Independent, including under circumstances that would require Enterprise to pay a termination fee; (iv) the failure to obtain necessary shareholder or regulatory approvals for the proposed merger with Independent; (v) the ability to successfully integrate the combined business; (vi) the possibility that the amount of the costs, fees, expenses, and charges related to the proposed merger with Independent may be greater than anticipated, including as a result of unexpected or unknown factors, events, or liabilities; (vii) the failure of the conditions to the proposed merger with Independent to be satisfied; (viii) reputational risk and the reaction of the parties’ customers to the proposed merger with Independent; (xi) the risk of potential litigation or regulatory action related to the proposed merger with Independent; (x) the impact on us and our customers of a decline in general economic conditions and any regulatory responses thereto; (xi) potential recession in the United States and our market areas; (xii) the impacts related to or resulting from uncertainty in the banking industry as a whole; (xiii) increased competition for deposits and related changes in deposit customer behavior; (xiv) 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; (xv) the lingering inflationary pressures, and the risk of the resurgence of elevated levels of inflation, in the United States and our market areas; (xvi) the uncertain impacts of ongoing quantitative tightening and current and future monetary policies of the Board of Governors of the Federal Reserve System; (xvii) increases in unemployment rates in the United States and our market areas; (xviii) declines in commercial real estate values and prices; (xix) uncertainty regarding United States fiscal debt, deficit and budget matters; (xx) 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; (xxi) 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, including potential changes in U.S. and international trade policies and the resulting impact on the Company and its customers; (xxii) competition and market expansion opportunities; (xxiii) changes in non-interest expenditures or in the anticipated benefits of such expenditures; (xxiv) changes in tax laws; (xxv) the risks related to the development, implementation, use and management of emerging technologies, including artificial intelligence and machine learnings; (xxvi) potential increased costs related to the impacts of climate change; and (xxvii) current or future litigation, regulatory examinations or other legal and/or regulatory actions. Therefore, 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. For more information about these factors, please see our reports filed with or furnished to the U.S. Securities and Exchange Commission (the “SEC”), including our 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.” Any forward-looking statements contained in this earnings release are made as of the date hereof, and we undertake no duty, and specifically disclaim any duty, to update or revise any such statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

ENTERPRISE BANCORP, INC.
Consolidated Balance Sheets
(unaudited)

(Dollars in thousands, except per share data)	December 31, 2024			December 31, 2023
Assets
Cash and cash equivalents:
Cash and due from banks	$	42,689		$	37,443
Interest-earning deposits with banks		41,152			19,149
Total cash and cash equivalents		83,841			56,592
Investments:
Debt securities at fair value (amortized cost of $685,766 and $763,981, respectively)		583,930			661,113
Equity securities at fair value		9,665			7,058
Total investment securities at fair value		593,595			668,171
Federal Home Loan Bank stock		7,093			2,402
Loans held for sale		520			200
Loans:
Total loans		3,982,898			3,567,631
Allowance for credit losses		(63,498	)		(58,995	)
Net loans		3,919,400			3,508,636
Premises and equipment, net		42,444			44,931
Lease right-of-use asset		24,126			24,820
Accrued interest receivable		20,553			19,233
Deferred income taxes, net		49,096			49,166
Bank-owned life insurance		67,421			65,455
Prepaid income taxes		2,583			1,589
Prepaid expenses and other assets		11,398			19,183
Goodwill		5,656			5,656
Total assets	$	4,827,726		$	4,466,034
Liabilities and Shareholders‘Equity
Liabilities
Deposits	$	4,187,698		$	3,977,521
Borrowed funds		153,136			25,768
Subordinated debt		59,815			59,498
Lease liability		23,849			24,441
Accrued expenses and other liabilities		33,425			45,011
Accrued interest payable		9,055			4,678
Total liabilities		4,466,978			4,136,917
Commitments and Contingencies
Shareholders‘Equity
Preferred stock, $0.01 par value per share; 1,000,000 shares authorized; no shares issued		—			—
Common stock, $0.01 par value per share; 40,000,000 shares authorized; 12,447,308 and 12,272,674 shares issued and outstanding, respectively.		124			123
Additional paid-in capital		111,295			107,377
Retained earnings		328,243			301,380
Accumulated other comprehensive loss		(78,914	)		(79,763	)
Total shareholders’ equity		360,748			329,117
Total liabilities and shareholders’ equity	$	4,827,726		$	4,466,034

ENTERPRISE BANCORP, INC.
Consolidated Statements of Income
(unaudited)

	Three months ended								Year ended
(Dollars in thousands, except per share data)	December 31, 2024			September 30, 2024			December 31, 2023		December 31, 2024			December 31, 2023
Interest and dividend income:
Other interest-earning assets	$	833		$	2,497		$	2,350	$	6,199		$	9,943
Investment securities		3,881			3,835			4,219		15,693			18,575
Loans and loans held for sale		54,528			53,809			46,680		208,378			172,535
Total interest and dividend income		59,242			60,141			53,249		230,270			201,053
Interest expense:
Deposits		19,488			20,581			15,821		76,513			44,389
Borrowed funds		394			674			43		2,426			113
Subordinated debt		867			866			867		3,467			3,467
Total interest expense		20,749			22,121			16,731		82,406			47,969
Net interest income		38,493			38,020			36,518		147,864			153,084
Provision for credit losses		(106	)		1,332			2,493		1,985			9,249
Net interest income after provision for credit losses		38,599			36,688			34,025		145,879			143,835
Non-interest income:
Wealth management fees		2,043			2,025			1,797		7,888			6,730
Deposit and interchange fees		2,240			2,282			2,145		8,875			8,475
Income on bank-owned life insurance, net		522			518			314		2,001			1,264
Net losses on sales of debt securities		—			(2	)		—		(2	)		(2,419	)
Net gains on sales of loans		33			57			—		156			34
Net (losses) gains on equity securities		(30	)		604			674		1,140			666
Other income		808			656			617		2,821			2,859
Total non-interest income		5,616			6,140			5,547		22,879			17,609
Non-interest expense:
Salaries and employee benefits		19,276			20,097			18,468		78,224			72,283
Occupancy and equipment expenses		2,364			2,438			2,283		9,667			9,722
Technology and telecommunications expenses		2,687			2,618			2,719		10,708			10,656
Advertising and public relations expenses		609			559			709		2,585			2,786
Audit, legal and other professional fees		460			569			788		2,474			2,945
Deposit insurance premiums		950			900			768		3,571			2,712
Supplies and postage expenses		242			261			245		980			998
Merger-related expenses		1,137			—			—		1,137			—
Other operating expenses		2,117			1,911			2,244		7,786			8,097
Total non-interest expense		29,842			29,353			28,224		117,132			110,199
Income before income taxes		14,373			13,475			11,348		51,626			51,245
Provision for income taxes		3,646			3,488			3,441		12,893			13,187
Net income	$	10,727		$	9,987		$	7,907	$	38,733		$	38,058

Basic earnings per common share	$	0.86		$	0.80		$	0.64	$	3.13		$	3.11
Diluted earnings per common share	$	0.86		$	0.80		$	0.64	$	3.12		$	3.11

Basic weighted average common shares outstanding		12,433,895			12,428,543			12,261,918		12,386,669			12,223,626
Diluted weighted average common shares outstanding		12,460,063			12,438,160			12,276,769		12,398,062			12,244,036

ENTERPRISE BANCORP, INC.
Selected Consolidated Financial Data and Ratios
(unaudited)

	At or for the three months ended
(Dollars in thousands, except per share data)	December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023
Balance Sheet Data
Total cash and cash equivalents	$	83,841		$	88,632		$	199,719		$	147,834		$	56,592
Total investment securities at fair value		593,595			631,975			636,838			652,026			668,171
Total loans		3,982,898			3,858,940			3,768,649			3,654,322			3,567,631
Allowance for credit losses		(63,498	)		(63,654	)		(61,999	)		(60,741	)		(58,995	)
Total assets		4,827,726			4,742,809			4,773,681			4,624,015			4,466,034
Total deposits		4,187,698			4,189,461			4,248,801			4,106,119			3,977,521
Borrowed funds		153,136			59,949			61,785			63,246			25,768
Subordinated debt		59,815			59,736			59,657			59,577			59,498
Total shareholders’ equity		360,748			368,109			340,441			333,439			329,117
Total liabilities and shareholders’ equity		4,827,726			4,742,809			4,773,681			4,624,015			4,466,034

Wealth Management
Wealth assets under management	$	1,230,014		$	1,212,076		$	1,129,147		$	1,105,036		$	1,077,761
Wealth assets under administration	$	305,930		$	302,891		$	267,529		$	268,074		$	242,338

Shareholders’ Equity Ratios
Book value per common share	$	28.98		$	29.62		$	27.40		$	26.94		$	26.82
Dividends paid per common share	$	0.24		$	0.24		$	0.24		$	0.24		$	0.23

Regulatory Capital Ratios
Total capital to risk weighted assets		13.06	%		13.07	%		13.07	%		13.20	%		13.12	%
Tier 1 capital to risk weighted assets⁽¹⁾		10.38	%		10.36	%		10.34	%		10.43	%		10.34	%
Tier 1 capital to average assets		8.94	%		8.68	%		8.76	%		8.85	%		8.74	%

Credit Quality Data
Non-performing loans	$	26,687		$	25,946		$	17,731		$	18,527		$	11,414
Non-performing loans to total loans		0.67	%		0.67	%		0.47	%		0.51	%		0.32	%
Non-performing assets to total assets		0.55	%		0.55	%		0.37	%		0.40	%		0.26	%
ACL for loans to total loans		1.59	%		1.65	%		1.65	%		1.66	%		1.65	%
Net charge-offs (recoveries)	$	221		$	(7	)	$	(130	)	$	122		$	15

Income Statement Data
Net interest income	$	38,493		$	38,020		$	36,161		$	35,190		$	36,518
Provision for credit losses		(106	)		1,332			137			622			2,493
Total non-interest income		5,616			6,140			5,628			5,495			5,547
Total non-interest expense		29,842			29,353			29,029			28,908			28,224
Income before income taxes		14,373			13,475			12,623			11,155			11,348
Provision for income taxes		3,646			3,488			3,111			2,648			3,441
Net income	$	10,727		$	9,987		$	9,512		$	8,507		$	7,907

Income Statement Ratios
Diluted earnings per common share	$	0.86		$	0.80		$	0.77		$	0.69		$	0.64
Return on average total assets		0.89	%		0.82	%		0.82	%		0.75	%		0.69	%
Return on average shareholders’ equity		11.82	%		11.20	%		11.55	%		10.47	%		10.21	%
Net interest margin (tax-equivalent)⁽²⁾		3.29	%		3.22	%		3.19	%		3.20	%		3.29	%

(1) Ratio also represents common equity tier 1 capital to risk weighted assets as of the periods presented.
(2) Tax-equivalent net interest margin is net interest income adjusted for the tax-equivalent effect associated with tax-exempt loan and investment income, expressed as a percentage of average interest-earning assets.

ENTERPRISE BANCORP, INC.
Consolidated Loan and Deposit Data
(unaudited)

Major classifications of loans at the dates indicated were as follows:

(Dollars in thousands)	December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023
Commercial real estate owner-occupied	$	704,634		$	660,063		$	660,478		$	635,420		$	619,302
Commercial real estate non owner-occupied		1,563,201			1,579,827			1,544,386			1,524,174			1,445,435
Commercial and industrial		479,821			415,642			426,976			417,604			430,749
Commercial construction		679,969			674,434			622,094			583,711			585,113
Total commercial loans		3,427,625			3,329,966			3,253,934			3,160,909			3,080,599

Residential mortgages		443,096			424,030			413,323			400,093			393,142
Home equity loans and lines		103,858			95,982			93,220			85,144			85,375
Consumer		8,319			8,962			8,172			8,176			8,515
Total retail loans		555,273			528,974			514,715			493,413			487,032
Total loans		3,982,898			3,858,940			3,768,649			3,654,322			3,567,631

ACL for loans		(63,498	)		(63,654	)		(61,999	)		(60,741	)		(58,995	)
Net loans	$	3,919,400		$	3,795,286		$	3,706,650		$	3,593,581		$	3,508,636

Deposits are summarized at the periods indicated were as follows:

(Dollars in thousands)	December 31, 2024		September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023
Non-interest checking	$	1,077,998	$	1,064,424	$	1,041,771	$	1,038,887	$	1,061,009
Interest-bearing checking		699,671		682,050		788,822		730,819		697,632
Savings		270,367		279,824		294,566		285,090		294,865
Money market		1,454,443		1,488,437		1,504,551		1,469,181		1,402,939
CDs $250,000 or less		377,958		375,055		358,149		337,367		295,789
CDs greater than $250,000		307,261		299,671		260,942		244,775		225,287
Deposits	$	4,187,698	$	4,189,461	$	4,248,801	$	4,106,119	$	3,977,521

ENTERPRISE BANCORP, INC.
Consolidated Average Balance Sheets and Yields (tax-equivalent basis)
(unaudited)

The following table presents the Company’s average balance sheets, net interest income and average rates for the periods indicated:

	Three months ended December 31, 2024						Three months ended September 30, 2024						Three months ended December 31, 2023
(Dollars in thousands)	Average Balance		Interest⁽¹⁾		Average Yield⁽¹⁾		Average Balance		Interest⁽¹⁾		Average Yield⁽¹⁾		Average Balance		Interest⁽¹⁾		Average Yield⁽¹⁾
Assets:
Other interest-earning assets⁽²⁾	$	68,224	$	833	4.85	%	$	181,465	$	2,497	5.48	%	$	172,167	$	2,350	5.42	%
Investment securities⁽³⁾(tax-equivalent)		704,629		3,985	2.26	%		731,815		3,945	2.16	%		799,093		4,345	2.17	%
Loans and loans held for sale⁽⁴⁾(tax-equivalent)		3,911,386		54,673	5.56	%		3,813,800		53,956	5.63	%		3,467,945		46,824	5.36	%
Total interest-earnings assets (tax-equivalent)		4,684,239		59,491	5.06	%		4,727,080		60,398	5.09	%		4,439,205		53,519	4.79	%
Other assets		101,952						104,284						78,102
Total assets	$	4,786,191					$	4,831,364					$	4,517,307

Liabilities and stockholders’ equity:
Non-interest checking	$	1,106,823		—			$	1,069,130		—			$	1,145,254	$	—
Interest checking, savings and money market		2,471,854		11,728	1.89	%		2,574,439		13,017	2.01	%		2,437,142		10,786	1.76	%
CDs		683,248		7,760	4.52	%		651,614		7,564	4.62	%		500,286		5,035	3.99	%
Total deposits		4,261,925		19,488	1.82	%		4,295,183		20,581	1.91	%		4,082,682		15,821	1.54	%
Borrowed funds		37,812		394	4.15	%		61,232		674	4.38	%		7,572		43	2.24	%
Subordinated debt⁽⁵⁾		59,768		867	5.80	%		59,689		866	5.81	%		59,451		867	5.83	%
Total funding liabilities		4,359,505		20,749	1.89	%		4,416,104		22,121	1.99	%		4,149,705		16,731	1.60	%
Other liabilities		65,720						60,524						60,376
Total liabilities		4,425,225						4,476,628						4,210,081
Stockholders’ equity		360,966						354,736						307,226
Total liabilities and stockholders’ equity	$	4,786,191					$	4,831,364					$	4,517,307

Net interest-rate spread (tax-equivalent)					3.17	%					3.10	%					3.19	%
Net interest income (tax-equivalent)				38,742						38,277						36,788
Net interest margin (tax-equivalent)					3.29	%					3.22	%					3.29	%
Less tax-equivalent adjustment				249						257						270
Net interest income			$	38,493					$	38,020					$	36,518
Net interest margin					3.27	%					3.20	%					3.27	%

(1) Average yields and interest income are presented on a tax-equivalent basis, calculated using a U.S. federal income tax rate of 21% for each period presented, based on tax-equivalent adjustments associated with tax-exempt loans and investments interest income.
(2) Average other interest-earning assets include interest-earning deposits with banks, federal funds sold and Federal Home Loan Bank stock.
(3) Average investment securities are presented at average amortized cost.
(4) Average loans and loans held for sale are presented at average amortized cost and include non-accrual loans.
(5) Subordinated debt is net of average deferred debt issuance costs.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This communication may contain forward-looking statements, including, but not limited to, certain plans, expectations, goals, projections, and statements about the benefits of the proposed transaction, the plans, objectives, expectations and intentions of Independent and Enterprise, the expected timing of completion of the proposed transaction, and other statements that are not historical facts. Such statements reflect the current views of Independent Bank Corp. (“Independent”) and Enterprise Bancorp, Inc. (“Enterprise”) with respect to future events and financial performance, and are subject to numerous assumptions, risks, and uncertainties. Statements that do not describe historical or current facts, including statements about beliefs, expectations, plans, predictions, forecasts, objectives, assumptions or future events or performance, are forward-looking statements. Forward-looking statements often, but not always, may be identified by words such as expect, anticipate, believe, intend, potential, estimate, plan, target, goal, or similar words or expressions, or future or conditional verbs such as will, may, might, should, would, could, or similar variations. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995.

Independent and Enterprise caution that the forward-looking statements in this communication are not guarantees of future performance and involve a number of known and unknown risks, uncertainties and assumptions that are difficult to assess and are subject to change based on factors which are, in many instances, beyond Independent’s and Enterprise’s control. While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: (1) changes in general economic, political, or industry conditions; (2) uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve Board; (3) volatility and disruptions in global capital and credit markets; (4) movements in interest rates; (5) the resurgence of elevated levels of inflation or inflationary pressures in the United States and the Enterprise and Independent market areas; (6) increased competition in the markets of Independent and Enterprise; (7) success, impact, and timing of business strategies of Independent and Enterprise; (8) the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations; (9) the expected impact of the proposed transaction between Enterprise and Independent on the combined entities’ operations, financial condition, and financial results; (10) the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed transaction); (11) the failure to obtain Enterprise shareholder approval or to satisfy any of the other conditions to the proposed transaction on a timely basis or at all or other delays in completing the proposed transaction; (12) the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the merger agreement; (13) the outcome of any legal proceedings that may be instituted against Independent or Enterprise; (14) the possibility that the anticipated benefits of the proposed transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Independent and Enterprise do business; (15) the possibility that the proposed transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (16) diversion of management’s attention from ongoing business operations and opportunities; (17) potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the proposed transaction; (18) the dilution caused by Independent’s issuance of additional shares of its capital stock in connection with the proposed transaction; (19) 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; and (20) other factors that may affect the future results of Independent and Enterprise.

Additional factors that could cause results to differ materially from those described above can be found in Independent’s Annual Report on Form 10-K for the year ended December 31, 2023 and in its subsequent Quarterly Reports on Form 10-Q, including in the respective “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of such reports, as well as in subsequent SEC filings, each of which is on file with the U.S. Securities and Exchange Commission (the “SEC”) and available in the “Investor Relations” section of Independent’s website, www.rocklandtrust.com, under the heading “SEC Filings” and in other documents Independent files with the SEC, and in Enterprise’s Annual Report on Form 10-K for the year ended December 31, 2023 and in its subsequent Quarterly Reports on Form 10-Q, including in the respective “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of such reports, as well as in subsequent SEC filings, each of which is on file with and available in the “Investor Relations” section of Enterprise’s website, enterprisebancorp.q4ir.com, under the heading “SEC Filings” and in other documents Enterprise files with the SEC.

All forward-looking statements speak only as of the date they are made and are based on information available at that time. Neither Independent nor Enterprise assumes any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by applicable law. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements. All forward-looking statements, express or implied, included in the document are qualified in their entirety by this cautionary statement.

ADDITIONAL INFORMATION AND WHERE TO FIND IT

This communication is being made with respect to the proposed transaction involving Independent and Enterprise. This material is not a solicitation of any vote or approval of the Enterprise shareholders and is not a substitute for the proxy statement/prospectus or any other documents that Independent and Enterprise may send to their respective shareholders in connection with the proposed transaction. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

In connection with the proposed transaction between Independent and Enterprise, Independent has filed with the SEC a Registration Statement on Form S-4 (the “Registration Statement”) that includes a proxy statement for a special meeting of Enterprise’s shareholders to approve the proposed transaction and that also constitutes a prospectus for the Independent common stock that will be issued in the proposed transaction, as well as other relevant documents concerning the proposed transaction. BEFORE MAKING ANY VOTING OR INVESTMENT DECISIONS, INVESTORS AND SHAREHOLDERS OF INDEPENDENT AND ENTERPRISE ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Enterprise will mail the proxy statement/prospectus to its shareholders. Shareholders are also urged to carefully review and consider Independent’s and Enterprise’s public filings with the SEC, including, but not limited to, their respective proxy statements, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Copies of the Registration Statement and of the proxy statement/prospectus and other filings incorporated by reference therein, as well as other filings containing information about Independent and Enterprise, can be obtained, free of charge, as they become available at the SEC’s website (http://www.sec.gov). Copies of the proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the proxy statement/prospectus can also be obtained, without charge, by directing a request to Independent Investor Relations, 288 Union Street, Rockland, Massachusetts 02370, telephone (774) 363-9872 or to Enterprise Bancorp, Inc., 222 Merrimack Street, Lowell, MA 01852, Attention: Corporate Secretary, telephone (978) 656-5578.

PARTICIPANTS IN THE SOLICITATION

Independent, Enterprise, and certain of their respective directors, executive officers and employees may, under the SEC’s rules, be deemed to be participants in the solicitation of proxies from the shareholders of Enterprise in connection with the proposed transaction. Information regarding Independent’s directors and executive officers is available in its definitive proxy statement relating to its 2024 Annual Meeting of Shareholders, which was filed with the SEC on March 28, 2024, and its Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 28, 2024, and other documents filed by Independent with the SEC. Information regarding Enterprise’s directors and executive officers is available in its definitive proxy statement relating to its 2024 Annual Meeting of Shareholders, which was filed with the SEC on April 3, 2024, and its Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on March 8, 2024 and other documents filed by Enterprise with the SEC. Other information regarding the persons who may, under the SEC’s rules, be deemed to be participants in the proxy solicitation of Enterprise’s shareholders in connection with the proposed transaction, and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus regarding the proposed transaction and other relevant materials filed with the SEC when they become available, which may be obtained free of charge as described in the preceding paragraph.

Contact Info: Joseph R. Lussier, Executive Vice President, Chief Financial Officer and Treasurer (978) 656-5578

The MIL Network –

January 29, 2025

MIL-OSI: Chemung Financial Corporation Reports Annual Net Income of $23.7 million, or $4.96 per share, and Fourth Quarter 2024 Net Income of $5.9 million, or $1.24 per share

Source: GlobeNewswire (MIL-OSI)

ELMIRA, N.Y., Jan. 28, 2025 (GLOBE NEWSWIRE) — Chemung Financial Corporation (the “Corporation”) (Nasdaq: CHMG), the parent company of Chemung Canal Trust Company (the “Bank”), today reported net income of $23.7 million, or $4.96 per share, for the year ended December 31, 2024, compared to $25.0 million, or $5.28 per share, for the year ended December 31, 2023. Net income was $5.9 million, or $1.24 per share, for the fourth quarter of 2024, compared to $5.7 million, or $1.19 per share, for the third quarter of 2024, and $3.8 million, or $0.80 per share, for the fourth quarter of 2023.

“A prudent and relationship-based effort to manage funding costs provided a tailwind for fourth quarter earnings, and capped a solid year of results in an uncertain environment,” said Anders M. Tomson, President and CEO of Chemung Financial Corporation. “Strong net interest margin expansion speaks to the execution of Bank-wide strategic initiatives and a thoughtful approach to loan growth, particularly in our newly established Canal Bank division,” added Tomson.

“As we reflect on 2024 and look ahead to 2025, the Corporation is situated to perform well, due in large part to the combined efforts of our team over the past year. Our results demonstrate the continued value of a community-focused approach to banking, which we look forward to carrying on in the coming year,” concluded Tomson.

Fourth Quarter Highlights:

Net interest margin expanded 20 basis points compared to the prior quarter, from 2.72% in the third quarter 2024 to 2.92% in the fourth quarter 2024. ¹

Annual loan growth totaled 5.0% for the year ended December 31, 2024, including commercial and industrial growth of 13.3% and commercial real estate growth of 8.4%.

Non-performing loans to total loans declined nine basis points compared to September 30, 2024 and ten basis points compared to December 31, 2023, while non-performing assets to total assets declined five basis points compared to both September 30, 2024 and December 31, 2023.

Dividends declared during the fourth quarter 2024 were $0.31 per share.

¹ See the GAAP to Non-GAAP reconciliations.

2024 vs 2023

Net Interest Income:

Net interest income for the year ended December 31, 2024 totaled $74.1 million, compared to $74.5 million for the prior year, a decrease of $0.4 million, or 0.5%, driven by increases of $14.1 million in interest expense on deposits and $0.8 million in interest expense on borrowed funds, and a decrease of $1.3 million in interest and dividend income on taxable securities, offset by increases of $14.9 million in interest income on loans, including fees, and $0.9 million in interest income on interest-earning deposits.

Interest expense on deposits increased primarily due to a 68 basis points increase in the average interest rate paid on interest-bearing deposits, which included brokered deposits, and deposit campaigns primarily relating to time deposits. The increase in interest expense on borrowed funds was largely due to a $16.2 million increase in average balances of borrowed funds, compared to the prior year, partially offset by a 14 basis points decrease in the average interest rate paid on total borrowings, compared to the prior year. Average balances of borrowed funds in the current year consisted of FHLBNY overnight and term advances and a Federal Reserve Bank Term Funding Program Advance (BTFP), while borrowed funds in the prior year consisted primarily of FHLBNY overnight advances. The decrease in interest and dividend income on taxable securities was largely due to a decrease of $58.0 million in average balances of taxable securities, primarily due to paydowns on mortgage-backed and SBA pooled loan securities. The average yield on taxable securities was comparable between 2023 and 2024.

Interest income on loans, including fees increased primarily due to an increase of $117.5 million in average total loan balances and an increase of 44 basis points in the average yield on total loans. The increase in average balances was concentrated in the commercial portfolio, which increased $136.8 million compared to the prior year. Average balances of consumer loans and residential mortgage loans decreased $11.0 million and $8.3 million respectively, compared to the prior year. The average yield on commercial loans increased 37 basis points, while the average yields on consumer loans and residential mortgage loans increased 69 and 30 basis points respectively, compared to the prior year. The increase in interest income on interest-earning deposits was mainly due to an increase of $18.8 million in average balances of interest-earning deposits, due to an increase in deposits at the Federal Reserve Bank of New York.

Fully taxable equivalent net interest margin was 2.76% for the year ended December 31, 2024, compared to 2.85% for the prior year. Average interest-earning assets increased $76.9 million while average interest-bearing liabilities increased $108.1 million during 2024, compared to the prior year. The average yield on interest-earning assets increased 41 basis points to 4.74%, while the average cost of interest-bearing liabilities increased 67 basis points to 2.87% during 2024, compared to the prior year, both primarily due to the lagging effects of interest rate increases during 2022 and 2023.

Provision for Credit Losses:

Provision for credit losses for the year ended December 31, 2024 was a credit of $46 thousand, compared to a provision of $3.3 million for the prior year, a decrease of $3.3 million. The decrease was largely due to the annual review and update to the loss drivers which the Bank’s CECL model is based upon, resulting in a decline in baseline loss rates. The updates were applied beginning in the first quarter of 2024, and resulted in a credit to provision of $2.0 million for the first quarter of 2024. Additionally, provisioning in 2023 included a $0.9 million specific allocation on a nonaccrual commercial real estate relationship.

Non-Interest Income:

Non-interest income for the year ended December 31, 2024 was $23.2 million, compared to $24.5 million for the prior year, a decrease of $1.3 million, or 5.3%, driven by decreases of $2.5 million in other non-interest income and $0.2 million in interchange revenue from debit card transactions, offset by an increase of $1.1 million in wealth management group fee income.

Other non-interest income decreased primarily due to the recognition of a $2.4 million employee retention tax credit (ERTC) in the third quarter of 2023. The decrease in interchange revenue from debit card transactions was primarily due to a decrease in transactional volume compared to the prior year. The increase in wealth management group fee income was largely due to improvements in equity markets during 2024.

Non-Interest Expense:

Non-interest expense for the year ended December 31, 2024 was $67.3 million, compared to $64.2 million for the prior year, an increase of $3.1 million, or 4.8%, driven by increases of $1.6 million in salaries and wages, $0.7 million in pension and other employee benefits, $0.3 million in data processing, and $0.3 million in marketing and advertising.

Salaries and wages increased primarily due to additional staffing in the Bank’s new Western New York market, merit-based wage increases, and promotions, which was partially offset by savings from the outsourcing of certain back office functions during 2024. The increase in pension and other employee benefits was largely due to an increase in employee healthcare-related expenses, compared to the prior year. The increase in data processing was primarily due to the addition of new contracts, an increase in debit card procurement expenses, and an increase in cybersecurity software expense. The increase in marketing and advertising was mainly due to expenditures relating to the Bank’s 190th anniversary checking account promotion and ongoing CD campaigns, the launch of the Bank’s new Western New York “Canal Bank” brand, and a general increase in advertising efforts during the current year.

Income Tax Expense:

Income tax expense for the year ended December 31, 2024 was $6.4 million, compared to $6.5 million for the prior year, a decrease of $0.1 million. The effective tax rate for the year ended December 31, 2024 increased to 21.3%, compared to 20.6% for the prior year. The decrease in income tax expense was primarily due to a decrease in pretax income.

4th Quarter 2024 vs 3rd Quarter 2024

Net Interest Income:

Net interest income for the fourth quarter of 2024 totaled $19.8 million, compared to $18.4 million for the prior quarter, an increase of $1.4 million, or 7.6%, driven by decreases of $0.8 million in interest expense on deposits and $0.4 million in interest expense on borrowed funds, and an increase of $0.2 million in interest income on loans.

Interest expense on deposits decreased primarily due to a decrease of 21 basis points in the average interest rate paid on total interest-bearing deposits, despite an increase of $17.6 million in average balances of total interest-bearing deposits, compared to the prior quarter. The average interest rate paid on brokered deposits decreased 61 basis points, as the Bank replaced brokered deposits carrying higher interest rates with lower cost brokered deposits during the quarter. Average balances of brokered deposits increased $8.9 million compared to the prior quarter. The average interest rate paid on customer time deposits decreased 21 basis points and average balances of customer time deposits decreased $13.8 million in the current quarter, compared to the prior quarter. Both the decrease in average interest rate paid and average balances were largely due to a shift in the Bank’s CD campaign strategy, which included reducing the interest rates of its primary campaign offerings by 50 basis points in September. Customer time deposits comprised 22.1% of average total deposits for the three months ended December 31, 2024, compared to 23.0% for the three months ended September 30, 2024. The average interest rate paid on savings and money market deposits decreased 17 basis points, as the Bank adjusted rates offered on money market products to better align with current market conditions, while average balances of savings and money market deposits increased $6.7 million, compared to the prior quarter.

The decrease in interest expense on borrowed funds was primarily due to a decrease in the average cost of total borrowings of 34 basis points, and a decrease in average balances of borrowed funds of $27.5 million, compared to the prior quarter. The decrease in the average cost was partially due to decreases in benchmark interest rates during the quarter, and the decrease in average balances was partially due to an increase in average balances of brokered deposits and seasonal inflows of municipal deposits at the end of the prior quarter. Average balances of borrowed funds in the current quarter consisted primarily of FHLBNY overnight advances, while average balances in the prior quarter primarily consisted of a $30.0 million FHLBNY term advance and a $50.0 million BTFP advance. The FHLBNY term advance matured in September 2024, while the BTFP advance was prepaid in its entirety in October 2024, without prepayment penalty.

Interest income on loans, including fees, increased primarily due to a $32.6 million increase in average balances of commercial loans, despite a decrease of seven basis points in the average yield on commercial loans, compared to the prior quarter. Increases in average balances were distributed between commercial real estate and commercial and industrial loans, while the decrease in the average yield was largely due to rate decreases on existing variable rate loans. Total interest income on commercial loans included $0.3 million in interest income recognized on the payoff of a nonaccrual construction loan during the fourth quarter. Average balances of residential mortgage loans increased $1.3 million and the average yield on residential mortgage loans increased two basis points, compared to the prior quarter. Origination yields of residential mortgage loans remained elevated despite the declining interest rate environment. Average balances of consumer loans decreased $7.9 million while the average yield increased eight basis points, compared to the prior quarter, as runoff from the indirect auto portfolio exceeded originations.

Fully taxable equivalent net interest margin was 2.92% for the current quarter, compared to 2.72% for the prior quarter. Net interest margin was positively impacted by the recognition of $0.3 million in interest income on the payoff of a nonaccrual construction loan. Average interest-earning assets increased $12.0 million, while average interest-bearing liabilities decreased $9.8 million during the fourth quarter, compared to the prior quarter. The average yield on interest-earning assets increased one basis point to 4.79%, while the average cost of interest-bearing liabilities decreased 24 basis points to 2.73%, compared to the prior quarter.

Provision for Credit Losses:

Provision for credit losses was $0.6 million in the current quarter, in line with the prior quarter. Provisioning in the current quarter was primarily due to commercial loan growth and net charge-off activity on commercial and industrial and auto loans. Improvements in economic forecasts for unemployment and GDP in the current quarter benefited the provision for credit losses, compared to modest deterioration in the prior quarter.

Non-Interest Income:

Non-interest income for the fourth quarter of 2024 was $6.1 million, compared to $5.9 million for the prior quarter, an increase of $0.2 million, or 3.4%, driven by increases of $0.2 million in other non-interest income and $0.1 million in service charges on deposit accounts, offset by a decrease of $0.2 million in the change in fair value of equity investments.

Other non-interest income increased primarily due to an increase in interest rate swap fee income compared to the prior quarter. The increase in service charges on deposit accounts was mainly due to fee rate increases which were phased in during the fourth quarter of 2024. The decrease in the change in fair value of equity investments was largely due to a decrease in the market value of assets held for the Corporation’s deferred compensation plan, compared to the increase in market value in the prior quarter.

Non-Interest Expense:

Non-interest expense for the fourth quarter of 2024 was $17.8 million, compared to $16.5 million for the prior quarter, an increase of $1.3 million, or 7.9%, driven by increases of $0.7 million in pension and other employee benefits, $0.3 million in salaries and wages, $0.2 million in professional services, and $0.1 million in data processing expenses.

Pension and other employee benefits increased compared to the prior quarter primarily due to an increase in employee healthcare-related expenses. The increase in salaries and wages was largely due to an increase in quarterly incentive compensation expense and additional staffing for the Corporation’s newly established Western New York regional banking center. The increase in professional services was primarily due to an increase in consulting fees compared to the prior quarter. The increase in data processing was primarily due to an increase in debit card procurement expenses and cybersecurity initiatives.

Income Tax Expense:

Income tax expense for the fourth quarter of 2024 was $1.6 million, compared to $1.5 million for the prior quarter, an increase of $0.1 million. The effective tax rate for the current quarter increased to 21.2% from 20.9% in the prior quarter. The increase in income tax expense was primarily due to an increase in pretax income.

4th Quarter 2024 vs 4th Quarter 2023

Net Interest Income:

Net interest income for the fourth quarter of 2024 totaled $19.8 million, compared to $17.9 million for the same period in the prior year, an increase of $1.9 million, or 10.6%, driven by increases of $2.7 million in interest income on loans, including fees and $0.3 million in interest income on interest-earning deposits, and a decrease of $0.2 million in interest expense on borrowed funds, partially offset by an increase of $0.8 million in interest expense on deposits and a decrease of $0.4 million in interest income on taxable securities.

Interest income on loans, including fees, increased primarily due to a $116.8 million increase in average balances of commercial loans and an increase of 22 basis points in the average yield on commercial loans, compared to the same period in the prior year. The increase in average balances of commercial loans was concentrated in commercial real estate, while the increase in the average yield on commercial loans was mainly due to higher total origination yields throughout 2024. Average balances of residential mortgage loans decreased $4.7 million compared to the same period in the prior year, due to an increase in sales of new originations to the secondary market, while the average yield on residential mortgage loans increased 40 basis points compared to the same period in the prior year, partially due to higher origination yields on loans held for investment in 2024. Average consumer loan balances decreased $21.9 million compared to the same period in the prior year, largely due to net runoff of the indirect auto portfolio, while the average yield on consumer loans increased 49 basis points, primarily due to runoff of older vintage indirect auto loans, replaced by higher yielding new originations. Interest income on interest-earning deposits increased mainly due to a $22.7 million increase in average balances of interest-earning deposits, compared to the same period in the prior year.

The decrease in interest expense on borrowed funds was primarily due to a decrease of $12.0 million in average balances of FHLBNY overnight advances, and a decrease of 86 basis points in the average interest rate paid on FHLBNY overnight advances, compared to the same period in the prior year. Average balances of FHLBNY overnight advances decreased due to the liquidity provided by an increase in customer deposits, compared to the same period in the prior year. The decrease in the average interest rate paid on FHLBNY overnight advances was primarily due to the declining interest rate environment in the current year period, compared to the static interest rate environment in the prior year period.

Interest expense on deposits increased primarily due to an increase of $105.9 million in average balances of customer interest-bearing deposits, and an increase of 17 basis points in the average interest rate paid on customer interest-bearing deposits, compared to the same period in the prior year. Both the increase in average balances of and the average interest rate paid on customer interest-bearing deposits was largely due to CD campaigns throughout 2024. The average balances of customer time deposits increased $93.5 million, and the average interest rate paid on customer time deposits increased 25 basis points, compared to the same period in the prior year. Customer time deposits comprised 22.1% of average total deposits for the three months ended December 31, 2024, compared to 18.7% for the same period in the prior year. The average balances of and average interest rate paid on brokered deposits decreased $29.2 million and 60 basis points, respectively, compared to the same period in the prior year. The decrease in the average balances of brokered deposits was mainly due to the liquidity provided by an increase in total customer deposits, compared to the same period in the prior year. The decrease in interest income on taxable securities was largely due to paydowns and maturities of available for sale securities between the prior year period and current year period of $54.5 million, primarily on SBA pooled loan securities and mortgage-backed securities.

Fully taxable equivalent net interest margin was 2.92% for the fourth quarter of 2024, compared to 2.69% for the same period in the prior year. Average interest-earning assets increased $57.4 million, while average interest-bearing liabilities increased $68.6 million, compared to the same period in the prior year. The average yield on interest-earning assets increased 29 basis points to 4.79%, while the average cost of interest-bearing liabilities increased five basis points to 2.73%, compared to the same period in the prior year.

Provision for Credit Losses:

Provision for credit losses decreased $1.7 million for the fourth quarter of 2024, compared to the same period in the prior year. The decrease was largely due to a $0.9 million specific allocation on a commercial real estate relationship in the fourth quarter of the prior year as well as a substantial decline in prepayment speeds used in the Bank’s CECL model in the fourth quarter of the prior year.

Non-Interest Income:

Non-interest income for the fourth quarter of 2024 was $6.1 million, compared to $5.9 million for the same period in the prior year, an increase of $0.2 million, or 3.4%, driven by increases of $0.3 million in wealth management group fee income, $0.1 million in service charges on deposit accounts, and $0.1 million in other non-interest income, partially offset by a decrease of $0.3 million in the change in fair value of equity investments.

The increase in wealth management group fee income was primarily due to fee rate increases effective July 1, 2024. The increase in service charges on deposit accounts was largely due to fee rate increases phased in during the fourth quarter of the current year. The increase in other non-interest income was mainly due to an increase in interest rate swap fee income, compared to the same period in the prior year. The decrease in the change in fair value of equity investments was mainly due to a decrease in the market value of assets held for the Corporation’s deferred compensation plan during the current year period, compared to an increase in market value in the prior year period.

Non-Interest Expense:

Non-interest expense for the fourth quarter of 2024 was $17.8 million, compared to $16.8 million for the same period in the prior year, an increase of $1.0 million, or 5.9%, driven by increases of $0.6 million in salaries and wages, $0.4 million in pension and other employee benefits, and $0.2 million in data processing, partially offset by a decrease of $0.4 million in other non-interest expense.

Salaries and wages increased primarily due to an increase in base salaries, including merit-based increases and additional staffing for the Corporation’s newly opened Western New York regional banking center, as well as an increase in incentive compensation expense. The increase in pension and other employee benefits expense was largely due to additional payroll tax expense, employee profit-sharing expense, and employee healthcare-related expense compared to the same period in the prior year. The increase in data processing was primarily due to increases in software and debit card related expenses, the addition of new contracts, and cybersecurity initiatives. The decrease in other non-interest expense was largely due to a decrease in non-loan charge-offs compared to the same period in the prior year.

Income Tax Expense:

Income tax expense for the fourth quarter of 2024 was $1.6 million, compared to $0.8 million for the fourth quarter of 2023, an increase of $0.8 million. The effective tax rate for the current quarter was 21.2%, compared to 18.1% for the same period in the prior year. The increase in income tax expense was primarily due to an increase in pretax income.

Asset Quality

Non-performing loans totaled $9.0 million as of December 31, 2024, or 0.43% of total loans, compared to $10.4 million, or 0.53% of total loans as of December 31, 2023. The decrease in non-performing loans was mainly due to the payoff of two large nonaccrual loans, a $2.2 million construction loan and a $1.9 million commercial real estate loan, during the current year. There was $1.2 million in paydowns on other non-performing commercial loans during 2024. $3.9 million in commercial loan balances were added to non-performing loans during 2024, comprised of $3.5 million in commercial real estate loans and $0.4 million in commercial and industrial loans. Net charge-offs on commercial loans totaled $0.2 million in 2024. The net changes in non-performing residential mortgage and consumer loans were an increase of $0.1 million and a decrease of $0.1 million, respectively. Non-performing assets, which are comprised of non-performing loans, other real estate owned, and repossessed vehicles, were $9.6 million, or 0.35% of total assets as of December 31, 2024, compared to $10.7 million, or 0.40% of total assets as of December 31, 2023. Other real estate owned was $0.4 million and repossessed vehicles was $0.2 million as of December 31, 2024.

Total loan delinquencies as of December 31, 2024 decreased compared to December 31, 2023. Annualized net charge-offs to total average loans for the fourth quarter of 2024 were 0.12%, compared to 0.02% for the third quarter of 2024, and were 0.06% for the year ended December 31, 2024, compared to 0.05% for the year ended December 31, 2023. Annualized commercial net charge-offs were 0.07% of average commercial loan balances for the fourth quarter of 2024, primarily due to $0.3 million in net charge-offs on two commercial and industrial loans. Commercial net charge-offs for the year ended December 31, 2024 were 0.01% of average commercial loan balances. Annualized consumer net charge-offs were 0.45% of average consumer loan balances for the fourth quarter of 2024, and 0.35% of average consumer loan balances for the year ended December 31, 2024, both largely concentrated in indirect auto loans. Residential mortgage loans had net recovery rates for both the fourth quarter of 2024 and the year ended December 31, 2024.

The allowance for credit losses was $21.4 million as of December 31, 2024 and $22.5 million as of December 31, 2023. The allowance for credit losses on unfunded commitments, a component of other liabilities, was $0.8 million as of December 31, 2024 and $0.9 million as of December 31, 2023. The decrease in the allowance for credit losses was mainly due to the annual review and update to the loss drivers which the Bank’s CECL model is based upon. Recalibration of loss drivers resulted in a decline in the baseline loss rates which the model utilizes, and were applied beginning in the first quarter of 2024. Additionally, the FOMC projection for U.S. GDP improved as of December 31, 2024 compared to December 31, 2023. Partially offsetting these declines were loan growth, a decline in modeled prepayment speeds, and a slightly weaker FOMC projection for national unemployment as of December 31, 2024 compared to December 31, 2023. The allowance for credit losses was 238.87% of non-performing loans as of December 31, 2024 and 216.28% as of December 31, 2023. The allowance for credit losses to total loans was 1.03% as of December 31, 2024 and 1.14% as of December 31, 2023. Provision for credit losses as a percentage of period-end loan balances was 0.03% for the fourth quarter of 2024.

Balance Sheet Activity

Total assets were $2.776 billion as of December 31, 2024, compared to $2.711 billion as of December 31, 2023, an increase of $65.6 million, or 2.4%. This increase was driven by increases of $98.8 million in loans, net of deferred origination fees and costs, $10.2 million in cash and cash equivalents, and $2.7 million in accrued interest receivable and other assets, partially offset by a decrease of $48.9 million in total investment securities.

Loans, net of deferred origination fees and costs increased primarily due to growth concentrated in the commercial loan portfolio, which increased $129.2 million, or 9.3%, compared to prior year-end. Growth in commercial loans during the current year consisted of $35.1 million in commercial and industrial balances and $94.1 million in commercial real estate balances. Consumer loans decreased $27.4 million, or 8.9%, compared to prior-year end, largely due to lower indirect auto loan origination activity during the current year, and a relatively fast turnover rate in the portfolio. Residential mortgages decreased $3.0 million, or 1.1% compared to prior year-end, as the Corporation continued to elect to sell a portion of originations into the secondary market and demand remained weakened in the current interest rate environment.

The increase in cash and cash equivalents was mainly due to an increase of $77.2 million in FHLBNY overnight advances and $49.6 million in net paydowns and maturities of available for sale securities, partially offset by an increase of $98.8 million in loans, net of deferred origination fees and costs, and a decrease of $32.5 million in total deposits. The increase in accrued interest receivable and other assets was largely due to increases in prepaid expenses and interest receivable on interest rate swaps.

Total investment securities decreased primarily due to a decrease of $52.6 million in securities available for sale, compared to prior year-end. Net paydowns and maturities of securities available for sale for the current year totaled $49.6 million, mainly due to paydowns on mortgage-backed securities and SBA pooled loan securities. The market value of securities available for sale decreased $0.7 million, due to unfavorable changes in market interest rates during the current year. Partially offsetting the decrease in total investment securities was an increase of $3.6 million in FHLB and FRB stock, at cost, mainly due to an increase in FHLBNY overnight advances as of December 31, 2024, compared to prior year-end.

Total liabilities were $2.561 billion as of December 31, 2024, compared to $2.515 billion as of December 31, 2023, an increase of $45.6 million, or 1.8%. This increase was driven by increases of $77.9 million in advances and other debt and $0.4 million in accrued interest payable and other liabilities, partially offset by a decrease of $32.5 million in deposits.

Advances and other debt increased mainly due to an increase of $77.2 million in FHLBNY overnight advances and an increase of $0.7 million in finance lease obligations. The increase in accrued interest payable and other liabilities was primarily due to an increase in interest payable on deposits of $0.6 million.

Total deposits decreased by $32.5 million or 1.3%, compared to prior year-end, largely due to decreases of $50.6 million in brokered deposits, $28.6 million in money market deposits, and $27.4 million in non interest-bearing demand deposits. These decreases were partially offset by increases of $62.3 million in customer time deposits and $15.4 million in interest-bearing demand deposits. Additionally, savings deposits decreased $3.6 million. Non interest-bearing deposits comprised 26.1% and 26.9% of total deposits as of December 31, 2024 and December 31, 2023, respectively.

Total shareholders’ equity was $215.3 million as of December 31, 2024, compared to $195.2 million as of December 31, 2023, an increase of $20.1 million, or 10.3%, driven by an increase of $17.8 million in retained earnings and a decrease of $0.9 million in accumulated other comprehensive loss. The increase in retained earnings was mainly due to net income of $23.7 million, offset by dividends declared of $5.9 million during the year ended December 31, 2024. The decrease in accumulated other comprehensive loss was largely due to revised actuarial assumptions relating to the Corporation’s pension plans, offset by the unfavorable impact of interest rates on available for sale securities during the current year.

The total equity to total assets ratio was 7.76% as of December 31, 2024, compared to 7.20% as of December 31, 2023, and the tangible equity to tangible assets ratio was 7.02% as of December 31, 2024, compared to 6.45% as of December 31, 2023.¹ Book value per share and tangible book value per share increased to $45.13 and $40.55, respectively as of December 31, 2024 from $41.07 and $36.48, respectively as of December 31, 2023.¹ As of December 31, 2024, the Bank’s capital ratios were in excess of those required to be considered well-capitalized under the regulatory framework for prompt corrective action.

¹ See the GAAP to Non-GAAP reconciliations

Liquidity

The Corporation uses a variety of resources to manage its liquidity, and management believes it has the necessary liquidity to allow for flexibility in meeting its various operational and strategic needs. These include short-term investments, cash flow from lending and investing activities, core-deposit growth and non-core funding sources, such as time deposits of $250,000 or greater, brokered deposits, FHLBNY overnight and term advances, and FRB advances. Borrowings may be used on a short-term basis for liquidity purposes or on a long-term basis to fund asset growth. As of December 31, 2024, the Corporation’s cash and cash equivalents balance was $47.0 million. The Corporation also maintains an investment portfolio of securities available for sale, comprised primarily of US Government treasury securities, SBA loan pools, mortgage-backed securities, and municipal bonds. Although this portfolio generates interest income for the Corporation, it also serves as an available source of liquidity and capital if the need should arise. As of December 31, 2024, the Corporation’s investment in securities available for sale was $531.4 million, $349.9 million of which was not pledged as collateral. Additionally, as of December 31, 2024 the Bank’s total advance line capacity at the Federal Home Loan Bank of New York was $221.1 million, $109.1 million of which was utilized and $112.0 million of which was available as additional borrowing capacity. In January 2024, the Corporation utilized the BTFP with an advance of $50.0 million, which the Corporation paid off in October 2024, without prepayment penalty.

As of December 31, 2024, uninsured deposits totaled $652.3 million, or 27.2% of total deposits, including $145.6 million of municipal deposits collateralized by pledged assets, when required. As of December 31, 2023, uninsured deposits totaled $655.7 million, or 27.0% of total deposits, including $153.2 million of municipal deposits collateralized by pledged assets. Due to their fluidity, the Corporation closely monitors uninsured deposit levels when considering liquidity management strategies.

The Corporation considers brokered deposits to be an element of its deposit strategy, and anticipates it may continue utilizing brokered deposits as a secondary source of funding in support of growth. As of December 31, 2024, the Corporation had entered into brokered deposit arrangements with multiple brokers. As of December 31, 2024, brokered deposits carried terms between 3 and 48 months, totaling $92.2 million. Excluding brokered deposits, total deposits increased $18.1 million compared to December 31, 2023.

Other Items

The market value of total assets under management or administration in our Wealth Management Group was $2.212 billion as of December 31, 2024, including $301.9 million of assets under management or administration for the Corporation, compared to $2.242 billion as of December 31, 2023, including $381.3 million of assets under management or administration for the Corporation, a decrease of $30.4 million, or 1.4%. Excluding assets under management or administration for the Corporation, total market value of Wealth Management Group assets increased $49.0 million, or 2.6%, largely due to market improvements during 2024.

As previously announced on January 8, 2021, the Corporation’s Board of Directors approved a stock repurchase program. Under the repurchase program, the Corporation may repurchase up to 250,000 shares of its common stock, or approximately 5% of its then outstanding shares. The repurchase program permits shares to be repurchased in open market or privately negotiated transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934. As of December 31, 2024, a total of 49,184 shares of common stock at a total cost of $2.0 million were repurchased by the Corporation under its share repurchase program. No shares were repurchased in the fourth quarter of 2024. The weighted average cost was $40.42 per share repurchased. Remaining buyback authority under the share repurchase program was 200,816 shares as of December 31, 2024.

During the fourth quarter, the Bank opened a full-service branch and regional banking center at 5529 Main Street in Williamsville, New York under the Canal Bank, a division of Chemung Canal Trust Company, name. After receiving regulatory approval, the Bank consolidated its previous branch operations in Clarence, New York into its Williamsville branch operations in December, and has converted the Clarence location into administrative offices in support of the Bank’s Western New York operations. Additionally, in November the Bank’s Ithaca, New York “Station” branch operations were consolidated into its nearby Ithaca location on Elmira Road.

About Chemung Financial Corporation

Chemung Financial Corporation is a $2.8 billion financial services holding company headquartered in Elmira, New York and operates 30 retail offices through its principal subsidiary, Chemung Canal Trust Company, a full service community bank with trust powers. Established in 1833, Chemung Canal Trust Company is the oldest locally-owned and managed community bank in New York State. Chemung Financial Corporation is also the parent of CFS Group, Inc., a financial services subsidiary offering non-traditional services including mutual funds, annuities, brokerage services, tax preparation services, and insurance.

This press release may be found at: www.chemungcanal.com under Investor Relations.

Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act, and the Private Securities Litigation Reform Act of 1995. The Corporation intends its forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in this press release. All statements regarding the Corporation’s expected financial position and operating results, the Corporation’s business strategy, the Corporation’s financial plans, forecasted demographic and economic trends relating to the Corporation’s industry and similar matters are forward-looking statements. These statements can sometimes be identified by the Corporation’s use of forward-looking words such as “may,” “will,” “anticipate,” “estimate,” “expect,” or “intend.” The Corporation cannot promise that its expectations in such forward-looking statements will turn out to be correct. The Corporation’s actual results could be materially different from expectations because of various factors, including changes in economic conditions or interest rates, credit risk, inflation, cyber security risks, difficulties in managing the Corporation’s growth, competition, changes in law or the regulatory environment, and changes in general business and economic trends.

Information concerning these and other factors, including Risk Factors, can be found in the Corporation’s periodic filings with the Securities and Exchange Commission (“SEC”), including the 2023 Annual Report on Form 10-K. These filings are available publicly on the SEC’s website at http://www.sec.gov, on the Corporation’s website at http://www.chemungcanal.com or upon request from the Corporate Secretary at (607) 737-3746. Except as otherwise required by law, the Corporation undertakes no obligation to publicly update or revise its forward-looking statements, whether as a result of new information, future events, or otherwise.

Chemung Financial Corporation
Consolidated Balance Sheets (Unaudited)
	Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,
(in thousands)		2024			2024			2024			2024			2023
ASSETS
Cash and due from financial institutions	$	26,224		$	36,247		$	23,184		$	22,984		$	22,247
Interest-earning deposits in other financial institutions		20,811			44,193			47,033			71,878			14,600
Total cash and cash equivalents		47,035			80,440			70,217			94,862			36,847

Equity investments		3,235			3,244			3,090			3,093			3,046

Securities available for sale		531,442			554,575			550,927			566,028			583,993
Securities held to maturity		808			657			657			785			785
FHLB and FRB stock, at cost		9,117			4,189			5,506			4,071			5,498
Total investment securities		541,367			559,421			557,090			570,884			590,276

Commercial		1,516,525			1,464,205			1,445,258			1,425,437			1,387,321
Mortgage		274,979			274,099			271,620			277,246			277,992
Consumer		279,915			290,650			294,594			300,927			307,351
Loans, net of deferred loan fees		2,071,419			2,028,954			2,011,472			2,003,610			1,972,664
Allowance for credit losses		(21,388	)		(21,441	)		(21,031	)		(20,471	)		(22,517	)
Loans, net		2,050,031			2,007,513			1,990,441			1,983,139			1,950,147

Loans held for sale		—			—			381			96			—
Premises and equipment, net		16,375			14,915			14,731			14,183			14,571
Operating lease right-of-use assets		5,446			5,637			5,827			6,018			5,648
Goodwill		21,824			21,824			21,824			21,824			21,824
Accrued interest receivable and other assets		90,834			81,221			92,212			90,791			88,170
Total assets	$	2,776,147		$	2,774,215		$	2,755,813		$	2,784,890		$	2,710,529

LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest-bearing demand deposits	$	625,762		$	616,126		$	619,192		$	656,330		$	653,166
Interest-bearing demand deposits		306,536			349,383			328,370			315,154			291,138
Money market deposits		595,123			630,870			613,131			631,350			623,714
Savings deposits		245,550			242,911			248,528			248,578			249,144
Time deposits		623,912			611,831			606,700			629,360			612,265
Total deposits		2,396,883			2,451,121			2,415,921			2,480,772			2,429,427

Advances and other debt		112,889			53,757			83,835			52,979			34,970
Operating lease liabilities		5,629			5,820			6,009			6,197			5,827
Accrued interest payable and other liabilities		45,437			42,863			48,826			47,814			45,064
Total liabilities		2,560,838			2,553,561			2,554,591			2,587,762			2,515,288

Shareholders’ equity
Common stock		53			53			53			53			53
Additional paid-in capital		48,783			48,457			48,102			47,794			47,773
Retained earnings		247,705			243,266			239,021			235,506			229,930
Treasury stock, at cost		(16,167	)		(15,987	)		(16,043	)		(16,147	)		(16,502	)
Accumulated other comprehensive loss		(65,065	)		(55,135	)		(69,911	)		(70,078	)		(66,013	)
Total shareholders’ equity		215,309			220,654			201,222			197,128			195,241
Total liabilities and shareholders’ equity	$	2,776,147		$	2,774,215		$	2,755,813		$	2,784,890		$	2,710,529

Period-end shares outstanding		4,771			4,774			4,772			4,768			4,754

Chemung Financial Corporation
Consolidated Statements of Income (Unaudited)
	Three Months Ended December 31,						Percent Change			Twelve Months Ended December 31,						Percent Change
(in thousands, except per share data)		2024			2023		Percent Change				2024			2023		Percent Change
Interest and dividend income:
Loans, including fees	$	28,805		$	26,115			10.3		$	112,128		$	97,228			15.3
Taxable securities		3,161			3,533			(10.5	)		13,029			14,283			(8.8	)
Tax exempt securities		247			257			(3.9	)		1,009			1,035			(2.5	)
Interest-earning deposits		384			128			200.0			1,398			528			164.8
Total interest and dividend income		32,597			30,033			8.5			127,564			113,074			12.8

Interest expense:
Deposits		12,191			11,349			7.4			50,052			35,926			39.3
Borrowed funds		585			786			(25.6	)		3,453			2,691			28.3
Total interest expense		12,776			12,135			5.3			53,505			38,617			38.6

Net interest income		19,821			17,898			10.7			74,059			74,457			(0.5	)
Provision (credit) for credit losses		551			2,300			(76.0	)		(46	)		3,262			(101.4	)
Net interest income after provision for credit losses		19,270			15,598			23.5			74,105			71,195			4.1

Non-interest income:
Wealth management group fee income		3,019			2,744			10.0			11,573			10,460			10.6
Service charges on deposit accounts		1,113			1,001			11.2			4,042			3,919			3.1
Interchange revenue from debit card transactions		1,099			1,138			(3.4	)		4,426			4,606			(3.9	)
Net gains on securities transactions		—			(39	)		N/M			—			(39	)		N/M
Change in fair value of equity investments		(54	)		202			(126.7	)		179			103			73.8
Net gains on sales of loans held for sale		52			54			(3.7	)		214			144			48.6
Net gains (losses) on sales of other real estate owned		4			23			N/M			(18	)		37			N/M
Income from bank owned life insurance		9			11			(18.2	)		38			43			(11.6	)
Other		814			737			10.4			2,776			5,276			(47.4	)
Total non-interest income		6,056			5,871			3.2			23,230			24,549			(5.4	)

Non-interest expense:
Salaries and wages		7,450			6,803			9.5			28,457			26,832			6.1
Pension and other employee benefits		2,296			1,901			20.8			8,083			7,368			9.7
Other components of net periodic pension and postretirement benefits		(218	)		(154	)		(41.6	)		(909	)		(676	)		(34.5	)
Net occupancy		1,472			1,395			5.5			5,832			5,637			3.5
Furniture and equipment		462			496			(6.9	)		1,659			1,728			(4.0	)
Data processing		2,656			2,506			6.0			10,093			9,840			2.6
Professional services		714			697			2.4			2,353			2,293			2.6
Marketing and advertising		239			203			17.7			1,182			923			28.1
Other real estate owned expense		41			(69	)		N/M			157			(20	)		N/M
FDIC insurance		503			520			(3.3	)		2,120			2,128			(0.4	)
Loan expense		374			258			45.0			1,182			1,047			12.9
Other		1,834			2,270			(19.2	)		7,041			7,143			(1.4	)
Total non-interest expense		17,823			16,826			5.9			67,250			64,243			4.7
Income before income tax expense		7,503			4,643			61.6			30,085			31,501			(4.5	)
Income tax expense		1,589			841			88.9			6,414			6,501			(1.3	)
Net income	$	5,914		$	3,802			55.5		$	23,671		$	25,000			(5.3	)

Basic and diluted earnings per share	$	1.24		$	0.80					$	4.96		$	5.28
Cash dividends declared per share	$	0.31		$	0.31					$	1.24		$	1.24
Average basic and diluted shares outstanding		4,774			4,743						4,770			4,732

N/M – Not Meaningful

Chemung Financial Corporation	As of or for the Three Months Ended															As of or for the Twelve Months Ended
Consolidated Financial Highlights (Unaudited)	Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,			Dec. 31,			Dec. 31,
(in thousands, except per share data)		2024			2024			2024			2024			2023			2024			2023
RESULTS OF OPERATIONS
Interest income	$	32,597		$	32,362		$	31,386		$	31,219		$	30,033		$	127,564		$	113,074
Interest expense		12,776			13,974			13,625			13,130			12,135			53,505			38,617
Net interest income		19,821			18,388			17,761			18,089			17,898			74,059			74,457
Provision (credit) for credit losses		551			564			879			(2,040	)		2,300			(46	)		3,262
Net interest income after provision for credit losses		19,270			17,824			16,882			20,129			15,598			74,105			71,195
Non-interest income		6,056			5,919			5,598			5,657			5,871			23,230			24,549
Non-interest expense		17,823			16,510			16,219			16,698			16,826			67,250			64,243
Income before income tax expense		7,503			7,233			6,261			9,088			4,643			30,085			31,501
Income tax expense		1,589			1,513			1,274			2,038			841			6,414			6,501
Net income	$	5,914		$	5,720		$	4,987		$	7,050		$	3,802		$	23,671		$	25,000

Basic and diluted earnings per share	$	1.24		$	1.19		$	1.05		$	1.48		$	0.80		$	4.96		$	5.28
Average basic and diluted shares outstanding		4,774			4,773			4,770			4,764			4,743			4,770			4,732
PERFORMANCE RATIOS
Return on average assets		0.85	%		0.83	%		0.73	%		1.04	%		0.56	%		0.86	%		0.94	%
Return on average equity		10.73	%		10.81	%		10.27	%		14.48	%		8.63	%		11.53	%		14.11	%
Return on average tangible equity (a)		11.92	%		12.07	%		11.56	%		16.29	%		9.86	%		12.90	%		16.09	%
Efficiency ratio (unadjusted) (e)		68.88	%		67.92	%		69.43	%		70.32	%		70.79	%		69.12	%		64.89	%
Efficiency ratio (adjusted) (a)		68.64	%		67.69	%		69.19	%		70.07	%		70.42	%		68.89	%		66.20	%
Non-interest expense to average assets		2.57	%		2.39	%		2.38	%		2.47	%		2.48	%		2.45	%		2.41	%
Loans to deposits		86.42	%		82.78	%		83.26	%		80.77	%		81.20	%		86.42	%		81.20	%
YIELDS / RATES – Fully Taxable Equivalent
Yield on loans		5.61	%		5.65	%		5.52	%		5.51	%		5.31	%		5.57	%		5.13	%
Yield on investments		2.29	%		2.21	%		2.27	%		2.35	%		2.24	%		2.28	%		2.21	%
Yield on interest-earning assets		4.79	%		4.78	%		4.69	%		4.70	%		4.50	%		4.74	%		4.33	%
Cost of interest-bearing deposits		2.67	%		2.88	%		2.86	%		2.75	%		2.59	%		2.79	%		2.11	%
Cost of borrowings		4.74	%		5.08	%		5.04	%		5.15	%		5.52	%		5.03	%		5.17	%
Cost of interest-bearing liabilities		2.73	%		2.97	%		2.94	%		2.85	%		2.68	%		2.87	%		2.20	%
Interest rate spread		2.06	%		1.81	%		1.75	%		1.85	%		1.82	%		1.87	%		2.13	%
Net interest margin, fully taxable equivalent		2.92	%		2.72	%		2.66	%		2.73	%		2.69	%		2.76	%		2.85	%
CAPITAL
Total equity to total assets at end of period		7.76	%		7.95	%		7.30	%		7.08	%		7.20	%		7.76	%		7.20	%
Tangible equity to tangible assets at end of period (a)		7.02	%		7.22	%		6.56	%		6.34	%		6.45	%		7.02	%		6.45	%
Book value per share	$	45.13		$	46.22		$	42.17		$	41.34		$	41.07		$	45.13		$	41.07
Tangible book value per share (a)		40.55			41.65			37.59			36.77			36.48			40.55			36.48
Period-end market value per share		48.81			48.02			48.00			42.48			49.80			48.81			49.80
Dividends declared per share		0.31			0.31			0.31			0.31			0.31			1.24			1.24
AVERAGE BALANCES
Loans and loans held for sale (b)	$	2,046,270		$	2,020,280		$	2,009,823		$	1,989,185		$	1,956,022		$	2,016,481		$	1,898,986
Interest-earning assets		2,711,995			2,699,968			2,699,402			2,681,059			2,654,638			2,698,148			2,621,251
Total assets		2,761,875			2,751,392			2,740,967			2,724,391			2,688,536			2,744,721			2,660,329
Deposits		2,446,662			2,410,735			2,419,169			2,402,215			2,397,663			2,419,744			2,377,736
Total equity		219,254			210,421			195,375			195,860			174,868			205,280			177,187
Tangible equity (a)		197,430			188,597			173,551			174,036			153,044			183,456			155,363
ASSET QUALITY
Net charge-offs	$	594		$	78		$	306		$	182		$	171		$	1,160		$	941
Non-performing loans (c)		8,954			10,545			8,195			7,835			10,411			8,954			10,411
Non-performing assets (d)		9,606			11,134			8,872			8,394			10,737			9,606			10,737
Allowance for credit losses		21,388			21,441			21,031			20,471			22,517			21,388			22,517
Annualized net charge-offs to average loans		0.12	%		0.02	%		0.06	%		0.04	%		0.03	%		0.06	%		0.05	%
Non-performing loans to total loans		0.43	%		0.52	%		0.41	%		0.39	%		0.53	%		0.43	%		0.53	%
Non-performing assets to total assets		0.35	%		0.40	%		0.32	%		0.30	%		0.40	%		0.35	%		0.40	%
Allowance for credit losses to total loans		1.03	%		1.06	%		1.05	%		1.02	%		1.14	%		1.03	%		1.14	%
Allowance for credit losses to non-performing loans		238.87	%		203.33	%		256.63	%		261.28	%		216.28	%		238.87	%		216.28	%

(a) See the GAAP to Non-GAAP reconciliations.
(b) Loans and loans held for sale do not reflect the allowance for credit losses.
(c) Non-performing loans include non-accrual loans only.
(d) Non-performing assets include non-performing loans plus other real estate owned and repossessed vehicles.
(e) Efficiency ratio (unadjusted) is non-interest expense divided by the total of net interest income plus non-interest income.

Chemung Financial Corporation
Average Consolidated Balance Sheets & Net Interest Income Analysis and Rate/Volume Analysis of Net Interest Income (Unaudited)

	Three Months Ended December 31, 2024								Three Months Ended December 31, 2023								Three Months Ended December 31, 2024 vs. 2023
(in thousands)	Average Balance			Interest			Yield / Rate		Average Balance			Interest			Yield / Rate		Total Change			Due to Volume			Due to Rate

Interest-earning assets:
Commercial loans	$	1,486,012		$	22,069		5.91	%	$	1,369,198		$	19,649		5.69	%	$	2,420		$	1,665		$	755
Mortgage loans		274,705			2,739		3.99	%		279,361			2,531		3.59	%		208			(46	)		254
Consumer loans		285,553			4,051		5.64	%		307,463			3,991		5.15	%		60			(299	)		359
Taxable securities		594,667			3,169		2.12	%		647,650			3,537		2.17	%		(368	)		(287	)		(81	)
Tax-exempt securities		37,776			273		2.88	%		40,339			284		2.79	%		(11	)		(19	)		8
Interest-earning deposits		33,282			384		4.59	%		10,627			128		4.78	%		256			261			(5	)
Total interest-earning assets		2,711,995			32,685		4.79	%		2,654,638			30,120		4.50	%		2,565			1,275			1,290

Non interest-earning assets:
Cash and due from banks		25,056								25,142
Other assets		46,352								29,153
Allowance for credit losses		(21,528	)							(20,397	)
Total assets	$	2,761,875							$	2,688,536

Interest-bearing liabilities:
Interest-bearing checking	$	327,223		$	1,391		1.69	%	$	285,733		$	1,176		1.63	%	$	215		$	172		$	43
Savings and money market		871,196			4,278		1.95	%		900,367			4,383		1.93	%		(105	)		(148	)		43
Time deposits		540,817			5,618		4.13	%		447,273			4,374		3.88	%		1,244			951			293
Brokered deposits		74,861			904		4.80	%		104,043			1,416		5.40	%		(512	)		(367	)		(145	)
FHLBNY overnight advances		41,408			505		4.77	%		53,390			758		5.63	%		(253	)		(150	)		(103	)
FRB advances and other debt		6,987			80		4.56	%		3,074			28		3.61	%		52			44			8
Total interest-bearing liabilities		1,862,492			12,776		2.73	%		1,793,880			12,135		2.68	%		641			502			139

Non interest-bearing liabilities:
Demand deposits		632,565								660,247
Other liabilities		47,564								59,541
Total liabilities		2,542,621								2,513,668
Shareholders’ equity		219,254								174,868
Total liabilities and shareholders’ equity	$	2,761,875							$	2,688,536

Fully taxable equivalent net interest income					19,909								17,985				$	1,924		$	773		$	1,151
Net interest rate spread (1)							2.06	%							1.82	%
Net interest margin, fully taxable equivalent (2)							2.92	%							2.69	%
Taxable equivalent adjustment					(88	)							(87	)
Net interest income				$	19,821							$	17,898

(1) Net interest rate spread is the difference in the average yield on interest-earning assets less the average rate on interest-bearing liabilities.
(2) Net interest margin is the ratio of fully taxable equivalent net interest income divided by average interest-earning assets.

Chemung Financial Corporation
Average Consolidated Balance Sheets & Net Interest Income Analysis and Rate/Volume Analysis of Net Interest Income (Unaudited)

	Twelve Months Ended December 31, 2024								Twelve Months Ended December 31, 2023								Twelve Months Ended December 31, 2024 vs. 2023
(in thousands)	Average Balance			Interest			Yield / Rate		Average Balance			Interest			Yield / Rate		Total Change			Due to Volume			Due to Rate

Interest-earning assets:
Commercial loans	$	1,446,493		$	85,570		5.92	%	$	1,309,692		$	72,698		5.55	%	$	12,872		$	7,857		$	5,015
Mortgage loans		274,801			10,618		3.86	%		283,093			10,084		3.56	%		534			(302	)		836
Consumer loans		295,187			16,165		5.48	%		306,201			14,664		4.79	%		1,501			(547	)		2,048
Taxable securities		613,375			13,046		2.13	%		671,345			14,295		2.13	%		(1,249	)		(1,249	)		—
Tax-exempt securities		39,032			1,103		2.83	%		40,506			1,171		2.89	%		(68	)		(44	)		(24	)
Interest-earning deposits		29,260			1,398		4.78	%		10,414			528		5.07	%		870			902			(32	)
Total interest-earning assets		2,698,148			127,900		4.74	%		2,621,251			113,440		4.33	%		14,460			6,617			7,843

Non interest-earning assets:
Cash and due from banks		25,112								25,419
Other assets		42,950								33,871
Allowance for credit losses		(21,489	)							(20,212	)
Total assets	$	2,744,721							$	2,660,329

Interest-bearing liabilities:
Interest-bearing checking	$	313,070		$	5,561		1.78	%	$	286,097		$	3,136		1.10	%	$	2,425		$	321		$	2,104
Savings and money market		863,849			17,468		2.02	%		899,996			13,027		1.45	%		4,441			(542	)		4,983
Time deposits		526,727			22,221		4.22	%		375,545			12,414		3.31	%		9,807			5,827			3,980
Brokered deposits		90,729			4,802		5.29	%		140,845			7,349		5.22	%		(2,547	)		(2,645	)		98
FHLBNY overnight advances		21,907			1,151		5.17	%		48,851			2,577		5.28	%		(1,426	)		(1,374	)		(52	)
FRB advances and other debt		46,363			2,302		4.97	%		3,177			114		3.59	%		2,188			2,128			60
Total interest-bearing liabilities		1,862,645			53,505		2.87	%		1,754,511			38,617		2.20	%		14,888			3,715			11,173

Non interest-bearing liabilities:
Demand deposits		625,369								675,253
Other liabilities		51,427								53,378
Total liabilities		2,539,441								2,483,142
Shareholders’ equity		205,280								177,187
Total liabilities and shareholders’ equity	$	2,744,721							$	2,660,329

Fully taxable equivalent net interest income					74,395								74,823				$	(428	)	$	2,902		$	(3,330	)
Net interest rate spread (1)							1.87	%							2.13	%
Net interest margin, fully taxable equivalent (2)							2.76	%							2.85	%
Taxable equivalent adjustment					(336	)							(366	)
Net interest income				$	74,059							$	74,457

(1) Net interest rate spread is the difference in the average yield on interest-earning assets less the average rate on interest-bearing liabilities.
(2) Net interest margin is the ratio of fully taxable equivalent net interest income divided by average interest-earning assets.

Chemung Financial Corporation

GAAP to Non-GAAP Reconciliations (Unaudited)

The Corporation prepares its Consolidated Financial Statements in accordance with GAAP. See the Corporation’s unaudited consolidated balance sheets and statements of income contained within this press release. That presentation provides the reader with an understanding of the Corporation’s results that can be tracked consistently from period-to-period and enables a comparison of the Corporation’s performance with other companies’ GAAP financial statements.

In addition to analyzing the Corporation’s results on a reported basis, management uses certain non-GAAP financial measures, because it believes these non-GAAP financial measures provide information to investors about the underlying operational performance and trends of the Corporation and, therefore, facilitate a comparison of the Corporation with the performance of other companies. Non-GAAP financial measures used by the Corporation may not be comparable to similarly named non-GAAP financial measures used by other companies.

The SEC has adopted Regulation G, which applies to all public disclosures, including earnings releases, made by registered companies that contain “non-GAAP financial measures.” Under Regulation G, companies making public disclosures containing non-GAAP financial measures must also disclose, along with each non-GAAP financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure and a statement of the Corporation’s reasons for utilizing the non-GAAP financial measure as part of its financial disclosures. The SEC has exempted from the definition of “non-GAAP financial measures” certain commonly used financial measures that are not based on GAAP. When these exempted measures are included in public disclosures, supplemental information is not required. The following measures used in this Report, which are commonly utilized by financial institutions, have not been specifically exempted by the SEC and may constitute “non-GAAP financial measures” within the meaning of the SEC’s rules, although we are unable to state with certainty that the SEC would so regard them.

Fully Taxable Equivalent Net Interest Income and Net Interest Margin

Net interest income is commonly presented on a tax-equivalent basis. That is, to the extent that some component of the institution’s net interest income, which is presented on a before-tax basis, is exempt from taxation (e.g., is received by the institution as a result of its holdings of state or municipal obligations), an amount equal to the tax benefit derived from that component is added to the actual before-tax net interest income total. This adjustment is considered helpful in comparing one financial institution’s net interest income to that of other institutions or in analyzing any institution’s net interest income trend line over time, to correct any analytical distortion that might otherwise arise from the fact that financial institutions vary widely in the proportions of their portfolios that are invested in tax-exempt securities, and that even a single institution may significantly alter over time the proportion of its own portfolio that is invested in tax-exempt obligations. Moreover, net interest income is itself a component of a second financial measure commonly used by financial institutions, net interest margin, which is the ratio of net interest income to average interest-earning assets. For purposes of this measure as well, fully taxable equivalent net interest income is generally used by financial institutions, as opposed to actual net interest income, again to provide a better basis of comparison from institution to institution and to better demonstrate a single institution’s performance over time. The Corporation follows these practices.

																As of or for the
	As of or for the Three Months Ended															Twelve Months Ended
	Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,			Dec. 31,			Dec. 31,
(in thousands, except ratio data)		2024			2024			2024			2024			2023			2024			2023
NET INTEREST MARGIN – FULLY TAXABLE EQUIVALENT
Net interest income (GAAP)	$	19,821		$	18,388		$	17,761		$	18,089		$	17,898		$	74,059		$	74,457
Fully taxable equivalent adjustment		88			83			81			84			87			336			366
Fully taxable equivalent net interest income (non-GAAP)	$	19,909		$	18,471		$	17,842		$	18,173		$	17,985		$	74,395		$	74,823

Average interest-earning assets (GAAP)	$	2,711,995		$	2,699,968		$	2,699,402		$	2,681,059		$	2,654,638		$	2,698,148		$	2,621,251

Net interest margin – fully taxable equivalent (non-GAAP)		2.92	%		2.72	%		2.66	%		2.73	%		2.69	%		2.76	%		2.85	%

Efficiency Ratio

The unadjusted efficiency ratio is calculated as non-interest expense divided by total revenue (net interest income and non-interest income). The adjusted efficiency ratio is a non-GAAP financial measure which represents the Corporation’s ability to turn resources into revenue and is calculated as non-interest expense divided by total revenue (fully taxable equivalent net interest income and non-interest income), adjusted for one-time occurrences and amortization. This measure is meaningful to the Corporation, as well as investors and analysts, in assessing the Corporation’s productivity measured by the amount of revenue generated for each dollar spent.

																As of or for the
	As of or for the Three Months Ended															Twelve Months Ended
	Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,			Dec. 31,			Dec. 31,
(in thousands, except ratio data)		2024			2024			2024			2024			2023			2024			2023
EFFICIENCY RATIO
Net interest income (GAAP)	$	19,821		$	18,388		$	17,761		$	18,089		$	17,898		$	74,059		$	74,457
Fully taxable equivalent adjustment		88			83			81			84			87			336			366
Fully taxable equivalent net interest income (non-GAAP)	$	19,909		$	18,471		$	17,842		$	18,173		$	17,985		$	74,395		$	74,823

Non-interest income (GAAP)	$	6,056		$	5,919		$	5,598		$	5,657		$	5,871		$	23,230		$	24,549
Less: net (gains) losses on security transactions		—			—			—			—			39			—			39
Less: recognition of employee retention tax credit		—			—			—			—			—			—			(2,370	)
Adjusted non-interest income (non-GAAP)	$	6,056		$	5,919		$	5,598		$	5,657		$	5,910		$	23,230		$	22,218

Non-interest expense (GAAP)	$	17,823		$	16,510		$	16,219		$	16,698		$	16,826		$	67,250		$	64,243

Efficiency ratio (unadjusted)		68.88	%		67.92	%		69.43	%		70.32	%		70.79	%		69.12	%		64.89	%
Efficiency ratio (adjusted)		68.64	%		67.69	%		69.19	%		70.07	%		70.42	%		68.89	%		66.20	%

Tangible Equity and Tangible Assets (Period-End)

Tangible equity, tangible assets, and tangible book value per share are each non-GAAP financial measures. Tangible equity represents the Corporation’s stockholders’ equity, less goodwill and intangible assets. Tangible assets represents the Corporation’s total assets, less goodwill and other intangible assets. Tangible book value per share represents the Corporation’s tangible equity divided by common shares at period-end. These measures are meaningful to the Corporation, as well as investors and analysts, in assessing the Corporation’s use of equity.

																As of or for the
	As of or for the Three Months Ended															Twelve Months Ended
	Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,			Dec. 31,			Dec. 31,
(in thousands, except per share and ratio data)		2024			2024			2024			2024			2023			2024			2023
TANGIBLE EQUITY AND TANGIBLE ASSETS
(PERIOD END)
Total shareholders’ equity (GAAP)	$	215,309		$	220,654		$	201,222		$	197,128		$	195,241		$	215,309		$	195,241
Less: intangible assets		(21,824	)		(21,824	)		(21,824	)		(21,824	)		(21,824	)		(21,824	)		(21,824	)
Tangible equity (non-GAAP)	$	193,485		$	198,830		$	179,398		$	175,304		$	173,417		$	193,485		$	173,417

Total assets (GAAP)	$	2,776,147		$	2,774,215		$	2,755,813		$	2,784,890		$	2,710,529		$	2,776,147		$	2,710,529
Less: intangible assets		(21,824	)		(21,824	)		(21,824	)		(21,824	)		(21,824	)		(21,824	)		(21,824	)
Tangible assets (non-GAAP)	$	2,754,323		$	2,752,391		$	2,733,989		$	2,763,066		$	2,688,705		$	2,754,323		$	2,688,705

Total equity to total assets at end of period (GAAP)		7.76	%		7.95	%		7.30	%		7.08	%		7.20	%		7.76	%		7.20	%
Book value per share (GAAP)	$	45.13		$	46.22		$	42.17		$	41.34		$	41.07		$	45.13		$	41.07

Tangible equity to tangible assets at end of period (non-GAAP)		7.02	%		7.22	%		6.56	%		6.34	%		6.45	%		7.02	%		6.45	%
Tangible book value per share (non-GAAP)	$	40.55		$	41.65		$	37.59		$	36.77		$	36.48		$	40.55		$	36.48

Tangible Equity (Average)

Average tangible equity and return on average tangible equity are each non-GAAP financial measures. Average tangible equity represents the Corporation’s average stockholders’ equity, less average goodwill and intangible assets for the period. Return on average tangible equity measures the Corporation’s earnings as a percentage of average tangible equity. These measures are meaningful to the Corporation, as well as investors and analysts, in assessing the Corporation’s use of equity.

																As of or for the
	As of or for the Three Months Ended															Twelve Months Ended
	Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,			Dec. 31,			Dec. 31,
(in thousands, except ratio data)		2024			2024			2024			2024			2023			2024			2023
TANGIBLE EQUITY (AVERAGE)
Total average shareholders’ equity (GAAP)	$	219,254		$	210,421		$	195,375		$	195,860		$	174,868		$	205,280		$	177,187
Less: average intangible assets		(21,824	)		(21,824	)		(21,824	)		(21,824	)		(21,824	)		(21,824	)		(21,824	)
Average tangible equity (non-GAAP)	$	197,430		$	188,597		$	173,551		$	174,036		$	153,044		$	183,456		$	155,363

Return on average equity (GAAP)		10.73	%		10.81	%		10.27	%		14.48	%		8.63	%		11.53	%		14.11	%
Return on average tangible equity (non-GAAP)		11.92	%		12.07	%		11.56	%		16.29	%		9.86	%		12.90	%		16.09	%

Adjustments for Certain Items of Income or Expense

In addition to disclosures of certain GAAP financial measures, including net income, EPS, ROA, and ROE, we may also provide comparative disclosures that adjust these GAAP financial measures for a particular period by removing from the calculation thereof the impact of certain transactions or other material items of income or expense occurring during the period, including certain nonrecurring items. The Corporation believes that the resulting non-GAAP financial measures may improve an understanding of its results of operations by separating out any such transactions or items that may have had a disproportionate positive or negative impact on the Corporation’s financial results during the particular period in question. In the Corporation’s presentation of any such non-GAAP (adjusted) financial measures not specifically discussed in the preceding paragraphs, the Corporation supplies the supplemental financial information and explanations required under Regulation G.

																As of or for the
	As of or for the Three Months Ended															Twelve Months Ended
	Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,			Dec. 31,			Dec. 31,
(in thousands, except per share and ratio data)		2024			2024			2024			2024			2023			2024			2023
NON-GAAP NET INCOME
Reported net income (GAAP)	$	5,914		$	5,720		$	4,987		$	7,050		$	3,802		$	23,671		$	25,000
Net (gains) losses on security transactions (net of tax)		—			—			—			—			29			—			29
Recognition of employee retention tax credit (net of tax)		—			—			—			—			—			—			(1,873	)
Net income (non-GAAP)	$	5,914		$	5,720		$	4,987		$	7,050		$	3,831		$	23,671		$	23,156

Average basic and diluted shares outstanding		4,774			4,773			4,770			4,764			4,743			4,770			4,732

Reported basic and diluted earnings per share (GAAP)	$	1.24		$	1.19		$	1.05		$	1.48		$	0.80		$	4.96		$	5.28
Reported return on average assets (GAAP)		0.85	%		0.83	%		0.73	%		1.04	%		0.56	%		0.86	%		0.94	%
Reported return on average equity (GAAP)		10.73	%		10.81	%		10.27	%		14.48	%		8.63	%		11.53	%		14.11	%

Basic and diluted earnings per share (non-GAAP)	$	1.24		$	1.19		$	1.05		$	1.48		$	0.81		$	4.96		$	4.89
Return on average assets (non-GAAP)		0.85	%		0.83	%		0.73	%		1.04	%		0.57	%		0.86	%		0.87	%
Return on average equity (non-GAAP)		10.73	%		10.81	%		10.27	%		14.48	%		8.69	%		11.53	%		13.07	%

Category: Financial

Source: Chemung Financial Corp

For further information contact:
Dale M. McKim, III, EVP and CFO
dmckim@chemungcanal.com
Phone: 607-737-3714

The MIL Network –

January 29, 2025

MIL-OSI: Veritex Holdings, Inc. Reports Fourth Quarter and Full Year 2024 Results

Source: GlobeNewswire (MIL-OSI)

DALLAS, Jan. 28, 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 fourth quarter and full year of 2024.

“We achieved significant milestones during 2024 as we improved our credit risk profile and strengthened and completed our balance sheet remake,” said C. Malcolm Holland, III, the Company’s Chairman and Chief Executive Officer. “My team and I are committed to continue to drive execution of our strategic plan in 2025. Now it’s back to what we do best; grow profitability.”

2024 Highlights:

Operating EPS was $2.17 for 2024;
Criticized loans decreased approximately $100 million during 2024;
Commercial real estate concentrations decreased from 320.2% for the year ended 2023 to 298.9% for the year ended 2024;
Nonperforming assets to total loans decreased 15 basis points to 0.62% from 2023;
Loan to deposit ratio decreased to 89.3% as of December 31, 2024 compared to 93.6% as of December 31, 2023;
Total deposits grew $414.4 million, or 4.0%, year-over-year;
Common equity tier 1 capital increased 80 bps to 11.09% as of December 31, 2024 compared to 10.29% as of December 31, 2023;
Tangible book value per common share increased 6.9%, or $1.40, during 2024 compared to 2023;
Allowance for credit losses (“ACL”) to total loans increased to 1.18%, or 4 bps, from 1.14% as of December 31, 2023;
Declared quarterly cash dividend of $0.20 per share of outstanding common stock payable on February 28, 2025;.and
Named one of the “Best Companies to Work For” by the 2024 Inaugural U.S. News & World Report which evaluates companies based on quality of pay, work/life balance, and opportunities for professional development and advancement.

	Quarter to Date									Full Year
*Financial Highlights*	Q4 2024			Q3 2024			Q4 2023				2024			2023
	(Dollars in thousands, except per share data) (unaudited)
GAAP
Net income	$	24,882		$	31,001		$	3,499		$	107,241		$	108,261
Diluted EPS		0.45			0.56			0.06			1.95			1.98
Book value per common share		29.37			29.53			28.18			29.37			28.18
Return on average assets¹		0.78	%		0.96	%		0.11	%		0.85	%		0.88	%
Return on average equity¹		6.17			7.79			0.92			6.85			7.21
Net interest margin		3.20			3.30			3.31			3.26			3.49
Efficiency ratio		67.04			61.94			77.49			62.62			55.82
Non-GAAP²
Operating earnings	$	29,769		$	32,181		$	31,625		$	119,397		$	142,114
Diluted operating EPS		0.54			0.59			0.58			2.17			2.60
Tangible book value per common share		21.61			21.72			20.21			21.61			20.21
Pre-tax, pre-provision operating earnings		40,945			44,555			47,688			173,576			222,211
Pre-tax, pre-provision operating return on average assets¹		1.28	%		1.38	%		1.54	%		1.37	%		1.81	%
Pre-tax, pre-provision operating return on average loans¹		1.72			1.83			1.97			1.81			2.32
Operating return on average assets¹		0.93			1.00			1.02			0.95			1.16
Return on average tangible common equity¹		9.04			11.33			2.00			10.10			10.91
Operating return on average tangible common equity¹		10.69			11.74			12.37			11.17			14.09
Operating efficiency ratio		62.98			60.63			55.50			60.22			50.94

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.

Results of Operations for the Three Months Ended December 31, 2024

Net Interest Income

For the three months ended December 31, 2024, net interest income before provision for credit losses was $96.1 million and net interest margin was 3.20%, compared to $100.1 million and 3.30%, respectively, for the three months ended September 30, 2024. The $3.9 million decrease, or 3.9%, in net interest income before provision for credit losses was primarily due to a $12.3 million decrease in interest income on loans primarily driven by a decrease in loan yields and average loan balances. This decrease was partially offset by a $1.1 million increase in interest income on debt securities, $6.0 million decrease in interest expense on certificates and other time deposits, $2.4 million decrease in interest expense on transaction and savings deposits during the three months ended December 31, 2024. Net interest margin decreased 10 bps from the three months ended September 30, 2024, primarily due to the decrease in loan yields during the three months ended December 31, 2024, partially offset by an increase in yields on debt securities.

Compared to the three months ended December 31, 2023, net interest income before provision for credit losses for the three months ended December 31, 2024 increased by $608 thousand, or 0.6%. The increase was primarily due to a $4.6 million increase in interest income on debt securities, a $3.7 million increase in interest income in deposits in financial institutions and fed funds sold, a $2.5 million decrease in interest expense on advances from FHLB and a $1.4 million decrease in transaction and savings deposits driven by an decrease in funding costs. The increase in net interest income was partially offset by a $10.4 million decrease in interest income on loans driven by a decrease in loan yields and average balances. Net interest margin decreased 11 bps to 3.20% for the three months ended December 31, 2024 from 3.31% for the three months ended December 31, 2023. The decrease was primarily due to the decrease in loan yields during the three months ended December 31, 2024.

Noninterest Income (Loss)

Noninterest income for the three months ended December 31, 2024 was $10.1 million, a decrease of $3.1 million, or 23.3%, compared to noninterest income of $13.1 million for the three months ended September 30, 2024. The decrease in noninterest income was primarily due to a $4.4 million loss on sales of debt securities as a result of a strategic restructuring in which we sold $188.9 million of lower-yielding AFS securities, at amortized cost, with a 3.89% average yield, and reinvested the proceeds in higher yielding AFS securities with a 5.67% average yield. The decrease was also the result of a decrease of $852 thousand of OREO income, higher amortization of our servicing assets of $829 thousand and a decrease of $681 thousands due to the change in the value of equity securities. The decrease was partially offset by an increase of $4.6 million increase in government guaranteed loan income.

Compared to the three months ended December 31, 2023, noninterest income for the three months ended December 31, 2024 increased $27.8 million, or 156.5%. The increase was primarily due to a $29.4 million loss on equity method investment income related to the write down of our equity method investment in Thrive during the three months ended December 31, 2023 with no corresponding loss recorded during the three months ended December 31, 2024. The Company has no remaining equity method investment in Thrive.

Noninterest Expense

Noninterest expense was $71.2 million for the three months ended December 31, 2024, compared to $70.1 million for the three months ended September 30, 2024, a increase of $1.1 million, or 1.6%. Changes within noninterest expenses items were nominal.

Noninterest expense was $71.2 million for the three months ended December 31, 2024, compared to $60.2 million for the three months ended December 31, 2023, an increase of $11.0 million, or 18.2%. The increase was primarily driven by a $6.8 million increase in salary and employee benefits, a $4.1 million increase in other expenses, a $1.2 million increase in data processing and software expenses, and a $951 thousand increase in marketing expenses. The increase was partially offset by a $2.1 million decrease in professional and regulatory fees.

Financial Condition

Total loans held for investment (“LHI”) was $8.90 billion at December 31, 2024, a decrease of $129.4 million, compared to September 30, 2024, and a decrease of $307.4 million, or 3.3%, compared to December 31, 2023.

Total deposits were $10.75 billion at December 31, 2024, an decrease of $283.4 million compared to September 30, 2024, and an increase of $414.4 million, or 4.0%, compared to December 31, 2023. The decrease from September 30, 2024 was primarily the result of a decrease of $667.1 million in certificates and other time deposits, a decrease of $452.4 million in noninterest-bearing deposits, and a decrease of $20.4 million in correspondent money market accounts. The decrease was partially offset by a increase of $856.4 million in interest-bearing transaction, money market, and savings deposits. The increase from December 31, 2023 was primarily the result of an increase in attractive deposits which consisted of $712.8 million in interest-bearing transaction, money market, and savings deposits. The increase was partially offset by a $232.9 million decrease in certificates and other time deposits, a $38.9 million decrease in correspondent money market accounts, and a $26.6 million decrease in non-interest bearing deposits.

Credit Quality

Nonperforming assets (“NPAs”) increased to $79.2 million, or 0.62% of total assets, at December 31, 2024, compared to $67.3 million, or 0.52% of total assets, at September 30, 2024. Net charge-offs compared to average loans outstanding were 21 bps for the year ended December 31, 2024, compared to 25 bps for year ended December 31, 2023.

ACL as a percentage of LHI was 1.18%, 1.21%, and 1.14% at December 31, 2024, September 30, 2024, and December 31, 2023, respectively. The Company recorded a provision for credit losses of $2.3 million for the three months ended December 31, 2024, compared to a provision for credit losses of $4.0 million and $9.5 million for the three months ended September 30, 2024 and December 31, 2023, respectively. The recorded provision for credit losses reported for the three months ended December 31, 2024, compared to the three months ended December 31, 2023 was primarily attributable to a decrease in the overall loans held for investment balances and changes in general reserves as a result of changes in economic factors. The Company recorded a benefit for unfunded commitments of $401 thousand and $1.5 million during the three months ended December 31, 2024, and December 31, 2023, respectively. There was no provision for unfunded commitments recorded during the three months ended in September 30, 2024. The decrease in the recorded benefit for unfunded commitments during the three months ended December 31, 2024, compared to the three months ended September 30, 2024, was primarily attributable to changes in the economic factors applied to unfunded commitment balances.

Dividend Information

On January 28, 2025, Veritex’s Board of Directors declared a quarterly cash dividend of $0.20 per share on its outstanding shares of common stock. The dividend will be paid on February 28, 2025 to stockholders of record as of the close of business on February 14, 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, 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 to review the results on Wednesday, January 29, 2025 at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/8uwctr48 and will receive a unique PIN, which can be used when dialing in for the call.

Participants may also register via teleconference at:
https://register.vevent.com/register/BIf4f4afb9195448ba90575ac59fb337bc. 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. 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’s quarterly cash dividend; the impact of certain changes in Veritex’s accounting policies, standards and interpretations; a continuation of recent turmoil in the banking industry, responsive measures to mitigate and manage it 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, 2023 and any updates to those risk factors set forth in Veritex’s Quarterly Reports on Form 10-Q, 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															For the Year Ended
	Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023			Dec 31, 2024			Dec 31, 2023
	(Dollars and shares in thousands, except per-share data)
Per Share Data (Common Stock):
Basic EPS	$	0.46		$	0.57		$	0.50		$	0.44		$	0.06		$	1.97		$	2.00
Diluted EPS		0.45			0.56			0.50			0.44			0.06			1.95			1.98
Book value per common share		29.37			29.53			28.49			28.23			28.18			29.37			28.18
Tangible book value per common share¹		21.61			21.72			20.62			20.33			20.21			21.61			20.21
Dividends paid per common share outstanding²		0.20			0.20			0.20			0.20			0.20			0.80			0.80

Common Stock Data:
Shares outstanding at period end		54,517			54,446			54,350			54,496			54,338			54,517			54,338
Weighted average basic shares outstanding for the period		54,489			54,409			54,457			54,444			54,327			54,450			54,256
Weighted average diluted shares outstanding for the period		55,237			54,932			54,823			54,842			54,691			54,958			54,596

Summary of Credit Ratios:
ACL to total LHI		1.18	%		1.21	%		1.16	%		1.15	%		1.14	%		1.18	%		1.14	%
NPAs to total assets		0.62			0.52			0.65			0.82			0.77			0.62			0.77
NPAs to total loans and OREO		0.83			0.70			0.85			1.06			1.00			0.83			1.00
Net charge-offs to average loans outstanding³		0.32			0.01			0.28			0.22			0.40			0.21			0.25

Summary Performance Ratios:
Return on average assets³		0.78	%		0.96	%		0.87	%		0.79	%		0.11	%		0.85	%		0.88	%
Return on average equity³		6.17			7.79			7.10			6.33			0.92			6.85			7.21
Return on average tangible common equity^{1, 3}		9.04			11.33			10.54			9.52			2.00			10.10			10.91
Efficiency ratio		67.04			61.94			59.11			62.45			77.49			62.62			55.82
Net interest margin		3.20			3.30			3.29			3.24			3.31			3.26			3.49

Selected Performance Metrics – Operating:
Diluted operating EPS¹	$	0.54		$	0.59		$	0.52		$	0.53		$	0.58		$	2.17		$	2.60
Pre-tax, pre-provision operating return on average assets^{1, 3}		1.28	%		1.38	%		1.42	%		1.42	%		1.54	%		1.37	%		1.81	%
Pre-tax, pre-provision operating return on average loans^{1, 3}		1.72			1.83			1.83			1.84			1.97			1.81			2.32
Operating return on average assets^1,3		0.93			1.00			0.91			0.95			1.02			0.95			1.16
Operating return on average tangible common equity^1,3		10.69			11.74			10.94			11.34			12.37			11.17			14.09
Operating efficiency ratio¹		62.98			60.63			58.41			58.73			55.50			60.22			50.94
Risk weighted assets	$	11,247,813		$	11,290,800		$	11,450,997		$	11,407,446		$	11,387,825		$	11,247,813		$	11,387,825

Veritex Holdings, Inc. Capital Ratios:
Average stockholders’ equity to average total assets		12.58	%		12.31	%		12.26	%		12.43	%		12.27	%		12.40	%		12.22	%
Tangible common equity to tangible assets¹		9.54			9.37			9.14			9.02			9.18			9.54			9.18
Tier 1 capital to average assets (leverage)		10.32			10.06			10.06			10.12			10.03			10.32			10.03
Common equity tier 1 capital		11.09			10.86			10.49			10.37			10.29			11.09			10.29
Tier 1 capital to risk-weighted assets		11.36			11.13			10.75			10.63			10.56			11.36			10.56
Total capital to risk-weighted assets		13.96			13.91			13.45			13.33			13.18			13.96			13.18

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)

	Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
ASSETS
Cash and due from banks	$	52,486		$	54,165		$	53,462		$	41,884		$	58,914
Interest bearing deposits in other banks		802,714			1,046,625			598,375			698,885			570,149
Cash and cash equivalents	$	855,200		$	1,100,790		$	651,837		$	740,769		$	629,063
Debt securities, net		1,478,538			1,423,610			1,349,354			1,344,930			1,257,042
Other investments		69,638			71,257			75,885			76,788			76,238
Loans held for sale (“LHFS”)		89,309			48,496			57,046			64,762			79,072
LHI, mortgage warehouse (“MW”)		605,411			630,650			568,047			449,531			377,796
LHI, excluding MW		8,899,133			9,028,575			9,209,094			9,249,551			9,206,544
Total loans		9,593,853			9,707,721			9,834,187			9,763,844			9,663,412
ACL		(111,745	)		(117,162	)		(113,431	)		(112,032	)		(109,816	)
Bank-owned life insurance		85,324			84,776			84,233			85,359			84,833
Bank premises, furniture and equipment, net		113,480			114,202			105,222			105,299			105,727
Other real estate owned (“OREO”)		24,737			9,034			24,256			18,445			—
Intangible assets, net of accumulated amortization		28,664			32,825			35,817			38,679			41,753
Goodwill		404,452			404,452			404,452			404,452			404,452
Other assets		226,200			211,471			232,518			241,863			241,633
Total assets	$	12,768,341		$	13,042,976		$	12,684,330		$	12,708,396		$	12,394,337
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing deposits	$	2,191,457		$	2,643,894		$	2,416,727		$	2,349,211		$	2,218,036
Interest-bearing transaction and savings deposits		5,061,157			4,204,708			3,979,454			4,220,114			4,348,385
Certificates and other time deposits		2,958,861			3,625,920			3,744,596			3,486,805			3,191,737
Correspondent money market deposits		541,117			561,489			584,067			597,690			580,037
Total deposits		10,752,592			11,036,011			10,724,844			10,653,820			10,338,195
Accounts payable and other liabilities		183,944			168,415			180,585			186,027			195,036
Advances from FHLB		—			—			—			100,000			100,000
Subordinated debentures and subordinated notes		230,736			230,536			230,285			230,034			229,783
Total liabilities		11,167,272			11,434,962			11,135,714			11,169,881			10,863,014
Commitments and contingencies
Stockholders’ equity:
Common stock		613			613			612			611			610
Additional paid-in capital		1,328,748			1,324,929			1,321,995			1,319,144			1,317,516
Retained earnings		507,903			493,921			473,801			457,499			444,242
Accumulated other comprehensive loss		(65,076	)		(40,330	)		(76,713	)		(71,157	)		(63,463	)
Treasury stock		(171,119	)		(171,119	)		(171,079	)		(167,582	)		(167,582	)
Total stockholders’ equity		1,601,069			1,608,014			1,548,616			1,538,515			1,531,323
Total liabilities and stockholders’ equity	$	12,768,341		$	13,042,976		$	12,684,330		$	12,708,396		$	12,394,337

VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(in thousands, except per share data)

	For the Quarter Ended													For the Year Ended
	Dec 31, 2024			Sep 30, 2024		Jun 30, 2024		Mar 31, 2024			Dec 31, 2023			Dec 31, 2024			Dec 31, 2023
	(unaudited)			(unaudited)		(unaudited)		(unaudited)			(unaudited)			(unaudited)
Interest income:
Loans, including fees	$	154,998		$	167,261	$	166,979	$	161,942		$	165,443		$	651,180		$	648,245
Debt securities		16,893			15,830		15,408		13,695			12,282			61,826			44,364
Deposits in financial institutions and Fed Funds sold		11,888			12,571		7,722		8,050			8,162			40,231			28,331
Equity securities and other investments		940			1,001		1,138		900			1,717			3,979			5,934
Total interest income		184,719			196,663		191,247		184,587			187,604			757,216			726,874
Interest expense:
Transaction and savings deposits		44,841			47,208		45,619		46,784			46,225			184,452			148,975
Certificates and other time deposits		40,279			46,230		44,811		40,492			40,165			171,812			125,409
Advances from FHLB		130			47		1,468		1,391			2,581			3,036			41,024
Subordinated debentures and subordinated notes		3,328			3,116		3,113		3,114			3,100			12,671			12,352
Total interest expense		88,578			96,601		95,011		91,781			92,071			371,971			327,760
Net interest income		96,141			100,062		96,236		92,806			95,533			385,245			399,114
Provision for credit losses		2,300			4,000		8,250		7,500			9,500			22,050			42,512
(Benefit) provision for unfunded commitments		(401	)		—		—		(1,541	)		(1,500	)		(1,942	)		(2,041	)
Net interest income after provisions		94,242			96,062		87,986		86,847			87,533			365,137			358,643
Noninterest income:
Service charges and fees on deposit accounts		5,612			5,442		4,974		4,896			4,800			20,924			20,248
Loan fees		2,265			3,278		2,207		2,510			1,200			10,260			6,348
Loss on sales of debt securities		(4,397	)		—		—		(6,304	)		—			(10,701	)		(5,321	)
Government guaranteed loan income, net		5,368			780		1,320		2,614			4,378			10,082			19,982
Equity method investment (loss) income		—			—		—		—			(29,417	)		—			(30,589	)
Customer swap income		509			271		326		449			258			1,555			1,633
Other income		699			3,335		1,751		2,497			989			8,282			6,804
Total noninterest income (loss)		10,056			13,106		10,578		6,662			(17,792	)		40,402			19,105
Noninterest expense:
Salaries and employee benefits		37,446			37,370		32,790		33,365			30,606			140,971			122,070
Occupancy and equipment		4,633			4,789		4,585		4,677			4,670			18,684			19,351
Professional and regulatory fees		5,564			4,903		5,617		6,053			7,626			22,137			26,166
Data processing and software expense		5,741			5,268		5,097		4,856			4,569			20,962			18,539
Marketing		2,896			2,781		1,976		1,546			1,945			9,199			8,704
Amortization of intangibles		2,437			2,438		2,438		2,438			2,438			9,751			9,838
Telephone and communications		323			335		365		261			356			1,284			1,551
Other		12,154			12,216		10,273		8,920			8,028			43,563			27,245
Total noninterest expense		71,194			70,100		63,141		62,116			60,238			266,551			233,464
Income before income tax expense		33,104			39,068		35,423		31,393			9,503			138,988			144,284
Income tax expense		8,222			8,067		8,221		7,237			6,004			31,747			36,023
Net income	$	24,882		$	31,001	$	27,202	$	24,156		$	3,499		$	107,241		$	108,261

Basic EPS	$	0.46		$	0.57	$	0.50	$	0.44		$	0.06		$	1.97		$	2.00
Diluted EPS	$	0.45		$	0.56	$	0.50	$	0.44		$	0.06		$	1.95		$	1.98
Weighted average basic shares outstanding		54,489			54,409		54,457		54,444			54,327			54,450			54,256
Weighted average diluted shares outstanding		55,237			54,932		54,823		54,842			54,691			54,958			54,596

VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)

	For the Quarter Ended
	December 31, 2024							September 30, 2024							December 31, 2023
	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	$	8,957,193		$	147,782	6.56	%	$	9,184,182		$	159,163	6.89	%	$	9,280,439		$	161,021	6.88	%
LHI, MW		492,372			7,216	5.83			477,592			8,098	6.75			301,345			4,422	5.82
Debt securities		1,458,057			16,893	4.61			1,384,835			15,830	4.55			1,188,776			12,282	4.10
Interest-earning deposits in other banks		971,451			11,888	4.87			924,685			12,571	5.41			587,929			8,162	5.51
Equity securities and other investments		72,223			940	5.18			75,884			1,001	5.25			82,271			1,717	8.28
Total interest-earning assets		11,951,296			184,719	6.15			12,047,178			196,663	6.49			11,440,760			187,604	6.51
ACL		(117,293	)						(115,510	)						(111,937	)
Noninterest-earning assets		916,969							930,250							977,811
Total assets	$	12,750,972						$	12,861,918						$	12,306,634

Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits	$	5,001,159			44,841	3.57	%	$	4,700,196		$	47,208	4.00	%	$	4,547,911			46,225	4.03	%
Certificates and other time deposits		3,319,628			40,279	4.83			3,678,718			46,230	5.00			3,285,164			40,165	4.85
Advances from FHLB and Other		10,598			130	4.88			3,261			47	5.73			182,935			2,581	5.60
Subordinated debentures and subordinated notes		230,633			3,328	5.74			230,393			3,116	5.38			229,648			3,100	5.36
Total interest-bearing liabilities		8,562,018			88,578	4.12			8,612,568			96,601	4.46			8,245,658			92,071	4.43

Noninterest-bearing liabilities:
Noninterest-bearing deposits		2,400,809							2,486,676							2,322,555
Other liabilities		183,810							179,273							228,135
Total liabilities		11,146,637							11,278,517							10,796,348
Stockholders’ equity		1,604,335							1,583,401							1,510,286
Total liabilities and stockholders’ equity	$	12,750,972						$	12,861,918						$	12,306,634

Net interest rate spread²						2.03	%						2.03	%						2.08	%
Net interest income and margin³				$	96,141	3.20	%				$	100,062	3.30	%				$	95,533	3.31	%

¹ Includes average outstanding balances of LHFS of $46.4 million, $54.3 million and $31.2 million for the three months ended December 31, 2024, September 30, 2024 and December 31, 2023, 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)

	For the Year Ended December 31,
		2024							2023
	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	$	9,191,753		$	624,853	6.80	%	$	9,244,070		$	628,122	6.79	%
LHI, MW		417,985			26,327	6.30			347,596			20,123	5.79
Debt securities		1,372,812			61,826	4.50			1,173,880			44,364	3.78
Interest-earning deposits in other banks		762,569			40,231	5.28			542,959			28,331	5.22
Equity securities and other investments		75,825			3,979	5.25			120,135			5,934	4.94
Total interest-earning assets		11,820,944			757,216	6.41			11,428,640			726,874	6.36
ACL		(115,259	)						(103,179	)
Noninterest-earning assets		927,178							957,286
Total assets	$	12,632,863						$	12,282,747

Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits	$	4,728,453			184,452	3.90		$	4,197,517			148,975	3.55
Certificates and other time deposits		3,468,448			171,812	4.95			2,977,178			125,409	4.21
Advances from FHLB and Other		55,109			3,036	5.51			873,617			41,024	4.70
Subordinated debentures and subordinated notes		230,264			12,671	5.50			229,268			12,352	5.39
Total interest-bearing liabilities		8,482,274			371,971	4.39			8,277,580			327,760	3.96

Noninterest-bearing liabilities:
Noninterest-bearing deposits		2,397,681							2,309,983
Other liabilities		186,951							193,659
Total liabilities		11,066,906							10,781,222
Stockholders’ equity		1,565,957							1,501,525
Total liabilities and stockholders’ equity	$	12,632,863						$	12,282,747

Net interest rate spread²						2.02	%						2.40	%
Net interest income and margin³				$	385,245	3.26	%				$	399,114	3.49	%

¹Includes average outstanding balances of LHFS of $53.3 million and $25.7 million for the twelve months ended December 31, 2024 and 2023, 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
	Dec 31, 2024		Sep 30, 2024		Jun 30, 2024		Mar 31, 2024		Dec 31, 2023
Average yield on interest-earning assets:
Loans¹	6.56	%	6.89	%	6.90	%	6.83	%	6.88	%
LHI, MW	5.83		6.75		6.36		6.27		5.82
Total loans	6.53		6.89		6.88		6.81		6.85
Debt securities	4.61		4.55		4.58		4.25		4.10
Interest-bearing deposits in other banks	4.87		5.41		5.54		5.54		5.51
Equity securities and other investments	5.18		5.25		5.80		4.75		8.28
Total interest-earning assets	6.15	%	6.49	%	6.54	%	6.44	%	6.51	%

Average rate on interest-bearing liabilities:
Interest-bearing demand and savings deposits	3.57	%	4.00	%	4.01	%	4.06	%	4.03	%
Certificates and other time deposits	4.83		5.00		5.02		4.96		4.85
Advances from FHLB	4.88		5.73		5.54		5.54		5.60
Subordinated debentures and subordinated notes	5.74		5.38		5.44		5.45		5.36
Total interest-bearing liabilities	4.12	%	4.46	%	4.50	%	4.47	%	4.43	%

Net interest rate spread²	2.03	%	2.03	%	2.04	%	1.97	%	2.08	%
Net interest margin³	3.20	%	3.30	%	3.29	%	3.24	%	3.31	%

¹ Includes average outstanding balances of LHFS of $46.4 million, $54.3 million, $58.5 million, $53.9 million and $31.2 million for the three months ended December 31, 2024, September 30, 2024, June 30, 2024, March 31, 2024 and December 31, 2023, 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										For the Year Ended
	Dec 31, 2024		Sep 30, 2024		Jun 30, 2024		Mar 31, 2024		Dec 31, 2023		Dec 31, 2024		Dec 31, 2023
Average cost of interest-bearing deposits	4.07	%	4.44	%	4.46	%	4.43	%	4.38	%	4.35	%	3.82	%
Average costs of total deposits, including noninterest-bearing	3.16		3.42		3.46		3.42		3.37		3.36		2.89

VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)

LHI and Deposit Portfolio Composition

	Dec 31, 2024					Sep 30, 2024					Jun 30, 2024					Mar 31, 2024					Dec 31, 2023
	(In thousands, except percentages)
LHI¹
Commercial and Industrial (“C&I”)	$	2,693,538		30.2	%	$	2,728,544		30.2	%	$	2,798,260		30.4	%	$	2,785,987		30.1	%	$	2,752,063		29.9	%
Real Estate:
Owner occupied commercial (“OOCRE”)		780,003		8.8			807,223		8.9			806,285		8.7			788,376		8.5			794,088		8.6
Non-owner occupied commercial (“NOOCRE”)		2,382,499		26.7			2,338,094		25.9			2,369,848		25.7			2,352,993		25.5			2,350,725		25.5
Construction and land		1,303,711		14.7			1,436,540		15.8			1,536,580		16.7			1,568,257		16.9			1,734,254		18.8
Farmland		31,690		0.4			32,254		0.4			30,512		0.3			30,979		0.3			31,114		0.3
1-4 family residential		957,341		10.7			944,755		10.5			917,402		10.0			969,401		10.5			937,119		10.2
Multi-family residential		750,218		8.4			738,090		8.2			748,740		8.1			751,607		8.1			605,817		6.6
Consumer		9,115		0.1			11,292		0.1			9,245		0.1			8,882		0.1			10,149		0.1
Total LHI¹	$	8,908,115		100	%	$	9,036,792		100	%	$	9,216,872		100	%	$	9,256,482		100	%	$	9,215,329		100	%

MW		605,411					630,650					568,047					449,531					377,796

Total LHI¹	$	9,513,526				$	9,667,442				$	9,784,919				$	9,706,013				$	9,593,125

Total LHFS		89,309					48,496					57,046					64,762					79,072

Total loans	$	9,602,835				$	9,715,938				$	9,841,965				$	9,770,775				$	9,672,197

Deposits
Noninterest-bearing	$	2,191,457		20.4	%	$	2,643,894		24.0	%	$	2,416,727		22.5	%	$	2,349,211		22.1	%	$	2,218,036		21.5	%
Interest-bearing transaction		839,005		7.8			421,059		3.8			523,272		4.9			724,171		6.8			927,193		8.9
Money market		3,772,964		35.1			3,462,709		31.4			3,268,286		30.5			3,326,742		31.2			3,284,324		31.8
Savings		449,188		4.2			320,940		2.9			187,896		1.8			169,201		1.6			136,868		1.3
Certificates and other time deposits		2,958,861		27.5			3,625,920		32.8			3,744,596		34.9			3,486,805		32.7			3,191,737		30.9
Correspondent money market account		541,117		5.0			561,489		5.1			584,067		5.4			597,690		5.6			580,037		5.6
Total deposits	$	10,752,592		100	%	$	11,036,011		100	%	$	10,724,844		100	%	$	10,653,820		100	%	$	10,338,195		100	%

Total loans to total deposits ratio		89.3	%				88.0	%				91.8	%				91.7	%				93.6	%

Total loans to Deposit Ratio, excluding MW loans and LHFS		82.8	%				81.9	%				85.9	%				86.9	%				89.1	%

¹ Total LHI does not include deferred costs of $9.0 million, $8.2 million, $7.8 million, $6.9 million and $8.8 million at December 31, 2024, September 30, 2024, June 30, 2024, March 31, 2024 and December 31, 2023, respectively.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)

Asset Quality

	For the Quarter Ended															For the Year Ended
	Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023			Dec 31, 2024			Dec 31, 2023
	(In thousands, except percentages)
NPAs:
Nonaccrual loans	$	52,521		$	55,335		$	58,537		$	75,721		$	79,133		$	52,521		$	79,133
Nonaccrual PCD loans¹		—			70			73			9,419			13,715			—			13,715
Accruing loans 90 or more days past due²		1,914			2,860			143			220			2,975			1,914			2,975
Total nonperforming loans held for investment (“NPLs”)		54,435			58,265			58,753			85,360			95,823			54,435			95,823
Other real estate owned (“OREO”)		24,737			9,034			24,256			18,445			—			24,737			—
Total NPAs	$	79,172		$	67,299		$	83,009		$	103,805		$	95,823		$	79,172		$	95,823

Charge-offs:
1-4 family residential	$	—		$	—		$	(31	)	$	—		$	(21	)	$	(31	)	$	(21	)
Multifamily		—			—			(198	)		—			(192	)		(198	)		(192	)
OOCRE		—			—			—			(120	)		(364	)		(120	)		(855	)
NOOCRE		(5,113	)		—			(1,969	)		(4,293	)		(5,434	)		(11,375	)		(13,649	)
C&I		(4,586	)		(2,259	)		(5,601	)		(946	)		(3,893	)		(13,392	)		(10,413	)
Consumer		(420	)		(54	)		(30	)		(71	)		(33	)		(575	)		(236	)
Total charge-offs	$	(10,119	)	$	(2,313	)	$	(7,829	)	$	(5,430	)	$	(9,937	)	$	(25,691	)	$	(25,366	)

Recoveries:
1-4 family residential	$	2		$	3		$	—		$	1		$	1		$	6		$	3
OOCRE		—			—			120			—			—			120			—
NOOCRE		1,323			—			—			—			—			1,323			350
C&I		1,047			1,962			361			96			387			3,466			1,165
MW					46			—			—			—			46			—
Consumer		30			33			497			49			34			609			100
Total recoveries	$	2,402		$	2,044		$	978		$	146		$	422		$	5,570		$	1,618

Net charge-offs	$	(7,717	)	$	(269	)	$	(6,851	)	$	(5,284	)	$	(9,515	)	$	(20,121	)	$	(23,748	)

Provision for credit losses	$	2,300		$	4,000		$	8,250		$	7,500		$	9,500		$	22,050		$	42,512

ACL	$	111,745		$	117,162		$	113,431		$	112,032		$	109,816		$	111,745		$	109,816

Asset Quality Ratios:
NPAs to total assets		0.62	%		0.52	%		0.65	%		0.82	%		0.77	%		0.62	%		0.77	%
NPAs, excluding nonaccrual PCD loans, to total assets		0.62			0.52			0.65			0.74			0.66			0.62			0.66
NPAs to total loans and OREO		0.83			0.70			0.85			1.06			1.00			0.83			1.00
NPLs to total LHI		0.57			0.60			0.60			0.88			1.00			0.57			1.00
NPLs, excluding nonaccrual PCD loans, to total LHI		0.57			0.60			0.60			0.78			0.86			0.57			0.86
ACL to total LHI		1.18			1.21			1.16			1.15			1.14			1.18			1.14
ACL to total loans, excluding MW and LHFS		1.25			1.30			1.23			1.21			1.19			1.25			1.19
Net charge-offs to average loans outstanding³		0.32			0.01			0.28			0.22			0.40			0.21			0.25

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 PCD loans greater than 90 days past due that are accounted for on a pooled basis.
³Annualized 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 per common share 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
	Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023
	(Dollars in thousands, except per share data)
Tangible Common Equity
Total stockholders’ equity	$	1,601,069		$	1,608,014		$	1,548,616		$	1,538,515		$	1,531,323
Adjustments:
Goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)
Core deposit intangibles		(18,744	)		(21,182	)		(23,619	)		(26,057	)		(28,495	)
Tangible common equity	$	1,177,873		$	1,182,380		$	1,120,545		$	1,108,006		$	1,098,376
Common shares outstanding		54,517			54,446			54,350			54,496			54,338

Book value per common share	$	29.37		$	29.53		$	28.49		$	28.23		$	28.18
Tangible book value per common share	$	21.61		$	21.72		$	20.62		$	20.33		$	20.21

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
	Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023
	(Dollars in thousands)
Tangible Common Equity
Total stockholders’ equity	$	1,601,069		$	1,608,014		$	1,548,616		$	1,538,515		$	1,531,323
Adjustments:
Goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)
Core deposit intangibles		(18,744	)		(21,182	)		(23,619	)		(26,057	)		(28,495	)
Tangible common equity	$	1,177,873		$	1,182,380		$	1,120,545		$	1,108,006		$	1,098,376
Tangible Assets
Total assets	$	12,768,341		$	13,042,976		$	12,684,330		$	12,708,396		$	12,394,337
Adjustments:
Goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)
Core deposit intangibles		(18,744	)		(21,182	)		(23,619	)		(26,057	)		(28,495	)
Tangible Assets	$	12,345,145		$	12,617,342		$	12,256,259		$	12,277,887		$	11,961,390
Tangible Common Equity to Tangible Assets		9.54	%		9.37	%		9.14	%		9.02	%		9.18	%

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															For the Year Ended
	Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023			Dec 31, 2024			Dec 31, 2023
	(Dollars in thousands)
Net income available for common stockholders adjusted for amortization of core deposit intangibles
Net income	$	24,882		$	31,001		$	27,202		$	24,156		$	3,499		$	107,241		$	108,261
Adjustments:
Plus: Amortization of core deposit intangibles		2,437			2,438			2,438			2,438			2,438			9,751			9,752
Less: Tax benefit at the statutory rate		512			512			512			512			512			2,048			2,048
Net income available for common stockholders adjusted for amortization of core deposit intangibles	$	26,807		$	32,927		$	29,128		$	26,082		$	5,425		$	114,944		$	115,965

Average Tangible Common Equity
Total average stockholders’ equity	$	1,604,335		$	1,583,401		$	1,541,609		$	1,533,868		$	1,510,286		$	1,565,957		$	1,501,525
Adjustments:
Average goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)
Average core deposit intangibles		(20,342	)		(22,789	)		(25,218	)		(27,656	)		(30,093	)		(23,988	)		(33,718	)
Average tangible common equity	$	1,179,541		$	1,156,160		$	1,111,939		$	1,101,760		$	1,075,741		$	1,137,517		$	1,063,355
Return on Average Tangible Common Equity (Annualized)		9.04	%		11.33	%		10.54	%		9.52	%		2.00	%		10.10	%		10.91	%

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, 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 equity method investment write-down, plus FDIC special assessment, plus severance payments, plus loss on sale of debt securities AFS, net, 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 benefit (provision) 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										For the Year Ended
	Dec 31, 2024		Sep 30, 2024		Jun 30, 2024		Mar 31, 2024		Dec 31, 2023		Dec 31, 2024		Dec 31, 2023
	(Dollars in thousands, except per share data)
Operating Earnings
Net income	$	24,882	$	31,001	$	27,202	$	24,156	$	3,499	$	107,241	$	108,261
Plus: Equity method investment write-down		—		—		—		—		29,417		—		29,417
Plus: FDIC special assessment		—		—		134		—		768		134		768
Plus: Severance payments¹		1,545		1,487		613		—		—		3,645		1,950
Plus: Loss on sale of debt securities AFS, net		4,397		—		—		6,304		—		10,701		5,321
Operating pre-tax income		30,824		32,488		27,949		30,460		33,684		121,721		145,717
Less: Tax impact of adjustments		1,248		307		166		1,323		2,059		3,044		3,603
Plus: Nonrecurring tax adjustments		193		—		527		—		—		720		—
Operating earnings	$	29,769	$	32,181	$	28,310	$	29,137	$	31,625	$	119,397	$	142,114

Weighted average diluted shares outstanding		55,237		54,932		54,823		54,842		54,691		54,958		54,596
Diluted EPS	$	0.45	$	0.56	$	0.50	$	0.44	$	0.06	$	1.95	$	1.98
Diluted operating EPS	$	0.54	$	0.59	$	0.52	$	0.53	$	0.58	$	2.17	$	2.60

¹ Severance payments relate to restructurings made during the periods disclosed.

	For the Quarter Ended															For the Year Ended
(Dollars in thousands)	Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023			Dec 31, 2024			Dec 31, 2023
Pre-Tax, Pre-Provision Operating Earnings
Net Income	$	24,882		$	31,001		$	27,202		$	24,156		$	3,499		$	107,241		$	108,261
Plus: Provision for income taxes		8,222			8,067			8,221			7,237			6,004			31,747			36,023
Plus: Provision for credit losses and unfunded commitments		1,899			4,000			8,250			5,959			8,000			20,108			40,471
Plus: Severance payments		1,545			1,487			613			—			—			3,645			1,950
Plus: Loss on sale of AFS, net		4,397			—			—			6,304			—			10,701			5,321
Plus: Equity method investment write-down		—			—			—			—			29,417			—			29,417
Plus: FDIC special assessment		—			—			134			—			768			134			768
Net pre-tax, pre-provision operating earnings	$	40,945		$	44,555		$	44,420		$	43,656		$	47,688		$	173,576		$	222,211

Average total assets	$	12,750,972		$	12,861,918		$	12,578,706		$	12,336,042		$	12,306,634		$	12,632,863		$	12,282,747
Pre-tax, pre-provision operating return on average assets¹		1.28	%		1.38	%		1.42	%		1.42	%		1.54	%		1.37	%		1.81	%

Average loans	$	9,449,565		$	9,661,774		$	9,765,428		$	9,563,372		$	9,581,784		$	9,609,738		$	9,591,666
Pre-tax, pre-provision operating return on average loans¹		1.72	%		1.83	%		1.83	%		1.84	%		1.97	%		1.81	%		2.32	%

Average Total Assets	$	12,750,972		$	12,861,918		$	12,578,706		$	12,336,042		$	12,306,634		$	12,632,863		$	12,282,747
Return on average assets¹		0.78	%		0.96	%		0.87	%		0.79	%		0.11	%		0.85	%		0.88	%
Operating return on average assets¹		0.93			1.00			0.91			0.95			1.02			0.95			1.16

Operating earnings adjusted for amortization of core deposit intangibles
Operating earnings	$	29,769		$	32,181		$	28,310		$	29,137		$	31,625		$	119,397		$	142,114
Adjustments:
Plus: Amortization of core deposit intangibles		2,437			2,438			2,438			2,438			2,438			9,751			9,752
Less: Tax benefit at the statutory rate		512			512			512			512			512			2,048			2,048
Operating earnings adjusted for amortization of core deposit intangibles	$	31,694		$	34,107		$	30,236		$	31,063		$	33,551		$	127,100		$	149,818

Average Tangible Common Equity
Total average stockholders’ equity	$	1,604,335		$	1,583,401		$	1,541,609		$	1,533,868		$	1,510,286		$	1,565,957		$	1,501,525
Adjustments:
Less: Average goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)
Less: Average core deposit intangibles		(20,342	)		(22,789	)		(25,218	)		(27,656	)		(30,093	)		(23,988	)		(33,718	)
Average tangible common equity	$	1,179,541		$	1,156,160		$	1,111,939		$	1,101,760		$	1,075,741		$	1,137,517		$	1,063,355
Operating return on average tangible common equity¹		10.69	%		11.74	%		10.94	%		11.34	%		12.37	%		11.17	%		14.09	%

Efficiency ratio		67.04	%		61.94	%		59.11	%		62.45	%		77.49	%		62.62	%		55.82	%
Operating efficiency ratio
Net interest income	$	96,141		$	100,062		$	96,236		$	92,806		$	95,533		$	385,245		$	399,114
Noninterest income (loss)		10,056			13,106			10,578			6,662			(17,792	)		40,402			19,105
Plus: Loss on sale of AFS, net		4,397			—			—			6,304			—			10,701			5,321
Plus: Equity method investment write-down		—			—			—			—			29,417			—			29,417
Operating noninterest income		14,453			13,106			10,578			12,966			11,625			51,103			53,843
Noninterest expense		71,194			70,100			63,141			62,116			60,238			266,551			233,464
Less: FDIC special assessment		—			—			134			—			768			134			768
Less: Severance payments		1,545			1,487			613			—			—			3,645			1,950
Operating noninterest expense	$	69,649		$	68,613		$	62,394		$	62,116		$	59,470		$	262,772		$	230,746
Operating efficiency ratio		62.98	%		60.63	%		58.41	%		58.73	%		55.50	%		60.22	%		50.94	%

¹ Annualized ratio for quarterly metrics.

The MIL Network –

January 29, 2025

MIL-OSI: Renasant Corporation Announces Earnings For the Fourth Quarter of 2024

Source: GlobeNewswire (MIL-OSI)

TUPELO, Miss., Jan. 28, 2025 (GLOBE NEWSWIRE) — Renasant Corporation (NYSE: RNST) (the “Company”) today announced earnings results for the fourth quarter of 2024.

(Dollars in thousands, except earnings per share)	Three Months Ended							Twelve Months Ended
	Dec 31, 2024		Sep 30, 2024		Dec 31, 2023			Dec 31, 2024		Dec 31, 2023
Net income and earnings per share:
Net income	$	44,747	$	72,455	$	28,124		$	195,457	$	144,678
After-tax gain on sale of insurance agency		—		38,951		—			38,951		—
After-tax loss on sale of securities (including impairments)		—		—		(17,859	)		—		(17,859	)
Basic EPS		0.70		1.18		0.50			3.29		2.58
Diluted EPS		0.70		1.18		0.50			3.27		2.56
Adjusted diluted EPS (Non-GAAP)⁽¹⁾		0.73		0.70		0.76			2.76		3.15
Impact to diluted EPS from after-tax gain on sale of insurance agency		—		0.63		—			0.65		—
Impact to diluted EPS from after-tax loss on sale of securities (including impairments)		—		—		—			—		(0.31	)

“The fourth quarter results marked the end to a successful year for Renasant. We announced a transformative merger with The First in July and, in the midst of diligently planning for a successful combination, our team maintained its focus on generating organic growth, disciplined pricing on both sides of the balance sheet and steady credit performance,” remarked C. Mitchell Waycaster, Chief Executive Officer of the Company.

Quarterly Highlights

Earnings

Net income for the fourth quarter of 2024 was $44.7 million; diluted EPS and adjusted diluted EPS (non-GAAP)⁽¹⁾ were $0.70 and $0.73, respectively
Net interest income (fully tax equivalent) for the fourth quarter of 2024 was $135.5 million, up $1.9 million on a linked quarter basis
For the fourth quarter of 2024, net interest margin was 3.36%, which was unchanged on a linked quarter basis
Cost of total deposits was 2.35% for the fourth quarter of 2024, down 16 basis points on a linked quarter basis
Noninterest income decreased $55.1 million on a linked quarter basis. The Company recognized a $53.3 million pre-tax gain on the insurance agency sale during the third quarter. Excluding the impact of this gain, noninterest income decreased $1.7 million from the third quarter
Mortgage banking income decreased $1.6 million on a linked quarter basis. The mortgage division generated $482.3 million in interest rate lock volume in the fourth quarter of 2024, down $61.3 million on a linked quarter basis. Gain on sale margin was 2.01% for the fourth quarter of 2024, up 45 basis points on a linked quarter basis
Noninterest expense decreased $7.2 million on a linked quarter basis. Merger and conversion expenses were $2.1 million for the fourth quarter of 2024, down from $11.3 million for the prior quarter

Balance Sheet

Loans increased $257.4 million on a linked quarter basis, representing 8.1% annualized net loan growth
Securities increased $41.8 million on a linked quarter basis. The Company purchased $113.6 million in securities during the fourth quarter, which was offset by cash flows related to principal payments, calls and maturities of $48.5 million and a negative fair market value adjustment in the Company’s available-for-sale portfolio of $24.3 million
Deposits at December 31, 2024 increased $62.9 million on a linked quarter basis. Brokered deposits outstanding at September 30, 2024 of $126.8 million matured or were called during the quarter. There were no outstanding brokered deposits at December 31, 2024. Noninterest bearing deposits decreased $125.8 million on a linked quarter basis and represented 23.4% of total deposits at December 31, 2024

Capital and Stock Repurchase Program

Book value per share and tangible book value per share (non-GAAP)⁽¹⁾ increased 0.7% and 1.3%, respectively, on a linked quarter basis
The Company has a $100.0 million stock repurchase program in effect through October 2025 under which the Company is authorized to repurchase outstanding shares of its common stock either in open market purchases or privately-negotiated transactions. There was no buyback activity during the fourth quarter of 2024

Credit Quality

The Company recorded a provision for credit losses of $2.6 million for the fourth quarter of 2024, compared to $0.9 million for the third quarter of 2024
The ratio of the allowance for credit losses on loans to total loans was 1.57% at December 31, 2024, down two basis points on a linked quarter basis
The coverage ratio, or the allowance for credit losses on loans to nonperforming loans, was 178.11% at December 31, 2024, compared to 168.07% at September 30, 2024
Net loan charge-offs for the fourth quarter of 2024 were $1.7 million, or 0.05% of average loans on an annualized basis
Nonperforming loans to total loans decreased to 0.88% at December 31, 2024 compared to 0.94% at September 30, 2024, and criticized loans (which include classified and Special Mention loans) to total loans decreased to 2.89% at December 31, 2024, compared to 3.02% at September 30, 2024

_{⁽¹⁾ This is a non-GAAP financial measure. A reconciliation of all non-GAAP financial measures disclosed in this release from GAAP to non-GAAP is included in the tables at the end of this release. The information below under the heading “Non-GAAP Financial Measures” explains why the Company believes the non-GAAP financial measures in this release provide useful information and describes the other purposes for which the Company uses non-GAAP financial measures.}

Income Statement

(Dollars in thousands, except per share data)	Three Months Ended														Twelve Months Ended
	Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023		Dec 31, 2024			Dec 31, 2023
Interest income
Loans held for investment	$	199,240		$	202,655		$	198,397		$	192,390		$	188,535	$	792,682		$	704,649
Loans held for sale		3,564			4,212			3,530			2,308			3,329		13,614			11,807
Securities		10,510			10,304			10,410			10,700			10,728		41,924			50,488
Other		12,030			11,872			7,874			7,781			7,839		39,557			30,375
Total interest income		225,344			229,043			220,211			213,179			210,431		887,777			797,319
Interest expense
Deposits		85,571			90,787			87,621			82,613			77,168		346,592			232,331
Borrowings		6,891			7,258			7,564			7,276			7,310		28,989			45,661
Total interest expense		92,462			98,045			95,185			89,889			84,478		375,581			277,992
Net interest income		132,882			130,998			125,026			123,290			125,953		512,196			519,327
Provision for credit losses
Provision for loan losses		3,100			1,210			4,300			2,638			2,518		11,248			18,793
Recovery of unfunded commitments		(500	)		(275	)		(1,000	)		(200	)		—		(1,975	)		(3,200	)
Total provision for credit losses		2,600			935			3,300			2,438			2,518		9,273			15,593
Net interest income after provision for credit losses		130,282			130,063			121,726			120,852			123,435		502,923			503,734
Noninterest income		34,218			89,299			38,762			41,381			20,356		203,660			113,075
Noninterest expense		114,747			121,983			111,976			112,912			111,880		461,618			439,622
Income before income taxes		49,753			97,379			48,512			49,321			31,911		244,965			177,187
Income taxes		5,006			24,924			9,666			9,912			3,787		49,508			32,509
Net income	$	44,747		$	72,455		$	38,846		$	39,409		$	28,124	$	195,457		$	144,678

Adjusted net income (non-GAAP)⁽¹⁾	$	46,458		$	42,960		$	38,846		$	36,572		$	42,887	$	165,066		$	177,657
Adjusted pre-provision net revenue (“PPNR”) (non-GAAP)⁽¹⁾	$	54,177		$	56,238		$	51,812		$	48,231		$	52,614	$	210,458		$	233,403

Basic earnings per share	$	0.70		$	1.18		$	0.69		$	0.70		$	0.50	$	3.29		$	2.58
Diluted earnings per share		0.70			1.18			0.69			0.70			0.50		3.27			2.56
Adjusted diluted earnings per share (non-GAAP)⁽¹⁾		0.73			0.70			0.69			0.65			0.76		2.76			3.15
Average basic shares outstanding		63,565,437			61,217,094			56,342,909			56,208,348			56,141,628		59,350,157			56,099,689
Average diluted shares outstanding		64,056,303			61,632,448			56,684,626			56,531,078			56,611,217		59,748,790			56,448,163
Cash dividends per common share	$	0.22		$	0.22		$	0.22		$	0.22		$	0.22	$	0.88		$	0.88

_{⁽¹⁾ This is a non-GAAP financial measure. A reconciliation of all non-GAAP financial measures disclosed in this release from GAAP to non-GAAP is included in the tables at the end of this release. The information below under the heading “Non-GAAP Financial Measures” explains why the Company believes the non-GAAP financial measures in this release provide useful information and describes the other purposes for which the Company uses non-GAAP financial measures.}

Performance Ratios

	Three Months Ended										Twelve Months Ended
	Dec 31, 2024		Sep 30, 2024		Jun 30, 2024		Mar 31, 2024		Dec 31, 2023		Dec 31, 2024		Dec 31, 2023
Return on average assets	0.99	%	1.63	%	0.90	%	0.92	%	0.65	%	1.11	%	0.84	%
Adjusted return on average assets (non-GAAP)⁽¹⁾	1.03		0.97		0.90		0.86		0.99		0.94		1.03
Return on average tangible assets (non-GAAP)⁽¹⁾	1.07		1.75		0.98		1.00		0.71		1.20		0.92
Adjusted return on average tangible assets (non-GAAP)⁽¹⁾	1.11		1.05		0.98		0.93		1.08		1.02		1.12
Return on average equity	6.70		11.29		6.68		6.85		4.93		7.92		6.50
Adjusted return on average equity (non-GAAP)⁽¹⁾	6.96		6.69		6.68		6.36		7.53		6.69		7.99
Return on average tangible equity (non-GAAP)⁽¹⁾	10.97		18.83		12.04		12.45		9.26		13.63		12.29
Adjusted return on average tangible equity (non-GAAP)⁽¹⁾	11.38		11.26		12.04		11.58		13.94		11.55		15.02
Efficiency ratio (fully taxable equivalent)	67.61		54.73		67.31		67.52		75.11		63.57		68.33
Adjusted efficiency ratio (non-GAAP)⁽¹⁾	65.82		64.62		66.60		68.23		66.18		66.30		63.48
Dividend payout ratio	31.43		18.64		31.88		31.43		44.00		26.75		34.11

Capital and Balance Sheet Ratios

	As of
	Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023
Shares outstanding		63,565,690			63,564,028			56,367,924			56,304,860			56,142,207
Market value per share	$	35.75		$	32.50		$	30.54		$	31.32		$	33.68
Book value per share		42.13			41.82			41.77			41.25			40.92
Tangible book value per share (non-GAAP)⁽¹⁾		26.36			26.02			23.89			23.32			22.92
Shareholders’ equity to assets		14.85	%		14.80	%		13.45	%		13.39	%		13.23	%
Tangible common equity ratio (non-GAAP)⁽¹⁾		9.84			9.76			8.16			8.04			7.87
Leverage ratio		11.34			11.32			9.81			9.75			9.62
Common equity tier 1 capital ratio		12.72			12.88			10.75			10.59			10.52
Tier 1 risk-based capital ratio		13.49			13.67			11.53			11.37			11.30
Total risk-based capital ratio		17.07			17.32			15.15			15.00			14.93

_{⁽¹⁾ This is a non-GAAP financial measure. A reconciliation of all non-GAAP financial measures disclosed in this release from GAAP to non-GAAP is included in the tables at the end of this release. The information below under the heading “Non-GAAP Financial Measures” explains why the Company believes the non-GAAP financial measures in this release provide useful information and describes the other purposes for which the Company uses non-GAAP financial measures.}

Noninterest Income and Noninterest Expense

(Dollars in thousands)	Three Months Ended											Twelve Months Ended
	Dec 31, 2024		Sep 30, 2024		Jun 30, 2024		Mar 31, 2024		Dec 31, 2023			Dec 31, 2024		Dec 31, 2023
Noninterest income
Service charges on deposit accounts	$	10,549	$	10,438	$	10,286	$	10,506	$	10,603		$	41,779	$	39,199
Fees and commissions		4,181		4,116		3,944		3,949		4,130			16,190		17,901
Insurance commissions		—		—		2,758		2,716		2,583			5,474		11,102
Wealth management revenue		6,371		5,835		5,684		5,669		5,668			23,559		22,132
Mortgage banking income		6,861		8,447		9,698		11,370		6,592			36,376		32,413
Gain on sale of insurance agency		—		53,349		—		—		—			53,349		—
Net losses on sales of securities (including impairments)		—		—		—		—		(19,352	)		—		(41,790	)
Gain on extinguishment of debt		—		—		—		56		620			56		620
BOLI income		3,317		2,858		2,701		2,691		2,589			11,567		10,463
Other		2,939		4,256		3,691		4,424		6,923			15,310		21,035
Total noninterest income	$	34,218	$	89,299	$	38,762	$	41,381	$	20,356		$	203,660	$	113,075
Noninterest expense
Salaries and employee benefits	$	70,260	$	71,307	$	70,731	$	71,470	$	71,841		$	283,768	$	281,768
Data processing		4,145		4,133		3,945		3,807		3,971			16,030		15,195
Net occupancy and equipment		11,312		11,415		11,844		11,389		11,653			45,960		46,471
Other real estate owned		590		56		105		107		306			858		267
Professional fees		2,686		3,189		3,195		3,348		2,854			12,418		13,671
Advertising and public relations		3,840		3,677		3,807		4,886		3,084			16,210		14,726
Intangible amortization		1,133		1,160		1,186		1,212		1,274			4,691		5,380
Communications		2,067		2,176		2,112		2,024		2,026			8,379		8,238
Merger and conversion related expenses		2,076		11,273		—		—		—			13,349		—
Other		16,638		13,597		15,051		14,669		14,871			59,955		53,906
Total noninterest expense	$	114,747	$	121,983	$	111,976	$	112,912	$	111,880		$	461,618	$	439,622

Mortgage Banking Income

(Dollars in thousands)	Three Months Ended										Twelve Months Ended
	Dec 31, 2024		Sep 30, 2024		Jun 30, 2024		Mar 31, 2024		Dec 31, 2023		Dec 31, 2024		Dec 31, 2023
Gain on sales of loans, net	$	2,379	$	4,499	$	5,199	$	4,535	$	1,860	$	16,612	$	14,573
Fees, net		2,850		2,646		2,866		1,854		2,010		10,216		9,051
Mortgage servicing income, net		1,632		1,302		1,633		4,981		2,722		9,548		8,789
Total mortgage banking income	$	6,861	$	8,447	$	9,698	$	11,370	$	6,592	$	36,376	$	32,413

Balance Sheet

(Dollars in thousands)	As of
	Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023
Assets
Cash and cash equivalents	$	1,092,032		$	1,275,620		$	851,906		$	844,400		$	801,351
Securities held to maturity, at amortized cost		1,126,112			1,150,531			1,174,663			1,199,111			1,221,464
Securities available for sale, at fair value		831,013			764,844			749,685			764,486			923,279
Loans held for sale, at fair value		246,171			291,735			266,406			191,440			179,756
Loans held for investment		12,885,020			12,627,648			12,604,755			12,500,525			12,351,230
Allowance for credit losses on loans		(201,756	)		(200,378	)		(199,871	)		(201,052	)		(198,578	)
Loans, net		12,683,264			12,427,270			12,404,884			12,299,473			12,152,652
Premises and equipment, net		279,796			280,550			280,966			282,193			283,195
Other real estate owned		8,673			9,136			7,366			9,142			9,622
Goodwill and other intangibles		1,003,003			1,004,136			1,008,062			1,009,248			1,010,460
Bank-owned life insurance		391,810			389,138			387,791			385,186			382,584
Mortgage servicing rights		72,991			71,990			72,092			71,596			91,688
Other assets		300,003			293,890			306,570			289,466			304,484
Total assets	$	18,034,868		$	17,958,840		$	17,510,391		$	17,345,741		$	17,360,535

Liabilities and Shareholders’ Equity
Liabilities
Deposits:
Noninterest-bearing	$	3,403,981		$	3,529,801		$	3,539,453		$	3,516,164		$	3,583,675
Interest-bearing		11,168,631			10,979,950			10,715,760			10,720,999			10,493,110
Total deposits		14,572,612			14,509,751			14,255,213			14,237,163			14,076,785
Short-term borrowings		108,018			108,732			232,741			108,121			307,577
Long-term debt		430,614			433,177			428,677			428,047			429,400
Other liabilities		245,306			249,102			239,059			250,060			249,390
Total liabilities		15,356,550			15,300,762			15,155,690			15,023,391			15,063,152

Shareholders’ equity:
Common stock		332,421			332,421			296,483			296,483			296,483
Treasury stock		(97,196	)		(97,251	)		(97,534	)		(99,683	)		(105,249	)
Additional paid-in capital		1,491,847			1,488,678			1,304,782			1,303,613			1,308,281
Retained earnings		1,093,854			1,063,324			1,005,086			978,880			952,124
Accumulated other comprehensive loss		(142,608	)		(129,094	)		(154,116	)		(156,943	)		(154,256	)
Total shareholders’ equity		2,678,318			2,658,078			2,354,701			2,322,350			2,297,383
Total liabilities and shareholders’ equity	$	18,034,868		$	17,958,840		$	17,510,391		$	17,345,741		$	17,360,535

Net Interest Income and Net Interest Margin

(Dollars in thousands)	Three Months Ended
	December 31, 2024						September 30, 2024						December 31, 2023
	Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate
Interest-earning assets:
Loans held for investment	$	12,746,941	$	201,562	6.29	%	$	12,584,104	$	204,935	6.47	%	$	12,249,429	$	190,857	6.18	%
Loans held for sale		250,812		3,564	5.69	%		272,110		4,212	6.19	%		199,510		3,329	6.68	%
Taxable securities		1,784,167		9,408	2.11	%		1,794,421		9,212	2.05	%		2,050,175		9,490	1.85	%
Tax-exempt securities⁽¹⁾		261,679		1,400	2.14	%		262,621		1,390	2.12	%		282,698		1,558	2.20	%
Total securities		2,045,846		10,808	2.11	%		2,057,042		10,602	2.06	%		2,332,873		11,048	1.89	%
Interest-bearing balances with banks		1,025,294		12,030	4.67	%		894,313		11,872	5.28	%		552,301		7,839	5.63	%
Total interest-earning assets		16,068,893		227,964	5.65	%		15,807,569		231,621	5.82	%		15,334,113		213,073	5.52	%
Cash and due from banks		188,493						189,425						180,609
Intangible assets		1,003,551						1,004,701						1,011,130
Other assets		682,211						679,969						669,988
Total assets	$	17,943,148					$	17,681,664					$	17,195,840
Interest-bearing liabilities:
Interest-bearing demand⁽²⁾	$	7,629,685	$	57,605	3.00	%	$	7,333,508	$	60,326	3.26	%	$	6,721,053	$	47,783	2.82	%
Savings deposits		804,132		706	0.35	%		815,545		729	0.36	%		888,692		765	0.34	%
Brokered deposits		60,298		1,013	6.68	%		150,991		1,998	5.25	%		632,704		8,594	5.39	%
Time deposits		2,512,097		26,247	4.16	%		2,546,860		27,734	4.33	%		2,185,737		20,026	3.63	%
Total interest-bearing deposits		11,006,212		85,571	3.09	%		10,846,904		90,787	3.32	%		10,428,186		77,168	2.94	%
Borrowed funds		556,966		6,891	4.94	%		562,146		7,258	5.14	%		564,715		7,310	5.16	%
Total interest-bearing liabilities		11,563,178		92,462	3.18	%		11,409,050		98,045	3.41	%		10,992,901		84,478	3.05	%
Noninterest-bearing deposits		3,502,931						3,509,266						3,703,050
Other liabilities		220,154						209,762						238,864
Shareholders’ equity		2,656,885						2,553,586						2,261,025
Total liabilities and shareholders’ equity	$	17,943,148					$	17,681,664					$	17,195,840
Net interest income/ net interest margin			$	135,502	3.36	%			$	133,576	3.36	%			$	128,595	3.33	%
Cost of funding					2.44	%					2.61	%					2.28	%
Cost of total deposits					2.35	%					2.51	%					2.17	%

_{⁽¹⁾ U.S. Government and some U.S. Government Agency securities are tax-exempt in the states in which the Company operates.}
_{⁽²⁾ Interest-bearing demand deposits include interest-bearing transactional accounts and money market deposits.}

Net Interest Income and Net Interest Margin, continued

(Dollars in thousands)	Twelve Months Ended
	December 31, 2024						December 31, 2023
	Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate
Interest-earning assets:
Loans held for investment	$	12,579,143	$	801,807	6.37	%	$	11,963,141	$	713,897	5.97	%
Loans held for sale		224,734		13,614	6.06	%		181,253		11,807	6.51	%
Taxable securities⁽¹⁾		1,825,404		37,383	2.05	%		2,313,874		44,619	1.93	%
Tax-exempt securities		264,615		5,746	2.17	%		332,749		7,634	2.29	%
Total securities		2,090,019		43,129	2.06	%		2,646,623		52,253	1.97	%
Interest-bearing balances with banks		772,274		39,557	5.12	%		568,155		30,375	5.35	%
Total interest-earning assets		15,666,170		898,107	5.73	%		15,359,172		808,332	5.26	%
Cash and due from banks		188,487						187,127
Intangible assets		1,006,665						1,012,239
Other assets		691,373						673,345
Total assets	$	17,552,695					$	17,231,883
Interest-bearing liabilities:
Interest-bearing demand⁽²⁾	$	7,254,646	$	226,563	3.12	%	$	6,357,753	$	138,730	2.18	%
Savings deposits		829,818		2,894	0.35	%		971,522		3,197	0.33	%
Brokered deposits		237,164		12,942	5.46	%		697,699		36,039	5.17	%
Time deposits		2,466,906		104,193	4.22	%		1,874,224		54,365	2.90	%
Total interest-bearing deposits		10,788,534		346,592	3.21	%		9,901,198		232,331	2.35	%
Borrowed funds		566,332		28,989	5.12	%		910,080		45,661	5.02	%
Total interest-bearing liabilities		11,354,866		375,581	3.31	%		10,811,278		277,992	2.57	%
Noninterest-bearing deposits		3,509,958						3,979,951
Other liabilities		221,487						216,148
Shareholders’ equity		2,466,384						2,224,506
Total liabilities and shareholders’ equity	$	17,552,695					$	17,231,883
Net interest income/ net interest margin			$	522,526	3.34	%			$	530,340	3.45	%
Cost of funding					2.53	%					1.88	%
Cost of total deposits					2.42	%					1.67	%

_{⁽¹⁾ U.S. Government and some U.S. Government Agency securities are tax-exempt in the states in which the Company operates.}
_{⁽²⁾ Interest-bearing demand deposits include interest-bearing transactional accounts and money market deposits.}

Supplemental Margin Information

(Dollars in thousands)	Three Months Ended									Twelve Months Ended
	Dec 31, 2024			Sep 30, 2024			Dec 31, 2023			Dec 31, 2024			Dec 31, 2023
Earning asset mix:
Loans held for investment		79.33	%		79.61	%		79.88	%		80.29	%		77.89	%
Loans held for sale		1.56			1.72			1.30			1.43			1.18
Securities		12.73			13.01			15.21			13.34			17.23
Interest-bearing balances with banks		6.38			5.66			3.61			4.94			3.70
Total		100.00	%		100.00	%		100.00	%		100.00	%		100.00	%

Funding sources mix:
Noninterest-bearing demand		23.25	%		23.52	%		25.20	%		23.61	%		26.91	%
Interest-bearing demand⁽¹⁾		50.64			49.16			45.73			48.80			42.98
Savings		5.34			5.47			6.05			5.58			6.57
Brokered deposits		0.40			1.01			4.31			1.60			4.72
Time deposits		16.67			17.07			14.87			16.60			12.67
Borrowed funds		3.70			3.77			3.84			3.81			6.15
Total		100.00	%		100.00	%		100.00	%		100.00	%		100.00	%

Net interest income collected on problem loans	$	151		$	642		$	283		$	770		$	219
Total accretion on purchased loans		616			1,089			1,117			3,402			4,166
Total impact on net interest income	$	767		$	1,731		$	1,400		$	4,172		$	4,385
Impact on net interest margin		0.02	%		0.04	%		0.04	%		0.03	%		0.03	%
Impact on loan yield		0.02			0.05			0.05			0.03	%		0.04	%

_{⁽¹⁾ Interest-bearing demand deposits include interest-bearing transactional accounts and money market deposits.}

Loan Portfolio

(Dollars in thousands)	As of
	Dec 31, 2024		Sep 30, 2024		Jun 30, 2024		Mar 31, 2024		Dec 31, 2023
Loan Portfolio:
Commercial, financial, agricultural	$	1,885,817	$	1,804,961	$	1,847,762	$	1,869,408	$	1,871,821
Lease financing		90,591		98,159		102,996		107,474		116,020
Real estate – construction		1,093,653		1,198,838		1,355,425		1,243,535		1,333,397
Real estate – 1-4 family mortgages		3,488,877		3,440,038		3,435,818		3,429,286		3,439,919
Real estate – commercial mortgages		6,236,068		5,995,152		5,766,478		5,753,230		5,486,550
Installment loans to individuals		90,014		90,500		96,276		97,592		103,523
Total loans	$	12,885,020	$	12,627,648	$	12,604,755	$	12,500,525	$	12,351,230

Credit Quality and Allowance for Credit Losses on Loans

(Dollars in thousands)	As of
	Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023
Nonperforming Assets:
Nonaccruing loans	$	110,811		$	113,872		$	97,795		$	73,774		$	68,816
Loans 90 days or more past due		2,464			5,351			240			451			554
Total nonperforming loans		113,275			119,223			98,035			74,225			69,370
Other real estate owned		8,673			9,136			7,366			9,142			9,622
Total nonperforming assets	$	121,948		$	128,359		$	105,401		$	83,367		$	78,992

Criticized Loans
Classified loans	$	241,708		$	218,135		$	191,595		$	206,502		$	166,893
Special Mention loans		130,882			163,804			138,343			138,366			99,699
Criticized loans⁽¹⁾	$	372,590		$	381,939		$	329,938		$	344,868		$	266,592

Allowance for credit losses on loans	$	201,756		$	200,378		$	199,871		$	201,052		$	198,578
Net loan charge-offs	$	1,722		$	703		$	5,481		$	164		$	1,713
Annualized net loan charge-offs / average loans		0.05	%		0.02	%		0.18	%		0.01	%		0.06	%
Nonperforming loans / total loans		0.88			0.94			0.78			0.59			0.56
Nonperforming assets / total assets		0.68			0.71			0.60			0.48			0.46
Allowance for credit losses on loans / total loans		1.57			1.59			1.59			1.61			1.61
Allowance for credit losses on loans / nonperforming loans		178.11			168.07			203.88			270.87			286.26
Criticized loans / total loans		2.89			3.02			2.62			2.76			2.16

_{⁽¹⁾ Criticized loans include classified and Special Mention loans.}

CONFERENCE CALL INFORMATION:
A live audio webcast of a conference call with analysts will be available beginning at 10:00 AM Eastern Time (9:00 AM Central Time) on Wednesday, January 29, 2025.

The webcast is accessible through Renasant’s investor relations website at www.renasant.com or https://event.choruscall.com/mediaframe/webcast.html?webcastid=8ssY2K7l. To access the conference via telephone, dial 1-877-513-1143 in the United States and request the Renasant Corporation 2024 Fourth Quarter Earnings Webcast and Conference Call. International participants should dial 1-412-902-4145 to access the conference call.

The webcast will be archived on www.renasant.com after the call and will remain accessible for one year. A replay can be accessed via telephone by dialing 1-877-344-7529 in the United States and entering conference number 8623913 or by dialing 1-412-317-0088 internationally and entering the same conference number. Telephone replay access is available until February 12, 2025.

ABOUT RENASANT CORPORATION:

Renasant Corporation is the parent of Renasant Bank, a 120-year-old financial services institution. Renasant has assets of approximately $18.0 billion and operates 186 banking, lending, mortgage and wealth management offices throughout the Southeast as well as offering factoring and asset-based lending on a nationwide basis.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:

This press release may contain, or incorporate by reference, statements about Renasant Corporation that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “projects,” “anticipates,” “intends,” “estimates,” “plans,” “potential,” “focus,” “possible,” “may increase,” “may fluctuate,” “will likely result,” and similar expressions, or future or conditional verbs such as “will,” “should,” “would” and “could,” are generally forward-looking in nature and not historical facts. Forward-looking statements include information about the Company’s future financial performance, business strategy, projected plans and objectives and are based on the current beliefs and expectations of management. The Company’s management believes these forward-looking statements are reasonable, but they are all inherently subject to significant business, economic and competitive risks and uncertainties, many of which are beyond the Company’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ from those indicated or implied in the forward-looking statements, and such differences may be material. Prospective investors are cautioned that any forward-looking statements are not guarantees of future performance and involve risks and uncertainties and, accordingly, investors should not place undue reliance on these forward-looking statements, which speak only as of the date they are made.

Important factors currently known to management that could cause the Company’s actual results to differ materially from those in forward-looking statements include the following: (i) the Company’s ability to efficiently integrate acquisitions (including its recently-announced acquisition of The First Bancshares, Inc.) into its operations, retain the customers of these businesses, grow the acquired operations and realize the cost savings expected from an acquisition to the extent and in the timeframe anticipated by management (including the possibility that such cost savings will not be realized when expected, or at all, as a result of the impact of, or challenges arising from, the integration of the acquired assets and assumed liabilities into the Company, potential adverse reactions or changes to business or employee relationships, or as a result of other unexpected factors or events); (ii) potential exposure to unknown or contingent risks and liabilities the Company has acquired, or may acquire, or target for acquisition, including in connection with the proposed merger with The First Bancshares, Inc.; (iii) the effect of economic conditions and interest rates on a national, regional or international basis; (iv) timing and success of the implementation of changes in operations to achieve enhanced earnings or effect cost savings; (v) competitive pressures in the consumer finance, commercial finance, financial services, asset management, retail banking, factoring and mortgage lending and auto lending industries; (vi) the financial resources of, and products available from, competitors; (vii) changes in laws and regulations as well as changes in accounting standards; (viii) changes in policy by regulatory agencies or increased scrutiny by, and/or additional regulatory requirements of, regulatory agencies as a result of the Company’s proposed merger with The First Bancshares, Inc.; (ix) changes in the securities and foreign exchange markets; (x) the Company’s potential growth, including its entrance or expansion into new markets, and the need for sufficient capital to support that growth; (xi) changes in the quality or composition of the Company’s loan or investment portfolios, including adverse developments in borrower industries or in the repayment ability of individual borrowers or issuers of investment securities, or the impact of interest rates on the value of the Company’s investment securities portfolio; (xii) an insufficient allowance for credit losses as a result of inaccurate assumptions; (xiii) changes in the sources and costs of the capital the Company uses to make loans and otherwise fund the Company’s operations, due to deposit outflows, changes in the mix of deposits and the cost and availability of borrowings; (xiv) general economic, market or business conditions, including the impact of inflation; (xv) changes in demand for loan and deposit products and other financial services; (xvi) concentrations of credit or deposit exposure; (xvii) changes or the lack of changes in interest rates, yield curves and interest rate spread relationships; (xviii) increased cybersecurity risk, including potential network breaches, business disruptions or financial losses; (xix) civil unrest, natural disasters, epidemics and other catastrophic events in the Company’s geographic area; (xx) geopolitical conditions, including acts or threats of terrorism or actions taken by the United States or other governments in response to acts or threats of terrorism and/or military conflicts, which could impact business and economic conditions in the United States and abroad; (xxi) the impact, extent and timing of technological changes; and (xxii) other circumstances, many of which are beyond management’s control.

Management believes that the assumptions underlying the Company’s forward-looking statements are reasonable, but any of the assumptions could prove to be inaccurate. Investors are urged to carefully consider the risks described in the Company’s filings with the Securities and Exchange Commission (the “SEC”) from time to time, including its most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, which are available at www.renasant.com and the SEC’s website at www.sec.gov.

The Company undertakes no obligation, and specifically disclaims any obligation, to update or revise forward-looking statements, whether as a result of new information or to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, except as required by federal securities laws.

NON-GAAP FINANCIAL MEASURES:

In addition to results presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”), this press release and the presentation slides furnished to the SEC on the same Form 8-K as this release contain non-GAAP financial measures, namely, (i) adjusted loan yield, (ii) adjusted net interest income and margin, (iii) pre-provision net revenue (including on an as-adjusted basis), (iv) adjusted net income, (v) adjusted diluted earnings per share, (vi) tangible book value per share, (vii) the tangible common equity ratio, (viii) the adjusted return on average assets and on average equity and certain other performance ratios (namely, the ratio of pre-provision net revenue to average assets and the return on average tangible assets and on average tangible common equity (including each of the foregoing on an as-adjusted basis)), and (ix) the adjusted efficiency ratio.

These non-GAAP financial measures adjust GAAP financial measures to exclude intangible assets, including related amortization, and/or certain gains or charges (such as, for the fourth quarter of 2024, merger and conversion expenses and the gain on the sale of mortgage servicing rights), with respect to which the Company is unable to accurately predict when these charges will be incurred or, when incurred, the amount thereof. Management uses these non-GAAP financial measures when evaluating capital utilization and adequacy. In addition, the Company believes that these non-GAAP financial measures facilitate the making of period-to-period comparisons and are meaningful indicators of its operating performance, particularly because these measures are widely used by industry analysts for companies with merger and acquisition activities. Also, because intangible assets such as goodwill and the core deposit intangible can vary extensively from company to company and, as to intangible assets, are excluded from the calculation of a financial institution’s regulatory capital, the Company believes that the presentation of this non-GAAP financial information allows readers to more easily compare the Company’s results to information provided in other regulatory reports and the results of other companies. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the tables below under the caption “Non-GAAP Reconciliations”.

None of the non-GAAP financial information that the Company has included in this release or the accompanying presentation slides are intended to be considered in isolation or as a substitute for any measure prepared in accordance with GAAP. Investors should note that, because there are no standardized definitions for the calculations as well as the results, the Company’s calculations may not be comparable to similarly titled measures presented by other companies. Also, there may be limits in the usefulness of these measures to investors. As a result, the Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.

Non-GAAP Reconciliations

(Dollars in thousands, except per share data)	Three Months Ended															Twelve Months Ended
	Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023			Dec 31, 2024			Dec 31, 2023
Adjusted Pre-Provision Net Revenue (“PPNR”)
Net income (GAAP)	$	44,747		$	72,455		$	38,846		$	39,409		$	28,124		$	195,457		$	144,678
Income taxes		5,006			24,924			9,666			9,912			3,787			49,508			32,509
Provision for credit losses (including unfunded commitments)		2,600			935			3,300			2,438			2,518			9,273			15,593
Pre-provision net revenue (non-GAAP)	$	52,353		$	98,314		$	51,812		$	51,759		$	34,429		$	254,238		$	192,780
Merger and conversion expense		2,076			11,273			—			—			—			13,349			—
Gain on extinguishment of debt		—			—			—			(56	)		(620	)		(56	)		(620	)
Gain on sales of MSR		(252	)		—			—			(3,472	)		(547	)		(3,724	)		(547	)
Gain on sale of insurance agency		—			(53,349	)		—			—			—			(53,349	)		—
Losses on sales of securities (including impairments)		—			—			—			—			19,352			—			41,790
Adjusted pre-provision net revenue (non-GAAP)	$	54,177		$	56,238		$	51,812		$	48,231		$	52,614		$	210,458		$	233,403

Adjusted Net Income and Adjusted Tangible Net Income
Net income (GAAP)	$	44,747		$	72,455		$	38,846		$	39,409		$	28,124		$	195,457		$	144,678
Amortization of intangibles		1,133			1,160			1,186			1,212			1,274			4,691			5,380
Tax effect of adjustments noted above⁽¹⁾		(283	)		(296	)		(233	)		(237	)		(240	)		(1,173	)		(1,012	)
Tangible net income (non-GAAP)	$	45,597		$	73,319		$	39,799		$	40,384		$	29,158		$	198,975		$	149,046

Net income (GAAP)	$	44,747		$	72,455		$	38,846		$	39,409		$	28,124		$	195,457		$	144,678
Merger and conversion expense		2,076			11,273			—			—			—			13,349			—
Gain on extinguishment of debt		—			—			—			(56	)		(620	)		(56	)		(620	)
Gain on sales of MSR		(252	)		—			—			(3,472	)		(547	)		(3,724	)		(547	)
Gain on sale of insurance agency		—			(53,349	)		—			—			—			(53,349	)		—
Losses on sales of securities (including impairments)		—			—			—			—			19,352			—			41,790
Tax effect of adjustments noted above⁽¹⁾		(113	)		12,581			—			691			(3,422	)		13,389			(7,644	)
Adjusted net income (non-GAAP)	$	46,458		$	42,960		$	38,846		$	36,572		$	42,887		$	165,066		$	177,657
Amortization of intangibles		1,133			1,160			1,186			1,212			1,274			4,691			5,380
Tax effect of adjustments noted above⁽¹⁾		(283	)		(296	)		(233	)		(237	)		(240	)		(1,173	)		(1,012	)
Adjusted tangible net income (non-GAAP)	$	47,308		$	43,824		$	39,799		$	37,547		$	43,921		$	168,584		$	182,025
Tangible Assets and Tangible Shareholders’ Equity
Average shareholders’ equity (GAAP)	$	2,656,885		$	2,553,586		$	2,337,731		$	2,314,281		$	2,261,025		$	2,466,384		$	2,224,506
Average intangible assets		(1,003,551	)		(1,004,701	)		(1,008,638	)		(1,009,825	)		(1,011,130	)		(1,006,665	)		(1,012,239	)
Average tangible shareholders’ equity (non-GAAP)	$	1,653,334		$	1,548,885		$	1,329,093		$	1,304,456		$	1,249,895		$	1,459,719		$	1,212,267

Average assets (GAAP)	$	17,943,148		$	17,681,664		$	17,371,369		$	17,203,013		$	17,195,840		$	17,552,695		$	17,231,883
Average intangible assets		(1,003,551	)		(1,004,701	)		(1,008,638	)		(1,009,825	)		(1,011,130	)		(1,006,665	)		(1,012,239	)
Average tangible assets (non-GAAP)	$	16,939,597		$	16,676,963		$	16,362,731		$	16,193,188		$	16,184,710		$	16,546,030		$	16,219,644

Shareholders’ equity (GAAP)	$	2,678,318		$	2,658,078		$	2,354,701		$	2,322,350		$	2,297,383		$	2,678,318		$	2,297,383
Intangible assets		(1,003,003	)		(1,004,136	)		(1,008,062	)		(1,009,248	)		(1,010,460	)		(1,003,003	)		(1,010,460	)
Tangible shareholders’ equity (non-GAAP)	$	1,675,315		$	1,653,942		$	1,346,639		$	1,313,102		$	1,286,923		$	1,675,315		$	1,286,923

Total assets (GAAP)	$	18,034,868		$	17,958,840		$	17,510,391		$	17,345,741		$	17,360,535		$	18,034,868		$	17,360,535
Intangible assets		(1,003,003	)		(1,004,136	)		(1,008,062	)		(1,009,248	)		(1,010,460	)		(1,003,003	)		(1,010,460	)
Total tangible assets (non-GAAP)	$	17,031,865		$	16,954,704		$	16,502,329		$	16,336,493		$	16,350,075		$	17,031,865		$	16,350,075

Adjusted Performance Ratios
Return on average assets (GAAP)		0.99	%		1.63	%		0.90	%		0.92	%		0.65	%		1.11	%		0.84	%
Adjusted return on average assets (non-GAAP)		1.03			0.97			0.90			0.86			0.99			0.94			1.03
Return on average tangible assets (non-GAAP)		1.07			1.75			0.98			1.00			0.71			1.20			0.92
Pre-provision net revenue to average assets (non-GAAP)		1.16			2.21			1.20			1.21			0.79			1.45			1.12
Adjusted pre-provision net revenue to average assets (non-GAAP)		1.20			1.27			1.20			1.13			1.21			1.20			1.35
Adjusted return on average tangible assets (non-GAAP)		1.11			1.05			0.98			0.93			1.08			1.02			1.12
Return on average equity (GAAP)		6.70			11.29			6.68			6.85			4.93			7.92			6.50
Adjusted return on average equity (non-GAAP)		6.96			6.69			6.68			6.36			7.53			6.69			7.99
Return on average tangible equity (non-GAAP)		10.97			18.83			12.04			12.45			9.26			13.63			12.29
Adjusted return on average tangible equity (non-GAAP)		11.38			11.26			12.04			11.58			13.94			11.55			15.02

Adjusted Diluted Earnings Per Share
Average diluted shares outstanding		64,056,303			61,632,448			56,684,626			56,531,078			56,611,217			59,748,790			56,448,163

Diluted earnings per share (GAAP)	$	0.70		$	1.18		$	0.69		$	0.70		$	0.50		$	3.27		$	2.56
Adjusted diluted earnings per share (non-GAAP)	$	0.73		$	0.70		$	0.69		$	0.65		$	0.76		$	2.76		$	3.15

Tangible Book Value Per Share
Shares outstanding		63,565,690			63,564,028			56,367,924			56,304,860			56,142,207			63,565,690			56,142,207

Book value per share (GAAP)	$	42.13		$	41.82		$	41.77		$	41.25		$	40.92		$	42.13		$	40.92
Tangible book value per share (non-GAAP)	$	26.36		$	26.02		$	23.89		$	23.32		$	22.92		$	26.36		$	22.92

Tangible Common Equity Ratio
Shareholders’ equity to assets (GAAP)		14.85	%		14.80	%		13.45	%		13.39	%		13.23	%		14.85	%		13.23	%
Tangible common equity ratio (non-GAAP)		9.84	%		9.76	%		8.16	%		8.04	%		7.87	%		9.84	%		7.87	%
Adjusted Efficiency Ratio
Net interest income (FTE) (GAAP)	$	135,502		$	133,576		$	127,598		$	125,850		$	128,595		$	522,526		$	530,340

Total noninterest income (GAAP)	$	34,218		$	89,299		$	38,762		$	41,381		$	20,356		$	203,660		$	113,075
Gain on sales of MSR		(252	)		—			—			(3,472	)		(547	)		(3,724	)		(547	)
Gain on extinguishment of debt		—			—			—			(56	)		(620	)		(56	)		(620	)
Gain on sale of insurance agency		—			(53,349	)		—			—			—			53,349			—
Losses on sales of securities (including impairments)		—			—			—			—			19,352			—			41,790
Total adjusted noninterest income (non-GAAP)	$	33,966		$	35,950		$	38,762		$	37,853		$	38,541		$	146,531		$	153,698

Noninterest expense (GAAP)	$	114,747		$	121,983		$	111,976		$	112,912		$	111,880		$	461,618		$	439,622
Amortization of intangibles		(1,133	)		(1,160	)		(1,186	)		(1,212	)		(1,274	)		(4,691	)		(5,380	)
Merger and conversion expense		(2,076	)		(11,273	)		—			—			—			(13,349	)		—
Total adjusted noninterest expense (non-GAAP)	$	111,538		$	109,550		$	110,790		$	111,700		$	110,606		$	443,578		$	434,242

Efficiency ratio (GAAP)		67.61	%		54.73	%		67.31	%		67.52	%		75.11	%		63.57	%		68.33	%
Adjusted efficiency ratio (non-GAAP)		65.82	%		64.62	%		66.60	%		68.23	%		66.18	%		66.30	%		63.48	%

Adjusted Net Interest Income and Adjusted Net Interest Margin
Net interest income (FTE) (GAAP)	$	135,502		$	133,576		$	127,598		$	125,850		$	128,595		$	522,526		$	530,340
Net interest income collected on problem loans		(151	)		(642	)		146			(123	)		(283	)		(770	)		(219	)
Accretion recognized on purchased loans		(616	)		(1,089	)		(897	)		(800	)		(1,117	)		(3,402	)		(4,166	)
Adjustments to net interest income	$	(767	)	$	(1,731	)	$	(751	)	$	(923	)	$	(1,400	)	$	(4,172	)	$	(4,385	)
Adjusted net interest income (FTE) (non-GAAP)	$	134,735		$	131,845		$	126,847		$	124,927		$	127,195		$	518,354		$	525,955

Net interest margin (GAAP)		3.36	%		3.36	%		3.31	%		3.30	%		3.33	%		3.34	%		3.45	%
Adjusted net interest margin (non-GAAP)		3.34	%		3.32	%		3.29	%		3.28	%		3.29	%		3.31	%		3.42	%

Adjusted Loan Yield
Loan interest income (FTE) (GAAP)	$	201,562		$	204,935		$	200,670		$	194,640		$	190,857		$	801,807		$	713,897
Net interest income collected on problem loans		(151	)		(642	)		146			(123	)		(283	)		(770	)		(219	)
Accretion recognized on purchased loans		(616	)		(1,089	)		(897	)		(800	)		(1,117	)		(3,402	)		(4,166	)
Adjusted loan interest income (FTE) (non-GAAP)	$	200,795		$	203,204		$	199,919		$	193,717		$	189,457		$	797,635		$	709,512

Loan yield (GAAP)		6.29	%		6.47	%		6.41	%		6.30	%		6.18	%		6.37	%		5.97	%
Adjusted loan yield (non-GAAP)		6.27	%		6.41	%		6.38	%		6.27	%		6.14	%		6.34	%		5.93	%

_{⁽¹⁾ Tax effect is calculated based on the respective legal entity’s appropriate federal and state tax rates (as applicable) for the period, and includes the estimated impact of both current and deferred tax expense. The tax effect of the discrete gain on sale of insurance agency was calculated based on an estimated tax rate of 27.0%.}

Contacts:	For Media:	For Financials:
	John S. Oxford	James C. Mabry IV
	Senior Vice President	Executive Vice President
	Chief Marketing Officer	Chief Financial Officer
	(662) 680-1219	(662) 680-1281

The MIL Network –

January 29, 2025

MIL-OSI USA: Boozman Backs Permanent Small Business Tax Cut

US Senate News:

Source: United States Senator for Arkansas – John Boozman
WASHINGTON—U.S. Senator John Boozman (R-AR) has cosponsored the Main Street Tax Certainty Act , legislation introduced by Senator Steve Daines (R-SD) and Majority Leader John Thune (R-SD) to make the 20 percent pass-through business tax deduction permanent. The expiration of this tax cut would require small businesses to face an immediate and insurmountable tax hike.
“From main street storefronts to manufacturers, agriculture producers and more – small business is the backbone of our economy,” said Boozman. “I am proud to support policies that help Natural State small businesses thrive and stimulate growth and investment into our local communities.”
“As the son of a contractor, I’ve seen firsthand the hard work it takes to keep a small business flourishing- especially as Americans are still grappling with the effects of Joe Biden’s inflation. It’s absolutely crucial that we pass this legislation to prevent a 20 percent tax increase for hardworking Montanans and I’ll keep fighting for ways to support Montana small businesses, which provide the majority of jobs in our state,” said Daines.
“Small businesses are the economic engine that drive growth and jobs in South Dakota and across our country. This legislation is critical to permanently extending a key provision from the Tax Cuts and Jobs Act and ensuring our small businesses and farms and ranches are not hit with a crippling tax hike at the end of 2025,” said Thune.
The legislation is also cosponsored by Senators John Barrasso (R-WY), Shelley Moore Capito (R-WV), James Lankford (R-OK), Joni Ernst (R-IA), Tom Cotton (R-AR), Tim Scott (R-SC), Chuck Grassley (R-IA), Kevin Cramer (R-ND), Jerry Moran (R-KS), Marsha Blackburn (R-TN), Mike Rounds (R-SD), Pete Ricketts (R-NE), Katie Britt (R-AL), Jim Risch (R-ID), Eric Schmitt (R-MO), Roger Wicker (R-MS), Cynthia Lummis (R-WY), Cindy Hyde-Smith (R-MS), Tommy Tuberville (R-AL), Ted Cruz (R-TX), John Hoeven (R-ND), Thom Tillis (R-NC), Roger Marshall, M.D. (R-KS), Jim Justice (R-WV), Tim Sheehy (R-MT), Deb Fischer (R-NE), Bill Cassidy, M.D. (R-LA), Ted Budd (R-NC), Rick Scott (R-FL), Bill Hagerty (R-TN), Todd Young (R-IN), John Kennedy (R-LA) and Jim Banks (R-IN).
The Main Street Tax Certainty Act is endorsed by multiple small businesses and advocacy groups. Here’s what they are saying about the bill.
“Congress must preserve the pass-through deduction to protect the small and medium manufacturers that are the backbone of the American supply chain. Manufacturers strongly support the Main Street Tax Certainty Act, which will make permanent this crucial provision and ensure that our tax code supports manufacturers in America as they invest in their businesses, create jobs, and drive the economy,” said National Association of Manufacturers Managing Vice President of Policy Chris Netram.
“If Congress fails to act, more than 30 million small businesses will face a massive tax hike at the end of this year. The 20 percent Small Business Deduction allows nine out of 10 Main Street job creators to compete, grow their business, hire new employees, raise wages, and give back to their communities,” said National Federation of Independent Businesses President Brad Close.
Over 230 trade associations also signed a letter in support of the Main Street Tax Certainty Act.
Click here to read the text of the legislation.

MIL OSI USA News –

January 29, 2025

MIL-OSI: Heartland BancCorp Earns $5.7 Million, or $2.63 Per Diluted Share, in the Fourth Quarter of 2024, and a Record $20.3 Million, or $9.75 Per Diluted Share, for the Year

Source: GlobeNewswire (MIL-OSI)

WHITEHALL, Ohio, Jan. 28, 2025 (GLOBE NEWSWIRE) — Heartland BancCorp (“Heartland” and “the Company”) (OTCQX: HLAN), parent company of Heartland Bank (“Bank”), today reported net income increased 7.2% to $5.7 million, or $2.63 per diluted share, in the fourth quarter of 2024, compared to $5.3 million, or $2.61 per diluted share, in the fourth quarter of 2023, and increased 28.0% compared to $4.4 million, or $2.12 per diluted share, in the preceding quarter. For the year 2024, net income increased 3.8% to a record $20.3 million, or $9.75 per diluted share, compared to $19.5 million, or $9.62 per diluted share, in 2023.

On July 29, 2024, Heartland announced that it had entered into a definitive merger agreement with German American Bancorp (“German American”). Upon completion of the transaction, Heartland’s subsidiary bank, Heartland Bank, will be merged into German American’s subsidiary bank, German American Bank, and operate under a co-branded name within the Ohio markets.

With the shareholders of Heartland and German American having each approved the Merger at special meetings held on November 19, 2024, Heartland and German American anticipate that the Merger will become effective as of February 1, 2025, subject to satisfaction of certain customary closing conditions contained in the Merger Agreement.

“Heartland produced strong net income for the fourth quarter, and record net income for the year, as we continue to deliver value to our clients and expand our market outreach,” stated G. Scott McComb, Chairman, President and Chief Executive Officer. “Our record earnings in 2024 were fueled by moderate loan growth and strong deposit growth generated in our Columbus and Greater Cincinnati market footprint, and our future growth opportunities will only be enhanced by our pending merger with German American. This strategic partnership allows us to partner with another like-minded, larger community bank that enables us to continue our strong brand and growth trajectory within the markets we serve. Strategically and culturally, Heartland and German American are exceptionally well-aligned with a strong commitment to the community banking business model. That model is centered on delivering an exceptional customer experience and the willingness to invest in local communities that Ohio has come to know and love from Heartland. I would like to thank our dedicated team of associates for all they do to support our loyal clients and communities as we look forward to continued success in 2025.”

Fourth Quarter 2024 Financial Highlights (at or for the three months ended December 31, 2024)

Net income was $5.7 million, or $2.63 per diluted share, compared to $5.3 million, or $2.61 per diluted share, in the fourth quarter of 2023.
Heartland recorded no provision for credit losses during the fourth quarter of 2024, compared to $550,000 for the fourth quarter a year ago.
Net interest margin was 3.19%, compared to 3.27% in the preceding quarter and 3.49% in the fourth quarter a year ago.
Fourth quarter revenues (net interest income plus noninterest income) were $18.5 million, compared to $18.6 million in the fourth quarter a year ago.
Annualized return on average assets was 1.14%, compared to 1.13% in the fourth quarter of 2023.
Annualized return on average tangible common equity was 13.90%, compared to 15.05% in the fourth quarter a year ago.
Net loans increased $5.6 million during the quarter to $1.54 billion at December 31, 2024, compared to three months earlier.
Demand deposits increased 2.8% during the quarter to $443.8 million, compared to $431.6 million three months earlier.
Credit quality remains strong with nonperforming loans to gross loans of 0.54% and nonperforming assets to total assets of 0.43% at December 31, 2024.
Tangible book value was $80.02 per share at December 31, 2024, compared to $74.23 per share a year ago.
Paid a quarterly cash dividend of $0.759 per share on December 30, 2024.

2024 Full Year Financial Highlights (at or for the twelve months ended December 31, 2024)

Net income for 2024 increased 3.8% to a record $20.3 million, compared to $19.5 million in 2023.
Net interest margin was 3.28% for the year, compared to 3.62% for 2023.
Annualized return on average assets was 1.06% for 2024, compared to 1.09% for 2023.
Annualized return on average tangible equity was 13.02% for 2024, compared to 14.15% for 2023.
Net loans increased $10.2 million year-over-year to $1.54 billion, compared to $1.53 billion a year ago.
Total deposits increased $108.1 million, or 6.6%, to $1.75 billion, compared to $1.64 billion a year ago.

Balance Sheet Review
Assets
Total assets increased 4.7% to $1.97 billion at December 31, 2024, compared to $1.88 billion a year earlier, and increased 1.6% compared to three months earlier. Heartland’s loan-to-deposit ratio was 88.0% at December 31, 2024, compared to 90.0% at September 30, 2024, and 93.2% at December 31, 2023.

Securities increased 5.3% to $222.4 million at December 31, 2024, compared to $211.1 million a year earlier, and decreased 3.3% compared to $229.9 million three months earlier. Securities comprise 11.3% of total assets at December 31, 2024, compared to 11.8% three months earlier and 11.2% a year ago.

Average earning assets increased to $1.87 billion in the fourth quarter of 2024, compared to $1.82 billion in the third quarter of 2024, and $1.75 billion in the fourth quarter of 2023. The average yield on interest-earning assets was 5.82% in the fourth quarter of 2024, down 13 basis points from 5.95% in the preceding quarter, and up 11 basis points from 5.71% in the fourth quarter a year ago.

Loan Portfolio
“Loan growth was muted during the fourth quarter, as we remain disciplined with new loan pricing amid stiff competition in our markets,” said Ben Babcanec, EVP and Chief Operating Officer.

Net loans totaled $1.54 billion at December 31, 2024, and increased modestly compared to $1.53 billion at September 30, 2024, and $1.52 billion at December 31, 2023. Commercial loans increased 7.8% from year ago levels to $186.2 million and comprise 11.9% of the total loan portfolio at December 31, 2024. Owner occupied commercial real estate loans (CRE) decreased 7.5% to $273.8 million at December 31, 2024, compared to a year ago, and comprise 17.6% of the total loan portfolio. Nonowner occupied CRE loans increased modestly to $503.2 million, compared to a year ago, and comprise 32.3% of the total loan portfolio at December 31, 2024. 1-4 family residential real estate loans increased 1.0% from year-ago levels to $513.2 million and represent 32.9% of total loans. Home equity loans increased 25.9% from year-ago levels to $65.1 million and represent 4.2% of total loans, while consumer loans decreased 5.6% from year-ago levels to $17.9 million and represent 1.1% of the total loan portfolio at December 31, 2024.

Deposits
Total deposits were $1.75 billion at December 31, 2024, a $45.0 million, or 2.6% increase, compared to $1.71 billion at September 30, 2024, and a $108.1 million, or 6.6% increase, compared to $1.64 billion at December 31, 2023. “Average deposits increased $61.6 million, or 3.6%, to $1.75 billion in the fourth quarter of 2024 compared to the preceding quarter, with good growth in all deposit categories,” said Babcanec.

At December 31, 2024, noninterest bearing demand deposit accounts decreased 9.0% compared to a year ago and represent 25.3% of total deposits; savings, NOW and money market accounts remained relatively unchanged compared to a year ago and represent 40.7% of total deposits; and CDs increased 33.8% compared to a year ago and comprise 33.9% of total deposits. The average cost of deposits was 2.73% in the fourth quarter of 2024, compared to 2.75% in the third quarter of 2024 and 2.21% in the fourth quarter of 2023.

Shareholders’ Equity
Shareholders’ equity was $175.4 million at December 31, 2024, compared to $175.9 million three months earlier and increased 7.9% compared to $162.5 million a year earlier. At December 31, 2024, Heartland’s tangible book value was $80.02 per share compared to $80.61 at September 30, 2024, and $74.23 at December 31, 2023.

Heartland continues to maintain capital levels in excess of the requirements to be categorized as “well-capitalized” with tangible equity to tangible assets of 8.30% at December 31, 2024, compared to 8.46% at September 30, 2024, and 8.00% at December 31, 2023.

Operating Results
In the fourth quarter of 2024, Heartland generated a ROAA of 1.14% and a ROATCE of 13.90%, compared to 0.91% and 11.10%, respectively, in the third quarter of 2024 and 1.13% and 15.05%, respectively, in the fourth quarter a year ago.

Net Interest Income/Net Interest Margin
Net interest income, before the provision for credit losses, decreased 2.5% to $15.0 million in the fourth quarter of 2024, compared to $15.4 million in the fourth quarter a year ago, and increased modestly compared to $14.9 million in the preceding quarter. For the year ended December 31, 2024, net interest income decreased 2.4% to $59.6 million, compared to $61.0 million in 2023.

Total revenues (net interest income, before the provision for credit losses, plus noninterest income) were $18.5 million in the fourth quarter of 2024, a 1.0% decrease compared to $18.6 million in the fourth quarter a year ago, and a 2.8% increase compared to $18.0 million in the preceding quarter. For the year 2024, total revenues were $72.4 million, compared to $73.5 million in 2023.

Heartland’s net interest margin was 3.19% in the fourth quarter of 2024, compared to 3.27% in the preceding quarter and 3.49% in the fourth quarter of 2023.

“The interest rate reductions during the third and fourth quarters of 2024 put temporary pressure on our net interest margin due to a lag in the maturity and downward repricing of some higher cost deposits,” said Carrie Almendinger, EVP and Chief Financial Officer.

Provision for Credit Losses
Due to strong credit quality, minimal net loan charge-offs, modest loan growth and economic forecast improvements within the CECL model, Heartland recorded no provision for credit losses in the fourth quarter of 2024. This compared to no provision for credit losses in the third quarter of 2024 and a $550,000 provision for credit losses in the fourth quarter of 2023.

Noninterest Income
Noninterest income increased 7.9% to $3.5 million in the fourth quarter of 2024, compared to $3.2 million in the fourth quarter a year ago, and increased 14.7% compared to $3.0 million in the preceding quarter. “Higher title insurance income and increases in income from life insurance contributed to gains in noninterest income during the fourth quarter,” said Almendinger.

Gains on sale of loans and originated mortgage servicing rights decreased 16.1% to $616,000 in the fourth quarter of 2024, compared to $734,000 in the fourth quarter a year ago, and decreased 10.6% compared to $689,000 in the preceding quarter. For the year 2024, noninterest income increased 3.1% to $12.8 million, compared to $12.4 million in 2023.

Noninterest Expense
Noninterest expense was $11.6 million during the fourth quarter of 2024, compared to $12.4 million in the preceding quarter and $11.6 million in the fourth quarter a year ago. Salary and employee benefits expense, the largest component of noninterest expense, was $6.8 million in the fourth quarter of 2024, compared to $7.2 million in the preceding quarter and $7.4 million in the fourth quarter of 2023. For the year 2024, noninterest expense totaled $47.5 million, compared to $47.1 million in 2023.

One-time merger related expenses totaled $278,000 in the fourth quarter of 2024 and $671,000 in the third quarter of 2024.

The efficiency ratio for the fourth quarter of 2024 was 62.7%, compared to 69.1% for the preceding quarter and 62.5% for the fourth quarter of 2023.

Income Tax Provision
In the fourth quarter of 2024, Heartland recorded $1.2 million in state and federal income tax expense for an effective tax rate of 17.7%, compared to $1.1 million, or 20.2%, in the third quarter of 2024 and $1.1 million, or 17.7%, in the fourth quarter a year ago.

Credit Quality
“Our credit quality metrics continue to remain stable, despite an increase in nonaccrual loans during the quarter,” said McComb. “Overall, we are seeing minimal signs of stress in the loan portfolio, and we hold strong collateral positions with all our loans.”

At December 31, 2024, the allowance for credit losses plus unfunded commitment liability (ACL + UCL) was $19.0 million, or 1.22% of total loans, compared to $19.1 million, or 1.23% of total loans, at September 30, 2024, and $19.4 million, or 1.25% of total loans, a year ago. As of December 31, 2024, the ACL represented 367% of nonaccrual loans, compared to 949% three months earlier and 1,106% one year earlier.

Nonaccrual loans were $4.9 million at December 31, 2024, compared to $1.9 million at September 30, 2024, and $1.6 million at December 31, 2023. At December 31, 2024, nonaccrual loans totaled 12 loans with an average balance of approximately $406,000. There was $3.6 million in loans past due 90 days and still accruing at December 31, 2024, compared to $5,000 at September 30, 2024, and $468,000 at December 31, 2023. Net loan charge-offs totaled $71,000 at December 31, 2024, compared to $32,000 in net loan recoveries at September 30, 2024, and $318,000 in net loan charge-offs at December 31, 2023.

There was no other real estate owned (“OREO”) and other nonperforming assets on the books at December 31, 2024. This compared to OREO of $30,000 at September 30, 2024, and $10,000 at December 31, 2023. Nonperforming assets (NPAs), consisting of nonperforming loans and loans past due 90 days or more, were $8.4 million, or 0.43% of total assets, at December 31, 2024, compared to $1.9 million, or 0.10%, at September 30, 2024, and $2.1 million, or 0.11% of total assets, at December 31, 2023.

About Heartland BancCorp
Heartland BancCorp is a registered Ohio bank holding company and the parent of Heartland Bank, which operates 20 full-service banking offices and TransCounty Title Agency, LLC. Heartland Bank, founded in 1911, provides full-service commercial, small business and consumer banking services; professional financial planning services; and other financial products and services. Heartland Bank is a member of the Federal Reserve, a member of the FDIC and an Equal Housing Lender. Heartland BancCorp is currently quoted on the OTC Markets (OTCQX) under the symbol HLAN. Learn more about Heartland Bank at Heartland.Bank.

Safe Harbor Statement
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about (i) Heartland’s plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts; and (ii) other statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “targets,” “projects,” or words of similar meaning generally intended to identify forward-looking statements. These forward-looking statements are based upon the current beliefs and expectations of Heartland’s management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of Heartland. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ materially from the anticipated results discussed in these forward-looking statements because of the following factors, among others: (1) the assumptions and estimates used by Heartland’s management include both assumptions as to certain business decisions that are subject to change and, in many respects, subjective judgment, and thus is susceptible to multiple interpretations and periodic revisions based on actual experience and business developments, and thus, may not be realized; (2) legislative or regulatory changes, including changes in accounting standards, may adversely affect the businesses in which Heartland is engaged; (3) changes in the interest rate environment may adversely affect net interest income; (4) results may be adversely affected by continued diversification of assets and adverse changes to credit quality; (5) competition from other financial services companies in Heartland’s markets could adversely affect operations; and (6) the current economic slowdown could adversely affect credit quality and loan originations.

Heartland cautions that the foregoing list of factors is not exclusive. All subsequent written and oral forward-looking statements are expressly qualified in their entirety by the cautionary statements above. Heartland does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law.

Additional Information
Communications in this press release do not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any proxy vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The proposed merger will be submitted to both the German American and Heartland shareholders for their consideration. In connection with the proposed merger, German American will file a Registration Statement on Form S-4 with the U.S. Securities and Exchange Commission (“SEC”) that will include a joint proxy statement for German American and Heartland and a prospectus for German American and other relevant documents concerning the proposed merger. INVESTORS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE CORRESPONDING JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED MERGER WHEN IT BECOMES AVAILABLE, AS WELL AS ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, TOGETHER WITH ALL AMENDMENTS AND SUPPLEMENTS TO THOSE DOCUMENTS, AS THEY WILL CONTAIN IMPORTANT INFORMATION. You will be able to obtain a copy of the joint proxy statement/prospectus once filed, as well as other filings containing information about German American, without charge, at the SEC’s website (http://www.sec.gov) or by accessing German American’s website (http://www.germanamerican.com) under the tab “Investor Relations” and then under the heading “Financial Information”. Copies of the joint proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the joint proxy statement/prospectus can also be obtained, without charge, by directing a request to Bradley C. Arnett, Investor Relations, German American Bancorp, Inc., 711 Main Street, Box 810, Jasper, Indiana 47546, telephone 812-482-1314 or to Jennifer Eckert, Investor Relations, Heartland BancCorp, 430 North Hamilton Road, Whitehall, Ohio 43213, telephone 614-337-4600.

German American and Heartland and certain of their directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of German American and Heartland in connection with the proposed merger. Information about the directors and executive officers of German American is set forth in the proxy statement for German American’s 2024 annual meeting of shareholders, as filed with the SEC on Schedule 14A on March 21, 2024, which information has been updated by German American from time to time in subsequent filings with the SEC. Information about the directors and executive officers of Heartland will be set forth in the joint proxy statement/prospectus relating to the proposed merger. Additional information about the interests of those participants and other persons who may be deemed participants in the transaction may also be obtained by reading the joint proxy statement/prospectus relating to the proposed merger when it becomes available. Free copies of this document may be obtained as described above.


Heartland BancCorp
Quarterly Financial Summary

		Three Months Ended
Earnings and dividends:		Dec. 31, 2024			Sep. 30, 2024			Jun. 30, 2024			Mar. 31, 2024			Dec. 31, 2023
	Interest income	$	27,334		$	27,233		$	26,190		$	25,626		$	25,195
	Interest expense		12,334			12,288			11,408			10,764			9,807
	Net interest income		15,000			14,945			14,782			14,862			15,388
	Provision for credit losses		–			–			–			–			550
	Noninterest income		3,470			3,026			3,212			3,119			3,217
	Noninterest expense		11,580			12,420			11,753			11,775			11,632
	Provision for income taxes		1,222			1,123			1,154			1,124			1,135
	Net income		5,668			4,428			5,087			5,082			5,288

Share data:
	Basic earnings per share	$	2.80		$	2.19		$	2.52		$	2.52		$	2.62
	Diluted earnings per share		2.63			2.12			2.50			2.51			2.61
	Dividends declared per share		0.76			0.76			0.76			0.76			0.76
	Book value per share		86.31			86.95			83.19			81.28			80.66
	Tangible book value per share		80.02			80.61			76.81			74.88			74.23

	Common shares outstanding, 20,000,000 authorized		2,123,355			2,113,153			2,106,879			2,105,737			2,105,737
	Treasury shares		(90,612	)		(90,612	)		(90,612	)		(90,612	)		(90,612	)
	Common shares, net		2,032,743			2,022,541			2,016,267			2,015,125			2,015,125
	Average common shares outstanding, net		2,024,267			2,018,442			2,015,627			2,015,125			2,015,125

Balance sheet – average balances:
	Loans receivable, net	$	1,541,814		$	1,533,219		$	1,524,818		$	1,519,946		$	1,520,331
	Earning assets		1,869,509			1,820,509			1,795,555			1,776,073			1,749,160
	Goodwill & intangible assets		12,805			12,846			12,888			12,934			12,982
	Total assets		1,974,165			1,926,237			1,899,413			1,878,171			1,854,191
	Demand deposits		442,599			423,555			437,524			453,581			476,992
	Deposits		1,751,452			1,689,877			1,670,394			1,639,911			1,622,335
	Borrowings		29,508			47,792			47,225			58,938			60,857
	Shareholders’ equity		175,050			171,562			164,744			163,283			152,393

Ratios:
	Return on average assets		1.14	%		0.91	%		1.08	%		1.09	%		1.13	%
	Return on average equity		12.88	%		10.27	%		12.42	%		12.52	%		13.77	%
	Return on average tangible common equity		13.90	%		11.10	%		13.47	%		13.59	%		15.05	%
	Yield on earning assets		5.82	%		5.95	%		5.87	%		5.80	%		5.71	%
	Cost of deposits		2.73	%		2.75	%		2.61	%		2.45	%		2.21	%
	Cost of funds		2.76	%		2.81	%		2.67	%		2.55	%		2.31	%
	Net interest margin		3.19	%		3.27	%		3.31	%		3.37	%		3.49	%
	Efficiency ratio		62.70	%		69.11	%		65.33	%		65.49	%		62.52	%

Asset quality:
	Net loan charge-offs to average loans		0.02	%		-0.01	%		0.08	%		0.01	%		0.08	%
	Nonperforming loans to gross loans		0.54	%		0.12	%		0.13	%		0.13	%		0.13	%
	Nonperforming assets to total assets		0.43	%		0.10	%		0.11	%		0.10	%		0.11	%
	Allowance for credit losses to gross loans		1.15	%		1.15	%		1.15	%		1.17	%		1.16	%
	ACL + UCL to gross loans		1.22	%		1.23	%		1.23	%		1.27	%		1.25	%

Heartland BancCorp
Consolidated Balance Sheets


Assets		Dec. 31, 2024			Sep. 30, 2024			Jun. 30, 2024			Mar. 31, 2024			Dec. 31, 2023
	Cash and due from	$	15,783		$	35,186		$	14,292		$	18,314		$	16,750
	Interest bearing deposits		87,077			32,585			31,419			15,717			19,932
	Interest bearing time deposits		–			–			–			–			–
	Available-for-sale securities		222,351			229,907			233,270			222,609			211,130
	Held-to-maturity securities		0			0			0			0			0

	Loans held for sale		1,462			2,854			2,855			2,210			1,145

	Commercial		186,156			183,739			179,961			166,413			172,658
	CRE (Owner occupied)		273,764			287,261			291,107			293,542			295,996
	CRE (Non Owner occupied)		503,223			489,483			495,466			489,709			501,056
	1-4 Family		513,223			510,587			504,959			507,374			508,826
	Home Equity		65,098			63,184			59,011			54,178			51,697
	Consumer		17,902			19,436			18,916			18,859			18,974
	Allowance for credit losses		(17,902	)		(17,845	)		(17,813	)		(17,897	)		(17,928	)
	Net Loans		1,541,464			1,535,845			1,531,607			1,512,178			1,531,279

	Premises and equipment		32,115			32,548			33,039			33,298			33,649
	Nonmarketable equity securities		6,949			6,946			6,943			6,941			6,866
	Mortgage servicing rights, net		3,638			3,545			3,473			3,384			3,373
	Foreclosed assets held for sale		0			30			0			0			10
	Goodwill		12,388			12,388			12,388			12,388			12,388
	Intangible Assets		392			433			475			517			565
	Deferred income taxes		7,375			6,007			7,213			6,662			7,087
	Life insurance assets		20,614			20,809			20,675			20,545			20,315
	Accrued interest receivable and other assets		20,128			21,520			22,483			22,429			18,661
	Total assets	$	1,971,736		$	1,940,603		$	1,920,132		$	1,877,192		$	1,883,150

Liabilities and Shareholders’ Equity
Liabilities
	Deposits
	Demand	$	443,754		$	431,582		$	414,829		$	419,864		$	487,631
	Saving, NOW and money market		713,060			686,221			673,674			705,942			711,198
	Time		593,876			587,927			556,690			502,848			443,772
	Total deposits		1,750,690			1,705,730			1,645,193			1,628,654			1,642,601
	Repurchase agreements		4,975			5,590			6,295			4,472			4,583
	FHLB Advances		0			10,000			59,000			38,000			31,000
	Subordinated debt		24,076			24,065			24,055			24,044			24,034
	Interest payable and other liabilities		16,555			19,352			17,849			18,228			18,400
	Total liabilities		1,796,296			1,764,737			1,752,392			1,713,398			1,720,618

Shareholders’ Equity
	Common stock, without par value		64,986			63,899			63,002			62,797			62,725
	Retained earnings		134,193			130,069			127,174			123,617			120,064
	Accumulated other comprehensive income (expense)		(18,745	)		(13,108	)		(17,442	)		(17,626	)		(15,263	)
	Treasury stock at Cost, Common		(4,994	)		(4,994	)		(4,994	)		(4,994	)		(4,994	)
	Total shareholders’ equity		175,440			175,866			167,740			163,794			162,532
	Total liabilities and shareholders’ equity	$	1,971,736		$	1,940,603		$	1,920,132		$	1,877,192		$	1,883,150

Heartland BancCorp
Consolidated Statements of Income

		Three Months Ended
Interest Income		Dec. 31, 2024		Sep. 30, 2024		Jun. 30, 2024		Mar. 31, 2024		Dec. 31, 2023
	Loans	$	23,943	$	24,194	$	23,381	$	23,015	$	22,850
	Securities
	Taxable		1,756		1,870		1,744		1,637		1,374
	Tax-exempt		683		686		677		657		629
	Other		952		483		388		317		342
	Total interest income		27,334		27,233		26,190		25,626		25,195
Interest Expense
	Deposits		12,005		11,687		10,832		10,006		9,017
	Borrowings		329		601		576		758		790
	Total interest expense		12,334		12,288		11,408		10,764		9,807
Net Interest Income			15,000		14,945		14,782		14,862		15,388
Provision for Credit Losses			–		–		–		–		550
Net Interest Income After Provision for Credit Losses			15,000		14,945		14,782		14,862		14,838
Noninterest income
	Service charges		977		1,005		1,011		952		1,002
	Gains on sale of loans and originated MSR		616		689		645		518		734
	Loan servicing fees, net		370		416		396		494		354
	Title insurance income		292		120		231		210		214
	Increase in cash value of life insurance		637		134		130		230		175
	Other		578		662		799		715		738
	Total noninterest income		3,470		3,026		3,212		3,119		3,217
Noninterest Expense
	Salaries and employee benefits		6,764		7,181		7,064		7,300		7,430
	Net occupancy and equipment expense		1,079		1,133		1,145		1,106		1,052
	Software and data processing fees		1,187		1,230		1,158		1,156		1,163
	Professional fees		702		1,125		496		233		242
	Marketing expense		228		213		303		310		320
	State financial institution tax		327		292		293		292		260
	FDIC insurance premiums		229		214		234		284		299
	Other		1,064		1,032		1,060		1,094		866
	Total noninterest expense		11,580		12,420		11,753		11,775		11,632
Income before Income Tax			6,890		5,551		6,241		6,206		6,423
Provision for Income Taxes			1,222		1,123		1,154		1,124		1,135
Net Income		$	5,668	$	4,428	$	5,087	$	5,082	$	5,288
Basic Earnings Per Share		$	2.80	$	2.19	$	2.52	$	2.52	$	2.62
Diluted Earnings Per Share		$	2.63	$	2.12	$	2.50	$	2.51	$	2.61

Heartland BancCorp
Consolidated Statements of Income

		Twelve Months Ended
Interest Income		Dec. 31, 2024		Dec. 31, 2023
	Loans	$	94,533	$	84,424
	Securities		–
	Taxable		7,007		4,320
	Tax-exempt		2,703		2,442
	Other		2,140		1,200
	Total interest income		106,383		92,386
Interest Expense			–
	Deposits		44,530		28,690
	Borrowings		2,264		2,662
	Total interest expense		46,794		31,352
Net Interest Income			59,589		61,034
Provision for Credit Losses			–		2,600
Net Interest Income After Provision for Credit Losses			59,589		58,434
Noninterest income
	Service charges		3,945		4,012
	Gains on sale of loans and originated MSR		2,468		2,372
	Loan servicing fees, net		1,676		1,530
	Title insurance income		853		892
	Increase in cash value of life insurance		1,131		526
	Other		2,754		3,108
	Total noninterest income		12,827		12,440
Noninterest Expense
	Salaries and employee benefits		28,309		29,558
	Net occupancy and equipment expense		4,463		4,231
	Software and data processing fees		4,731		4,462
	Professional fees		2,556		1,021
	Marketing expense		1,054		1,199
	State financial institution tax		1,204		1,039
	FDIC insurance premiums		961		1,166
	Other		4,250		4,376
	Total noninterest expense		47,528		47,052
Income before Income Tax			24,888		23,822
Provision for Income Taxes			4,623		4,306
Net Income		$	20,265	$	19,516
Basic Earnings Per Share		$	10.04	$	9.69
Diluted Earnings Per Share		$	9.75	$	9.62

Heartland BancCorp
ADDITIONAL FINANCIAL INFORMATION
(Dollars in thousands except per share amounts)(Unaudited)

Asset Quality Ratios and Data:
	Dec. 31, 2024			Sep. 30, 2024			Jun. 30, 2024			Mar. 31, 2024			Dec. 31, 2023
Nonaccrual loans (excluding restructured loans)	$	4,872		$	1,881		$	1,569		$	1,817		$	1,621
Nonaccrual restructured loans		–			–			–			–			–
Loans past due 90 days and still accruing		3,559			5			513			149			468
Total non-performing loans		8,431			1,886			2,082			1,966			2,089

OREO and other non-performing assets		–			30			–			–			10
Total non-performing assets	$	8,431		$	1,916		$	2,082		$	1,966		$	2,099

Nonperforming loans to gross loans		0.54	%		0.12	%		0.13	%		0.13	%		0.13	%
Nonperforming assets to total assets		0.43	%		0.10	%		0.11	%		0.10	%		0.11	%
Allowance for credit losses to gross loans		1.15	%		1.15	%		1.15	%		1.17	%		1.16	%
Unfunded commitment liability to gross loans		0.07	%		0.08	%		0.08	%		0.10	%		0.09	%
ACL + UCL to gross loans		1.22	%		1.23	%		1.23	%		1.27	%		1.25	%

Contact:	G. Scott McComb, Chairman, President & CEO
	Heartland BancCorp 614-337-4600

The MIL Network –

January 29, 2025

MIL-OSI: First Community Bankshares, Inc. Announces Fourth Quarter and Full Year 2024 Results, Quarterly Cash Dividend, and Special Dividend

Source: GlobeNewswire (MIL-OSI)

BLUEFIELD, Va., Jan. 28, 2025 (GLOBE NEWSWIRE) — First Community Bankshares, Inc. (NASDAQ: FCBC) (www.firstcommunitybank.com) (the “Company”) today reported its unaudited results of operations and other financial information for the quarter ended December 31, 2024. The Company reported net income of $13.04 million, or $0.71 per diluted common share, for the quarter ended December 31, 2024. Net income for the twelve months ended December 31, 2024, was $51.60 million or $2.80 per diluted common share.

The Company also declared a quarterly cash dividend to common shareholders of thirty-one cents, $0.31 per common share. The quarterly dividend is payable to common shareholders of record on February 14, 2025, and is expected to be paid on February 28, 2025. This marks the 40th consecutive year of regular dividends to common shareholders.

Additionally, the Board of Directors declared a special cash dividend to common shareholders of $2.07 per common share.

The Company’s capital management plan and philosophy require the maintenance of a strong capital base from which to grow and serve its customers. As part of the capital plan, the Company intends to return current earnings not needed to fund growth in core operations or other uses back to shareholders through regular cash dividends and stock repurchases. To the extent current earnings exceed those capital uses, the Company may declare special dividends from time to time. The Company earned approximately $197.45 million in the last four years, from which it paid regular dividends of $79.68 million, and repurchased shares for $81.95 million. Since July 1, 2013, the Company earned approximately $415.90 million, from which it paid regular dividends of $174.84 million, special dividends of $8.12 million, and repurchased 9.33 million shares for $232.08 million

The Board of Directors determined that the Company will have sufficient surplus capital to support anticipated growth opportunities and other needs after payment of the special dividend totaling approximately $37.92 million. This special cash dividend is also payable on February 28, 2025, to shareholders of record February 14, 2025, and may not be indicative of special cash dividend activity in the future.

Fourth Quarter 2024 Highlights

Income Statement

Net income of $13.04 million for the fourth quarter of 2024, was a increase of $1.26 million, or 10.65%, from the same quarter of 2023. Net income of $51.60 million for the year, was an increase of $3.58 million, or 7.46%, from the same period of 2023.
Net interest income decreased $730 thousand compared to the same quarter in 2023, primarily due to increases in rates paid on interest-bearing deposits.
Net interest margin of 4.36% was a decrease of 6 basis points over the same quarter of 2023. The yield on earning assets increased 11 basis points from the same period of 2023 and is primarily attributable to an increase in interest income of $422 thousand. Interest income on interest-bearing deposits with banks increased $2.91 million and was primarily due to the increase in the average balance of $246.39 million offset by a decrease in yield of 75 basis points. This increase in interest income was offset by decreases in interest income for loans and securities available-for-sale of $2.04 million and $450 thousand, respectively. The decreases were primarily due to decreases in the average balance for loans and securities available-for-sale of $159.86 million and $107.16 million offset by increases in yield of 2 basis points and 72 basis points, respectively. Interest expense on interest-bearing liabilities increased $1.16 million and is primarily attributable to yield. The yield on interest-bearing liabilities increased 26 basis points when compared with the same period of 2023 and is primarily attributable to increased rates on interest-bearing deposit liabilities.
Noninterest income decreased approximately $125 thousand, or 1.19%, when compared to the same quarter of 2023. Noninterest expense decreased $2.67 million, or 9.98% when compared to the same period of 2023. The decrease is primarily attributable to litigation expense of $3.00 million recorded in the fourth quarter of 2023.
Annualized return on average assets (“ROA”) was 1.60% for both the fourth quarter and for the twelve months of 2024 compared to 1.43% and 1.48% for the same periods, respectively, of 2023. Annualized return on average common equity (“ROE”) was 9.89% for the fourth quarter of 2024 and 10.03% for the year compared to 9.39% and 10.02% for the same periods, respectively, of 2023. Annualized return on average tangible common equity (“ROTCE”) was 14.12% for the fourth quarter of 2024 and 14.48% for the year compared to 13.82% and 14.65% for the same periods, respectively, of 2023.

Balance Sheet and Asset Quality

Consolidated assets totaled $3.26 billion at December 31, 2024.
Loans decreased $156.21 million, or 6.07%, from December 31, 2023. Securities available for sale decreased $111.12 million, or 39.55%, from December 31, 2023. Deposits decreased $31.08 million, or 1.14%. The net effect of these balance sheet changes resulted in an increase in cash and cash equivalents of $261.03 million, or 224.22%.
The Company did not repurchase any common shares during the fourth quarter of 2024. The Company repurchased 257,294 common shares during 2024 at a total cost of $8.72 million.
Non-performing loans to total loans increased to 0.83% when compared with the same quarter of 2023. The Company experienced net charge-offs for the fourth quarter of 2024 of $1.48 million, or 0.24% of annualized average loans, compared to net charge-offs of $883 thousand, or 0.14%, of annualized average loans for the same period in 2023.
The allowance for credit losses to total loans was 1.44% at December 31, 2024, compared to 1.41% at December 31, 2023.
Book value per share at December 31, 2024, was $ 28.73, an increase of $1.53 from year-end 2023.

Non-GAAP Financial Measures

In addition to financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company uses certain non-GAAP financial measures that provide useful information for financial and operational decision making, evaluating trends, and comparing financial results to other financial institutions. The non-GAAP financial measures presented in this news release include “tangible book value per common share,” “return on average tangible common equity,” “adjusted earnings,” “adjusted diluted earnings per share,” “adjusted return on average assets,” “adjusted return on average common equity,” “adjusted return on average tangible common equity,” and certain financial measures presented on a fully taxable equivalent (“FTE”) basis. FTE basis is calculated using the federal statutory income tax rate of 21%. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as a reconciliation to that comparable GAAP financial measure can be found in the attached tables to this press release. While the Company believes certain non-GAAP financial measures enhance the understanding of its business and performance, they are supplemental and not a substitute for, or more important than, financial measures prepared in accordance with GAAP and may not be comparable to those reported by other financial institutions.

About First Community Bankshares, Inc.

First Community Bankshares, Inc., a financial holding company headquartered in Bluefield, Virginia, provides banking products and services through its wholly owned subsidiary First Community Bank. First Community Bank operated 53 branch banking locations in Virginia, West Virginia, North Carolina, and Tennessee as of December 31, 2024. First Community Bank offers wealth management and investment advice and services through its Trust Division and through its wholly owned subsidiary, First Community Wealth Management, which collectively managed and administered $1.62 billion in combined assets as of December 31, 2024. The Company reported consolidated assets of $3.26 billion as of December 31, 2024. The Company’s common stock is listed on the NASDAQ Global Select Market under the trading symbol, “FCBC”. Additional investor information is available on the Company’s website at www.firstcommunitybank.com.

This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; changes in banking laws and regulations; the degree of competition by traditional and non-traditional competitors; the impact of natural disasters, extreme weather events, military conflict , terrorism or other geopolitical events; and other risks detailed from time to time in the Company’s Securities and Exchange Commission reports including, but not limited to, the Annual Report on Form 10-K for the most recent fiscal year end. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.


CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	Three Months Ended															Year Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,
(Amounts in thousands, except share and per share data)	2024			2024			2024			2024			2023			2024			2023
Interest income
Interest and fees on loans	$	31,637		$	32,120		$	32,696		$	33,418		$	33,676		$	129,871		$	126,727
Interest on securities		1,447			1,070			1,211			1,698			1,888			5,426			7,956
Interest on deposits in banks		3,348			3,702			2,882			913			438			10,845			2,482
Total interest income		36,432			36,892			36,789			36,029			36,002			146,142			137,165
Interest expense
Interest on deposits		5,099			5,298			4,877			4,365			3,935			19,639			9,341
Interest on borrowings		–			–			–			35			4			35			140
Total interest expense		5,099			5,298			4,877			4,400			3,939			19,674			9,481
Net interest income		31,333			31,594			31,912			31,629			32,063			126,468			127,684
Provision for credit losses		1,082			1,360			144			1,011			1,029			3,597			7,985
Net interest income after provision		30,251			30,234			31,768			30,618			31,034			122,871			119,699
Noninterest income		10,337			10,452			9,342			9,259			10,462			39,390			37,452
Noninterest expense		24,107			24,177			24,897			23,386			26,780			96,567			95,177
Income before income taxes		16,481			16,509			16,213			16,491			14,716			65,694			61,974
Income tax expense		3,441			3,476			3,527			3,646			2,932			14,090			13,954
Net income	$	13,040		$	13,033		$	12,686		$	12,845		$	11,784		$	51,604		$	48,020


Earnings per common share
Basic	$	0.71		$	0.71		$	0.69		$	0.70		$	0.64		$	2.81		$	2.67
Diluted	$	0.71		$	0.71		$	0.71		$	0.71		$	0.66		$	2.80		$	2.72
Cash dividends per common share
Regular		0.31			0.31			0.29			0.29			0.29			1.20			1.16
Weighted average shares outstanding
Basic		18,299,612			18,279,612			18,343,958			18,476,128			18,530,114			18,349,498			17,996,373
Diluted		18,418,441			18,371,907			18,409,876			18,545,910			18,575,226			18,430,206			18,027,151
Performance ratios
Return on average assets		1.60	%		1.60	%		1.58	%		1.60	%		1.43	%		1.60	%		1.48	%
Return on average common equity		9.89	%		10.04	%		10.02	%		10.18	%		9.39	%		10.03	%		10.02	%
Return on average tangible common equity(1)		14.12	%		14.46	%		14.54	%		14.82	%		13.82	%		14.48	%		14.65	%

_____________

(1)		A non-GAAP financial measure defined as net income divided by average stockholders’ equity less average goodwill and other intangible assets.


CONDENSED CONSOLIDATED QUARTERLY NONINTEREST INCOME AND EXPENSE (Unaudited)

	Three Months Ended										Year Ended
	December 31,		September 30,		June 30,		March 31,		December 31,		December 31,
(Amounts in thousands)	2024		2024		2024		2024		2023		2024		2023
Noninterest income
Wealth management	$	1,251	$	1,071	$	1,064	$	1,099	$	1,052	$	4,485	$	4,179
Service charges on deposits		3,613		3,661		3,428		3,310		3,637		14,012		13,996
Other service charges and fees		3,575		3,697		3,670		3,450		3,541		14,392		13,647
(Loss) gain on sale of securities		–		–		–		–		–		–		(21	)
Other operating income		1,898		2,023		1,180		1,400		2,232		6,501		5,651
Total noninterest income	$	10,337	$	10,452	$	9,342	$	9,259	$	10,462	$	39,390	$	37,452
Noninterest expense
Salaries and employee benefits	$	13,501	$	13,129	$	12,491	$	12,581	$	12,933	$	51,702	$	49,887
Occupancy expense		1,329		1,270		1,309		1,378		1,252		5,286		4,967
Furniture and equipment expense		1,562		1,574		1,687		1,545		1,489		6,368		5,878
Service fees		2,305		2,461		2,427		2,449		2,255		9,642		8,908
Advertising and public relations		1,165		967		933		796		843		3,861		3,300
Professional fees		295		221		330		372		787		1,218		1,567
Amortization of intangibles		535		536		530		530		536		2,131		1,731
FDIC premiums and assessments		365		365		364		369		376		1,463		1,511
Merger expense		–		–		–		–		–		–		2,393
Litigation expense		–		–		1,800		–		3,000		1,800		3,000
Other operating expense		3,050		3,654		3,026		3,366		3,309		13,096		12,035
Total noninterest expense	$	24,107	$	24,177	$	24,897	$	23,386	$	26,780	$	96,567	$	95,177


RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EARNINGS (Unaudited)

	Three Months Ended															Year Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,
(Amounts in thousands, except per share data)	2024			2024			2024			2024			2023			2024			2023
Adjusted Net Income for diluted earnings per share	$	13,040		$	13,033		$	12,686		$	12,845		$	12,314		$	51,604		$	49,120
Non-GAAP adjustments:
Loss (gain) on sale of securities		–			–			–			–			–			–			21
Merger expense		–			–			–			–			–			–			2,393
Day 2 provision for allowance for credit losses – Surrey		–			–			–			–			–			–			1,614
Litigation expense		–			–			1,800			–			3,000			1,800			3,000
Other items(1)		–			(825	)		–			–			–			(825	)		(204	)
Total adjustments		–			(825	)		1,800			–			3,000			975			6,824
Tax effect		–			(198	)		432			–			720			234			1,203
Adjusted earnings, non-GAAP	$	13,040		$	12,406		$	14,054		$	12,845		$	14,594		$	52,345		$	54,741

Adjusted diluted earnings per common share, non-GAAP	$	0.71		$	0.68		$	0.76		$	0.69		$	0.79		$	2.84		$	3.04
Performance ratios, non-GAAP
Adjusted return on average assets		1.60	%		1.53	%		1.75	%		1.60	%		1.77	%		1.62	%		1.68	%
Adjusted return on average common equity		9.89	%		9.56	%		11.10	%		10.18	%		11.63	%		10.18	%		11.43	%
Adjusted return on average tangible common equity (2)		14.12	%		13.77	%		16.11	%		14.82	%		17.11	%		14.69	%		16.70	%

_____________

(1)		Includes other non-recurring income and expense items.
(2)		A non-GAAP financial measure defined as adjusted earnings divided by average stockholders’ equity less average goodwill and other intangible assets.


AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)

	Three Months Ended December 31,
	2024							2023
	Average				Average Yield/			Average				Average Yield/
(Amounts in thousands)	Balance		Interest(1)		Rate(1)			Balance		Interest(1)		Rate(1)
Assets
Earning assets
Loans(2)(3)	$	2,421,668	$	31,717		5.21	%	$	2,581,528	$	33,758		5.19	%
Securities available for sale		167,357		1,474		3.50	%		274,513		1,924		2.78	%
Interest-bearing deposits		277,678		3,351		4.80	%		31,293		438		5.55	%
Total earning assets		2,866,703		36,542		5.07	%		2,887,334		36,120		4.96	%
Other assets		379,566							379,960
Total assets	$	3,246,269						$	3,267,294

Liabilities and stockholders’ equity
Interest-bearing deposits
Demand deposits	$	663,033	$	226		0.14	%	$	697,555	$	180		0.10	%
Savings deposits		886,886		3,476		1.56	%		838,455		3,050		1.44	%
Time deposits		242,899		1,396		2.29	%		254,668		705		1.10	%
Total interest-bearing deposits		1,792,818		5,098		1.13	%		1,790,678		3,935		0.87	%
Borrowings
Federal funds purchased		–		–		–			293		4		5.35	%
Retail repurchase agreements		995		1		0.05	%		1,090		–		0.05	%
Total borrowings		995		1		0.05	%		1,383		4		0.87	%
Total interest-bearing liabilities		1,793,813		5,099		1.13	%		1,792,061		3,939		0.87	%
Noninterest-bearing demand deposits		881,767							931,681
Other liabilities		46,142							45,819
Total liabilities		2,721,722							2,769,561
Stockholders’ equity		524,547							497,733
Total liabilities and stockholders’ equity	$	3,246,269						$	3,267,294
Net interest income, FTE(1)			$	31,443						$	32,181
Net interest rate spread						3.94	%						4.09	%
Net interest margin, FTE(1)						4.36	%						4.42	%

_____________

(1)		Interest income and average yield/rate are presented on a FTE, non-GAAP, basis using the federal statutory income tax rate of 21%.
(2)		Nonaccrual loans are included in the average balance; however, no related interest income is recorded during the period of nonaccrual.
(3)		Interest on loans includes non-cash and accelerated purchase accounting accretion of $863 thousand and $792 thousand for the three months ended December 31, 2024 and 2023, respectively.


AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)

	Year Ended December 31,
	2024							2023
	Average				Average Yield/			Average				Average Yield/
(Amounts in thousands)	Balance		Interest(1)		Rate(1)			Balance		Interest(1)		Rate(1)
Assets
Earning assets
Loans(2)(3)	$	2,481,215	$	130,196		5.25	%	$	2,538,361	$	127,019		5.00	%
Securities available for sale		171,081		5,547		3.24	%		298,389		8,115		2.72	%
Interest-bearing deposits		206,629		10,850		5.25	%		46,601		2,485		5.33	%
Total earning assets		2,858,925		146,593		5.13	%		2,883,351		137,619		4.77	%
Other assets		374,398							369,700
Total assets	$	3,233,323						$	3,253,051

Liabilities and stockholders’ equity
Interest-bearing deposits
Demand deposits	$	662,584	$	796		0.12	%	$	686,534	$	405		0.06	%
Savings deposits		878,584		14,206		1.62	%		847,397		6,781		0.80	%
Time deposits		246,035		4,636		1.88	%		267,957		2,155		0.80	%
Total interest-bearing deposits		1,787,203		19,638		1.10	%		1,801,888		9,341		0.52	%
Borrowings
Federal funds purchased		628		35		5.53	%		2,715		139		5.12	%
Retail repurchase agreements		1,045		1		0.05	%		1,528		1		0.06	%
Total borrowings		1,673		36		2.15	%		4,243		140		3.30	%
Total interest-bearing liabilities		1,788,876		19,674		1.10	%		1,806,131		9,481		0.52	%
Noninterest-bearing demand deposits		882,700							926,378
Other liabilities		47,362							41,477
Total liabilities		2,718,938							2,773,986
Stockholders’ equity		514,385							479,065
Total liabilities and stockholders’ equity	$	3,233,323						$	3,253,051
Net interest income, FTE(1)			$	126,919						$	128,138
Net interest rate spread						4.03	%						4.25	%
Net interest margin, FTE(1)						4.44	%						4.44	%

_____________

(1)		Interest income and average yield/rate are presented on a FTE, non-GAAP, basis using the federal statutory income tax rate of 21%.
(2)		Nonaccrual loans are included in the average balance; however, no related interest income is recorded during the period of nonaccrual.
(3)		Interest on loans includes non-cash and accelerated purchase accounting accretion of $2.90 million and $2.74 million for the twelve months ended December 31, 2024 and 2023, respectively.


CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)

	December 31,			September 30,			June 30,			March 31,			December 31,
(Amounts in thousands, except per share data)	2024			2024			2024			2024			2023
Assets
Cash and cash equivalents	$	377,454		$	315,338		$	329,877		$	248,905		$	116,420
Debt securities available for sale, at fair value		169,849			166,669			129,686			166,247			280,961
Loans held for investment, net of unearned income		2,416,089			2,444,113			2,473,268			2,519,833			2,572,298
Allowance for credit losses		(34,825	)		(35,118	)		(34,885	)		(35,461	)		(36,189	)
Loans held for investment, net		2,381,264			2,408,995			2,438,383			2,484,372			2,536,109
Premises and equipment, net		48,735			49,654			50,528			51,333			50,680
Other real estate owned		521			346			100			374			192
Interest receivable		9,207			9,883			9,984			10,719			10,881
Goodwill		143,946			143,946			143,946			143,946			143,946
Other intangible assets		13,014			13,550			14,085			14,615			15,145
Other assets		117,226			115,980			116,230			115,470			114,211
Total assets	$	3,261,216		$	3,224,361		$	3,232,819		$	3,235,981		$	3,268,545

Liabilities
Deposits
Noninterest-bearing	$	883,499		$	869,723		$	889,462		$	902,396		$	931,920
Interest-bearing		1,807,748			1,789,530			1,787,810			1,779,819			1,790,405
Total deposits		2,691,247			2,659,253			2,677,272			2,682,215			2,722,325
Securities sold under agreements to repurchase		906			954			894			1,006			1,119
Interest, taxes, and other liabilities		42,671			43,460			45,769			45,816			41,807
Total liabilities		2,734,824			2,703,667			2,723,935			2,729,037			2,765,251

Stockholders’ equity
Common stock		18,322			18,291			18,270			18,413			18,502
Additional paid-in capital		169,752			168,691			168,272			173,041			175,841
Retained earnings		349,489			342,121			334,756			327,389			319,902
Accumulated other comprehensive loss		(11,171	)		(8,409	)		(12,414	)		(11,899	)		(10,951	)
Total stockholders’ equity		526,392			520,694			508,884			506,944			503,294
Total liabilities and stockholders’ equity	$	3,261,216		$	3,224,361		$	3,232,819		$	3,235,981		$	3,268,545

Shares outstanding at period-end		18,321,795			18,290,938			18,270,273			18,413,088			18,502,396
Book value per common share	$	28.73		$	28.47		$	27.85		$	27.53		$	27.20
Tangible book value per common share(1)		20.16			19.86			19.20			18.92			18.60

_____________

(1 )		A non-GAAP financial measure defined as stockholders’ equity less goodwill and other intangible assets, divided by shares outstanding.


SELECTED CREDIT QUALITY INFORMATION (Unaudited)

	December 31,			September 30,			June 30,			March 31,			December 31,
(Amounts in thousands)	2024			2024			2024			2024			2023
Allowance for Credit Losses
Balance at beginning of period:
Allowance for credit losses – loans	$	35,118		$	34,885		$	35,461		$	36,189		$	36,031
Allowance for credit losses – loan commitments		441			441			746			746			758
Total allowance for credit losses beginning of period		35,559			35,326			36,207			36,935			36,789
Provision for credit losses:
Provision for credit losses – loans		1,182			1,360			449			1,011			1,041
(Recovery of) provision for credit losses – loan commitments		(100	)		–			(305	)		–			(12	)
Total provision for credit losses – loans and loan commitments		1,082			1,360			144			1,011			1,029
Charge-offs		(2,005	)		(1,799	)		(1,599	)		(2,448	)		(2,105	)
Recoveries		530			672			574			709			1,222
Net (charge-offs) recoveries		(1,475	)		(1,127	)		(1,025	)		(1,739	)		(883	)
Balance at end of period:
Allowance for credit losses – loans		34,825			35,118			34,885			35,461			36,189
Allowance for credit losses – loan commitments		341			441			441			746			746
Ending balance	$	35,166		$	35,559		$	35,326		$	36,207		$	36,935

Nonperforming Assets
Nonaccrual loans	$	19,869		$	19,754		$	19,815		$	19,617		$	19,356
Accruing loans past due 90 days or more		149			176			19			30			104
Modified loans past due 90 days or more		135			–			–			–			–
Total nonperforming loans		20,153			19,930			19,834			19,647			19,460
OREO		521			346			100			374			192
Total nonperforming assets	$	20,674		$	20,276		$	19,934		$	20,021		$	19,652


Additional Information
Total modified loans	$	2,260		$	2,320		$	2,290		$	2,177		$	1,873

Asset Quality Ratios
Nonperforming loans to total loans		0.83	%		0.82	%		0.80	%		0.78	%		0.76	%
Nonperforming assets to total assets		0.63	%		0.63	%		0.62	%		0.62	%		0.60	%
Allowance for credit losses to nonperforming loans		172.80	%		176.21	%		175.88	%		180.49	%		185.97	%
Allowance for credit losses to total loans		1.44	%		1.44	%		1.41	%		1.41	%		1.41	%
Annualized net charge-offs (recoveries) to average loans		0.24	%		0.18	%		0.16	%		0.27	%		0.14	%

FOR MORE INFORMATION, CONTACT:
David D. Brown
(276) 326-9000

The MIL Network –

January 29, 2025

MIL-OSI: Qorvo® Announces Fiscal 2025 Third Quarter Financial Results

Source: GlobeNewswire (MIL-OSI)

GREENSBORO, N.C., Jan. 28, 2025 (GLOBE NEWSWIRE) — Qorvo^® (Nasdaq:QRVO), a leading global provider of connectivity and power solutions, today announced financial results for the Company’s fiscal 2025 third quarter ended December 28, 2024.

On a GAAP basis, revenue for Qorvo’s fiscal 2025 third quarter was $916.3 million, gross margin was 42.7%, operating income was $53.0 million, and diluted earnings per share was $0.43. On a non-GAAP basis, gross margin was 46.5%, operating income was $177.9 million, and diluted earnings per share was $1.61.

Bob Bruggeworth, president and chief executive officer of Qorvo, said, “Qorvo is executing on a broad set of strategic initiatives to expand margin, generate strong free cash flow, and increase shareholder value. During the December quarter, we continued to successfully support our largest customer, who represented approximately 50% of sales. Within our Android 5G product portfolio, we are narrowing our focus to the higher-value flagship and premium tiers, where customers value Qorvo’s differentiated products. In HPA, we had record Defense & Aerospace quarterly revenue and expect continued strength in the March quarter. As we continue to execute on our growth and diversification strategy, we expect HPA and CSG to deliver double-digit growth in fiscal 2025 and next fiscal year.”

Financial Commentary and Outlook

Grant Brown, chief financial officer of Qorvo, said, “Qorvo exceeded the midpoint of our December quarter non-GAAP guidance in revenue, gross margin, and EPS. During the quarter, we took proactive steps to change how we support our Android business. These actions will reduce operating expense and are expected to benefit gross margin in our fiscal 2026. Subsequent to the quarter, we divested our silicon carbide business. These actions, in aggregate, are expected to support a high-40%’s gross margin in seasonally strong quarters of fiscal 2026 and additional gross margin improvement in fiscal 2027.”

Qorvo’s current outlook for the March 2025 quarter is:

Quarterly revenue of approximately $850 million, plus or minus $25 million¹
Non-GAAP gross margin between 43% and 44%
Non-GAAP diluted earnings per share between $0.90 and $1.10

_{¹ Includes immaterial silicon carbide revenue, versus silicon carbide revenue of approximately $9 million in the December 2024 quarter}

See “Forward-looking non-GAAP financial measures” below. Qorvo’s actual quarterly results may differ from these expectations and projections, and such differences may be material.

Selected Financial Information

The following tables set forth selected GAAP and non-GAAP financial information for Qorvo for the periods indicated. See the more detailed financial information for Qorvo, including reconciliations of GAAP and non-GAAP financial information, attached.

SELECTED GAAP RESULTS
(In millions, except for percentages and EPS)
(Unaudited)

	Q3 Fiscal 2025			Q2 Fiscal 2025			Q3 Fiscal 2024			Sequential Change			Year-over-Year Change
Revenue	$	916.3		$	1,046.5		$	1,073.9		$	(130.2	)	$	(157.6	)
Gross profit	$	391.4		$	445.3		$	387.9		$	(53.9	)	$	3.5
Gross margin		42.7	%		42.6	%		36.1	%	0.1 ppt			6.6 ppt
Operating expenses	$	338.4		$	435.6		$	429.4		$	(97.2	)	$	(91.0	)
Operating income (loss)	$	53.0		$	9.7		$	(41.6	)	$	43.3		$	94.6
Net income (loss)	$	41.3		$	(17.4	)	$	(126.9	)	$	58.7		$	168.2
Weighted-average diluted shares		95.0			94.9			97.2			0.1			(2.2	)
Diluted EPS (loss per share)	$	0.43		$	(0.18	)	$	(1.31	)	$	0.61		$	1.74


SELECTED NON-GAAP RESULTS⁽¹⁾
(In millions, except for percentages and EPS)
(Unaudited)

	Q3 Fiscal 2025			Q2 Fiscal 2025			Q3 Fiscal 2024			Sequential Change			Year-over-Year Change
Revenue	$	916.3		$	1,046.5		$	1,073.9		$	(130.2	)	$	(157.6	)
Gross profit	$	426.3		$	492.0		$	470.5		$	(65.7	)	$	(44.2	)
Gross margin		46.5	%		47.0	%		43.8	%	(0.5) ppt			2.7 ppt
Operating expenses	$	248.4		$	279.8		$	234.0		$	(31.4	)	$	14.4
Operating income	$	177.9		$	212.2		$	236.5		$	(34.3	)	$	(58.6	)
Net income	$	152.8		$	179.8		$	205.9		$	(27.0	)	$	(53.1	)
Weighted-average diluted shares		95.0			95.8			97.8			(0.8	)		(2.8	)
Diluted EPS	$	1.61		$	1.88		$	2.10		$	(0.27	)	$	(0.49	)

^{(1) Adjusted for stock-based compensation expense, amortization of intangible assets, restructuring-related charges, acquisition and integration-related costs, goodwill and other asset impairments, net adjustments related to a terminated capacity reservation agreement, gain or loss on assets, other expense or income, gain or loss on investments, and an adjustment of income taxes.}

SELECTED GAAP RESULTS BY OPERATING SEGMENT
(In millions, except percentages)
(Unaudited)
	Q3 Fiscal 2025			Q2 Fiscal 2025			Q3 Fiscal 2024			Sequential Change		Year-over-Year Change
Revenue
HPA	$	171.7		$	148.3		$	118.9		15.8	%	44.4	%
CSG		109.5			146.8			108.9		(25.4	)%	0.6	%
ACG		635.1			751.4			846.1		(15.5	)%	(24.9	)%
Total revenue	$	916.3		$	1,046.5		$	1,073.9		(12.4	)%	(14.7	)%
Operating income (loss)
HPA	$	32.6		$	13.1		$	1.6		148.9	%	1,937.5	%
CSG		(11.7	)		(9.0	)		(25.6	)	(30.0	)%	54.3	%
ACG		161.2			215.1			263.8		(25.1	)%	(38.9	)%
All other⁽¹⁾		(129.1	)		(209.5	)		(281.4	)	38.4	%	54.1	%
Total operating income (loss)	$	53.0		$	9.7		$	(41.6	)	446.4	%	227.4	%
Operating income (loss) as a % of revenue
HPA		19.0	%		8.8	%		1.3	%	10.2 ppt		17.7 ppt
CSG		(10.7	)		(6.1	)		(23.5	)	(4.6) ppt		12.8 ppt
ACG		25.4			28.6			31.2		(3.2) ppt		(5.8) ppt
Total operating income (loss) as a % of revenue		5.8	%		0.9	%	(3.9		)%	4.9 ppt		9.7 ppt

^{(1) Includes stock-based compensation expense, amortization of intangible assets, restructuring-related charges, acquisition and integration-related costs, goodwill and other asset impairments, net adjustments related to a terminated capacity reservation agreement, gain or loss on assets, other expense or income, costs associated with upgrading certain of the Company’s core business systems and other miscellaneous corporate overhead expenses.}

Non-GAAP Financial Measures

In addition to disclosing financial results calculated in accordance with United States (U.S.) generally accepted accounting principles (GAAP), this earnings release contains some or all of the following non-GAAP financial measures: (i) non-GAAP gross profit and gross margin, (ii) non-GAAP operating expenses, operating income and operating margin, (iii) non-GAAP net income, (iv) non-GAAP net income per diluted share, (v) free cash flow, (vi) EBITDA, (vii) non-GAAP return on invested capital (ROIC), and (viii) net debt or positive net cash. Each of these non-GAAP financial measures is either adjusted from GAAP results to exclude certain expenses or derived from multiple GAAP measures, which are outlined in the “Reconciliation of GAAP to Non-GAAP Financial Measures” tables, attached, and the “Additional Selected Non-GAAP Financial Measures and Reconciliations” tables, attached.

In managing Qorvo’s business on a consolidated basis, management develops an annual operating plan, which is approved by our Board of Directors, using non-GAAP financial measures. In developing and monitoring performance against this plan, management considers the actual or potential impacts on these non-GAAP financial measures from actions taken to reduce costs with the goal of increasing gross margin and operating margin. In addition, management relies upon these non-GAAP financial measures to assess whether research and development efforts are at an appropriate level, and when making decisions about product spending, administrative budgets, and other operating expenses. Also, we believe that non-GAAP financial measures provide useful supplemental information to investors and enable investors to analyze the results of operations in the same way as management. We have chosen to provide this supplemental information to enable investors to perform additional comparisons of our operating results, to assess our liquidity and capital position and to analyze financial performance excluding the effect of expenses unrelated to operations, and stock-based compensation expense, which may obscure trends in Qorvo’s underlying performance.

We believe that these non-GAAP financial measures offer an additional view of Qorvo’s operations that, when coupled with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of Qorvo’s results of operations and the factors and trends affecting Qorvo’s business. However, these non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

Our rationale for using these non-GAAP financial measures, as well as their impact on the presentation of Qorvo’s operations, are outlined below:

Non-GAAP gross profit and gross margin. Non-GAAP gross profit and gross margin exclude amortization of intangible assets, stock-based compensation expense, restructuring-related charges, acquisition and integration-related costs, and certain other expense (income). We believe that exclusion of these costs in presenting non-GAAP gross profit and gross margin facilitates a useful evaluation of our historical performance and projected costs and the potential for realizing cost efficiencies.

We view amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company’s research and development efforts, trade names, and customer relationships, as items arising from pre-acquisition activities, determined at the time of an acquisition, rather than ongoing costs of operating Qorvo’s business. While these intangible assets are continually evaluated for impairment, amortization of the cost of purchased intangible assets is a static expense, which is not typically affected by operations during any particular period. Although we exclude the amortization of purchased intangible assets from these non-GAAP financial measures, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase price accounting and contribute to revenue generation.

We believe that presentation of non-GAAP gross profit and gross margin and other non-GAAP financial measures that exclude the impact of stock-based compensation expense assists management and investors in evaluating the period-over-period performance of Qorvo’s ongoing operations because (i) the expenses are non-cash in nature, and (ii) although the size of the grants is within our control, the amount of expense varies depending on factors such as short-term fluctuations in stock price volatility and prevailing interest rates, which can be unrelated to the operational performance of Qorvo during the period in which the expense is incurred and generally are outside the control of management. Moreover, we believe that the exclusion of stock-based compensation expense in presenting non-GAAP gross profit and gross margin and other non-GAAP financial measures is useful to investors to understand the impact of the expensing of stock-based compensation to Qorvo’s gross profit and gross margins and other financial measures in comparison to prior periods. We also believe that the adjustments to profit and margin related to restructuring-related charges, and acquisition and integration-related costs do not constitute part of Qorvo’s ongoing operations and therefore the exclusion of these items provides management and investors with better visibility into the actual costs required to generate revenues over time and facilitates a useful evaluation of our historical and projected performance. We believe disclosure of non-GAAP gross profit and gross margin has economic substance because the excluded expenses do not represent continuing cash expenditures and, as described above, we have little control over the timing and amount of the expenses in question.

Non-GAAP gross profit and gross margin also exclude net adjustments related to a terminated capacity reservation agreement. In October 2023, a long-term capacity reservation agreement with a foundry supplier was amended. Pursuant to the amendment, Qorvo is no longer obligated to order silicon wafers from the foundry supplier and the agreement was terminated effective December 31, 2023. Included in the net adjustments to our cost of goods sold for the third quarter of fiscal 2024 is a contract termination fee which we paid during the fourth quarter of fiscal 2024. We believe these net adjustments are not reflective of the performance of our ongoing business.

Non-GAAP operating expenses, operating income and operating margin. Non-GAAP operating expenses, operating income and operating margin exclude stock-based compensation expense, amortization of intangible assets, acquisition and integration-related costs, goodwill and other asset impairments, restructuring-related charges, net adjustments related to a terminated capacity reservation agreement, (gain) loss on assets and certain other expense (income). We believe that presentation of a measure of operating expenses, operating income and operating margin that excludes amortization of intangible assets and stock-based compensation expense is useful to both management and investors for the same reasons as described above with respect to our use of non-GAAP gross profit and gross margin. We believe that acquisition and integration-related costs, goodwill and other asset impairments, restructuring-related charges, net adjustments related to a terminated capacity reservation agreement, (gain) loss on assets and certain other expense (income) do not constitute part of Qorvo’s ongoing operations and therefore, the exclusion of these costs provides management and investors with better visibility into the actual costs required to generate revenues over time and facilitates a useful evaluation of our historical and projected performance. We believe disclosure of non-GAAP operating expenses, operating income and operating margin has economic substance because the excluded expenses are either unrelated to ongoing operations or do not represent current cash expenditures.

Non-GAAP net income and non-GAAP net income per diluted share. Non-GAAP net income and non-GAAP net income per diluted share exclude the effects of stock-based compensation expense, amortization of intangible assets, acquisition and integration-related costs, goodwill and other asset impairments, restructuring-related charges, net adjustments related to a terminated capacity reservation agreement, (gain) loss on assets, certain other expense (income), gain or loss on investments, and also reflect an adjustment of income taxes. The income tax adjustment primarily represents the use of research and development tax credit carryforwards, deferred tax expense (benefit) items not affecting taxes payable, adjustments related to the deemed and actual repatriation of historical foreign earnings, non-cash expense (benefit) related to uncertain tax positions and other items unrelated to the current fiscal year or that are not indicative of our ongoing business operations. We believe that presentation of measures of net income and net income per diluted share that exclude these items is useful to both management and investors for the reasons described above with respect to non-GAAP gross profit and gross margin and non-GAAP operating expenses, operating income and operating margin. We believe disclosure of non-GAAP net income and non-GAAP net income per diluted share has economic substance because the excluded expenses are either unrelated to ongoing operations or do not represent current cash expenditures.

Free cash flow. Qorvo defines free cash flow as net cash provided by operating activities during the period minus property and equipment expenditures made during the period, and free cash flow margin is calculated as free cash flow as a percentage of revenue. We use free cash flow as a supplemental financial measure in our evaluation of liquidity and financial strength. Management believes that this measure is useful as an indicator of our ability to service our debt, meet other payment obligations and make strategic investments. Free cash flow should be considered in addition to, rather than as a substitute for, net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. Additionally, our definition of free cash flow is limited, in that it does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our entire statement of cash flows.

EBITDA. Qorvo adjusts GAAP net income for interest expense, interest income, income tax expense (benefit), depreciation and intangible amortization expense, stock-based compensation and other charges that are not representative of Qorvo’s ongoing operations (including goodwill and other asset impairments, investment activity, acquisition-related costs and restructuring-related costs and certain net adjustments related to a terminated capacity reservation agreement) when presenting EBITDA. Management believes that this measure is useful to evaluate our ongoing operations and as a general indicator of our operating cash flow (in conjunction with a cash flow statement which also includes among other items, changes in working capital and the effect of non-cash charges).

Non-GAAP ROIC. Return on invested capital (ROIC) is a non-GAAP financial measure that management believes provides useful supplemental information for management and the investor by measuring the effectiveness of our operations’ use of invested capital to generate profits. We use ROIC to track how much value we are creating for our shareholders. Non-GAAP ROIC is calculated by dividing annualized non-GAAP operating income, net of an adjustment for income taxes (as described above), by average invested capital. Average invested capital is calculated by subtracting the average of the beginning balance and the ending balance of equity plus net debt, less certain goodwill.

Net debt or positive net cash. Net debt or positive net cash is defined as unrestricted cash, cash equivalents and short-term investments minus any borrowings under our credit facility and the principal balance of our senior unsecured notes. Management believes that net debt or positive net cash provides useful information regarding the level of Qorvo’s indebtedness by reflecting cash and investments that could be used to repay debt.

Inventory days on hand. Inventory days on hand is defined as (a) average net inventory for the period, divided by (b) the result of non-GAAP cost of goods sold for the period divided by the number of days in the period.

Forward-looking non-GAAP financial measures. Our earnings release contains forward-looking free cash flow, gross margin, income tax rate and diluted earnings per share. We provide these non-GAAP measures to investors on a prospective basis for the same reasons (set forth above) that we provide them to investors on a historical basis. We are unable to provide a reconciliation of the forward-looking non-GAAP financial measures to the most directly comparable forward-looking GAAP financial measures without unreasonable effort due to variability and difficulty in making accurate projections for items that would be required to be included in the GAAP measures, such as stock-based compensation, acquisition and integration-related costs, restructuring-related charges, gain or loss on assets, goodwill and other asset impairments, gain or loss on investments and the provision for income taxes, which could have a potentially significant impact on our future GAAP results.

Limitations of non-GAAP financial measures. The primary material limitations associated with the use of non-GAAP financial measures as an analytical tool compared to the most directly comparable GAAP financial measures are these non-GAAP financial measures (i) may not be comparable to similarly titled measures used by other companies in our industry, and (ii) exclude financial information that some may consider important in evaluating our performance, thus limiting their usefulness as a comparative tool. We compensate for these limitations by providing full disclosure of the differences between these non-GAAP financial measures and the corresponding GAAP financial measures, including a reconciliation of the non-GAAP financial measures to the corresponding GAAP financial measures, to enable investors to perform their own analysis of our gross profit and gross margin, operating expenses, operating income, net income, net income per diluted share and net cash provided by operating activities. We further compensate for the limitations of our use of non-GAAP financial measures by presenting the corresponding GAAP measures more prominently.

Qorvo will conduct a conference call at 4:30 p.m. ET today to discuss today’s press release. The conference call will be broadcast live over the Internet and can be accessed by any interested party at the following URL: https://ir.qorvo.com (under “Events & Presentations”). A telephone playback of the conference call will be available approximately two hours after the call’s completion and can be accessed by dialing 1-412-317-0088 and using the passcode 8143934. The playback will be available through the close of business February 4, 2025.

About Qorvo

Qorvo (Nasdaq:QRVO) supplies innovative semiconductor solutions that make a better world possible. We combine product and technology leadership, systems-level expertise and global manufacturing scale to quickly solve our customers’ most complex technical challenges. Qorvo serves diverse high-growth segments of large global markets, including automotive, consumer, defense & aerospace, industrial & enterprise, infrastructure and mobile. Visit www.qorvo.com to learn how our diverse and innovative team is helping connect, protect and power our planet.

Qorvo is a registered trademark of Qorvo, Inc. in the U.S. and in other countries. All other trademarks are the property of their respective owners.

This press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objectives, representations and contentions, and are not historical facts and typically are identified by terms such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “forecast,” “predict,” “potential,” “continue” and similar words, although some forward-looking statements are expressed differently. You should be aware that the forward-looking statements included herein represent management’s current judgment and expectations as of the date the statement is first made, but our actual results, events and performance could differ materially from those expressed or implied by forward-looking statements. We caution you not to place undue reliance upon any such forward-looking statements. We do not intend to update any of these forward-looking statements or publicly announce the results of any revisions to these forward-looking statements, other than as is required under U.S. federal securities laws. Our business is subject to numerous risks and uncertainties, including those relating to fluctuations in our operating results on a quarterly and annual basis; our substantial dependence on developing new products and achieving design wins; our dependence on several large customers for a substantial portion of our revenue; a loss of revenue if defense and aerospace contracts are canceled or delayed; our dependence on third parties; risks related to sales through distributors; risks associated with the operation of our manufacturing facilities; business disruptions; poor manufacturing yields; increased inventory risks and costs, due to timing of customers’ forecasts; our inability to effectively manage or maintain relationships with chipset suppliers; our ability to continue to innovate in a very competitive industry; underutilization of manufacturing facilities; unfavorable changes in interest rates, pricing of certain precious metals, utility rates and foreign currency exchange rates; our acquisitions, divestitures and other strategic investments failing to achieve financial or strategic objectives; our ability to attract, retain and motivate key employees; warranty claims, product recalls and product liability; changes in our effective tax rate; enactment of international or domestic tax legislation, or changes in regulatory guidance; changes in the favorable tax status of certain of our subsidiaries; risks associated with social, environmental, health and safety regulations, and climate change; risks from international sales and operations; economic regulation in China; changes in government trade policies, including imposition of tariffs and export restrictions; we may not be able to generate sufficient cash to service all of our debt; restrictions imposed by the agreements governing our debt; our reliance on our intellectual property portfolio; claims of infringement of third-party intellectual property rights; security breaches, failed system upgrades or regular maintenance and other similar disruptions to our IT systems; theft, loss or misuse of personal data by or about our employees, customers or third parties; provisions in our governing documents and Delaware law may discourage takeovers and business combinations that our stockholders might consider to be in their best interests; and volatility in the price of our common stock. These and other risks and uncertainties, which are described in more detail under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 30, 2024, and Qorvo’s subsequent reports and statements that we file with the SEC, could cause actual results and developments to be materially different from those expressed or implied by any of these forward-looking statements.

# # #

Financial Tables to Follow

QORVO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)

	Three Months Ended						Nine Months Ended
	December 28, 2024			December 30, 2023			December 28, 2024			December 30, 2023
Revenue	$	916,317		$	1,073,861		$	2,849,497		$	2,828,518

Costs and expenses:
Cost of goods sold		524,901			685,983			1,680,471			1,721,880
Research and development		179,126			164,329			567,778			502,366
Selling, general and administrative		90,360			86,914			313,043			296,033
Other operating expense		68,905			178,204			220,899			246,516
Total costs and expenses		863,292			1,115,430			2,782,191			2,766,795

Operating income (loss)		53,025			(41,569	)		67,306			61,723
Interest expense		(18,655	)		(17,581	)		(58,343	)		(51,963	)
Other income, net		14,526			15,359			41,713			34,286

Income (loss) before income taxes		48,896			(43,791	)		50,676			44,046
Income tax expense		(7,625	)		(83,147	)		(26,426	)		(117,103	)
Net income (loss)	$	41,271		$	(126,938	)	$	24,250		$	(73,057	)

Net income (loss) per share:
Basic	$	0.44		$	(1.31	)	$	0.26		$	(0.75	)
Diluted	$	0.43		$	(1.31	)	$	0.25		$	(0.75	)

Weighted-average shares of common stock outstanding:
Basic		94,341			97,152			94,942			97,905
Diluted		95,031			97,152			95,808			97,905

QORVO, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In thousands, except per share data) (Unaudited)

	Three Months Ended
	December 28, 2024			September 28, 2024			December 30, 2023

GAAP operating income (loss)	$	53,025		$	9,675		$	(41,569	)
Stock-based compensation expense		28,384			38,181			21,755
Amortization of intangible assets		26,085			29,482			29,787
Restructuring-related charges		68,072			34,396			6,075
Acquisition and integration-related costs		1,382			1,211			2,529
Goodwill impairment		—			96,458			173,414
Net adjustments related to a terminated capacity reservation agreement		(1,253	)		885			51,864
Other expense (income)		2,216			1,926			(7,333	)
Non-GAAP operating income	$	177,911		$	212,214		$	236,522

GAAP net income (loss)	$	41,271		$	(17,435	)	$	(126,938	)
Stock-based compensation expense		28,384			38,181			21,755
Amortization of intangible assets		26,085			29,482			29,787
Restructuring-related charges		68,072			34,396			6,075
Acquisition and integration-related costs		1,382			1,211			2,529
Goodwill impairment		—			96,458			173,414
Net adjustments related to a terminated capacity reservation agreement		(1,253	)		885			51,864
Other expense (income)		600			(506	)		(12,252	)
(Gain) loss on investments		(1,721	)		780			464
Adjustment of income taxes		(10,067	)		(3,611	)		59,161
Non-GAAP net income	$	152,753		$	179,841		$	205,859

GAAP weighted-average outstanding diluted shares		95,031			94,886			97,152
Dilutive stock-based awards		—			867			666
Non-GAAP weighted-average outstanding diluted shares		95,031			95,753			97,818

Non-GAAP net income per share, diluted	$	1.61		$	1.88		$	2.10

QORVO, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited)

	Three Months Ended
(in thousands, except percentages)	December 28, 2024					September 28, 2024					December 30, 2023
GAAP gross profit/margin	$	391,416		42.7	%	$	445,306		42.6	%	$	387,878		36.1	%
Stock-based compensation expense		5,742		0.6			6,047		0.6			5,575		0.5
Amortization of intangible assets		23,462		2.6			25,523		2.4			25,457		2.4
Restructuring-related charges		6,931		0.7			15,414		1.4			(250	)	—
Acquisition and integration-related costs		1		—			636		0.1			1		—
Net adjustments related to a terminated capacity reservation agreement		(1,253	)	(0.1	)		(885	)	(0.1	)		51,864		4.8
Non-GAAP gross profit/margin	$	426,299		46.5	%	$	492,041		47.0	%	$	470,525		43.8	%

	Three Months Ended
Non-GAAP Operating Income	December 28, 2024
(as a percentage of revenue)

GAAP operating income	5.8	%
Stock-based compensation expense	3.1
Amortization of intangible assets	2.8
Restructuring-related charges	7.4
Acquisition and integration-related costs	0.2
Net adjustments related to a terminated capacity reservation agreement	(0.1	)
Other expense	0.2
Non-GAAP operating income	19.4	%

	Three Months Ended
Free Cash Flow⁽¹⁾	December 28, 2024
(in millions)

Net cash provided by operating activities	$	214.1
Purchases of property and equipment		(37.8	)
Free cash flow	$	176.3

^{(1) Free Cash Flow is calculated as net cash provided by operating activities minus property and equipment expenditures.}

QORVO, INC. AND SUBSIDIARIES ADDITIONAL SELECTED NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (In thousands) (Unaudited)

	Three Months Ended
	December 28, 2024		September 28, 2024		December 30, 2023
GAAP research and development expense	$	179,126	$	201,050	$	164,329
Less:
Stock-based compensation expense		13,650		13,468		11,830
Acquisition and integration-related costs		1		2		2
Non-GAAP research and development expense	$	165,475	$	187,580	$	152,497

	Three Months Ended
	December 28, 2024		September 28, 2024		December 30, 2023
GAAP selling, general and administrative expense	$	90,360	$	107,760	$	86,914
Less:
Stock-based compensation expense		8,985		18,488		4,336
Amortization of intangible assets		2,623		3,959		4,330
Acquisition and integration-related costs		—		1		—
Non-GAAP selling, general and administrative expense	$	78,752	$	85,312	$	78,248

	Three Months Ended
	December 28, 2024		September 28, 2024		December 30, 2023
GAAP other operating expense	$	68,905	$	126,821	$	178,204
Less:
Stock-based compensation expense		7		178		14
Restructuring-related charges		61,141		18,982		6,325
Acquisition and integration-related costs		1,380		572		2,526
Goodwill impairment		—		96,458		173,414
Other expense (income)		2,216		3,696		(7,333	)
Non-GAAP other operating expense	$	4,161	$	6,935	$	3,258

	Three Months Ended
	December 28, 2024		September 28, 2024		December 30, 2023
GAAP total operating expense	$	338,391	$	435,631	$	429,447
Less:
Stock-based compensation expense		22,642		32,134		16,180
Amortization of intangible assets		2,623		3,959		4,330
Restructuring-related charges		61,141		18,982		6,325
Acquisition and integration-related costs		1,381		575		2,528
Goodwill impairment		—		96,458		173,414
Other expense (income)		2,216		3,696		(7,333	)
Non-GAAP total operating expense	$	248,388	$	279,827	$	234,003

QORVO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)

	December 28, 2024		March 30, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	769,432	$	1,029,258
Accounts receivable, net		427,863		412,960
Inventories		656,216		710,555
Other current assets		126,917		133,983
Assets of disposal group held for sale		116,435		159,278
Total current assets		2,096,863		2,446,034

Property and equipment, net		820,874		870,982
Goodwill		2,437,234		2,534,601
Intangible assets, net		332,338		509,383
Long-term investments		25,692		23,252
Other non-current assets		250,095		170,383
Total assets	$	5,963,096	$	6,554,635

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	551,676	$	589,760
Current portion of long-term debt		—		438,740
Other current liabilities		227,110		113,215
Liabilities of disposal group held for sale		29,075		88,372
Total current liabilities		807,861		1,230,087

Long-term debt		1,549,230		1,549,272
Other long-term liabilities		225,572		218,904
Total liabilities		2,582,663		2,998,263

Stockholders’ equity		3,380,433		3,556,372
Total liabilities and stockholders’ equity	$	5,963,096	$	6,554,635

At Qorvo^®
Doug DeLieto
VP, Investor Relations
1.336.678.7968

The MIL Network –

January 29, 2025

MIL-OSI: Solana Based Meme Coin Launchpad Solana.Pattie.Meme Goes Live

Source: GlobeNewswire (MIL-OSI)

Birmingham, UK, Jan. 28, 2025 (GLOBE NEWSWIRE) — Pattie.Meme the BSC based meme Launchpad is pleased to announce the Solana Based Launchpad was added and it goes live today at 1:00 pm UTC. The highly anticipated meme coin website is set to democratise the way people can launch, use, engage with and trade meme coins, leveraging off the speed and robustness of Solana, the fastest and most secure blockchain currently in existence.

Meme coins have become increasingly popular for users to design their own pieces of digital scarcity, allowing users to own and trade their tokens just as you would with physical assets such as sticker trading cards.

Solana.Pattie.Meme has been built to be the ultimate destination for meme coin creators and enthusiasts, with security at the heart of the platform. Not only is it seamless for anyone to launch their own digital asset, but user tokens are also protected with the aim of creating longer-term value.

Solana.Pattie.Meme is underpinned by the PATTIE cryptocurrency and has been built specifically to eliminate the risk of developers launching tokens that are subject to “rug pulls”. This is achieved by ensuring newly launched token liquidity is locked and burned and automatically deployed onto Raydium once a market capitalisation of $100k , $17k of liquidity is then deposited in Raydium and burned. In the near future Pattieswap will launch soon their own Solana Based Swap.

Revenue generated from fees will be used to buy back and burn the native PATTIE token, making it a deflationary asset that is designed to further enhance the value of the ecosystem.

About Pattie.Meme Solana

Solana.Pattie.Meme is at the forefront of meme coin generation allowing users to launch their very own token for as little as $1.25 (0.0055 SOL) Whether it is a meme coin based on a frog, mouse or anything else, Solana.Pattie.Meme facilitates the creation of assets with user protection in mind. Pattie.Meme brings security to people who want to partake in the rapidly growing digital economy.

SOL: https://solana.pattie.meme
BSC: https://pattie.meme
Telegram: https://t.me/pattiememe

Disclaimer: The information provided in this press release is not a solicitation for investment, nor is it intended as investment advice, financial advice, or trading advice. It is strongly recommended you practice due diligence, including consultation with a professional financial advisor, before investing in or trading cryptocurrency and securities.

The MIL Network –

January 29, 2025

MIL-OSI USA: Fischer Joins “Mornings with Maria” to Discuss Delivering for Americans

US Senate News:

Source: United States Senator for Nebraska Deb Fischer

U.S. Senator Deb Fischer (R-Neb.) joined Maria Bartiromo on FOX Business today to discuss how Republicans will deliver for the American people. Senator Fischer condemned the Democrats for stalling President Trump’s Cabinet nominees, risking America’s national security, and playing political games instead of serving their constituents.

Senator Fischer also highlighted her plans to continue working for the American people during reconciliation by making her Paid Family Medical Leave tax credit permanent.

Click the image above to watch a video of Senator Fischer’s remarks

Click here to download audio

Click here to download video

Republicans Are Here To Work:

Maria Bartiromo: You will be part of Howard Lutnick’s confirmation hearing. Tell us about your expectations for Howard Lutnick and the rest of these nominees. Do you think they’ll all get past the finish line?

Senator Fischer: It is so very important that we do get these nominees confirmed, and that we do it quickly. Of course, as you’re well aware, Maria, the Democrats are slow walking everything. Republicans have shown that we will stay late. We will stay over the weekends in order to get this done.

On Democrats Stalling President Trump’s Cabinet Nominees:

Maria Bartiromo: The President needs his team on the ground. Do you feel like your colleagues on the left have been stalling these hearings?

Senator Fischer: Oh, most definitely. You know, you especially saw it on Armed Services Committee where the Democrat members wanted to have another round of questions. They wanted to postpone the vote. They just wanted to drag it out.

Let’s remember that, I think it was in the first 12 days of President Obama’s administration. He had 12 or 15 nominees already confirmed. We need to do that for national security reasons, for reasons that the American people are tired of waiting. You know, we want to see things happen, we need to move ahead. But we’ve got to do our job, we have to be thorough in it, and I can guarantee that we are.

On Democrats Playing Political Games:

Maria Bartiromo: Yeah, I mean, more than that, people are sick and tired of the political tricks. We’ve been watching political games since President Trump walked down that escalator 10 years ago. From the Russia collusion lie, to hiding things about the Biden family, to now this obstruction of justice…

Senator Fischer: It’s just nonsense. We heard J.D. Vance answer a question this weekend, “You know, I don’t really care Margaret.” That is a calling that I hear all across Nebraska and all across America. You know, I don’t really care anymore. We have work to do. We need to get it done. Stop with the tricks, stop with all this stalling, and let’s get to work for the American people, on energy, on inflation, on reconciliation. There is so much to do.

On Working for the American People During Reconciliation:

Maria Bartiromo: House Republicans are set to meet with VP Vance today at the Trump Doral Resort in Florida, as part of their annual conference. Committee chairs will also hold reconciliation meetings on how to pass President Trump’s agenda. Trump joined lawmakers for dinner last night with a speech on his priorities. Here’s what he said. Watch:

President Trump: In the coming weeks, I’m looking forward to working with Congress on a reconciliation bill that financially takes care of our plans to totally and permanently restore the sovereign borders of the United States once and for all. I’m also eager to get to work with Congress on the largest package of tax cuts and reforms in American history. We got to get that done, and we don’t want to get hung up on the budget process. We just want whether it’s one bill, two bills, I don’t care.

Maria Bartiromo: Senator, how do you see this playing out?

Senator Fischer: Well, I agree with the President on his goals here, and I agree with him when he says whether it’s one bill or two bills, you know, I don’t care. We need to make sure that we’re going to deliver for the American people. What I’m worried about are American families. You know, they have to choose right now between making ends meet and taking care of their families.

My top priority in reconciliation is my Paid Family Medical Leave tax credit. That was included in the 2017 Tax Reform, and I want to make that permanent in this reconciliation package. So we are working hard on that with a number of my colleagues. In the Senate, we are working together, as you know, in reconciliation, we just need to keep our guys together. And we’re trying to do that through a number of committees to make sure that we protect this country, that we protect our borders. That we can provide for families and meet their needs, so that they can have a better life for themselves and their children. These are promises made, and they’re going to be promises kept.

On Putting America First:

Maria Bartiromo: I’m glad that you’re focused on families, whether it be their economic progress or their security. President Trump declared a national energy emergency in an effort to increase U.S. oil production. Gas executives told the New York Times they don’t plan on doing so unless prices rise significantly. This is another potentially economic yet also national security issue. And I spoke with your colleague, the Leader of the U.S. Senate, John Thune, on Sunday, and we talked about military spending being lifted. Here’s what he said. Watch: “What are you looking for in terms of specifics in bulking up America’s defense?

Senate Majority Leader Thune: Well, obviously our Navy, and if you look at the number of ships we have relative to our adversaries, particularly China, that’s something the President is interested in, an American Iron Dome concept. But, frankly, the thing we’ve got to do Maria is we’ve got to increase the top line. We have not, we have underfunded and in the Biden budget, there wasn’t a single Biden budget that kept up with the rate of inflation when it comes to the military, and so we’ve got some making up to do. I think there’s a very compelling argument on Panama, very compelling argument on Greenland and optimism in America that we haven’t seen in a long time. I think there’s been a real this has been a sluggish country, a country that’s been bogged down under the weight of government, regulation and red tape and taxation.

Maria Bartiromo: Senator, I’ve got the Iron Dome for America Executive Order in front of me, and this is one of the ways that President Trump says he will be protecting America from a national security standpoint. What are you considering in terms of defense spending? And tell us where the priorities are in this plan.

Senator Fischer: Right. You know, on Armed Services Committee the last three years that President Biden sent us his top line for his budget, we increased that in the Senate Armed Services Committee, because we are well aware of the threats that face this nation. I happen to chair the Subcommittee on Strategic Forces. So not only do we have jurisdiction over STRATCOM and Space Command, but we also have jurisdiction over our nuclear triad to make sure that we have that strong deterrence policy.

You’ve heard President Trump and the Vice President talk about deterrence that is so important to keep this country safe. We also have jurisdiction on strategic forces over missile defense, and we have been putting funding into missile defense in this country since I have been here and on that committee for now into my third term. So I am very, very pleased to hear that President Trump is prioritizing that with a focus on Iron Dome. We need to continue to look at our missile defense, the capabilities that we have, the capabilities that we need in order to defend and protect our homeland.

On Curbing Government Spending:

Maria Bartiromo: Yeah, I’m so glad to hear you talk this way. I could not agree more. Unfortunately, something has got to give. Senator, can you name one or two important offsets that you think will be significant? Interest is the single largest item in the budget behind Social Security. More than spending on defense, Medicare, and on children? Senator, what’s your most important offset to pay for all this?

Senator Fischer: You know, there’s a number of things, as you know, Maria, that all of us are looking at and being able to go through a budget. On Appropriations Committee, we’re going to be really having a strong oversight with our agencies that we have jurisdiction over and hold them accountable for programs. I think we can look, for example, on job training programs. I know a few years ago, across agencies, there were like 37 different job training programs. I am all for job training, but I think we need to figure out what the balance is. And I think that’s a private enterprise. A private business does training in conjunction with our community colleges, in conjunction with our state universities.

I mean, just simple things like that. You’re going to see a lot of things like that. And I know we’ve heard some in the past. What I want to see, though, is a return to energy dominance. That is going to bring in, it’s going to help lower prices for families in this country. I want to be able to see inflation addressed, which we will.

Maria Bartiromo: Of course.

Senator Fischer: I know, I know many are saying, well, we’ve seen the price of eggs go up. Why hasn’t it dropped yet? I’m going, it’s been a week, folks, it’s been a week. You know, we are, we are focused, and we’re getting it done.

Maria Bartiromo: Senator, we’ll be watching your work. It’s a great point, the oversight alone may actually save a lot, given the reckless spending in the past. We’ll be watching. Thank you so much. Senator Deb Fisher, joining us this morning.

Senator Fischer: Thank you.

MIL OSI USA News –

January 29, 2025

MIL-OSI Asia-Pac: India-Oman Joint Commission Meeting held; leaders focus on enhancing bilateral cooperation in trade, investment, technology, food security and renewable energy

Source: Government of India (2)

India-Oman Joint Commission Meeting held; leaders focus on enhancing bilateral cooperation in trade, investment, technology, food security and renewable energy

Union Minister of Commerce & Industry Shri Piyush Goyal concludes successful visit to Oman

Posted On: 28 JAN 2025 5:03PM by PIB Delhi

Union Minister of Commerce and Industry, Shri Piyush Goyal concluded a successful visit to the Sultanate of Oman from 27-28 January 2025.

During the visit, Shri Goyal co-chaired the 11th Session of the India-Oman Joint Commission Meeting (JCM) with H.E. Qais bin Mohammed Al Yousef, Minister of Commerce, Industry, and Investment Promotion of Sultanate of Oman. The JCM saw productive discussions on enhancing bilateral cooperation in trade, investment, technology, food security, renewable energy and other key areas. The Minister held a productive bilateral meeting with Minister Qais during which he undertook a detailed review of the bilateral trade and economic relations between India and Oman and identified concrete steps to further strengthen the mutually beneficial business ties.

The two Ministers also exchanged views on a bilateral India-Oman Comprehensive Economic Partnership Agreement (CEPA), which is under advanced stages of negotiations. Both Ministers agreed to expedite the discussions for an early signing of the CEPA which will be a new milestone in bilateral trade relations and has the potential to significantly scale-up two-way trade and investments.

On the sidelines of the visit, both sides signed the Protocol to amend the India-Oman Double Taxation Avoidance Agreement (DTAA), aligning it with international standards on cross-border taxation, simplifying tax procedures, and promoting greater cooperation in tax matters.

Minister Goyal called-on His Highness Sayyid Asa’ad bin Tarik Al Said, Deputy Prime Minister for International Relations and Cooperation Affairs and Special Representative of His Majesty on January 28, 2025. HH Sayyid Asaad had led the Omani delegation to India for the G-20 Summit in September 2023.

Shri Goyal also held bilateral meetings with H.E. Sultan bin Salem Al Habsi, Minister of Finance, and H.E. Ali bin Masoud Al Sunaidy, Chairman of the Public Authority for Special Economic Zones and Free Zones (OPAZ), to deepen economic ties.

The Minister participated in the India-Oman Joint Business Council (JBC) meeting which was hosted by the Oman Chamber of Commerce and Industry (OCCI), with support and participation of a delegation from FICCI. The JBC, which is traditionally held on the sidelines of the India-Oman JCM, provided an excellent platform for wide ranging discussions among the two business communities and provided exposure to investment opportunities and incentives of both India and Oman.

Shri Goyal met with a select group of CEOs and business leaders of Oman at a Business Roundtable hosted by the Ambassador of India at the Indian Embassy premises. This interaction provided an opportunity for the Minister to directly engage with key business leaders of Oman to apprise them of the India opportunity and seek their suggestions for bilateral cooperation.

Minister Goyal also addressed the Future Leaders Programme at the Royal Academy of Management, Oman, highlighting India’s growth story and sharing insights on leadership and its role in shaping a better world.

The Commerce Minister visited the Sultan Qaboos Grand Mosque in Muscat which is an icon of cultural and architectural heritage of Oman. He will also offer prayers at the historic Shiva Temple in old Muscat, later this evening, underscoring the deep-rooted cultural and people-to-people ties between India and Oman.

The successful visit of the Shri Goyal reinforced the strong foundations of India-Oman relations, paving the way for enhanced collaboration in trade and investment.

***

Abhisekh Dayal/Abhijith Narayanan/Asmitabha Manna

(Release ID: 2097043) Visitor Counter : 37

MIL OSI Asia Pacific News –

January 29, 2025

MIL-OSI Asia-Pac: Mahakumbh 2025: Digital Exhibition at Prayagraj highlights how Government initiatives are spreading the message ‘Unity in Diversity’

Source: Government of India

Mahakumbh 2025: Digital Exhibition at Prayagraj highlights how Government initiatives are spreading the message ‘Unity in Diversity’

The exhibition is also providing information about various Government of India schemes on Entrepreneurship

Posted On: 28 JAN 2025 3:37PM by PIB Delhi

A digital exhibition highlighting ‘Unity in Diversity’ through initiatives of Government of India put up at the Mahakumbh 2025 in Prayagraj by M/o Information and Broadcasting is drawing huge crowds.

The phrase “ऐक्यं बलं सामंजस्य” (Unity in Diversity) is being realized through initiatives by the Government of India like ‘One Nation, One Tax’, ‘One Nation, One Power Grid’, and ‘One Nation, One Ration Card’ etc. Visitors to the digital exhibition set up by the Union Ministry of Information and Broadcasting at the Triveni Marg in Mahakumbh, Prayagraj, are being informed about these initiatives that are strengthening the unity of the country. A picture conveying the message of unity also features a statue of Sardar Patel, the symbol of national unity.

With the American of Article 370 from Jammu and Kashmir, the pledge of ‘One Nation, One Constitution’ has been fulfilled. Efforts toward ‘One Nation, One Election’ and ‘One Nation, One Civil Code’ are speeding up the realization of the dream of a developed India, which is also presented in an attractive format at the exhibition.

The exhibition, based on public welfare programs, policies, and the achievements of the Government of India, emphasizes efforts to promote entrepreneurship and self-employment, which is being realized through various schemes like the MUDRA Scheme, PM Vishwakarma Yojana, PMEGP, and the Credit Guarantee Fund Scheme.

Since the exhibition began on January 13, a large number of devotees have visited, gaining information about development and heritage through audio-visual mediums. Documentaries displayed on the LED wall showcasing different government schemes are attracting visitors, with which they are also taking selfies.

*****

AD/VM

(Release ID: 2096963) Visitor Counter : 71

MIL OSI Asia Pacific News –

January 29, 2025

MIL-OSI: C&F Financial Corporation Announces Net Income for 2024

Source: GlobeNewswire (MIL-OSI)

TOANO, Va., Jan. 28, 2025 (GLOBE NEWSWIRE) — C&F Financial Corporation (the Corporation) (NASDAQ: CFFI), the holding company for C&F Bank, today reported consolidated net income of $6.0 million for the fourth quarter of 2024, compared to $5.1 million for the fourth quarter of 2023. The Corporation reported consolidated net income of $19.9 million for the year ended December 31, 2024, compared to $23.7 million for the year ended December 31, 2023. The following table presents selected financial performance highlights for the periods indicated:


	For The Quarter Ended						For the Year Ended
Consolidated Financial Highlights (unaudited)	12/31/2024			12/31/2023			12/31/2024			12/31/2023
Consolidated net income (000’s)	$	6,029		$	5,088		$	19,918		$	23,746

Earnings per share – basic and diluted	$	1.87		$	1.50		$	6.01		$	6.92

Annualized return on average equity		10.60	%		10.06	%		9.02	%		11.68	%
Annualized return on average tangible common equity¹		12.17	%		11.74	%		10.37	%		13.58	%
Annualized return on average assets		0.94	%		0.85	%		0.80	%		0.99	%

_________________
¹ For more information about these non-GAAP financial measures, which are not calculated in accordance with generally accepted accounting principles (GAAP), please see “Use of Certain Non-GAAP Financial Measures” and “Reconciliation of Certain Non-GAAP Financial Measures,” below.

“While the past year’s financial performance reflected the challenges of a dynamic interest rate environment, our fourth quarter earnings were solid, and we are optimistic of earnings momentum heading into the coming year,” commented Tom Cherry, President and Chief Executive Officer of C&F Financial Corporation. “Our net interest margin was down for 2024, however, it stabilized in the fourth quarter, and we are cautiously optimistic about margin performance in 2025. The community banking segment delivered solid loan and deposit growth across all markets. Despite facing headwinds from higher mortgage rates and a low inventory of homes for sale, the mortgage banking segment increased its loan production and net income over 2023. While higher charge-offs weighed on profitability at the consumer finance segment, we were able to achieve significant operational efficiencies during 2024. Despite obstacles and adversities that continually confront the banking industry in general, we believe C&F is well-positioned for the future.”

Key highlights for the fourth quarter and the year ended December 31, 2024 are as follows.

Community banking segment loans grew $21.5 million, or 6.0 percent annualized, and $180.0 million, or 14.1 percent, compared to September 30, 2024 and December 31, 2023, respectively;
Consumer finance segment loans decreased $10.5 million, or 8.8 percent annualized, and $1.7 million, or less than one percent, compared to September 30, 2024 and December 31, 2023, respectively;
Deposits increased $35.0 million, or 6.6 percent annualized, and $104.7 million, or 5.1 percent, compared to September 30, 2024 and December 31, 2023, respectively;
Consolidated annualized net interest margin was 4.13 percent for the fourth quarter of 2024 compared to 4.17 percent for the fourth quarter of 2023 and 4.13 percent in the third quarter of 2024. Consolidated net interest margin was 4.12 percent for the year ended December 31, 2024 compared to 4.31 percent for the year ended December 31, 2023;
The community banking segment recorded no provision for credit losses for the fourth quarter of 2024 and $75,000 for the fourth quarter of 2023, and recorded provision for credit losses of $1.7 million and $1.6 million for the years ended December 31, 2024 and 2023, respectively;
The consumer finance segment recorded provision for credit losses of $3.5 million and $2.4 million for the fourth quarters of 2024 and 2023, respectively, and recorded provision for credit losses of $11.6 million and $6.7 million for the years ended December 31, 2024 and 2023, respectively;
The consumer finance segment experienced net charge-offs at an annualized rate of 3.40 percent of average total loans for the fourth quarter of 2024, compared to 2.72 percent for the fourth quarter of 2023. Net charge-offs as a percentage of average total loans were 2.62 percent for the year ended December 31, 2024, compared to 1.99 percent for the year ended December 31, 2023; and
Mortgage banking segment loan originations increased $32.2 million, or 32.8 percent, to $130.4 million for the fourth quarter of 2024 compared to the fourth quarter of 2023 and increased $29.0 million, or 5.8 percent, to $527.8 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.

Community Banking Segment. The community banking segment reported net income of $6.4 million for the fourth quarter of 2024, compared to $5.2 million for the same period of 2023, due primarily to:

higher interest income resulting from higher average balances of loans and the effects of higher interest rates on asset yields, offset in part by lower average balances of securities;
higher other income from bank owned life insurance policies; and
lower salaries and employee benefits expense due primarily to a reduction in headcount through attrition;

partially offset by:

higher interest expense due primarily to higher rates on deposits and higher average balances of interest-bearing deposits, offset in part by lower average balances of borrowings.

The community banking segment reported net income of $20.3 million for the year ended December 31, 2024, compared to $22.9 million for the same period of 2023, due primarily to:

higher interest expense resulting from higher rates on deposits and higher average balances of interest-bearing deposits, partially offset by lower average balances of borrowings;
higher data processing and consulting costs related to investments in operational technology to improve resilience, efficiency and customer experience;
higher occupancy expense related to branch network improvements, including the relocation of a branch and the opening of a new branch; and
higher salaries and employee benefits expense, which have generally increased in line with market conditions, offset in part by a reduction in headcount through attrition;

partially offset by:

higher interest income resulting from higher average balances of loans and the effects of higher interest rates on asset yields, offset in part by lower average balances of securities;
higher wealth management services income due primarily to higher assets under management;
higher other income from bank owned life insurance policies; and
higher investment income from other equity investments.

Average loans increased $180.8 million, or 14.4 percent, for the fourth quarter of 2024 and increased $164.0 million, or 13.5 percent, for the year ended December 31, 2024, compared to the same periods in 2023, due primarily to growth in the construction, commercial real estate, and residential mortgage segments of the loan portfolio. Average deposits increased $140.2 million, or 6.9 percent, for the fourth quarter of 2024 and increased $110.8 million, or 5.5 percent, for the year ended December 31, 2024, compared to the same periods in 2023, due primarily to higher balance of time deposits, partially offset by decreases in savings and interest-bearing demand deposits and noninterest-bearing demand deposits amid increased competition for deposits and the higher interest rate environment.

Average loan yields and average costs of interest-bearing deposits were higher for the fourth quarter and the year ended December 31, 2024, compared to the same periods of 2023, due primarily to the effects of the higher interest rate environment.

The community banking segment’s nonaccrual loans were $333,000 at December 31, 2024 compared to $406,000 at December 31, 2023. The community banking segment recorded no provision for credit losses for the fourth quarter of 2024 and $1.7 million for the year ended December 31, 2024 compared to $75,000 and $1.6 million for the same periods of 2023. At December 31, 2024, the allowance for credit losses increased to $17.4 million, compared to $16.1 million at December 31, 2023. The allowance for credit losses as a percentage of total loans decreased to 1.20 percent at December 31, 2024 from 1.26 percent at December 31, 2023. The increases in provision and allowance for credit losses are due primarily to growth in the loan portfolio. Management believes that the level of the allowance for credit losses is adequate to reflect the net amount expected to be collected.

Mortgage Banking Segment. The mortgage banking segment reported net income of $87,000 and $1.1 million for the fourth quarter and year ended December 31, 2024, respectively, compared to a net loss of $103,000 and net income of $465,000 for the same periods of 2023, due primarily to:

higher gains on sales of loans and higher mortgage banking fee income due to higher volume of mortgage loan originations; and
lower occupancy expenses due to an effort to reduce overhead costs;

partially offset by:

higher variable expenses tied to mortgage loan origination volume such as commissions and bonuses, reported in salaries and employee benefits; and
lower reversal of provision for indemnifications.

The sustained elevated level of mortgage interest rates, combined with higher home prices and lower levels of inventory, led to a level of mortgage loan originations in 2024 and 2023 for the industry that is lower than recent historical averages. Mortgage loan originations for the mortgage banking segment were $130.4 million for the fourth quarter of 2024, comprised of $15.9 million refinancings and $114.5 million home purchases, compared to $98.2 million, comprised of $12.5 million refinancings and $85.7 million home purchases, for the same period in 2023. Mortgage loan originations for the mortgage banking segment were $527.8 million for the year ended December 31, 2024, comprised of $50.2 million refinancings and $477.6 million home purchases, compared to $498.8 million, comprised of $52.7 million refinancings and $446.1 million home purchases, for the same period in 2023. Mortgage loan originations in the fourth quarter of 2024 decreased $26.6 million compared to the third quarter of 2024 due in part to normal industry seasonal fluctuations. Mortgage loan segment originations include originations of loans sold to the community banking segment, at prices similar to those paid by third-party investors. These transactions are eliminated to reach consolidated totals.

During the fourth quarter and year ended December 31, 2024, the mortgage banking segment recorded a reversal of provision for indemnification losses of $85,000 and $460,000, respectively, compared to a reversal of provision for indemnification losses of $150,000 and $585,000 in the same periods of 2023. The mortgage banking segment increased reserves for indemnification losses during 2020 based on widespread forbearance on mortgage loans and economic uncertainty related to the COVID-19 pandemic. The release of indemnification reserves in 2024 and 2023 was due primarily to improvement in the mortgage banking segment’s assessment of borrower payment performance, lower volume of mortgage loan originations in recent years and other factors affecting expected losses on mortgage loans sold in the secondary market, such as time since origination. Management believes that the indemnification reserve is sufficient to absorb losses related to loans that have been sold in the secondary market.

Consumer Finance Segment. The consumer finance segment reported net income of $272,000 and $1.4 million for the fourth quarter and year ended December 31, 2024, respectively, compared to net income of $618,000 and $2.9 million for the same periods in 2023. The decreases in consumer finance segment net income were due primarily to:

higher provision for credit losses due primarily to increased net charge-offs; and
higher interest expense on variable rate borrowings from the community banking segment as a result of higher interest rates and higher average balances of borrowings;

partially offset by:

higher interest income resulting from the effects of higher interest rates on loan yields and higher average balances of loans;
lower salaries and employee benefits expense due to an effort to reduce overhead costs; and
lower loan processing and collection expenses due primarily to efficiency initiatives within the collections department.

Average loans increased $2.5 million, or one percent, for the fourth quarter of 2024 and increased $2.9 million, or one percent, for the year ended December 31, 2024, compared to the same periods in 2023. The consumer finance segment experienced net charge-offs at a rate of 2.62 percent of average total loans for the year ended December 31, 2024, compared to 1.99 percent for the year ended December 31, 2023, due primarily to an increase in the number of delinquent loans, the number of repossessions, and the average amount charged-off when a loan was uncollectable. Higher amounts charged-off per loan resulted in part from larger loan amounts, generally purchased in 2020 and 2021 when automobile values were higher, being charged-off in the current year, with the wholesale values of automobiles having declined since then. At December 31, 2024, total delinquent loans as a percentage of total loans was 3.90 percent, compared to 4.09 percent at December 31, 2023, and 3.49 percent at September 30, 2024.

The consumer finance segment, at times, offers payment deferrals as a portfolio management technique to achieve higher ultimate cash collections on select loan accounts. A significant reliance on deferrals as a means of managing collections may result in a lengthening of the loss confirmation period, which would increase expectations of credit losses inherent in the portfolio. Average amounts of payment deferrals of automobile loans on a monthly basis, which are not included in delinquent loans, were 2.11 percent and 1.80 percent of average automobile loans outstanding during the fourth quarter and year ended December 31, 2024, respectively, compared to 2.02 percent and 1.87 percent during the same periods during 2023. The allowance for credit losses was $22.7 million at December 31, 2024 and $23.6 million at December 31, 2023. The allowance for credit losses as a percentage of total loans decreased to 4.86 percent at December 31, 2024 from 5.03 percent at December 31, 2023, primarily as a result of growth in loans with stronger credit quality while balances of loans with lower credit quality declined. Management believes that the level of the allowance for credit losses is adequate to reflect the net amount expected to be collected. If loan performance deteriorates resulting in further elevated delinquencies or net charge-offs, the provision for credit losses may increase in future periods.

Liquidity. The objective of the Corporation’s liquidity management is to ensure the continuous availability of funds to satisfy the credit needs of our customers and the demands of our depositors, creditors and investors. Uninsured deposits represent an estimate of amounts above the Federal Deposit Insurance Corporation (FDIC) insurance coverage limit of $250,000. As of December 31, 2024, the Corporation’s uninsured deposits were approximately $640.2 million, or 29.5 percent of total deposits. Excluding intercompany cash holdings and municipal deposits, which are secured with pledged securities, amounts uninsured were approximately $455.2 million, or 21.0 percent of total deposits as of December 31, 2024. The Corporation’s liquid assets, which include cash and due from banks, interest-bearing deposits at other banks and nonpledged securities available for sale, were $288.1 million and borrowing availability was $606.2 million as of December 31, 2024, which in total exceed uninsured deposits, excluding intercompany cash holdings and secured municipal deposits, by $439.1 million as of December 31, 2024.

In addition to deposits, the Corporation utilizes short-term and long-term borrowings as sources of funds. Short-term borrowings from the Federal Reserve Bank and the Federal Home loan Bank of Atlanta (FHLB) may be used to fund the Corporation’s day-to-day operations. Short-term borrowings also include securities sold under agreements to repurchase. Total borrowings increased to $122.6 million at December 31, 2024 from $109.5 million at December 31, 2023 due primarily to higher long-term borrowings from the FHLB used in part to fund loan growth.

Additional sources of liquidity available to the Corporation include cash flows from operations, loan payments and payoffs, deposit growth, maturities, calls and sales of securities and the issuance of brokered certificates of deposit.

Capital and Dividends. The Corporation declared cash dividends during the year ended December 31, 2024 totaling $1.76 per share, including a quarterly cash dividend of 44 cents per share during the fourth quarter of 2024, which was paid on January 1, 2025. These dividends represent a payout ratio of 23.5 percent of earnings per share for the fourth quarter of 2024 and 29.3 percent of earnings per share for the year ended December 31, 2024. The Board of Directors of the Corporation continually reviews the amount of cash dividends per share and the resulting dividend payout ratio in light of changes in economic conditions, current and future capital requirements, and expected future earnings.

Total consolidated equity increased $9.5 million at December 31, 2024, compared to December 31, 2023, due primarily to net income and lower unrealized losses in the market value of securities available for sale, which are recognized as a component of other comprehensive income, partially offset by share repurchases and dividends paid on the Corporation’s common stock. The Corporation’s securities available for sale are fixed income debt securities and their unrealized loss position is a result of rising market interest rates since they were purchased. The Corporation expects to recover its investments in debt securities through scheduled payments of principal and interest. Unrealized losses are not expected to affect the earnings or regulatory capital of the Corporation or C&F Bank. The accumulated other comprehensive loss related to the Corporation’s securities available for sale, net of deferred income taxes, decreased to $23.7 million at December 31, 2024 compared to $25.0 million at December 31, 2023 due primarily to fluctuations in debt security market interest rates and a decrease in the balance of securities available for sale.

As of December 31, 2024, the most recent notification from the FDIC categorized the C&F Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized under regulations applicable at December 31, 2024, C&F Bank was required to maintain minimum total risk-based, Tier 1 risk-based, CET1 risk-based and Tier 1 leverage ratios. In addition to the regulatory risk-based capital requirements, C&F Bank must maintain a capital conservation buffer of additional capital of 2.5 percent of risk-weighted assets as required by the Basel III capital rules. The Corporation and C&F Bank exceeded these ratios at December 31, 2024. For additional information, see “Capital Ratios” below. The above mentioned ratios are not impacted by unrealized losses on securities available for sale. In the event that all of these unrealized losses became realized into earnings, the Corporation and C&F Bank would both continue to exceed minimum capital requirements, including the capital conservation buffer, and be considered well capitalized.

In December 2023, the Board of Directors authorized a program, effective January 1, 2024 through December 31, 2024, to repurchase up to $10.0 million of the Corporation’s common stock (the 2024 Repurchase Program). During the fourth quarter and year ended December 31, 2024, the Corporation repurchased 11,100 shares, or $679,000, and 160,694 shares, or $7.9 million, of its common stock under the 2024 Repurchase Program, respectively. In December 2024, the Board of Directors authorized a new program, effective January 1, 2025 through December 31, 2025, to repurchase up to $5.0 million of the Corporation’s common stock through December 31, 2025 (the 2025 Repurchase Program).

About C&F Financial Corporation. The Corporation’s common stock is listed for trading on The Nasdaq Stock Market under the symbol CFFI. The common stock closed at a price of $75.40 per share on January 27, 2025. At December 31, 2024, the book value per share of the Corporation was $70.00 and the tangible book value per share was $61.86. For more information about the Corporation’s tangible book value per share, which is not calculated in accordance with GAAP, please see “Use of Certain Non-GAAP Financial Measures” and “Reconciliation of Certain Non-GAAP Financial Measures,” below.

C&F Bank operates 31 banking offices and four commercial loan offices located throughout eastern and central Virginia and offers full wealth management services through its subsidiary C&F Wealth Management, Inc. C&F Mortgage Corporation and its subsidiary C&F Select LLC provide mortgage loan origination services through offices located in Virginia and the surrounding states. C&F Finance Company provides automobile, marine and recreational vehicle loans through indirect lending programs offered primarily in the Northeastern, Midwestern and Southern United States from its headquarters in Henrico, Virginia.

Additional information regarding the Corporation’s products and services, as well as access to its filings with the Securities and Exchange Commission (SEC), are available on the Corporation’s website at http://www.cffc.com.

Use of Certain Non-GAAP Financial Measures. The accounting and reporting policies of the Corporation conform to GAAP in the United States and prevailing practices in the banking industry. However, certain non-GAAP measures are used by management to supplement the evaluation of the Corporation’s performance. These include adjusted net income, adjusted earnings per share, adjusted return on average equity, adjusted return on average assets, return on average tangible common equity (ROTCE), adjusted ROTCE, tangible book value per share, price to tangible book value ratio, and the following fully-taxable equivalent (FTE) measures: interest income on loans-FTE, interest income on securities-FTE, total interest income-FTE and net interest income-FTE.

Management believes that the use of these non-GAAP measures provides meaningful information about operating performance by enhancing comparability with other financial periods, other financial institutions, and between different sources of interest income. The non-GAAP measures used by management enhance comparability by excluding the effects of balances of intangible assets, including goodwill, that vary significantly between institutions, and tax benefits that are not consistent across different opportunities for investment. These non-GAAP financial measures should not be considered an alternative to GAAP-basis financial statements, and other bank holding companies may define or calculate these or similar measures differently. A reconciliation of the non-GAAP financial measures used by the Corporation to evaluate and measure the Corporation’s performance to the most directly comparable GAAP financial measures is presented below.

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. These forward-looking statements are based on the beliefs of the Corporation’s management, as well as assumptions made by, and information currently available to, the Corporation’s management, and reflect management’s current views with respect to certain events that could have an impact on the Corporation’s future financial performance. These statements, including without limitation statements made in Mr. Cherry’s quote and statements regarding future interest rates and conditions in the Corporation’s industries and markets, relate to expectations concerning matters that are not historical fact, may express “belief,” “intention,” “expectation,” “potential” and similar expressions, and may use the words “believe,” “expect,” “anticipate,” “estimate,” “plan,” “may,” “might,” “will,” “intend,” “target,” “should,” “could,” or similar expressions. These statements are inherently uncertain, and there can be no assurance that the underlying assumptions will prove to be accurate. Actual results could differ materially from those anticipated or implied by such statements. Forward-looking statements in this release may include, without limitation, statements regarding expected future operations and financial performance, expected trends in yields on loans, expected future recovery of investments in debt securities, future dividend payments, deposit trends, charge-offs and delinquencies, changes in cost of funds and net interest margin and items affecting net interest margin, strategic business initiatives and the anticipated effects thereof, changes in interest rates and the effects thereof on net interest income, mortgage loan originations, expectations regarding C&F Bank’s regulatory risk-based capital requirement levels, technology initiatives, our diversified business strategy, asset quality, credit quality, adequacy of allowances for credit losses and the level of future charge-offs, market interest rates and housing inventory and resulting effects in mortgage loan origination volume, sources of liquidity, adequacy of the reserve for indemnification losses related to loans sold in the secondary market, the effect of future market and industry trends, the effects of future interest rate fluctuations, cybersecurity risks, and inflation. Factors that could have a material adverse effect on the operations and future prospects of the Corporation include, but are not limited to, changes in:

interest rates, such as volatility in short-term interest rates or yields on U.S. Treasury bonds, increases in interest rates following actions by the Federal Reserve and increases or volatility in mortgage interest rates
general business conditions, as well as conditions within the financial markets
general economic conditions, including unemployment levels, inflation rates, supply chain disruptions and slowdowns in economic growth
general market conditions, including disruptions due to pandemics or significant health hazards, severe weather conditions, natural disasters, terrorist activities, financial crises, political crises, war and other military conflicts (including the ongoing military conflicts between Russia and Ukraine and in the Middle East) or other major events, or the prospect of these events
average loan yields and average costs of interest-bearing deposits
financial services industry conditions, including bank failures or concerns involving liquidity
labor market conditions, including attracting, hiring, training, motivating and retaining qualified employees
the legislative/regulatory climate, regulatory initiatives with respect to financial institutions, products and services, the Consumer Financial Protection Bureau (the CFPB) and the regulatory and enforcement activities of the CFPB
monetary and fiscal policies of the U.S. Government, including policies of the FDIC, U.S. Department of the Treasury and the Board of Governors of the Federal Reserve System, and the effect of these policies on interest rates and business in our markets
demand for financial services in the Corporation’s market area
the value of securities held in the Corporation’s investment portfolios
the quality or composition of the loan portfolios and the value of the collateral securing those loans
the inventory level, demand and fluctuations in the pricing of used automobiles, including sales prices of repossessed vehicles
the level of automobile loan delinquencies or defaults and our ability to repossess automobiles securing delinquent automobile finance installment contracts
the level of net charge-offs on loans and the adequacy of our allowance for credit losses
the level of indemnification losses related to mortgage loans sold
demand for loan products
deposit flows
the strength of the Corporation’s counterparties
the availability of lines of credit from the FHLB and other counterparties
the soundness of other financial institutions and any indirect exposure related to the closing of other financial institutions and their impact on the broader market through other customers, suppliers and partners, or that the conditions which resulted in the liquidity concerns experienced by closed financial institutions may also adversely impact, directly or indirectly, other financial institutions and market participants with which the Corporation has commercial or deposit relationships
competition from both banks and non-banks, including competition in the non-prime automobile finance markets and marine and recreational vehicle finance markets
services provided by, or the level of the Corporation’s reliance upon third parties for key services
the commercial and residential real estate markets, including changes in property values
the demand for residential mortgages and conditions in the secondary residential mortgage loan markets
the Corporation’s technology initiatives and other strategic initiatives
the Corporation’s branch expansions and consolidations plans
cyber threats, attacks or events
C&F Bank’s product offerings
accounting principles, policies and guidelines, and elections by the Corporation thereunder

These risks and uncertainties should be considered in evaluating the forward-looking statements contained herein, and readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this release. For additional information on risk factors that could affect the forward-looking statements contained herein, see the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2023 and other reports filed with the SEC. The Corporation undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.


C&F Financial Corporation Selected Financial Information (dollars in thousands, except for per share data) (unaudited)

Financial Condition	12/31/2024		12/31/2023
Interest-bearing deposits in other banks	$	49,423	$	58,777
Investment securities – available for sale, at fair value		418,625		462,444
Loans held for sale, at fair value		20,112		14,176
Loans, net:
Community Banking segment		1,436,226		1,257,557
Consumer Finance segment		444,085		444,931
Total assets		2,563,385		2,438,498
Deposits		2,170,860		2,066,130
Repurchase agreements		28,994		30,705
Other borrowings		93,615		78,834
Total equity		226,970		217,516


	For The				For The
	Quarter Ended				Year Ended
Results of Operations	12/31/2024		12/31/2023		12/31/2024		12/31/2023
Interest income	$	36,443	$	32,408	$	139,594	$	124,137
Interest expense		11,343		8,466		42,819		26,430
Provision for credit losses:
Community Banking segment		–		75		1,650		1,625
Consumer Finance segment		3,500		2,400		11,600		6,650
Noninterest income:
Gains on sales of loans		1,250		850		6,064		5,780
Other		5,700		6,953		24,474		23,835
Noninterest expenses:
Salaries and employee benefits		11,953		14,035		53,578		54,876
Other		9,363		9,038		36,352		35,007
Income tax expense		1,205		1,109		4,215		5,418
Net income		6,029		5,088		19,918		23,746

Fully-taxable equivalent (FTE) amounts¹
Interest income on loans-FTE		33,122		29,147		127,288		111,146
Interest income on securities-FTE		3,046		3,121		12,079		12,710
Total interest income-FTE		36,731		32,677		140,741		125,101
Net interest income-FTE		25,388		24,211		97,922		98,671

_________________
¹For more information about these non-GAAP financial measures, please see “Use of Certain Non-GAAP Financial Measures” and “Reconciliation of Certain Non-GAAP Financial Measures.”


	For the Quarter Ended
	12/31/2024							12/31/2023
	Average			Income/		Yield/		Average			Income/		Yield/
Yield Analysis	Balance			Expense		Rate		Balance			Expense		Rate
Assets
Securities:
Taxable	$	321,796		$	1,898	2.36	%	$	392,368		$	2,093	2.13	%
Tax-exempt		120,119			1,148	3.82			118,263			1,028	3.48
Total securities		441,915			3,046	2.76			510,631			3,121	2.44
Loans:
Community banking segment		1,438,195			20,036	5.54			1,257,418			16,813	5.30
Mortgage banking segment		30,674			486	6.30			22,288			383	6.82
Consumer finance segment		473,816			12,600	10.58			471,355			11,951	10.06
Total loans		1,942,685			33,122	6.78			1,751,061			29,147	6.60
Interest-bearing deposits in other banks		58,212			563	3.85			42,114			409	3.85
Total earning assets		2,442,812			36,731	5.98			2,303,806			32,677	5.63
Allowance for credit losses		(40,930	)						(40,614	)
Total non-earning assets		159,082							142,252
Total assets	$	2,560,964						$	2,405,444

Liabilities and Equity
Interest-bearing deposits:
Interest-bearing demand deposits	$	331,156			601	0.72		$	341,243			556	0.65
Money market deposit accounts		299,321			1,136	1.51			299,712			896	1.19
Savings accounts		176,106			26	0.06			194,476			33	0.07
Certificates of deposit		811,224			8,325	4.08			635,702			5,665	3.54
Total interest-bearing deposits		1,617,807			10,088	2.48			1,471,133			7,150	1.93
Borrowings:
Repurchase agreements		30,673			131	1.71			33,418			126	1.51
Other borrowings		93,765			1,124	4.79			98,875			1,190	4.81
Total borrowings		124,438			1,255	4.03			132,293			1,316	3.98
Total interest-bearing liabilities		1,742,245			11,343	2.59			1,603,426			8,466	2.10
Noninterest-bearing demand deposits		547,890							554,321
Other liabilities		43,379							45,462
Total liabilities		2,333,514							2,203,209
Equity		227,450							202,235
Total liabilities and equity	$	2,560,964						$	2,405,444
Net interest income				$	25,388						$	24,211
Interest rate spread						3.39	%						3.53	%
Interest expense to average earning assets						1.85	%						1.46	%
Net interest margin						4.13	%						4.17	%


	For the Year Ended
	12/31/2024							12/31/2023
	Average			Income/		Yield/		Average			Income/		Yield/
Yield Analysis	Balance			Expense		Rate		Balance			Expense		Rate
Assets
Securities:
Taxable	$	335,647		$	7,563	2.25	%	$	428,895		$	9,110	2.12	%
Tax-exempt		119,978			4,516	3.76			108,006			3,600	3.33
Total securities		455,625			12,079	2.65			536,901			12,710	2.37
Loans:
Community banking segment		1,378,131			75,707	5.49			1,214,143			62,188	5.12
Mortgage banking segment		30,737			1,897	6.17			25,598			1,695	6.62
Consumer finance segment		476,775			49,684	10.42			473,885			47,263	9.97
Total loans		1,885,643			127,288	6.75			1,713,626			111,146	6.49
Interest-bearing deposits in other banks		37,238			1,374	3.69			35,351			1,245	3.52
Total earning assets		2,378,506			140,741	5.92			2,285,878			125,101	5.47
Allowance for loan losses		(40,736	)						(41,047	)
Total non-earning assets		156,726							148,666
Total assets	$	2,494,496						$	2,393,497

Liabilities and Equity
Interest-bearing deposits:
Interest-bearing demand deposits	$	327,700			2,170	0.66		$	354,643			2,134	0.60
Money market deposit accounts		296,278			4,313	1.46			317,601			3,017	0.95
Savings accounts		180,429			111	0.06			209,033			124	0.06
Certificates of deposit		767,721			31,465	4.10			541,252			15,112	2.79
Total interest-bearing deposits		1,572,128			38,059	2.42			1,422,529			20,387	1.43
Borrowings:
Repurchase agreements		27,754			456	1.64			32,393			399	1.23
Other borrowings		91,713			4,304	4.69			116,908			5,644	4.83
Total borrowings		119,467			4,760	3.98			149,301			6,043	4.05
Total interest-bearing liabilities		1,691,595			42,819	2.53			1,571,830			26,430	1.68
Noninterest-bearing demand deposits		536,828							575,452
Other liabilities		45,217							42,954
Total liabilities		2,273,640							2,190,236
Equity		220,856							203,261
Total liabilities and equity	$	2,494,496						$	2,393,497
Net interest income				$	97,922						$	98,671
Interest rate spread						3.39	%						3.79	%
Interest expense to average earning assets						1.80	%						1.16	%
Net interest margin						4.12	%						4.31	%


	12/31/2024
Funding Sources	Capacity		Outstanding		Available
Unsecured federal funds agreements	$	75,000	$	—	$	75,000
Borrowings from FHLB		257,734		40,000		217,734
Borrowings from Federal Reserve Bank		313,499		—		313,499
Total	$	646,233	$	40,000	$	606,233


Asset Quality	12/31/2024			12/31/2023
Community Banking
Total loans	$	1,453,605		$	1,273,629
Nonaccrual loans	$	333		$	406

Allowance for credit losses (ACL)	$	17,379		$	16,072
Nonaccrual loans to total loans		0.02	%		0.03	%
ACL to total loans		1.20	%		1.26	%
ACL to nonaccrual loans		5,218.92	%		3,958.62	%
Year-to-date net charge-offs to average loans		0.01	%		0.01	%

Consumer Finance
Total loans	$	466,793		$	468,510
Nonaccrual loans	$	614		$	892
Repossessed assets	$	779		$	646
ACL	$	22,708		$	23,579
Nonaccrual loans to total loans		0.13	%		0.19	%
ACL to total loans		4.86	%		5.03	%
ACL to nonaccrual loans		3,698.37	%		2,643.39	%
Year-to-date net charge-offs to average loans		2.62	%		1.99	%


	For The						For The
	Quarter Ended						Year Ended
Other Performance Data	12/31/2024			12/31/2023			12/31/2024			12/31/2023
Net Income (Loss):
Community Banking	$	6,364		$	5,186		$	20,284		$	22,928
Mortgage Banking		87			(103	)		1,108			465
Consumer Finance		272			618			1,414			2,879
Other¹		(694	)		(613	)		(2,888	)		(2,526	)
Total	$	6,029		$	5,088		$	19,918		$	23,746

Net income attributable to C&F Financial Corporation	$	6,037		$	5,068		$	19,834		$	23,604

Earnings per share – basic and diluted	$	1.87		$	1.50		$	6.01		$	6.92
Weighted average shares outstanding – basic and diluted		3,226,999			3,367,931			3,299,574			3,411,995

Annualized return on average assets		0.94	%		0.85	%		0.80	%		0.99	%
Annualized return on average equity		10.60	%		10.06	%		9.02	%		11.68	%
Annualized return on average tangible common equity²		12.17	%		11.74	%		10.37	%		13.58	%
Dividends declared per share	$	0.44		$	0.44		$	1.76		$	1.76

Mortgage loan originations – Mortgage Banking	$	130,426		$	98,238		$	527,750		$	498,797
Mortgage loans sold – Mortgage Banking		154,552			109,387			522,001			498,852

_________________
¹ Includes results of the holding company that are not allocated to the business segments and elimination of inter-segment activity.
² For more information about these non-GAAP financial measures, please see “Use of Certain Non-GAAP Financial Measures” and “Reconciliation of Certain Non-GAAP Financial Measures.”


Market Ratios	12/31/2024		12/31/2023
Market value per share	$	71.25	$	68.19
Book value per share	$	70.00	$	64.28
Price to book value ratio		1.02		1.06
Tangible book value per share¹	$	61.86	$	56.40
Price to tangible book value ratio¹		1.15		1.21
Price to earnings ratio (ttm)		11.86		9.87

_________________
¹ For more information about these non-GAAP financial measures, please see “Use of Certain Non-GAAP Financial Measures” and “Reconciliation of Certain Non-GAAP Financial Measures.”



			Minimum Capital
Capital Ratios	12/31/2024	12/31/2023	Requirements³
C&F Financial Corporation¹
Total risk-based capital ratio	14.1%	14.8%	8.0%
Tier 1 risk-based capital ratio	11.9%	12.6%	6.0%
Common equity tier 1 capital ratio	10.7%	11.3%	4.5%
Tier 1 leverage ratio	9.8%	10.1%	4.0%

C&F Bank²
Total risk-based capital ratio	13.6%	14.1%	8.0%
Tier 1 risk-based capital ratio	12.3%	12.9%	6.0%
Common equity tier 1 capital ratio	12.3%	12.9%	4.5%
Tier 1 leverage ratio	10.1%	10.3%	4.0%

_________________
¹ The Corporation, a small bank holding company under applicable regulations and guidance, is not subject to the minimum regulatory capital regulations for bank holding companies. The regulatory requirements that apply to bank holding companies that are subject to regulatory capital requirements are presented above, along with the Corporation’s capital ratios as determined under those regulations.
² All ratios at December 31, 2024 are estimates and subject to change pending regulatory filings. All ratios at December 31, 2023 are presented as filed.
³ The ratios presented for minimum capital requirements are those to be considered adequately capitalized.


	For The Quarter Ended						For The Year Ended
	12/31/2024			12/31/2023			12/31/2024			12/31/2023
Reconciliation of Certain Non-GAAP Financial Measures
Return on Average Tangible Common Equity
Average total equity, as reported	$	227,450		$	202,235		$	220,856		$	203,261
Average goodwill		(25,191	)		(25,191	)		(25,191	)		(25,191	)
Average other intangible assets		(1,183	)		(1,439	)		(1,273	)		(1,538	)
Average noncontrolling interest		(518	)		(515	)		(649	)		(675	)
Average tangible common equity	$	200,558		$	175,090		$	193,743		$	175,857

Net income	$	6,029		$	5,088		$	19,918		$	23,746
Amortization of intangibles		64			69			260			273
Net loss (income) attributable to noncontrolling interest		8			(20	)		(84	)		(142	)
Net tangible income attributable to C&F Financial Corporation	$	6,101		$	5,137		$	20,094		$	23,877

Annualized return on average equity, as reported		10.60	%		10.06	%		12.02	%		15.58	%
Annualized return on average tangible common equity		12.17	%		11.74	%		10.37	%		13.58	%


	For The Quarter Ended				For The Year Ended
	12/31/2024		12/31/2023		12/31/2024		12/31/2023
Fully Taxable Equivalent Net Interest Income¹
Interest income on loans	$	33,075	$	29,093	$	127,089	$	110,938
FTE adjustment		47		54		199		208
FTE interest income on loans	$	33,122	$	29,147	$	127,288	$	111,146

Interest income on securities	$	2,805	$	2,906	$	11,131	$	11,954
FTE adjustment		241		215		948		756
FTE interest income on securities	$	3,046	$	3,121	$	12,079	$	12,710

Total interest income	$	36,443	$	32,408	$	139,594	$	124,137
FTE adjustment		288		269		1,147		964
FTE interest income	$	36,731	$	32,677	$	140,741	$	125,101

Net interest income	$	25,100	$	23,942	$	96,775	$	97,707
FTE adjustment		288		269		1,147		964
FTE net interest income	$	25,388	$	24,211	$	97,922	$	98,671

_________________
¹ Assuming a tax rate of 21%.


	December 31,			December 31,
*(Dollars in thousands except for per share data)*	2024			2023
Tangible Book Value Per Share
Equity attributable to C&F Financial Corporation	$	226,360		$	216,878
Goodwill		(25,191	)		(25,191	)
Other intangible assets		(1,147	)		(1,407	)
Tangible equity attributable to C&F Financial Corporation	$	200,022		$	190,280

Shares outstanding		3,233,672			3,374,098

Book value per share	$	70.00		$	64.28
Tangible book value per share	$	61.86		$	56.40

Contact:	Jason Long, CFO and Secretary
	(804) 843-2360

The MIL Network –

January 29, 2025

MIL-OSI Security: Two Men Sentenced to Over Seven Years in Prison for Laundering Proceeds From an Elder Fraud Scheme

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

ALEXANDRIA, Va. – Two men were sentenced to seven years and three months in prison for their roles in laundering over $6 million in elder fraud proceeds.

According to court documents, Fei Liang, 42, of Flushing, New York, and Ziguang Li, 36, of Las Vegas, Nevada, opened bank accounts for fictitious businesses. These bank accounts were used to launder the proceeds of fraud.

Liang’s and Li’s co-conspirators operated a nationwide “tech support” scam or other similar elder fraud scheme, in which they targeted unsuspecting victims who logged onto their computer to use one or more online services from various corporations. The conspirators falsely advised victims of purported criminal or technical issues with their accounts associated with these online services, and that to address these issues they were required to wire money to business accounts. The accounts to which the victims wired money were controlled by the conspirators.

Money from the scam was directed to the accounts opened by Liang and Li. The accounts were then used to wire the proceeds to other members of the conspiracy, domestically and internationally.

During a search of Li’s residence, law enforcement recovered a handwritten list of the fictitious businesses used to further the money laundering scheme, records associated with bank accounts that received victim-funded wires, and copies of documents bearing personal identifiable information (PII). Law enforcement also recovered Li’ s cellphones and computers, which contained victims’ PII, business documents, identification documents, Employer Identification Numbers, and bank account information for at least 25 different entities, including fictitious businesses that provided victim-funded transfers to Li.

Liang pled guilty on Sept. 6, 2024, and was sentenced on Dec. 13, 2024. Li, pled guilty on Nov. 1, 2024, and was sentenced today.

Erik S. Siebert, U.S. Attorney for the Eastern District of Virginia; Sean Ryan, Special Agent in Charge of the FBI Washington Field Office’s Criminal and Cyber Division; Damon E. Wood, Inspector in Charge of the Washington Division of the U.S. Postal Inspection Service; and and Special Agent in Charge Scott Moffit, Treasury Inspector General for Tax Administration Cybercrimes Investigation Division, made the announcement after sentencing by Senior U.S. District Judge Claude M. Hilton.

Assistant U.S. Attorney Christopher J. Hood and former Assistant U.S. Attorney Kenneth R. Simon Jr. prosecuted the case.

A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information are located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:24-cr-170.

MIL Security OSI –

January 29, 2025

MIL-OSI USA: King Cosponsors Bipartisan Bill to Increase Price Transparency on Prescription Drug Advertising

US Senate News:

Source: United States Senator for Maine Angus King
WASHINGTON, D.C. — U.S. Senator Angus King (I-ME) is cosponsoring legislation to promote transparency, boost competition, and bring down the cost of prescription drugs. The bipartisan Drug-Price Transparency for Consumers (DTC) Act would require price disclosures on advertisements for prescription drugs in order to inform patients who are considering certain medications after seeing television commercials. By requiring direct-to-consumer (DTC) advertisements for prescription drugs to include a disclosure of the list price, patients can make informed choices when inundated with drug commercials and pharmaceutical companies may reconsider their pricing and advertising tactics.
Each year, the pharmaceutical industry spends $6 billion in DTC drug advertising to fill the airwaves with ads, resulting in the average American seeing nine DTC ads each day. Studies show that these commercials often steer patients to more expensive drugs, even when a patient may not need the medication or a lower-cost generic is available. Studies show that patients are more likely to ask their doctor, and ultimately receive a prescription, for a specific drug when they have seen ads for it. For these reasons, most countries have banned DTC prescription drug advertising — the United States and New Zealand are the only industrialized nations that allow these ads.
“Current advertisement practices in the pharmaceutical industry allow drug companies to unfairly inflate the efficacy of their products while concealing their exorbitant prices,” said Senator King. “The Drug-Price Transparency for Consumers (DTC) Act would ensure that Maine people have more transparency, choice, and competition in the prescription drug marketplace. I want to thank my colleagues on both sides of the aisle for putting Americans first above the profits of big pharma.”
The Government Accountability Office (GAO) has found that prescription drugs advertised directly to consumers accounted for more than half of Medicare’s spending on drugs between 2016 and 2018, while a 2023 study in the Journal of the American Medical Association found that two-thirds of advertised drugs offered “low therapeutic value.” Additionally, a Kaiser survey found that 88 percent of Americans support this price disclosure policy for advertisements.
Below are some key findings from the GAO report:
Two-thirds of pharma’s spending between 2016 and 2018 on DTC ads ($12 billion out of $18 billion total) was concentrated on just 39 drugs.
During this period, these advertised drugs accounted for 58 percent of Medicare’s spending on drugs ($320 billion out of $560 billion).
Among the top 10 drugs with the highest cost to Medicare, four were also in the top 10 for advertising spending (Humira, Eliquis, Keytruda, Lyrica).
Joining King on this bill are Senators Dick Durbin (D-IL), Chuck Grassley (R-IA), Joni Ernst (R-IA), Tina Smith (D-MN), Peter Welch (D-VT), Richard Blumenthal (D-CT), and Tammy Baldwin (D-WI).
Senator King has consistently worked to lower healthcare costs and increase transparency for Maine people. Last year, he introduced bicameral legislation to prohibit direct-to-consumer drug advertising of pharmaceutical drugs in the first three years after the drug receives Federal Drug Administration (FDA) approval. Senator King also cosponsored the Health Care Affordability Act which permanently extends enhanced Premium Tax Credits (PTCs) — tax subsidies that increase the amount of financial assistance available to people buying their own health insurance. Additionally, Senator King has introduced legislation to prohibit pharmaceutical drug manufacturers from claiming tax deductions for consumer advertising expenses.

MIL OSI USA News –

January 29, 2025

MIL-OSI Economics: The value of AI: How Microsoft’s customers and partners are reinventing how they do business today

Source: Microsoft

Headline: The value of AI: How Microsoft’s customers and partners are reinventing how they do business today

Organizational leaders in every industry around the world are evaluating ways AI can unlock opportunities, drive pragmatic innovation and yield value across their business. At Microsoft, we are dedicated to helping our customers accelerate AI Transformation by empowering human ambition with Copilots and agents, developing differentiated AI solutions and building scalable cybersecurity foundations. At Microsoft Ignite we made over 100 announcements that bring the latest innovation directly to our customers and partners, and shared how Microsoft is the only technology leader to offer three distinct AI platforms for them to build AI solutions:

Copilot is your UI for AI, with Copilot Studio enabling low-code creation of agents and extensibility to your data.
Azure AI Foundry is the only AI app server for building real-world, world-class, AI-native applications.
Microsoft Fabric is the AI data platform that provides one common way to reason over your data —no matter where it lives.

All three of these platforms are open and work synchronously to enable the development of modern AI solutions; and each is surrounded by our world-class security offerings so leaders can move their AI-first strategies forward with confidence.

As we look ahead to what we can achieve together, I remain inspired by the work we are doing today. Below are a handful of the many stories from the past quarter highlighting the differentiated AI solutions our customers and partners are driving to move business forward across industries and realize pragmatic value. Their success clearly illustrates that real results can be harnessed from AI today, and it is changing the way organizations do business.

To power its industrial IoT and AI platform, ABB Group leveraged Microsoft Azure OpenAI Service to create Genix Copilot: a generative AI-powered analytics suite aimed at solving some of the most complex industrial problems. The solution helps customers analyze key functions in their operations —such as asset and process performance, energy optimization and emission monitoring — with real-time operational insights. As a result, customers are seeing up to 35% savings in operations and maintenance, and up to 20% improvement in energy and emission optimization. ABB also saw an 80% decrease in service calls with the self-service capabilities of Genix Copilot.

Serving government healthcare agencies across the US, Acentra Health turned to Microsoft to help introduce the latest AI capabilities that maximize talent and cut costs in a secure, HIPAA-compliant manner. Using Azure OpenAI Service, the company developed MedScribe — an AI-powered tool reducing the time specially trained nursing staff spend on appeal determination letters. This innovation saved 11,000 nursing hours and nearly $800,000, reducing time spent on each appeal determination letter by about 50%. MedScribe also significantly enhanced operational efficiency, enabling nurses to process 20 to 30 letters daily with a 99% approval rate.

To ease challenges for small farmers, Romanian agribusiness group Agricover revolutionized access to credit by developing MyAgricover. Built with help from partner Avaelgo, the scalable digital platform utilizes Microsoft Azure, Azure API Management and Microsoft Fabric to automate the loan process and enable faster approvals and disbursements. This has empowered small farmers to grow their businesses and receive faster access to financing by reducing loan approval time by 90 percent — from 10 working days to a maximum of 24 hours.

Building on its status as a world-class airline with a strong Indian identity, Air India sought ways to enhance customer support while managing costs. By developing AI.g, one of the industry’s first generative AI virtual assistants built on Azure OpenAI Service, the airline upgraded the customer experience. Today, 97% of customer queries are handled with full automation, resulting in millions of dollars of support costs saved and improved customer satisfaction — further positioning the airline for continued growth.

BMW Group aimed to enhance data delivery efficiency and improve vehicle development and prototyping cycles by implementing a Mobile Data Recorder (MDR) solution with Azure App Service, Azure AI and Azure Kubernetes Service (AKS). The solution achieved 10 times more efficient data delivery, significantly improved data accessibility and elevated overall development quality. The MDR monitors and records more than 10,000 signals twice per second in every vehicle of BMW’s fleet of 3,500 development cars and transmits data within seconds to a centralized cloud back end. Using Azure AI Foundry and Azure OpenAI Service, BMW Group created an MDR copilot fueled by GPT-4o. Engineers can now chat with the interface using natural language, and the MDR copilot converts the conversations into KQL queries, simplifying access to technical insights. Moving from on-premises tools to a cloud-based system with faster data management also helps engineers troubleshoot in real time. The vehicle data covered by the system has doubled, and data delivery and analysis happen 10 times faster.

Coles Group modernized its logistics and administrative applications using Microsoft Azure Stack HCI to scale its edge AI capabilities and improve efficiency and customer experience across its 1,800 stores. By expanding its Azure Stack HCI footprint from two stores to over 500, Coles achieved a six-fold increase in the pace of application deployment, significantly enhancing operational efficiency and enabling rapid innovation without disrupting workloads. The retailer is also using Azure Machine Learning to train and develop edge AI models, speeding up data annotation time for training models by 50%.

Multinational advertising and media company Dentsu wanted to speed time to insights for its team of data scientists and media analysts to support its media planning and budget optimization. Using Microsoft Azure AI Foundry and Azure OpenAI Service, Dentsu developers built a predictive analytics copilot that uses conversational chat and draws on deep expertise in media forecasting, budgeting and optimization. This AI-driven tool has reduced time to media insights for employees and clients by 90% and cut analysis costs.

To overcome the limitations of its current systems, scale operations and automate processes across millions of workflows, Docusign created the Intelligent Agreement Management (IAM) platform on Azure. Using Azure AI, Azure Cosmos DB, Azure Logic Apps and AKS, the platform transforms agreement data into actionable insights to enhance productivity and accelerate contract review cycles. IAM also ensures better collaboration and unification across business systems to provide secure solutions tailored to diverse customer needs. For example, its customer KPC Private funds reported a 70% reduction in time and resources dedicated to agreement processes.

Emirates Global Aluminium (EGA) transformed its manufacturing operations by leveraging a hybrid environment with Azure Arc, Azure Stack HCI and Azure Kubernetes Service. This digital manufacturing platform resulted in 86% cost savings for AI image and video analytics and a 13-fold improvement in AI response times. The seamless hybrid cloud architecture has enhanced EGA’s operational efficiency and agility, supporting its Industry 4.0 transformation strategy.

EY collaborated with Microsoft to enhance the inclusivity of AI development using Azure AI Studio. By involving neurodivergent technologists from EY’s Neuro-Diverse Centers of Excellence, they improved the accessibility and productivity of AI tools, resulting in more inclusive AI solutions, fostering innovation and ensuring that AI tools unlock the potential of all users. With an estimated 20% of the global workforce identifying as neurodivergent, inclusive AI solutions are crucial for maximizing creativity and productivity. Neurodivergent EY technologists also collaborated with Microsoft developers to make Azure AI Foundry more inclusive and help all users work productively to create innovative AI solutions.

Colombian household appliance manufacturer Haceb integrated AI to optimize processes, reduce costs and improve service quality. Using Microsoft Copilot Studio and Azure OpenAI Service, the company created a virtual technical support assistant, saving its 245 technicians 5 minutes per visit — a total of 5,000 minutes saved daily. This AI solution has enhanced efficiency and boosted customer satisfaction by allowing for faster issue resolution. Haceb’s AI adoption has also empowered employees, boosted productivity and positioned the company as a leader in AI innovation in Colombia.

To better serve its global patients, Operation Smile — in collaboration with partner Squadra — leveraged Azure AI, Machine Learning and Microsoft Fabric to develop an AI-powered solution to predict surgical outcomes and optimize resource allocation. This innovation resulted in a 30% increase in surgical efficiency, a 90% reduction in translation errors and improved patient outcomes. Additionally, report generation is now up to 95% quicker, and repeated medical events have decreased by 15%, enabling Operation Smile to provide better care to more children worldwide.

Ontada — a McKesson business dedicated to oncology data and evidence, clinical education and point-of-care technologies — needed a way to generate key insights across 150 million unstructured oncology documents. Using Microsoft Azure AI and Azure OpenAI Service, Ontada developed a data platform solution called ON.Genuity to provide AI-driven insights into the patient journey, enhance patient trial matching and identify care gaps. The company also implemented large language models to target nearly 100 critical oncology data elements across 39 cancer types, enabling the company to analyze an estimated 70% of previously inaccessible data, reduce processing time by 75% and accelerate product time-to-market from months to just one week.

As the UK’s largest pet care company, Pets at Home sought a way to combat fraud across its retail operations — particularly as its online business continued to grow. Working closely with its fraud team, it adopted Copilot Studio to develop an AI agent that quickly identifies suspicious transactions. The agent autonomously gathers relevant information, performs analysis and shares it with a fraud agent to enable a manual, data-intensive investigative process while ensuring a human remains in the loop. With this low-code agent extending and seamlessly integrating into existing systems, the company’s fraud department can act more quickly; what used to take 20 to 30 minutes is now handled by the AI agent within seconds. The company is identifying fraud 10 times faster and is processing 20 times more cases a day. Now, the company can operate at scale with speed, efficiency and accuracy — with savings expected to be in the seven figures as it continues to build more agents.

Revenue Grid, a technology company specializing in sales engagement and revenue optimization solutions, partnered with Cloud Services to modernize its data infrastructure and develop a unified data warehouse capable of handling unstructured, semi-structured and structured data. By migrating to Microsoft Fabric, Revenue Grid can now deliver data-powered revenue intelligence, driven by a unified platform, elastic scalability, enhanced analytics capabilities and streamlined operations. Revenue Grid has reduced infrastructure costs by 60% while enhancing its analytical capabilities to improve real-time data processing, empowering sales teams with accurate and diverse data.

To better manage and integrate employee data across diverse regions and systems, UST built a comprehensive Employee Data platform on Microsoft Fabric. In under a year, UST migrated 20 years of employee data with all security measures to enhance data accessibility and employee productivity. The Meta Data Driven Integration (MDDI) framework in Fabric also helped the company cut data ingestion time by 50% so employees can focus more on analysis than preparation. As a result of this implementation, the company has seen an increase in collaboration and innovation from employees, helping put its values into action.

The Microsoft Commercial Marketplace offers millions of customers worldwide a convenient place to find, try and buy software and services across 140 countries. As a Marketplace partner, WeTransact is helping independent software vendors (ISVs) list and transact their software solutions — and find opportunities for co-selling and extending their reach to enterprise customers through development of the WeTransact platform. Powered by Azure OpenAI Service, the platform is changing the way partnerships are being built by using AI pairing to facilitate a “plug and play” reseller network. More than 300 ISVs worldwide have joined the Microsoft Commercial Marketplace using the WeTransact platform, cutting their time to publish by 75%.

The opportunity for AI to create value is no longer an ambition for the future — it is happening now, and organizational leaders across industries are investing in AI-first strategies to change the way they do business. We believe AI should empower human achievement and enrich the lives of employees; and we are uniquely differentiated to help you accelerate your AI Transformation responsibly and securely. Choosing the right technology provider comes down to trust, and I look forward to what we will achieve together as we partner with you on your AI journey.

MIL OSI Economics –

January 29, 2025

Category: Taxation

IMF Communications Department

MEDIA RELATIONS

India-Oman Joint Commission Meeting held; leaders focus on enhancing bilateral cooperation in trade, investment, technology, food security and renewable energyUnion Minister of Commerce & Industry Shri Piyush Goyal concludes successful visit to Oman

Mahakumbh 2025: Digital Exhibition at Prayagraj highlights how Government initiatives are spreading the message ‘Unity in Diversity’The exhibition is also providing information about various Government of India schemes on Entrepreneurship

India-Oman Joint Commission Meeting held; leaders focus on enhancing bilateral cooperation in trade, investment, technology, food security and renewable energy

Union Minister of Commerce & Industry Shri Piyush Goyal concludes successful visit to Oman

Mahakumbh 2025: Digital Exhibition at Prayagraj highlights how Government initiatives are spreading the message ‘Unity in Diversity’

The exhibition is also providing information about various Government of India schemes on Entrepreneurship