Category: Taxation

  • MIL-OSI: Seacoast Reports Third Quarter 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    Strong Growth in Loans and Deposits

    Annualized 20% Increase in Tangible Book Value Per Share

    Well-Positioned Balance Sheet with Strong Capital and Liquidity

    STUART, Fla., Oct. 24, 2024 (GLOBE NEWSWIRE) — Seacoast Banking Corporation of Florida (“Seacoast” or the “Company”) (NASDAQ: SBCF) today reported net income in the third quarter of 2024 of $30.7 million, or $0.36 per diluted share, compared to $30.2 million, or $0.36 per diluted share in the second quarter of 2024 and $31.4 million, or $0.37 per diluted share in the third quarter of 2023.

    Pre-tax pre-provision earnings1 were $46.1 million in the third quarter of 2024, an increase of 3% compared to the second quarter of 2024 and an increase of 6% compared to the third quarter of 2023. Adjusted pre-tax pre-provision earnings1 were $46.4 million in the third quarter of 2024, an increase of 4% compared to the second quarter of 2024 and a decrease of 2% compared to the third quarter of 2023.

    For the third quarter of 2024, return on average tangible assets was 0.99% and return on average tangible shareholders’ equity was 10.31%, compared to 1.00% and 10.75%, respectively, in the prior quarter, and 1.04% and 11.90%, respectively, in the prior year quarter.

    Charles M. Shaffer, Chairman and CEO of Seacoast, stated, “I would like to thank all of the Seacoast associates for their unwavering dedication during the challenging impact of back-to-back significant hurricanes. Your commitment to our customers and the well-being of our communities is commendable. I am very proud to serve alongside such an amazing and dedicated group of bankers. Furthermore, our hearts and sympathy go out to all those in our communities who lost loved ones and experienced catastrophic outcomes as a result of the storms.”

    Shaffer added, “Turning to third quarter results, this marks the turn in organic growth we had anticipated, with nearly 7% annualized loan growth and 7% annualized customer deposit growth, clearly showcasing the results of our previous investments in banking teams across the state. Additionally, this quarter demonstrated continued growth in net interest income, noninterest income and, when removing accretion on acquired loans, expansion in the net interest margin. Our competitive transformation is taking shape as we build Seacoast into Florida’s leading regional bank. We expect to continue to see positive results from recent talent acquisitions, which will drive further organic growth in the coming periods.”

    Shaffer concluded, “We remain committed to a disciplined approach to credit, and our balance sheet is one of the strongest in the industry, with a Tier 1 capital ratio of 14.8%2 as of September 30, 2024. The ratio of tangible common equity to tangible assets has increased to a strong 9.64%. Our liquidity position is also robust, with a loan-to-deposit ratio of 83%, providing us with balance sheet flexibility as we continue to work towards stronger earnings in the coming periods.”

    Update on Hurricane Recovery

    In late September and early October 2024, communities across our corporate footprint were impacted by Hurricanes Helene and Milton. We maintained uninterrupted digital and telephone access for our customers and, having experienced minimal impacts to our branch properties, we fully reopened to serve our communities shortly after each storm passed. Recovery efforts in many areas continue and the full impacts on people and businesses in the most hard-hit regions are not fully known. We do not expect a significant impact from Hurricane Helene, but an additional provision for credit losses may be warranted in the fourth quarter of 2024 for Hurricane Milton, in a range between approximately $5 million and $10 million.

    Financial Results

    Income Statement

    • Net income in the third quarter of 2024 was $30.7 million, or $0.36 per diluted share, compared to $30.2 million, or $0.36 per diluted share in the prior quarter and $31.4 million, or $0.37 per diluted share in the prior year quarter. For the nine months ended September 30, 2024, net income was $86.9 million, or $1.02 per diluted share, compared to $74.5 million, or $0.89 per diluted share, for the nine months ended September 30, 2023. Adjusted net income1 for the third quarter of 2024 was $30.5 million, or $0.36 per diluted share, compared to $30.3 million, or $0.36 per diluted share, for the prior quarter, and $34.2 million, or $0.40 per diluted share, for the prior year quarter. For the nine months ended September 30, 2024, adjusted net income1 was $91.9 million, or $1.08 per diluted share, compared to $101.9 million, or $1.21 per diluted share, for the nine months ended September 30, 2023.
    • Net revenues were $130.3 million in the third quarter of 2024, an increase of $3.7 million, or 3%, compared to the prior quarter, and a decrease of $6.8 million, or 5%, compared to the prior year quarter. For the nine months ended September 30, 2024, net revenues were $382.5 million, a decrease of $56.7 million, or 13%, compared to the nine months ended September 30, 2023. Adjusted net revenues1 were $130.5 million in the third quarter of 2024, an increase of $3.6 million, or 3%, compared to the prior quarter, and a decrease of $7.2 million, or 5%, compared to the prior year quarter. For the nine months ended September 30, 2024, adjusted net revenues1 were $382.9 million, a decrease of $55.2 million, or 13%, compared to the nine months ended September 30, 2023.
    • Pre-tax pre-provision earnings1 were $46.1 million in the third quarter of 2024, an increase of $1.5 million, or 3%, compared to the second quarter of 2024 and an increase of $2.7 million, or 6%, compared to the third quarter of 2023. For the nine months ended September 30, 2024, pre-tax pre-provision earnings1 were $126.3 million, a decrease of $5.5 million, or 4%, compared to the nine months ended September 30, 2023. Adjusted pre-tax pre-provision earnings1 were $46.4 million in the third quarter of 2024, an increase of $1.9 million, or 4%, compared to the second quarter of 2024 and a decrease of $1.0 million, or 2%, compared to the third quarter of 2023. For the nine months ended September 30, 2024, adjusted pre-tax pre-provision earnings1 were $133.4 million, a decrease of $35.5 million, or 21%, compared to the nine months ended September 30, 2023.
    • Net interest income totaled $106.7 million in the third quarter of 2024, an increase of $2.2 million, or 2%, compared to the prior quarter, and a decrease of $12.6 million, or 11%, compared to the prior year quarter. For the nine months ended September 30, 2024, net interest income was $316.2 million, a decrease of $61.3 million, or 16%, compared to the nine months ended September 30, 2023. In the loan portfolio, higher interest income from new loan production was partially offset by lower accretion of purchase discount on acquired loans. Included in loan interest income was accretion on acquired loans of $9.2 million in the third quarter of 2024, $10.2 million in the second quarter of 2024, and $14.8 million in the third quarter of 2023. For the nine months ended September 30, 2024, accretion on acquired loans totaled $30.0 million, compared to $45.4 million for the nine months ended September 30, 2023. Recent purchases in the securities portfolio contributed to higher securities yields. Higher interest expense on deposits reflects the impact of higher rates, with cuts to the federal funds rate late in the quarter not yet fully impacting the third quarter 2024 results.
    • Net interest margin decreased one basis point to 3.17% in the third quarter of 2024 compared to 3.18% in the second quarter of 2024. Excluding the effects of accretion on acquired loans, net interest margin increased three basis points to 2.90% in the third quarter of 2024 compared to 2.87% in the second quarter of 2024. Loan yields were 5.94%, an increase of one basis point from the prior quarter. Securities yields increased six basis points to 3.75%, compared to 3.69% in the prior quarter. The cost of deposits increased three basis points from 2.31% in the prior quarter, to 2.34% in the third quarter of 2024. We expect the cost of deposits to decline in the fourth quarter of 2024.
    • Noninterest income totaled $23.7 million in the third quarter of 2024, an increase of $1.5 million, or 7%, compared to the prior quarter, and an increase of $5.9 million, or 33%, compared to the prior year quarter. For the nine months ended September 30, 2024, noninterest income totaled $66.4 million, an increase of $4.5 million, or 7%, compared to the nine months ended September 30, 2023. Results in the third quarter of 2024 included:
      • Service charges on deposits totaled $5.4 million, an increase of $0.1 million, or 1%, from the prior quarter and an increase of $0.8 million, or 16%, from the prior year quarter. Our investments in talent and significant market expansion across the state have resulted in continued growth in treasury management services to commercial customers.
      • Wealth management income totaled $3.8 million, an increase of $0.1 million, or 2%, from the prior quarter and an increase of $0.7 million, or 22%, from the prior year quarter. The wealth management division continues to grow and add new relationships, with assets under management increasing 26% year over year to $2.0 billion at September 30, 2024.
      • Insurance agency income totaled $1.4 million, an increase of 3% from the prior quarter and an increase of 18% from the prior year quarter, reflecting continued growth and expansion of services.
      • SBA gains totaled $0.4 million, a decrease of $0.3 million, or 44%, from the prior quarter and a decrease of $0.2 million, or 36%, from the prior year quarter, due to lower saleable originations.
      • Other income totaled $7.5 million, an increase of $1.5 million, or 26%, from the prior quarter and an increase of $3.2 million, or 74% from the prior year quarter. Increases in the third quarter of 2024 include gains on SBIC investments and higher swap-related fees.
    • The provision for credit losses was $6.3 million in the third quarter of 2024, compared to $4.9 million in the second quarter of 2024 and $2.7 million in the third quarter of 2023.
    • Noninterest expense was $84.8 million in the third quarter of 2024, an increase of $2.3 million, or 3%, compared to the prior quarter, and a decrease of $9.1 million, or 10%, compared to the prior year quarter. Noninterest expense for the nine months ended September 30, 2024, totaled $257.7 million, a decrease of $51.5 million, or 17%, compared to the nine months ended September 30, 2023. With significant cost-saving initiatives now complete, Seacoast has prudently managed expenses while strategically investing to support continued growth. Results in the third quarter of 2024 included:
      • Salaries and wages totaled $40.7 million, an increase of $1.8 million, or 5%, compared to the prior quarter and a decrease $5.7 million, or 12%, from the prior year quarter. The third quarter of 2024 reflects continued additions to the banking team as the Company focuses on organic growth.
      • Outsourced data processing costs totaled $8.0 million, a decrease of $0.2 million, or 3%, compared to the prior quarter and a decrease of $0.7 million, or 8%, from the prior year quarter, reflecting the benefit of lower negotiated rates with key service providers.
      • Marketing expenses totaled $2.7 million, a decrease of $0.5 million, or 16%, compared to the prior quarter and an increase of $0.9 million, or 45%, from the prior year quarter, primarily associated with the timing of various campaigns. We will continue to invest in marketing and branding supporting customer growth.
      • Legal and professional fees totaled $2.7 million, an increase of $0.7 million, or 37%, compared to the prior quarter and an increase of $29 thousand, or 1%, from the prior year quarter. Professional services engaged in connection with contract negotiations contributed to the increase in the third quarter of 2024.
    • Seacoast recorded $8.6 million of income tax expense in the third quarter of 2024, compared to $8.9 million in the second quarter of 2024, and $9.1 million in the third quarter of 2023. Tax benefits related to stock-based compensation totaled $0.1 million in the third quarter of 2024, compared to tax expense of $0.2 million in the second quarter of 2024 and a nominal tax benefit in the third quarter of 2023.
    • The efficiency ratio was 59.84% in the third quarter of 2024, compared to 60.21% in the second quarter of 2024 and 62.60% in the prior year quarter. The adjusted efficiency ratio1 was 59.84% in the third quarter of 2024, compared to 60.21% in the second quarter of 2024 and 60.19% in the prior year quarter. The Company continues to remain keenly focused on disciplined expense control, while making investments for growth.

    Balance Sheet

    • At September 30, 2024, the Company had total assets of $15.2 billion and total shareholders’ equity of $2.2 billion. Book value per share was $25.68 as of September 30, 2024, compared to $24.98 as of June 30, 2024, and $24.06 as of September 30, 2023. Tangible book value per share increased 20% annualized from the prior quarter to $16.20 as of September 30, 2024, compared to $15.41 as of June 30, 2024, and $14.26 as of September 30, 2023.
    • Debt securities totaled $2.8 billion as of September 30, 2024, an increase of $180.8 million compared to June 30, 2024. Debt securities include approximately $2.2 billion in securities classified as available for sale and recorded at fair value.
      • During the third quarter of 2024, net unrealized losses associated with available for sale securities declined by $59.6 million due to changes in the interest rate environment. This contributed $0.53 to the increase in tangible book value per share during the quarter. The unrealized loss on available for sale securities is fully reflected in the value presented on the balance sheet.
      • The portfolio also includes $646.1 million in securities classified as held to maturity with a fair value of $538.5 million. Held-to-maturity securities consist solely of mortgage-backed securities and collateralized mortgage obligations guaranteed by U.S. government agencies, each of which is expected to recover any price depreciation over its holding period as the debt securities move to maturity. The Company has significant liquidity and available borrowing capacity and has the intent and ability to hold these investments to maturity.
      • In October, we took advantage of favorable market conditions and repositioned a portion of the available for sale securities portfolio. We sold securities with an average book yield of 2.8%, resulting in a pre-tax loss of approximately $8.0 million impacting fourth quarter results. The proceeds, approximately $113 million, were reinvested in agency mortgage-backed securities with an average book yield of 5.4%, for an estimated earnback of less than three years.
    • Loans increased $166.8 million, or 6.6% annualized, totaling $10.2 billion as of September 30, 2024. Loan originations increased 22% to $657.9 million in the third quarter of 2024, compared to $538.0 million in the second quarter of 2024. The Company continues to exercise a disciplined approach to lending and is benefiting from the investments made in recent years to attract talent from large regional banks across its markets. This talent is onboarding significant new relationships, resulting in increased loan production.
    • Loan pipelines (loans in underwriting and approval or approved and not yet closed) totaled $831.1 million as of September 30, 2024, compared to $834.4 million at June 30, 2024 and $353.0 million at September 30, 2023.
      • Commercial pipelines were $744.5 million as of September 30, 2024, compared to $743.8 million at June 30, 2024, and $259.4 million at September 30, 2023.
      • SBA pipelines were $28.9 million as of September 30, 2024, compared to $29.3 million at June 30, 2024, and $41.4 million at September 30, 2023.
      • Residential saleable pipelines were $11.2 million as of September 30, 2024, compared to $12.1 million at June 30, 2024, and $6.8 million at September 30, 2023. Retained residential pipelines were $21.9 million as of September 30, 2024, compared to $24.7 million at June 30, 2024, and $20.9 million at September 30, 2023.
      • Consumer pipelines were $24.4 million as of September 30, 2024, compared to $24.5 million at both June 30, 2024 and September 30, 2023.
    • Total deposits were $12.2 billion as of September 30, 2024, an increase of $127.5 million, or 4.2% annualized, when compared to June 30, 2024. Excluding brokered balances, total deposits increased $195.9 million, or 6.6% annualized, in the third quarter of 2024.
      • Commercial deposits increased $133.0 million, or 2%, compared to the prior quarter. Of note, commercial noninterest bearing deposits increased $67.2 million, or 3%, from the prior quarter, the result of onboarding new clients.
      • Total noninterest bearing deposits increased $45.5 million, or 5.3% annualized, from the prior quarter.
      • At September 30, 2024, customer transaction account balances represented 49% of total deposits.
      • The Company benefits from a granular deposit franchise, with the top ten depositors representing approximately 3% of total deposits.
      • Average deposits per banking center were $159 million at September 30, 2024, compared to $157 million at June 30, 2024.
      • Uninsured deposits represented only 36% of overall deposit accounts as of September 30, 2024. This includes public funds under the Florida Qualified Public Depository program, which provides loss protection to depositors beyond FDIC insurance limits. Excluding such balances, the uninsured and uncollateralized deposits were 31% of total deposits. The Company has liquidity sources including cash and lines of credit with the Federal Reserve and Federal Home Loan Bank that represent 145% of uninsured deposits, and 167% of uninsured and uncollateralized deposits.
      • Consumer deposits represent 43% of overall deposit funding with an average consumer customer balance of $26 thousand. Commercial deposits represent 57% of overall deposit funding with an average business customer balance of $117 thousand.
    • Federal Home Loan Bank advances totaled $245.0 million at September 30, 2024 with a weighted average interest rate of 4.19%.

    Asset Quality

    • Nonperforming loans were $80.9 million at September 30, 2024, compared to $59.9 million at June 30, 2024, and $41.5 million at September 30, 2023. New nonperforming loans in the third quarter of 2024 have collateral values well in excess of balances outstanding, and therefore, no loss is expected. Nonperforming loans to total loans outstanding were 0.79% at September 30, 2024, 0.60% at June 30, 2024, and 0.41% at September 30, 2023.
    • Accruing past due loans were $50.7 million, or 0.50% of total loans, at September 30, 2024, compared to $39.6 million, or 0.39% of total loans, at June 30, 2024, and $35.5 million, or 0.33% of total loans, at September 30, 2023. A limited number of larger-balance residential mortgage loans, which returned to current status in October, comprise the majority of the increase from the prior quarter.
    • Nonperforming assets to total assets were 0.58% at September 30, 2024, compared to 0.45% at June 30, 2024, and 0.33% at September 30, 2023.
    • The ratio of allowance for credit losses to total loans was 1.38% at September 30, 2024, 1.41% at June 30, 2024, and 1.49% at September 30, 2023.
    • Net charge-offs were $7.4 million in the third quarter of 2024, compared to $9.9 million in the second quarter of 2024 and $12.7 million in the third quarter of 2023. Charge-offs during the quarter primarily reflect specifically identified reserves previously established in the allowance for credit losses.
    • Portfolio diversification, in terms of asset mix, industry, and loan type, has been a critical element of the Company’s lending strategy. Exposure across industries and collateral types is broadly distributed. Seacoast’s average loan size is $360 thousand, and the average commercial loan size is $789 thousand, reflecting an ability to maintain granularity within the overall loan portfolio.
    • Construction and land development and commercial real estate loans remain well below regulatory guidance at 36% and 241% of total bank-level risk-based capital2, respectively, compared to 36% and 235%, respectively, at June 30, 2024. On a consolidated basis, construction and land development and commercial real estate loans represent 34% and 227%, respectively, of total consolidated risk-based capital2.

    Capital and Liquidity

    • The Company continues to operate with a fortress balance sheet with a Tier 1 capital ratio at September 30, 2024 of 14.8%2 compared to 14.8% at June 30, 2024, and 14.0% at September 30, 2023. The Total capital ratio was 16.2%2, the Common Equity Tier 1 capital ratio was 14.1%2, and the Tier 1 leverage ratio was 11.2%2 at September 30, 2024. The Company is considered “well capitalized” based on applicable U.S. regulatory capital ratio requirements.
    • Cash and cash equivalents at September 30, 2024 totaled $637.1 million.
    • The Company’s loan to deposit ratio was 83.4% at September 30, 2024, which should provide liquidity and flexibility moving forward.
    • Tangible common equity to tangible assets was 9.64% at September 30, 2024, compared to 9.30% at June 30, 2024, and 8.68% at September 30, 2023. If all held-to-maturity securities were adjusted to fair value, the tangible common equity ratio would have been 9.11% at September 30, 2024.
    • At September 30, 2024, in addition to $637.1 million in cash, the Company had $5.6 billion in available borrowing capacity, including $4.1 billion in available collateralized lines of credit, $1.2 billion of unpledged debt securities available as collateral for potential additional borrowings, and available unsecured lines of credit of $0.3 billion. These liquidity sources as of September 30, 2024, represented 167% of uninsured and uncollateralized deposits.

    Non-GAAP measure, see “Explanation of Certain Unaudited Non-GAAP Financial Measures” for more information and for a reconciliation to GAAP.
    Estimated.

    FINANCIAL HIGHLIGHTS              
    (Amounts in thousands except per share data) (Unaudited)
      Quarterly Trends
                       
      3Q’24   2Q’24   1Q’24   4Q’23   3Q’23
    Selected balance sheet data:                  
    Gross loans $ 10,205,281     $ 10,038,508     $ 9,978,052     $ 10,062,940     $ 10,011,186  
    Total deposits   12,243,585       12,116,118       12,015,840       11,776,935       12,107,834  
    Total assets   15,168,371       14,952,613       14,830,015       14,580,249       14,823,007  
                       
    Performance measures:                  
    Net income $ 30,651     $ 30,244     $ 26,006     $ 29,543     $ 31,414  
    Net interest margin   3.17 %     3.18 %     3.24 %     3.36 %     3.57 %
    Pre-tax pre-provision earnings1 $ 46,086     $ 44,555     $ 35,674     $ 42,006     $ 43,383  
    Average diluted shares outstanding   85,069       84,816       85,270       85,336       85,666  
    Diluted earnings per share (EPS)   0.36       0.36       0.31       0.35       0.37  
    Return on (annualized):                  
    Average assets (ROA)   0.81 %     0.82 %     0.71 %     0.80 %     0.84 %
    Average tangible assets (ROTA)2   0.99       1.00       0.89       0.99       1.04  
    Average tangible common equity (ROTCE)2   10.31       10.75       9.55       11.22       11.90  
    Tangible common equity to tangible assets2   9.64       9.30       9.25       9.31       8.68  
    Tangible book value per share2 $ 16.20     $ 15.41     $ 15.26     $ 15.08     $ 14.26  
    Efficiency ratio   59.84 %     60.21 %     66.78 %     60.32 %     62.60 %
                       
    Adjusted operating measures1:                  
    Adjusted net income4 $ 30,511     $ 30,277     $ 31,132     $ 31,363     $ 34,170  
    Adjusted pre-tax pre-provision earnings4   46,390       44,490       42,513       45,016       47,349  
    Adjusted diluted EPS4   0.36       0.36       0.37       0.37       0.40  
    Adjusted ROTA2   0.98 %     1.00 %     1.04 %     1.04 %     1.12 %
    Adjusted ROTCE2   10.27       10.76       11.15       11.80       12.79  
    Adjusted efficiency ratio   59.84       60.21       61.13       60.32       60.19  
    Net adjusted noninterest expense as a
    percent of average tangible assets2
      2.19 %     2.19 %     2.23 %     2.25 %     2.34 %
                       
    Other data:                  
    Market capitalization3 $ 2,277,003     $ 2,016,472     $ 2,156,529     $ 2,415,158     $ 1,869,891  
    Full-time equivalent employees   1,493       1,449       1,445       1,541       1,570  
    Number of ATMs   96       95       95       96       97  
    Full-service banking offices   77       77       77       77       77  
    1Non-GAAP measure, see “Explanation of Certain Unaudited Non-GAAP Financial Measures” for more information and a reconciliation to GAAP.
    2The Company defines tangible assets as total assets less intangible assets, and tangible common equity as total shareholders’ equity less intangible assets.
    3Common shares outstanding multiplied by closing bid price on last day of each period.
    4As of 1Q’24, amortization of intangibles is excluded from adjustments to noninterest expense; prior periods have been updated to reflect the change.

    OTHER INFORMATION

    Conference Call Information

    Seacoast will host a conference call October 25, 2024, at 10:00 a.m. (Eastern Time) to discuss the third quarter of 2024 earnings results and business trends. Investors may call in (toll-free) by dialing (800) 715-9871 (Conference ID: 6787376). Charts will be used during the conference call and may be accessed at Seacoast’s website at www.SeacoastBanking.com by selecting “Presentations” under the heading “News/Events.” Additionally, a recording of the call will be made available to individuals shortly after the conference call and can be accessed via a link at www.SeacoastBanking.com under the heading “Corporate Information.” The recording will be available for one year.

    About Seacoast Banking Corporation of Florida (NASDAQ: SBCF)

    Seacoast Banking Corporation of Florida (NASDAQ: SBCF) is one of the largest community banks headquartered in Florida with approximately $15.2 billion in assets and $12.2 billion in deposits as of September 30, 2024. Seacoast provides integrated financial services including commercial and consumer banking, wealth management, and mortgage services to customers at 77 full-service branches across Florida, and through advanced mobile and online banking solutions. Seacoast National Bank is the wholly-owned subsidiary bank of Seacoast Banking Corporation of Florida. For more information about Seacoast, visit www.SeacoastBanking.com

    Cautionary Notice Regarding Forward-Looking Statements

    This press release contains “forward-looking statements” within the meaning, and protections, of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, statements about future financial and operating results, cost savings, enhanced revenues, economic and seasonal conditions in the Company’s markets, and improvements to reported earnings that may be realized from cost controls, tax law changes, new initiatives and for integration of banks that the Company has acquired, or expects to acquire, as well as statements with respect to Seacoast’s objectives, strategic plans, expectations and intentions and other statements that are not historical facts. Actual results may differ from those set forth in the forward-looking statements.

    Forward-looking statements include statements with respect to the Company’s beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates and intentions about future performance and involve known and unknown risks, uncertainties and other factors, which may be beyond the Company’s control, and which may cause the actual results, performance or achievements of Seacoast Banking Corporation of Florida (“Seacoast” or the “Company”) or its wholly-owned banking subsidiary, Seacoast National Bank (“Seacoast Bank”), to be materially different from results, performance or achievements expressed or implied by such forward-looking statements. You should not expect the Company to update any forward-looking statements.

    All statements other than statements of historical fact could be forward-looking statements. You can identify these forward-looking statements through the use of words such as “may”, “will”, “anticipate”, “assume”, “should”, “support”, “indicate”, “would”, “believe”, “contemplate”, “expect”, “estimate”, “continue”, “further”, “plan”, “point to”, “project”, “could”, “intend”, “target” or other similar words and expressions of the future. These forward-looking statements may not be realized due to a variety of factors, including, without limitation: the impact of current and future economic and market conditions generally (including seasonality) and in the financial services industry, nationally and within Seacoast’s primary market areas, including the effects of inflationary pressures, changes in interest rates, slowdowns in economic growth, and the potential for high unemployment rates, as well as the financial stress on borrowers and changes to customer and client behavior and credit risk as a result of the foregoing; potential impacts of adverse developments in the banking industry, including those highlighted by high-profile bank failures, and including impacts on customer confidence, deposit outflows, liquidity and the regulatory response thereto (including increases in the cost of our deposit insurance assessments), the Company’s ability to effectively manage its liquidity risk and any growth plans, and the availability of capital and funding; governmental monetary and fiscal policies, including interest rate policies of the Board of Governors of the Federal Reserve, as well as legislative, tax and regulatory changes including proposed overdraft and late fee caps, including those that impact the money supply and inflation; the risks of changes in interest rates on the level and composition of deposits (as well as the cost of, and competition for, deposits), loan demand, liquidity and the values of loan collateral, securities, and interest rate sensitive assets and liabilities; interest rate risks (including the impacts of interest rates on macroeconomic conditions, customer and client behavior, and on our net interest income), sensitivities and the shape of the yield curve; changes in accounting policies, rules and practices; changes in retail distribution strategies, customer preferences and behavior generally and as a result of economic factors, including heightened inflation; changes in the availability and cost of credit and capital in the financial markets; changes in the prices, values and sales volumes of residential and commercial real estate, especially as they relate to the value of collateral supporting the Company’s loans; the Company’s concentration in commercial real estate loans and in real estate collateral in Florida; Seacoast’s ability to comply with any regulatory requirements and the risk that the regulatory environment may not be conducive to or may prohibit or delay the consummation of future mergers and/or business combinations, may increase the length of time and amount of resources required to consummate such transactions, and may reduce the anticipated benefit; inaccuracies or other failures from the use of models, including the failure of assumptions and estimates, as well as differences in, and changes to, economic, market and credit conditions; the impact on the valuation of Seacoast’s investments due to market volatility or counterparty payment risk, as well as the effect of a decline in stock market prices on our fee income from our wealth management business; statutory and regulatory dividend restrictions; increases in regulatory capital requirements for banking organizations generally; the risks of mergers, acquisitions and divestitures, including Seacoast’s ability to continue to identify acquisition targets, successfully acquire and integrate desirable financial institutions and realize expected revenues and revenue synergies; changes in technology or products that may be more difficult, costly, or less effective than anticipated; the Company’s ability to identify and address increased cybersecurity risks, including those impacting vendors and other third parties which may be exacerbated by developments in generative artificial intelligence; fraud or misconduct by internal or external parties, which Seacoast may not be able to prevent, detect or mitigate; inability of Seacoast’s risk management framework to manage risks associated with the Company’s business; dependence on key suppliers or vendors to obtain equipment or services for the business on acceptable terms; reduction in or the termination of Seacoast’s ability to use the online- or mobile-based platform that is critical to the Company’s business growth strategy; the effects of war or other conflicts, acts of terrorism, natural disasters, including hurricanes in the Company’s footprint, health emergencies, epidemics or pandemics, or other catastrophic events that may affect general economic conditions and/or increase costs, including, but not limited to, property and casualty and other insurance costs; Seacoast’s ability to maintain adequate internal controls over financial reporting; potential claims, damages, penalties, fines, costs and reputational damage resulting from pending or future litigation, regulatory proceedings and enforcement actions; the risks that deferred tax assets could be reduced if estimates of future taxable income from the Company’s operations and tax planning strategies are less than currently estimated, the results of tax audit findings, challenges to our tax positions, or adverse changes or interpretations of tax laws; the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, non-bank financial technology providers, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions; the failure of assumptions underlying the establishment of reserves for expected credit losses; risks related to, and the costs associated with, environmental, social and governance matters, including the scope and pace of related rulemaking activity and disclosure requirements; a deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S. government may take to avoid exceeding the debt ceiling, and uncertainties surrounding the federal budget and economic policy; the risk that balance sheet, revenue growth, and loan growth expectations may differ from actual results; and other factors and risks described under “Risk Factors” herein and in any of the Company’s subsequent reports filed with the SEC and available on its website at www.sec.gov.

    All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in the Company’s annual report on Form 10-K for the year ended December 31, 2023 and in other periodic reports that the Company files with the SEC. Such reports are available upon request from the Company, or from the Securities and Exchange Commission, including through the SEC’s Internet website at www.sec.gov.

    FINANCIAL HIGHLIGHTS         (Unaudited)          
    SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                    
              Quarterly Trends           Nine Months Ended
    (Amounts in thousands, except ratios and per share data) 3Q’24   2Q’24   1Q’24   4Q’23   3Q’23   3Q’24   3Q’23
    Summary of Earnings                          
    Net income $ 30,651     $ 30,244     $ 26,006     $ 29,543     $ 31,414     $ 86,901     $ 74,490  
    Adjusted net income1,6   30,511       30,277       31,132       31,363       34,170       91,920       101,878  
    Net interest income2   106,975       104,657       105,298       111,035       119,505       316,930       378,009  
    Net interest margin2,3   3.17 %     3.18 %     3.24 %     3.36 %     3.57 %     3.19 %     3.91 %
    Pre-tax pre-provision earnings1   46,086       44,555       35,674       42,006       43,383       126,315       131,807  
    Adjusted pre-tax pre-provision earnings1,6   46,390       44,490       42,513       45,016       47,349       133,393       168,905  
                               
    Performance Ratios                          
    Return on average assets-GAAP basis3   0.81 %     0.82 %     0.71 %     0.80 %     0.84 %     0.78 %     0.68 %
    Return on average tangible assets-GAAP basis3,4   0.99       1.00       0.89       0.99       1.04       0.96       0.88  
    Adjusted return on average tangible assets1,3,4   0.98       1.00       1.04       1.04       1.12       1.01       1.15  
    Pre-tax pre-provision return on average tangible assets1,3,4,6   1.46       1.45       1.22       1.39       1.43       1.38       1.49  
    Adjusted pre-tax pre-provision return on average tangible assets1,3,4   1.47       1.45       1.42       1.48       1.55       1.44       1.85  
    Net adjusted noninterest expense to average tangible assets1,3,4   2.19       2.19       2.23       2.25       2.34       2.20       2.40  
    Return on average shareholders’ equity-GAAP basis3   5.62       5.74       4.94       5.69       6.01       5.44       4.94  
    Return on average tangible common equity-GAAP basis3,4   10.31       10.75       9.55       11.22       11.90       10.21       10.09  
    Adjusted return on average tangible common equity1,3,4   10.27       10.76       11.15       11.80       12.79       10.72       13.14  
    Efficiency ratio5   59.84       60.21       66.78       60.32       62.60       62.24       65.19  
    Adjusted efficiency ratio1   59.84       60.21       61.13       60.32       60.19       60.39       56.47  
    Noninterest income to total revenue (excluding securities gains/losses)   18.05       17.55       16.17       15.14       13.22       17.27       14.16  
    Tangible common equity to tangible assets4   9.64       9.30       9.25       9.31       8.68       9.64       8.68  
    Average loan-to-deposit ratio   83.79       83.11       84.50       83.38       82.63       83.80       82.86  
    End of period loan-to-deposit ratio   83.44       82.90       83.12       85.48       82.71       83.44       82.71  
                               
    Per Share Data                          
    Net income diluted-GAAP basis $ 0.36     $ 0.36     $ 0.31     $ 0.35     $ 0.37     $ 1.02     $ 0.89  
    Net income basic-GAAP basis   0.36       0.36       0.31       0.35       0.37       1.03       0.89  
    Adjusted earnings1,6   0.36       0.36       0.37       0.37       0.40       1.08       1.21  
                               
    Book value per share common   25.68       24.98       24.93       24.84       24.06       25.68       24.06  
    Tangible book value per share   16.20       15.41       15.26       15.08       14.26       16.20       14.26  
    Cash dividends declared   0.18       0.18       0.18       0.18       0.18       0.54       0.53  
    1Non-GAAP measure – see “Explanation of Certain Unaudited Non-GAAP Financial Measures” for more information and a reconciliation to GAAP. 2Calculated on a fully taxable equivalent basis using amortized cost. 3These ratios are stated on an annualized basis and are not necessarily indicative of future periods. 4The Company defines tangible assets as total assets less intangible assets, and tangible common equity as total shareholders’ equity less intangible assets. 5Defined as noninterest expense less amortization of intangibles and gains, losses, and expenses on foreclosed properties divided by net operating revenue (net interest income on a fully taxable equivalent basis plus noninterest income excluding securities gains and losses). 6As of 1Q’24, amortization of intangibles is excluded from adjustments to noninterest expense; prior periods have been updated to reflect the change.
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME   (Unaudited)          
    SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                    
      Quarterly Trends   Nine Months Ended
    (Amounts in thousands, except per share data) 3Q’24   2Q’24   1Q’24   4Q’23   3Q’23   3Q’24   3Q’23
                               
    Interest on securities:                          
    Taxable $ 25,963   $ 24,155     $ 22,393     $ 21,383     $ 21,401     $ 72,511   $ 61,543  
    Nontaxable   34     33       34       55       97       101     299  
    Interest and fees on loans   150,980     147,292       147,095       147,801       149,871       445,367     433,304  
    Interest on interest bearing deposits and other investments   7,138     8,328       6,184       7,616       8,477       21,650     16,974  
    Total Interest Income   184,115     179,808       175,706       176,855       179,846       539,629     512,120  
                               
    Interest on deposits   51,963     51,319       47,534       44,923       38,396       150,816     81,612  
    Interest on time certificates   19,002     17,928       17,121       15,764       16,461       54,051     36,490  
    Interest on borrowed money   6,485     6,137       5,973       5,349       5,683       18,595     16,597  
    Total Interest Expense   77,450     75,384       70,628       66,036       60,540       223,462     134,699  
                               
    Net Interest Income   106,665     104,424       105,078       110,819       119,306       316,167     377,421  
    Provision for credit losses   6,273     4,918       1,368       3,990       2,694       12,559     33,528  
    Net Interest Income After Provision for Credit Losses   100,392     99,506       103,710       106,829       116,612       303,608     343,893  
                               
    Noninterest income:                          
    Service charges on deposit accounts   5,412     5,342       4,960       4,828       4,648       15,714     13,450  
    Interchange income   1,911     1,940       1,888       2,433       1,684       5,739     11,444  
    Wealth management income   3,843     3,766       3,540       3,261       3,138       11,149     9,519  
    Mortgage banking fees   485     582       381       378       410       1,448     1,412  
    Insurance agency income   1,399     1,355       1,291       1,066       1,183       4,045     3,444  
    SBA gains   391     694       739       921       613       1,824     1,184  
    BOLI income   2,578     2,596       2,264       2,220       2,197       7,438     6,181  
    Other   7,473     5,953       5,205       4,668       4,307       18,631     15,636  
        23,492     22,228       20,268       19,775       18,180       65,988     62,270  
    Securities gains (losses), net   187     (44 )     229       (2,437 )     (387 )     372     (456 )
    Total Noninterest Income   23,679     22,184       20,497       17,338       17,793       66,360     61,814  
                               
    Noninterest expense:                          
    Salaries and wages   40,697     38,937       40,304       38,435       46,431       119,938     139,202  
    Employee benefits   6,955     6,861       7,889       6,678       7,206       21,705     23,240  
    Outsourced data processing costs   8,003     8,210       12,118       8,609       8,714       28,331     43,489  
    Occupancy   7,096     7,180       8,037       7,512       7,758       22,313     24,360  
    Furniture and equipment   2,060     1,956       2,011       2,028       2,052       6,027     6,664  
    Marketing   2,729     3,266       2,655       2,995       1,876       8,650     6,161  
    Legal and professional fees   2,708     1,982       2,151       3,294       2,679       6,841     14,220  
    FDIC assessments   1,882     2,131       2,158       2,813       2,258       6,171     5,817  
    Amortization of intangibles   6,002     6,003       6,292       6,888       7,457       18,297     21,838  
    Other real estate owned expense and net loss (gain) on sale   491     (109 )     (26 )     573       274       356     412  
    Provision for credit losses on unfunded commitments   250     251       250                   751     1,239  
    Other   5,945     5,869       6,532       6,542       7,210       18,346     22,613  
    Total Noninterest Expense   84,818     82,537       90,371       86,367       93,915       257,726     309,255  
                               
    Income Before Income Taxes   39,253     39,153       33,836       37,800       40,490       112,242     96,452  
    Provision for income taxes   8,602     8,909       7,830       8,257       9,076       25,341     21,962  
    Net Income $ 30,651   $ 30,244     $ 26,006     $ 29,543     $ 31,414     $ 86,901   $ 74,490  
                               
    Share Data                          
    Net income per share of common stock                          
    Diluted $ 0.36   $ 0.36     $ 0.31     $ 0.35     $ 0.37     $ 1.02   $ 0.89  
    Basic   0.36     0.36       0.31       0.35       0.37       1.03     0.89  
    Cash dividends declared   0.18     0.18       0.18       0.18       0.18       0.54     0.53  
                               
    Average common shares outstanding                          
    Diluted   85,069     84,816       85,270       85,336       85,666       84,915     83,993  
    Basic   84,434     84,341       84,908       84,817       85,142       84,319     83,457  
                               
    CONDENSED CONSOLIDATED BALANCE SHEETS       (Unaudited)        
    SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                
      September 30,   June 30,   March 31,   December 31,   September 30,
    (Amounts in thousands)  2024     2024     2024     2023     2023 
    Assets                  
    Cash and due from banks $ 182,743     $ 168,738     $ 137,850     $ 167,511     $ 182,036  
    Interest bearing deposits with other banks   454,315       580,787       544,874       279,671       513,946  
    Total cash and cash equivalents   637,058       749,525       682,724       447,182       695,982  
                       
    Time deposits with other banks   5,207       7,856       7,856       5,857       4,357  
                       
    Debt Securities:                  
    Securities available for sale (at fair value)   2,160,055       1,967,204       1,949,463       1,836,020       1,841,845  
    Securities held to maturity (at amortized cost)   646,050       658,055       669,896       680,313       691,404  
    Total debt securities   2,806,105       2,625,259       2,619,359       2,516,333       2,533,249  
                       
    Loans held for sale   11,039       5,975       9,475       4,391       2,979  
                       
    Loans   10,205,281       10,038,508       9,978,052       10,062,940       10,011,186  
    Less: Allowance for credit losses   (140,469 )     (141,641 )     (146,669 )     (148,931 )     (149,661 )
    Loans, net of allowance for credit losses   10,064,812       9,896,867       9,831,383       9,914,009       9,861,525  
                       
    Bank premises and equipment, net   108,776       109,945       110,787       113,304       115,749  
    Other real estate owned   6,421       6,877       7,315       7,560       7,216  
    Goodwill   732,417       732,417       732,417       732,417       731,970  
    Other intangible assets, net   77,431       83,445       89,377       95,645       102,397  
    Bank owned life insurance   306,379       303,816       301,229       298,974       296,763  
    Net deferred tax assets   94,820       108,852       111,539       113,232       131,602  
    Other assets   317,906       321,779       326,554       331,345       339,218  
    Total Assets $ 15,168,371     $ 14,952,613     $ 14,830,015     $ 14,580,249     $ 14,823,007  
                       
    Liabilities                  
    Deposits                  
    Noninterest demand $ 3,443,455     $ 3,397,918     $ 3,555,401     $ 3,544,981     $ 3,868,132  
    Interest-bearing demand   2,487,448       2,821,092       2,711,041       2,790,210       2,800,152  
    Savings   524,474       566,052       608,088       651,454       721,558  
    Money market   4,034,371       3,707,761       3,531,029       3,314,288       3,143,897  
    Time deposits   1,753,837       1,623,295       1,610,281       1,476,002       1,574,095  
    Total Deposits   12,243,585       12,116,118       12,015,840       11,776,935       12,107,834  
                       
    Securities sold under agreements to repurchase   210,176       262,103       326,732       374,573       276,450  
    Federal Home Loan Bank borrowings   245,000       180,000       110,000       50,000       110,000  
    Long-term debt, net   106,800       106,634       106,468       106,302       106,136  
    Other liabilities   168,960       157,377       153,225       164,353       174,193  
    Total Liabilities   12,974,521       12,822,232       12,712,265       12,472,163       12,774,613  
                       
    Shareholders’ Equity                  
    Common stock   8,614       8,530       8,494       8,486       8,515  
    Additional paid in capital   1,821,050       1,815,800       1,811,941       1,808,883       1,813,068  
    Retained earnings   508,036       492,805       478,017       467,305       453,117  
    Less: Treasury stock   (18,680 )     (18,744 )     (16,746 )     (16,710 )     (14,035 )
        2,319,020       2,298,391       2,281,706       2,267,964       2,260,665  
    Accumulated other comprehensive loss, net   (125,170 )     (168,010 )     (163,956 )     (159,878 )     (212,271 )
    Total Shareholders’ Equity   2,193,850       2,130,381       2,117,750       2,108,086       2,048,394  
    Total Liabilities & Shareholders’ Equity $ 15,168,371     $ 14,952,613     $ 14,830,015     $ 14,580,249     $ 14,823,007  
                       
    Common shares outstanding   85,441       85,299       84,935       84,861       85,150  
    CONSOLIDATED QUARTERLY FINANCIAL DATA       (Unaudited)    
    SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                    
                         
    (Amounts in thousands)   3Q’24   2Q’24   1Q’24   4Q’23   3Q’23
    Credit Analysis                    
    Net charge-offs   $ 7,445     $ 9,946     $ 3,630     $ 4,720     $ 12,748  
    Net charge-offs to average loans     0.29 %     0.40 %     0.15 %     0.19 %     0.50 %
                         
    Allowance for credit losses   $ 140,469     $ 141,641     $ 146,669     $ 148,931     $ 149,661  
                         
    Non-acquired loans at end of period   $ 7,178,186     $ 6,834,059     $ 6,613,763     $ 6,571,454     $ 6,343,121  
    Acquired loans at end of period     3,027,095       3,204,449       3,364,289       3,491,486       3,668,065  
    Total Loans   $ 10,205,281     $ 10,038,508     $ 9,978,052     $ 10,062,940     $ 10,011,186  
                         
    Total allowance for credit losses to total loans at end of period     1.38 %     1.41 %     1.47 %     1.48 %     1.49 %
    Purchase discount on acquired loans at end of period     4.48       4.51       4.63       4.75       4.86  
                         
    End of Period                    
    Nonperforming loans   $ 80,857     $ 59,927     $ 77,205     $ 65,104     $ 41,508  
    Other real estate owned     933       1,173       309       221       221  
    Properties previously used in bank operations included in other real estate owned     5,488       5,704       7,006       7,339       6,995  
    Total Nonperforming Assets   $ 87,278     $ 66,804     $ 84,520     $ 72,664     $ 48,724  
                         
    Nonperforming Loans to Loans at End of Period     0.79 %     0.60 %     0.77 %     0.65 %     0.41 %
                         
    Nonperforming Assets to Total Assets at End of Period     0.58       0.45       0.57       0.50       0.33  
                         
        September 30,   June 30,   March 31,   December 31,   September 30,
    Loans    2024     2024     2024     2023     2023 
    Construction and land development   $ 595,753     $ 593,534     $ 623,246     $ 767,622     $ 793,736  
    Commercial real estate – owner occupied     1,676,814       1,656,391       1,656,131       1,670,281       1,675,881  
    Commercial real estate – non-owner occupied     3,573,076       3,423,266       3,368,339       3,319,890       3,285,974  
    Residential real estate     2,564,903       2,555,320       2,521,399       2,445,692       2,418,903  
    Commercial and financial     1,575,228       1,582,290       1,566,198       1,607,888       1,588,152  
    Consumer     219,507       227,707       242,739       251,567       248,540  
    Total Loans   $ 10,205,281     $ 10,038,508     $ 9,978,052     $ 10,062,940     $ 10,011,186  
     
    AVERAGE BALANCES, INTEREST INCOME AND EXPENSES, YIELDS AND RATES 1       (Unaudited)                    
    SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                                
                                       
                                       
      3Q’24   2Q’24   3Q’23
      Average       Yield/   Average       Yield/   Average       Yield/
    (Amounts in thousands) Balance   Interest   Rate   Balance   Interest   Rate   Balance   Interest   Rate
                                       
    Assets                                  
    Earning assets:                                  
    Securities:                                  
    Taxable $ 2,756,502     $ 25,963   3.75 %   $ 2,629,716     $ 24,155   3.69 %   $ 2,575,002     $ 21,401   3.32 %
    Nontaxable   5,701       42   2.93       5,423       40   2.97       15,280       119   3.11  
    Total Securities   2,762,203       26,005   3.75       2,635,139       24,195   3.69       2,590,282       21,520   3.32  
                                       
    Federal funds sold   433,423       5,906   5.42       510,401       6,967   5.49       547,576       7,415   5.37  
    Interest bearing deposits with other banks and other investments   102,700       1,232   4.77       98,942       1,361   5.53       90,039       1,062   4.68  
                                       
    Total Loans, net2   10,128,822       151,282   5.94       10,005,122       147,518   5.93       10,043,611       150,048   5.93  
                                       
    Total Earning Assets   13,427,148       184,425   5.46       13,249,604       180,041   5.47       13,271,508       180,045   5.38  
                                       
    Allowance for credit losses   (141,974 )             (146,380 )             (158,440 )        
    Cash and due from banks   167,103               168,439               168,931          
    Bank premises and equipment, net   109,699               110,709               116,704          
    Intangible assets   812,761               818,914               839,787          
    Bank owned life insurance   304,703               302,165               295,272          
    Other assets including deferred tax assets   317,406               336,256               372,241          
                                       
    Total Assets $ 14,996,846             $ 14,839,707             $ 14,906,003          
                                       
    Liabilities and Shareholders’ Equity                                  
    Interest-bearing liabilities:                                  
    Interest-bearing demand $ 2,489,674     $ 12,905   2.06 %   $ 2,670,569     $ 14,946   2.25 %   $ 2,804,243     $ 15,013   2.12 %
    Savings   546,473       601   0.44       584,490       560   0.39       770,503       465   0.24  
    Money market   3,942,357       38,457   3.88       3,665,858       35,813   3.93       2,972,495       22,918   3.06  
    Time deposits   1,716,720       19,002   4.40       1,631,290       17,928   4.42       1,619,572       16,461   4.03  
    Securities sold under agreements to repurchase   241,083       2,044   3.37       293,603       2,683   3.68       327,711       2,876   3.48  
    Federal Home Loan Bank borrowings   237,935       2,549   4.26       149,234       1,592   4.29       111,087       888   3.17  
    Long-term debt, net   106,706       1,892   7.05       106,532       1,862   7.03       106,036       1,919   7.18  
                                       
    Total Interest-Bearing Liabilities   9,280,948       77,450   3.32       9,101,576       75,384   3.33       8,711,647       60,540   2.76  
                                       
    Noninterest demand   3,393,110               3,485,603               3,987,761          
    Other liabilities   154,344               134,900               133,846          
    Total Liabilities   12,828,402               12,722,079               12,833,254          
                                       
    Shareholders’ equity   2,168,444               2,117,628               2,072,747          
                                       
    Total Liabilities & Equity $ 14,996,846             $ 14,839,707             $ 14,906,003          
                                       
    Cost of deposits         2.34 %           2.31 %           1.79 %
    Interest expense as a % of earning assets         2.29 %           2.29 %           1.81 %
    Net interest income as a % of earning assets     $ 106,975   3.17 %       $ 104,657   3.18 %       $ 119,505   3.57 %
                                       
                                       
    On a fully taxable equivalent basis. All yields and rates have been computed using amortized cost.              
    Fees on loans have been included in interest on loans. Nonaccrual loans are included in loan balances.              
    AVERAGE BALANCES, INTEREST INCOME AND EXPENSES, YIELDS AND RATES 1       (Unaudited)        
    SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                    
                           
                           
      Nine Months Ended September 30, 2024   Nine Months Ended September 30, 2023
      Average       Yield/   Average       Yield/
    (Amounts in thousands) Balance   Interest   Rate   Balance   Interest   Rate
                           
    Assets                      
    Earning assets:                      
    Securities:                      
    Taxable $ 2,655,422     $ 72,511   3.65 %   $ 2,649,127     $ 61,543   3.10 %
    Nontaxable   5,677       123   2.89       15,721       370   3.14  
    Total Securities   2,661,099       72,634   3.65       2,664,848       61,913   3.10  
                           
    Federal funds sold   438,089       17,929   5.47       336,022       12,444   4.95  
    Interest bearing deposits with other banks and other investments   102,415       3,721   4.85       90,511       4,530   6.69  
                           
    Total Loans, net2   10,056,466       446,108   5.93       9,840,484       433,821   5.89  
                           
    Total Earning Assets   13,258,069       540,392   5.44       12,931,865       512,708   5.30  
                           
    Allowance for credit losses   (145,579 )             (151,613 )        
    Cash and due from banks   167,424               185,426          
    Bank premises and equipment, net   110,929               116,840          
    Intangible assets   819,046               811,483          
    Bank owned life insurance   302,220               287,756          
    Other assets including deferred tax assets   330,898               402,175          
                           
    Total Assets $ 14,843,007             $ 14,583,932          
                           
    Liabilities and Shareholders’ Equity                      
    Interest-bearing liabilities:                      
    Interest-bearing demand $ 2,626,026     $ 43,117   2.19 %   $ 2,642,180     $ 25,780   1.30 %
    Savings   586,285       1,701   0.39       909,184       1,292   0.19  
    Money market   3,673,493       105,998   3.85       2,831,747       54,540   2.58  
    Time deposits   1,646,285       54,051   4.39       1,288,736       36,490   3.79  
    Securities sold under agreements to repurchase   289,181       7,806   3.61       249,242       5,333   2.86  
    Federal Home Loan Bank borrowings   163,468       5,101   4.17       214,415       5,936   3.70  
    Long-term debt, net   106,538       5,688   7.13       103,469       5,328   6.88  
                           
    Total Interest-Bearing Liabilities   9,091,276       223,462   3.28       8,238,973       134,699   2.19  
                           
    Noninterest demand   3,468,790               4,204,389          
    Other liabilities   148,000               126,487          
    Total Liabilities   12,708,066               12,569,849          
                           
    Shareholders’ equity   2,134,941               2,014,083          
                           
    Total Liabilities & Equity $ 14,843,007             $ 14,583,932          
                           
    Cost of deposits         2.28 %           1.33 %
    Interest expense as a % of earning assets         2.25 %           1.39 %
    Net interest income as a % of earning assets     $ 316,930   3.19 %       $ 378,009   3.91 %
                           
                           
    On a fully taxable equivalent basis. All yields and rates have been computed using amortized cost.        
    Fees on loans have been included in interest on loans. Nonaccrual loans are included in loan balances.        
    CONSOLIDATED QUARTERLY FINANCIAL DATA         (Unaudited)        
    SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                  
    (Amounts in thousands) September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Customer Relationship Funding                  
    Noninterest demand                  
    Commercial $ 2,731,564   $ 2,664,353   $ 2,808,151   $ 2,752,644   $ 3,089,488
    Retail   509,527     532,623     553,697     561,569     570,727
    Public funds   139,072     142,846     145,747     173,893     134,649
    Other   63,292     58,096     47,806     56,875     73,268
    Total Noninterest Demand   3,443,455     3,397,918     3,555,401     3,544,981     3,868,132
                       
    Interest-bearing demand                  
    Commercial   1,426,920     1,533,725     1,561,905     1,576,491     1,618,755
    Retail   874,043     892,032     930,178     956,900     994,224
    Brokered       198,337            
    Public funds   186,485     196,998     218,958     256,819     187,173
    Total Interest-Bearing Demand   2,487,448     2,821,092     2,711,041     2,790,210     2,800,152
                       
    Total transaction accounts                  
    Commercial   4,158,484     4,198,078     4,370,056     4,329,135     4,708,243
    Retail   1,383,570     1,424,655     1,483,875     1,518,469     1,564,951
    Brokered       198,337            
    Public funds   325,557     339,844     364,705     430,712     321,822
    Other   63,292     58,096     47,806     56,875     73,268
    Total Transaction Accounts   5,930,903     6,219,010     6,266,442     6,335,191     6,668,284
                       
    Savings                  
    Commercial   44,151     53,523     52,665     58,562     79,731
    Retail   480,323     512,529     555,423     592,892     641,827
    Total Savings   524,474     566,052     608,088     651,454     721,558
                       
    Money market                  
    Commercial   1,953,851     1,771,927     1,709,636     1,655,820     1,625,455
    Retail   1,887,975     1,733,505     1,621,618     1,469,142     1,362,390
    Public funds   192,545     202,329     199,775     189,326     156,052
    Total Money Market   4,034,371     3,707,761     3,531,029     3,314,288     3,143,897
                       
    Brokered time certificates   256,536     126,668     142,717     122,347     307,963
    Time deposits   1,497,301     1,496,627     1,467,564     1,353,655     1,266,132
        1,753,837     1,623,295     1,610,281     1,476,002     1,574,095
    Total Deposits $ 12,243,585   $ 12,116,118   $ 12,015,840   $ 11,776,935   $ 12,107,834
                       
    Securities sold under agreements to repurchase   210,176     262,103     326,732     374,573     276,450
                       
    Total customer funding 1 $ 12,197,225   $ 12,053,216   $ 12,199,855   $ 12,029,161   $ 12,076,321
                       
    1Total deposits and securities sold under agreements to repurchase, excluding brokered deposits. Securities sold under agreements to repurchase consists of customer sweep accounts.

    Explanation of Certain Unaudited Non-GAAP Financial Measures

    This presentation contains financial information determined by methods other than Generally Accepted Accounting Principles (“GAAP”). Management uses these non-GAAP financial measures in its analysis of the Company’s performance and believes these presentations provide useful supplemental information, and a clearer understanding of the Company’s performance. The Company believes the non-GAAP measures enhance investors’ understanding of the Company’s business and performance and if not provided would be requested by the investor community. These measures are also useful in understanding performance trends and facilitate comparisons with the performance of other financial institutions. The limitations associated with operating measures are the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might define or calculate these measures differently. The Company provides reconciliations between GAAP and these non-GAAP measures. These disclosures should not be considered an alternative to GAAP.

    GAAP TO NON-GAAP RECONCILIATION         (Unaudited)              
    SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                        
              Quarterly Trends           Nine Months Ended
    (Amounts in thousands, except per share data) 3Q’24   2Q’24   1Q’24   4Q’23   3Q’23   3Q’24 3Q’23
    Net Income $ 30,651     $ 30,244     $ 26,006     $ 29,543     $ 31,414     $ 86,901   $ 74,490  
                             
    Total noninterest income   23,679       22,184       20,497       17,338       17,793       66,360     61,814  
    Securities (gains) losses, net   (187 )     44       (229 )     2,437       387       (372 )   456  
    BOLI benefits on death (included in other income)                                     (2,117 )
    Total Adjustments to Noninterest Income   (187 )     44       (229 )     2,437       387       (372 )   (1,661 )
    Total Adjusted Noninterest Income   23,492       22,228       20,268       19,775       18,180       65,988     60,153  
                             
    Total noninterest expense   84,818       82,537       90,371       86,367       93,915       257,726     309,255  
    Merger-related charges                                     (33,180 )
    Branch reductions and other expense initiatives               (7,094 )           (3,305 )     (7,094 )   (5,167 )
    Adjustments to Noninterest Expense               (7,094 )           (3,305 )     (7,094 )   (38,347 )
    Adjusted Noninterest Expense2   84,818       82,537       83,277       86,367       90,610       250,632     270,908  
                             
    Income Taxes   8,602       8,909       7,830       8,257       9,076       25,341     21,962  
    Tax effect of adjustments   (47 )     11       1,739       617       936       1,703     9,298  
    Adjusted Income Taxes   8,555       8,920       9,569       8,874       10,012       27,044     31,260  
    Adjusted Net Income2 $ 30,511     $ 30,277     $ 31,132     $ 31,363     $ 34,170     $ 91,920   $ 101,878  
                             
    Earnings per diluted share, as reported $ 0.36     $ 0.36     $ 0.31     $ 0.35     $ 0.37     $ 1.02   $ 0.89  
    Adjusted Earnings per Diluted Share   0.36       0.36       0.37       0.37       0.40       1.08     1.21  
    Average diluted shares outstanding   85,069       84,816       85,270       85,336       85,666       84,915     83,993  
                             
    Adjusted Noninterest Expense $ 84,818     $ 82,537     $ 83,277     $ 86,367     $ 90,610     $ 250,632   $ 270,908  
    Provision for credit losses on unfunded commitments   (250 )     (251 )     (250 )                 (751 )   (1,239 )
    Other real estate owned expense and net gain (loss) on sale   (491 )     109       26       (573 )     (274 )     (356 )   (412 )
    Amortization of intangibles   (6,002 )     (6,003 )     (6,292 )     (6,888 )     (7,457 )     (18,297 )   (21,838 )
    Net Adjusted Noninterest Expense $ 78,075     $ 76,392     $ 76,761     $ 78,906     $ 82,879     $ 231,228   $ 247,419  
    Average tangible assets   14,184,085       14,020,793       13,865,245       13,906,005       14,066,216       14,023,961     13,772,449  
    Net Adjusted Noninterest Expense to Average Tangible Assets   2.19 %     2.19 %     2.23 %     2.25 %     2.34 %     2.20 %   2.40 %
                             
    Net Revenue $ 130,344     $ 126,608     $ 125,575     $ 128,157     $ 137,099     $ 382,527   $ 439,235  
    Total Adjustments to Net Revenue   (187 )     44       (229 )     2,437       387       (372 )   (1,661 )
    Impact of FTE adjustment   310       233       220       216       199       763     588  
    Adjusted Net Revenue on a fully taxable equivalent basis $ 130,467     $ 126,885     $ 125,566     $ 130,810     $ 137,685     $ 382,918   $ 438,162  
    Adjusted Efficiency Ratio   59.84 %     60.21 %     61.13 %     60.32 %     60.19 %     60.39 %   56.47 %
                             
    Net Interest Income $ 106,665     $ 104,424     $ 105,078     $ 110,819     $ 119,306     $ 316,167   $ 377,421  
    Impact of FTE adjustment   310       233       220       216       199       763     588  
    Net Interest Income including FTE adjustment $ 106,975     $ 104,657     $ 105,298     $ 111,035     $ 119,505     $ 316,930   $ 378,009  
    Total noninterest income   23,679       22,184       20,497       17,338       17,793       66,360     61,814  
    Total noninterest expense less provision for credit losses on unfunded commitments   84,568       82,286       90,121       86,367       93,915       256,975     308,016  
    Pre-Tax Pre-Provision Earnings $ 46,086     $ 44,555     $ 35,674     $ 42,006     $ 43,383     $ 126,315   $ 131,807  
    Total Adjustments to Noninterest Income   (187 )     44       (229 )     2,437       387       (372 )   (1,661 )
    Total Adjustments to Noninterest Expense including other real estate owned expense and net (gain) loss on sale   491       (109 )     7,068       573       3,579       7,450     38,759  
    Adjusted Pre-Tax Pre-Provision Earnings2 $ 46,390     $ 44,490     $ 42,513     $ 45,016     $ 47,349     $ 133,393   $ 168,905  
                             
    Average Assets $ 14,996,846     $ 14,839,707     $ 14,690,776     $ 14,738,034     $ 14,906,003     $ 14,843,007   $ 14,583,932  
    Less average goodwill and intangible assets   (812,761 )     (818,914 )     (825,531 )     (832,029 )     (839,787 )     (819,046 )   (811,483 )
    Average Tangible Assets $ 14,184,085     $ 14,020,793     $ 13,865,245     $ 13,906,005     $ 14,066,216     $ 14,023,961   $ 13,772,449  
    Return on Average Assets (ROA)   0.81 %     0.82 %     0.71 %     0.80 %     0.84 %     0.78 %   0.68 %
    Impact of removing average intangible assets and related amortization   0.18       0.18       0.18       0.19       0.20       0.18     0.20  
    Return on Average Tangible Assets (ROTA)   0.99       1.00       0.89       0.99       1.04       0.96     0.88  
    Impact of other adjustments for Adjusted Net Income   (0.01 )           0.15       0.05       0.08       0.05     0.27  
    Adjusted Return on Average Tangible Assets   0.98       1.00       1.04       1.04       1.12       1.01     1.15  
                             
    Pre-Tax Pre-Provision return on Average Tangible Assets   1.46       1.45       1.22       1.39       1.43       1.38     1.49  
    Impact of adjustments on Pre-Tax Pre-Provision earnings   0.01             0.20       0.09       0.12       0.06     0.36  
    Adjusted Pre-Tax Pre-Provision Return on Tangible Assets2   1.47 %     1.45 %     1.42 %     1.48 %     1.55 %     1.44 %   1.85 %
                             
    Average Shareholders’ Equity $ 2,168,444     $ 2,117,628     $ 2,118,381     $ 2,058,912     $ 2,072,747     $ 2,134,941   $ 2,014,083  
    Less average goodwill and intangible assets   (812,761 )     (818,914 )     (825,531 )     (832,029 )     (839,787 )     (819,046 )   (811,483 )
    Average Tangible Equity $ 1,355,683     $ 1,298,714     $ 1,292,850     $ 1,226,883     $ 1,232,960     $ 1,315,895   $ 1,202,600  
                             
    Return on Average Shareholders’ Equity   5.62 %     5.74 %     4.94 %     5.69 %     6.01 %     5.44 %   4.94 %
    Impact of removing average intangible assets and related amortization   4.69       5.01       4.61       5.53       5.89       4.77     5.15  
    Return on Average Tangible Common Equity (ROTCE)   10.31       10.75       9.55       11.22       11.90       10.21     10.09  
    Impact of other adjustments for Adjusted Net Income   (0.04 )     0.01       1.60       0.58       0.89       0.51     3.05  
    Adjusted Return on Average Tangible Common Equity   10.27 %     10.76 %     11.15 %     11.80 %     12.79 %     10.72 %   13.14 %
                             
    Loan interest income1 $ 151,282     $ 147,518     $ 147,308     $ 148,004     $ 150,048     $ 446,108   $ 433,821  
    Accretion on acquired loans   (9,182 )     (10,178 )     (10,595 )     (11,324 )     (14,843 )     (29,955 )   (45,365 )
    Loan interest income excluding accretion on acquired loans $ 142,100     $ 137,340     $ 136,713     $ 136,680     $ 135,205     $ 416,153   $ 388,456  
                             
    Yield on loans1   5.94       5.93       5.90       5.85       5.93       5.93     5.89  
    Impact of accretion on acquired loans   (0.36 )     (0.41 )     (0.42 )     (0.45 )     (0.59 )     (0.40 )   (0.61 )
    Yield on loans excluding accretion on acquired loans   5.58 %     5.52 %     5.48 %     5.40 %     5.34 %     5.53 %   5.89 %
                             
    Net Interest Income1 $ 106,975     $ 104,657     $ 105,298     $ 111,035     $ 119,505     $ 316,930   $ 378,009  
    Accretion on acquired loans   (9,182 )     (10,178 )     (10,595 )     (11,324 )     (14,843 )     (29,955 )   (45,365 )
    Net interest income excluding accretion on acquired loans $ 97,793     $ 94,479     $ 94,703     $ 99,711     $ 104,662     $ 286,975   $ 332,644  
                             
    Net Interest Margin   3.17       3.18       3.24       3.36       3.57       3.19     3.91  
    Impact of accretion on acquired loans   (0.27 )     (0.30 )     (0.33 )     (0.34 )     (0.44 )     (0.30 )   (0.47 )
    Net interest margin excluding accretion on acquired loans   2.90 %     2.87 %     2.91 %     3.02 %     3.13 %     2.89 %   3.44 %
                             
    Security interest income1 $ 26,005     $ 24,195     $ 22,434     $ 21,451     $ 21,520     $ 72,634   $ 61,913  
    Tax equivalent adjustment on securities   (8 )     (7 )     (7 )     (13 )     (22 )     (22 )   (71 )
    Security interest income excluding tax equivalent adjustment $ 25,997     $ 24,188     $ 22,427     $ 21,438     $ 21,498     $ 72,612   $ 61,842  
                             
    Loan interest income1 $ 151,282     $ 147,518     $ 147,308     $ 148,004     $ 150,048     $ 446,108   $ 433,821  
    Tax equivalent adjustment on loans   (302 )     (226 )     (213 )     (203 )     (177 )     (741 )   (517 )
    Loan interest income excluding tax equivalent adjustment $ 150,980     $ 147,292     $ 147,095     $ 147,801     $ 149,871     $ 445,367   $ 433,304  
                             
    Net Interest Income1 $ 106,975     $ 104,657     $ 105,298     $ 111,035     $ 119,505     $ 316,930   $ 378,009  
    Tax equivalent adjustment on securities   (8 )     (7 )     (7 )     (13 )     (22 )     (22 )   (71 )
    Tax equivalent adjustment on loans   (302 )     (226 )     (213 )     (203 )     (177 )     (741 )   (517 )
    Net interest income excluding tax equivalent adjustment $ 106,665     $ 104,424     $ 105,078     $ 110,819     $ 119,306     $ 316,167   $ 377,421  
                             
    1On a fully taxable equivalent basis. All yields and rates have been computed using amortized cost.    
    2As of 1Q’24, amortization of intangibles is excluded from adjustments to noninterest expense; prior periods have been updated to reflect the change.    

    The MIL Network

  • MIL-OSI: The First of Long Island Corporation Reports Earnings for the Third Quarter of 2024

    Source: GlobeNewswire (MIL-OSI)

    MELVILLE, N.Y., Oct. 24, 2024 (GLOBE NEWSWIRE) — The First of Long Island Corporation (Nasdaq: FLIC, the “Company” or the “Corporation”), the parent of The First National Bank of Long Island (the “Bank”), reported earnings for the three and nine months ended September 30, 2024.

    President and Chief Executive Officer Chris Becker commented on the Company’s results: “We are encouraged by a second consecutive linked quarter showing improvements in key financial metrics. After an increase in the net interest margin of one basis point in the second quarter of 2024 from the first quarter of 2024, the margin increased nine basis points in the third quarter of 2024 when compared to second quarter of 2024. We are optimistic the trend will continue during the fourth quarter of this year. Excluding merger and branch consolidation expenses, our noninterest expense remains well controlled and in line with expectations. Finally, our credit quality results remained strong.”

    Analysis of Earnings – Nine Months Ended September 30, 2024

    Net income and earnings per share (“EPS”) for the nine months ended September 30, 2024, were $13.8 million and $0.61, respectively, as compared to $20.2 million and $0.89, respectively, in the same period of 2023.  Adjusted net income and EPS for the current nine-month period, which exclude merger and branch consolidation expenses, were $14.8 million and $0.66, respectively (see “Non-GAAP Reconciliation” table at the end of this release). The principal drivers of the change in adjusted net income were a decline in net interest income of $11.7 million, or 17.5%, and a provision for credit losses of $740,000 as compared to a provision reversal of $1.2 million in the prior period, partially offset by a loss on sales of securities of $3.5 million in the first quarter of 2023, an increase in remaining noninterest income of $1.4 million, and decreases in noninterest expense of $1.2 million and income tax expense of $2.2 million. The nine months ended 2024 produced a return on average assets (“ROA”) of 0.44%, a return on average equity (“ROE”) of 4.88%, an efficiency ratio of 76.39%, and a net interest margin of 1.83%.  Excluding merger and branch consolidation expenses, adjusted ROA and ROE were 0.47% and 5.23%, respectively, and the adjusted efficiency ratio was 74.21% (see “Non-GAAP Reconciliation” table at the end of this release).

    Net interest income declined when comparing the first nine months of 2024 and 2023 due to an increase in interest expense of $23.4 million that was only partially offset by a $11.7 million increase in interest income. The cost of interest-bearing liabilities increased 109 basis points while the yield on interest-earning assets increased 38 basis points when comparing the nine-month periods.  The Bank’s balance sheet remains liability sensitive, however the pace of repricing of average interest-earning assets began outpacing the repricing of average interest-bearing liabilities in the third quarter.

    The Bank recorded a provision for credit losses of $740,000 for the nine months ended 2024, compared to a provision reversal of $1.2 million in the same period of 2023. The allowance for credit losses declined when compared to year-end 2023 largely due to declines in historical loss rates and reserves on individually evaluated loans, partially offset by a deterioration in current and forecasted economic conditions, including adjustments for rent stabilization status of multifamily properties. The reserve coverage ratio remained stable at 0.88% of total loans at September 30, 2024 as compared to 0.88% at June 30, 2024 and 0.89% at December 31, 2023. Past due loans and nonaccrual loans were at $346,000 and $2.9 million, respectively, on September 30, 2024. Overall credit quality of the loan and investment portfolios remains strong.

    Noninterest income, excluding the loss on sales of securities of $3.5 million in the 2023 period, increased $1.4 million, or 19.1%, when comparing the first nine months of 2024 and 2023. Recurring components of noninterest income including bank-owned life insurance (“BOLI”) and service charges on deposit accounts had increases of 8.0% and 13.4%, respectively. Other noninterest income increased 33.2% and included increases of $469,000 in merchant card services, $232,000 in back-to-back swap fees, and $181,000 in pension income, which were partially offset by a gain on disposition of premises and fixed assets of $240,000 in 2023.

    Noninterest expense increased $254,000, or 0.5%, for the nine months of 2024, as compared to the same period in 2023. Excluding merger and branch consolidation expenses, adjusted noninterest expense decreased by $1.2 million (See “Non-GAAP Reconciliation” table at the end of this release). Reductions in occupancy and equipment expense of $685,000 and telecommunication expense of $383,000 drove the decline in adjusted noninterest expense. The decrease in occupancy and equipment expense was largely due to the ongoing branch optimization strategy, which resulted in the closing of various locations. Telecom expense decreased mainly due to efficiencies associated with system upgrades.

    Income tax expense decreased $2.7 million, and the effective tax rate declined to (0.3)% for the nine months ended 2024 as compared to 11.6% for the same period in prior year. The decline in the effective tax rate is mainly due to an increase in the percentage of pre-tax income derived from the Bank’s real estate investment trust reducing the state and local income tax due. The decrease in income tax expense reflects the lower effective tax rate and a decline in pre-tax income.

    Analysis of EarningsThird Quarter 2024 Versus Third Quarter 2023

    Net income for the third quarter of 2024 decreased $2.2 million as compared to the third quarter of last year. Adjusted net income for the third quarter decreased by $1.2 million (see “Non-GAAP Reconciliation” table at the end of this release). The change in adjusted net income is mainly attributable to a $2.8 million decline in net interest income for substantially the same reasons discussed above with respect to the nine-month periods along with a $341,000 increase in the provision for credit losses.  Partially offsetting the decreases, was an increase in noninterest income of $966,000 for substantially the same reasons discussed above with respect to the nine-month periods. The quarter produced a ROA of 0.44%, a ROE of 4.77%, an efficiency ratio of 79.09%, and a net interest margin of 1.89%.  On an adjusted basis, ROA and ROE were 0.53% and 5.79%, respectively, and the efficiency ratio was 72.69% (see “Non-GAAP Reconciliation” table at the end of this release).

    Analysis of EarningsThird Quarter 2024 Versus Second Quarter 2024

    Net income for the third quarter of 2024 decreased $199,000 compared to the second quarter of 2024. Adjusted net income for the third quarter increased by $782,000 (see “Non-GAAP Reconciliation” table at the end of this release). The increase in adjusted net income was partially due to an increase in net interest income of $169,000, a decrease in the provision for credit losses of $400,000, and an increase in back-to-back swap fees of $232,000.  

    Net interest income increased due to an increase in net interest margin. The increase in the net interest margin to 1.89% in the third quarter of 2024 from 1.80% in the second quarter of 2024 was largely due to the repricing of wholesale funding at lower costs largely offsetting the increase in cost of other interest-bearing liabilities while the yield on interest-earning assets continued to rise. Additionally, average interest-bearing deposits decreased $35.8 million and average higher cost borrowings decreased $65.6 million.

    The decrease in income tax expense was substantially due to the same reasons discussed above with respect to the nine-month periods.

    Liquidity

    Total average deposits declined by $89.6 million, or 2.6%, when comparing the nine-month periods of 2024 and 2023. On September 30, 2024, overnight advances and other borrowings were down by $70.0 million and $27.5 million, respectively, from year-end 2023. The Bank had $582.8 million in collateralized borrowing lines with the Federal Home Loan Bank of New York and the Federal Reserve Bank, as well as a $20 million unsecured line of credit with a correspondent bank. We also had $312.9 million in unencumbered cash and securities. In total, we had approximately $915.7 million of available liquidity on September 30, 2024.  At September 30, 2024, uninsured deposits were 45.9% of total deposits. 

    Capital

    The Corporation’s capital position remains strong with a leverage ratio of approximately 10.13% on September 30, 2024.  Book value per share was $17.25 on September 30, 2024, versus $16.83 on December 31, 2023. The accumulated other comprehensive loss component of stockholders’ equity is mainly comprised of a net unrealized loss in the available-for-sale securities portfolio due to higher market interest rates. The Company declared its quarterly cash dividend of $0.21 per share during the quarter. There were no share repurchases during the quarter. The Board and management continue to evaluate the quarterly dividend to provide the best opportunity to maximize shareholder value.

    Forward Looking Information

    This earnings release contains various “forward-looking statements” within the meaning of that term as set forth in Rule 175 of the Securities Act of 1933 and Rule 3b-6 of the Securities Exchange Act of 1934. Such statements are generally contained in sentences including the words “may” or “expect” or “could” or “should” or “would” or “believe” or “anticipate”. The Corporation cautions that these forward-looking statements are subject to numerous assumptions, risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. Factors that could cause future results to vary from current management expectations include, but are not limited to, changing economic conditions; legislative and regulatory changes; monetary and fiscal policies of the federal government; changes in interest rates; deposit flows and the cost of funds; demand for loan products; competition; changes in management’s business strategies; changes in accounting principles, policies or guidelines; changes in real estate values; and other factors discussed in the “risk factors” section of the Corporation’s filings with the Securities and Exchange Commission (“SEC”). The forward-looking statements are made as of the date of this press release, and the Corporation assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

    For more detailed financial information please see the Corporation’s quarterly report on Form 10-Q for the quarter ended September 30, 2024. The Form 10-Q will be available through the Bank’s website at www.fnbli.com on or about October 28, 2024, when it is anticipated to be electronically filed with the SEC. Our SEC filings are also available on the SEC’s website at www.sec.gov.

               
    CONSOLIDATED BALANCE SHEETS
    (Unaudited)
               
      9/30/2024     12/31/2023  
      (dollars in thousands)  
    Assets:              
    Cash and cash equivalents $ 78,568     $ 60,887  
    Investment securities available-for-sale, at fair value   659,696       695,877  
                   
    Loans:              
    Commercial and industrial   146,440       116,163  
    Secured by real estate:              
    Commercial mortgages   1,950,008       1,919,714  
    Residential mortgages   1,103,937       1,166,887  
    Home equity lines   36,962       44,070  
    Consumer and other   1,150       1,230  
        3,238,497       3,248,064  
    Allowance for credit losses   (28,647 )     (28,992 )
        3,209,850       3,219,072  
                   
    Restricted stock, at cost   28,191       32,659  
    Bank premises and equipment, net   30,180       31,414  
    Right-of-use asset – operating leases   20,359       22,588  
    Bank-owned life insurance   116,192       114,045  
    Pension plan assets, net   10,421       10,740  
    Deferred income tax benefit   27,779       28,996  
    Other assets   20,243       19,622  
      $ 4,201,479     $ 4,235,900  
    Liabilities:              
    Deposits:              
    Checking $ 1,121,871     $ 1,133,184  
    Savings, NOW and money market   1,594,317       1,546,369  
    Time   610,876       591,433  
        3,327,064       3,270,986  
                   
    Overnight advances         70,000  
    Other borrowings   445,000       472,500  
    Operating lease liability   22,876       24,940  
    Accrued expenses and other liabilities   17,958       17,328  
        3,812,898       3,855,754  
    Stockholders’ Equity:              
    Common stock, par value $0.10 per share:              
    Authorized, 80,000,000 shares;              
    Issued and outstanding, 22,532,080 and 22,590,942 shares   2,253       2,259  
    Surplus   79,157       79,728  
    Retained earnings   355,541       355,887  
        436,951       437,874  
    Accumulated other comprehensive loss, net of tax   (48,370 )     (57,728 )
        388,581       380,146  
      $ 4,201,479     $ 4,235,900  
                   
                   
    CONSOLIDATED STATEMENTS OF INCOME
    (Unaudited)
               
      Nine Months Ended     Three Months Ended  
      9/30/2024     9/30/2023     9/30/2024     9/30/2023  
      (dollars in thousands)  
    Interest and dividend income:                              
    Loans $ 102,679     $ 94,706     $ 35,026     $ 32,818  
    Investment securities:                              
    Taxable   20,701       15,877       6,229       6,594  
    Nontaxable   2,872       3,976       955       1,004  
        126,252       114,559       42,210       40,416  
    Interest expense:                              
    Savings, NOW and money market deposits   33,637       22,188       12,117       8,802  
    Time deposits   20,748       13,086       6,712       5,785  
    Overnight advances   392       596       125       50  
    Other borrowings   16,283       11,782       4,656       4,347  
        71,060       47,652       23,610       18,984  
    Net interest income   55,192       66,907       18,600       21,432  
    Provision (credit) for credit losses   740       (1,227 )     170       (171 )
    Net interest income after provision (credit) for credit losses   54,452       68,134       18,430       21,603  
                                   
    Noninterest income:                              
    Bank-owned life insurance   2,573       2,383       876       809  
    Service charges on deposit accounts   2,543       2,243       842       703  
    Net loss on sales of securities         (3,489 )            
    Other   3,732       2,802       1,492       732  
        8,848       3,939       3,210       2,244  
    Noninterest expense:                              
    Salaries and employee benefits   29,169       29,268       9,695       9,649  
    Occupancy and equipment   9,289       9,974       2,965       3,253  
    Merger expenses   866             866        
    Branch consolidation expenses   547             547        
    Other   9,635       10,010       3,378       3,262  
        49,506       49,252       17,451       16,164  
    Income before income taxes   13,794       22,821       4,189       7,683  
    Income tax (credit) expense   (38 )     2,641       (410 )     883  
    Net income $ 13,832     $ 20,180     $ 4,599     $ 6,800  
                                   
    Share and Per Share Data:                              
    Weighted Average Common Shares   22,520,026       22,538,520       22,529,051       22,569,716  
    Dilutive restricted stock units   87,716       69,010       138,272       86,914  
    Dilutive weighted average common shares   22,607,742       22,607,530       22,667,323       22,656,630  
                                   
    Basic EPS $ 0.61     $ 0.90     $ 0.20     $ 0.30  
    Diluted EPS   0.61       0.89       0.20       0.30  
    Cash Dividends Declared per share   0.63       0.63       0.21       0.21  
                                   
    FINANCIAL RATIOS  
    (Unaudited)  
    ROA   0.44 %     0.64 %     0.44 %     0.63 %
    ROE   4.88       7.29       4.77       7.34  
    Net Interest Margin   1.83       2.21       1.89       2.13  
    Dividend Payout Ratio   103.28       70.79       105.00       70.00  
    Efficiency Ratio   76.39       65.33       79.09       67.51  
                                   
                                   
    PROBLEM AND POTENTIAL PROBLEM LOANS AND ASSETS
    (Unaudited)
               
      9/30/2024     12/31/2023  
      (dollars in thousands)  
    Loans including modifications to borrowers experiencing financial difficulty:              
    Modified and performing according to their modified terms $ 424     $ 431  
    Past due 30 through 89 days   346       3,086  
    Past due 90 days or more and still accruing          
    Nonaccrual   2,899       1,053  
        3,669       4,570  
    Other real estate owned          
      $ 3,669     $ 4,570  
                   
    Allowance for credit losses $ 28,647     $ 28,992  
    Allowance for credit losses as a percentage of total loans   0.88 %     0.89 %
    Allowance for credit losses as a multiple of nonaccrual loans   9.9 x     27.5 x
                   
                   
    AVERAGE BALANCE SHEET, INTEREST RATES AND INTEREST DIFFERENTIAL
    (Unaudited)
           
        Nine Months Ended September 30,  
        2024     2023  
        Average     Interest/     Average     Average     Interest/     Average  
    (dollars in thousands)   Balance     Dividends     Rate     Balance     Dividends     Rate  
    Assets:                                                
    Interest-earning bank balances   $ 66,593     $ 2,724       5.46 %   $ 52,163     $ 1,969       5.05 %
    Investment securities:                                                
    Taxable (1)     620,721       17,977       3.86       564,857       13,908       3.28  
    Nontaxable (1) (2)     152,758       3,636       3.17       209,566       5,033       3.20  
    Loans (1) (2)     3,236,794       102,679       4.23       3,266,184       94,708       3.87  
    Total interest-earning assets     4,076,866       127,016       4.15       4,092,770       115,618       3.77  
    Allowance for credit losses     (28,590 )                     (30,531 )                
    Net interest-earning assets     4,048,276                       4,062,239                  
    Cash and due from banks     32,844                       31,410                  
    Premises and equipment, net     30,979                       32,107                  
    Other assets     122,671                       115,167                  
        $ 4,234,770                     $ 4,240,923                  
    Liabilities and Stockholders’ Equity:                                                
    Savings, NOW & money market deposits   $ 1,589,154       33,637       2.83     $ 1,668,506       22,188       1.78  
    Time deposits     625,553       20,748       4.43       536,529       13,086       3.26  
    Total interest-bearing deposits     2,214,707       54,385       3.28       2,205,035       35,274       2.14  
    Overnight advances     9,303       392       5.63       14,993       596       5.31  
    Other borrowings     457,053       16,283       4.76       377,053       11,782       4.18  
    Total interest-bearing liabilities     2,681,063       71,060       3.54       2,597,081       47,652       2.45  
    Checking deposits     1,136,738                       1,236,001                  
    Other liabilities     38,354                       37,736                  
          3,856,155                       3,870,818                  
    Stockholders’ equity     378,615                       370,105                  
        $ 4,234,770                     $ 4,240,923                  
                                                     
    Net interest income (2)           $ 55,956                     $ 67,966          
    Net interest spread (2)                     0.61 %                     1.32 %
    Net interest margin (2)                     1.83 %                     2.21 %
                                                     
    (1) The average balances of loans include nonaccrual loans. The average balances of investment securities exclude unrealized gains and losses on available-for-sale securities.
    (2) Tax-equivalent basis. Interest income on a tax-equivalent basis includes the additional amount of interest income that would have been earned if the Corporation’s investment in tax-exempt loans and investment securities had been made in loans and investment securities subject to federal income taxes yielding the same after-tax income. The tax-equivalent amount of $1.00 of nontaxable income was $1.27 for each period presented using the statutory federal income tax rate of 21%.
       
    AVERAGE BALANCE SHEET, INTEREST RATES AND INTEREST DIFFERENTIAL
    (Unaudited)
           
        Three Months Ended September 30,  
        2024     2023  
        Average     Interest/     Average     Average     Interest/     Average  
    (dollars in thousands)   Balance     Dividends     Rate     Balance     Dividends     Rate  
    Assets:                                                
    Interest-earning bank balances   $ 33,463     $ 453       5.39 %   $ 66,474     $ 902       5.38 %
    Investment securities:                                                
    Taxable (1)     602,446       5,776       3.84       625,827       5,692       3.64  
    Nontaxable (1) (2)     152,278       1,209       3.18       161,423       1,271       3.15  
    Loans (1)     3,237,138       35,026       4.33       3,257,256       32,818       4.03  
    Total interest-earning assets     4,025,325       42,464       4.22       4,110,980       40,683       3.96  
    Allowance for credit losses     (28,495 )                     (29,981 )                
    Net interest-earning assets     3,996,830                       4,080,999                  
    Cash and due from banks     33,028                       33,420                  
    Premises and equipment, net     30,754                       32,268                  
    Other assets     126,428                       113,084                  
        $ 4,187,040                     $ 4,259,771                  
    Liabilities and Stockholders’ Equity:                                                
    Savings, NOW & money market deposits   $ 1,614,294       12,117       2.99     $ 1,655,032       8,802       2.11  
    Time deposits     600,873       6,712       4.44       587,814       5,785       3.90  
    Total interest-bearing deposits     2,215,167       18,829       3.38       2,242,846       14,587       2.58  
    Overnight advances     8,793       125       5.66       3,478       50       5.70  
    Other borrowings     396,739       4,656       4.67       382,500       4,347       4.51  
    Total interest-bearing liabilities     2,620,699       23,610       3.58       2,628,824       18,984       2.87  
    Checking deposits     1,146,274                       1,225,052                  
    Other liabilities     36,805                       38,123                  
          3,803,778                       3,891,999                  
    Stockholders’ equity     383,262                       367,772                  
        $ 4,187,040                     $ 4,259,771                  
                                                     
    Net interest income (2)           $ 18,854                     $ 21,699          
    Net interest spread (2)                     0.64 %                     1.09 %
    Net interest margin (2)                     1.89 %                     2.13 %
                                                     
    (1) The average balances of loans include nonaccrual loans. The average balances of investment securities exclude unrealized gains and losses on available-for-sale securities.
    (2) Tax-equivalent basis. Interest income on a tax-equivalent basis includes the additional amount of interest income that would have been earned if the Corporation’s investment in tax-exempt investment securities had been made in investment securities subject to federal income taxes yielding the same after-tax income. The tax-equivalent amount of $1.00 of nontaxable income was $1.27 for each period presented using the statutory federal income tax rate of 21%.
       

    NON-GAAP RECONCILIATION
    (Unaudited)

    The following tables provide supplemental non-GAAP financial measures which management uses internally to help understand, manage, and evaluate our business performance and to help make operating decisions. These supplemental financial measures are not measurements of financial performance under generally accepted accounting principles in the United States (“GAAP”) and, as a result may not be comparable to similarly titled measures of other companies. The Corporation believes that these non-GAAP financial measures are useful to investors and analysts in comparing our performance across reporting periods on a consistent basis. The Corporation also believes the use of these non-GAAP financial measures can facilitate comparison of our operating results to those of our competitors. The following non-GAAP financial measures exclude merger related and branch consolidation expenses:  

               
      Nine Months Ended     Three Months Ended  
      9/30/2024     9/30/2023     9/30/2024     9/30/2023  
      (dollars in thousands, except per share data)  
    Reconciliation of adjusted net income:                              
    Net income $ 13,832     $ 20,180     $ 4,599     $ 6,800  
    Adjustments to net income:                              
    Merger expenses   866             866        
    Branch consolidation expenses   547             547        
    Income tax effect of adjustments (1)   (432 )           (432 )      
    Adjusted net income $ 14,813     $ 20,180     $ 5,580     $ 6,800  
                                   
    Diluted EPS                              
    Net income $ 13,832     $ 20,180     $ 4,599     $ 6,800  
    Adjusted net income   14,813       20,180       5,580       6,800  
                                   
    Dilutive weighted average common shares   22,607,742       22,607,530       22,667,323       22,656,630  
                                   
    Diluted EPS $ 0.61     $ 0.89     $ 0.20     $ 0.30  
    Adjusted Diluted EPS   0.66       0.89       0.25       0.30  
                                   
    ROA and ROE                              
    Net income $ 13,832     $ 20,180     $ 4,599     $ 6,800  
    Adjusted net income   14,813       20,180       5,580       6,800  
                                   
    Average Total Assets $ 4,234,770     $ 4,240,923     $ 4,187,040     $ 4,259,771  
    Average Total Equity   378,615       370,105       383,262       367,772  
                                   
    ROA   0.44 %     0.64 %     0.44 %     0.63 %
    Adjusted ROA   0.47       0.64       0.53       0.63  
                                   
    ROE   4.88 %     7.29 %     4.77 %     7.34 %
    Adjusted ROE   5.23       7.29       5.79       7.34  
                                   
    Efficiency Ratio                              
    Noninterest expense $ 49,506     $ 49,252     $ 17,451     $ 16,164  
    Adjustments to noninterest expense:                              
    Merger expenses   (866 )           (866 )      
    Branch consolidation expenses   (547 )           (547 )      
    Adjusted noninterest expense $ 48,093     $ 49,252     $ 16,038     $ 16,164  
                                   
    Net interest income $ 55,956       67,966       18,854       21,699  
    Noninterest income   8,848       3,939       3,210       2,244  
    Total revenue $ 64,804     $ 71,905     $ 22,064     $ 23,943  
                                   
    Efficiency Ratio   76.39 %     65.33 %     79.09 %     67.51 %
    Adjusted Efficiency Ratio   74.21       65.33       72.69       67.51  
                                   

    (1) Adjustments to net income are taxed at the Corporation’s approximate statutory rate. 

    For More Information Contact:
    Janet Verneuille, SEVP and CFO
    (516) 671-4900, Ext. 7462

    The MIL Network

  • MIL-OSI USA: Sorensen Returns Over $3.2 Million to Illinois Neighbors

    Source: United States House of Representatives – Congressman Eric Sorensen (IL-17)

    ROCK ISLAND, IL – Congressman Eric Sorensen (IL-17) is announcing that his office has returned more than $3.2 million to his neighbors through federal casework services since he was sworn into Congress. 

    “My number one job as the representative for Central and Northwestern Illinois in Congress is to make sure the federal government is working on behalf of my neighbors,” said Sorensen. “I know how stressful it can be when you need help from the government and all you get is the runaround. That is where I can step in to get you the help you need. I am proud of the work we have done to put more than $3.2 million of my neighbor’s hard-earned cash back in their pockets. If you need any help dealing with a federal agency, know that I have your back.” 

    The more than $3,263,230 secured for his neighbors across Central and Northwestern Illinois comes as a result of Sorensen and his staff’s work to help constituents get the refunds and benefits they are owed from federal agencies, which include overdue tax returns and delayed Social Security, veterans, and worker’s compensation benefits.  

    Residents of Illinois’ 17th Congressional District who need help with a federal agency are encouraged to contact Sorensen’s office at (309) 786-3406 or fill out a casework request form on Sorensen’s official website. All submissions are reviewed by a member of Sorensen’s staff. 

    The following stories are from constituents that Sorensen’s office has helped: 

    Daniel from Peoria Heights reached out to get help with VA benefits: “I was having trouble having my VA benefits reinstated after they were mistakenly revoked after contacting Representative Sorensen’s office Hillary handle my case and my benefits were reinstated, and I had a check within 30 days.” 

    Holly from Morrison needed help getting issues resolved between her and the IRS: “I reached out in hopes to get help with repeated problems I have been having with the IRS. They were able to reach out on my behalf and figure the issue out. Within a very short timeframe my issues were all resolved.” 

    Deb from Freeport needed to get her families passports renewed quickly and called Sorensen’s office for help: “Staff helped us with the issue we were having trying to renew our passports. If she would not have kept pushing for a resolution, we would not have received them, as the only response we could get was the passport processing center lost them. We are so thankful for their continued excellent fast assistance to our needs.” 

    Katie from Monmouth lost her job and needed help getting her past wages: “Ever since I lost my job at WCCS Head Start, I have had help with gaining information on how to get my past wages that are due. Eric Sorensen’s office has helped me gain information about my situation and ways to improve the outcome.” 

    Bob from Peoria needed help getting Medicare Part B coverage: “I was having difficulty trying to get my Medicare Part B to begin on September 1st, 2023, with our local office of the Social Security Administration. After many failed attempts to get a certain individual to return my calls, as well as several conversations with the Chicago and Maryland offices with no results, I contacted your office. I spoke with staff in your office about my difficulties with this matter on August 31st, 2023, and within three days, our local office received a letter or document from your office, and they got me signed up for Part B on September 15th, 2023, to be effective on September 1st, 2023. Staff were caring and showed extraordinary expedience in helping me get this issue resolved.” 

    Melissa from Rock Island reached out to get help with a refugee family: “Staff assisted me in the process of rescheduling USCIS appointments for a refugee family in Moline. Her assistance has allowed a constituent and her family the opportunity to continue the immigration process more easily. Staff has been friendly, supportive, and knowledgeable every step of the process. We are so grateful for her help.” 

    Congressman Eric Sorensen serves on the House Committee on Agriculture and the House Committee on Science, Space, and Technology. Prior to serving in Congress, Sorensen was a local meteorologist in Rockford and the Quad Cities for nearly 20 years. His district includes Illinois’ Quad Cities, Rockford, Peoria, and Bloomington-Normal.

    ###

    MIL OSI USA News

  • MIL-OSI: Xtract One Announces Annual Fiscal 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    TORONTO, Oct. 24, 2024 (GLOBE NEWSWIRE) — Xtract One Technologies Inc. (TSX: XTRA) (OTCQX: XTRAF) (FRA: 0PL) (“Xtract One” or the “Company”) a leading technology-driven threat detection and security solution that prioritizes the patron access experience by leveraging artificial intelligence (AI), today announced its annual results for the year ended July 31, 2024. All information is in Canadian dollars unless otherwise indicated.

    “What a year it’s been! With record results across the board, we continue to make progress towards profitability through operational execution and higher top line growth,” stated Peter Evans, Chief Executive Officer of Xtract One. “Revenue for the year was $16.4 million – quadruple that of last year – while our combined backlog rose to $26.8 million, reflecting strong demand across all vertical markets. We’re positioning the Company for continued expansion going forward as we are seeing growing interest from all types of customers – stadiums and arenas to schools, business centers, and factories – putting us on track for even greater performance in fiscal 2025.”

    “To add further momentum to this success, the recent introduction of Xtract One Gateway will significantly expand our addressable market, and win rate in those markets, by improving the Company’s competitive positioning. Xtract One Gateway will allow high-traffic facilities like schools, convention centers, and commercial properties to quickly screen patrons who may have laptops, tablets or other large metallic objects while still accurately detecting weapons. As the only product on the market with these capabilities, it’s clearly transformational for us and the industry.”

    Fiscal 2024 Annual Highlights

    • Record revenue of $16.4 million for the year ended July 31, 2024 versus $4.1 million in the prior fiscal year
    • Gross profit margin of 63% for the year ended July 31, 2024 versus 60% in the prior fiscal year
    • Total contract value of new bookings1 was $29.8 million for the year ended July 31, 2024 as compared to $15.0 million during the prior fiscal year
    • Platform contractual backlog was $13.8 million at the end of fiscal 2024 as compared to $4.1 million at the end of fiscal 2023. This excludes an additional $13.0 million of agreements pending installation1 at the end of fiscal 2024 versus $10.4 million at the end of fiscal 2023
    • Loss and comprehensive loss was $11.1 million for the year ended July 31, 2024 as compared to $16.3 million for the prior year
    • Subsequent to July 31, 2024, the Company launched Xtract One Gateway, with advanced bi-directional configurable screening and proprietary sensors, for precise weapons detection at locations where users carry a medium volume of personal items such as laptops

    Fourth Quarter Highlights

    • Record quarterly revenue of $5.6 million for the three months ended July 31, 2024 versus $1.8 million in the prior year period
    • Gross profit margin of 65% for the fourth quarter versus 70% in the prior year period
    • Total contract value of new bookings1 was $5.6 million for the three months ended July 31, 2024 as compared to $5.2 million for the prior year period
    • Loss and comprehensive loss was $2.4 million for the three months ended July 31, 2024 as compared to $3.3 million for the same period in fiscal 2023

    This press release should be read in conjunction with the Company’s Annual Consolidated Financial Statements, prepared in accordance with International Financial Reporting Standards (“IFRS”) and the Company’s Management’s Discussion and Analysis for the years ended July 31, 2024 and 2023, which can be found under the Company’s profile on SEDAR+ at www.sedarplus.ca.

    Conference Call Details

    Xtract One will host a conference call to discuss its results on October 25, 2024 at 10:00 am ET. Peter Evans, CEO and Director, and Karen Hersh, CFO and Corporate Secretary, will provide an overview of the financial results along with management’s outlook for the business, followed by a question-and-answer period.

    The webcast and presentation will be accessible on the Company’s website. The webcast can be accessed here and the telephone number for the conference call is 844-481-3016 (412-317-1881 for international callers).

    About Xtract One Technologies

    Xtract One Technologies is a leading technology-driven provider of threat detection and security solutions leveraging AI to deliver seamless and secure experiences. The Company makes unobtrusive weapons and threat detection systems that enable facility operators to prioritize and deliver improved “Walk-right-In” experiences while providing unprecedented safety. Xtract One’s innovative portfolio of AI-powered Gateway solutions excels at allowing facilities to discreetly screen and identify weapons and other threats at points of entry and exit without disrupting the flow of traffic. With solutions built to serve the unique market needs for schools, hospitals, arenas, stadiums, manufacturing, distribution, and other customers, Xtract One is recognized as a market leader delivering the highest security in combination with the best individual experience. For more information, visit www.xtractone.com or connect on Facebook, X, and LinkedIn.

    For further information, please contact:

    Xtract One Inquiries: info@xtractone.com, http://www.xtractone.com    
    Media Contact: Kristen Aikey, JMG Public Relations, 212-206-1645, kristen@jmgpr.com
    Investor Relations: Chris Witty, Darrow Associates, 646-438-9385, cwitty@darrowir.com

    1Supplementary Financial Measures
    The Company utilizes specific supplementary financial measures in this earnings release to allow for a better evaluation of the operating performance of the Company’s business and facilitates meaningful comparison of results in the current period with those in prior periods and future periods. Supplementary financial measures do not have any standardized meaning prescribed under IFRS and therefore may not be comparable to measures presented by other companies. Supplementary financial measures presented in this earnings release include ‘Agreements pending installation’ and ‘Total contract value of new bookings.’ Agreements pending installation reflects total value of signed contracts awarded to the Company that has not been installed at the customer site. ‘Total contract value of new bookings’ is comprised of all new contracts signed and awarded to the Company, regardless of the performance obligations outstanding as of the end of the reporting period. Total contract value is the aggregate value of sales commitments from customers as at the end of the reporting period without consideration of the Company’s completion of the associated performance obligations outlined in each contract.

    Forward Looking Statements

    This news release contains forward-looking statements within the meaning of applicable securities laws that are not historical facts. Forward-looking statements are often identified by terms such as “will”, “may”, “should”, “anticipates”, “expects”, “believes”, and similar expressions or the negative of these words or other comparable terminology. All statements other than statements of historical fact, included in this release are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company’s expectations include but are not limited to the risks detailed from time to time in the continuous disclosure filings made by the Company with securities regulations. The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company. The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release and the Company will update or revise publicly any of the included forward-looking statements only as expressly required by applicable law.

    No securities exchange or commission has reviewed or accepts responsibility for the adequacy or accuracy of this release.

    Consolidated Statements of Loss and Comprehensive Loss for the Years Ended July 31, 2024 and 2023

    The following table is extracted from the Company’s consolidated financial statements and presented in Canadian dollars to demonstrate the Statements of Loss and Comprehensive loss for the years ended July 31, 2024 and 2023:

            2024       2023    
                 
    Revenue          
    Platform revenue   $ 15,969,996     $ 3,596,999    
    Xtract revenue     388,011       514,245    
    Total revenue   $ 16,358,007     $ 4,111,244    
                 
    Cost of revenue          
    Platform cost of revenue   $ 5,858,611     $ 1,383,623    
    Xtract cost of revenue     241,377       242,724    
    Total cost of revenue   $ 6,099,988     $ 1,626,347    
                 
    Gross profit   $ 10,258,019     $ 2,484,897    
                 
    Operating expenses          
    Selling and marketing   $ 5,593,432     $ 4,566,130    
    General and administration     7,479,609       6,813,847    
    Research and development     8,265,043       7,078,280    
    Loss on inventory write-down     175,042       346,374    
    Loss on retirement of assets     95,066       181,107    
    Total operating expenses   $ 21,608,192     $ 18,985,738    
                 
    Loss from operations     (11,350,173 )     (16,500,841 )  
                 
    Other income (loss)          
    Unrealized gain on investments           58,333    
    Realized loss on investment           (55,082 )  
    Interest and other income     285,318       161,117    
                 
    Loss and comprehensive loss for the year     $ (11,064,855 )   $ (16,336,473 )  
                 
    Weighted average number of shares     203,820,258       176,664,492    
                 
    Basic and diluted loss per share   $ (0.05 )   $ (0.09 )  
                 

    Consolidated Statements of Financial Position as at July 31, 2024 and 2023

    The following table is extracted from the Company’s consolidated financial statements and presented in Canadian dollars to demonstrate the Company’s financial position as at July 31, 2024 and July 31, 2023:

        July 31, 2024   July 31, 2023
    Assets      
    Current assets      
      Cash and cash equivalents $ 8,628,521     $ 8,327,449  
      Receivables   3,862,199       847,429  
      Prepaid expenses and deposits   949,012       1,026,668  
      Current portion of deferred cost of revenue   371,309        
      Inventory   3,688,246       1,602,971  
             
          17,499,287       11,804,517  
             
    Property and equipment   2,135,956       2,063,817  
    Intangible assets   4,465,755       4,843,700  
    Non-current portion of deferred cost of revenue   496,868        
    Right of use assets   344,304       286,796  
             
    Total assets $ 24,942,170     $ 18,998,830  
             
    Liabilities      
    Current liabilities      
      Accounts payable and accrued liabilities $ 3,991,292     $ 2,519,350  
      Current portion of deferred revenue   3,443,524       968,509  
      Current portion of lease liability   190,400       232,483  
             
          7,625,216       3,720,342  
             
    Non-Current liabilities      
      Non-current portion of deferred revenue   3,155,579       411,232  
      Non-current portion of lease liability   190,526       124,358  
             
        $ 10,971,321     $ 4,255,932  
             
    Shareholders’ equity      
      Share capital $ 144,372,452     $ 135,823,337  
      Contributed surplus   16,163,950       14,420,259  
      Accumulated deficit   (146,565,553 )     (135,500,698 )
             
        $ 13,970,849     $ 14,742,898  
             
    Total liabilities and shareholders’ equity $ 24,942,170     $ 18,998,830  
             


    Consolidated Statements of Cash Flows for the Years Ended July 31, 2024 and 2023

    The following table is extracted from the Company’s consolidated financial statements and presented in Canadian dollars to demonstrate the Company’s cash flows for the years ended July 31, 2024 and 2023:

              2024       2023    
    Cash flow used in operating activities          
      Loss and comprehensive loss for the year   $ (11,064,855 )   $ (16,336,473 )  
      Adjustment for:          
        Share-based compensation     1,036,744       950,536    
        Depreciation     1,303,571       923,764    
        Amortization     805,900       805,900    
        Finance cost     22,420       42,237    
        Loss on inventory     175,042       346,374    
        Loss on retirement of assets     95,066       181,107    
        Other income           (20,000 )  
        Realized loss on investments           55,082    
        Unrealized gain on investments           (58,333 )  
                   
              (7,626,112 )     (13,109,806 )  
      Changes in non-cash working capital          
        Receivables     (3,014,770 )     1,047,727    
        Prepaid expenses and deposits     77,656       (358,018 )  
        Inventory     (4,522,739 )     (2,198,583 )  
        Deferred cost of revenue     250,853          
        Accounts payable and accrued liabilities     1,471,942       (99,732 )  
        Deferred revenue     5,219,362       1,183,090    
                   
      Cash used in operating activities     (8,143,808 )     (13,535,322 )  
                   
    Cash flow used in investing activities          
      Acquisition of intangible assets     (427,955 )        
      Acquisition of right of use asset     (1,800 )        
      Purchase of property and equipment           (32,539 )  
      Disposal of investment – Gemina Labs           397,001    
                   
      Cash (used in) received from investing activities     (429,755 )     364,462    
                   
    Cash flow from financing activities          
      Proceeds on issue of share capital, net of share issue costs   9,256,062       15,583,660    
      Lease payments     (381,427 )     (362,672 )  
                   
      Cash received from financing activities     8,874,635       15,220,988    
                   
    Net increase in cash for the year   $ 301,072     $ 2,050,128    
                   
    Cash beginning of the year     8,327,449       6,277,321    
                   
    Cash end of the year   $ 8,628,521     $ 8,327,449    
                   

    The MIL Network

  • MIL-OSI: First Savings Financial Group, Inc. Reports Financial Results for the Fiscal Year Ended September 30, 2024

    Source: GlobeNewswire (MIL-OSI)

    JEFFERSONVILLE, Ind., Oct. 24, 2024 (GLOBE NEWSWIRE) — First Savings Financial Group, Inc. (NASDAQ: FSFG – news) (the “Company”), the holding company for First Savings Bank (the “Bank”), today reported net income of $13.6 million, or $1.98 per diluted share, for the year ended September 30, 2024, compared to net income of $8.2 million, or $1.19 per diluted share, for the year ended September 30, 2023. The core banking segment reported net income of $16.9 million, or $2.47 per diluted share for the year ended September 30, 2024, compared to $14.9 million, or $2.18 per diluted share for the year ended September 30, 2023.

    Commenting on the Company’s performance, Larry W. Myers, President and CEO, stated “Fiscal 2024 was, in many ways, a year of rebuilding, repositioning and refinement. A summary of these enhancement actions is provided below. While we’re not entirely pleased with the financial performance in fiscal 2024, we are confident that the Company is well positioned to better perform in fiscal 2025 and the years thereafter regardless of the economic environment. For fiscal 2025 we’ll remain focused on core banking; strong asset quality; selective high-quality lending; core deposit growth; increased SBA lending volume; continued improvement of liquidity, capital and interest rate sensitivity positions; and strategic opportunities. We believe the efforts of fiscal 2024 along with the focus for fiscal 2025 will deliver enhanced shareholder value. Additionally, we’ll continue to evaluate options and strategies that we believe will further position the Company for future success and deliver shareholder value.”

    Enhancements Actions During Fiscal Year Ended September 30, 2024

    • Converted the core operating system immediately prior to the beginning of fiscal 2024 and committed to effectively adapt to the new system and gain efficiencies and expense reductions therewith.
    • Ceased national mortgage banking operations in the first fiscal quarter, including sale of the residential mortgage servicing rights portfolio.
    • Implemented additional expense reduction and containment strategies, which were effective.
    • Experienced the net interest margin floor in the second fiscal quarter and recognized expansion in the subsequent quarters, in addition to a slowed paced of deposit migration to higher cost types.
    • Maintained a balance sheet position that is expected to benefit in a potential decreasing rate environment but having limited exposure to potential increasing rates.
    • Remained disciplined in our lending philosophy with respect to both rate expectations and credit quality.
    • Enhanced our review of asset quality, which remains strong, in order to prepare for any potential financial downturn that may occur.
    • Enhanced SBA Lending business development staff with new and replacement hires throughout the fiscal year, plus decreased surplus support staff at the end of the fourth fiscal quarter.

    Results of Operations for the Fiscal Years Ended September 30, 2024 and 2023

    Net interest income decreased $3.5 million, or 5.7%, to $58.1 million for the year ended September 30, 2024 as compared to the prior year. The tax equivalent net interest margin for the year ended September 30, 2024 was 2.68% as compared to 3.10% for the prior year. The decrease in net interest income was due to a $22.3 million increase in interest expense, partially offset by an $18.8 million increase in interest income. A table of average balance sheets, including average asset yields and average liability costs, is included at the end of this release.

    The Company recognized a provision for credit losses for loans of $3.5 million, a credit for unfunded lending commitments of $421,000, and a provision for credit losses for securities of $21,000 for the year ended September 30, 2024, compared to a provision for loan losses of $2.6 million only for the prior year. The provision for credit losses for loans increased primarily due to loan growth and the effects of adopting the Current Expected Credit Loss (CECL) methodology during the year ended September 30, 2024. The Company recognized net charge-offs totaling $527,000 during the year, of which $104,000 was related to unguaranteed portions of SBA loans, compared to net charge-offs of $1.1 million during the prior year, of which $872,000 was related to unguaranteed portions of SBA loans. Nonperforming loans, which consist of nonaccrual loans and loans over 90 days past due and still accruing interest, increased $3.0 million from $13.9 million at September 30, 2023 to $16.9 million at September 30, 2024.

    Noninterest income decreased $12.8 million for the year ended September 30, 2024 as compared to the prior year. The decrease was due primarily to a $14.1 million decrease in mortgage banking income due to the cessation of national mortgage banking operations in the quarter ended December 31, 2023.

    Noninterest expense decreased $23.2 million for the year ended September 30, 2024 as compared to the prior year. The decrease was due primarily to decreases in compensation and benefits, data processing expense and other operating expenses of $12.0 million, $2.2 million and $7.8 million, respectively. The decrease in compensation and benefits expense was due primarily to a reduction in staffing related to the cessation of national mortgage banking operations in the quarter ended December 31, 2023. The decrease in data processing expense was due primarily to expenses recognized in the prior year related to the implementation of the new core operating system in August 2023. The decrease in other operating expense was due primarily to a $1.9 decrease in net loss on captive insurance operations due to the dissolution of the captive insurance company in September 2023; a decrease in loss contingency accrual for SBA-guaranteed loans of $754,000 in 2024 compared to an increase of $1.5 million in 2023; a decrease in the loss contingency accrual for restitution to mortgage borrowers of $283,000 in 2024 compared to an increase of $609,000 in 2023; and a decrease of $853,000 in loan expense for 2024 as compared to 2023 due primarily to lower mortgage loan originations related to the cessation of national mortgage banking operations in the quarter ended December 31, 2023.

    The Company recognized income tax expense of $1.0 million for the year ended September 30, 2024 compared to tax expense of $10,000 for the prior year. The increase is primarily due to higher taxable income in the 2024 period. The effective tax rate for 2024 was 7.0%, which was an increase from the effective tax rate of 0.1% in 2023. The effective tax rate is well below the statutory tax rate primarily due to the recognition of investment tax credits related to solar projects in both the 2024 and 2023 periods.

    Results of Operations for the Three Months Ended September 30, 2024 and 2023

    The Company reported net income of $3.7 million, or $0.53 per diluted share, for the three months ended September 30, 2024, compared to a net loss of $747,000, or $0.11 per diluted share, for the three months ended September 30, 2023. The core banking segment reported net income of $4.1 million, or $0.60 per diluted share, for the three months ended September 30, 2024, compared to $2.3 million, or $0.33 per diluted share, for the three months ended September 30, 2023.

    Net interest income decreased $459,000, or 3.0%, to $15.1 million for the three months ended September 30, 2024 as compared to the same period in 2023. The tax equivalent net interest margin was 2.72% for the three months ended September 30, 2024 as compared to 3.03% for the same period in 2023. The decrease in net interest income was due to a $4.5 million increase in interest expense, partially offset by a $4.1 million increase in interest income. A table of average balance sheets, including average asset yields and average liability costs, is included at the end of this release.

    The Company recognized a provision for credit losses for loans of $1.8 million, a credit for unfunded lending commitments of $262,000, and a credit for credit losses for securities of $86,000 for the three months ended September 30, 2024, compared to a provision for loan losses of $815,000 only for the same period in 2023. The provision for credit losses for loans increased primarily due to loan growth and the effects of adopting the Current Expected Credit Loss (CECL) methodology during the year ended September 30, 2024. The Company recognized net charge-offs totaling $304,000 during the 2024 period, of which $120,000 was related to unguaranteed portions of SBA loans, compared to net charge-offs of $753,000 during the 2023 period, of which $609,000 was related to unguaranteed portions of SBA loans.

    Noninterest income decreased $2.6 million for the three months ended September 30, 2024 as compared to the same period in 2023. The decrease was due primarily to a $3.0 million decrease in mortgage banking income due to the cessation of national mortgage banking operations in the quarter ended December 31, 2023.

    Noninterest expense decreased $9.0 million for the three months ended September 30, 2024 as compared to the same period in 2023. The decrease was due primarily to decreases in compensation and benefits expense, data processing expense, and other operating expenses of $4.5 million, $1.5 million and $3.5 million, respectively. The decrease in compensation and benefits expense was due primarily to a reduction in staffing related to the cessation of national mortgage banking operations in the quarter ended December 31, 2023. The decrease in data processing expense was due primarily to expenses recognized in the prior year period related to the implementation of the new core operating system in August 2023. The decrease in other operating expense was due primarily to a $978,000 decrease in the net loss on captive insurance operations due to the dissolution of the captive insurance company in September 2023; a decrease in loss contingency accrual for SBA-guaranteed loans of $14,000 in 2024 compared to an increase of $1.0 million in 2023; and a decrease of $270,000 in loan expense for 2024 as compared to 2023 due primarily to lower mortgage loan originations related to the cessation of the national mortgage banking operations in the quarter ended December 31, 2023.

    The Company recognized income tax expense of $145,000 for the three months ended September 30, 2024 compared to income tax benefit of $737,000 for the same period in 2023. The increase was primarily due to higher taxable income in the 2024 period.

    Comparison of Financial Condition at September 30, 2024 and September 30, 2023

    Total assets increased $161.5 million, from $2.29 billion at September 30, 2023 to $2.45 billion at September 30, 2024. Net loans held for investment increased $193.6 million during the year ended September 30, 2024 due primarily to growth in residential real estate, residential construction, and commercial real estate loans. Loans held for sale decreased by $20.1 million from $45.9 million at September 30, 2023 to $25.7 million, primarily due to the winddown of the national mortgage banking operations. Residential mortgage loan servicing rights decreased $59.8 million during the year ended September 30, 2024, due to the sale of the entire residential mortgage loan servicing rights portfolio during the year.

    Total liabilities increased $135.4 million due primarily to increases in total deposits of $199.1 million, which included an increase in brokered deposits of $70.8 million, partially offset by a decrease in FHLB borrowings of $61.5 million. As of September 30, 2024, deposits exceeding the FDIC insurance limit of $250,000 per insured account were 30.1% of total deposits and 13.7% of total deposits when excluding public funds insured by the Indiana Public Deposit Insurance Fund.

    Common stockholders’ equity increased $26.1 million, from $151.0 million at September 30, 2023 to $177.1 million at September 30, 2024, due primarily to a $18.4 million decrease in accumulated other comprehensive loss and an increase in retained net income of $7.0 million. The decrease in accumulated other comprehensive loss was due primarily to decreasing long term market interest rates during the year ended September 30, 2024, which resulted in an increase in the fair value of securities available for sale. At September 30, 2024 and September 30, 2023, the Bank was considered “well-capitalized” under applicable regulatory capital guidelines.

    First Savings Bank is an entrepreneurial community bank headquartered in Jeffersonville, Indiana, which is directly across the Ohio River from Louisville, Kentucky, and operates fifteen depository branches within Southern Indiana. The Bank also has two national lending programs, including single-tenant net lease commercial real estate and SBA lending, with offices located predominately in the Midwest. The Bank is a recognized leader, both in its local communities and nationally for its lending programs. The employees of First Savings Bank strive daily to achieve the organization’s vision, We Expect To Be The BEST community BANK, which fuels our success. The Company’s common shares trade on The NASDAQ Stock Market under the symbol “FSFG.”

    This release may contain forward-looking statements within the meaning of the federal securities laws. These statements are not historical facts; rather, they are statements based on the Company’s current expectations regarding its business strategies and their intended results and its future performance. Forward-looking statements are preceded by terms such as “expects,” “believes,” “anticipates,” “intends” and similar expressions.

    Forward-looking statements are not guarantees of future performance. Numerous risks and uncertainties could cause or contribute to the Company’s actual results, performance and achievements to be materially different from those expressed or implied by the forward-looking statements. Factors that may cause or contribute to these differences include, without limitation, changes in general economic conditions; changes in market interest rates; changes in monetary and fiscal policies of the federal government; legislative and regulatory changes; and other factors disclosed periodically in the Company’s filings with the Securities and Exchange Commission.

    Because of the risks and uncertainties inherent in forward-looking statements, readers are cautioned not to place undue reliance on them, whether included in this report or made elsewhere from time to time by the Company or on its behalf. Except as may be required by applicable law or regulation, the Company assumes no obligation to update any forward-looking statements.

    Contact:
    Tony A. Schoen, CPA
    Chief Financial Officer
    812-283-0724

    FIRST SAVINGS FINANCIAL GROUP, INC.  
    CONSOLIDATED FINANCIAL HIGHLIGHTS  
    (Unaudited)  
                         
                         
      Three Months Ended   Years Ended      
    OPERATING DATA: September 30,   September 30,      
    (In thousands, except share and per share data)   2024       2023       2024       2023        
                         
    Total interest income $ 32,223     $ 28,137     $ 121,988     $ 103,229        
    Total interest expense   17,146       12,601       63,926       41,655        
                         
    Net interest income   15,077       15,536       58,062       61,574        
                         
    Provision for credit losses – loans   1,808       815       3,492       2,612        
    Provision (credit) for unfunded lending commitments   (262 )           (421 )            
    Provision (credit) for credit losses – securities   (86 )           21              
                         
    Total provision for credit losses   1,460       815       3,092       2,612        
                         
    Net interest income after provision for credit losses   13,617       14,721       54,970       58,962        
                         
    Total noninterest income   2,842       5,442       12,530       25,342        
    Total noninterest expense   12,642       21,647       52,890       76,122        
                         
    Income (loss) before income taxes   3,817       (1,484 )     14,610       8,182        
    Income tax expense (benefit)   145       (737 )     1,018       10        
                         
    Net income (loss) $ 3,672     $ (747 )   $ 13,592     $ 8,172        
                         
    Net income (loss) per share, basic $ 0.54     $ (0.11 )   $ 1.99     $ 1.19        
    Weighted average shares outstanding, basic   6,833,376       6,817,365       6,830,466       6,848,311        
                         
    Net income (loss) per share, diluted $ 0.53     $ (0.11 )   $ 1.98     $ 1.19        
    Weighted average shares outstanding, diluted   6,877,518       6,837,919       6,856,520       6,880,072        
                         
                         
    Performance ratios (annualized)                    
    Return on average assets   0.61 %     (0.13 %)     0.58 %     0.37 %      
    Return on average equity   8.52 %     (1.82 %)     8.31 %     5.04 %      
    Return on average common stockholders’ equity   8.52 %     (1.82 %)     8.31 %     5.04 %      
    Net interest margin (tax equivalent basis)   2.72 %     3.03 %     2.68 %     3.10 %      
    Efficiency ratio   70.55 %     103.19 %     74.92 %     87.58 %      
                         
                         
              QTD       FYTD  
    FINANCIAL CONDITION DATA: September 30,   June 30,   Increase   September 30,   Increase  
    (In thousands, except per share data)   2024       2024     (Decrease)     2023     (Decrease)  
                         
    Total assets $ 2,450,368     $ 2,393,491     $ 56,877     $ 2,288,854     $ 161,514    
    Cash and cash equivalents   52,142       42,423       9,719       30,845       21,297    
    Investment securities   249,719       238,785       10,934       229,039       20,680    
    Loans held for sale   25,716       125,859       (100,143 )     45,855       (20,139 )  
    Gross loans   1,985,146       1,846,769       138,377       1,787,143       198,003    
    Allowance for credit losses (1)   21,294       19,789       1,505       16,900       4,394    
    Interest earning assets   2,277,512       2,239,109       38,403       2,083,397       194,115    
    Goodwill   9,848       9,848             9,848          
    Core deposit intangibles   398       438       (40 )     561       (163 )  
    Loan servicing rights   2,754       2,860       (106 )     62,819       (60,065 )  
    Noninterest-bearing deposits   191,528       201,854       (10,326 )     242,237       (50,709 )  
    Interest-bearing deposits (customer)   1,180,196       1,111,143       69,053       1,001,238       178,958    
    Interest-bearing deposits (brokered)   509,157       399,151       110,006       438,319       70,838    
    Federal Home Loan Bank borrowings   301,640       425,000       (123,360 )     363,183       (61,543 )  
    Subordinated debt and other borrowings   48,603       48,563       40       48,444       159    
    Total liabilities   2,273,253       2,225,491       47,762       2,137,873       135,380    
    Accumulated other comprehensive loss   (11,195 )     (17,415 )     6,220       (29,587 )     18,392    
    Stockholders’ equity   177,115       168,000       9,115       150,981       26,134    
                         
    Book value per share $ 25.72     $ 24.41       $ 1.31     $ 21.99     $ 3.73    
    Tangible book value per share – Non-GAAP (2)   24.23       22.91       1.32       20.47       3.76    
                         
    Non-performing assets:                    
    Nonaccrual loans – SBA guaranteed $ 5,036     $ 5,049     $ (13 )   $ 5,091     $ (55 )  
    Nonaccrual loans   11,906       11,705       201       8,857       3,049    
    Total nonaccrual loans $ 16,942     $ 16,754     $ 188     $ 13,948     $ 2,994    
    Accruing loans past due 90 days                              
    Total non-performing loans   16,942       16,754       188       13,948       2,994    
    Foreclosed real estate   444       444             474       (30 )  
    Troubled debt restructurings classified as performing loans                     1,266       (1,266 )  
    Total non-performing assets $ 17,386     $ 17,198     $ 188     $ 15,688     $ 1,698    
                         
    Asset quality ratios:                    
    Allowance for credit losses as a percent of total gross loans   1.07 %     1.07 %     0.00 %     0.95 %     0.13 %  
    Allowance for credit losses as a percent of nonperforming loans   125.69 %     118.12 %     7.57 %     121.16 %     4.52 %  
    Nonperforming loans as a percent of total gross loans   0.85 %     0.91 %     (0.05 %)     0.78 %     0.07 %  
    Nonperforming assets as a percent of total assets   0.71 %     0.72 %     (0.01 %)     0.69 %     0.02 %  
                         
    (1) The Company adopted ASU 2016-13 Topic 326 on October 1, 2023. Allowance was determined using current expected credit loss methodology (CECL) for the quarters ended September, June, and March 2024 and December 2023. Allowance was determined using the previous incurred loss methodology as of September 30, 2023.  
    (2) See reconciliation of GAAP and non-GAAP financial measures for additional information relating to calculation of these figures.
                         
    RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES (UNAUDITED):                
    The following non-GAAP financial measures used by the Company provide information useful to investors in understanding the Company’s performance. The Company believes the financial measures presented below are important because of their widespread use by investors as a means to evaluate capital adequacy and earnings. The following table summarizes the non-GAAP financial measures derived from amounts reported in the evaluate capital adequacy and earnings. The following table summarizes the non-GAAP financial measures derived from amounts reported in the evaluate capital adequacy and earnings. The following table summarizes the non-GAAP financial measures derived from amounts reported in the Company’s consolidated financial statements and reconciles those non-GAAP financial measures with the comparable GAAP financial measures.      
                         
      Three Months Ended   Fiscal Year Ended      
      September 30,   September 30,      
        2024       2023       2024       2023        
    Net Income (In thousands)                    
    Net income attributable to the Company (non-GAAP) $ 3,660     $ 2,824     $ 11,674     $ 12,731        
    Plus: Reversal of contingent liability, net of tax effect               212              
    Plus: Record Visa Class C shares, net of tax effect   15             342              
    Plus: Decrease in loss contingency for SBA-guaranteed loans, net of tax effect               492              
    Plus: Adjustment to MSR valuation allowance, net of tax effect               583              
    Plus: Gain (loss) on premises and equipment, net of tax effect   (3 )           87              
    Plus: Adjustment to previous data processing contract termination accrual, net of tax effect               117              
    Plus: Distribution from equity investment, net of tax effect               85              
    Plus: Gain from repurchase of subordinated debt, net of tax effect                     513        
    Less: Net loss on sales of available for sale securities and time deposits, net of tax effect                     (429 )      
    Less: Data processing system conversion, net of tax effect         (979 )           (1,119 )      
    Less: MSR valuation allowance for intended sale, net of tax effect         (598 )           (598 )      
    Less: Loss contingency for SBA-guaranteed loans, net of tax effect         (779 )           (1,160 )      
    Less: Mortgage banking loss contingencies, net of tax effect         (296 )           (847 )      
    Less: Professional fees related to mortgage banking loss contingencies, net of tax effect         (919 )           (919 )      
    Net income attributable to the Company (GAAP) $ 3,672     $ (747 )   $ 13,592     $ 8,172        
                         
    Net Income per Share, Diluted                    
    Net income per share, diluted (non-GAAP) $ 0.53     $ 0.41     $ 1.70     $ 1.85        
    Plus: Reversal of contingent liability, net of tax effect               0.03              
    Plus: Record Visa Class C shares, net of tax effect               0.05              
    Plus: Decrease in loss contingency for SBA-guaranteed loans, net of tax effect               0.07              
    Plus: Adjustment to MSR valuation allowance, net of tax effect               0.09              
    Plus: Gain (loss) on premises and equipment, net of tax effect               0.01              
    Plus: Adjustment to previous data processing contract termination accrual, net of tax effect               0.02              
    Plus: Distribution from equity investment, net of tax effect               0.01              
    Plus: Gain from repurchase of subordinated debt, net of tax effect                     0.07        
    Less: Net loss on sales of available for sale securities and time deposits, net of tax effect                     (0.06 )      
    Less: Data processing system conversion, net of tax effect         (0.14 )           (0.16 )      
    Less: MSR valuation allowance for intended sale, net of tax effect         (0.09 )           (0.09 )      
    Less: Loss contingency for SBA-guaranteed loans, net of tax effect         (0.11 )           (0.17 )      
    Less: Mortgage banking loss contingencies, net of tax effect         (0.05 )           (0.12 )      
    Less: Professional fees related to mortgage banking loss contingencies, net of tax effect         (0.13 )           (0.13 )      
    Net income per share, diluted (GAAP) $ 0.53     $ (0.11 )   $ 1.98     $ 1.19        
                         
    Core Banking Net Income (In thousands)                    
    Net income attributable to the Core Bank (non-GAAP) $ 4,081     $ 5,046     $ 15,449     $ 18,338        
    Plus: Reversal of contingent liability, net of tax effect               212              
    Plus: Record Visa Class C shares, net of tax effect   15             342              
    Plus: Adjustment to MSR valuation allowance, net of tax effect               583              
    Plus: Gain (loss) on premises and equipment, net of tax effect   (3 )           87              
    Plus: Adjustment to previous data processing contract termination accrual, net of tax effect               117              
    Plus: Distribution from equity investment, net of tax effect               85              
    Plus: Gain from repurchase of subordinated debt, net of tax effect                     513        
    Less: Net loss on sales of available for sale securities and time deposits, net of tax effect                     (429 )      
    Less: Data processing system conversion, net of tax effect         (979 )           (1,119 )      
    Less: MSR valuation allowance for intended sale, net of tax effect         (598 )           (598 )      
    Less: Mortgage banking loss contingencies, net of tax effect         (296 )           (847 )      
    Less: Professional fees related to mortgage banking loss contingencies, net of tax effect         (919 )           (919 )      
    Net income (loss) attributable to the Core Bank (GAAP) $ 4,093     $ 2,254     $ 16,875     $ 14,939        
                         
    Core Bank Net Income per Share, Diluted                    
    Core Bank net income per share, diluted (non-GAAP) $ 0.60     $ 0.74     $ 2.26     $ 2.67        
    Plus: Reversal of contingent liability, net of tax effect               0.03              
    Plus: Record Visa Class C shares, net of tax effect               0.05              
    Plus: Adjustment to MSR valuation allowance, net of tax effect               0.09              
    Plus: Gain (loss) on premises and equipment, net of tax effect               0.01              
    Plus: Adjustment to previous data processing contract termination accrual, net of tax effect               0.02              
    Plus: Distribution from equity investment, net of tax effect               0.01              
    Plus: Gain from repurchase of subordinated debt, net of tax effect                     0.07        
    Less: Net loss on sales of available for sale securities and time deposits, net of tax effect                     (0.06 )      
    Less: Data processing system conversion, net of tax effect         (0.14 )           (0.16 )      
    Less: MSR valuation allowance for intended sale, net of tax effect         (0.09 )           (0.09 )      
    Less: Mortgage banking loss contingencies, net of tax effect         (0.05 )           (0.12 )      
    Less: Professional fees related to mortgage banking loss contingencies, net of tax effect         (0.13 )           (0.13 )      
    Core Bank net income per share, diluted (GAAP) $ 0.60     $ 0.33     $ 2.47     $ 2.18        
                         
    Efficiency Ratio (In thousands)                    
    Net interest income (GAAP) $ 15,077     $ 15,536     $ 58,062     $ 61,574        
                         
    Noninterest income (GAAP)   2,842       5,442       12,530       25,342        
                         
    Noninterest expense (GAAP)   12,646       21,647       52,890       76,122        
                         
    Efficiency ratio (GAAP)   70.55 %     103.19 %     74.92 %     87.58 %      
                         
    Noninterest income (GAAP) $ 2,842     $ 5,442     $ 12,530     $ 25,342        
    Plus: Record Visa Class C shares   20             456              
    Plus: Adjustment to MSR valuation allowance               777              
    Plus: Gain (loss) on premises and equipment   (4 )           116              
    Plus: Distribution from equity investment               113              
    Plus: Gain from repurchase of subordinated debt                     684        
    Less: Net loss on sales of available for sale securities and time deposits                     (572 )      
    Less: MSR valuation allowance for intended sale         (797 )           (797 )      
    Noninterest income (Non-GAAP)   2,858       4,645       13,992       24,657        
                         
    Noninterest expense (GAAP) $ 12,642     $ 21,647     $ 52,890     $ 76,122        
    Plus: Reversal of contingent liability               283              
    Plus: Decrease in loss contingency for SBA-guaranteed loans               656              
    Plus: Adjustment to previous data processing contract termination accrual               156              
    Less: Data processing system conversion         (1,305 )           (1,492 )      
    Less: Loss contingency for SBA-guaranteed loans         (1,039 )           (1,547 )      
    Less: Mortgage banking loss contingencies         (395 )           (1,129 )      
    Less: Professional fees related to mortgage banking loss contingencies         (1,225 )           (1,225 )      
    Noninterest expense (Non-GAAP)   12,642       17,683       53,985       70,729        
                         
    Efficiency ratio (excluding nonrecurring items) (non-GAAP)   70.49 %     87.62 %     74.92 %     82.02 %      
                         
                         
    Tangible Book Value Per Share September 30,   June 30,   Increase   September 30,   Increase  
    (In thousands, except share and per share data)   2024       2024     (Decrease)     2023     (Decrease)  
                         
    Stockholders’ equity, net of noncontrolling interests (GAAP) $ 177,115     $ 168,000     $ 9,115     $ 150,981     $ 26,134    
    Less: goodwill and core deposit intangibles   (10,246 )     (10,286 )     40       (10,409 )     163    
    Tangible equity (non-GAAP) $ 166,869     $ 157,714     $ 9,155     $ 140,572       26,297    
                         
    Outstanding common shares   6,887,106       6,883,656     $ 3,450       6,867,121       19,985    
                         
    Tangible book value per share (non-GAAP) $ 24.23     $ 22.91     $ 1.32     $ 20.47     $ 3.76    
                         
    Book value per share (GAAP) $ 25.72     $ 24.41     $ 1.31     $ 21.99     $ 3.73    
                         
                         
    SUMMARIZED FINANCIAL INFORMATION (UNAUDITED): As of  
    Summarized Consolidated Balance Sheets September 30,   June 30,   March 31,   December 31,   September 30,  
    (In thousands, except per share data)   2024       2024       2023       2023       2023    
                         
    Total cash and cash equivalents $ 52,142     $ 42,423     $ 62,969     $ 33,366     $ 30,845    
    Total investment securities   249,719       238,785       240,142       246,801       229,039    
    Total loans held for sale   25,716       125,859       19,108       22,866       45,855    
    Total loans, net of allowance for credit losses   1,963,852       1,826,980       1,882,458       1,841,953       1,770,243    
    Loan servicing rights   2,754       2,860       3,028       3,711       62,819    
    Total assets   2,450,368       2,393,491       2,364,983       2,308,092       2,288,854    
                         
    Customer deposits $ 1,371,724     $ 1,312,997     $ 1,239,271     $ 1,180,951     $ 1,243,475    
    Brokered deposits   509,157       399,151       548,175       502,895       438,319    
    Total deposits   1,880,881       1,712,148       1,787,446       1,683,846       1,681,794    
    Federal Home Loan Bank borrowings   301,640       425,000       315,000       356,699       363,183    
                         
    Common stock and additional paid-in capital $ 27,725     $ 27,592     $ 27,475     $ 27,397     $ 27,064    
    Retained earnings – substantially restricted   173,337       170,688       167,648       163,753       166,306    
    Accumulated other comprehensive income (loss)   (11,195 )     (17,415 )     (17,144 )     (13,606 )     (29,587 )  
    Unearned stock compensation   (901 )     (999 )     (1,096 )     (1,194 )     (1,015 )  
    Less treasury stock, at cost   (11,851 )     (11,866 )     (11,827 )     (11,827 )     (11,787 )  
    Total stockholders’ equity   177,115       168,000       165,056       164,523       150,981    
                         
    Outstanding common shares   6,887,106       6,883,656       6,883,160       6,883,160       6,867,121    
                         
                         
      Three Months Ended  
    Summarized Consolidated Statements of Income September 30,   June 30,   March 31,   December 31,   September 30,  
    (In thousands, except per share data)   2024       2024       2023       2023       2023    
                         
    Total interest income $ 32,223     $ 31,094     $ 30,016     $ 28,655     $ 28,137    
    Total interest expense   17,146       16,560       15,678       14,542       12,601    
    Net interest income   15,077       14,534       14,338       14,113       15,536    
    Provision for credit losses – loans   1,808       501       713       412       815    
    Provision (credit) for unfunded lending commitments   (262 )     158       (259 )              
    Provision (credit) for credit losses – securities   (86 )     84       23                
    Net interest income after provision for credit losses   13,617       13,791       13,861       13,701       14,721    
                         
    Total noninterest income   2,842       3,196       3,710       2,782       5,442    
    Total noninterest expense   12,642       12,431       11,778       16,039       21,647    
    Income (loss) before income taxes   3,817       4,556       5,793       444       (1,484 )  
    Income tax expense (benefit)   145       483       866       (476 )     (737 )  
    Net income (loss) $ 3,672     $ 4,073     $ 4,927     $ 920     $ (747 )  
                         
                         
    Net income (loss) per share, basic $ 0.54     $ 0.60     $ 0.72     $ 0.13     $ (0.11 )  
    Weighted average shares outstanding, basic   6,833,376       6,832,452       6,832,130       6,823,948       6,817,365    
                         
    Net income (loss) per share, diluted $ 0.53     $ 0.60     $ 0.72     $ 0.13     $ (0.11 )  
    Weighted average shares outstanding, diluted   6,877,518       6,842,336       6,859,611       6,839,704       6,837,919    
                         
                         
    SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED): Three Months Ended  
    Noninterest Income Detail September 30,   June 30,   March 31,   December 31,   September 30,  
    (In thousands)   2024       2024       2023       2023       2023    
                         
    Service charges on deposit accounts $ 552     $ 538     $ 387     $ 473     $ 479    
    ATM and interchange fees   642       593       585       449       816    
    Net loss on sales of available for sale securities                           (11 )  
    Net unrealized gain on equity securities   28       419       6       38       11    
    Net gain on sales of loans, Small Business Administration   647       581       951       834       538    
    Mortgage banking income   6       49       53       89       3,018    
    Increase in cash surrender value of life insurance   363       353       333       329       311    
    Commission income   294       220       220       222       182    
    Real estate lease income   122       154       115       115       116    
    Net gain on premises and equipment   (4 )           120             20    
    Other income   192       289       940       233       (38 )  
    Total noninterest income $ 2,842     $ 3,196     $ 3,710     $ 2,782     $ 5,442    
                         
                         
      Three Months Ended  
      September 30,   June 30,   March 31,   December 31,   September 30,  
    Consolidated Performance Ratios (Annualized)   2024       2024       2023       2023       2023    
                         
    Return on average assets   0.61 %     0.69 %     0.92 %     0.16 %     (0.13 %)  
    Return on average equity   8.52 %     9.86 %     13.06 %     2.42 %     (1.82 %)  
    Return on average common stockholders’ equity   8.52 %     9.86 %     13.06 %     2.42 %     (1.82 %)  
    Net interest margin (tax equivalent basis)   2.72 %     2.67 %     2.66 %     2.69 %     3.03 %  
    Efficiency ratio   70.55 %     70.11 %     65.26 %     94.93 %     103.19 %  
                         
                         
      As of or for the Three Months Ended  
      September 30,   June 30,   March 31,   December 31,   September 30,  
    Consolidated Asset Quality Ratios   2024       2024       2023       2023       2023    
                         
    Nonperforming loans as a percentage of total loans   0.85 %     0.91 %     0.82 %     0.83 %     0.78 %  
    Nonperforming assets as a percentage of total assets   0.71 %     0.72 %     0.68 %     0.69 %     0.69 %  
    Allowance for credit losses as a percentage of total loans   1.07 %     1.07 %     1.02 %     1.01 %     0.95 %  
    Allowance for credit losses as a percentage of nonperforming loans   125.69 %     118.12 %     124.01 %     121.16 %     121.16 %  
    Net charge-offs to average outstanding loans   0.02 %     0.01 %     0.01 %     0.00 %     0.04 %  
                         
                         
    SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED): Three Months Ended  
    Segmented Statements of Income Information September 30,   June 30,   March 31,   December 31,   September 30,  
    (In thousands)   2024       2024       2023       2023       2023    
                         
    Core Banking Segment:                    
    Net interest income $ 14,083     $ 13,590     $ 13,469     $ 13,113     $ 14,167    
    Provision (credit) for credit losses – loans   1,339       320       909       (49 )     1,266    
    Provision (credit) for unfunded lending commitments   78       64       (259 )              
    Provision (credit) for credit losses – securities   (86 )     84       23                
    Net interest income after provision for credit losses   12,752       13,122       12,796       13,162       12,901    
    Noninterest income   2,042       2,474       2,537       1,679       2,136    
    Noninterest expense   10,400       10,192       10,093       10,252       13,559    
    Income before income taxes   4,394       5,404       5,240       4,589       1,478    
    Income tax expense   301       689       729       541       3    
    Net income $ 4,093     $ 4,715     $ 4,511     $ 4,048     $ 1,475    
                         
    SBA Lending Segment (Q2 Business Capital, LLC):                    
    Net interest income $ 994     $ 944     $ 869     $ 1,003     $ 990    
    Provision (credit) for credit losses – loans   469       181       (196 )     461       (451 )  
    Provision (credit) for unfunded lending commitments   (340 )     94                      
    Net interest income after provision for credit losses   865       669       1,065       542       1,441    
    Noninterest income   800       722       1,173       1,003       367    
    Noninterest expense   2,242       2,239       1,685       2,146       2,907    
    Income (loss) before income taxes   (577 )     (848 )     553       (601 )     (1,099 )  
    Income tax expense (benefit)   (156 )     (206 )     137       (131 )     (273 )  
    Net income (loss) $ (421 )   $ (642 )   $ 416     $ (470 )   $ (826 )  
                         
    Mortgage Banking Segment: (3)                    
    Net interest income (loss) $     $     $     $ (3 )   $ 379    
    Provision for credit losses – loans                              
    Provision for unfunded lending commitments                              
    Net interest income (loss) after provision for credit losses                     (3 )     379    
    Noninterest income                     100       2,939    
    Noninterest expense                     3,641       5,181    
    Loss before income taxes                     (3,544 )     (1,863 )  
    Income tax benefit                     (886 )     (467 )  
    Net loss $     $     $     $ (2,658 )   $ (1,396 )  
                         
    (3) National mortgage banking operations were ceased in the quarter ended December 31, 2023 and subsequent immaterial mortgage lending activity is reported within the Core Banking segment.
                         
                         
    SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED): Three Months Ended  
    Segmented Statements of Income Information September 30,   June 30,   March 31,   December 31,   September 30,  
    (In thousands, except percentage data)   2024       2024       2023       2023       2023    
                         
    Net Income (Loss) Per Share by Segment                    
    Net income per share, basic – Core Banking $ 0.60     $ 0.69     $ 0.66     $ 0.59     $ 0.22    
    Net income (loss) per share, basic – SBA Lending (Q2 Business Capital, LLC)   (0.06 )     (0.09 )     0.06       (0.07 )     (0.12 )  
    Net income (loss) per share, basic – Mortgage Banking   0.00       0.00       0.00       (0.40 )     (0.21 )  
    Total net income (loss) per share, basic $ 0.54     $ 0.60     $ 0.72     $ 0.12     $ (0.11 )  
                         
    Net Income (Loss) Per Diluted Share by Segment                    
    Net income per share, diluted – Core Banking $ 0.60     $ 0.69     $ 0.66     $ 0.59     $ 0.22    
    Net income (loss) per share, diluted – SBA Lending (Q2 Business Capital, LLC)   (0.06 )     (0.09 )     0.06       (0.07 )     (0.12 )  
    Net loss per share, diluted – Mortgage Banking   0.00       0.00       0.00       (0.40 )     (0.21 )  
    Total net income (loss) per share, diluted $ 0.54     $ 0.60     $ 0.72     $ 0.12     $ (0.11 )  
                         
    Return on Average Assets by Segment (annualized) (4)                    
    Core Banking   0.71 %     0.83 %     0.80 %     0.73 %     0.28 %  
    SBA Lending   (1.71 %)     (2.91 %)     1.81 %     (2.11 %)     (3.81 %)  
                         
    Efficiency Ratio by Segment (annualized) (4)                    
    Core Banking   64.50 %     63.45 %     63.06 %     69.31 %     83.17 %  
    SBA Lending   124.97 %     134.39 %     82.52 %     106.98 %     214.22 %  
                         
                         
      Three Months Ended  
    Noninterest Expense Detail by Segment September 30,   June 30,   March 31,   December 31,   September 30,  
    (In thousands)   2024       2024       2023       2023       2023    
                         
    Core Banking Segment:                    
    Compensation $ 5,400     $ 5,587     $ 5,656     $ 5,691     $ 6,528    
    Occupancy   1,554       1,573       1,615       1,481       1,418    
    Advertising   399       253       205       189       404    
    Other   3,047       2,779       2,617       2,891       5,209    
    Total Noninterest Expense $ 10,400     $ 10,192     $ 10,093     $ 10,252     $ 13,559    
                         
    SBA Lending Segment (Q2 Business Capital, LLC):                    
    Compensation $ 1,854     $ 1,893     $ 1,933     $ 1,826     $ 1,533    
    Occupancy   55       51       58       91       68    
    Advertising   17       12       7       10       10    
    Other   316       283       (313 )     219       1,296    
    Total Noninterest Expense $ 2,242     $ 2,239     $ 1,685     $ 2,146     $ 2,907    
                         
    Mortgage Banking Segment: (4)                    
    Compensation $     $     $     $ 2,146     $ 3,647    
    Occupancy                     469       395    
    Advertising                     119       129    
    Other                     907       1,010    
    Total Noninterest Expense $     $     $     $ 3,641     $ 5,181    
                         
    (4) Ratios for Mortgage Banking Segment are not considered meaningful due to cessation of national mortgage banking operations in the quarter ended December 31, 2023.  
                         
                         
    SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED):    
      Three Months Ended  
    SBA Lending (Q2 Business Capital, LLC) Data September 30,   June 30,   March 31,   December 31,   September 30,  
    (In thousands, except percentage data)   2024       2024       2023       2023       2023    
                         
    Final funded loans guaranteed portion sold, SBA $ 10,880     $ 7,515     $ 15,144     $ 14,098     $ 8,431    
                         
    Gross gain on sales of loans, SBA $ 1,029     $ 811     $ 1,443     $ 1,303     $ 809    
    Weighted average gross gain on sales of loans, SBA   9.46 %     10.79 %     9.53 %     9.24 %     9.60 %  
                         
    Net gain on sales of loans, SBA (5) $ 647     $ 581     $ 951     $ 834     $ 538    
    Weighted average net gain on sales of loans, SBA   5.95 %     7.73 %     6.28 %     5.92 %     6.38 %  
                         
    (5) Inclusive of gains on servicing assets and net of commissions, referral fees, SBA repair fees and discounts on unguaranteed portions held-for-investment.      
                         
                         
    SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED): Three Months Ended  
    Summarized Consolidated Average Balance Sheets September 30,   June 30,   March 31,   December 31,   September 30,  
    (In thousands)   2024       2024       2023       2023       2023    
    Interest-earning assets                    
    Average balances:                    
    Interest-bearing deposits with banks $ 16,841     $ 26,100     $ 24,587     $ 20,350     $ 21,631    
    Loans   1,988,997       1,943,716       1,914,609       1,857,654       1,796,749    
    Investment securities – taxable   99,834       101,350       102,699       103,728       105,393    
    Investment securities – nontaxable   158,917       157,991       157,960       159,907       160,829    
    FRB and FHLB stock   24,986       24,986       24,986       24,968       24,939    
    Total interest-earning assets $ 2,289,575     $ 2,254,143     $ 2,224,841     $ 2,166,607     $ 2,109,541    
                         
    Interest income (tax equivalent basis):                    
    Interest-bearing deposits with banks $ 209     $ 324     $ 261     $ 249     $ 266    
    Loans   29,450       28,155       27,133       26,155       25,214    
    Investment securities – taxable   910       918       923       942       969    
    Investment securities – nontaxable   1,685       1,665       1,662       1,687       1,695    
    FRB and FHLB stock   471       519       499       74       428    
    Total interest income (tax equivalent basis) $ 32,725     $ 31,581     $ 30,478     $ 29,107     $ 28,572    
                         
    Weighted average yield (tax equivalent basis, annualized):                    
    Interest-bearing deposits with banks   4.96 %     4.97 %     4.25 %     4.89 %     4.92 %  
    Loans   5.92 %     5.79 %     5.67 %     5.63 %     5.61 %  
    Investment securities – taxable   3.65 %     3.62 %     3.59 %     3.63 %     3.68 %  
    Investment securities – nontaxable   4.24 %     4.22 %     4.21 %     4.22 %     4.22 %  
    FRB and FHLB stock   7.54 %     8.31 %     7.99 %     1.19 %     6.86 %  
    Total interest-earning assets   5.72 %     5.60 %     5.48 %     5.37 %     5.42 %  
                         
    Interest-bearing liabilities                    
    Interest-bearing deposits $ 1,563,258     $ 1,572,871     $ 1,549,012     $ 1,389,384     $ 1,385,994    
    Fed funds purchased                           76    
    Federal Home Loan Bank borrowings   378,956       351,227       333,275       440,786       353,890    
    Subordinated debt and other borrowings   48,576       48,537       48,497       48,458       48,406    
    Total interest-bearing liabilities $ 1,990,790     $ 1,972,635     $ 1,930,784     $ 1,878,628     $ 1,788,366    
                         
    Interest expense:                    
    Interest-bearing deposits $ 12,825     $ 12,740     $ 12,546     $ 9,989     $ 9,457    
    Fed funds purchased                           1    
    Federal Home Loan Bank borrowings   3,521       3,021       2,298       3,769       2,459    
    Subordinated debt and other borrowings   800       799       833       784       684    
    Total interest expense $ 17,146     $ 16,560     $ 15,677     $ 14,542     $ 12,601    
                         
    Weighted average cost (annualized):                    
    Interest-bearing deposits   3.28 %     3.24 %     3.24 %     2.88 %     2.73 %  
    Fed funds purchased   0.00 %     0.00 %     0.00 %     0.00 %     5.26 %  
    Federal Home Loan Bank borrowings   3.72 %     3.44 %     2.76 %     3.42 %     2.78 %  
    Subordinated debt and other borrowings   6.59 %     6.58 %     6.87 %     6.47 %     5.65 %  
    Total interest-bearing liabilities   3.45 %     3.36 %     3.25 %     3.10 %     2.82 %  
                         
    Net interest income (taxable equivalent basis) $ 15,579     $ 15,021     $ 14,801     $ 14,565     $ 15,971    
    Less: taxable equivalent adjustment   (502 )     (487 )     (463 )     (452 )     (435 )  
    Net interest income $ 15,077     $ 14,534     $ 14,338     $ 14,113     $ 15,536    
                         
    Interest rate spread (tax equivalent basis, annualized)   2.27 %     2.24 %     2.23 %     2.27 %     2.60 %  
                         
    Net interest margin (tax equivalent basis, annualized)   2.72 %     2.67 %     2.66 %     2.69 %     3.03 %  
                         

    The MIL Network

  • MIL-OSI USA: Cantwell Celebrates 67 New Affordable Homes At Airway Heights Ribbon-Cutting Ceremony

    US Senate News:

    Source: United States Senator for Washington Maria Cantwell

    10.24.24

    Cantwell Celebrates 67 New Affordable Homes At Airway Heights Ribbon-Cutting Ceremony

    In addition to 51 new rental units, Highland Village Phase II will include 16 for-sale affordable homes; A Cantwell-championed federal program covered $13.2 million, or 62% of total project cost

    AIRWAY HEIGHTS, WA – Today, U.S. Senator Maria Cantwell (D-WA) joined Community Frameworks, Habitat for Humanity-Spokane, and other community leaders in celebrating the grand opening of Highland Village Phase II. The project will add 67 affordable homes to an affordable apartment complex in Airway Heights focused on providing a mixed-income community of multifamily rental and homeownership homes.

    Highland Village Phase II was paid for in part by the Low-Income Housing Tax Credit (LIHTC), a federal housing program championed by Sen. Cantwell. LIHTC funds covered $13.198 million of the total project cost.

    “It’s all about just having a place to call home. We sometimes take that for granted, but then we meet individuals who don’t have that opportunity, and you see how precious it really is — it gives people a start. It gives people an opportunity to get back on their feet, to have the life that they want to have,” Sen. Cantwell said. “I think most people in America get it: Build more supply, and you’ll drive down price. But here we’re building more in Highland Village, so that we can bring down the price and give people options.”

    The Highland Village development is a multi-year effort. The second phase included a mix of 51 apartment homes completed by Community Frameworks and 16 single family homes for affordable homeownership completed by Habitat for Humanity. The rental homes will be available this fall, and the Habitat homes will be available by December of 2024, with the families moving in throughout the fall and winter. Additional phases of Highland Village will continue through 2026. 

    Sen. Cantwell has been a longtime supporter of affordable housing and the Low-Income Housing Tax Credit and is currently the leading Senate proponent of a pending tax package that would significantly boost the LIHTC program. That legislation was approved by the House earlier this year on an overwhelming bipartisan vote and includes two provisions authored by Sen. Cantwell to enhance LIHTC, which together represent the most significant investment in affordable housing in the last 35 years.

    Since its creation in 1986, LIHTC has helped pay for 90% of the federally-funded affordable housing construction across the country, and has financed over 3.8 million affordable homes, including more than 100,000 in Washington state. The economic activity that the credit generated has supported nearly 170,000 jobs and generated more than $19 billion in wages.

    More information about Sen. Cantwell’s work to include an expansion to the LIHTC program in the bipartisan tax package is available HERE.

    Photos of today’s grand opening are HERE; video of Sen. Cantwell’s remarks are HERE; and a transcript is HERE



    MIL OSI USA News

  • MIL-OSI Australia: More Government services under one roof on the Gold Coast

    Source: Ministers for Social Services

    Government services are now more accessible for people on the Gold Coast, with citizenship testing now available at Services Australia’s Biggera Waters Service Centre.

    Biggera Waters is the first citizenship testing site for the Gold Coast, and the first Services Australia service centre to deliver such large-scale testing – offering up to 100 tests a week.

    The service is now available at 44 service centres across the country, with Services Australia delivering more than 2,800 tests every month.

    Citizenship testing at the Biggera Waters Service Centre is a partnership between Services Australia and the Department of Home Affairs.

    The test consists of 20 multiple choice questions to demonstrate an applicants’ knowledge of Australia, the English language, understanding of what it means to become an Australian citizen and their commitment to Australian values.

    Biggera Waters Service Centre is located at 97-99 Brisbane Road Biggera Waters, and is open from 8:30am – 4:30pm, Monday to Friday.

    The Department of Home Affairs allocates the date, time and place of appointments, which can be rescheduled through the Department online.

    More information on citizenship testing can be found at the Department of Home Affairs website, and more information on Biggera Waters Service Centre can be found at the Services Australia website.

    Quotes attributable to Minister for Government Services the Hon. Bill Shorten MP

    “Bringing multiple services together under one roof is the kind of sensible approach to government services people expect, and we’re delivering on that.”

    “Thanks to this fantastic partnership between Services Australia and the Department of Home Affairs, more than 2,800 citizenship tests are happening at Services Australia service centres nationally every month.”

    “Before the Biggera Waters Service Centre offered citizenship testing, people living on the Gold Coast or Logan had to travel up the M1 to the Brisbane CBD, or to Tweed Heads, to sit a test.”

    “Not only are we saving South East Queenslanders time, we’re ensuring they have easily accessible, face-to-face government services when they need it.”

    “This is just one of the many ways we’re making face-to-face government services easier to access for all Australians.”

    Quotes attributable to Assistant Minister for Citizenship and Multicultural Affairs, the Hon. Julian Hill MP

    “Citizenship is the common legal bond that binds, protects and empowers Australians as a people.”

    “Citizenship testing is an integral part of the Citizenship process, and this partnership with Services Australia makes it more accessible for people on the Gold Coast.”

    “More than 150,000 people complete a Citizenship test nationally each year, with Services Australia facilitating almost 20 per cent of those tests last financial year.”

    “These numbers demonstrate Services Australia’s critical role in the citizenship process, with thousands expected to benefit from this new service at Biggera Waters.”

    MIL OSI News

  • MIL-OSI Banking: Transcript of European Economic Outlook October 2024 Press Briefing

    Source: International Monetary Fund

    October 24, 2024

    Speakers:
    Alfred Kammer, Director, European Department, IMF
    Helge Berger, Deputy Director, European Department, IMF
    Oya Celasun, Deputy Director, European Department, IMF
    Moderator:
    Camila Perez, Senior Communications Officer, IMF

    MS. PEREZ: Hi everyone, thanks so much for joining today’s press conference on the release of the European Economic Outlook. My name is Camila Perez. I’m a Communications Officer here at the IMF. And we’re here with Alfred Kammer, Director of the European Department. We’re also here with two of his Deputies, Oya Celasun and Helge Berger. We’re going to get started with some opening remarks from Mr. Kammer, and then we’re going to go to the floor and online to take your questions. Alfred?

    MR: KAMMER: Welcome to this press conference on the Economic Outlook for Europe.

    Headline inflation has come within reach in targets in advanced European economies, but progress remains uneven in Central, Eastern and Southeastern European countries. CESEE as we call it. A moderate recovery is underway. This reflects that financial conditions are still tight, as the easing cycle will take time to take effect. Importantly, the rebound also reflects a high level of uncertainty that keeps consumers and investors cautious.

    Our main message today is that Europe’s recovery is falling short of its full potential. And more importantly, the medium-term outlook is no better. Europe has fallen behind, and I will come to this theme back later, but let’s briefly look at our near-term outlook first.

    Our baseline foresees a modest increase in growth for 2024 and 2025. On inflation, we expect the ECB to sustainably reach its target by mid-‘25. For most CESEE countries, it will take a year longer until 2026. So for this to materialize, Europe needs a safe pair of hands. Central banks should pursue a smooth loosening path in advanced economies, and they need to be more careful and ease more cautiously in several CESEE countries, as real wages may outpace productivity growth there. We also recommend tightening the fiscal stance across most of Europe. We are expecting a recovery, but deficits are too large to stabilize public debt.

    The good news is that the EU has agreed on a fiscal rules framework addressing sustainability concerns while allowing for investment in green transitions and infrastructure. And now we need to follow through. But the urgency for policy action is even more acute when it comes to the medium-term, and that’s really what our report is focusing on. Europe has an underwhelming potential growth rate, and when we are looking at the medium-term, that is not changing.

    Compared to the U.S., income per capita is a stunning 30 percent lower and the gap has remained unchanged for two decades. And I should say at the turn of the century that gap did not exist. Low productivity in CESEE and a low capital stock, are the main reasons.

    Our report identifies three factors holding Europe back. First, Europe markets are too fragmented to provide the needed scale for firms to grow. Second, Europe has no shortage of savings, but its capital markets fail to provide to boost young and productive firms. In addition, Europe is missing skilled labor where it is needed. A deeper, more integrated Single Market can resolve most of these issues. This means removing the barriers that still prevent goods, services, capital, and labor to flow freely between countries.

    We estimate existing barriers in Europe’s Single Market to be equivalent to an ad-valorem tariff of 44 percent for manufacturing, between U.S. states it is 15 percent, and that tariff equivalent is 110 percent for services between EU countries. These are staggering numbers that illustrate how much income Europe leaves on the table.

    While private investment is key, there is also a need for public investment. For example, on infrastructure, connectivity, nd in addition, deepening and broadening, the Single Market could support a faster growing and more resilient Europe.

    New Member states joining the EU in 2004 saw that GDP per capita increase by more than 30 percent in the 15 years after EU accession, helped by strong reforms and market access. And the larger Single Market also helped old member countries. So Europe can close the gap with the global frontier if it builds on its most important asset. And I have been emphasizing that in the past and I continue to emphasize that. And that is the EU’s Single Market.

    So, what are some of the immediate steps which we are outlining? Open energy, telecommunications, and financial services sectors. This will bring more private sector investment, dynamism, and innovation. Advance the capital markets union. This will funnel savings to the most productive firms and startups, make a real effort to ease administrative barriers to firms entering markets, especially in the service sector, and improve infrastructure, institutions and governance in CESEE countries.

    So, in conclusion, Europe has the means to lift growth to its full potential. This is completely under Europe’s control, and it needs to be done. Thank you.

    MS. PEREZ: Thanks so much, Alfred. We’re going to get started with some questions in the room. I see there are some colleagues online. We will get to you. But we’re going to take the first question. The gentleman in the second row. Thank you.

    Question: Thank you so much. In the recent World Economic Outlook, the IMF predicted a slightly better growth for Europe in this year and worse dynamics in 2025, especially for emerging and developing economies. You already described some factors which are driving this process.

    But I have a question regarding the particular issue. This is Russia’s war in Ukraine. How does this factor affect the dynamics in Europe now? And secondly, the IMF significantly marked down the projection for Ukraine, at the same time saying Ukraine’s economy remains resilient despite the war. Could you elaborate, please, on the exact reasons for these negative expectations? What could be done more to improve the situation in Ukraine? Thank you.

    MR: KAMMER: So let me start first with the general impact of Russia’s war in Ukraine on the European outlook. When you’re seeing the growth trajectory, it hasn’t changed very much over the last year. And the main reason why Europe is doing poorly is really the large Russian induced energy price shock Europe is going through. So we are seeing this year, coming out of this crisis, moderate recovery. It’s driven mostly by consumption, as real wages are strengthening. And we are expecting then next year that we will have a handoff to investment demand when policy rates, interest rates, are going to come down.

    So very much when you’re looking at some of the more detailed pictures, Germany very much affected because of the energy price shock, still because of its energy intensive manufacturing. That’s a direct impact of the Russian war. If you’re looking at the tightening cycle of the ECB, that had to be harsher simply because inflation was higher. That’s a result of Russia’s war in Ukraine.

    So that is the general trajectory we are on. But we also have revised down growth for 2025. And what we’re seeing is a bit of moderation in the recovery we have been projecting. And again, it’s a result of the uncertainty created as part of the environment and Russia’s war in Ukraine. That’s an uncertainty for consumers, which are wondering what is going to happen with energy prices and with the future. That is an uncertainty on the investor side, on wondering what is happening in the medium-term. And these headwinds are going to stay with Europe for the time being. So that is the direct impact we are seeing that Russia’s war on Ukraine has still implications for Europe’s economic developments.

    On your second point, with regard to the growth in Ukraine. Growth numbers this year have been brutally affected by the bombing of the energy infrastructure in Ukraine, and that dampens growth and also the outlook. And in addition, of course, like for all of Europe, this creates uncertainty in Ukraine, and it has a dampening effect on aggregate demand. And when you’re looking at our projections for 2025, we also have downgraded those for Ukraine. And that is a reflection that Russia’s war in Ukraine is going to continue. We had assumed that it would stop earlier. It doesn’t. And those are, again, additional costs for the Ukrainian economy.

    On Ukraine. The economic team has been doing and is still doing a marvelous job in terms of, one, maintaining macrostability. Two, supporting the economy to get growth going and supporting enterprises to operate this environment, protect vulnerable people suffering from the war. And three, preparing the fundamentals for hopefully a reconstruction that will come soon and the medium-term path to EU accession.

    MS. PEREZ: Thanks so much, Alfred. We’re going to go with the lady on the third road, please.

    Question: Thank you. My question is related with — Spain has one of the best growth prospects in Europe. What recommendations do you have to ensure that this good momentum continues when the European funds end? And I would also like to know if you have any advice for the housing problem that the country is facing, which has provoked numerous protests by citizens who cannot buy a house due to speculation and high prices. Thank you.

    MR: KAMMER: Spain had indeed a very strong growth performance. That was a result of what we saw on the tourism front, very much still, to some extent, a Pandemic implication. Spain, finally, we saw also, because of lower interest rates and more confidence, a pickup in investment that has been supporting growth. And when we are looking at the supply side, we see the large employment increases have been supported also by immigration. So those were growth drivers we saw in Spain. They will moderate a bit in 2025, but they still will carry on. And of course, implementation of the Next Generation EU will not only have short-term positive impacts but also impacts on the medium-term growth projections for Spain.

    I think when it comes to our policy recommendation for Spain, when you’re looking at the growth performance right now, it was labor intensive, so it was driven by an increase in employment. In future, what we need to see is a growth performance, which is driven by an increase in productivity. And when I mentioned the word productivity and you asked me a question on any country in Europe, that’s the key word. Productivity is an issue in every single member country in Europe. And that needs to be the focus of strong policy reforms. Those are reforms domestically and the structural reforms we have been talking about in our Article IVs.

    But importantly, these are reforms which need to be carried out EU-wide in order to get the productivity increases we need from the Single Market, from companies and firms to be able to grow to scale, go to the global technology frontier and produce and to see a very dynamic business sector. That’s an issue for Spain, but this is an issue for all other countries, and Europe can help there. This is not a national action per se, but this is an action at the European level. But it requires will at the national level to go for European reforms.

    MS. PEREZ: Thank you so much. We’re going to go to the middle of the room. The lady in the third row, please.

    QUESTION: Hello, two questions, if I may, on different topics. You mentioned the importance of integrating Europe’s capital markets. In this context, how important is it for Europe to have bigger banks? Would you welcome the potential merger of UniCredit and Commerzbank? And if capital markets are very important, should the German government drop its objection to this potential bank tie-up? Have you also communicated a message to the German government? And on a completely different topic, you’ve warned about the need for advanced economies to carry out fiscal consolidation and to reduce their borrowing after many years of emergency spending. The UK Chancellor, Rachel Reeves, today has said that she will change her measure of her debt target to one which promotes investment. Would you welcome this kind of step, given your worries about the fiscal overhangs from the Pandemic?

    MR: KAMMER: Thank you. Yeah, maybe I’ll start with your first question on the capital markets union and the banking union. Critically important for Europe. When we see drilling down why we have that productivity gap. One is companies cannot grow to scale. The second problem is lack of business dynamism. And lack of business dynamism stands for we have startups in Europe as we have in the U.S., but they are not getting the same kind of chance in terms of funding. Because as a startup you need equity financing, especially when you’re in the tech sector and you produce intangibles, you cannot provide that as collateral to banks. You need venture capital. And when you’re looking at venture capital, Europe versus the U.S., it’s four times as high in the U.S. than it’s in Europe. So startups in Europe start with a big handicap. And therefore, banking union and the capital markets union are essentially for those startups to grow and be productive, create employment, and push up GDP per capita.

    And yes, as part of the operating to scale for European economies, that they’re not just national players in 27 national countries, but Pan-European players as the U.S. companies are. You need also larger Pan-European banks. And that means we see that one way of doing this is through merger and consolidations. So this is part of helping creating scale in the banking system. And therefore, these mergers and these mergers are welcome. And yes, that has been our recommendation that these mergers should take place now.n individual merger transactions we are not commenting, but our advice is very clear: that the general direction is clear – mergers are needed.

    MS. PEREZ: Thanks.

    MR: KAMMER: On the UK?

    MR. BERGER: Sure, thanks. I would have been disappointed if there had been no question on the UK. Always popular.

    Let’s start with some good news. You have seen that our growth numbers for this year went up 1.1 percent instead of 0.7. Next year at 1.5. So that’s the trajectory, upward looking, against which we discuss fiscal policy.

    So if you allow me to step back before coming to the fiscal framework on the debt question, we recognize that the government very helpfully is committed to reduce the debt level in percent of GDP over the next five years, or at least to stabilize it. So that’s very welcome. It’s in line with longstanding recommendations from our UK team. Now, this is going to require a notable fiscal effort. As you know, the deficit levels are high. There are spending pressures waiting to be tackled in the healthcare system and social care. We also have very high public investment needs. There’s transport. There’s housing. There’s climate. So all of this needs to be put within one umbrella going forward.

    The team has always maintained that this can be done in different ways, including prioritizing spending or increasing fiscal revenues. It’s deliberate, or in the middle, and not an end. You know, your governments will have to see what is best suited to the situation at hand. We’re looking forward to the autumn budget, which will give us clarity on how all of this will hang together.

    Now, in this context, of course, it’s very important to operate within a fiscal framework that’s well understood. We have told many countries, not just the UK, in the past that we like well-organized and explained fiscal frameworks. They help to anchor the policy of the budget over the medium-term. Can help ensure that public debt indeed goes in a direction we wanted to go. Now, in order to facilitate growth, which is part of any such endeavor of reducing public debt, public investment is important. So you need to find a way to protect this as you define your fiscal framework. Now, in this context, we’ll have to see how this new proposal is, you know, really laid out in detail. Again, we will learn more when we have the budget, and it’s good to look all of this together in one go.

    MS. PEREZ: Thanks so much. We’re going to go online. I see Anton has raised his hand. Go ahead, Anton, please.

    QUESTION: Thank you for doing this. As the IMF recently raised its 2024 growth forecast for Russia from 3.2% to 3.6%, what factors contributed to this upward revision despite the ongoing geopolitical tensions and economic sanctions? How are the existing and potential future sanctions on Russia affecting its long-term economic stability? Are there areas of the Russian economy showing resilience despite these sanctions? Thank you very much.

    MS. PEREZ: I believe we have other questions on Russia. online. Please go ahead.

    QUESTION: Good day, everyone. I have a question about the 2025 outlook for Russian’s economy. Since compared to the April outlook, the outlook was downgraded from 1.8 to 1.3 of GDP. And I want to ask, can you elaborate what impacted this forecast and including the fact that Russian Central Bank is close to increasing the key rate to 20-21 percent from 19 percent. How critical the risks for the Russian economy are now? And can you elaborate on its future from this perspective?

    MS. PEREZ: Thank you. I think in the room, gentlemen in the first row, please.

    QUESTION: Hello. Good afternoon. I wanted to follow up on a monetary policy question. So to what extent does this tightening monetary policy by Russian Central Bank will impact Russian economy and will it be effective for fighting inflation from your point of view? And the second question from my side, why did the IMF adjust the projections for Russian debt level for 2024 and 2025 downwards in comparison with April’s economic outlook? Thank you.

    MS. PEREZ: Thanks so much.

    MR. KAMMER: Okay, so quite a number of questions. To the 2024 upgrade that was mostly mechanical, reflecting data outturns for the first half, and they have been reflected in our forecast. What we are seeing right now in the Russian economy, that it is pushing against capacity constraint. So we have a positive output gap, or you could put it differently – the Russian economy is overheating. What we are expecting for next year is simply also the impact that going over your supply capacity, you cannot maintain for very long. So we see an impact on moving into more normal territory there. And of course, that is supported by a tight monetary policy by the Central Bank of Russia. A tight monetary policy, in order to bring down inflation, slows down aggregate demand, and in 2025 will have these effects on GDP. That’s why we are seeing the slowdown in 2025.

    Now, with regard to the longer-term outlook for Russia, as we have been saying before, the medium term looks dim, potential growth has been reduced. That is a result of less technology transfers, less ability to finance. That will impact the productive capacity of the Russian economy in the medium-term, and that will stop the convergence towards Western European per capita GDP levels, which Russia was on more than ten years ago. And this is an effect of the sanctioned regime, which is in place. With regard to the debt levels. I think that is a simple reflection of that the nominal GDP has been revised up, and therefore, debt to GDP ratios are coming down.

    MS. PEREZ: Thanks so much. We’re going to go with the gentleman in the fourth row, gray shirt, please. Thank you.

    QUESTION: Thank you. Once again, we are talking about tariffs. And in your report you highlight the risks of EU tariffs on Chinese EV cars. But is it so much more important for Europe to keep its trade free than to protect strategic sector of its industry? Thank you very much.

    MS. CELASUN: Thank you very much. On that question. You’re right. Europe is very open to trade, has benefited greatly over the decades from trading with other nations. So as it responds to growing tensions around the world and fragmentation, it has to keep in mind the fact that it is benefiting. So we would indeed urge all countries, including Europe, to look for cooperative solutions, which are always the first best. When approaching, for example, the issue of subsidies in other countries for countries to come together, come out clean on what they are subsidizing and how much, and then find cooperative ways of reducing them.

    Tariffs rarely help to solve the problem. They essentially make countries imposing tariffs less competitive, they raise costs, and they trigger retaliation, which would be something to take very seriously for any country that benefits greatly from trade.

    MS. PEREZ: Thanks so much. We’re going to stay in this side of the room. The gentleman on the third row, white shirt, please.

    QUESTION: Thank you. Hello. I had a question on the German economy outlook, which is still, which growth prospects are still very low. I was wondering if the IMF is fearing an effect of this low growth on a shift to political. I mean, on the political side, which would be a rise up the far right, for example, ahead of the next election, federal election next year. Thank you.

    MS. CELASUN: Thank you. As you know, we don’t comment on elections. What we do is to engage with governments, to give them policy advice to strengthen growth and to make growth resilient over time. And on that, our advice hasn’t changed for quite some time. Germany is facing a sharp downturn in its working age population. Quite a sharp decline coming in the next five years. Productivity trends have been very weak. The remedies are to boost labor supply, help women have full time jobs with better childcare, elder care, reducing the marginal tax rates of second earners, and take a host of productivity enhancing reforms. Public investment should be higher in Germany. It’s among the countries with the lowest public investment rates among advanced economies. The other areas we have highlighted are the high level of red tape. Administrative burdens need to be reduced, which would help productivity as well. And Germany should be a champion of the single market, including for the capital markets union, to help its promising companies have better prospects for reaching scale and growing. Thank you.

    MS. PEREZ: We’re going to take the lady in the middle of the room in the fourth row with the light jacket, please.

    QUESTION: Thank you. My question is about the Turkish economy. Türkiye has significantly tightened its policy stance over the past year. How do you see the country’s current state of economy? And also what is the IMF’s approach to the potential timing of easing these policies?

    MR. KAMMER: We, as you know, have been very favorably impressed by the policy pivot since last year in Türkiye. And what we see are two main results. One is the vulnerability to a crisis. Risk has been greatly reduced over this time. And second, inflation is now on a downward trajectory. And those are two huge achievements in this policy pivot that took place. When it comes to our policy advice, what is important now is the fight against inflation has not been won yet. That means that a tight monetary policy will need to be maintained, and it would be premature to reduce the restrictiveness on the monetary policy side. What we also continue to advise is a focus on incomes policies.

    One of the problems in Türkiye and nexus to inflation was minimum wage increases which were based on backward looking inflation developments. We need to have these minimum wage agreements which are now, once a year, done in a forward-looking way in order to avoid the second round effect of these measures.

    And finally, we could use more fiscal adjustment. Fiscal adjustment would help on the inflationary side and of course it always enhances the credibility of the adjustment effort. But overall, I should say to the economic team working in Türkiye, a job well done, that a job needs to continue, and these policies need to be sustained. This is a painful period to go through for the population of Türkiye and is a tough period for our policymakers, but it’s necessary toward crisis risk and bring inflation down.

    MS. PEREZ: We’re running out of time. We’re going to try to get in a few more questions. Let’s go with the lady in the first row. Yellow jacket, please.

    QUESTION: I was wondering, since the IMF is once again flagging Italy for its high debt, if it’s a fair conclusion that you do not agree with Fitch, who is saying that Italy’s fiscal credibility has recently increased, does the promotion of its outlook? And therefore, what is your suggestion for the debt reduction?

    MS. PEREZ: Let’s see if there are any other questions on Italy. The gentleman on the third row. On this side. Over here. Yeah, third row here. Thank you.

    QUESTION: Thank you. The outlook quotes the recent proposal by Mario Draghi to reform the EU. What are the most urgent reforms that you encourage Europe to undertake, based on that report?

    MR. BERGER: So, on Italy, that’s indeed good news. If you look at the debt ratio and percent of GDP, it has come down notably since its peak in 2020. So, and I, everybody, including financial markets, will do well to recognize this, but it’s also true that the same debt ratio is still very high. And we think it’s going to end up this year around 130 — sorry, end of last year it was 134 percent. And you know, if you follow our baseline for the forecast going forward, we see it increasing slightly over the next five years or so. There’s still a fiscal task ahead for the government and we understand the government is ready to approach this. We think deficits are still higher than they should be.

    We welcome, therefore, the expected adjustment that the European Commission and the Italian government have agreed on over time. I think the key for countries like Italy and others that have relatively high debt levels still is to be a bit more ambitious than just gradually reducing deficits. So we would encourage the government to look for ways of achieving this in a growth friendly way and at the same time. And that will help both credit rating agencies and the country itself. There are a lot of structural reforms the country can conduct that would help us sort of raise growth overall, which makes the fiscal situation also more promising.

    MS. PEREZ: Thank you. We’re going to —

    MR. KAMMER: Sorry, on the Draghi report quickly. Pretty much the same focus that we have in our REO on productivity and innovation. And the solution to that problem on enhancing productivity is the single market. So we need to get rid of the barriers in the single market. That’s Draghi, that’s us. That’s uniformly accepted policy recommendation. That’s where we need to make progress. Second point to make is Draghi identified an investment gap of 4.5 percent of GDP in order to move Europe up. That is mostly private investment. That private investment needs to come because of good investment opportunities, because capital is allocated efficiently. That needs capital market and banking union. So all of these reforms to be undertaken are enabler for the private sector then to make these investments in order to fill that investment gap. Mostly private sector, some part public investment.

    MS. PEREZ: Thanks so much. We’re going to go with the lady on the second room in. Sorry, second row here in the middle of the room.

    QUESTION: Hi, another one for the UK because of course we are your greatest fans. Just a clarification on the debt rule. On principle, is it right that the UK should be borrowing to invest given the debt trajectory that you yourselves outline in the fiscal monitor? And if I may, your colleague Era Dabla-Norris was sitting where you are, Alfred, yesterday and she said when it comes to tax rises, it’s important to build trust among populations that taxes collected are well spent. Our finance minister has indicated she does want to raise taxes in her budget next week and concentrate those tax rises on wealthy people and businesses. Is that fair? And can any economy tax its way to prosperity?

    MS. PEREZ: Shall we see if there are any other questions on the UK? The gentleman.

    QUESTION: Thank you. Just again, following up on UK sort of debt rules, do you have any particular view about what an appropriate measure is to target for a debt rule? Whether something like public sector net financial liabilities is a good measure, or whether sort of government should be focusing more on, say, general government debt, which is to know what the IMF mostly forecasts.

    MR. BERGER: Thank you for this quick lightning round at the very end. I think it’s good public finance principles to accept the fact that it can at times be helpful for governments to borrow when it comes to financing investment. hat is a general principle that applies to many countries. The question is, what kind of public investment is being done? The question is, what do we expect, reasonably, credibly, this investment to do for growth going forward? And then, of course, any forward looking government will take into account these longer term effects of such investment. So this is something we would expect any fiscal framework for any country to consider as it is designed and implemented and or adjusted.

    Taxation is highly relevant on the same high level of fiscal principles to finance ongoing spending in any country. If the government is supplying service to its citizens, you know, there are many governments do supply, then this needs to be financed and then, you know, taxes are part of fiscal revenues that will facilitate this. And that is what in the end supports and increases welfare of a country’s citizens. As to the treatment of assets, you know, these differ across countries. They come in different form, from railways to intangibles. And this is something that needs to be looked at very carefully in any of these circumstances, specifically in general, since assets come with revenue streams that can be uncertain. A certain degree of conservatism when looking at this is helpful. How all of these general principles apply to the UK, or any other country, is a matter of detail. In the case of the UK, let’s all stay tuned. Wait for the budget, wait for the details of the new fiscal rule, and we analyze this and we’ll take it from there.

    MS. PEREZ: I’m afraid we’re going to have to wrap up, but please, your questions, send them to me and my colleagues in the media team, we’ll make sure we will get back to you. Just a reminder that the report has been released and it is available on IMF.org. Thanks very much everybody for joining. Apologies we couldn’t get to all of your questions. Please do reach out to us and thanks for colleagues joining online.

    MR. KAMMER: Thank you.

    IMF Communications Department
    MEDIA RELATIONS

    PRESS OFFICER: Camila Perez

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

    @IMFSpokesperson

    MIL OSI Global Banks

  • MIL-OSI Australia: Do your best to help stop Perth pest

    Source: Government of Western Australia

    The City is calling on the community to join the fight against the invasive Polyphagous shot-hole borer (PSHB).

    First detected in Perth in 2021, the tiny, wood-boring beetle has been detected in trees across Perth, with a quarantine notice quickly put in place to support the Department of Primary Industries and Regional Development’s (DPIRD) response.

    The City is working closely with DPIRD to prevent the spread of the PSHB, and encourages the community to use the MyPestGuide app to report suspected sightings.

    Mayor Linda Aitken said the City needed residents’ support to help stop the spread of the PSHB.

    “The PSHB could significantly impact the City of Wanneroo’s urban canopy if it were to become established here,” she said. 

    “It’s important that we all check our trees for signs and report any suspected sightings through the app, to allow DPIRD to investigate.

    “Protecting and increasing our canopy cover and vegetation is a key goal for the City, as set out in our Urban Forest Strategy.”

    The City of Wanneroo currently sits in Zone B of the Quarantine Area. This means residents:

    • cannot move untreated or unseasoned wood outside the Quarantine Area, unless chipped to pieces that are 2.5 cm or less in diameter,
    • cannot move plant materials, including living plants, that are greater than 2cm in diameter outside the Quarantine Area,
    • must ensure any machinery used to handle green waste is cleaned before it can be moved outside the Quarantine Area, can move wood or plant materials, including living plants, into Zone A.

    Find out more about the PSHB and how you can help prevent its spread.

    MIL OSI News

  • MIL-OSI: FirstCash Reports Record Third Quarter Operating Results; Strength in U.S. Pawn Segment Drives Record Revenue and Earnings; Declares Quarterly Cash Dividend

    Source: GlobeNewswire (MIL-OSI)

    FORT WORTH, Texas, Oct. 24, 2024 (GLOBE NEWSWIRE) — FirstCash Holdings, Inc. (“FirstCash” or the “Company”) (Nasdaq: FCFS), the leading international operator of more than 3,000 retail pawn stores and a leading provider of retail point-of-sale (“POS”) payment solutions through American First Finance (“AFF”), today announced operating results for the three and nine month periods ended September 30, 2024. The Company also announced that the Board of Directors declared a quarterly cash dividend of $0.38 per share, which will be paid in November 2024.

    Mr. Rick Wessel, chief executive officer, stated, “FirstCash achieved record revenue and earnings results for both the third quarter and year-to-date periods. Impressive third quarter achievements also included a fifth consecutive quarter of double-digit growth in same-store pawn receivables for the U.S. pawn segment. The LatAm pawn segment also saw continued growth in local currency pawn revenues and receivables, while AFF recorded a 14% increase in third quarter gross origination volumes driven primarily by 25% growth in new merchant locations.

    “Expansion of retail pawn locations continues to be robust as well, with the opening of 16 new pawn stores in the third quarter and the combined opening and acquisition of 83 total stores during the first nine months of this year. Growth in the number of stores and earning assets, coupled with consistent shareholder returns through dividends and share repurchases, continue to be funded primarily through operating cash flows.”

    This release contains adjusted financial measures, which exclude certain non-operating and/or non-cash income and expenses, that are non-GAAP financial measures. Please refer to the descriptions and reconciliations to GAAP of these and other non-GAAP financial measures at the end of this release.

        Three Months Ended September 30,
        As Reported (GAAP)   Adjusted (Non-GAAP)
    In thousands, except per share amounts   2024   2023   2024   2023
    Revenue   $ 837,321   $ 786,301   $ 837,321   $ 786,301
    Net income   $ 64,827   $ 57,144   $ 75,179   $ 70,775
    Diluted earnings per share   $ 1.44   $ 1.26   $ 1.67   $ 1.56
    EBITDA (non-GAAP measure)   $ 138,134   $ 129,350   $ 139,278   $ 132,985
    Weighted-average diluted shares     44,970     45,374     44,970     45,374
        Nine Months Ended September 30,
        As Reported (GAAP)   Adjusted (Non-GAAP)
    In thousands, except per share amounts   2024   2023   2024   2023
    Revenue   $ 2,504,703   $ 2,299,662   $ 2,504,703   $ 2,299,662
    Net income   $ 175,268   $ 149,712   $ 207,266   $ 184,028
    Diluted earnings per share   $ 3.88   $ 3.27   $ 4.58   $ 4.02
    EBITDA (non-GAAP measure)   $ 388,372   $ 348,291   $ 392,752   $ 350,028
    Weighted-average diluted shares     45,214     45,747     45,214     45,747
                             

    Consolidated Operating Highlights

    • Gross revenues totaled $837 million in the third quarter, an increase of 6% on a U.S. dollar basis and 9% on a constant currency basis compared to the prior-year quarter. Year-to-date revenues totaled $2.5 billion, an increase of 9%, in both dollars and constant currency, compared to the prior-year period.
    • Diluted earnings per share for the third quarter increased 14% over the prior-year quarter on a GAAP basis while adjusted diluted earnings per share increased 7% compared to the prior-year quarter. Year-to-date diluted earnings per share increased 19% over the prior-year period on a GAAP basis while adjusted diluted earnings per share increased 14% compared to the prior-year period.
    • Net income for the third quarter increased 13% over the prior-year quarter on a GAAP basis while adjusted net income increased 6% compared to the prior-year quarter. Year-to-date, net income totaled $175 million on a GAAP basis while adjusted net income was $207 million. 
    • For the trailing twelve month period ended September 30, 2024:
      • Revenues totaled a record $3.4 billion
      • Net income totaled $245 million on a GAAP basis while adjusted net income was $300 million
      • Adjusted EBITDA was $554 million
      • Operating cash flows were $441 million and adjusted free cash flows were $217 million

    Store Base and Platform Growth

    • Pawn Stores – 16 new pawn locations were added in the third quarter through acquisitions and new store openings. Year-to-date through September 30, 2024, a total of 83 pawn locations have been added:
      • One U.S. store was acquired in Georgia during the third quarter. Year-to-date through September 30, 2024, a total of 29 new locations have opened or been acquired in the U.S.
      • There were 15 new store openings in Latin America in the third quarter which included 11 locations in Mexico and four locations in Guatemala. Year-to-date through September 30, 2024, a total of 54 new locations have opened in Latin America.
      • As of September 30, 2024, the Company had 3,025 locations, comprised of 1,201 U.S. locations and 1,824 locations in Latin America.
    • Retail POS Payment Solutions (AFF) Merchant Partnerships – At September 30, 2024, there were approximately 13,500 active retail and e-commerce merchant partner locations, representing a 25% increase in the number of active merchant locations compared to a year ago.

    U.S. Pawn Segment Operating Results

    • Segment pre-tax operating income in the third quarter of 2024 was a record $98 million, an increase of $14 million, or 16%, compared to the prior-year quarter. The resulting segment pre-tax operating margin was 25% for the third quarter of 2024 which is consistent with the margin for the prior-year quarter.
    • Year-to-date segment pre-tax operating income increased by $48 million, or 20%, compared to the prior-year period. The pre-tax operating margin increased to 25% for the year-to-date period, as compared to the 24% margin for the prior-year period.
    • Pawn receivables continued to grow to record levels, increasing 12% in total at September 30, 2024 compared to the prior year. The increase in total pawn receivables was driven by a 4% increase in the weighted-average U.S. store count coupled with an impressive 10% same-store increase. The same-store increase was driven by a 7% increase in average loan size and a 3% increase in the number of loans outstanding.
    • Pawn loan fees increased 13% for the third quarter and 18% year-to-date, while on a same-store basis, pawn loan fee revenue increased 8% for the quarter and 11% year-to-date compared to the respective prior-year periods. The increased pawn loan fee revenue reflected both store growth and continued growth in demand for pawn loans.
    • Retail merchandise sales increased 15% in the third quarter of 2024 compared to the prior-year quarter, while same-store retail sales increased 7% compared to the prior-year quarter.
    • Retail sales margins were 43% for the third quarter, improving sequentially over the second quarter and in-line with the prior-year margins. Year-to-date margins were 42% compared to 43% in the prior-year period.
    • Annualized inventory turnover was 2.8 times for the trailing twelve months ended September 30, 2024, which equaled the prior-year annualized inventory turnover. Inventories aged greater than one year at September 30, 2024 remained low at 2% of total inventories.
    • Operating expenses for the third quarter increased 12% in total due to the 4% weighted-average store count growth over the past year and increased same-store expenses of 6% compared to the prior-year period.

    Latin America Pawn Segment Operating Results

    Note: Certain growth rates below are calculated on a constant currency basis, a non-GAAP financial measure defined at the end of this release. The average Mexican peso to U.S. dollar exchange rate for the third quarter of 2024 was 18.9 pesos / dollar, an unfavorable change of 11% versus the comparable prior-year period, and for the nine month period ended September 30, 2024 was 17.7 pesos / dollar, a favorable change of 1% versus the prior-year period.

    • Third quarter segment pre-tax operating income totaled $38 million, a 6% decline on a U.S. dollar-basis compared to the prior year due primarily to an 11% decline in the Mexican peso exchange rate. On a constant currency basis, segment income increased 2% for the quarter. The resulting pre-tax operating margin was 19% compared to 20% in the prior-year quarter.
    • Year-to-date segment pre-tax operating income totaled $107 million, a 4% decline on a U.S. dollar-basis compared to the prior-year period due primarily to increased labor costs and store expansion expenses as described further below. The year-to-date pre-tax operating margin was 18% compared to 19% in the prior-year period.
    • While total and same-store pawn loan fees in the third quarter decreased 4% on a U.S. dollar-basis, they increased 6% on a constant currency basis compared to the prior-year quarter. Year-to-date pawn loan fees increased 7%, or 6% on a constant currency basis, compared to the prior-year period. Same-store pawn loan fees were up 6%, both in total and on a constant currency basis, compared to the prior year-to-date period.
    • While total and same-store receivables at September 30, 2024 were down 4% on a U.S. dollar basis, they increased 6% on a constant currency basis compared to the prior year.
    • Both total and same-store retail merchandise sales in the third quarter of 2024 decreased 3% on a U.S. dollar basis, but increased 7% on a constant currency basis compared to the prior-year quarter. Year-to-date retail merchandise sales increased 4% in total and on a constant currency basis while same-store retail merchandise sales increased 4%, or 3% on a constant currency basis.
    • Retail margins were 35% for the third quarter of 2024 compared to 36% in the prior-year quarter. Annualized inventory turnover was 4.2 times for the trailing twelve months ended September 30, 2024 compared to 4.3 times in the prior-year period. Inventories aged greater than one year at September 30, 2024 remained extremely low at 1%.
    • Operating expenses decreased 1% in total and 2% on a same-store basis compared to the prior-year quarter. On a constant currency basis, they increased 8% in total and on a same-store basis. The increase in constant currency expenses from all stores reflected increased store counts, accelerated store opening activity and higher labor costs (due primarily to further increases in the federal minimum wage and other mandated benefit programs), along with other inflationary impacts.

    American First Finance (AFF) – Retail POS Payment Solutions Segment Operating Results

    • Third quarter segment pre-tax operating income totaled $30 million compared to $39 million in the prior-year quarter, as a significant $35 million dollar increase in gross transaction origination volume over the same quarter last year drove an increase in up-front lifetime lease and loan loss provisioning of approximately $10 million.
    • Year-to-date segment pre-tax operating income totaled $89 million, a 1% increase over the prior-year period which was also generally consistent with year-to-date gross origination activity.
    • Segment revenues for the quarter, comprised of lease-to-own (“LTO”) fees and interest and fees on finance receivables, were flat compared to the prior-year quarter while increasing 4% year-to-date.
    • Gross transaction volume of lease and loan originations during the third quarter increased $35 million, or 14%, compared to last year, driven primarily by the 25% increase in active merchant door counts and continued growth in non-furniture verticals. Excluding furniture, third quarter origination volume increased approximately 35%. For the year-to-date period, overall gross transaction volume increased 5% over the same prior-year period and was up 23% excluding furniture.
    • Combined gross leased merchandise and finance receivables outstanding at September 30, 2024 increased 1% compared to the September 30, 2023 balances.
    • The combined lease and loan loss provision as a percentage of the total gross transaction volume originated was 28% for the third quarter of 2024, compared to the 29% provisioning rate in the third quarter of 2023. The resulting allowance on combined leased merchandise and finance receivables at September 30, 2024 was 44% of gross leased merchandise and receivables, which was consistent with the prior year.
    • The average monthly net charge-off (“NCO”) rate for combined leased merchandise and finance receivable products was 5.8% for the third quarter of 2024 and 5.2% for the year-to-date period. While slightly above the prior year, charge-offs remain within the range of forecast expectations.
    • Operating expenses were flat compared to the prior-year quarter and the year-to-date period, which was reflective of continued realization of operating synergies.

    Cash Flow and Liquidity

    • Each of the Company’s business segments generated significant operating cash flows during the twelve month period ended September 30, 2024. Consolidated operating cash flows for the twelve month period ended September 30, 2024 totaled $441 million and adjusted free cash flows (a non-GAAP measure) were $217 million.
    • The operating cash flows helped fund significant growth in earning assets and continued investments in the store platform over the past twelve months with a nominal increase in net debt:
      • A total of 36 pawn stores were acquired for a combined purchase price of $82 million.
      • 64 new, or de novo, pawn stores were added with a combined investment of $20 million in fixed assets and working capital.
      • Investments in real estate totaled $78 million as the Company purchased the underlying real estate at 63 of its existing pawn stores, bringing the number of owned properties to over 380 locations.
    • In August 2024, the Company amended its U.S. revolving commercial bank credit facility to increase the total lender commitment from $640 million to $700 million with two new banks added to the commercial bank lending group. The term of the facility was extended through August 8, 2029. In addition, the permitted consolidated leverage ratio was increased to 3.25 times adjusted EBITDA for the full term of the agreement, while the other financial covenants remain substantially unchanged.
    • Over $1.5 billion of the Company’s long-term financing remains fixed rate debt with favorable interest rates ranging from 4.625% to 6.875% and maturity dates that do not begin until 2028 and continue into 2032.
    • Based on trailing twelve month results, the net debt to adjusted EBITDA ratio was 2.96x at September 30, 2024.

    Shareholder Returns

    • The Board of Directors declared a $0.38 per share fourth quarter cash dividend, which will be paid on November 27, 2024 to stockholders of record as of November 15, 2024. This represents an annualized dividend of $1.52 per share. Any future dividends are subject to approval by the Company’s Board of Directors.
    • Year-to-date, the Company has repurchased $85 million of common stock. The Company has $115 million available under the $200 million share repurchase program authorized in July 2023. Future share repurchases are subject to expected liquidity, acquisitions and other investment opportunities, debt covenant restrictions, market conditions and other relevant factors.
    • The Company generated a 12% return on equity and a 6% return on assets for the twelve months ended September 30, 2024. Using adjusted net income for the twelve months ended September 30, 2024, the adjusted return on equity was 15% while the adjusted return on assets was 7%.

    2024 Outlook

    The outlook for the remainder of 2024 continues to be highly positive, with expected year-over-year growth in consolidated revenue and earnings driven by the continued growth in earning asset balances coupled with store additions. Anticipated conditions and trends for the fourth quarter include the following:

    Pawn Operations:

    • Pawn operations are expected to remain the primary earnings driver in 2024 as the Company expects segment income from the combined U.S. and Latin America pawn segments to be over 80% of total segment level pre-tax income for the full year.
    • The company is targeting the addition of approximately 90 total pawn locations for 2024 through a combination of new store openings and acquisitions.

    U.S. Pawn

    • Pawn receivables were up 12% at September 30, 2024 compared to a year ago, with October balances to date up similarly. Resulting pawn fees are expected to increase in the range of 10% to 12%.
    • Retail sales growth is expected to remain in-line with the inventory growth of 10% at the most recent quarter end while retail margins are projected to remain consistent with the year-to-date results.

    Latin America Pawn

    • Latin America results in the fourth quarter are expected to be negatively impacted by the lower exchange rate for the Mexican peso which has recently been in a range of 19 to 20 pesos per U.S. dollar.
    • Pawn loan growth to-date in October is up approximately 8% on a constant currency basis, although down 2% on a U.S. dollar basis as compared to the prior year assuming the current exchange rate. A similar result is projected for constant currency fourth quarter pawn fees.
    • Retail sales in Latin America are also expected to increase in-line with inventory growth of 9% on a constant currency basis and are expected to be roughly flat to the prior year on a U.S. dollar basis, assuming the current exchange rate, with consistent retail margins.

    Retail POS Payment Solutions (AFF) Operations:

    • While weakness in the macro furniture retail environment continues to negatively impact performance from many of its merchant retail partners in the furniture retail vertical, year-over-year growth in gross transaction volumes is still projected for the full year and fourth quarter of 2024, driven by increasing active merchant doors and further expansion of non-furniture verticals. Resulting full year gross revenues for 2024 are expected to remain at or above the prior-year level. AFF now expects furniture to account for less than 40% of 2024 originations compared to almost 50% in 2023.
    • The origination and revenue outlook takes into consideration the previously announced bankruptcy filing of Conn’s Home Plus which now assumes minimal originations from November 2024 forward from this merchant relationship.
    • Anticipated provision rates (combined provision for lease and loan losses as a percentage of the total gross transaction volume originated) are expected to range between 25% and 28% in the fourth quarter of the year.

    Interest Expense, Tax Rates and Currency:

    • Interest expense for the fourth quarter is expected to be consistent with the prior year.
    • The full year 2024 effective income tax rate under current tax codes in the U.S. and Latin America is expected to range from 24.5% to 25.5%.
    • Each full point change in the exchange rate of the Mexican peso represents an annual earnings impact of approximately $0.10 per share.

    Additional Commentary and Analysis   

    Mr. Wessel provided additional insights on the Company’s third quarter results and outlook for the remainder of 2024, “Our results continue to demonstrate strong fundamental product demand trends which we expect to drive future revenue and earnings growth.

    “The U.S. pawn segment again saw continued record levels of demand for pawn loans and record per store loan balances. The 10% growth in same-store pawn receivables is especially strong given that the comparative prior-year comp was 11%. On a stacked, two-year basis, same-store pawn loans are up 21% compared to the third quarter of 2022, illustrating tremendous, continued momentum in the business. Demand trends in October remain strong and we believe lending volumes should continue to also benefit from increased gold prices while our inventories are well positioned for the holiday sales season.

    “In Latin America, currency adjusted pawn receivables and pawn fees continued to show impressive growth in the third quarter, with further acceleration to date in October, while third quarter retail sales grew even faster. While the volatility of the Mexican peso slightly impacted third quarter earnings results by approximately $0.04 per share, there is minimal impact on cash flows as we continue to reinvest a large portion of our cash flows in Latin America. We believe in the long term opportunity for Latin America, driven by near-shore manufacturing expansion and the use of pawn loans being an integral part of the economy for our customer base.

    “Unit growth in both pawn segments remains exceptional. We have now added 83 stores this year and a total of 240 stores since the beginning of 2023. Looking ahead, we continue to see and evaluate expansion opportunities across markets in both the U.S. and Latin America.

    “AFF’s gross transaction volumes in the third quarter improved both sequentially and year-over-year (even when excluding Conn’s Home Plus third quarter closeout volume) with significant contributions from both new doors and expanding non-furniture verticals driven largely by robust productivity from our field sales channel. Excluding furniture, third quarter origination volume increased approximately 35%. This growth has led to a further decrease in large merchant concentration risk, with the largest merchant partner now representing approximately 12% of current total gross transaction volume. Additionally, combined lease and loan losses remain well within our target metrics while the combined reserve remains consistent at over 40% of the total portfolio.

    “All of FirstCash’s business segments continue to generate strong cash flows while its balance sheet remains highly liquid. Over 60% of pawn loans are collateralized with jewelry, which is primarily gold and very liquid, while almost 50% of retail inventories are comprised of jewelry that typically has the highest margins. Our balance sheet maintains favorable unsecured financing featuring long-dated maturities at attractive rates. Accordingly, we believe that we are well positioned to drive continued shareholder value through organic store growth, strategic acquisitions, dividends and share repurchases,” concluded Mr. Wessel.

    About FirstCash

    FirstCash is the leading international operator of pawn stores focused on serving cash and credit-constrained consumers. FirstCash’s more than 3,000 pawn stores in the U.S. and Latin America buy and sell a wide variety of jewelry, electronics, tools, appliances, sporting goods, musical instruments and other merchandise, and make small non-recourse pawn loans secured by pledged personal property. FirstCash’s pawn segments in the U.S. and Latin America currently account for approximately 80% of segment earnings, with the remainder provided by its wholly owned subsidiary, AFF, which provides lease-to-own and retail finance payment solutions for consumer goods and services.

    FirstCash is a component company in both the Standard & Poor’s MidCap 400 Index® and the Russell 2000 Index®. FirstCash’s common stock (ticker symbol “FCFS”) is traded on the Nasdaq, the creator of the world’s first electronic stock market. For additional information regarding FirstCash and the services it provides, visit FirstCash’s websites located at http://www.firstcash.com and http://www.americanfirstfinance.com.

    Forward-Looking Information     

    This release contains forward-looking statements about the business, financial condition, outlook and prospects of FirstCash Holdings, Inc. and its wholly owned subsidiaries (together, the “Company”), including the Company’s outlook for 2024. Forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, can be identified by the use of forward-looking terminology such as “outlook,” “believes,” “projects,” “expects,” “may,” “estimates,” “should,” “plans,” “targets,” “intends,” “could,” “would,” “anticipates,” “potential,” “confident,” “optimistic,” or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy, objectives, estimates, guidance, expectations, outlook and future plans. Forward-looking statements can also be identified by the fact these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties.

    While the Company believes the expectations reflected in forward-looking statements are reasonable, there can be no assurances such expectations will prove to be accurate. Security holders are cautioned that such forward-looking statements involve risks and uncertainties. Certain factors may cause results to differ materially from those anticipated by the forward-looking statements made in this release. Such factors may include, without limitation, risks related to the extensive regulatory environment in which the Company operates; risks associated with the legal and regulatory proceedings that the Company is a party to or may become a party to in the future, including the Consumer Financial Protection Bureau (the “CFPB”) lawsuit filed against the Company; risks related to the Company’s acquisitions, including the failure of the Company’s acquisitions to deliver the estimated value and benefits expected by the Company and the ability of the Company to continue to identify and consummate acquisitions on favorable terms, if at all; potential changes in consumer behavior and shopping patterns which could impact demand for the Company’s pawn loan, retail, lease-to-own (“LTO”) and retail finance products; labor shortages and increased labor costs; a deterioration in the economic conditions in the United States and Latin America, including as a result of inflation, elevated interest rates and higher gas prices, which potentially could have an impact on discretionary consumer spending and demand for the Company’s products; currency fluctuations, primarily involving the Mexican peso; competition the Company faces from other retailers and providers of retail payment solutions; the ability of the Company to successfully execute on its business strategies; contraction in sales activity at merchant partners of the Company’s retail POS payment solutions business; impact of store closures, financial difficulties or even bankruptcies at the merchant partners of the Company’s retail POS payment solutions business; and other risks discussed and described in the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”), including the risks described in Part 1, Item 1A, “Risk Factors” thereof, and other reports filed with the SEC. Many of these risks and uncertainties are beyond the ability of the Company to control, nor can the Company predict, in many cases, all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. The forward-looking statements contained in this release speak only as of the date of this release, and the Company expressly disclaims any obligation or undertaking to report any updates or revisions to any such statement to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.

    FIRSTCASH HOLDINGS, INC.
    CONSOLIDATED STATEMENTS OF INCOME
    (unaudited, in thousands)
     
      Three Months Ended   Nine Months Ended
      September 30,   September 30,
      2024   2023   2024   2023
    Revenue:              
    Retail merchandise sales $ 363,141     $ 335,081     $ 1,093,425     $ 983,860  
    Pawn loan fees   186,561       174,560       547,142       480,298  
    Leased merchandise income   188,560       189,382       588,801       562,625  
    Interest and fees on finance receivables   61,198       61,413       175,384       174,247  
    Wholesale scrap jewelry sales   37,861       25,865       99,951       98,632  
    Total revenue   837,321       786,301       2,504,703       2,299,662  
                   
    Cost of revenue:              
    Cost of retail merchandise sold   218,178       199,719       659,854       590,991  
    Depreciation of leased merchandise   104,928       103,698       335,369       307,824  
    Provision for lease losses   39,171       39,736       129,834       141,674  
    Provision for loan losses   40,557       33,096       102,091       90,571  
    Cost of wholesale scrap jewelry sold   29,880       21,405       81,711       79,012  
    Total cost of revenue   432,714       397,654       1,308,859       1,210,072  
                   
    Net revenue   404,607       388,647       1,195,844       1,089,590  
                   
    Expenses and other income:              
    Operating expenses   224,926       211,524       674,431       615,366  
    Administrative expenses   40,930       45,056       129,563       124,428  
    Depreciation and amortization   25,933       27,365       78,507       81,526  
    Interest expense   27,424       24,689       78,029       66,657  
    Interest income   (403 )     (328 )     (1,407 )     (1,253 )
    Loss (gain) on foreign exchange   882       (286 )     2,133       (1,905 )
    Merger and acquisition expenses   225       3,387       2,186       3,670  
    Other expenses (income), net   (490 )     (384 )     (841 )     (260 )
    Total expenses and other income   319,427       311,023       962,601       888,229  
                   
    Income before income taxes   85,180       77,624       233,243       201,361  
                   
    Provision for income taxes   20,353       20,480       57,975       51,649  
                   
    Net income $ 64,827     $ 57,144     $ 175,268     $ 149,712  
    FIRSTCASH HOLDINGS, INC.
    CONSOLIDATED BALANCE SHEETS
    (unaudited, in thousands)
     
      September 30,   December 31,
      2024   2023   2023
    ASSETS          
    Cash and cash equivalents $ 106,320     $ 86,547     $ 127,018  
    Accounts receivable, net   74,378       72,336       71,922  
    Pawn loans   517,877       483,785       471,846  
    Finance receivables, net   123,751       113,307       113,901  
    Inventories   334,394       314,382       312,089  
    Leased merchandise, net   137,769       143,169       171,191  
    Prepaid expenses and other current assets   34,861       21,114       38,634  
    Total current assets   1,329,350       1,234,640       1,306,601  
               
    Property and equipment, net   689,075       604,673       632,724  
    Operating lease right of use asset   329,228       312,097       328,458  
    Goodwill   1,788,795       1,713,354       1,727,652  
    Intangible assets, net   241,389       291,690       277,724  
    Other assets   10,339       10,057       10,242  
    Deferred tax assets, net   4,671       8,052       6,514  
    Total assets $ 4,392,847     $ 4,174,563     $ 4,289,915  
               
    LIABILITIES AND STOCKHOLDERS’ EQUITY          
    Accounts payable and accrued liabilities $ 133,792     $ 146,873     $ 163,050  
    Customer deposits and prepayments   78,083       71,752       70,580  
    Lease liability, current   96,598       98,745       101,962  
    Total current liabilities   308,473       317,370       335,592  
               
    Revolving unsecured credit facilities   200,000       560,229       568,000  
    Senior unsecured notes   1,530,604       1,037,151       1,037,647  
    Deferred tax liabilities, net   127,425       139,713       136,773  
    Lease liability, non-current   227,151       202,516       215,485  
    Total liabilities   2,393,653       2,256,979       2,293,497  
               
    Stockholders’ equity:          
    Common stock   575       573       573  
    Additional paid-in capital   1,764,351       1,737,497       1,741,046  
    Retained earnings   1,344,542       1,164,228       1,218,029  
    Accumulated other comprehensive loss   (114,807 )     (64,521 )     (43,037 )
    Common stock held in treasury, at cost   (995,467 )     (920,193 )     (920,193 )
    Total stockholders’ equity   1,999,194       1,917,584       1,996,418  
    Total liabilities and stockholders’ equity $ 4,392,847     $ 4,174,563     $ 4,289,915  
    FIRSTCASH HOLDINGS, INC.
    U.S. PAWN SEGMENT RESULTS
    (UNAUDITED)
     
    U.S. Pawn Operating Results and Margins (dollars in thousands)
     
      Three Months Ended        
      September 30,    
      2024   2023   Increase
    Revenue:                  
    Retail merchandise sales $ 235,037     $ 203,769       15 %  
    Pawn loan fees   128,393       114,022       13 %  
    Wholesale scrap jewelry sales   26,685       17,140       56 %  
    Total revenue   390,115       334,931       16 %  
                       
    Cost of revenue:                  
    Cost of retail merchandise sold   134,966       115,670       17 %  
    Cost of wholesale scrap jewelry sold   21,393       14,297       50 %  
    Total cost of revenue   156,359       129,967       20 %  
                       
    Net revenue   233,756       204,964       14 %  
                       
    Segment expenses:                  
    Operating expenses   128,104       113,976       12 %  
    Depreciation and amortization   7,365       6,586       12 %  
    Total segment expenses   135,469       120,562       12 %  
                       
    Segment pre-tax operating income $ 98,287     $ 84,402       16 %  
                       
    Operating metrics:                  
    Retail merchandise sales margin 43 %   43 %        
    Net revenue margin 60 %   61 %        
    Segment pre-tax operating margin 25 %   25 %        
    FIRSTCASH HOLDINGS, INC.
    U.S. PAWN SEGMENT RESULTS (CONTINUED)
    (UNAUDITED)
     
      Nine Months Ended        
      September 30,    
      2024   2023   Increase
    Revenue:                  
    Retail merchandise sales $ 702,120     $ 610,493       15 %  
    Pawn loan fees   371,699       315,679       18 %  
    Wholesale scrap jewelry sales   70,722       61,108       16 %  
    Total revenue   1,144,541       987,280       16 %  
                       
    Cost of revenue:                  
    Cost of retail merchandise sold   407,329       349,138       17 %  
    Cost of wholesale scrap jewelry sold   57,928       49,604       17 %  
    Total cost of revenue   465,257       398,742       17 %  
                       
    Net revenue   679,284       588,538       15 %  
                       
    Segment expenses:                  
    Operating expenses   372,191       331,916       12 %  
    Depreciation and amortization   21,609       18,786       15 %  
    Total segment expenses   393,800       350,702       12 %  
                       
    Segment pre-tax operating income $ 285,484     $ 237,836       20 %  
                       
    Operating metrics:                  
    Retail merchandise sales margin 42 %   43 %        
    Net revenue margin 59 %   60 %        
    Segment pre-tax operating margin 25 %   24 %        
    FIRSTCASH HOLDINGS, INC.
    U.S. PAWN SEGMENT RESULTS (CONTINUED)
    (UNAUDITED)
     
    U.S. Pawn Earning Assets and Portfolio Metrics (dollars in thousands, except as otherwise noted)
     
      As of September 30,    
      2024   2023   Increase
    Earning assets:                  
    Pawn loans $ 380,962     $ 341,123       12 %  
    Inventories   238,668       217,406       10 %  
      $ 619,630     $ 558,529       11 %  
                       
    Average outstanding pawn loan amount (in ones) $ 264     $ 245       8 %  
                       
    Composition of pawn collateral:                  
    General merchandise 30 %   31 %        
    Jewelry 70 %   69 %        
      100 %   100 %        
                       
    Composition of inventories:                  
    General merchandise 43 %   45 %        
    Jewelry 57 %   55 %        
      100 %   100 %        
                       
    Percentage of inventory aged greater than one year 2 %   1 %        
                       
    Inventory turns (trailing twelve months cost of merchandise sales divided by average inventories) 2.8 times   2.8 times        
    FIRSTCASH HOLDINGS, INC.
    LATIN AMERICA PAWN SEGMENT RESULTS
    (UNAUDITED)
     
    Constant currency results are non-GAAP financial measures, which exclude the effects of foreign currency translation and are calculated by translating current-year results at prior-year average exchange rates. See the “Constant Currency Results” section below for additional discussion of constant currency operating results.
     
    Latin America Pawn Operating Results and Margins (dollars in thousands)
     
                          Constant Currency Basis
                          Three Months        
                    Ended        
        Three Months Ended           September 30,   Increase /
        September 30,   Increase /   2024   (Decrease)
        2024     2023   (Decrease)   (Non-GAAP)   (Non-GAAP)
    Revenue:                              
    Retail merchandise sales   $ 129,081       $ 132,784       (3 )%     $ 142,147       7 %  
    Pawn loan fees     58,168         60,538       (4 )%       64,130       6 %  
    Wholesale scrap jewelry sales     11,176         8,725       28 %       11,176       28 %  
    Total revenue     198,425         202,047       (2 )%       217,453       8 %  
                                   
    Cost of revenue:                              
    Cost of retail merchandise sold     83,729         84,816       (1 )%       92,131       9 %  
    Cost of wholesale scrap jewelry sold     8,487         7,108       19 %       9,378       32 %  
    Total cost of revenue     92,216         91,924       %       101,509       10 %  
                                   
    Net revenue     106,209         110,123       (4 )%       115,944       5 %  
                                   
    Segment expenses:                              
    Operating expenses     63,062         63,907       (1 )%       69,199       8 %  
    Depreciation and amortization     4,676         5,236       (11 )%       5,117       (2 )%  
    Total segment expenses     67,738         69,143       (2 )%       74,316       7 %  
                                     
    Segment pre-tax operating income   $ 38,471       $ 40,980       (6 )%     $ 41,628       2 %  
                                   
    Operating metrics:                              
    Retail merchandise sales margin 35 %   36 %         35 %        
    Net revenue margin 54 %   55 %         53 %        
    Segment pre-tax operating margin 19 %   20 %         19 %        
    FIRSTCASH HOLDINGS, INC.
    LATIN AMERICA PAWN SEGMENT RESULTS (CONTINUED)
    (UNAUDITED)
     
                          Constant Currency Basis
                          Nine Months        
                    Ended        
        Nine Months Ended           September 30,   Increase /
        September 30,   Increase /    2024   (Decrease)
         2024      2023   (Decrease)   (Non-GAAP)   (Non-GAAP)
    Revenue:                              
    Retail merchandise sales   $ 394,375       $ 378,302       4 %     $ 391,606       4 %  
    Pawn loan fees     175,443         164,619       7 %       174,228       6 %  
    Wholesale scrap jewelry sales     29,229         37,524       (22 )%       29,229       (22 )%  
    Total revenue     599,047         580,445       3 %       595,063       3 %  
                                   
    Cost of revenue:                              
    Cost of retail merchandise sold     254,188         244,439       4 %       252,377       3 %  
    Cost of wholesale scrap jewelry sold     23,783         29,408       (19 )%       23,627       (20 )%  
    Total cost of revenue     277,971         273,847       2 %       276,004       1 %  
                                   
    Net revenue     321,076         306,598       5 %       319,059       4 %  
                                   
    Segment expenses:                              
    Operating expenses     198,389         179,170       11 %       196,986       10 %  
    Depreciation and amortization     15,199         15,884       (4 )%       15,072       (5 )%  
    Total segment expenses     213,588         195,054       10 %       212,058       9 %  
                                   
    Segment pre-tax operating income   $ 107,488       $ 111,544       (4 )%     $ 107,001       (4 )%  
                                   
    Operating metrics:                              
    Retail merchandise sales margin 36 %   35 %         36 %        
    Net revenue margin 54 %   53 %         54 %        
    Segment pre-tax operating margin 18 %   19 %         18 %        
    FIRSTCASH HOLDINGS, INC.
    LATIN AMERICA PAWN SEGMENT RESULTS (CONTINUED)
    (UNAUDITED)
     
    Latin America Pawn Earning Assets and Portfolio Metrics (dollars in thousands, except as otherwise noted)
     
                          Constant Currency Basis
                          As of        
                          September 30,    
      As of September 30,       2024   Increase
      2024   2023   (Decrease)   (Non-GAAP)   (Non-GAAP)
    Earning assets:                              
    Pawn loans $ 136,915     $ 142,662       (4 )%   $ 151,486     6 %  
    Inventories   95,726       96,976       (1 )%     105,792     9 %  
      $ 232,641     $ 239,638       (3 )%   $ 257,278     7 %  
                                   
    Average outstanding pawn loan amount (in ones) $ 85     $ 89       (4 )%   $ 94     6 %  
                                   
    Composition of pawn collateral:                              
    General merchandise 62 %   66 %                    
    Jewelry 38 %   34 %                    
      100 %   100 %                    
                                   
    Composition of inventories:                              
    General merchandise 70 %   68 %                    
    Jewelry 30 %   32 %                    
      100 %   100 %                    
                                   
    Percentage of inventory aged greater than one year 1 %   1 %                    
                                   
    Inventory turns (trailing twelve months cost of merchandise sales divided by average inventories) 4.2 times   4.3 times                    
    FIRSTCASH HOLDINGS, INC.
    RETAIL POS PAYMENT SOLUTIONS SEGMENT RESULTS
    (UNAUDITED)
     
    Retail POS Payment Solutions Operating Results (dollars in thousands)
     
      Three Months Ended        
      September 30,   Increase /
      2024   2023   (Decrease)
    Revenue:              
    Leased merchandise income $ 188,560   $ 189,382     %  
    Interest and fees on finance receivables   61,198     61,413     %  
    Total revenue   249,758     250,795     %  
                   
    Cost of revenue:              
    Depreciation of leased merchandise   105,308     104,198     1 %  
    Provision for lease losses   39,268     39,640     (1 )%  
    Provision for loan losses   40,557     33,096     23 %  
    Total cost of revenue   185,133     176,934     5 %  
                   
    Net revenue   64,625     73,861     (13 )%  
                   
    Segment expenses:              
    Operating expenses   33,760     33,641     %  
    Depreciation and amortization   679     771     (12 )%  
    Total segment expenses   34,439     34,412     %  
                   
    Segment pre-tax operating income $ 30,186   $ 39,449     (23 )%  
    FIRSTCASH HOLDINGS, INC.
    RETAIL POS PAYMENT SOLUTIONS SEGMENT RESULTS (CONTINUED)
    (UNAUDITED)
     
      Nine Months Ended        
      September 30,   Increase /
      2024   2023   (Decrease)
    Revenue:              
    Leased merchandise income $ 588,801   $ 562,625     5 %  
    Interest and fees on finance receivables   175,384     174,247     1 %  
    Total revenue   764,185     736,872     4 %  
                   
    Cost of revenue:              
    Depreciation of leased merchandise   336,649     309,432     9 %  
    Provision for lease losses   130,272     141,854     (8 )%  
    Provision for loan losses   102,091     90,571     13 %  
    Total cost of revenue   569,012     541,857     5 %  
                   
    Net revenue   195,173     195,015     %  
                   
    Segment expenses:              
    Operating expenses   103,851     104,280     %  
    Depreciation and amortization   2,078     2,258     (8 )%  
    Total segment expenses   105,929     106,538     (1 )%  
                   
    Segment pre-tax operating income $ 89,244   $ 88,477     1 %  
    FIRSTCASH HOLDINGS, INC.
    RETAIL POS PAYMENT SOLUTIONS SEGMENT RESULTS (CONTINUED)
    (UNAUDITED)
     
    Retail POS Payment Solutions Gross Transaction Volumes (dollars in thousands)
     
      Three Months Ended        
      September 30,   Increase /
      2024   2023   (Decrease)
    Leased merchandise $ 143,146   $ 147,513     (3 )%  
    Finance receivables   142,910     103,183     39 %  
    Total gross transaction volume $ 286,056   $ 250,696     14 %  
                   
                   
      Nine Months Ended        
      September 30,   Increase /
      2024   2023   (Decrease)
    Leased merchandise $ 444,045   $ 452,792     (2 )%  
    Finance receivables   350,332     303,485     15 %  
    Total gross transaction volume $ 794,377   $ 756,277     5 %  
    Retail POS Payment Solutions Earning Assets (dollars in thousands)
     
      As of September 30,   Increase /
      2024   2023   (Decrease)
    Leased merchandise, net:              
    Leased merchandise, before allowance for lease losses $ 231,796     $ 250,298       (7 )%  
    Less allowance for lease losses   (93,823 )     (105,472 )     (11 )%  
    Leased merchandise, net $ 137,973     $ 144,826       (5 )%  
                   
    Finance receivables, net:              
    Finance receivables, before allowance for loan losses $ 232,948     $ 209,991       11 %  
    Less allowance for loan losses   (109,197 )     (96,684 )     13 %  
    Finance receivables, net $ 123,751     $ 113,307       9 %  
    FIRSTCASH HOLDINGS, INC.
    RETAIL POS PAYMENT SOLUTIONS SEGMENT RESULTS (CONTINUED)
    (UNAUDITED)
     
    Allowance for Lease and Loan Losses and Other Portfolio Metrics (dollars in thousands)
     
      Three Months Ended        
      September 30,   Increase /
        2024     2023   (Decrease)
    Allowance for lease losses:                  
    Balance at beginning of period   $ 103,301       $ 110,964       (7 )%  
    Provision for lease losses     39,268         39,640       (1 )%  
    Charge-offs     (50,394 )       (46,794 )     8 %  
    Recoveries     1,648         1,662       (1 )%  
    Balance at end of period   $ 93,823       $ 105,472       (11 )%  
                       
    Leased merchandise portfolio metrics:                  
    Provision rate(1) 27 %   27 %        
    Average monthly net charge-off rate(2) 6.8 %   5.9 %        
    Delinquency rate(3) 23.6 %   23.2 %        
                       
    Allowance for loan losses:                  
    Balance at beginning of period   $ 99,961       $ 93,054       7 %  
    Provision for loan losses     40,557         33,096       23 %  
    Charge-offs     (32,969 )       (30,890 )     7 %  
    Recoveries     1,648         1,424       16 %  
    Balance at end of period   $ 109,197       $ 96,684       13 %  
                       
    Finance receivables portfolio metrics:                  
    Provision rate(1) 28 %   32 %        
    Average monthly net charge-off rate(2) 4.8 %   4.7 %        
    Delinquency rate(3) 19.4 %   21.9 %        

    (1)   Calculated as provision for lease or loan losses as a percentage of the respective gross transaction volume originated.
    (2)   Calculated as charge-offs, net of recoveries, as a percentage of the respective average earning asset balance before allowance for lease or loan losses.
    (3)   Calculated as the percentage of the respective contractual earning asset balance owed that is 1 to 89 days past due (the Company charges off leases and finance receivables when they are 90 days or more contractually past due).

    FIRSTCASH HOLDINGS, INC.
    RETAIL POS PAYMENT SOLUTIONS SEGMENT RESULTS (CONTINUED)
    (UNAUDITED)
     
      Nine Months Ended        
      September 30,   Increase /
        2024     2023   (Decrease)
    Allowance for lease losses:                  
    Balance at beginning of period   $ 95,752       $ 79,576       20 %  
    Provision for lease losses     130,272         141,854       (8 )%  
    Charge-offs     (137,516 )       (120,966 )     14 %  
    Recoveries     5,315         5,008       6 %  
    Balance at end of period   $ 93,823       $ 105,472       (11 )%  
                       
    Leased merchandise portfolio metrics:                  
    Provision rate(1) 29 %   31 %        
    Average monthly net charge-off rate(2) 5.9 %   5.3 %        
    Delinquency rate(3) 23.6 %   23.2 %        
                       
    Allowance for loan losses:                  
    Balance at beginning of period   $ 96,454       $ 84,833       14 %  
    Provision for loan losses     102,091         90,571       13 %  
    Charge-offs     (95,061 )       (83,281 )     14 %  
    Recoveries     5,713         4,561       25 %  
    Balance at end of period   $ 109,197       $ 96,684       13 %  
                       
    Finance receivables portfolio metrics:                  
    Provision rate(1) 29 %   30 %        
    Average monthly net charge-off rate(2) 4.5 %   4.4 %        
    Delinquency rate(3) 19.4 %   21.9 %        

    (1)   Calculated as provision for lease or loan losses as a percentage of the respective gross transaction volume originated.
    (2)   Calculated as charge-offs, net of recoveries, as a percentage of the respective average earning asset balance before allowance for lease or loan losses.
    (3)   Calculated as the percentage of the respective contractual earning asset balance owed that is 1 to 89 days past due (the Company charges off leases and finance receivables when they are 90 days or more contractually past due).

    FIRSTCASH HOLDINGS, INC.
    PAWN STORE LOCATIONS AND MERCHANT PARTNER LOCATIONS
     
    Pawn Operations
     
    As of September 30, 2024, the Company operated 3,025 pawn store locations composed of 1,201 stores in 29 U.S. states and the District of Columbia, 1,723 stores in 32 states in Mexico, 72 stores in Guatemala, 17 stores in El Salvador and 12 stores in Colombia.
     
    The following tables detail pawn store count activity for the three and nine months ended September 30, 2024:
     
      Three Months Ended September 30, 2024
      U.S.   Latin America   Total
    Total locations, beginning of period 1,201     1,817     3,018  
    New locations opened(1)     15     15  
    Locations acquired 1         1  
    Consolidation of existing pawn locations(2) (1 )   (8 )   (9 )
    Total locations, end of period 1,201     1,824     3,025  
               
               
      Nine Months Ended September 30, 2024
      U.S.   Latin America   Total
    Total locations, beginning of period 1,183     1,814     2,997  
    New locations opened(1) 1     54     55  
    Locations acquired 28         28  
    Consolidation of existing pawn locations(2) (3) (11 )   (44 )   (55 )
    Total locations, end of period 1,201     1,824     3,025  

    (1)   In addition to new store openings, the Company strategically relocated three stores in the U.S. and one store in Latin America during the three months ended September 30, 2024. During the nine months ended September 30, 2024, the Company strategically relocated nine stores in the U.S and one store in Latin America.
    (2)   Store consolidations were primarily acquired locations which have been combined with overlapping stores and for which the Company expects to maintain a significant portion of the acquired customer base in the consolidated location.
    (3)   Includes 10 pawnshops located in Acapulco, Mexico that were severely damaged by a hurricane in the fall of 2023 which the Company elected to consolidate with other stores in this market. The Company expects to replace certain of these locations in this market over time as the city’s infrastructure recovers.

    Retail POS Payment Solutions

    As of September 30, 2024, AFF provided LTO and retail POS payment solutions for consumer goods and services through a network of approximately 13,500 active retail merchant partner locations located in all 50 U.S. states, the District of Columbia and Puerto Rico. This compares to the active door count of approximately 10,800 locations at September 30, 2023.

    FIRSTCASH HOLDINGS, INC.
    RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
    TO GAAP FINANCIAL MEASURES
    (UNAUDITED)
     

    The Company uses certain financial calculations such as adjusted net income, adjusted diluted earnings per share, EBITDA, adjusted EBITDA, free cash flow, adjusted free cash flow, adjusted return on equity, adjusted return on assets and constant currency results as factors in the measurement and evaluation of the Company’s operating performance and period-over-period growth. The Company derives these financial calculations on the basis of methodologies other than generally accepted accounting principles (“GAAP”), primarily by excluding from a comparable GAAP measure certain items the Company does not consider to be representative of its actual operating performance. These financial calculations are “non-GAAP financial measures” as defined under the SEC rules. The Company uses these non-GAAP financial measures in operating its business because management believes they are less susceptible to variances in actual operating performance that can result from the excluded items, other infrequent charges and currency fluctuations. The Company presents these financial measures to investors because management believes they are useful to investors in evaluating the primary factors that drive the Company’s core operating performance and provide greater transparency into the Company’s results of operations. However, items that are excluded and other adjustments and assumptions that are made in calculating these non-GAAP financial measures are significant components in understanding and assessing the Company’s financial performance. These non-GAAP financial measures should be evaluated in conjunction with, and are not a substitute for, the Company’s GAAP financial measures. Further, because these non-GAAP financial measures are not determined in accordance with GAAP, and are thus susceptible to varying calculations, the non-GAAP financial measures, as presented, may not be comparable to other similarly-titled measures of other companies.

    While acquisitions are an important part of the Company’s overall strategy, the Company has adjusted the applicable financial calculations to exclude merger and acquisition expenses and amortization of acquired AFF intangible assets. The Company does not consider these items to be related to the organic operations of the acquired businesses or its continuing operations and are generally not relevant to assessing or estimating the long-term performance of the acquired businesses. In addition, excluding these items allows for more accurate comparisons of the financial results to prior periods. Merger and acquisition expenses include incremental costs directly associated with merger and acquisition activities, including professional fees, legal expenses, severance, retention and other employee-related costs, contract breakage costs and costs related to the consolidation of technology systems and corporate facilities, among others.

    The Company has certain leases in Mexico which are denominated in U.S. dollars. The lease liability of these U.S. dollar-denominated leases, which is considered a monetary liability, is remeasured into Mexican pesos using current period exchange rates, resulting in the recognition of foreign currency exchange gains or losses. The Company has adjusted the applicable financial measures to exclude these remeasurement gains or losses (i) because they are non-cash, non-operating items that could create volatility in the Company’s consolidated results of operations due to the magnitude of the end of period lease liability being remeasured and (ii) to improve comparability of current periods presented with prior periods.

    FIRSTCASH HOLDINGS, INC.
    RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
    TO GAAP FINANCIAL MEASURES (CONTINUED)
    (UNAUDITED)
     

    Adjusted Net Income and Adjusted Diluted Earnings Per Share

    Management believes the presentation of adjusted net income and adjusted diluted earnings per share provides investors with greater transparency and provides a more complete understanding of the Company’s financial performance and prospects for the future by excluding items that management believes are non-operating in nature and are not representative of the Company’s core operating performance. In addition, management believes the adjustments shown below are useful to investors in order to allow them to compare the Company’s financial results for the current periods presented with the prior periods presented.

    The following tables provide a reconciliation between net income and diluted earnings per share calculated in accordance with GAAP to adjusted net income and adjusted diluted earnings per share, which are shown net of tax (in thousands, except per share amounts):

                      Trailing Twelve
      Three Months Ended   Nine Months Ended Months Ended
      September 30,   September 30, September 30,
      2024
    2023 2024
    2023 2024
    2023
      In Thousands   In Thousands   In Thousands   In Thousands   In Thousands   In Thousands
    Net income, as reported $ 64,827     $ 57,144     $ 175,268     $ 149,712     $ 244,857     $ 229,778  
    Adjustments, net of tax:                      
    Merger and acquisition expenses   171       2,605       1,675       2,818       4,946       4,379  
    Non-cash foreign currency loss (gain) related to lease liability   986       442       2,124       (1,171 )     1,517       (1,856 )
    AFF purchase accounting and other adjustments   9,572       10,880       28,717       32,869       50,189       50,529  
    Gain on revaluation of contingent acquisition consideration                                 (21,952 )
    Other expenses (income), net   (377 )     (296 )     (518 )     (200 )     (1,397 )     (208 )
    Adjusted net income $ 75,179     $ 70,775     $ 207,266     $ 184,028     $ 300,112     $ 260,670  
    FIRSTCASH HOLDINGS, INC.
    RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
    TO GAAP FINANCIAL MEASURES (CONTINUED)
    (UNAUDITED)
                   
      Three Months Ended   Nine Months Ended
      September 30,   September 30,
      2024   2023   2024   2023
      Per Share   Per Share   Per Share   Per Share
    Diluted earnings per share, as reported $ 1.44     $ 1.26     $ 3.88     $ 3.27  
    Adjustments, net of tax:              
    Merger and acquisition expenses   0.01       0.06       0.04       0.06  
    Non-cash foreign currency loss (gain) related to lease liability   0.02       0.01       0.05       (0.03 )
    AFF purchase accounting and other adjustments   0.21       0.24       0.63       0.72  
    Other expenses (income), net   (0.01 )     (0.01 )     (0.02 )      
    Adjusted diluted earnings per share $ 1.67     $ 1.56     $ 4.58     $ 4.02  
    FIRSTCASH HOLDINGS, INC.
    RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
    TO GAAP FINANCIAL MEASURES (CONTINUED)
    (UNAUDITED)
     

    Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA

    The Company defines EBITDA as net income before income taxes, depreciation and amortization, interest expense and interest income and adjusted EBITDA as EBITDA adjusted for certain items, as listed below, that management considers to be non-operating in nature and not representative of its actual operating performance. The Company believes EBITDA and adjusted EBITDA are commonly used by investors to assess a company’s financial performance, and adjusted EBITDA is used as a starting point in the calculation of the consolidated total debt ratio as defined in the Company’s senior unsecured notes. The following table provides a reconciliation of net income to EBITDA and adjusted EBITDA (in thousands):

                Trailing Twelve
        Three Months Ended   Nine Months Ended   Months Ended
        September 30,   September 30,   September 30,
        2024   2023   2024   2023   2024   2023
    Net income   $ 64,827     $ 57,144     $ 175,268     $ 149,712     $ 244,857     $ 229,778  
    Income taxes     20,353       20,480       57,975       51,649       79,874       73,189  
    Depreciation and amortization     25,933       27,365       78,507       81,526       106,142       107,863  
    Interest expense     27,424       24,689       78,029       66,657       104,615       86,616  
    Interest income     (403 )     (328 )     (1,407 )     (1,253 )     (1,623 )     (1,462 )
    EBITDA     138,134       129,350       388,372       348,291       533,865       495,984  
    Adjustments:                                    
    Merger and acquisition expenses     225       3,387       2,186       3,670       6,438       5,697  
    Non-cash foreign currency loss (gain) related to lease liability     1,409       632       3,035       (1,673 )     2,168       (2,652 )
    AFF purchase accounting and other adjustments(1)                             13,968       8,760  
    Gain on revaluation of contingent acquisition consideration                                   (26,760 )
    Other expenses (income), net     (490 )     (384 )     (841 )     (260 )     (1,983 )     (270 )
    Adjusted EBITDA   $ 139,278     $ 132,985     $ 392,752     $ 350,028     $ 554,456     $ 480,759  
    FIRSTCASH HOLDINGS, INC.
    RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
    TO GAAP FINANCIAL MEASURES (CONTINUED)
    (UNAUDITED)
     

    (1)   The following table details AFF purchase accounting and other adjustments for the trailing twelve months ended September 30, 2024 and 2023 (in thousands):

      Trailing Twelve
      Months Ended
      September 30,
      2024   2023
    Amortization of fair value adjustment on acquired finance receivables included in interest and fees on finance receivables $   $ 7,859
    Amortization of fair value adjustment on acquired leased merchandise included in depreciation of leased merchandise       901
    Other non-recurring costs included in administrative expenses related to a discontinued finance product   13,968    
      $ 13,968   $ 8,760
    FIRSTCASH HOLDINGS, INC.
    RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
    TO GAAP FINANCIAL MEASURES (CONTINUED)
    (UNAUDITED)
     

    Free Cash Flow and Adjusted Free Cash Flow

    For purposes of its internal liquidity assessments, the Company considers free cash flow and adjusted free cash flow. The Company defines free cash flow as cash flow from operating activities less purchases of furniture, fixtures, equipment and improvements and net fundings/repayments of pawn loan and finance receivables, which are considered to be operating in nature by the Company but are included in cash flow from investing activities. Adjusted free cash flow is defined as free cash flow adjusted for merger and acquisition expenses paid that management considers to be non-operating in nature.

    Free cash flow and adjusted free cash flow are commonly used by investors as additional measures of cash generated by business operations that may be used to repay scheduled debt maturities and debt service or, following payment of such debt obligations and other non-discretionary items, that may be available to invest in future growth through new business development activities or acquisitions, repurchase stock, pay cash dividends or repay debt obligations prior to their maturities. These metrics can also be used to evaluate the Company’s ability to generate cash flow from business operations and the impact that this cash flow has on the Company’s liquidity. However, free cash flow and adjusted free cash flow have limitations as analytical tools and should not be considered in isolation or as a substitute for cash flow from operating activities or other income statement data prepared in accordance with GAAP. The following table reconciles cash flow from operating activities to free cash flow and adjusted free cash flow (in thousands):

                        Trailing Twelve
        Three Months Ended   Nine Months Ended   Months Ended
        September 30,   September 30,   September 30,
        2024   2023   2024   2023   2024   2023
    Cash flow from operating activities   $ 113,090     $ 111,368     $ 341,809     $ 317,037     $ 440,914     $ 460,544  
    Cash flow from certain investing activities:                        
    Pawn loans, net(1)     (48,836 )     (59,614 )     (69,723 )     (59,426 )     (45,275 )     (20,536 )
    Finance receivables, net     (48,623 )     (30,869 )     (86,186 )     (87,994 )     (113,634 )     (123,713 )
    Purchases of furniture, fixtures, equipment and improvements     (13,368 )     (18,375 )     (56,032 )     (46,723 )     (69,457 )     (52,679 )
    Free cash flow     2,263       2,510       129,868       122,894       212,548       263,616  
    Merger and acquisition expenses paid, net of tax benefit     171       2,605       1,675       2,818       4,946       4,379  
    Adjusted free cash flow   $ 2,434     $ 5,115     $ 131,543     $ 125,712     $ 217,494     $ 267,995  

    (1)   Includes the funding of new loans net of cash repayments and recovery of principal through the sale of inventories acquired from forfeiture of pawn collateral.

    FIRSTCASH HOLDINGS, INC.
    RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
    TO GAAP FINANCIAL MEASURES (CONTINUED)
    (UNAUDITED)
     

    Adjusted Return on Equity and Adjusted Return on Assets

    Management believes the presentation of adjusted return on equity and adjusted return on assets provides investors with greater transparency and provides a more complete understanding of the Company’s financial performance by excluding items that management believes are non-operating in nature and not representative of the Company’s core operating performance.

    Annualized adjusted return on equity and adjusted return on assets is calculated as follows (dollars in thousands):

      Trailing Twelve
      Months Ended
      September 30, 2024
    Adjusted net income(1) $ 300,112  
         
    Average stockholders’ equity (average of five most recent quarter-end balances) $ 1,987,405  
    Adjusted return on equity (trailing twelve months adjusted net income divided by average equity) 15 %
         
    Average total assets (average of five most recent quarter-end balances) $ 4,285,437  
    Adjusted return on assets (trailing twelve months adjusted net income divided by average total assets) 7 %

    (1)   See detail of adjustments to net income in the “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section above.

    Constant Currency Results

    The Company’s reporting currency is the U.S. dollar, however, certain performance metrics discussed in this release are presented on a “constant currency” basis, which is considered a non-GAAP financial measure. The Company’s management uses constant currency results to evaluate operating results of business operations in Latin America, which are transacted in local currencies in Mexico, Guatemala and Colombia. The Company also has operations in El Salvador, where the reporting and functional currency is the U.S. dollar.

    The Company believes constant currency results provide valuable supplemental information regarding the underlying performance of its business operations in Latin America, consistent with how the Company’s management evaluates such performance and operating results. Constant currency results reported herein are calculated by translating certain balance sheet and income statement items denominated in local currencies using the exchange rate from the prior-year comparable period, as opposed to the current comparable period, in order to exclude the effects of foreign currency rate fluctuations for purposes of evaluating period-over-period comparisons. See the Latin America pawn segment tables elsewhere in this release for an additional reconciliation of certain constant currency amounts to as reported GAAP amounts.

    FIRSTCASH HOLDINGS, INC.
    RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
    TO GAAP FINANCIAL MEASURES (CONTINUED)
    (UNAUDITED)
     
    Exchange Rates for the Mexican Peso, Guatemalan Quetzal and Colombian Peso
     
      September 30,   Favorable /
      2024   2023   (Unfavorable)
    Mexican peso / U.S. dollar exchange rate:              
    End-of-period 19.6   17.6     (11 )%  
    Three months ended 18.9   17.1     (11 )%  
    Nine months ended 17.7   17.8     1 %  
                   
    Guatemalan quetzal / U.S. dollar exchange rate:              
    End-of-period 7.7   7.9     3 %  
    Three months ended 7.7   7.9     3 %  
    Nine months ended 7.8   7.8     %  
                   
    Colombian peso / U.S. dollar exchange rate:              
    End-of-period 4,164   4,054     (3 )%  
    Three months ended 4,095   4,048     (1 )%  
    Nine months ended 3,979   4,413     10 %  
                     
    FIRSTCASH HOLDINGS, INC.
    INTERSEGMENT TRANSACTIONS
    (UNAUDITED)
     

    Intersegment transactions relate to the Company offering AFF’s LTO payment solution in its U.S. pawn stores and are eliminated to arrive at consolidated totals. For the three months ended September 30, 2024 and 2023, these intersegment amounts are as follows:

    • U.S. pawn retail merchandise sales includes $1.0 million and $1.5 million, respectively. Excluding these intersegment sales, consolidated U.S. retail merchandise sales totaled $234.1 million and $202.3 million, respectively.
    • U.S. pawn cost of retail merchandise sold includes $0.5 million and $0.8 million, respectively. Excluding these intersegment sales, consolidated U.S. cost of retail merchandise sold totaled $134.4 million and $114.9 million, respectively.
    • Retail POS payment solutions depreciation of leased merchandise includes $0.4 million and $0.5 million respectively. Excluding these intersegment transactions, consolidated depreciation of leased merchandise totaled $104.9 million and $103.7 million, respectively.
    • Retail POS payment solutions provision for lease losses includes an increase of $0.1 million and a provision reduction of $0.1 million, respectively. Excluding these intersegment transactions, consolidated provision for lease losses totaled $39.2 million and $39.7 million, respectively.

    For the nine months ended September 30, 2024 and 2023, these intersegment amounts are as follows:

    • U.S. pawn retail merchandise sales includes $3.1 million and $4.9 million, respectively. Excluding these intersegment sales, consolidated U.S. retail merchandise sales totaled $699.1 million and $605.6 million, respectively.
    • U.S. pawn cost of retail merchandise sold includes $1.7 million and $2.6 million, respectively. Excluding these intersegment sales, consolidated U.S. cost of retail merchandise sold totaled $405.7 million and $346.6 million, respectively.
    • Retail POS payment solutions depreciation of leased merchandise includes $1.3 million and $1.6 million, respectively. Excluding these intersegment transactions, consolidated depreciation of leased merchandise totaled $335.4 million and $307.8 million, respectively.
    • Retail POS payment solutions provision for lease losses includes $0.4 million and $0.2 million, respectively. Excluding these intersegment transactions, consolidated provision for lease losses totaled $129.8 million and $141.7 million, respectively.

    As of September 30, 2024 and 2023, these intersegment amounts are as follows:

    • Retail POS payment solutions leased merchandise, net includes $0.2 million and $1.7 million, respectively. Excluding these intersegment transactions, consolidated net leased merchandise totaled $137.8 million and $143.2 million, respectively.

    The MIL Network

  • MIL-OSI United Kingdom: Council asked to approve £6.3m boost to Landbank Fund

    Source: Scotland – Highland Council

    Members will be asked to approve the repayment of £6.308m to the Landbank Fund from income from Council Tax on 2nd homes, at the Highland Council meeting on 31 October. The additional money will support the Council in finding solutions to the Highland Housing Challenge.

    Chair of the Council’s Economy and Infrastructure Committee, Cllr Ken Gowans said: “The Landbank Fund is a valuable mechanism which allows us to invest further in housing supply in the Highlands. The additional £6.308 million will boost our capacity to bring housing back into communities and help to address the housing challenge.” 

    The Highland Council has in recent years sought flexibility to the Council to utilise income from council tax on second homes to support the revenue budget. 

    Scottish Government granted flexibility to the Council to utilise income in 2022/23 and 2023/24 to support the revenue budget, rather than for affordable housing purposes, given the financial challenges being faced by the Council at that time. That flexibility was however conditional on repayment of income into the Landbank Fund within 3 years of the flexibility being exercised.  

    Through its budget plans, the Council has made provision for repayment back into the Landbank Fund, this through a combination of budget provision made in 2024/25 and reserves earmarked for this purpose.  In total, the sum due to be paid back is £6.308m covering the two financial years.

    24 Oct 2024

    MIL OSI United Kingdom

  • MIL-OSI: Amalgamated Financial Corp. Reports Record Third Quarter 2024 Financial Results; Margin Expands to 3.51%; Return on Average Assets of 1.32%

    Source: GlobeNewswire (MIL-OSI)

    NEW YORK, Oct. 24, 2024 (GLOBE NEWSWIRE) — Amalgamated Financial Corp. (the “Company” or “Amalgamated”) (Nasdaq: AMAL), the holding company for Amalgamated Bank (the “Bank”), today announced financial results for the third quarter ended September 30, 2024.

    Third Quarter 2024 Highlights (on a linked quarter basis)

    • Net income of $27.9 million, or $0.90 per diluted share, compared to $26.8 million, or $0.87 per diluted share.
    • Core net income1 of $28.0 million, or $0.91 per diluted share, compared to $26.2 million, or $0.85 per diluted share.

    Deposits and Liquidity

    • Total deposits increased $145.6 million, or 2.0%, to $7.6 billion including a $51.3 million decline in Brokered CDs.
    • Excluding Brokered CDs, on-balance sheet deposits increased $196.9 million, or 2.7%, to $7.5 billion.
    • Political deposits increased $231.9 million, or 13%, to $2.0 billion, which includes both on and off-balance sheet deposits.
    • Off-balance sheet deposits increased $114.1 million, or 11%, to $1.2 billion, comprised of both transactional political deposits and other segment deposits.
    • Average cost of deposits, excluding Brokered CDs, increased 3 basis points to 151 basis points, where non-interest-bearing deposits comprised 51% of total deposits excluding Brokered CDs.

    Assets and Margin

    • Net loans receivable increased $78.0 million, or 1.8%, to $4.5 billion.
    • Excluding a $40.9 million package of low yielding residential loans marked-to-market and moved to held-for-sale, net loans receivable increased $118.9 million or 2.7%.
    • Total PACE assessments grew $10.6 million, or 0.9%, to $1.2 billion.
    • Net interest income grew $2.9 million, or 4.2%, to $72.1 million.
    • Net interest margin increased 5 basis points to 3.51%.

    Capital and Returns

    • Tier 1 leverage ratio of 8.63%, increased by 21 basis points, and Common Equity Tier 1 ratio of 13.82%.
    • Tangible common equity1 ratio of 8.14%, representing an eighth consecutive quarter of improvement.
    • Tangible book value per share1 increased $1.69, or 8.2%, to $22.29, and has increased $4.87, or 27.9% since September 2023.
    • Strong core return on average tangible common equity1 of 17.04% and core return on average assets1 of 1.33%.

    ________________________
    1 Reconciliations of non-GAAP financial measures to the most comparable GAAP measure are set forth on the last page of the financial information accompanying this press release and may also be found on our website, www.amalgamatedbank.com.

    Priscilla Sims Brown, President and Chief Executive Officer, commented, “Our third quarter financial results continue to demonstrate that Amalgamated remains positioned to achieve sustainable earnings and profitability.   During the quarter, we delivered outstanding deposit and loan growth, strong profitability and returns, and a growing capital base that positions us to invest in our strategic initiatives which will sustain our growth into the future.”

    Third Quarter Earnings

    Net income for the third quarter of 2024 was $27.9 million, or $0.90 per diluted share, compared to $26.8 million, or $0.87 per diluted share, for the second quarter of 2024. The $1.1 million increase during the quarter was primarily driven by a $3.2 million increase in non-core ICS One-Way Sell fee income from our off-balance sheet deposits, a $2.9 million increase in net interest income, a $1.3 million decrease in provision for credit losses, and a $0.7 million increase in non-core income from solar tax equity investments, which was expected. This was offset by a $4.3 million reduction in fair value on a pool of lower yielding residential loans moved to held for sale, a $1.5 million increase in non-interest expense, and a $1.3 million increase in income tax expense, and a $0.5 million increase in losses on securities sales.

    Core net income1 for the third quarter of 2024 was $28.0 million, or $0.91 per diluted share, compared to $26.2 million, or $0.85 per diluted share, for the second quarter of 2024. Excluded from core net income for the quarter, pre-tax, was $8.1 million of ICS One-Way Sell fee income, a $4.3 million reduction in fair value of held for sale residential loans, $3.2 million of losses on the sale of securities, $1.1 million of accelerated depreciation from solar tax equity investments, $0.7 million of gains on subordinated debt repurchases, and $0.2 million in severance costs. Excluded from core net income for the second quarter of 2024, pre-tax, was $4.9 million of ICS One-Way Sell fee income, $2.7 million of losses on the sale of securities, $1.8 million of accelerated depreciation from our solar tax equity investments, $0.4 million of gains on subordinated debt repurchases.

    Net interest income was $72.1 million for the third quarter of 2024, compared to $69.2 million for the second quarter of 2024. Loan interest income increased $2.8 million and loan yields increased 11 basis points mainly as a result of a $86.7 million increase in average loan balances. Adjusted for two discrete items; the effect of $2.1 million of accelerated amortization related to purchase premiums last quarter and the recognition in the current quarter of a $1.3 million acceleration of deferred costs on certain loans, loan interest income increased by $2.1 million in the quarter. Interest income on securities increased $1.7 million driven by an increase in the average balance of securities of $79.7 million. Interest expense on total interest-bearing deposits increased $1.2 million driven by a 26 basis point increase in cost despite a decrease in the average balance of total interest-bearing deposits of $235.6 million. The increase in deposit cost was primarily related to adjustments to rates on money market products and select non-time deposit accounts late in second quarter and early in the current quarter.   The decrease in the average balance of interest-bearing deposits was primarily driven by a mix shift as newly raised political deposits were mainly non-interest-bearing whereas related outflows were mainly interest-bearing. Additionally, the average balance on Brokered CD’s declined $25.0 million as certain long-term issuances were called. The average balance of borrowings also decreased $32.6 million, now substantially consisting of lower-cost subordinated debt.

    Net interest margin was 3.51% for the third quarter of 2024, an increase of 5 basis points from 3.46% in the second quarter of 2024. As noted above, there were two discrete items that affected the third quarter and second quarter margin. Excluding these discrete items, net interest margin improved 2 basis points from the prior quarter, all else equal. Prepayment penalties had no impact on our net interest margin in the third quarter of 2024, which is the same as in the prior quarter.

    Provision for credit losses totaled an expense of $1.8 million for the third quarter of 2024 compared to an expense of $3.2 million in the second quarter of 2024. The expense in the third quarter was primarily driven by charge-offs on our consumer solar and small business portfolios, and updates to CECL model assumptions, offset by decreases in reserves for unfunded loan commitments.

    Non-interest income was $8.9 million for the third quarter of 2024, compared to $9.3 million in the second quarter of 2024. Excluding all non-core income adjustments noted above, core non-interest income1 was $8.8 million for the third quarter of 2024, compared to $8.5 million in the second quarter of 2024. The increase was primarily related to higher commercial banking fees, increased fees from our treasury investment services, and modestly higher income from our trust business.

    Non-interest expense for the third quarter of 2024 was $41.0 million, an increase of $1.5 million from the second quarter of 2024. Core non-interest expense1 for the third quarter of 2024 was $40.7 million, an increase of $1.3 million from the second quarter of 2024. This was mainly driven by a $0.7 million increase in compensation and employee benefits expense due to strategic new hires and corporate performance accruals, as well as higher data processing expense related to the advance of digital initiatives scheduled for 2025.

    Our provision for income tax expense was $10.3 million for the third quarter of 2024, compared to $9.0 million for the second quarter of 2024. The effective tax rate for the third quarter of 2024 was 26.9%. In the prior quarter, there were $0.5 million of discrete tax benefits resulting in an effective tax rate of 25.2%, or 26.6% excluding the discrete items.

    Balance Sheet Quarterly Summary

    Total assets were $8.4 billion at September 30, 2024, compared to $8.3 billion at June 30, 2024, which modestly grew the balance sheet above its target range but also carried $40.9 million in loans held for sale related to the residential loan sale that settled shortly after the quarter closed. Notable changes within individual balance sheet line items include a $91.2 million increase in cash and cash equivalents, a $24.1 million increase in securities, and a $78.0 million increase in net loans receivable. Additionally, deposits excluding Brokered CDs increased by $196.9 million while Brokered CDs decreased $51.3 million, and borrowings decreased by $8.8 million. Our off-balance sheet deposits increased by $114.1 million, or 11%, to $1.2 billion.

    Total net loans receivable, at September 30, 2024 were $4.5 billion, an increase of $78.0 million, or 1.8% for the quarter. The increase in loans is primarily driven by a $60.8 million increase in multifamily loans, a $46.0 million increase in commercial and industrial loans, and a $37.6 million increase in commercial real estate loans, offset by an $11.1 million decrease in consumer solar loans, and a $54.3 million decrease in residential loans, primarily due to the noted loan pool sale. During the quarter, criticized or classified loans decreased $5.9 million, largely related to a $6.9 million note sale (with a related fully reserved $4.5 million charge-off) on a legacy non-accrual leveraged loan. Additionally, payoffs of two delinquent commercial and industrial loans totaling $1.7 million and charge-offs of smaller commercial and industrial loans totaling $1.0 million were offset by the downgrade of one $3.2 million multifamily loan to substandard and accruing and downgrades of small business loans totaling $1.1 million.

    Total deposits at September 30, 2024 were $7.6 billion, an increase of $145.6 million, or 2.0%, during the quarter. Total deposits excluding Brokered CDs increased by $196.9 million to $7.5 billion, or a 2.7% increase. Including accounts currently held off-balance sheet, deposits held by politically active customers, such as campaigns, PACs, advocacy-based organizations, and state and national party committees were $2.0 billion as of September 30, 2024, an increase of $231.9 million during this quarter. Non-interest-bearing deposits represented 50% of average total deposits and 51% of ending total deposits for the quarter, excluding Brokered CDs, contributing to an average cost of total deposits of 158 basis points. Super-core deposits2 totaled approximately $4.5 billion, had a weighted average life of 16 years, and comprised 60% of total deposits, excluding Brokered CDs. Total uninsured deposits were $4.5 billion, comprising 59% of total deposits.

    Nonperforming assets totaled $28.6 million, or 0.34% of period-end total assets at September 30, 2024, a decrease of $7.1 million, compared with $35.7 million, or 0.43% on a linked quarter basis. The decrease in nonperforming assets was primarily driven by the note sale mentioned above, a $0.2 million decrease in residential real estate nonaccrual loans, a $0.2 million decrease in consumer and consumer solar nonaccrual loans, offset by a $0.3 million increase in commercial and industrial nonaccrual loans.

    During the quarter, the allowance for credit losses on loans decreased $1.9 million to $61.5 million. The ratio of allowance to total loans was 1.35%, a decrease of 7 basis points from 1.42% in the second quarter of 2024. The decrease was primarily the result of a release of reserves from the previously noted legacy leveraged commercial and industrial note sale, which carried a reserve of $4.5 million.

    ________________________
    2 Refer to Terminology on page 6 for definitions of certain terms used in this release.


    Capital Quarterly Summary

    As of September 30, 2024, the Common Equity Tier 1 Capital ratio was 13.82%, the Total Risk-Based Capital ratio was 16.25%, and the Tier 1 Leverage Capital ratio was 8.63%, compared to 13.48%, 16.04% and 8.42%, respectively, as of June 30, 2024. Stockholders’ equity at September 30, 2024 was $698.3 million, an increase of $52.2 million during the quarter. The increase in stockholders’ equity was primarily driven by $27.9 million of net income for the quarter and a $26.9 million improvement in accumulated other comprehensive loss due to the tax effected mark-to-market on our available for sale securities portfolio, offset by $3.7 million in dividends paid at $0.12 per outstanding share.

    Tangible book value per share was $22.29 as of September 30, 2024 compared to $20.61 as of June 30, 2024. Tangible common equity1 improved to 8.14% of tangible assets, compared to 7.66% as of June 30, 2024.

    Conference Call

    As previously announced, Amalgamated Financial Corp. will host a conference call to discuss its third quarter 2024 results today, October 24, 2024 at 11:00am (Eastern Time). The conference call can be accessed by dialing 1-877-407-9716 (domestic) or 1-201-493-6779 (international) and asking for the Amalgamated Financial Corp. Third Quarter 2024 Earnings Call. A telephonic replay will be available approximately two hours after the call and can be accessed by dialing 1-844-512-2921, or for international callers 1-412-317-6671 and providing the access code 13748697. The telephonic replay will be available until October 31, 2024.

    Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the investor relations section of our website at https://ir.amalgamatedbank.com/. The online replay will remain available for a limited time beginning immediately following the call.

    The presentation materials for the call can be accessed on the investor relations section of our website at https://ir.amalgamatedbank.com/.

    About Amalgamated Financial Corp.

    Amalgamated Financial Corp. is a Delaware public benefit corporation and a bank holding company engaged in commercial banking and financial services through its wholly-owned subsidiary, Amalgamated Bank. Amalgamated Bank is a New York-based full-service commercial bank and a chartered trust company with a combined network of five branches across New York City, Washington D.C., and San Francisco, and a commercial office in Boston. Amalgamated Bank was formed in 1923 as Amalgamated Bank of New York by the Amalgamated Clothing Workers of America, one of the country’s oldest labor unions. Amalgamated Bank provides commercial banking and trust services nationally and offers a full range of products and services to both commercial and retail customers. Amalgamated Bank is a proud member of the Global Alliance for Banking on Values and is a certified B Corporation®. As of September 30, 2024, our total assets were $8.4 billion, total net loans were $4.5 billion, and total deposits were $7.6 billion. Additionally, as of September 30, 2024, our trust business held $35.4 billion in assets under custody and $14.6 billion in assets under management.

    Non-GAAP Financial Measures

    This release (and the accompanying financial information and tables) refer to certain non-GAAP financial measures including, without limitation, “Core operating revenue,” “Core non-interest expense,” “Core non-interest income,” “Core net income,” “Tangible common equity,” “Average tangible common equity,” “Core return on average assets,” “Core return on average tangible common equity,” and “Core efficiency ratio.”

    Our management utilizes this information to compare our operating performance for September 30, 2024 versus certain periods in 2024 and 2023 and to prepare internal projections. We believe these non-GAAP financial measures facilitate making period-to-period comparisons and are meaningful indications of our operating performance. In addition, because intangible assets such as goodwill and other discrete items unrelated to our core business, which are excluded, vary extensively from company to company, we believe that the presentation of this information allows investors to more easily compare our results to those of other companies.

    The presentation of non-GAAP financial information, however, is not intended to be considered in isolation or as a substitute for GAAP financial measures. We strongly encourage readers to review the GAAP financial measures included in this release and not to place undue reliance upon any single financial measure. In addition, because non-GAAP financial measures are not standardized, it may not be possible to compare the non-GAAP financial measures presented in this release with other companies’ non-GAAP financial measures having the same or similar names. Reconciliations of non-GAAP financial disclosures to comparable GAAP measures found in this release are set forth in the final pages of this release and also may be viewed on our website, amalgamatedbank.com.

    Terminology

    Certain terms used in this release are defined as follows:

    “Core efficiency ratio” is defined as “Core non-interest expense” divided by “Core operating revenue.” We believe the most directly comparable performance ratio derived from GAAP financial measures is an efficiency ratio calculated by dividing total non-interest expense by the sum of net interest income and total non-interest income.

    “Core net income” is defined as net income after tax excluding gains and losses on sales of securities, ICS One-Way Sell fee income, gains on the sale of owned property, costs related to branch closures, restructuring/severance costs, acquisition costs, tax credits and accelerated depreciation on solar equity investments, and taxes on notable pre-tax items. We believe the most directly comparable GAAP financial measure is net income.

    “Core non-interest expense” is defined as total non-interest expense excluding costs related to branch closures, restructuring/severance, and acquisitions. We believe the most directly comparable GAAP financial measure is total non-interest expense.

    “Core non-interest income” is defined as total non-interest income excluding gains and losses on sales of securities, ICS One-Way Sell fee income, gains on the sale of owned property, and tax credits and accelerated depreciation on solar equity investments. We believe the most directly comparable GAAP financial measure is non-interest income.

    “Core operating revenue” is defined as total net interest income plus “core non-interest income”. We believe the most directly comparable GAAP financial measure is the total of net interest income and non-interest income.

    “Core return on average assets” is defined as “Core net income” divided by average total assets. We believe the most directly comparable performance ratio derived from GAAP financial measures is return on average assets calculated by dividing net income by average total assets.

    “Core return on average tangible common equity” is defined as “Core net income” divided by average “tangible common equity.” We believe the most directly comparable performance ratio derived from GAAP financial measures is return on average equity calculated by dividing net income by average total stockholders’ equity.

    “Super-core deposits” are defined as total deposits from commercial and consumer customers, with a relationship length of greater than 5 years. We believe the most directly comparable GAAP financial measure is total deposits.

    “Tangible assets” are defined as total assets excluding, as applicable, goodwill and core deposit intangibles. We believe the most directly comparable GAAP financial measure is total assets.

    “Tangible common equity”, and “Tangible book value” are defined as stockholders’ equity excluding, as applicable, minority interests, preferred stock, goodwill and core deposit intangibles. We believe that the most directly comparable GAAP financial measure is total stockholders’ equity.

    “Traditional securities portfolio” is defined as total investment securities excluding PACE assessments. We believe the most directly comparable GAAP financial measure is total investment securities.

    Forward-Looking Statements

    Statements included in this release that are not historical in nature are intended to be, and are hereby identified as, forward-looking statements within the meaning of the Private Securities Litigation Reform Act, Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not statements of historical or current fact nor are they assurances of future performance and generally can be identified by the use of forward-looking terminology, such as “may,” “approximately,” “will,” “anticipate,” “should,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “plan,” “possible,” and “intend,” or the negative thereof as well as other similar words and expressions of the future. Forward-looking statements are subject to risks, uncertainties and assumptions that are difficult to predict as to timing, extent, likelihood and degree of occurrence, which could cause our actual results to differ materially from those anticipated in or by such statements. Potential risks and uncertainties include, but are not limited to, the following: (i) uncertain conditions in the banking industry and in national, regional and local economies in our core markets, which may have an adverse impact on our business, operations and financial performance; (ii) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; (iii) deposit outflows and subsequent declines in liquidity caused by factors that could include lack of confidence in the banking system, a deterioration in market conditions or the financial condition of depositors; (iv) changes in our deposits, including an increase in uninsured deposits; (v) our ability to maintain sufficient liquidity to meet our deposit and debt obligations as they come due, which may require that we sell investment securities at a loss, negatively impacting our net income, earnings and capital; (vi) unfavorable conditions in the capital markets, which may cause declines in our stock price and the value of our investments; (vii) negative economic and political conditions that adversely affect the general economy, housing prices, the real estate market, the job market, consumer confidence, the financial condition of our borrowers and consumer spending habits, which may affect, among other things, the level of non-performing assets, charge-offs and provision expense; (viii) fluctuations or unanticipated changes in the interest rate environment including changes in net interest margin or changes in the yield curve that affect investments, loans or deposits; (ix) the general decline in the real estate and lending markets, particularly in commercial real estate in our market areas, and the effects of the enactment of or changes to rent-control and other similar regulations on multi-family housing; (x) changes in legislation, regulation, public policies, or administrative practices impacting the banking industry, including increased minimum capital requirements and other regulation in the aftermath of recent bank failures; (xi) the outcome of any legal proceedings that may be instituted against us (xii) our inability to achieve organic loan and deposit growth and the composition of that growth; (xiii) the composition of our loan portfolio, including any concentration in industries or sectors that may experience unanticipated or anticipated adverse conditions greater than other industries or sectors in the national or local economies in which we operate; (xiv) inaccuracy of the assumptions and estimates we make and policies that we implement in establishing our allowance for credit losses; (xv) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (xvi) any matter that would cause us to conclude that there was impairment of any asset, including intangible assets; (xvii) limitations on our ability to declare and pay dividends; (xviii) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on our results, including as a result of compression to net interest margin; (xix) increased competition for experienced members of the workforce including executives in the banking industry; (xx) a failure in or breach of our operational or security systems or infrastructure, or those of third party vendors or other service providers, including as a result of unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (xxi) increased regulatory scrutiny and exposure from the use of “big data” techniques, machine learning, and artificial intelligence; (xxii) downgrade in our credit rating; (xxiii) “greenwashing claims” against us and our Environmental, Social and Governance (“ESG”) products and increased scrutiny and political opposition to ESG and Diversity, Equity and Inclusion (“DEI”) practices; (xxiv) any unanticipated or greater than anticipated adverse conditions (including the possibility of earthquakes, wildfires, and other natural disasters)affecting the markets in which we operate; (xxv) physical and transitional risks related to climate change as they impact our business and the businesses that we finance; (xxvi) future repurchase of our shares through our common stock repurchase program; and (xxvii) descriptions of assumptions underlying or relating to any of the foregoing. Additional factors which could affect the forward-looking statements can be found in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the SEC and available on the SEC’s website at https://www.sec.gov/. We disclaim any obligation to update or revise any forward-looking statements contained in this release, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by law.

    Investor Contact:
    Jamie Lillis
    Solebury Strategic Communications
    shareholderrelations@amalgamatedbank.com
    800-895-4172

    Consolidated Statements of Income (unaudited)

      Three Months Ended   Nine Months Ended
      September 30,   June 30,   September 30,   September 30,
    ($ in thousands)   2024       2024       2023       2024       2023  
    INTEREST AND DIVIDEND INCOME                  
    Loans $ 54,110     $ 51,293     $ 49,578     $ 157,355     $ 139,744  
    Securities   46,432       44,978       39,971       133,801       118,989  
    Interest-bearing deposits in banks   2,274       2,690       1,687       7,556       3,360  
    Total interest and dividend income   102,816       98,961       91,236       298,712       262,093  
    INTEREST EXPENSE                  
    Deposits   30,105       28,882       23,158       84,879       55,809  
    Borrowed funds   604       887       4,350       4,497       12,292  
    Total interest expense   30,709       29,769       27,508       89,376       68,101  
    NET INTEREST INCOME   72,107       69,192       63,728       209,336       193,992  
    Provision for credit losses   1,849       3,161       2,014       6,598       10,913  
    Net interest income after provision for credit losses   70,258       66,031       61,714       202,738       183,079  
    NON-INTEREST INCOME                  
    Trust Department fees   3,704       3,657       3,678       11,215       11,613  
    Service charges on deposit accounts   12,091       8,614       2,731       26,841       7,897  
    Bank-owned life insurance income   613       615       727       1,837       2,054  
    Losses on sale of securities   (3,230 )     (2,691 )     (1,699 )     (8,695 )     (5,052 )
    Gain (loss) on sale of loans and changes in fair value on loans held-for-sale, net   (4,223 )     69       26       (4,107 )     30  
    Equity method investments income (loss)   (823 )     (1,551 )     550       (301 )     1,261  
    Other income   807       545       767       1,636       2,127  
    Total non-interest income   8,939       9,258       6,780       28,426       19,930  
    NON-INTEREST EXPENSE                  
    Compensation and employee benefits   23,757       23,045       21,345       69,075       64,525  
    Occupancy and depreciation   3,423       3,379       3,349       9,705       10,184  
    Professional fees   2,575       2,332       2,222       7,284       7,211  
    Data processing   5,087       4,786       4,545       14,503       13,176  
    Office maintenance and depreciation   651       580       685       1,894       2,130  
    Amortization of intangible assets   183       182       222       548       666  
    Advertising and promotion   1,023       1,175       816       3,417       3,431  
    Federal deposit insurance premiums   900       1,050       1,200       3,000       3,018  
    Other expense   3,365       2,983       2,955       9,203       9,154  
    Total non-interest expense   40,964       39,512       37,339       118,629       113,495  
    Income before income taxes   38,233       35,777       31,155       112,535       89,514  
    Income tax expense   10,291       9,024       8,847       30,591       24,230  
    Net income $ 27,942     $ 26,753     $ 22,308     $ 81,944     $ 65,284  
    Earnings per common share – basic $ 0.91     $ 0.88     $ 0.73     $ 2.68     $ 2.13  
    Earnings per common share – diluted $ 0.90     $ 0.87     $ 0.73     $ 2.65     $ 2.12  

    Consolidated Statements of Financial Condition

    ($ in thousands) September 30,
    2024
      June 30,
    2024
      December 31,
    2023
    Assets (unaudited)   (unaudited)    
    Cash and due from banks $ 3,946     $ 4,081     $ 2,856  
    Interest-bearing deposits in banks   145,261       53,912       87,714  
    Total cash and cash equivalents   149,207       57,993       90,570  
    Securities:          
    Available for sale, at fair value          
    Traditional securities   1,617,045       1,581,338       1,429,739  
    Property Assessed Clean Energy (“PACE”) assessments   149,500       112,923       53,303  
        1,766,545       1,694,261       1,483,042  
    Held-to-maturity, at amortized cost:          
    Traditional securities, net of allowance for credit losses of $51, $53, and $54, respectively   583,788       606,013       620,232  
    PACE assessments, net of allowance for credit losses of $641, $655, and $667, respectively   1,028,588       1,054,569       1,076,602  
        1,612,376       1,660,582       1,696,834  
               
    Loans held for sale   38,623       1,926       1,817  
    Loans receivable, net of deferred loan origination costs   4,547,903       4,471,839       4,411,319  
    Allowance for credit losses   (61,466 )     (63,444 )     (65,691 )
    Loans receivable, net   4,486,437       4,408,395       4,345,628  
               
    Resell agreements   74,883       137,461       50,000  
    Federal Home Loan Bank of New York (“FHLBNY”) stock, at cost   4,625       4,823       4,389  
    Accrued interest receivable   54,268       52,575       55,484  
    Premises and equipment, net   6,413       6,599       7,807  
    Bank-owned life insurance   107,365       106,752       105,528  
    Right-of-use lease asset   16,125       17,971       21,074  
    Deferred tax asset, net   38,510       47,654       56,603  
    Goodwill   12,936       12,936       12,936  
    Intangible assets, net   1,669       1,852       2,217  
    Equity method investments   11,514       12,710       13,024  
    Other assets   32,144       26,214       25,371  
    Total assets $ 8,413,640     $ 8,250,704     $ 7,972,324  
    Liabilities          
    Deposits $ 7,594,564     $ 7,448,988     $ 7,011,988  
    Borrowings   68,436       77,252       304,927  
    Operating leases   22,292       24,784       30,646  
    Other liabilities   30,016       53,568       39,399  
    Total liabilities   7,715,308       7,604,592       7,386,960  
    Stockholders’ equity          
    Common stock, par value $.01 per share   308       307       307  
    Additional paid-in capital   287,167       286,021       288,232  
    Retained earnings   459,398       435,202       388,033  
    Accumulated other comprehensive loss, net of income taxes   (46,702 )     (73,579 )     (86,004 )
    Treasury stock, at cost   (1,972 )     (1,972 )     (5,337 )
    Total Amalgamated Financial Corp. stockholders’ equity   698,199       645,979       585,231  
    Noncontrolling interests   133       133       133  
    Total stockholders’ equity   698,332       646,112       585,364  
    Total liabilities and stockholders’ equity $ 8,413,640     $ 8,250,704     $ 7,972,324  

    Select Financial Data

      As of and for the   As of and for the
      Three Months Ended   Nine Months Ended
      September 30,   June 30,   September 30,   September 30,
    (Shares in thousands)   2024       2024       2023       2024       2023  
    Selected Financial Ratios and Other Data:                  
    Earnings per share                  
    Basic $ 0.91     $ 0.88     $ 0.73     $ 2.68     $ 2.13  
    Diluted   0.90       0.87       0.73       2.65       2.12  
    Core net income (non-GAAP)                  
    Basic $ 0.91     $ 0.86     $ 0.76     $ 2.61     $ 2.23  
    Diluted   0.91       0.85       0.76       2.59       2.22  
    Book value per common share (excluding minority interest) $ 22.77     $ 21.09     $ 17.93     $ 22.77     $ 17.93  
    Tangible book value per share (non-GAAP) $ 22.29     $ 20.61     $ 17.43     $ 22.29     $ 17.43  
    Common shares outstanding, par value $.01 per share(1)   30,663       30,630       30,459       30,663       30,459  
    Weighted average common shares outstanding, basic   30,646       30,551       30,481       30,558       30,601  
    Weighted average common shares outstanding, diluted   30,911       30,832       30,590       30,868       30,738  
                       
    (1) 70,000,000 shares authorized; 30,776,163, 30,743,666, and 30,736,141 shares issued for the periods ended September 30, 2024, June 30, 2024, and September 30, 2023 respectively, and 30,662,883, 30,630,386, and 30,458,781 shares outstanding for the periods ended September 30, 2024, June 30, 2024, and September 30, 2023, respectively.

    Select Financial Data

      As of and for the   As of and for the
      Three Months Ended   Nine Months Ended
      September 30,   June 30,   September 30,   September 30,
      2024   2024   2023   2024   2023
    Selected Performance Metrics:                  
    Return on average assets 1.32 %   1.30 %   1.12 %   1.33 %   1.11 %
    Core return on average assets (non-GAAP) 1.33 %   1.27 %   1.17 %   1.29 %   1.17 %
    Return on average equity 16.63 %   17.27 %   16.43 %   17.35 %   16.69 %
    Core return on average tangible common equity (non-GAAP) 17.04 %   17.34 %   17.67 %   17.31 %   18.02 %
    Average equity to average assets 7.96 %   7.53 %   6.82 %   7.65 %   6.67 %
    Tangible common equity to tangible assets (non-GAAP) 8.14 %   7.66 %   6.72 %   8.14 %   6.72 %
    Loan yield 4.79 %   4.68 %   4.56 %   4.74 %   4.43 %
    Securities yield 5.25 %   5.22 %   4.94 %   5.23 %   4.84 %
    Deposit cost 1.58 %   1.55 %   1.33 %   1.53 %   1.08 %
    Net interest margin 3.51 %   3.46 %   3.29 %   3.48 %   3.40 %
    Efficiency ratio (1) 50.54 %   50.37 %   52.96 %   49.89 %   53.05 %
    Core efficiency ratio (non-GAAP) 50.35 %   50.80 %   51.71 %   50.52 %   51.88 %
                       
    Asset Quality Ratios:                  
    Nonaccrual loans to total loans 0.61 %   0.78 %   0.79 %   0.61 %   0.79 %
    Nonperforming assets to total assets 0.34 %   0.43 %   0.46 %   0.34 %   0.46 %
    Allowance for credit losses on loans to nonaccrual loans 222.30 %   182.83 %   197.58 %   222.30 %   197.58 %
    Allowance for credit losses on loans to total loans 1.35 %   1.42 %   1.56 %   1.35 %   1.56 %
    Annualized net charge-offs to average loans 0.61 %   0.25 %   0.27 %   0.35 %   0.27 %
                       
    Capital Ratios:                  
    Tier 1 leverage capital ratio 8.63 %   8.42 %   7.89 %   8.63 %   7.89 %
    Tier 1 risk-based capital ratio 13.82 %   13.48 %   12.63 %   13.82 %   12.63 %
    Total risk-based capital ratio 16.25 %   16.04 %   15.28 %   16.25 %   15.28 %
    Common equity tier 1 capital ratio 13.82 %   13.48 %   12.63 %   13.82 %   12.63 %
                       
    (1) Efficiency ratio is calculated by dividing total non-interest expense by the sum of net interest income and total non-interest income

    Loan and PACE Assessments Portfolio Composition

    (In thousands) At September 30, 2024   At June 30, 2024   At September 30, 2023
      Amount   % of total   Amount   % of total   Amount   % of total
    Commercial portfolio:                      
    Commercial and industrial $ 1,058,376     23.3 %   $ 1,012,400     22.6 %   $ 1,050,355     24.1 %
    Multifamily   1,291,380     28.4 %     1,230,545     27.5 %     1,094,955     25.1 %
    Commercial real estate   415,077     9.1 %     377,484     8.4 %     324,139     7.4 %
    Construction and land development   22,224     0.5 %     23,254     0.5 %     28,326     0.6 %
    Total commercial portfolio   2,787,057     61.3 %     2,643,683     59.0 %     2,497,775     57.2 %
                           
    Retail portfolio:                      
                           
    Residential real estate lending   1,350,347     29.7 %     1,404,624     31.4 %     1,409,530     32.3 %
    Consumer solar   374,499     8.2 %     385,567     8.6 %     415,324     9.5 %
    Consumer and other   36,000     0.8 %     37,965     1.0 %     42,116     1.0 %
    Total retail portfolio   1,760,846     38.7 %     1,828,156     41.0 %     1,866,970     42.8 %
    Total loans held for investment   4,547,903     100.0 %     4,471,839     100.0 %     4,364,745     100.0 %
                           
    Allowance for credit losses   (61,466 )         (63,444 )         (67,815 )    
    Loans receivable, net $ 4,486,437         $ 4,408,395         $ 4,296,930      
                           
    PACE assessments:                      
    Available for sale, at fair value                      
    Residential PACE assessments   149,500     12.7 %     112,923     9.7 %     38,526     3.5 %
                           
    Held-to-maturity, at amortized cost                      
    Commercial PACE assessments   256,128     21.7 %     256,663     22.0 %     270,020     24.3 %
    Residential PACE assessments   773,101     65.6 %     798,561     68.4 %     800,484     72.2 %
    Total Held-to-maturity PACE assessments   1,029,229     87.3 %     1,055,224     90.4 %     1,070,504     96.5 %
    Total PACE assessments   1,178,729     100.0 %     1,168,147     100.0 %     1,109,030     100.0 %
                           
    Allowance for credit losses   (641 )         (655 )         (670 )    
    Total PACE assessments, net $ 1,178,088         $ 1,167,492         $ 1,108,360      
                           
                           
    Loans receivable, net and total PACE assessments, net as a % of Deposits   74.6 %         74.9 %         77.3 %    
    Loans receivable, net and total PACE assessments, net as a % of Deposits excluding Brokered CDs   75.6 %         76.4 %         81.9 %    

    Net Interest Income Analysis

      Three Months Ended
      September 30, 2024   June 30, 2024   September 30, 2023
    (In thousands) Average
    Balance
    Income /
    Expense
    Yield /
    Rate
      Average
    Balance
    Income /
    Expense
    Yield /
    Rate
      Average
    Balance
    Income /
    Expense
    Yield /
    Rate
                                       
    Interest-earning assets:                                  
    Interest-bearing deposits in banks $ 182,981   $ 2,274   4.94 %   $ 213,725   $ 2,690   5.06 %   $ 170,830   $ 1,687   3.92 %
    Securities(1)   3,388,580     44,678   5.25 %     3,308,881     42,937   5.22 %     3,208,334     39,971   4.94 %
    Resell agreements   104,933     1,754   6.65 %     122,618     2,041   6.69 %           0.00 %
    Loans receivable, net (2)   4,493,520     54,110   4.79 %     4,406,843     51,293   4.68 %     4,314,767     49,578   4.56 %
    Total interest-earning assets   8,170,014     102,816   5.01 %     8,052,067     98,961   4.94 %     7,693,931     91,236   4.70 %
    Non-interest-earning assets:                                  
    Cash and due from banks   6,144             6,371             6,129        
    Other assets   217,332             217,578             204,506        
    Total assets $ 8,393,490           $ 8,276,016           $ 7,904,566        
                                       
    Interest-bearing liabilities:                                  
    Savings, NOW and money market deposits $ 3,506,499   $ 26,168   2.97 %   $ 3,729,858   $ 24,992   2.69 %   $ 3,446,027   $ 17,157   1.98 %
    Time deposits   223,337     2,148   3.83 %     210,565     1,898   3.63 %     176,171     1,122   2.53 %
    Brokered CDs   131,103     1,789   5.43 %     156,086     1,992   5.13 %     371,329     4,879   5.21 %
    Total interest-bearing deposits   3,860,939     30,105   3.10 %     4,096,509     28,882   2.84 %     3,993,527     23,158   2.30 %
    Borrowings   71,948     604   3.34 %     104,560     887   3.41 %     376,585     4,350   4.58 %
    Total interest-bearing liabilities   3,932,887     30,709   3.11 %     4,201,069     29,769   2.85 %     4,370,112     27,508   2.50 %
    Non-interest-bearing liabilities:                                  
    Demand and transaction deposits   3,721,398             3,390,941             2,920,737        
    Other liabilities   70,804             60,982             74,964        
    Total liabilities   7,725,089             7,652,992             7,365,813        
    Stockholders’ equity   668,401             623,024             538,753        
    Total liabilities and stockholders’ equity $ 8,393,490           $ 8,276,016           $ 7,904,566        
                                       
    Net interest income / interest rate spread     $ 72,107   1.90 %       $ 69,192   2.09 %       $ 63,728   2.20 %
    Net interest-earning assets / net interest margin $ 4,237,127       3.51 %   $ 3,850,998       3.46 %   $ 3,323,819       3.29 %
                                       
    Total deposits excluding Brokered CDs / total cost of deposits excluding Brokered CDs $ 7,451,234       1.51 %   $ 7,331,364       1.48 %   $ 6,542,935       1.11 %
    Total deposits / total cost of deposits $ 7,582,337       1.58 %   $ 7,487,450       1.55 %   $ 6,914,264       1.33 %
    Total funding / total cost of funds $ 7,654,285       1.60 %   $ 7,592,010       1.58 %   $ 7,290,849       1.50 %
                                                   

    (1) Includes FHLBNY stock in the average balance, and dividend income on FHLBNY stock in interest income.
    (2) No material impact of prepayment penalty interest income in 3Q2024, 2Q2024, or 3Q2023

    Net Interest Income Analysis

      Nine Months Ended
      September 30, 2024   September 30, 2023
    (In thousands) Average
    Balance
    Income /
    Expense
    Yield /
    Rate
      Average
    Balance
    Income /
    Expense
    Yield /
    Rate
                           
    Interest-earning assets:                      
    Interest-bearing deposits in banks $ 200,627   $ 7,556   5.03 %   $ 125,560   $ 3,360   3.58 %
    Securities   3,289,635     128,679   5.23 %     3,276,065     118,557   4.84 %
    Resell agreements   102,197     5,122   6.69 %     8,003     432   7.22 %
    Total loans, net (1)(2)   4,431,801     157,355   4.74 %     4,216,391     139,744   4.43 %
    Total interest-earning assets   8,024,260     298,712   4.97 %     7,626,019     262,093   4.60 %
    Non-interest-earning assets:                      
    Cash and due from banks   5,862             5,067        
    Other assets   219,096             210,112        
    Total assets $ 8,249,218           $ 7,841,198        
                           
    Interest-bearing liabilities:                      
    Savings, NOW and money market deposits $ 3,608,927   $ 73,033   2.70 %   $ 3,248,278   $ 40,010   1.65 %
    Time deposits   207,374     5,622   3.62 %     161,756     2,030   1.68 %
    Brokered CDs   159,041     6,224   5.23 %     383,521     13,769   4.80 %
    Total interest-bearing deposits   3,975,342     84,879   2.85 %     3,793,555     55,809   1.97 %
    Borrowings   154,564     4,497   3.89 %     365,262     12,292   4.50 %
    Total interest-bearing liabilities   4,129,906     89,376   2.89 %     4,158,817     68,101   2.19 %
    Non-interest-bearing liabilities:                      
    Demand and transaction deposits   3,417,970             3,086,482        
    Other liabilities   70,476             72,821        
    Total liabilities   7,618,352             7,318,120        
    Stockholders’ equity   630,866             523,078        
    Total liabilities and stockholders’ equity $ 8,249,218           $ 7,841,198        
                           
    Net interest income / interest rate spread     $ 209,336   2.08 %       $ 193,992   2.41 %
    Net interest-earning assets / net interest margin $ 3,894,354       3.48 %   $ 3,467,202       3.40 %
                           
    Total deposits excluding Brokered CDs / total cost of deposits excluding Brokered CDs $ 7,234,271       1.45 %   $ 6,496,516       0.87 %
    Total deposits / total cost of deposits $ 7,393,312       1.53 %   $ 6,880,037       1.08 %
    Total funding / total cost of funds $ 7,547,876       1.58 %   $ 7,245,299       1.26 %
                                   

    (1) Includes Federal Home Loan Bank (FHLB) stock in the average balance, and dividend income on FHLB stock in interest income.
    (2) Includes prepayment penalty interest income in September YTD 2024 and September YTD 2023 of $18 thousand and $0, respectively.

    Deposit Portfolio Composition

      Three Months Ended
    (In thousands) September 30, 2024   June 30, 2024   September 30, 2023
      Ending
    Balance
      Average
    Balance
      Ending
    Balance
      Average
    Balance
      Ending
    Balance
      Average
    Balance
    Non-interest-bearing demand deposit accounts $ 3,801,834   $ 3,721,398   $ 3,445,068   $ 3,390,941   $ 2,808,300   $ 2,920,737
    NOW accounts   186,557     188,250     192,452     191,253     192,654     192,883
    Money market deposit accounts   2,959,264     2,986,434     3,093,644     3,202,365     3,059,982     2,893,930
    Savings accounts   327,935     331,816     336,943     336,240     357,470     359,214
    Time deposits   216,901     223,337     227,437     210,565     180,529     176,171
    Brokered certificates of deposit (“CDs”)   102,073     131,103     153,444     156,086     391,919     371,329
    Total deposits $ 7,594,564   $ 7,582,338   $ 7,448,988   $ 7,487,450   $ 6,990,854   $ 6,914,264
                           
    Total deposits excluding Brokered CDs $ 7,492,491   $ 7,451,235   $ 7,295,544   $ 7,331,364   $ 6,598,935   $ 6,542,935
      Three Months Ended
      September 30, 2024   June 30, 2024   September 30, 2023
    (In thousands) Average
    Rate Paid(1)
      Cost of
    Funds
      Average
    Rate Paid(1)
      Cost of
    Funds
      Average
    Rate Paid(1)
      Cost of
    Funds
                           
    Non-interest bearing demand deposit accounts 0.00 %   0.00 %   0.00 %   0.00 %   0.00 %   0.00 %
    NOW accounts 0.90 %   1.09 %   1.07 %   1.07 %   0.95 %   1.01 %
    Money market deposit accounts 3.00 %   3.24 %   3.08 %   2.93 %   2.31 %   2.14 %
    Savings accounts 1.42 %   1.64 %   1.67 %   1.37 %   1.16 %   1.14 %
    Time deposits 3.83 %   3.83 %   3.50 %   3.63 %   2.88 %   2.53 %
    Brokered CDs 4.89 %   5.43 %   4.98 %   5.13 %   5.14 %   5.21 %
    Total deposits 1.43 %   1.58 %   1.59 %   1.55 %   1.46 %   1.33 %
                           
    Interest-bearing deposits excluding Brokered CDs 2.80 %   3.02 %   2.88 %   2.74 %   2.16 %   2.00 %
                                       

    (1) Average rate paid is calculated as the weighted average of spot rates on deposit accounts. Off-balance sheet deposits are excluded from all calculations shown.

    Asset Quality

    (In thousands) September 30,
    2024
      June 30,
    2024
      September 30,
    2023
    Loans 90 days past due and accruing $     $     $  
    Nonaccrual loans held for sale   989       989       2,189  
    Nonaccrual loans – Commercial   17,108       23,778       28,041  
    Nonaccrual loans – Retail   10,542       10,924       6,283  
    Nonaccrual securities   8       29       31  
    Total nonperforming assets $ 28,647     $ 35,720     $ 36,544  
               
    Nonaccrual loans:          
    Commercial and industrial $ 1,849     $ 8,428     $ 7,575  
    Multifamily                
    Commercial real estate   4,146       4,231       4,575  
    Construction and land development   11,113       11,119       15,891  
    Total commercial portfolio   17,108       23,778       28,041  
               
    Residential real estate lending   7,578       7,756       3,009  
    Consumer solar   2,848       2,794       2,817  
    Consumer and other   116       374       457  
    Total retail portfolio   10,542       10,924       6,283  
    Total nonaccrual loans $ 27,650     $ 34,702     $ 34,324  

    Credit Quality

      September 30,
    2024
      June 30,
    2024
      September 30,
    2023
    ($ in thousands)          
    Criticized and classified loans          
    Commercial and industrial $ 45,329     $ 53,940     $ 45,959  
    Multifamily   13,386       10,242       10,999  
    Commercial real estate   8,186       8,311       8,762  
    Construction and land development   11,113       11,119       15,891  
    Residential real estate lending   7,578       7,756       3,009  
    Consumer solar   2,848       2,794       2,817  
    Consumer and other   116       374       457  
    Total loans $ 88,556     $ 94,536     $ 87,894  
    Criticized and classified loans to total loans          
    Commercial and industrial 1.00 %   1.21 %   1.05 %
    Multifamily 0.29 %   0.23 %   0.25 %
    Commercial real estate 0.18 %   0.19 %   0.20 %
    Construction and land development 0.24 %   0.25 %   0.36 %
    Residential real estate lending 0.17 %   0.17 %   0.07 %
    Consumer solar 0.06 %   0.06 %   0.06 %
    Consumer and other %   0.01 %   0.01 %
    Total loans 1.94 %   2.12 %   2.00 %
      September 30, 2024   June 30, 2024   September 30, 2023
      Annualized net charge-offs (recoveries) to average loans   ACL to total portfolio balance   Annualized net charge-offs (recoveries) to average loans   ACL to total portfolio balance   Annualized net charge-offs (recoveries) to average loans   ACL to total portfolio balance
    Commercial and industrial 2.14 %   1.01 %   0.32 %   1.44 %   %   1.71 %
    Multifamily %   0.37 %   %   0.38 %   0.45 %   0.46 %
    Commercial real estate %   0.40 %   %   0.40 %   %   0.64 %
    Construction and land development %   3.73 %   %   3.60 %   %   3.68 %
    Residential real estate lending (0.03 )%   0.91 %   (0.18 )%   0.88 %   (0.07 )%   1.13 %
    Consumer solar 1.58 %   7.68 %   2.57 %   7.00 %   1.88 %   6.72 %
    Consumer and other 1.05 %   6.44 %   0.01 %   6.49 %   0.04 %   6.00 %
    Total loans 0.61 %   1.35 %   0.25 %   1.42 %   0.27 %   1.60 %

    Reconciliation of GAAP to Non-GAAP Financial Measures
    The information provided below presents a reconciliation of each of our non-GAAP financial measures to the most directly comparable GAAP financial measure.

      As of and for the   As of and for the
      Three Months Ended   Nine Months Ended
    (in thousands) September 30,
    2024
      June 30,
    2024
      September 30,
    2023
      September 30,
    2024
      September 30,
    2023
    Core operating revenue                  
    Net Interest Income (GAAP) $ 72,107     $ 69,192     $ 63,728     $ 209,336     $ 193,992  
    Non-interest income (GAAP)   8,939       9,258       6,780       28,426       19,930  
    Add: Securities loss   3,230       2,691       1,699       8,695       5,052  
    Less: ICS One-Way Sell Fee Income(1)   (8,085 )     (4,859 )           (15,847 )      
    Less: Changes in fair value of loans held-for-sale   4,265                   4,265        
    Less: Subdebt repurchase gain(2)   (669 )     (406 )     (637 )     (1,076 )     (1,417 )
    Add: Tax (credits) depreciation on solar investments(3)   1,089       1,815             1,095        
    Core operating revenue (non-GAAP)   80,876       77,691       71,570       234,894       217,557  
                       
    Core non-interest expense                  
    Non-interest expense (GAAP) $ 40,964     $ 39,512     $ 37,339     $ 118,629     $ 113,495  
    Add: Gain on settlement of lease termination(4)                     499        
    Less: Severance costs(5)   (241 )     (44 )     (332 )     (471 )     (617 )
    Core non-interest expense (non-GAAP)   40,723       39,468       37,007       118,657       112,878  
                       
    Core net income                  
    Net Income (GAAP) $ 27,942     $ 26,753     $ 22,308     $ 81,944     $ 65,284  
    Add: Securities loss   3,230       2,691       1,699       8,695       5,052  
    Less: ICS One-Way Sell Fee Income(1)   (8,085 )     (4,859 )           (15,847 )      
    Less: Changes in fair value of loans held-for-sale   4,265                   4,265        
    Less: Gain on settlement of lease termination(4)                     (499 )      
    Less: Subdebt repurchase gain(2)   (669 )     (406 )     (637 )     (1,076 )     (1,417 )
    Add: Severance costs(5)   241       44       332       471       617  
    Add: Tax (credits) depreciation on solar investments(3)   1,089       1,815             1,095        
    Less: Tax on notable items   (19 )     180       (396 )     764       (1,151 )
    Core net income (non-GAAP)   27,994       26,218       23,306       79,812       68,385  
                       
    Tangible common equity                  
    Stockholders’ equity (GAAP) $ 698,332     $ 646,112     $ 546,291     $ 698,332     $ 546,291  
    Less: Minority interest   (133 )     (133 )     (133 )     (133 )     (133 )
    Less: Goodwill   (12,936 )     (12,936 )     (12,936 )     (12,936 )     (12,936 )
    Less: Core deposit intangible   (1,669 )     (1,852 )     (2,439 )     (1,669 )     (2,439 )
    Tangible common equity (non-GAAP)   683,594       631,191       530,783       683,594       530,783  
                       
    Average tangible common equity                  
    Average stockholders’ equity (GAAP) $ 668,401     $ 623,024     $ 538,753     $ 630,866     $ 523,078  
    Less: Minority interest   (133 )     (133 )     (133 )     (133 )     (133 )
    Less: Goodwill   (12,936 )     (12,936 )     (12,936 )     (12,936 )     (12,936 )
    Less: Core deposit intangible   (1,759 )     (1,941 )     (2,547 )     (1,940 )     (2,768 )
    Average tangible common equity (non-GAAP)   653,573       608,014       523,137       615,857       507,241  
                                           

    (1) Included in service charges on deposit accounts in the Consolidated Statements of Income
    (2) Included in other income in the Consolidated Statements of Income
    (3) Included in equity method investments income in the Consolidated Statements of Income
    (4) Included in occupancy and depreciation in the Consolidated Statements of Income
    (5) Included in compensation and employee benefits in the Consolidated Statements of Income

    Reconciliation of GAAP to Non-GAAP Financial Measures
    The information provided below presents a reconciliation of each of our non-GAAP financial measures to the most directly comparable GAAP financial measure.

      As of and for the   As of and for the
      Three Months Ended   Nine Months Ended
    (in thousands) September 30,
    2024
      June 30,
    2024
      September 30,
    2023
      September 30,
    2024
      September 30,
    2023
                       
    Core return on average assets                  
    Numerator: Core net income (non-GAAP) $ 27,994     $ 26,218     $ 23,306     $ 79,812     $ 68,385  
    Denominator: Total average assets (GAAP) $ 8,393,490     $ 8,276,016     $ 7,904,566       8,249,218       7,841,198  
    Core return on average assets (non-GAAP)   1.33 %     1.27 %     1.17 %     1.29 %     1.17 %
                       
    Core return on average tangible common equity                  
    Numerator: Core net income (non-GAAP) $ 27,994     $ 26,218     $ 23,306     $ 79,812     $ 68,385  
    Denominator: Average tangible common equity (non-GAAP) $ 653,573     $ 608,014     $ 523,137       615,857       507,241  
    Core return on average tangible common equity (non-GAAP)   17.04 %     17.34 %     17.67 %     17.31 %     18.02 %
                       
    Core efficiency ratio                  
    Numerator: Core non-interest expense (non-GAAP) $ 40,723     $ 39,468     $ 37,007     $ 118,657     $ 112,878  
    Denominator: Core operating revenue (non-GAAP)   80,876       77,691       71,570       234,894       217,557  
    Core efficiency ratio (non-GAAP)   50.35 %     50.80 %     51.71 %     50.52 %     51.88 %

    The MIL Network

  • MIL-OSI Asia-Pac: Tariff Notification No. 69/2024-Customs (N.T.) dated 23rd October, 2024 in respect of Fixation of Tariff Value for Edible Oils, Brass Scrap, Areca Nut, Gold and Silver

    Source: Government of India (2)

    Posted On: 24 OCT 2024 2:03PM by PIB Delhi

    In exercise of the powers conferred by sub-section (2) of section 14 of the Customs Act, 1962 (52 of 1962), the Central Board of Indirect Taxes & Customs, being satisfied that it is necessary and expedient to do so, hereby makes the following amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 36/2001-Customs (N.T.), dated the 3rd August, 2001, published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii), vide number S. O. 748 (E), dated the 3rd August, 2001, namely:-

    In the said notification, for TABLE-1, TABLE-2, and TABLE-3 the following Tables shall be substituted, namely: –

    “TABLE-1

    Sl. No.

    Chapter/ heading/ sub-heading/tariff item

    Description of goods

    Tariff value

    (US $Per Metric Tonne)

    (1)

    (2)

    (3)

    (4)

    1

    1511 10 00

    Crude Palm Oil

    1008 (i.e., no change)

    2

    1511 90 10

    RBD Palm Oil

    1019 (i.e., no change)

    3

    1511 90 90

    Others – Palm Oil

    1014 (i.e., no change)

    4

    1511 10 00

    Crude Palmolein

    1024 (i.e., no change)

    5

    1511 90 20

    RBD Palmolein

    1027 (i.e., no change)

    6

    1511 90 90

    Others – Palmolein

    1026 (i.e., no change)

    7

    1507 10 00

    Crude Soya bean Oil

    1025 (i.e., no change)

    8

    7404 00 22

    Brass Scrap (all grades)

    5626 (i.e., no change)

    TABLE-2

    Sl. No.

    Chapter/ heading/ sub-heading/tariff item

    Description of goods

    Tariff value

    (US $)

    (1)

    (2)

    (3)

    (4)

     

    1.

    71 or 98

    Gold, in any form, in respect of which the benefit of entries at serial number 356 of the Notification No. 50/2017-Customs dated 30.06.2017 is availed

    855 per 10 grams  (i.e., no change)

     

     

    2.

    71 or 98

    Silver, in any form, in respect of which the benefit of entries at serial number 357 of the Notification No. 50/2017-Customs dated 30.06.2017 is availed

     

     

    1118 per kilogram

     

     

     

     

     

     

     

     

    3.

     

    71

    (i) Silver, in any form, other than medallions and silver coins having silver content not below 99.9% or semi-manufactured forms of silver falling under sub-heading 7106 92;

     

    (ii) Medallions and silver coins having silver  content not below 99.9% or semi-manufactured forms of silver falling under sub-heading 7106 92, other than imports of such goods through post, courier or baggage.

     

    Explanation. – For the purposes of this entry, silver in any form shall not include foreign currency coins, jewellery made of silver or  articles made of silver.

    1118 per kilogram

     

     

     

     

    4.

    71

    (i) Gold bars, other than tola bars, bearing manufacturer’s or refiner’s engraved serial number and weight expressed in metric units;

    (ii) Gold coins having gold content not below 99.5% and gold findings, other than imports of such goods through post, courier or baggage.

    Explanation. – For the purposes of this entry, “gold findings” means a small component such as hook, clasp, clamp, pin, catch, screw back used to hold the whole or a part of a piece of Jewellery in place.

     855 per 10 grams (i.e., no change)

    TABLE-3

    Sl. No.

    Chapter/ heading/ sub-heading/tariff item

    Description of goods

    Tariff value

    (US $ Per Metric Ton)

    (1)

    (2)

    (3)

    (4)

    1

    080280

    Areca nuts

    6552 (i.e., no change)”

    1. This notification shall come into force with effect from the 24th   day of October, 2024.

    Note: – The principal notification was published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii), vide Notification No. 36/2001–Customs (N.T.), dated the 3rd August, 2001, vide number S. O. 748 (E), dated the 3rd August, 2001 and was last amended vide Notification No. 66/2024-Customs (N.T.), dated the 15th October 2024 e-published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii), vide number S.O. 4535 (E), dated 15th October 2024.    

    ****

    NB/AD

    (Release ID: 2067637) Visitor Counter : 85

    Read this release in: Hindi

    MIL OSI Asia Pacific News

  • MIL-OSI Asia-Pac: Minister of State Shri S P Singh Baghel takes stock of progress under Special Campaign 4.0; Lays emphasis on Speedy Disposal of Public Grievances and Appeals

    Source: Government of India (2)

    Posted On: 24 OCT 2024 9:01AM by PIB Delhi

    Under the ongoing Special Campaign 4.0, Minister of State, Ministry of Fisheries, Animal Husbandry & Dairying (MoFAHD) and Ministry of Panchayati Raj (MoPR), Shri Prof. S P Singh Baghel inspected the ongoing cleanliness drive and related activities in the Department of Animal Husbandry and Dairying.  The Minister of State during the inspection visited various sections, rooms, record room of the Department. He also inspected the corridors of 5th, 4th and 3rd floor in Krishi Bhawan.  During his visit Shri S P Singh Baghel interacted with the staff and took their feedback regarding the ongoing cleanliness drive. He also gave valuable suggestions regarding the same and expressed concern on the lack of space particularly in respect of records.

     

     

     

     

     

     

     

    The Minister of State, thereafter, reviewed the progress of various parameters under the Special Campaign 4.0. As per the data entered in Special Campaign 4.0 portal as on 22.10.2024, the status of achievement against the targets was as under:

     

     

    Special Campaign 4.0

    Sl. No.

    Parameter

    Target

    Achievement

    1.

    Reference from MPs

     5

    5

    2.

    Parliamentary Assurance

    8

    2

    3.

    IMC References (Cabinet Proposals)

    0

    0

    4.

    State Govt. References

    0

    0

    5.

    Public grievances

    197

    170

    6.

    PMO Ref.

    2

    2

    7.

    Public grievances Appeal

    98

    19

    8.

    Easing of Rules/processes

    1

    1

    9.

    Review of Physical files

    10244

    10244

    10

    Review of e-files

    633

    513

    11

    Cleanliness of sites

    213

    156

    12.

    Revenue earned

     

    8,42,753

     

    It was also informed that social media is being leveraged by the department to drive the message of the Special Campaign 4.0.

    Shri S P Singh Baghel emphasized on timely achievement of the targets under the Special Campaign 4.0 and the need to expedite disposal of Public Grievances and Appeals. The officials reaffirmed their commitment towards the ongoing campaign.

    *****

    AA

    (Release ID: 2067549) Visitor Counter : 52

    MIL OSI Asia Pacific News

  • MIL-OSI: Visteon Announces Third Quarter 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    VAN BUREN TOWNSHIP, Mich., Oct. 24, 2024 (GLOBE NEWSWIRE) — Visteon Corporation (NASDAQ: VC) today reported third quarter financial results. Highlights include:

    • Sales of $980 million with Growth-over-Market of 6%1
    • Net income of $39 million and adjusted net income of $63 million
    • Adjusted EBITDA of $119 million
    • Launched 30 new products in the quarter and 71 year-to-date
    • New business wins of $4.9 billion year-to-date
    • Net cash of $229 million at quarter end

    Visteon reported solid net sales of $980 million in a challenging production environment. We delivered 6% outperformance relative to customer vehicle production, driven by strong demand for digital cockpit and electrification products. Our market outperformance was offset by lower customer production and reduced customer recoveries resulting from improved semiconductor supply.

    Gross margin in the third quarter was $131 million. Net income attributable to Visteon was $39 million or $1.40 per diluted share and adjusted net income, a non-GAAP measure defined below, was $63 million or $2.26 per diluted share. Net income, as compared to the prior year, includes the favorable impact of strong operational performance and lower net engineering, partially offset by restructuring expense incurred in the third quarter of 2024. Adjusted EBITDA, a non-GAAP measure defined below, was $119 million in the third quarter and reflects the Company’s strong focus on operational execution, commercial excellence, and cost discipline.

    For the first nine months, cash from operations was $224 million, capital expenditures were $96 million and adjusted free cash flow, a non-GAAP measure defined below, was $135 million. The company ended the third quarter with cash of $553 million and debt of $324 million. Our strong balance sheet, with a net cash position of $229 million, provides the flexibility to deliver on our capital allocation priorities.

    Visteon launched 30 new products in the third quarter, with launches across each of its product lines. Key third quarter launches include an infotainment display system on the Tata Punch, highlighting our continued momentum in India; SmartCore(TM) on an electric SUV for Lynk & Co for the European market and the Renault Grand Koleos hybrid for the Korean market; a digital cluster on the Nissan Qashqai, a popular SUV in Europe; and a wireless BMS for the all-electric Jeep Wagoneer.

    Visteon secured $4.9 billion in new business through the first nine months of the year, including $2.5 billion of wins with OEMs in Asia excluding China. Our success in diversifying into adjacent end-markets also continued, with further momentum with two-wheeler and commercial vehicle OEMs. Third quarter wins included a large, curved display for multiple mass market vehicles in Europe for a global OEM, SmartCore™ and display wins for a SUV model for an Indian OEM and for an electric vehicle for a domestic China OEM. We also had a follow-on win for a digital cluster with a two-wheeler OEM in India.

    “Visteon delivered solid sales and growth-over-market in the third quarter, demonstrating our ability to navigate a challenging customer production environment,” said President and CEO Sachin Lawande. “Demand from our customers remains robust for our diverse product portfolio targeting automotive megatrends of digitalization and electrification. Our continued success in securing new business wins and our momentum with two-wheeler and commercial vehicle OEMs provide a strong foundation for future growth.”

    Based on our year-to-date performance and outlook for the fourth quarter, Visteon is updating its full-year 2024 guidance and anticipates sales in the range of $3.85 – $3.90 billion, adjusted EBITDA in the range of $465 – $480 million, and adjusted free cash flow in the range of $165 – $185 million.

    About Visteon

    Visteon is advancing mobility through innovative technology solutions that enable a software-defined and electric future. With next-generation digital cockpit and electrification products, Visteon leverages the strength and agility of its global network with a local footprint to deliver a cleaner, safer and more connected vehicle experience. Headquartered in Van Buren Township, Michigan, Visteon operates in 17 countries worldwide, recorded approximately $3.95 billion in annual sales and booked $7.2 billion of new business in 2023. Learn more at investors.visteon.com/.

    Conference Call and Presentation
    Today, Thursday, October 24, at 9 a.m. ET, the company will host a conference call for the investment community to discuss the quarter’s results and other related items. The conference call is available to the general public via a live audio webcast.

    The dial-in numbers to participate in the call are:

    U.S./Canada: 1-888-330-2508
    Outside U.S./Canada: 1-240-789-2735
    Conference ID: 8897485  

    (Call approximately 10 minutes before the start of the conference.)

    The conference call and live audio webcast, related presentation materials and other supplemental information will be accessible in the Investors section of Visteon’s website.

    Use of Non-GAAP Financial Information

    Because not all companies use identical calculations, adjusted EBITDA, adjusted net income, adjusted EPS, free cash flow and adjusted free cash flow used throughout this press release may not be comparable to other similarly titled measures of other companies.

    In order to provide the forward-looking non-GAAP financial measures for full-year 2024, the company provides reconciliations to the most directly comparable GAAP financial measures on the subsequent slides. The provision of these comparable GAAP financial measures is not intended to indicate that the company is explicitly or implicitly providing projections on those GAAP financial measures, and actual results for such measures are likely to vary from those presented. The reconciliations include all information reasonably available to the company at the date of this press release and the adjustments that management can reasonably predict.

    Forward-looking Information

    This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The words “will,” “may,” “designed to,” “outlook,” “believes,” “should,” “anticipates,” “plans,” “expects,” “intends,” “estimates,” “forecasts” and similar expressions identify certain of these forward-looking statements. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various factors, risks and uncertainties that could cause our actual results to differ materially from those expressed in these forward-looking statements, including, but not limited to:

    • continued and future impacts of the geopolitical conflicts and related supply chain disruptions, including but not limited to the conflicts in the Middle East, Russia and East Asia and the possible imposition of sanctions;
    • significant or prolonged shortage of critical components from our suppliers, including but not limited to semiconductors, and particularly those who are our sole or primary sources;
    • failure of the Company’s joint venture partners to comply with contractual obligations or to exert influence or pressure in China;
    • conditions within the automotive industry, including (i) the automotive vehicle production volumes and schedules of our customers, (ii) the financial condition of our customers and the effects of any restructuring or reorganization plans that may be undertaken by our customers, including work stoppages at our customers, and (iii) possible disruptions in the supply of commodities to us or our customers due to financial distress, work stoppages, natural disasters or civil unrest;
    • our ability to satisfy future capital and liquidity requirements; including our ability to access the credit and capital markets at the times and in the amounts needed and on terms acceptable to us; our ability to comply with financial and other covenants in our credit agreements; and the continuation of acceptable supplier payment terms;
    • our ability to access funds generated by foreign subsidiaries and joint ventures on a timely and cost-effective basis;
    • general economic conditions, including changes in interest rates and fuel prices; the timing and expenses related to internal restructurings, employee reductions, acquisitions or dispositions and the effect of pension and other post-employment benefit obligations;
    • disruptions in information technology systems including, but not limited to, system failure, cyber-attack, malicious computer software (malware including ransomware), unauthorized physical or electronic access, or other natural or man-made incidents or disasters;
    • increases in raw material and energy costs and our ability to offset or recover these costs; increases in our warranty, product liability and recall costs or the outcome of legal or regulatory proceedings to which we are or may become a party;
    • changes in laws, regulations, policies or other activities of governments, agencies and similar organizations, domestic and foreign, that may tax or otherwise increase the cost of, or otherwise affect, the manufacture, licensing, distribution, sale, ownership or use of our products or assets; and
    • those factors identified in our filings with the SEC (including our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as updated by our subsequent filings with the Securities and Exchange Commission).

    Caution should be taken not to place undue reliance on our forward-looking statements, which represent our view only as of the date of this release, and which we assume no obligation to update. The financial results presented herein are preliminary and unaudited; final financial results will be included in the company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2024. New business wins and re-wins do not represent firm orders or firm commitments from customers, but are based on various assumptions, including the timing and duration of product launches, vehicle production levels, customer price reductions and currency exchange rates.

    Follow Visteon:

    https://www.linkedin.com/company/visteon 
    https://twitter.com/visteon 
    https://www.facebook.com/VisteonCorporation 
    https://www.youtube.com/user/Visteon
    https://www.instagram.com/visteon/ 
    https://mp.weixin.qq.com/?lang=en_US 
    https://m.weibo.cn/u/6605315328 
    http://i.youku.com/u/UNDgyMjA1NjUxNg==?spm=a2h0k.8191407.0.0

    VISTEON CORPORATION AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
    (In millions except per share amounts)
    (Unaudited)
     
      Three Months Ended   Nine Months Ended
      September 30,   September 30,
        2024       2023       2024       2023  
                   
    Net sales $ 980     $ 1,014     $ 2,927     $ 2,964  
    Cost of sales   (849 )     (871 )     (2,530 )     (2,607 )
    Gross margin   131       143       397       357  
    Selling, general and administrative expenses   (51 )     (52 )     (152 )     (156 )
    Restructuring, net   (28 )           (31 )     (2 )
    Interest expense, net         (1 )           (7 )
    Equity in net income (loss) of non-consolidated affiliates   (3 )     (1 )     (7 )     (8 )
    Other income (expense), net   2       3       7       (4 )
    Income (loss) before income taxes   51       92       214       180  
    Provision for income taxes   (11 )     (21 )     (55 )     (48 )
    Net income (loss)   40       71       159       132  
    Less: Net (income) loss attributable to non-controlling interests   (1 )     (5 )     (7 )     (12 )
    Net income (loss) attributable to Visteon Corporation $ 39     $ 66     $ 152     $ 120  
                   
    Comprehensive income (loss) $ 69     $ 58     $ 153     $ 114  
    Less: Comprehensive (income) loss attributable to non-controlling interests   (7 )     (4 )     (10 )     (6 )
    Comprehensive income (loss) attributable to Visteon Corporation $ 62     $ 54     $ 143     $ 108  
                   
    Basic earnings (loss) per share attributable to Visteon Corporation $ 1.41     $ 2.35     $ 5.51     $ 4.26  
                   
    Diluted earnings (loss) per share attributable to Visteon Corporation $ 1.40     $ 2.32     $ 5.45     $ 4.20  
                   
    Average shares outstanding (in millions)              
    Basic   27.6       28.1       27.6       28.2  
    Diluted   27.9       28.5       27.9       28.6  
    VISTEON CORPORATION AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS
    (In millions)
     
      (Unaudited)    
      September 30,   December 31,
        2024       2023  
    ASSETS      
    Cash and equivalents $ 550     $ 515  
    Restricted cash   3       3  
    Accounts receivable, net   719       666  
    Inventories, net   321       298  
    Other current assets   109       134  
    Total current assets   1,702       1,616  
           
    Property and equipment, net   438       418  
    Intangible assets, net   157       90  
    Right-of-use assets   103       109  
    Investments in non-consolidated affiliates   27       35  
    Deferred tax assets   387       384  
    Other non-current assets   79       75  
    Total assets $ 2,893     $ 2,727  
           
    LIABILITIES AND EQUITY      
    Short-term debt $ 18     $ 18  
    Accounts payable   547       551  
    Accrued employee liabilities   98       99  
    Current lease liability   29       30  
    Other current liabilities   245       233  
    Total current liabilities   937       931  
           
    Long-term debt, net   306       318  
    Employee benefits   143       160  
    Non-current lease liability   79       79  
    Deferred tax liabilities   46       31  
    Other non-current liabilities   109       85  
           
    Stockholders’ equity:      
    Common stock   1       1  
    Additional paid-in capital   1,369       1,356  
    Retained earnings   2,426       2,274  
    Accumulated other comprehensive loss   (263 )     (254 )
    Treasury stock   (2,348 )     (2,339 )
    Total Visteon Corporation stockholders’ equity   1,185       1,038  
    Non-controlling interests   88       85  
    Total equity   1,273       1,123  
    Total liabilities and equity $ 2,893     $ 2,727  
    VISTEON CORPORATION AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In millions)
    (Unaudited)
     
      Three Months Ended   Nine Months Ended
      September 30,   September 30,
        2024       2023       2024       2023  
    OPERATING              
    Net income (loss) $ 40     $ 71     $ 159     $ 132  
    Adjustments to reconcile net income (loss) to net cash provided from (used by) operating activities:              
    Depreciation and amortization   25       24       71       79  
    Non-cash stock-based compensation   10       9       31       26  
    Equity in net loss (income) of non-consolidated affiliates, net of dividends remitted   3       1       7       8  
    Tax valuation allowance benefit   (7 )           (7 )      
    Other non-cash items   3       1       10       (3 )
    Changes in assets and liabilities:              
    Accounts receivable   (6 )     (12 )     (55 )     (19 )
    Inventories         6       (23 )     23  
    Accounts payable   (5 )     35       3       (54 )
    Other assets and other liabilities   35       (8 )     28       (23 )
    Net cash provided from (used by) operating activities   98       127       224       169  
    INVESTING              
    Capital expenditures, including intangibles   (28 )     (31 )     (96 )     (82 )
    Acquisition of business, net of cash acquired   (48 )           (48 )      
    Contributions to equity method investments   (1 )     (1 )     (1 )     (1 )
    Loan provided to non-consolidated affiliate               (5 )      
    Other   1       1       2       3  
    Net cash used by investing activities   (76 )     (31 )     (148 )     (80 )
    FINANCING              
    Dividends to non-controlling interests         (12 )           (27 )
    Short-term debt, net         (3 )            
    Repurchase of common stock         (46 )     (20 )     (76 )
    Stock based compensation tax withholding payments         (1 )     (7 )     (16 )
    Proceeds from the exercise of stock options         4             8  
    Principal repayment of term debt facility   (4 )     (4 )     (13 )     (8 )
    Net cash used by financing activities   (4 )     (62 )     (40 )     (119 )
    Effect of exchange rate changes on cash   27       (8 )     (1 )     (8 )
    Net decrease in cash, equivalents, and restricted cash   45       26       35       (38 )
    Cash, equivalents, and restricted cash at beginning of the period   508       459       518       523  
    Cash, equivalents, and restricted cash at end of the period $ 553     $ 485     $ 553     $ 485  

    VISTEON CORPORATION AND SUBSIDIARIES
    RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
    (In millions except per share amounts)
    (Unaudited)

    Adjusted EBITDA: Adjusted EBITDA is presented as a supplemental measure of the Company’s performance that management believes is useful to investors because the excluded items may vary significantly in timing or amounts and/or may obscure trends useful in evaluating and comparing the Company’s operating activities across reporting periods. The Company defines adjusted EBITDA as net income attributable to the Company adjusted to eliminate the impact of depreciation and amortization, provision for (benefit from) income taxes, non-cash stock-based compensation expense, net interest expense, net income attributable to non-controlling interests, net restructuring expense, equity in net (income)/loss of non-consolidated affiliates, gain on non-consolidated affiliate transactions, and other gains and losses not reflective of the Company’s ongoing operations. Because not all companies use identical calculations, this presentation of adjusted EBITDA may not be comparable to similarly titled measures of other companies.

      Three Months Ended   Nine Months Ended   Estimated
      September 30,   September 30,   Full Year
    Visteon:   2024       2023       2024       2023       2024  
    Net income attributable to Visteon Corporation $ 39     $ 66     $ 152     $ 120       202  
    Depreciation and amortization   25       24       71       79       96  
    Provision for income taxes   11       21       55       48       75  
    Non-cash, stock-based compensation expense   10       9       31       26       42  
    Restructuring, net   28             31       2       34  
    Interest expense, net         1             7        
    Net income attributable to non-controlling interests   1       5       7       12       10  
    Equity in net loss (income) of non-consolidated affiliates   3       1       7       8       9  
    Other   2       1       3       15       5  
    Adjusted EBITDA $ 119     $ 128     $ 357     $ 317     $ 4732  
                       

    Adjusted EBITDA is not a recognized term under U.S. GAAP and does not purport to be a substitute for net income as an indicator of operating performance or cash flows from operating activities as a measure of liquidity. Adjusted EBITDA has limitations as an analytical tool and is not intended to be a measure of cash flow available for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. In addition, the Company uses adjusted EBITDA (i) as a factor in incentive compensation decisions, (ii) to evaluate the effectiveness of the Company’s business strategies, and (iii) because the Company’s credit agreements use similar measures for compliance with certain covenants.

    VISTEON CORPORATION AND SUBSIDIARIES
    RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
    (In millions except per share amounts)
    (Unaudited)

    Free Cash Flow and Adjusted Free Cash Flow: Free cash flow and adjusted free cash flow are presented as supplemental measures of the Company’s liquidity that management believes are useful to investors in analyzing the Company’s ability to service and repay its debt. The Company defines free cash flow as cash flow provided from operating activities less capital expenditures, including intangibles. The Company defines adjusted free cash flow as cash flow provided from operating activities less capital expenditures, including intangibles as further adjusted for restructuring related payments. Because not all companies use identical calculations, this presentation of free cash flow and adjusted free cash flow may not be comparable to other similarly titled measures of other companies.

      Three Months Ended   Nine Months Ended   Estimated
      September 30,   September 30,   Full Year
    Visteon:   2024       2023       2024       2023       2024  
    Cash provided from (used by) operating activities $ 98     $ 127     $ 224     $ 169       305  
    Capital expenditures, including intangibles   (28 )     (31 )     (96 )     (82 )     (145 )
    Free cash flow $ 70     $ 96     $ 128     $ 87     $ 160  
    Restructuring related payments   3       2       7       6       15  
    Adjusted free cash flow $ 73     $ 98     $ 135     $ 93     $ 1753  
     

    Free cash flow and adjusted free cash flow are not recognized terms under U.S. GAAP and do not purport to be a substitute for cash flows from operating activities as a measure of liquidity. Free cash flow and adjusted free cash flow have limitations as analytical tools as they do not reflect cash used to service debt and do not reflect funds available for investment or other discretionary uses. In addition, the Company uses free cash flow and adjusted free cash flow (i) as factors in incentive compensation decisions and (ii) for planning and forecasting future periods.

    VISTEON CORPORATION AND SUBSIDIARIES
    RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
    (In millions except per share amounts)
    (Unaudited)

    Adjusted Net Income and Adjusted Earnings Per Share: Adjusted net income and adjusted earnings per share are presented as supplemental measures that management believes are useful to investors in analyzing the Company’s profitability, providing comparability between periods by excluding certain items that may not be indicative of recurring business operating results. The Company believes management and investors benefit from referring to these supplemental measures in assessing company performance and when planning, forecasting and analyzing future periods. The Company defines adjusted net income as net income attributable to Visteon adjusted to eliminate the impact of restructuring expense, loss on divestiture, gain on non-consolidated affiliate transactions, other gains and losses not reflective of the Company’s ongoing operations and related tax effects. The Company defines adjusted earnings per share as adjusted net income divided by diluted shares. Because not all companies use identical calculations, this presentation of adjusted net income and adjusted earnings per share may not be comparable to other similarly titled measures of other companies.

      Three Months Ended   Nine Months Ended
      September 30,   September 30,
        2024       2023       2024       2023  
    Net income attributable to Visteon $ 39     $ 66     $ 152     $ 120  
                   
    Diluted earnings per share:              
    Net income attributable to Visteon $ 39     $ 66     $ 152     $ 120  
    Average shares outstanding, diluted   27.9       28.5       27.9       28.6  
    Diluted earnings per share $ 1.40     $ 2.32     $ 5.45     $ 4.20  
                   
    Adjusted net income and adjusted earnings per share:              
    Net income attributable to Visteon $ 39     $ 66     $ 152     $ 120  
    Restructuring, net   28             31       2  
    Other   2       1       3       15  
    Tax impacts of adjustments   (6 )           (7 )      
    Adjusted net income $ 63     $ 67     $ 179     $ 137  
    Average shares outstanding, diluted   27.9       28.5       27.9       28.6  
    Adjusted earnings per share $ 2.26     $ 2.35     $ 6.42     $ 4.79  
                   

    Adjusted net income and adjusted earnings per share are not recognized terms under U.S. GAAP and do not purport to be a substitute for profitability. Adjusted net income and adjusted earnings per share have limitations as analytical tools as they do not consider certain restructuring and transaction-related payments and/or expenses. In addition, the Company uses adjusted net income and adjusted earnings per share for internal planning and forecasting purposes.

    1 Excludes Y/Y impact of currency fluctuations
    2 Based on mid-point of the range of the Company’s financial guidance
    3 Based on mid-point of the range of the Company’s financial guidance

    The MIL Network

  • MIL-OSI: ConnectOne Bancorp, Inc. Reports Third Quarter 2024 Results; Declares Common and Preferred Dividends

    Source: GlobeNewswire (MIL-OSI)

    ENGLEWOOD CLIFFS, N.J., Oct. 24, 2024 (GLOBE NEWSWIRE) — ConnectOne Bancorp, Inc. (Nasdaq: CNOB) (the “Company” or “ConnectOne”), parent company of ConnectOne Bank (the “Bank”), today reported net income available to common stockholders of $15.7 million for the third quarter of 2024 compared with $17.5 million for the second quarter of 2024 and $19.9 million for the third quarter of 2023. Included in net income available to common stockholders’ was merger and restructuring pre-tax expenses of $0.7 million for the third quarter of 2024, while there were no such charges during the second quarter of 2024 and the third quarter of 2023. Diluted earnings per share were $0.41 for the third quarter of 2024 compared with $0.46 for the second quarter of 2024 and $0.51 for the third quarter of 2023. Return on average assets was 0.70%, 0.79% and 0.88% for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively. Return on average tangible common equity was 6.93%, 7.98% and 9.11% for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively.

    Operating net income available to common stockholders, which excludes non-operating items, was $16.1 million for the third quarter of 2024, $17.9 million for the second quarter of 2024 and $20.4 million for the third quarter of 2023. Operating diluted earnings per share were $0.42 for the third quarter of 2024, $0.47 for the second quarter of 2024 and $0.52 for the third quarter of 2023. Operating return on average assets was 0.72%, 0.80% and 0.90% for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively. Operating return on average tangible common equity was 7.03%, 8.05% and 9.21% for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively. See supplemental tables for a complete reconciliation of GAAP earnings to operating earnings, and other non-GAAP measures.

    The decrease in net income available to common stockholders and diluted earnings per share from the second quarter of 2024 was primarily due to a $1.3 million increase in the provision for credit losses, a $1.0 million increase in noninterest expenses, and a $0.6 million decrease in net interest income, partially offset by a $0.7 million decrease in income tax expenses and a $0.3 million increase in noninterest income. The decrease in net income available to common stockholders from the third quarter of 2023 was primarily due to a $2.9 million increase in noninterest expenses, a $2.3 million increase in the provision for credit losses, and a $1.5 million decrease in net interest income, partially offset by a $1.2 million increase in noninterest income and a $1.2 million decrease in income tax expense. The increases in noninterest expenses when compared to the prior sequential quarter and the prior year quarter included the impact of the aforementioned $0.7 million of merger and restructuring expense that occurred during the third quarter of 2024.

    “In September, we announced a planned merger with The First of Long Island Corporation, a transaction that we believe will create a truly premier New York-metro community bank,” commented Frank Sorrentino, ConnectOne’s Chairman and Chief Executive Officer. “Our integration planning is off to a good start, the initial regulatory process is underway, and we’re excited about creating a significantly enhanced platform for continued growth across all markets and communities we serve. Further, the economic environment and interest rate outlook confirms our belief that this combination will deliver meaningful benefits to our communities, clients and shareholders. We look forward to updating you on our progress in the months and quarters ahead.”

    Mr. Sorrentino added, “Meanwhile, we remain focused and committed to our client-first culture and relationship banking model. During the first nine months of the year, we have actively reduced non-relationship loans from our balance sheet in an effort to improve our loan-to-deposit ratio, diversify our loan mix, and capitalize on the improving interest rate environment.”

    “The net interest margin, for the third quarter, on a core basis was flat; however, as a result of the Fed’s 50 basis-point cut in late September, we ended the quarter with a so-called spot margin upwards of 10 basis points wider. And with our liability-sensitive balance sheet, we are positioned to drive increased profitability through the fourth quarter, into 2025 and post-merger completion.”

    Dividend Declarations

    The Company announced that its Board of Directors declared a cash dividend on both its common stock and its outstanding preferred stock. A cash dividend on common stock of $0.18 per share will be paid on December 2, 2024, to common stockholders of record on November 15, 2024. A dividend of $0.328125 per depositary share, representing a 1/40th interest in a share of the Company’s 5.25% Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A, will also be paid on December 2, 2024 to holders of record on November 15, 2024.

    Operating Results

    Fully taxable equivalent net interest income for the third quarter of 2024 was $61.7 million, a decrease of $0.5 million, or 0.9%, from the second quarter of 2024, due to a five basis-point contraction of the net interest margin to 2.67% from 2.72%. During the third quarter of 2024, average loans decreased $89.4 million, or 1.1% when compared to the second quarter of 2024. The contraction of the net interest margin was primarily due to an increase in average cash balances during the third quarter of 2024, as well as a decrease in loan prepayment fees and nonaccrual loan interest recapture. The net interest margin is expected to increase by 10 basis points or more in the fourth quarter of 2024 reflecting the Fed’s actual and expected rate cuts along with deployment of excess cash-on-hand.

    Fully taxable equivalent net interest income for the third quarter of 2024 decreased by $1.5 million, or 2.4%, from the third quarter of 2023. The decrease from the third quarter of 2023 resulted primarily from a nine basis-point contraction in the net interest margin to 2.67% from 2.76%. During the third quarter of 2024, average loans decreased by $45.9 million, or 0.6% when compared to the third quarter of 2023. The contraction of the net interest margin for the third quarter of 2024 when compared to the third quarter of 2023 was primarily attributable to a 40 basis-point increase in the average cost of deposits, including noninterest-bearing deposits, partially offset by a 24 basis-point increase in the loan portfolio yield.

    Noninterest income was $4.7 million in the third quarter of 2024, $4.4 million in the second quarter of 2024 and $3.6 million in the third quarter of 2023. The $0.3 million increase in noninterest income for the third quarter of 2024 when compared to the second quarter of 2024 was due to a $0.6 million increase in net gains on equity securities, a $0.4 million increase in BOLI death benefits and a $0.2 million increase in other deposit, loan and other income, partially offset a $0.9 million decrease in net gains on sale of loans held-for-sale. The $1.2 million increase in noninterest income for the third quarter of 2024 when compared to the third quarter of 2023 was due to a $0.7 million increase in net gains on equity securities, a $0.4 million increase in BOLI death benefits received, a $0.2 million increase in BOLI income, a $0.1 million increase in BoeFly income, and a $0.1 million increase in other deposit, loan and other income, partially offset by a decrease in net gains on sale of loans held-for-sale of $0.3 million.

    Noninterest expenses were $38.6 million for the third quarter of 2024, $37.6 million for the second quarter of 2024 and $35.8 million for the third quarter of 2023. The $1.0 million increase in noninterest expenses for the third quarter of 2024 when compared to the second quarter of 2024 was primarily due to a $0.7 million increase in merger and restructuring expenses, a $0.3 million increase in information and technology communications, a $0.2 million increase in salaries and employee benefits and a $0.2 million increase in professional and consulting fees, partially offset by decreases in other expenses of $0.4 million. The $2.9 million increase in noninterest expenses for the third quarter of 2024 when compared to the third quarter of 2023 was primarily due to a $1.0 million increase in information technology and communications, a $0.7 million increase in merger and restructuring expenses, a $0.7 million increase in salaries and employee benefits, a $0.3 million increase in professional and consulting, a $0.2 million increase in occupancy and equipment and a $0.1 million increase in marketing and advertising, partially offset by a decrease in other expenses of $0.1 million. The increases in information technology and communications when compared to the second quarter of 2024 and the third quarter of 2023 are attributable to additional investments in technology, equipment, and software. The increase in salaries and employee benefits when compared to the second quarter of 2024 was primarily attributable to increases in incentive-based compensation accruals, partially offset by decreases in payroll tax expenses and other employee benefit expenses. The increase in salaries and employee benefits when compared to the third quarter of 2023 was primarily attributable to increases in incentive-based compensation accruals, and an increase in other employee benefit expenses, partially offset by decreases in stock-compensation expenses.

    Income tax expense was $6.0 million for the third quarter of 2024, $6.7 million for the second quarter of 2024 and $7.2 million for the third quarter of 2023. The effective tax rates for the second quarter of 2024, first quarter of 2024 and second quarter of 2023 were 26.0%, 26.0% and 25.2%, respectively.

    Asset Quality

    The provision for credit losses was $3.8 million for the third quarter of 2024, $2.5 million for the second quarter of 2024 and $1.5 million for the third quarter of 2023. The increase in the current quarter’s provision for credit losses from both the second quarter of 2024 and the third quarter of 2023 was primarily due to increases in specific reserves, partially offset by decreases in general reserves.

    Nonperforming assets, which includes nonaccrual loans and other real estate owned (the Bank had no other real estate owned during the periods reported), was $51.3 million as of September 30, 2024, $52.5 million as of December 31, 2023 and $56.1 million as of September 30, 2023. Nonperforming assets as a percentage of total assets was 0.53% as of September 30, 2024, 0.53% as of December 31, 2023 and 0.58% as of September 30, 2023. The ratio of nonaccrual loans to loans receivable was 0.63%, 0.63% and 0.69%, as of September 30, 2024, December 31, 2023 and September 30, 2023, respectively. The annualized net loan charge-offs ratio was 0.17% for the third quarter of 2024, 0.43% for the fourth quarter of 2023 and 0.12% for the third quarter of 2023. The allowance for credit losses represented 1.02%, 0.98%, and 1.08% of loans receivable as of September 30, 2024, December 31, 2023, and September 30, 2023, respectively. The allowance for credit losses as a percentage of nonaccrual loans was 160.8% as of September 30, 2024, 156.1% as of December 31, 2023 and 157.4% as of September 30, 2023. Criticized and classified loans as a percentage of total loans was 2.23% as of September 30, 2024, up from 1.35% as of December 31, 2023 and up from 1.44% as of September 30, 2023. The increase is primarily due to a loan modification of one CRE relationship that was moved to special mention. Loans delinquent 30 to 89 days was 0.16% of loans as of September 30, 2024, down from 0.30% as of December 31, 2023 and up from 0.04% as of September 30, 2023.

    Selected Balance Sheet Items

    The Company’s total assets were $9.639 billion as of September 30, 2024, compared to $9.856 billion as of December 31, 2023. Loans receivable were $8.112 billion as of September 30, 2024 and $8.345 billion as of December 31, 2023. Total deposits were $7.524 billion as of September 30, 2024 and $7.536 billion as of December 31, 2023.

    The Company’s total stockholders’ equity was $1.239 billion as of September 30, 2024 and $1.217 billion as of December 31, 2023. The increase in total stockholders’ equity was primarily attributable to an increase in retained earnings of $28.5 million, partially offset by an increase in accumulated other comprehensive losses of approximately $1.6 million and increases in treasury stock of approximately $5.8 million. As of September 30, 2024, the Company’s tangible common equity ratio and tangible book value per share were 9.71% and $23.85, respectively, compared to 9.25% and $23.14, respectively, as of December 31, 2023. Total goodwill and other intangible assets were $213.3 million as of September 30, 2024, and $214.2 million as of December 31, 2023.

    Use of Non-GAAP Financial Measures

    In addition to the results presented in accordance with Generally Accepted Accounting Principles (“GAAP”), ConnectOne routinely supplements its evaluation with an analysis of certain non-GAAP measures. ConnectOne believes these non-GAAP financial measures, in addition to the related GAAP measures, provide meaningful information to investors in understanding our operating performance and trends. These non-GAAP measures have inherent limitations and are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for an analysis of results reported under GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Reconciliations of non-GAAP financial measures disclosed in this earnings release to the comparable GAAP measures are provided in the accompanying tables.

    Third Quarter 2024 Results Conference Call

    Management will also host a conference call and audio webcast at 10:00 a.m. ET on October 24, 2024 to review the Company’s financial performance and operating results. The conference call dial-in number is 1 (646) 307-1963, access code 5504182. Please dial in at least five minutes before the start of the call to register. An audio webcast of the conference call will be available to the public, on a listen-only basis, via the “Investor Relations” link on the Company’s website https://www.ConnectOneBank.com or at http://ir.connectonebank.com.

    A replay of the conference call will be available beginning at approximately 1:00 p.m. ET on Thursday, October 24, 2024 and ending on Thursday, October 31, 2024 by dialing 1 (609) 800-9909, access code 5504182. An online archive of the webcast will be available following the completion of the conference call at https://www.ConnectOneBank.com or at http://ir.connectonebank.com.

    About ConnectOne Bancorp, Inc.

    ConnectOne Bancorp, Inc., is a modern financial services company that operates, through its subsidiary, ConnectOne Bank, and the Bank’s fintech subsidiary, BoeFly, Inc. ConnectOne Bank is a high-performing commercial bank offering a full suite of banking & lending products and services that focus on small to middle-market businesses. BoeFly, Inc. is a fintech marketplace that connects borrowers in the franchise space with funding solutions through a network of partner banks. ConnectOne Bancorp, Inc. is traded on the Nasdaq Global Market under the trading symbol “CNOB,” and information about ConnectOne may be found at https://www.connectonebank.com.

    This news release contains certain forward-looking statements which are based on certain assumptions and describe future plans, strategies, and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to, those factors set forth in Item 1A – Risk Factors of the Company’s Annual Report on Form 10-K, as filed with the U.S. Securities and Exchange Commission, as supplemented by the Company’s subsequent filings with the U.S. Securities and Exchange Commission, and changes in interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company’s market area, changes in accounting principles and guidelines and the impact of the health emergencies and natural disasters on the Company, its employees and operations, and its customers. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

    Investor Contact:
    William S. Burns
    Senior Executive Vice President & CFO
    201.816.4474: bburns@cnob.com

    Media Contact:
    Shannan Weeks 
    MikeWorldWide
    732.299.7890: sweeks@mww.com

    CONNECTONE BANCORP, INC. AND SUBSIDIARIES            
    CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION          
    (in thousands)            
                 
      September 30,   December 31,   September 30,  
        2024       2023       2023    
      (unaudited)       (unaudited)  
    ASSETS            
    Cash and due from banks $ 61,093     $ 61,421     $ 56,170    
    Interest-bearing deposits with banks   186,155       181,293       197,128    
    Cash and cash equivalents   247,248       242,714       253,298    
                 
    Investment securities   646,713       617,162       581,867    
    Equity securities   20,399       18,564       17,677    
                 
    Loans receivable   8,111,976       8,345,145       8,181,109    
    Less: Allowance for credit losses – loans   82,494       81,974       88,230    
    Net loans receivable   8,029,482       8,263,171       8,092,879    
                 
    Investment in restricted stock, at cost   42,772       51,457       49,387    
    Bank premises and equipment, net   29,068       30,779       28,432    
    Accrued interest receivable   46,951       49,108       46,795    
    Bank owned life insurance   242,016       237,644       236,009    
    Right of use operating lease assets   14,211       12,007       11,229    
    Goodwill   208,372       208,372       208,372    
    Core deposit intangibles   4,935       5,874       6,222    
    Other assets   107,436       118,751       146,718    
    Total assets $ 9,639,603     $ 9,855,603     $ 9,678,885    
                 
    LIABILITIES            
    Deposits:            
    Noninterest-bearing $ 1,262,568     $ 1,259,364     $ 1,224,125    
    Interest-bearing   6,261,537       6,276,838       6,214,370    
    Total deposits   7,524,105       7,536,202       7,438,495    
    Borrowings   742,133       933,579       887,590    
    Subordinated debentures, net   79,818       79,439       79,313    
    Operating lease liabilities   15,252       13,171       12,424    
    Other liabilities   38,799       76,592       72,909    
    Total liabilities   8,400,107       8,638,983       8,490,731    
                 
    COMMITMENTS AND CONTINGENCIES            
                 
    STOCKHOLDERS’ EQUITY            
    Preferred stock   110,927       110,927       110,927    
    Common stock   586,946       586,946       586,946    
    Additional paid-in capital   34,995       33,182       32,027    
    Retained earnings   619,497       590,970       579,776    
    Treasury stock   (76,116 )     (70,296 )     (68,108 )  
    Accumulated other comprehensive loss   (36,753 )     (35,109 )     (53,414 )  
    Total stockholders’ equity   1,239,496       1,216,620       1,188,154    
    Total liabilities and stockholders’ equity $ 9,639,603     $ 9,855,603     $ 9,678,885    
                 
    CONNECTONE BANCORP, INC. AND SUBSIDIARIES                
    CONSOLIDATED STATEMENTS OF INCOME                
    (dollars in thousands, except for per share data)                
                     
      Three Months Ended Nine Months Ended  
      09/30/24   09/30/23   09/30/24   09/30/23  
    Interest income                
    Interest and fees on loans $ 119,280   $ 115,405     $ 359,513   $ 333,356    
    Interest and dividends on investment securities:                
    Taxable   4,740     4,128       13,757     12,386    
    Tax-exempt   1,119     1,136       3,394     3,475    
    Dividends   1,048     907       3,390     2,750    
    Interest on federal funds sold and other short-term investments   4,055     2,110       9,802     9,141    
    Total interest income   130,242     123,686       389,856     361,108    
    Interest expense                
    Deposits   63,785     56,043       186,278     146,844    
    Borrowings   5,570     5,286       20,952     20,980    
    Total interest expense   69,355     61,329       207,230     167,824    
                     
    Net interest income   60,887     62,357       182,626     193,284    
    Provision for credit losses   3,800     1,500       10,300     5,500    
    Net interest income after provision for credit losses   57,087     60,857       172,326     187,784    
                     
    Noninterest income                
    Deposit, loan and other income   1,817     1,605       5,063     4,553    
    Income on bank owned life insurance   2,145     1,597       5,486     4,681    
    Net gains on sale of loans held-for-sale   343     633       2,126     1,232    
    Net losses (gains) on equity securities   432     (273 )     309     (674 )  
    Total noninterest income   4,737     3,562       12,984     9,792    
                     
    Noninterest expenses                
    Salaries and employee benefits   22,957     22,251       67,809     66,213    
    Occupancy and equipment   2,889     2,738       8,797     8,176    
    FDIC insurance   1,800     1,800       5,400     4,465    
    Professional and consulting   2,147     1,834       5,998     5,960    
    Marketing and advertising   635     554       1,925     1,642    
    Information technology and communications   4,464     3,487       13,051     10,192    
    Merger and restructuring   742           742        
    Amortization of core deposit intangibles   297     347       939     1,090    
    Other expenses   2,710     2,773       8,639     8,366    
    Total noninterest expenses   38,641     35,784       113,300     106,104    
                     
    Income before income tax expense   23,183     28,635       72,010     91,472    
    Income tax expense   6,022     7,228       18,588     23,742    
    Net income   17,161     21,407       53,422     67,730    
    Preferred dividends   1,509     1,509       4,527     4,527    
    Net income available to common stockholders $ 15,652   $ 19,898     $ 48,895   $ 63,203    
                     
    Earnings per common share:                
    Basic $ 0.41   $ 0.51     $ 1.27   $ 1.62    
    Diluted   0.41     0.51       1.27     1.61    
                     
    ConnectOne’s management believes that the supplemental financial information, including non-GAAP measures provided below, is useful to investors. The non-GAAP measures should not be viewed as a substitute for financial results determined in accordance with GAAP, and are not necessarily comparable to non-GAAP financial measures presented by other companies.  
                         
    CONNECTONE BANCORP, INC.                    
    SUPPLEMENTAL GAAP AND NON-GAAP FINANCIAL MEASURES                    
                         
      As of  
      Sept. 30,   Jun. 30,   Mar. 31,   Dec. 31,   Sep. 30,  
        2024       2024       2024       2023       2023    
    Selected Financial Data (dollars in thousands)  
    Total assets $ 9,639,603     $ 9,723,731     $ 9,853,964     $ 9,855,603     $ 9,678,885    
    Loans receivable:                    
    Commercial $ 1,505,743     $ 1,491,079     $ 1,561,063     $ 1,564,768     $ 1,464,479    
    Commercial real estate   3,261,160       3,274,941       3,333,488       3,342,603       3,288,704    
    Multifamily   2,482,258       2,499,581       2,507,893       2,566,904       2,559,927    
    Commercial construction   616,087       639,168       646,593       620,496       622,748    
    Residential   250,249       256,786       254,214       256,041       251,416    
    Consumer   835       945       850       1,029       936    
    Gross loans   8,116,332       8,162,500       8,304,101       8,351,841       8,188,210    
    Net deferred loan fees   (4,356 )     (4,597 )     (6,144 )     (6,696 )     (7,101 )  
    Loans receivable   8,111,976       8,157,903       8,297,957       8,345,145       8,181,109    
    Loans held-for-sale         435                      
    Total loans $ 8,111,976     $ 8,158,338     $ 8,297,957     $ 8,345,145     $ 8,181,109    
                         
    Investment and equity securities $ 667,112     $ 640,322     $ 638,854     $ 635,726     $ 599,544    
    Goodwill and other intangible assets   213,307       213,604       213,925       214,246       214,594    
    Deposits:                    
    Noninterest-bearing demand $ 1,262,568     $ 1,268,882     $ 1,290,523     $ 1,259,364     $ 1,224,125    
    Time deposits   2,614,187       2,593,165       2,623,391       2,531,371       2,522,210    
    Other interest-bearing deposits   3,647,350       3,713,967       3,674,740       3,745,467       3,692,160    
    Total deposits $ 7,524,105     $ 7,576,014     $ 7,588,654     $ 7,536,202     $ 7,438,495    
                         
    Borrowings $ 742,133     $ 756,144     $ 877,568     $ 933,579     $ 887,590    
    Subordinated debentures (net of debt issuance costs)   79,818       79,692       79,566       79,439       79,313    
    Total stockholders’ equity   1,239,496       1,224,227       1,216,609       1,216,620       1,188,154    
                         
    Quarterly Average Balances                    
    Total assets $ 9,742,853     $ 9,745,853     $ 9,860,753     $ 9,690,746     $ 9,625,625    
    Loans receivable:                    
    Commercial $ 1,485,777     $ 1,517,446     $ 1,552,360     $ 1,510,634     $ 1,471,006    
    Commercial real estate (including multifamily)   5,752,467       5,789,498       5,890,853       5,874,854       5,821,794    
    Commercial construction   628,740       652,227       637,993       630,468       625,640    
    Residential   252,975       254,284       252,965       253,200       253,114    
    Consumer   7,887       5,155       5,091       6,006       4,972    
    Gross loans   8,127,846       8,218,610       8,339,262       8,275,162       8,176,526    
    Net deferred loan fees   (4,513 )     (5,954 )     (6,533 )     (6,894 )     (7,387 )  
    Loans receivable   8,123,333       8,212,656       8,332,729       8,268,268       8,169,139    
    Loans held-for-sale   83       169       99       31       171    
    Total loans $ 8,123,416     $ 8,212,825     $ 8,332,828     $ 8,268,299     $ 8,169,310    
                         
    Investment and equity securities $ 650,897     $ 637,551     $ 633,270     $ 602,287     $ 628,429    
    Goodwill and other intangible assets   213,502       213,813       214,133       214,472       214,822    
    Deposits:                    
    Noninterest-bearing demand $ 1,259,912     $ 1,256,251     $ 1,254,201     $ 1,248,132     $ 1,275,325    
    Time deposits   2,625,329       2,587,706       2,567,767       2,495,091       2,606,122    
    Other interest-bearing deposits   3,747,427       3,721,167       3,696,374       3,747,093       3,723,561    
    Total deposits $ 7,632,668     $ 7,565,124     $ 7,518,342     $ 7,490,316     $ 7,605,008    
                         
    Borrowings $ 717,586     $ 787,256     $ 947,003     $ 823,123     $ 651,112    
    Subordinated debentures (net of debt issuance costs)   79,735       79,609       79,483       79,356       79,230    
    Total stockholders’ equity   1,234,724       1,220,621       1,220,818       1,198,389       1,202,647    
                         
      Three Months Ended  
      Sept. 30,   Jun. 30,   Mar. 31,   Dec. 31,   Sep. 30,  
        2024       2024       2024       2023       2023    
      (dollars in thousands, except for per share data)  
    Net interest income $ 60,887     $ 61,439     $ 60,300     $ 61,822     $ 62,357    
    Provision for credit losses   3,800       2,500       4,000       2,700       1,500    
    Net interest income after provision for credit losses   57,087       58,939       56,300       59,122       60,857    
    Noninterest income                    
    Deposit, loan and other income   1,817       1,654       1,592       1,545       1,605    
    Income on bank owned life insurance   2,145       1,677       1,664       1,635       1,597    
    Net gains on sale of loans held-for-sale   343       1,277       506       472       633    
    Net gains (losses) on equity securities   432       (209 )     86       557       (273 )  
    Total noninterest income   4,737       4,399       3,848       4,209       3,562    
    Noninterest expenses                    
    Salaries and employee benefits   22,957       22,721       22,131       22,010       22,251    
    Occupancy and equipment   2,889       2,899       3,009       2,708       2,738    
    FDIC insurance   1,800       1,800       1,800       3,900       1,800    
    Professional and consulting   2,147       1,923       1,928       1,587       1,834    
    Marketing and advertising   635       613       677       323       554    
    Information technology and communications   4,464       4,198       4,389       4,148       3,487    
    Merger and restructuring   742                            
    Amortization of core deposit intangible   297       321       321       348       347    
    Other expenses   2,710       3,119       2,810       2,821       2,773    
    Total noninterest expenses   38,641       37,594       37,065       37,845       35,784    
                         
    Income before income tax expense   23,183       25,744       23,083       25,486       28,635    
    Income tax expense   6,022       6,688       5,878       6,213       7,228    
    Net income   17,161       19,056       17,205       19,273       21,407    
    Preferred dividends   1,509       1,509       1,509       1,509       1,509    
    Net income available to common stockholders $ 15,652     $ 17,547     $ 15,696     $ 17,764     $ 19,898    
                         
    Weighted average diluted common shares outstanding   38,525,484       38,448,594       38,511,747       38,651,391       38,829,681    
    Diluted EPS (GAAP) $ 0.41     $ 0.46     $ 0.41     $ 0.46     $ 0.51    
                         
    Reconciliation of GAAP Net Income to Operating Net Income:                    
    Net income $ 17,161     $ 19,056     $ 17,205     $ 19,273     $ 21,407    
    Merger and restructuring   742                            
    Amoritization of core deposit intangibles   297       321       321       348       347    
    FDIC special assessment                     2,100          
    Net (gains) losses on equity securities   (432 )     209       (86 )     (557 )     273    
    Tax impact of adjustments   (171 )     (149 )     (66 )     (569 )     (187 )  
    Operating net income $ 17,597     $ 19,437     $ 17,374     $ 20,595     $ 21,840    
    Preferred dividends   1,509       1,509       1,509       1,509       1,509    
    Operating net income available to common stockholders $ 16,088     $ 17,928     $ 15,865     $ 19,086     $ 20,331    
                         
    Opearting diluted EPS (non-GAAP)(1) $ 0.42     $ 0.47     $ 0.41     $ 0.49     $ 0.52    
                         
    Return on Assets Measures                    
    Average assets $ 9,742,853     $ 9,745,853     $ 9,860,753     $ 9,690,746     $ 9,625,625    
    Return on avg. assets   0.70 %     0.79 %     0.70 %     0.79 %     0.88 %  
    Operating return on avg. assets (non-GAAP)(2)   0.72       0.80       0.71       0.84       0.90    
    _________________________                     
    (1)Operating net income available to common stockholders divided by weighted average diluted shares outstanding.
    (2)Operating net income divided by average assets.
                         
      Three Months Ended  
      Sept. 30,   Jun. 30,   Mar. 31,   Dec. 31,   Sep. 30,  
        2024       2024       2024       2023       2023    
    Return on Equity Measures (dollars in thousands)  
    Average stockholders’ equity $ 1,234,724     $ 1,220,621     $ 1,220,818     $ 1,198,389     $ 1,202,647    
    Less: average preferred stock   (110,927 )     (110,927 )     (110,927 )     (110,927 )     (110,927 )  
    Average common equity $ 1,123,797     $ 1,109,694     $ 1,109,891     $ 1,087,462     $ 1,091,720    
    Less: average intangible assets   (213,502 )     (213,813 )     (214,133 )     (214,472 )     (214,822 )  
    Average tangible common equity $ 910,295     $ 895,881     $ 895,758     $ 872,990     $ 876,898    
    Return on avg. common equity (GAAP)   5.54 %     6.36 %     5.69 %     6.48 %     7.23 %  
    Operating return on avg. common equity (non-GAAP)(3)   5.70       6.50       5.75       6.96       7.39    
    Return on avg. tangible common equity (non-GAAP)(4)   6.93       7.98       7.15       8.18       9.11    
    Operating return on avg. tangible common equity (non-GAAP)(5)   7.03       8.05       7.12       8.67       9.20    
                         
    Efficiency Measures                    
    Total noninterest expenses $ 38,641     $ 37,594     $ 37,065     $ 37,845     $ 35,784    
    Merger and restructuring   (742 )                          
    Amortization of core deposit intangibles   (297 )     (321 )     (321 )     (348 )     (347 )  
    FDIC special assessment                     (2,100 )        
    Operating noninterest expense $ 37,602     $ 37,273     $ 36,744     $ 35,397     $ 35,437    
                         
    Net interest income (tax equivalent basis) $ 61,710     $ 62,255     $ 61,111     $ 62,627     $ 63,208    
    Noninterest income   4,737       4,399       3,848       4,209       3,562    
    Net (gains) losses on equity securities   (432 )     209       (86 )     (557 )     273    
    Operating revenue $ 66,015     $ 66,863     $ 64,873     $ 66,279     $ 67,043    
                         
    Operating efficiency ratio (non-GAAP)(6)   57.0 %     55.7 %     56.6 %     53.4 %     52.9 %  
                         
    Net Interest Margin                    
    Average interest-earning assets $ 9,206,038     $ 9,210,050     $ 9,323,291     $ 9,172,165     $ 9,089,431    
    Net interest income (tax equivalent basis)   61,710       62,255       61,111       62,627       63,208    
    Net interest margin (GAAP)   2.67 %     2.72 %     2.64 %     2.71 %     2.76 %  
    _________________________                     
    (3)Operating net income available to common stockholders divided by average common equity.
    (4)Net income available to common stockholders, excluding amortization of intangible assets, divided by average tangible common equity.
    (5)Operating net income available to common stockholders, divided by average tangible common equity.
    (6)Operating noninterest expense divided by operating revenue.
                         
      As of  
      Sept. 30,   Jun. 30,   Mar. 31,   Dec. 31,   Sep. 30,  
        2024       2024       2024       2023       2023    
    Capital Ratios and Book Value per Share (dollars in thousands, except for per share data)  
    Stockholders equity $ 1,239,496     $ 1,224,227     $ 1,216,609     $ 1,216,620     $ 1,188,154    
    Less: preferred stock   (110,927 )     (110,927 )     (110,927 )     (110,927 )     (110,927 )  
    Common equity $ 1,128,569     $ 1,113,300     $ 1,105,682     $ 1,105,693     $ 1,077,227    
    Less: intangible assets   (213,307 )     (213,604 )     (213,925 )     (214,246 )     (214,594 )  
    Tangible common equity $ 915,262     $ 899,696     $ 891,757     $ 891,447     $ 862,633    
                         
    Total assets $ 9,639,603     $ 9,723,731     $ 9,853,964     $ 9,855,603     $ 9,678,885    
    Less: intangible assets   (213,307 )     (213,604 )     (213,925 )     (214,246 )     (214,594 )  
    Tangible assets $ 9,426,296     $ 9,510,127     $ 9,640,039     $ 9,641,357     $ 9,464,291    
                         
    Common shares outstanding   38,368,217       38,365,069       38,333,053       38,519,770       38,621,970    
                         
    Common equity ratio (GAAP)   11.71 %     11.45 %     11.22 %     11.22 %     11.13 %  
    Tangible common equity ratio (non-GAAP)(7)   9.71       9.46       9.25       9.25       9.11    
                         
    Regulatory capital ratios (Bancorp):                    
    Leverage ratio   11.10 %     10.97 %     10.73 %     10.86 %     10.86 %  
    Common equity Tier 1 risk-based ratio   11.07       10.90       10.70       10.62       10.64    
    Risk-based Tier 1 capital ratio   12.42       12.25       12.03       11.95       11.98    
    Risk-based total capital ratio   14.29       14.10       13.88       13.77       13.90    
                         
    Regulatory capital ratios (Bank):                    
    Leverage ratio   11.43 %     11.29 %     11.10 %     11.20 %     11.23 %  
    Common equity Tier 1 risk-based ratio   12.79       12.60       12.43       12.31       12.38    
    Risk-based Tier 1 capital ratio   12.79       12.60       12.43       12.31       12.38    
    Risk-based total capital ratio   13.77       13.58       13.41       13.28       13.43    
                         
    Book value per share (GAAP) $ 29.41     $ 29.02     $ 28.84     $ 28.70     $ 27.89    
    Tangible book value per share (non-GAAP)(8)   23.85       23.45       23.26       23.14       22.34    
                         
    Net Loan Charge-offs (Recoveries):                    
    Net loan charge-offs (recoveries):                    
    Charge-offs $ 3,559     $ 3,595     $ 3,185     $ 8,960     $ 2,487    
    Recoveries   (53 )     (324 )     (23 )           (8 )  
    Net loan charge-offs $ 3,506     $ 3,271     $ 3,162     $ 8,960     $ 2,479    
    Net loan charge-offs as a % of average loans receivable (annualized)   0.17 %     0.16 %     0.15 %     0.43 %     0.12 %  
                         
    Asset Quality                    
    Nonaccrual loans $ 51,300     $ 46,026     $ 47,438     $ 52,524     $ 56,059    
    Other real estate owned                              
    Nonperforming assets $ 51,300     $ 46,026     $ 47,438     $ 52,524     $ 56,059    
                         
    Allowance for credit losses – loans (“ACL”) $ 82,494     $ 82,077     $ 82,869     $ 81,974     $ 88,230    
    Loans receivable   8,111,976       8,157,903       8,297,957       8,345,145       8,181,109    
                         
    Nonaccrual loans as a % of loans receivable   0.63 %     0.56 %     0.57 %     0.63 %     0.69 %  
    Nonperforming assets as a % of total assets   0.53       0.47       0.48       0.53       0.58    
    ACL as a % of loans receivable   1.02       1.01       1.00       0.98       1.08    
    ACL as a % of nonaccrual loans   160.8       178.3       174.7       156.1       157.4    
     _________________________                     
    (7)Tangible common equity divided by tangible assets.
    (8)Tangible common equity divided by common shares outstanding at period-end.
                         
    CONNECTONE BANCORP, INC.                            
    NET INTEREST MARGIN ANALYSIS                            
    (dollars in thousands)                              
                                       
            For the Quarter Ended  
            September 30, 2024 June 30, 2024 September 30, 2023
            Average         Average         Average      
    Interest-earning assets:   Balance Interest Rate(7)   Balance Interest Rate(7)   Balance Interest Rate(7)
    Investment securities(1) (2) $ 736,946   $ 6,157   3.32 %   $ 739,591   $ 6,102   3.32 %   $ 723,408   $ 5,566   3.05 %
    Loans receivable and loans held-for-sale(2) (3) (4)         8,123,416     119,805   5.87       8,212,825     120,663   5.91       8,169,310     115,954   5.63  
    Federal funds sold and interest-                            
    bearing deposits with banks   304,009     4,056   5.31       212,811     2,841   5.37       158,155     2,110   5.29  
    Restricted investment in bank stock   41,667     1,048   10.01       44,823     1,217   10.92       38,558     907   9.33  
    Total interest-earning assets   9,206,038     131,066   5.66       9,210,050     130,823   5.71       9,089,431     124,537   5.44  
    Allowance for credit losses   (83,355 )           (84,681 )           (89,966 )      
    Noninterest-earning assets     620,170             620,484             626,160        
    Total assets     $ 9,742,853           $ 9,745,853           $ 9,625,625        
                                       
    Interest-bearing liabilities:                            
    Time deposits     $ 2,625,329     30,245   4.58     $ 2,587,706     28,898   4.49     $ 2,606,122     25,437   3.87  
    Other interest-bearing deposits   3,747,427     33,540   3.56       3,721,167     33,188   3.59       3,723,561     30,606   3.26  
    Total interest-bearing deposits   6,372,756     63,785   3.98       6,308,873     62,086   3.96       6,329,683     56,043   3.51  
                                       
    Borrowings       717,586     4,239   2.35       787,256     5,150   2.63       651,112     3,950   2.41  
    Subordinated debentures, net   79,735     1,312   6.55       79,609     1,311   6.62       79,230     1,312   6.57  
    Finance lease       1,349     20   5.90       1,416     21   5.96       1,603     24   5.94  
    Total interest-bearing liabilities   7,171,426     69,356   3.85       7,177,154     68,568   3.84       7,061,628     61,329   3.45  
                                       
    Noninterest-bearing demand deposits   1,259,912             1,256,251             1,275,325        
    Other liabilities       76,791             91,827             86,025        
    Total noninterest-bearing liabilities   1,336,703             1,348,078             1,361,350        
    Stockholders’ equity     1,234,724             1,220,621             1,202,647        
    Total liabilities and stockholders’ equity $ 9,742,853           $ 9,745,853           $ 9,625,625        
                                       
    Net interest income (tax equivalent basis)     61,710             62,255             63,208      
    Net interest spread(5)       1.82 %       1.87 %       1.99 %
                                       
    Net interest margin(6)       2.67 %       2.72 %       2.76 %
                                       
    Tax equivalent adjustment       (823 )           (816 )           (851 )    
    Net interest income     $ 60,887           $ 61,439           $ 62,357      
    _________________________                                   
    (1)Average balances are calculated on amortized cost.
    (2)Interest income is presented on a tax equivalent basis using 21% federal tax rate.
    (3)Includes loan fee income.
    (4)Loans include nonaccrual loans.
    (5)Represents difference between the average yield on interest-earning assets and the average cost of interest-bearing.
    liabilities and is presented on a tax equivalent basis.
    (6)Represents net interest income on a tax equivalent basis divided by average total interest-earning assets.
    (7)Rates are annualized.
                                       

    The MIL Network

  • MIL-OSI: Nasdaq Reports Third Quarter 2024 Results; Fourth Consecutive Quarter of Double-Digit Solutions Revenue Growth

    Source: GlobeNewswire (MIL-OSI)

    NEW YORK, Oct. 24, 2024 (GLOBE NEWSWIRE) — Nasdaq, Inc. (Nasdaq: NDAQ) today reported financial results for the third quarter of 2024.

    • Third quarter 2024 net revenue1 was $1.1 billion, or $1.2 billion on a non-GAAP basis2, an increase of 22% over the third quarter of 2023, up 10% on a pro forma3 basis. This included Solutions4 revenue increasing 26%, or 10% on a pro forma basis.
    • Annualized Recurring Revenue (ARR)5 of $2.7 billion increased 31% over the third quarter of 2023, up 8% on a pro forma basis.
    • Financial Technology revenue of $371 million increased 56% over the third quarter of 2023, up 10% on a pro forma basis.
    • Index revenue of $182 million increased 26%, with $62 billion of net inflows over the trailing twelve months and $14 billion in the third quarter.
    • GAAP diluted earnings per share decreased 11% in the third quarter of 2024. Non-GAAP diluted earnings per share increased 5% in the third quarter of 2024 and increased 20% organically.
    • In the third quarter of 2024, the company returned $138 million to shareholders through dividends and $88 million through repurchases of common stock. The company also repaid net $50 million of commercial paper in the third quarter of 2024.

    Third Quarter 2024 Highlights

    (US$ millions, except per share) 3Q24 Change %
    (YoY)
    Organic change % (YoY) Pro forma change % (YoY)
    GAAP Solutions Revenue $872 26%    
    Non-GAAP Solutions Revenue $906 31% 9% 10%
    Market Services Net Revenue $266 13% 13%  
    GAAP Net Revenue* $1,146 22%    
    Non-GAAP Net Revenue* $1,180 26% 10% 10%
    GAAP Operating Income $448 4%    
    Non-GAAP Operating Income $637 30% 12% 14%
    ARR $2,736 31% 7% 8%
    GAAP Diluted EPS $0.53 (11)%    
    Non-GAAP Diluted EPS $0.74 5% 20%  

    Note: The period over period percentages are calculated based on exact dollars, and therefore may not agree to a recalculation based on rounded numbers shown in the table above. Pro forma results are not calculated in a manner consistent with the pro forma requirements in Article 11 of Regulation S-X. Refer to the footnotes below for further discussion.

    *Net revenues includes $8 million of Other Revenues, which reflect revenues associated with the European power trading and clearing business.

    Adena Friedman, Chair and CEO said, “Nasdaq delivered its fourth consecutive quarter of double-digit Solutions growth with strong overall quarterly performance.

    As we approach the one-year anniversary of the Adenza acquisition, I am proud of our progress to date and excited about driving even greater value for our clients and shareholders.

    The integration continues seamlessly. Through our One Nasdaq strategy we are deepening our partnerships with clients across the financial system and unlocking opportunities for sustained and scalable growth.”

    Sarah Youngwood, Executive Vice President and CFO said, “Nasdaq’s performance continues to reflect the quality and diversity of our platforms, driving strong growth across the business with particular strength in Index and Financial Technology.

    We are continuing to deliver ahead on deleveraging and synergies and are benefiting from significant operating leverage.

    Looking ahead, we remain well positioned to execute on our next phase of sustainable growth.”

    FINANCIAL REVIEW

    • Third quarter 2024 net revenue was $1.1 billion, reflecting 22% growth versus the prior year period while non-GAAP net revenue was $1.2 billion. Revenue growth included a $146 million benefit related to the acquisition of Adenza. Net revenue grew 10% on a pro forma basis.
    • Solutions revenue was $872 million in the third quarter of 2024, up 26% versus the prior year period, or 10% growth on a pro forma basis, reflecting strong growth from Index and Financial Technology.
    • ARR grew 31% year over year, or 8% on a pro forma basis, in the third quarter of 2024 with 14% pro forma ARR growth for Financial Technology and 2% ARR growth for Capital Access Platforms.
    • Market Services net revenue was $266 million in the third quarter of 2024, up 13% versus the prior year period. The increase was primarily driven by a $15 million increase in U.S. equity derivatives and an $11 million increase in U.S. cash equities.
    • Third quarter 2024 GAAP operating expenses were $698 million, an increase of 37% versus the prior year period. The increase for the third quarter was primarily due to the acquisition of Adenza, which resulted in an additional $87 million in amortization expense of acquired intangible assets, and $61 million of other AxiomSL and Calypso operating expenses, as well as organic growth driven by increased investments in technology and our people to drive innovation and long-term growth.
    • Third quarter 2024 non-GAAP operating expenses were $543 million, reflecting 21% growth versus the prior year period, or 5% growth on a pro forma basis. The increase for the third quarter was primarily due to the inclusion of $61 million of AxiomSL and Calypso operating expenses. The pro forma increase reflects growth driven by increased investments in technology and our people to drive innovation and long-term growth, partially offset by the benefit of synergies.
    • Third quarter 2024 cash flow from operations was $244 million, enabling the company to continue to make meaningful progress on its deleveraging plan. In the third quarter, the company returned $138 million to shareholders through dividends and $88 million through repurchases of our common stock. The company also repaid net $50 million of commercial paper in the third quarter of 2024. As of September 30, 2024, there was $1.7 billion remaining under the board authorized share repurchase program.

    2024 EXPENSE AND TAX GUIDANCE UPDATE6

    • The company is updating its 2024 non-GAAP operating expense guidance to a range of $2,150 million to $2,180 million, and is updating its 2024 non-GAAP tax rate guidance to be in the range of 23.5% to 24.5%.

    STRATEGIC AND BUSINESS UPDATES

    • Financial Technology delivered healthy revenue growth in the third quarter. Division revenue increased 10% on a pro forma basis, reflective of the mission-critical nature of the division’s solutions suite. Financial Technology pro forma ARR growth was 14% in the third quarter, with 39 new customers, 110 upsells, and 2 cross-sells. Third quarter highlights include:
      • Nasdaq leapt to 5th place in Chartis’ annual RiskTech100® global ranking. This ranking is widely regarded as the most comprehensive independent study of the world’s major players in risk and compliance technology. The significant jump in ranking reflects the combined power of Nasdaq and Adenza’s technology offerings with Nasdaq and Adenza previously ranking #18 and #10, respectively. Nasdaq Verafin and AxiomSL won Chartis industry awards recognizing Nasdaq’s leadership in financial crime management and in regulatory reporting. The study also highlighted the value of Nasdaq’s governance and sustainability solutions.
      • Financial Crime Management Technology had ARR growth of 24% with 114% net revenue retention and launched new AI product innovations. Financial Crime Management Technology signed 28 new SMB clients, in addition to the previously announced Tier 1 win in July. Nasdaq Verafin extended its track record of product innovation success with its AI Entity Research Copilot now deployed to more than 2,000 U.S. institutions. In the third quarter Nasdaq Verafin announced new enhancements to its Targeted Typology Analytics, an artificial intelligence (AI) based suite of detection capabilities targeting terrorist financing and drug trafficking activity.
      • AxiomSL and Calypso achieved 15% combined pro forma ARR growth. AxiomSL and Calypso delivered a combined 47 upsells and 4 new clients, with 17% of new bookings in the quarter cloud-based. Combined gross revenue retention7 was 97% and net revenue retention8 was 111%. Excluding the impact of a significant bankruptcy first noted in the fourth quarter of 2023, pro forma ARR growth was 16%, gross revenue retention was 98%, and net revenue retention was 112%.
      • Market Technology delivered 14% ARR growth as it continues to capture opportunities associated with the market modernization megatrend. Market Technology was driven by 13 upsells, 1 new client, and 1 cross-sell in the third quarter. ARR growth also benefited from the conversion of a previously mentioned large client delivery.
    • U.S. equity derivatives achieved record quarterly net revenue. In the third quarter of 2024, Nasdaq achieved a record quarter of U.S. equity derivatives net revenue of $107 million, with multi-listed U.S. options market share once again surpassing 30% in the quarter and 19% growth in U.S. index options volume.
    • Index delivered another quarter of outstanding performance and advanced its growth strategy across product innovation, globalization, and institutional client expansion. The Index business had $62 billion in net inflows over the trailing 12 months, with $14 billion in the third quarter. The business achieved another record in Index ETP AUM, averaging $575 billion in the third quarter and reaching $600 billion at quarter-end. Index derivatives trading volumes grew 24% year-over-year, also contributing to revenue growth. Nasdaq launched 35 new products with our partners in the quarter, 20 of which were international. The launches included 8 options overlays and 7 institutional insurance annuity products. Additionally, Nasdaq recently received 2024 Best Index Provider from Structured Retail Products, a global market intelligence provider, highlighting the business’ innovation and success as a strategic partner to our clients.
    • Nasdaq strengthened its listings leadership in the U.S. in the third quarter. Nasdaq listed 33 U.S. operating company IPOs that raised more than $6 billion in proceeds, reflecting an 85% win rate among eligible operating companies in the quarter. These listings contributed to a 75% win rate year-to-date through the third quarter for eligible operating companies comprising of 5 of the top 10 IPOs, including Lineage, the largest offering so far this year. Nasdaq also celebrated its 500th switch to our U.S. exchange in the quarter.
    • Nasdaq celebrated 25 Years of MarketSite in Times Square. MarketSite has stood as a physical embodiment of the Nasdaq brand since its debut and reflects Nasdaq’s culture of driving innovation and delivering valuable client solutions. MarketSite is a hub for Nasdaq’s clients and partners and an integral part of the global finance landscape.
    • Nasdaq continued its progress on its 2024 strategic priorities – Integrate, Innovate, Accelerate – positioning the company to capitalize on opportunities for sustainable, scalable, and resilient growth.
      • Integrate – Since the acquisition of Adenza nearly a year-ago, Nasdaq has actioned more than 80% of its net expense synergy target and continues to delever ahead of plan.
      • Innovate – Nasdaq reached new milestones in deploying AI tools and products including the launch of an internal Generative AI platform with custom-built efficiency tools and completed the rollout of AI copilot tools to all of its developers. Calypso also announced an AI-based solution for X-Value Adjustments (XVA) with up to 100 times faster processing speeds that improves the efficiency of risk calculations for banks, insurers, and other financial institutions. Beyond Nasdaq’s AI innovations, Market Services migrated Nasdaq International Securities Exchange to its next-generation derivatives platform, Fusion. Four of Nasdaq’s U.S. markets and one European equity derivatives market are operating on this platform which provides enhanced performance, including lower latency, higher throughput, and increased productivity.
      • Accelerate – We continue to make progress on our One Nasdaq strategy driving two cross-sells across the Financial Technology division in the quarter. The percentage of cross-sell opportunities in the division’s pipeline is over 10% and Nasdaq remains on track to exceed $100 million in cross-sells by the end of 2027.

    ____________
    1 Represents revenue less transaction-based expenses.
    2 Refer to our reconciliations of U.S. GAAP to non-GAAP Solutions revenue, net revenue, net income attributable to Nasdaq, diluted earnings per share, operating income, operating expenses and organic impacts included in the attached schedules.
    3 Pro forma results are presented assuming AxiomSL and Calypso were included in the prior year quarterly results and revenue for AxiomSL on-premises contracts were recognized ratably for all of 2023 and 2024. Pro forma growth excludes the impacts of foreign currency except for AxiomSL and Calypso, which are not yet calculated on an organic basis. These pro forma results are not calculated, and do not intend to be calculated, in a manner consistent with the pro forma requirements in Article 11 of Regulation S-X. Preparation of this information in accordance with Article 11 would differ from results presented in this release.
    4 Constitutes revenue from our Capital Access Platforms and Financial Technology segments.
    5 Annualized Recurring Revenue (ARR) for a given period is the current annualized value derived from subscription contracts with a defined contract value. This excludes contracts that are not recurring, are one-time in nature or where the contract value fluctuates based on defined metrics. ARR is currently one of our key performance metrics to assess the health and trajectory of our recurring business. ARR does not have any standardized definition and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items. For AxiomSL and Calypso recurring revenue contracts, the amount included in ARR is consistent with the amount that we invoice the customer during the current period. Additionally, for AxiomSL and Calypso recurring revenue contracts that include annual values that increase over time, we include in ARR only the annualized value of components of the contract that are considered active as of the date of the ARR calculation. We do not include the future committed increases in the contract value as of the date of the ARR calculation. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.
    6 U.S. GAAP operating expense and tax rate guidance are not provided due to the inherent difficulty in quantifying certain amounts due to a variety of factors including the unpredictability in the movement in foreign currency rates, as well as future charges or reversals outside of the normal course of business.
    7 Gross Retention: ARR in the current period over ARR in the prior year period for existing customers excluding price increases and upsells and excluding new customers.
    8 Net Retention: ARR in the current period over ARR in the prior year period for existing customers including price increases and upsells and excluding new customers.

    ABOUT NASDAQ

    Nasdaq (Nasdaq: NDAQ) is a global technology company serving corporate clients, investment managers, banks, brokers, and exchange operators as they navigate and interact with the global capital markets and the broader financial system. We aspire to deliver world-leading platforms that improve the liquidity, transparency, and integrity of the global economy. Our diverse offering of data, analytics, software, exchange capabilities, and client-centric services enables clients to optimize and execute their business vision with confidence. To learn more about the company, technology solutions and career opportunities, visit us on LinkedIn, on X @Nasdaq, or at www.nasdaq.com.

    NON-GAAP INFORMATION

    In addition to disclosing results determined in accordance with U.S. GAAP, Nasdaq also discloses certain non-GAAP results of operations, including, but not limited to, non-GAAP Solutions revenue, non-GAAP net revenue, non-GAAP net income attributable to Nasdaq, non-GAAP diluted earnings per share, non-GAAP operating income, and non-GAAP operating expenses, that include certain adjustments or exclude certain charges and gains that are described in the reconciliation table of U.S. GAAP to non-GAAP information provided at the end of this release. Management uses this non-GAAP information internally, along with U.S. GAAP information, in evaluating our performance and in making financial and operational decisions. We believe our presentation of these measures provides investors with greater transparency and supplemental data relating to our financial condition and results of operations. In addition, we believe the presentation of these measures is useful to investors for period-to-period comparisons of results as the items described below in the reconciliation tables do not reflect ongoing operating performance.

    These measures are not in accordance with, or an alternative to, U.S. GAAP, and may be different from non-GAAP measures used by other companies. In addition, other companies, including companies in our industry, may calculate such measures differently, which reduces their usefulness as a comparative measure. Investors should not rely on any single financial measure when evaluating our business. This information should be considered as supplemental in nature and is not meant as a substitute for our operating results in accordance with U.S. GAAP. We recommend investors review the U.S. GAAP financial measures included in this earnings release. When viewed in conjunction with our U.S. GAAP results and the accompanying reconciliations, we believe these non-GAAP measures provide greater transparency and a more complete understanding of factors affecting our business than U.S. GAAP measures alone.

    We understand that analysts and investors regularly rely on non-GAAP financial measures, such as those noted above, to assess operating performance. We use these measures because they highlight trends more clearly in our business that may not otherwise be apparent when relying solely on U.S. GAAP financial measures, since these measures eliminate from our results specific financial items that have less bearing on our ongoing operating performance.

    Organic revenue and expense growth, organic change and organic impact are non-GAAP measures that reflect adjustments for: (i) the impact of period-over-period changes in foreign currency exchange rates, and (ii) the revenue, expenses and operating income associated with acquisitions and divestitures for the twelve month period following the date of the acquisition or divestiture. Reconciliations of these measures are described within the body of this release or in the reconciliation tables at the end of this release.

    Foreign exchange impact: In countries with currencies other than the U.S. dollar, revenue and expenses are translated using monthly average exchange rates. Certain discussions in this release isolate the impact of year-over-year foreign currency fluctuations to better measure the comparability of operating results between periods. Operating results excluding the impact of foreign currency fluctuations are calculated by translating the current period’s results by the prior period’s exchange rates.

    Restructuring programs: In the fourth quarter of 2023, following the closing of the Adenza acquisition, our management approved, committed to and initiated a restructuring program, “Adenza Restructuring” to optimize our efficiencies as a combined organization. In connection with this program, we expect to incur pre-tax charges principally related to employee-related costs, contract terminations, real estate impairments and other related costs. We expect to achieve benefits primarily in the form of expense and revenue synergies. In October 2022, following our September announcement to realign our segments and leadership, we initiated a divisional alignment program with a focus on realizing the full potential of this structure. In connection with the program, we expect to incur pre-tax charges principally related to employee-related costs, consulting, asset impairments and contract terminations over a two-year period. We expect to achieve benefits in the form of both increased customer engagement and operating efficiencies. Costs related to the Adenza restructuring and the divisional alignment programs are recorded as “restructuring charges” in our consolidated statements of income. We exclude charges associated with these programs for purposes of calculating non-GAAP measures as they are not reflective of ongoing operating performance or comparisons in Nasdaq’s performance between periods.

    CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

    Information set forth in this communication contains forward-looking statements that involve a number of risks and uncertainties. Nasdaq cautions readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information. Such forward-looking statements include, but are not limited to (i) projections relating to our future financial results, total shareholder returns, growth, dividend program, trading volumes, products and services, ability to transition to new business models or implement our new corporate structure, taxes and achievement of synergy targets, (ii) statements about the closing or implementation dates and benefits of certain acquisitions, divestitures and other strategic, restructuring, technology, environmental, deleveraging and capital allocation initiatives, (iii) statements about our integrations of our recent acquisitions, (iv) statements relating to any litigation or regulatory or government investigation or action to which we are or could become a party, and (v) other statements that are not historical facts. Forward-looking statements involve a number of risks, uncertainties or other factors beyond Nasdaq’s control. These factors include, but are not limited to, Nasdaq’s ability to implement its strategic initiatives, economic, political and market conditions and fluctuations, geopolitical instability, government and industry regulation, interest rate risk, U.S. and global competition. Further information on these and other factors are detailed in Nasdaq’s filings with the U.S. Securities and Exchange Commission, including its annual reports on Form 10-K and quarterly reports on Form 10-Q, which are available on Nasdaq’s investor relations website at http://ir.nasdaq.com and the SEC’s website at www.sec.gov. Nasdaq undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

    WEBSITE DISCLOSURE

    Nasdaq intends to use its website, ir.nasdaq.com, as a means for disclosing material non-public information and for complying with SEC Regulation FD and other disclosure obligations.

    Media Relations Contact   Investor Relations Contact  
    Nick Jannuzzi   Ato Garrett
    973.760.1741   212.401.8737
    nicholas.jannuzzi.@nasdaq.com   ato.garrett@nasdaq.com

    NDAQF

     
    Nasdaq, Inc.
    Condensed Consolidated Statements of Income
    (in millions, except per share amounts)
    (unaudited)
               
      Three Months Ended   Nine Months Ended
      September 30,   September 30,   September 30,   September 30,
        2024       2023       2024       2023  
                     
    Revenues:              
    Capital Access Platforms $ 501     $ 456     $ 1,460     $ 1,309  
    Financial Technology   371       238       1,183       700  
    Market Services   1,022       747       2,700       2,378  
    Other Revenues   8       10       27       30  
      Total revenues   1,902       1,451       5,370       4,417  
    Transaction-based expenses:              
    Transaction rebates   (513 )     (447 )     (1,478 )     (1,377 )
    Brokerage, clearance and exchange fees   (243 )     (64 )     (470 )     (262 )
    Revenues less transaction-based expenses   1,146       940       3,422       2,778  
                   
    Operating Expenses:              
    Compensation and benefits   332       260       1,000       777  
    Professional and contract services   36       31       108       92  
    Technology and communication infrastructure   71       58       207       168  
    Occupancy   28       28       85       99  
    General, administrative and other   26       26       84       62  
    Marketing and advertising   11       12       34       30  
    Depreciation and amortization   153       64       460       198  
    Regulatory   9       9       37       27  
    Merger and strategic initiatives   10       4       23       51  
    Restructuring charges   22       17       103       49  
      Total operating expenses   698       509       2,141       1,553  
    Operating income   448       431       1,281       1,225  
    Interest income   8       72       20       86  
    Interest expense   (102 )     (101 )     (313 )     (174 )
    Other income (loss)   1       1       15       (6 )
    Net income (loss) from unconsolidated investees   1       (12 )     7       (8 )
    Income before income taxes   356       391       1,010       1,123  
    Income tax provision   51       97       250       262  
    Net income   305       294       760       861  
    Net loss attributable to noncontrolling interests   1             2       1  
    Net income attributable to Nasdaq $ 306     $ 294     $ 762     $ 862  
                   
    Per share information:              
    Basic earnings per share $ 0.53     $ 0.60     $ 1.32     $ 1.76  
    Diluted earnings per share $ 0.53     $ 0.60     $ 1.32     $ 1.74  
    Cash dividends declared per common share $ 0.24     $ 0.22     $ 0.70     $ 0.64  
                   
    Weighted-average common shares outstanding              
    for earnings per share:              
    Basic   575.1       491.3       575.6       490.7  
    Diluted   579.0       494.1       579.0       494.2  
                     
    Nasdaq, Inc.
    Revenue Detail
    (in millions)
    (unaudited)
                     
            Three Months Ended   Nine Months Ended
            September 30,   September 30,   September 30,   September 30,
              2024       2023       2024       2023  
                         
    CAPITAL ACCESS PLATFORMS              
      Data and Listing Services revenues $ 190     $ 188     $ 562     $ 559  
      Index revenues   182       144       517       383  
      Workflow and Insights revenues   129       124       381       367  
        Total Capital Access Platforms revenues   501       456       1,460       1,309  
                         
    FINANCIAL TECHNOLOGY              
      Financial Crime Management Technology revenues   69       58       200       163  
      Regulatory Technology revenues   68       35       253       102  
      Capital Markets Technology revenues   234       145       730       435  
        Total Financial Technology revenues   371       238       1,183       700  
                         
    MARKET SERVICES              
      Market Services revenues   1,022       747       2,700       2,378  
      Transaction-based expenses:              
          Transaction rebates   (513 )     (447 )     (1,478 )     (1,377 )
          Brokerage, clearance and exchange fees   (243 )     (64 )     (470 )     (262 )
        Total Market Services revenues, net   266       236       752       739  
                         
    OTHER REVENUES   8       10       27       30  
                         
    REVENUES LESS TRANSACTION-BASED EXPENSES $ 1,146     $ 940     $ 3,422     $ 2,778  
                         
                         
    Nasdaq, Inc.
    Condensed Consolidated Balance Sheets
    (in millions)
               
          September 30,   December 31,
            2024       2023  
    Assets   (unaudited)    
    Current assets:        
      Cash and cash equivalents   $ 266     $ 453  
      Restricted cash and cash equivalents     42       20  
      Default funds and margin deposits     5,865       7,275  
      Financial investments     202       188  
      Receivables, net     944       929  
      Other current assets     239       231  
    Total current assets     7,558       9,096  
    Property and equipment, net     584       576  
    Goodwill     14,165       14,112  
    Intangible assets, net     7,072       7,443  
    Operating lease assets     388       402  
    Other non-current assets     793       665  
    Total assets   $ 30,560     $ 32,294  
               
    Liabilities        
    Current liabilities:        
      Accounts payable and accrued expenses   $ 289     $ 332  
      Section 31 fees payable to SEC     74       84  
      Accrued personnel costs     314       303  
      Deferred revenue     663       594  
      Other current liabilities     229       146  
      Default funds and margin deposits     5,865       7,275  
      Short-term debt     499       291  
    Total current liabilities     7,933       9,025  
    Long-term debt     9,359       10,163  
    Deferred tax liabilities, net     1,566       1,642  
    Operating lease liabilities     399       417  
    Other non-current liabilities     222       220  
    Total liabilities     19,479       21,467  
             
    Commitments and contingencies        
    Equity        
    Nasdaq stockholders’ equity:        
      Common stock     6       6  
      Additional paid-in capital     5,477       5,496  
      Common stock in treasury, at cost     (643 )     (587 )
      Accumulated other comprehensive loss     (1,952 )     (1,924 )
      Retained earnings     8,184       7,825  
    Total Nasdaq stockholders’ equity     11,072       10,816  
      Noncontrolling interests     9       11  
    Total equity     11,081       10,827  
    Total liabilities and equity   $ 30,560     $ 32,294  
               
               
    Nasdaq, Inc.
    Reconciliation of U.S. GAAP to Non-GAAP Net Income Attributable to Nasdaq and Diluted Earnings Per Share
    (in millions, except per share amounts)
    (unaudited)
                       
                   
           Three Months Ended   Nine Months Ended
          September 30,   September 30,   September 30,   September 30,
            2024       2023       2024       2023  
                       
    U.S. GAAP net income attributable to Nasdaq   $ 306     $ 294     $ 762     $ 862  
    Non-GAAP adjustments:                
      Adenza purchase accounting adjustment (1)     34             34        
      Amortization expense of acquired intangible assets (2)     122       37       366       112  
      Merger and strategic initiatives expense (3)     10       4       23       51  
      Restructuring charges (4)     22       17       103       49  
      Lease asset impairments (5)                       24  
      Net (income) loss from unconsolidated investees (6)     (1 )     12       (7 )     8  
      Legal and regulatory matters (7)                 16       (10 )
      Pension settlement charge (8)                 23        
      Other (income) loss (9)     1       9       (8 )     17  
      Total non-GAAP adjustments     188       79       550       251  
      Non-GAAP adjustment to the income tax provision (10)     (65 )     (24 )     (151 )     (76 )
      Tax on intra-group transfer of intellectual property assets (11)                 33        
      Total non-GAAP adjustments, net of tax     123       55       432       175  
    Non-GAAP net income attributable to Nasdaq   $ 429     $ 349     $ 1,194     $ 1,037  
                       
    U.S. GAAP diluted earnings per share   $ 0.53     $ 0.60     $ 1.32     $ 1.74  
      Total adjustments from non-GAAP net income above     0.21       0.11       0.74       0.36  
    Non-GAAP diluted earnings per share   $ 0.74     $ 0.71     $ 2.06     $ 2.10  
                       
    Weighted-average diluted common shares outstanding for earnings per share:     579.0       494.1       579.0       494.2  
                       
                       
    (1) During the third quarter of 2024, as part of finalizing the purchase accounting of the Adenza acquisition, we implemented a change to the accounting treatment of the revenues associated with AxiomSL on-premises subscription contracts, which are included in the Regulatory Technology business within the Financial Technology segment. Starting in the third quarter of 2024, we began recognizing AxiomSL’s subscription-based revenues on a ratable basis over the contract term. As a result of this change, we recognized a one-time revenue reduction of $32 million in the third quarter of 2024, reflecting the net impact of the accounting change since the date of the Adenza acquisition. The adjustment of $34 million reflects the prior year impact of this change.
           
    (2) We amortize intangible assets acquired in connection with various acquisitions. Intangible asset amortization expense can vary from period to period due to episodic acquisitions completed, rather than from our ongoing business operations.
           
    (3) We have pursued various strategic initiatives and completed acquisitions and divestitures in recent years which have resulted in expenses which would not have otherwise been incurred. These expenses generally include integration costs, as well as legal, due diligence and other third party transaction costs. The frequency and amount of such expenses vary significantly based on the size, timing and complexity of the transaction. For the three and nine months ended September 30, 2024 and September 30, 2023, these costs primarily relate to the Adenza acquisition. For the nine months ended September 30, 2024, these costs were partially offset by a termination payment recognized in the second quarter of 2024 relating to the proposed divestiture of our Nordic power trading and clearing business.
                       
    (4) In the fourth quarter of 2023, following the closing of the Adenza acquisition, our management approved, committed to and initiated a restructuring program, “Adenza Restructuring” to optimize our efficiencies as a combined organization. In connection with this program, we expect to incur pre-tax charges principally related to employee-related costs, contract terminations, real estate impairments and other related costs. We expect to achieve benefits primarily in the form of expense and revenue synergies. In October 2022, following our September 2022 announcement to realign our segments and leadership, we initiated a divisional alignment program with a focus on realizing the full potential of this structure. In September 2024, we completed our divisional alignment program and recognized total pre-tax charges of $139 million over a two-year period.
                       
    (5) During the first quarter of 2023, we initiated a review of our real estate and facility capacity requirements due to our new and evolving work models. As a result, for the nine months ended September 30, 2023, we recorded impairment charges related to our operating lease assets and leasehold improvements associated with vacating certain leased office space, which are recorded in occupancy expense and depreciation and amortization expense in our Condensed Consolidated Statements of Income.
                       
    (6) We exclude our share of the earnings and losses of our equity method investments. This provides a more meaningful analysis of Nasdaq’s ongoing operating performance or comparisons in Nasdaq’s performance between periods.
                       
    (7) For the nine months ended September 30, 2024, these items primarily included the settlement of a Swedish Financial Supervisory Authority, or SFSA, fine and accruals related to certain legal matters. For the nine months ended September 30, 2023, these items primarily included insurance recoveries related to legal matters. The fine is recorded in regulatory expense and the accruals and insurance recoveries are recorded in professional and contract services and general, administrative and other expense in the Condensed Consolidated Statements of Income.
                       
    (8) For the nine months ended September 30, 2024, we recorded a pre-tax loss as a result of settling our U.S. pension plan. The plan was terminated and partially settled in 2023, with final settlement occurring during the first quarter of 2024. The pre-tax loss is recorded in compensation and benefits in the Condensed Consolidated Statements of Income.
                       
    (9) For the nine months ended September 30, 2024, and for the three and nine months ended September 30, 2023, other items primarily include net gains from strategic investments entered into through our corporate venture program, which are included in other income (loss) in our Condensed Consolidated Statements of Income.
                       
    (10) The non-GAAP adjustment to the income tax provision primarily includes the tax impact of each non-GAAP adjustment.
                       
    (11) For the nine months ended September 30, 2024, the completion of an intra-group transfer of intellectual property assets to U.S. headquarters resulted in a net tax expense of $33 million.
                       
    Nasdaq, Inc.
    Reconciliation of U.S. GAAP to Non-GAAP Revenues Less Transaction-Based Expenses
    (in millions)
    (unaudited)
                   
      Three Months Ended   Nine Months Ended
      September 30, 2024   September 30, 2024
      U.S. GAAP Revenues Less Transaction-Based Expenses Adenza purchase accounting adjustment (1) Non-GAAP Revenues Less Transaction-Based Expenses   U.S. GAAP Revenues Less Transaction-Based Expenses Adenza purchase accounting adjustment (1) Non-GAAP Revenues Less Transaction-Based Expenses
    CAPITAL ACCESS PLATFORMS $ 501 $ $ 501   $ 1,460 $ 1,460
                   
    FINANCIAL TECHNOLOGY              
    Financial Crime Management Technology revenues   69     69     200   200
    Regulatory Technology revenues (1)   68   34   102     253   34 287
    Capital Markets Technology revenues   234     234     730   730
    Total Financial Technology revenues   371   34   405     1,183   34 1,217
    SOLUTIONS REVENUES   872   34   906     2,643   34 2,677
                   
    MARKET SERVICES REVENUES, NET   266     266     752   752
    OTHER REVENUES   8     8     27   27
    REVENUES LESS TRANSACTION-BASED EXPENSES $ 1,146 $ 34 $ 1,180   $ 3,422 $ 34 3,456
                   
    (1) During the third quarter of 2024, as part of finalizing the purchase accounting of the Adenza acquisition, we implemented a change to the accounting treatment of the revenues associated with AxiomSL on-premises subscription contracts, which are included in the Regulatory Technology business within the Financial Technology segment. Starting in the third quarter of 2024, we began recognizing AxiomSL’s subscription-based revenues on a ratable basis over the contract term. As a result of this change, we recognized a one-time revenue reduction of $32 million in the third quarter of 2024, reflecting the net impact of the accounting change since the date of the Adenza acquisition. The adjustment of $34 million reflects the prior year impact of this change.
                   
    Nasdaq, Inc.
    Reconciliation of U.S. GAAP to Non-GAAP Operating Income and Operating Margin
    (in millions)
    (unaudited)
                   
           Three Months Ended   Nine Months Ended
          September 30,   September 30,   September 30,   September 30,
            2024       2023       2024       2023  
                       
    U.S. GAAP operating income   $ 448     $ 431     $ 1,281     $ 1,225  
    Non-GAAP adjustments:                
      Adenza purchase accounting adjustment (1)     34             34        
      Amortization expense of acquired intangible assets (2)     122       37       366       112  
      Merger and strategic initiatives expense (3)     10       4       23       51  
      Restructuring charges (4)     22       17       103       49  
      Lease asset impairments (5)                       24  
      Legal and regulatory matters (6)                 16       (10 )
      Pension settlement charge (7)                 23        
      Other loss     1       2       4       2  
      Total non-GAAP adjustments     189       60       569       228  
    Non-GAAP operating income   $ 637     $ 491     $ 1,850     $ 1,453  
                     
    Revenues less transaction-based expenses   $ 1,146     $ 940     $ 3,422     $ 2,778  
                       
    U.S. GAAP operating margin (8)     39 %     46 %     37 %     44 %
                       
    Non-GAAP operating margin (9)     54 %     52 %     54 %     52 %
                       
                       
    (1) During the third quarter of 2024, as part of finalizing the purchase accounting of the Adenza acquisition, we implemented a change to the accounting treatment of the revenues associated with AxiomSL on-premises subscription contracts, which are included in the Regulatory Technology business within the Financial Technology segment. Starting in the third quarter of 2024, we began recognizing AxiomSL’s subscription-based revenues on a ratable basis over the contract term. As a result of this change, we recognized a one-time revenue reduction of $32 million in the third quarter of 2024, reflecting the net impact of the accounting change since the date of the Adenza acquisition. The adjustment of $34 million reflects the prior year impact of this change.
           
    (2) We amortize intangible assets acquired in connection with various acquisitions. Intangible asset amortization expense can vary from period to period due to episodic acquisitions completed, rather than from our ongoing business operations.
                       
    (3) We have pursued various strategic initiatives and completed acquisitions and divestitures in recent years which have resulted in expenses which would not have otherwise been incurred. These expenses generally include integration costs, as well as legal, due diligence and other third party transaction costs. The frequency and amount of such expenses vary significantly based on the size, timing and complexity of the transaction. For the three and nine months ended September 30, 2024 and September 30, 2023, these costs primarily relate to the Adenza acquisition. For the nine months ended September 30, 2024, these costs were partially offset by a termination payment recognized in the second quarter of 2024 relating to the proposed divestiture of our Nordic power trading and clearing business.
                       
    (4) In the fourth quarter of 2023, following the closing of the Adenza acquisition, our management approved, committed to and initiated a restructuring program, “Adenza Restructuring” to optimize our efficiencies as a combined organization. In connection with this program, we expect to incur pre-tax charges principally related to employee-related costs, contract terminations, real estate impairments and other related costs. We expect to achieve benefits primarily in the form of expense and revenue synergies. In October 2022, following our September announcement to realign our segments and leadership, we initiated a divisional alignment program with a focus on realizing the full potential of this structure. In September 2024, we completed our divisional alignment program and recognized total pre-tax charges of $139 million over a two-year period.
                       
    (5) During the first quarter of 2023, we initiated a review of our real estate and facility capacity requirements due to our new and evolving work models. As a result, for the nine months ended September 30, 2023, we recorded impairment charges related to our operating lease assets and leasehold improvements associated with vacating certain leased office space, which are recorded in occupancy expense and depreciation and amortization expense in our Condensed Consolidated Statements of Income.
                       
    (6) For the nine months ended September 30, 2024, these items primarily included the settlement of a SFSA fine and accruals related to certain legal matters. For the nine months ended September 30, 2023, these items primarily included insurance recoveries related to legal matters. The fine is recorded in regulatory expense and the accruals and insurance recoveries are recorded in professional and contract services and general, administrative and other expense in the Condensed Consolidated Statements of Income.
                       
    (7) For the nine months ended September 30, 2024, we recorded a pre-tax loss as a result of settling our U.S. pension plan. The plan was terminated and partially settled in 2023, with final settlement occurring during the first quarter of 2024. The pre-tax loss is recorded in compensation and benefits in the Condensed Consolidated Statements of Income.
                       
    (8) U.S. GAAP operating margin equals U.S. GAAP operating income divided by revenues less transaction-based expenses.
                       
    (9) Non-GAAP operating margin equals non-GAAP operating income divided by non-GAAP revenues less transaction-based expenses.
                       
    Nasdaq, Inc.
    Reconciliation of U.S. GAAP to Non-GAAP Operating Expenses
    (in millions)
    (unaudited)
                   
           Three Months Ended   Nine Months Ended
          September 30,   September 30,   September 30,   September 30,
            2024       2023       2024       2023  
                       
    U.S. GAAP operating expenses   $ 698     $ 509     $ 2,141     $ 1,553  
    Non-GAAP adjustments:                
      Amortization expense of acquired intangible assets (1)     (122 )     (37 )     (366 )     (112 )
      Merger and strategic initiatives expense (2)     (10 )     (4 )     (23 )     (51 )
      Restructuring charges (3)     (22 )     (17 )     (103 )     (49 )
      Lease asset impairments (4)                       (24 )
      Legal and regulatory matters (5)                 (16 )     10  
      Pension settlement charge (6)                 (23 )      
      Other (loss)     (1 )     (2 )     (4 )     (2 )
      Total non-GAAP adjustments     (155 )     (60 )     (535 )     (228 )
    Non-GAAP operating expenses   $ 543     $ 449     $ 1,606     $ 1,325  
                       
                       
    (1) We amortize intangible assets acquired in connection with various acquisitions. Intangible asset amortization expense can vary from period to period due to episodic acquisitions completed, rather than from our ongoing business operations.
           
    (2) We have pursued various strategic initiatives and completed acquisitions and divestitures in recent years which have resulted in expenses which would not have otherwise been incurred. These expenses generally include integration costs, as well as legal, due diligence and other third party transaction costs. The frequency and amount of such expenses vary significantly based on the size, timing and complexity of the transaction. For the three and nine months ended September 30, 2024 and September 30, 2023, these costs primarily relate to the Adenza acquisition. For the nine months ended September 30, 2024, these costs were partially offset by a termination payment recognized in the second quarter of 2024 relating to the proposed divestiture of our Nordic power trading and clearing business.
                       
    (3) In the fourth quarter of 2023, following the closing of the Adenza acquisition, our management approved, committed to and initiated a restructuring program, “Adenza Restructuring” to optimize our efficiencies as a combined organization. In connection with this program, we expect to incur pre-tax charges principally related to employee-related costs, contract terminations, real estate impairments and other related costs. We expect to achieve benefits primarily in the form of expense and revenue synergies. In October 2022, following our September announcement to realign our segments and leadership, we initiated a divisional alignment program with a focus on realizing the full potential of this structure. In September 2024, we completed our divisional alignment program and recognized total pre-tax charges of $139 million over a two-year period.
                       
    (4) During the first quarter of 2023, we initiated a review of our real estate and facility capacity requirements due to our new and evolving work models. As a result, for the nine months ended September 30, 2023, we recorded impairment charges related to our operating lease assets and leasehold improvements associated with vacating certain leased office space, which are recorded in occupancy expense and depreciation and amortization expense in our Condensed Consolidated Statements of Income.
                       
    (5) For the nine months ended September 30, 2024, these items primarily included the settlement of a SFSA fine and accruals related to certain legal matters. For the nine months ended September 30, 2023, these items primarily included insurance recoveries related to legal matters. The fine is recorded in regulatory expense and the accruals and insurance recoveries are recorded in professional and contract services and general, administrative and other expense in the Condensed Consolidated Statements of Income.
                       
    (6) For the nine months ended September 30, 2024, we recorded a pre-tax loss as a result of settling our U.S. pension plan. The plan was terminated and partially settled in 2023, with final settlement occurring during the first quarter of 2024. The pre-tax loss is recorded in compensation and benefits in the Condensed Consolidated Statements of Income.
                       
    Nasdaq, Inc.
    Reconciliation of Pro Forma Impacts for U.S. Non-GAAP Revenues less transaction-based expenses, Non-GAAP Operating Expenses,
    Non-GAAP Operating Income, and Non-GAAP Operating Margin
    (in millions)
    (unaudited)
     
      Three Months Ended   Three Months Ended                  
      September 30, 2024   September 30, 2023   Total Variance   FX (3)   Pro Forma Impacts
      Non-GAAP Adenza Adjustment (1)   Pro Forma   Non-GAAP   Adenza (2)   Pro Forma   $   %   $   $ %
    Capital Access Platforms revenues $ 501   $     $ 501     $ 456     $   $ 456     $ 45     10 %   $ 1   $ 44   9 %
                                           
    Financial Crime Management Technology revenues   69           69       58           58       11     20 %         11   20 %
    Regulatory Technology revenues   102     (2 )     100       35       56     91       9     10 %     1     8   8 %
    Capital Markets Technology revenues   234           234       145       71     216       18     8 %         18   8 %
    Financial Technology revenues   405     (2 )     403       238       127     365       38     10 %     1     37   10 %
    Solutions revenues (4)   906     (2 )     904       694       127     821       83     10 %     2     81   10 %
                                           
    Market Services, net revenues   266           266       236           236       30     13 %         30   13 %
    Other revenues   8           8       10           10       (2 )   (13 )%         (2 ) (14 )%
    Revenues less transaction-based expenses   1,180     (2 )     1,178       940       127     1,067       111     10 %     2     109   10 %
                                           
    Non-GAAP operating expenses   543           543       449       65     514       29     6 %     1     28   5 %
    Non-GAAP operating income $ 637   $ (2 )   $ 635     $ 491     $ 62   $ 553     $ 82     15 %   $ 1   $ 81   14 %
    Non-GAAP operating margin   54 %       54 %     52 %         52 %                  
                                           
    Note: Pro forma results are presented assuming AxiomSL and Calypso were included in the prior year quarterly results and revenue for AxiomSL on-premises contracts were recognized ratably for all of 2023 and 2024. Pro forma growth excludes the impacts of foreign currency except for AxiomSL and Calypso, which are not yet calculated on an organic basis. These pro forma results are not calculated, and do not intend to be calculated, in a manner consistent with the pro forma requirements in Article 11 of Regulation S-X. Preparation of this information in accordance with Article 11 would differ from results presented in this release. The current period percentages are calculated based on exact dollars, and therefore may not recalculate exactly using rounded numbers as presented in US$ millions.
                                           
    (1) Adjustment to remove the cumulative impact of changing to ratable revenue recognition for AxiomSL on-premises subscription contracts, which related to the first six months of 2024.
     
    (2) The Adenza results above are presented on a non-GAAP basis and have been adjusted for certain items. We believe presenting these measures excluding these items provides investors with greater transparency as they do not represent ongoing operations. These adjustments include intangible amortization of $39 million and other transaction and restructuring related costs of $3 million for the third quarter of 2023.
     
    (3) Reflects the impacts from changes in FX rates.
     
    (4) Represents Capital Access Platforms and Financial Technology Segments.
                                           
    Nasdaq, Inc.
    Reconciliation of Organic Impacts for U.S. Non-GAAP Revenues less transaction-based expenses, Non-GAAP Operating Expenses,
    Non-GAAP Operating Income, and Non-GAAP Diluted Earnings Per Share
    (in millions)
    (unaudited)
                                   
      Three Months Ended                        
      September 30,   September 30,   Total Variance   Organic Impact   Other Impacts (1)
      2024   2023   $   %   $   %   $   %
    CAPITAL ACCESS PLATFORMS                              
    Data and Listing Services revenues $ 190   $ 188   $ 2     1 %   $ 1     1 %   $ 1     %
    Index revenues   182     144     38     26 %     38     26 %         %
    Workflow and Insights revenues   129     124     5     4 %     5     3 %         %
    Total Capital Access Platforms revenues   501     456     45     10 %     44     9 %     1     %
                                   
    FINANCIAL TECHNOLOGY                              
    Financial Crime Management Technology revenues   69     58     11     20 %     11     20 %         %
    Regulatory Technology revenues   102     35     67     190 %     2     6 %     65     185 %
    Capital Markets Technology revenues   234     145     89     62 %     7     5 %     82     57 %
    Total Financial Technology revenues   405     238     167     71 %     20     9 %     147     62 %
                                   
    SOLUTIONS REVENUES (2)   906     694     212     31 %     64     9 %     148     21 %
                                   
    MARKET SERVICES REVENUES, NET   266     236     30     13 %     30     13 %         %
                                   
    OTHER REVENUES   8     10     (2 )   (13 )%     (2 )   (14 )%         1 %
                                   
    REVENUES LESS TRANSACTION-BASED EXPENSES $ 1,180   $ 940   $ 240     26 %   $ 92     10 %   $ 148     16 %
                                   
    Non-GAAP Operating Expenses $ 543   $ 449   $ 94     21 %   $ 32     7 %   $ 62     14 %
                                   
    Non-GAAP Operating Income $ 637   $ 491   $ 146     30 %   $ 60     12 %   $ 86     18 %
                                   
    Non-GAAP diluted earnings per share $ 0.74   $ 0.71   $ 0.03     5 %   $ 0.14     20 %   $ (0.11 )   (16 )%
                                   
    Note: The period over period percentages are calculated based on exact dollars, and therefore may not agree to a recalculation based on rounded numbers shown in the tables above. The sum of the percentage changes may not tie to the percentage change in total variance due to rounding.
                                   
    (1) Primarily includes the impacts of the Adenza acquisition and changes in FX rates.
     
    (2) Represents Capital Access Platforms and Financial Technology Segments.
                                   
    Nasdaq, Inc.
    Quarterly Key Drivers Detail
    (unaudited)
                     
        Three Months Ended   Nine Months Ended
        September 30,   September 30,   September 30,   September 30,
          2024       2023       2024       2023  
    Capital Access Platforms              
      Annualized recurring revenues (in millions) (1) $ 1,254     $ 1,222     $ 1,254     $ 1,222  
      Initial public offerings              
      The Nasdaq Stock Market (2)   48       39       114       102  
      Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic   1             7       3  
      Total new listings              
      The Nasdaq Stock Market (2)   138       87       301       230  
      Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic (3)   6       3       18       16  
      Number of listed companies              
      The Nasdaq Stock Market (4)   4,039       4,086       4,039       4,086  
      Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic (5)   1,186       1,236       1,186       1,236  
      Index              
      Number of licensed exchange traded products (6)   388       366       388       366  
      Period end ETP assets under management (AUM) tracking Nasdaq indexes (in billions) $ 600     $ 411     $ 600     $ 411  
      Quarterly average ETP AUM tracking Nasdaq indexes (in billions) $ 575     $ 423          
      TTM (7) net inflows ETP AUM tracking Nasdaq indexes (in billions) $ 62     $ 24     $ 62     $ 24  
      TTM (7) net appreciation ETP AUM tracking Nasdaq indexes (in billions) $ 143     $ 78     $ 143     $ 78  
                     
    Financial Technology              
      Annualized recurring revenues (in millions) (1)              
      Financial Crime Management Technology $ 268     $ 216     $ 268     $ 216  
      Regulatory Technology   350       132       350       132  
      Capital Markets Technology   864       511       864       511  
      Total Financial Technology $ 1,482     $ 859     $ 1,482     $ 859  
                     
    Market Services              
      Equity Derivative Trading and Clearing              
      U.S. equity options              
      Total industry average daily volume (in millions)   44.5       39.6       43.3       40.4  
      Nasdaq PHLX matched market share   9.4 %     11.0 %     9.9 %     11.2 %
      The Nasdaq Options Market matched market share   5.8 %     5.6 %     5.5 %     6.4 %
      Nasdaq BX Options matched market share   2.3 %     4.4 %     2.3 %     3.6 %
      Nasdaq ISE Options matched market share   6.8 %     5.7 %     6.7 %     5.8 %
      Nasdaq GEMX Options matched market share   2.7 %     3.0 %     2.6 %     2.3 %
      Nasdaq MRX Options matched market share   3.2 %     2.0 %     2.6 %     1.7 %
      Total matched market share executed on Nasdaq’s exchanges   30.2 %     31.7 %     29.6 %     31.0 %
      Nasdaq Nordic and Nasdaq Baltic options and futures              
      Total average daily volume of options and futures contracts (8)   213,911       245,986       235,137       298,785  
                     
      Cash Equity Trading              
      Total U.S.-listed securities              
      Total industry average daily share volume (in billions)   11.5       10.4       11.7       11.0  
      Matched share volume (in billions)   117.4       106.7       354.3       342.2  
      The Nasdaq Stock Market matched market share   15.6 %     15.5 %     15.6 %     15.9 %
      Nasdaq BX matched market share   0.3 %     0.4 %     0.4 %     0.4 %
      Nasdaq PSX matched market share   0.2 %     0.3 %     0.2 %     0.4 %
      Total matched market share executed on Nasdaq’s exchanges   16.1 %     16.2 %     16.2 %     16.7 %
      Market share reported to the FINRA/Nasdaq Trade Reporting Facility   44.7 %     40.2 %     43.0 %     35.2 %
      Total market share (9)   60.8 %     56.4 %     59.2 %     51.9 %
      Nasdaq Nordic and Nasdaq Baltic securities              
      Average daily number of equity trades executed on Nasdaq’s exchanges   609,167       556,257       645,622       676,132  
      Total average daily value of shares traded (in billions) $ 4.1     $ 3.6     $ 4.5     $ 4.5  
      Total market share executed on Nasdaq’s exchanges   71.6 %     71.6 %     72.2 %     70.6 %
                     
      Fixed Income and Commodities Trading and Clearing              
      Fixed Income              
      Total average daily volume of Nasdaq Nordic and Nasdaq Baltic fixed income contracts   89,037       88,383       94,493       96,461  
                     
      (1) Annualized Recurring Revenue (ARR) for a given period is the current annualized value derived from subscription contracts with a defined contract value. This excludes contracts that are not recurring, are one-time in nature, or where the contract value fluctuates based on defined metrics. ARR is currently one of our key performance metrics to assess the health and trajectory of our recurring business. ARR does not have any standardized definition and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items. For AxiomSL and Calypso recurring revenue contracts, the amount included in ARR is consistent with the amount that we invoice the customer during the current period. Additionally, for AxiomSL and Calypso recurring revenue contracts that include annual values that increase over time, we include in ARR only the annualized value of components of the contract that are considered active as of the date of the ARR calculation. We do not include the future committed increases in the contract value as of the date of the ARR calculation. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.
       
      (2) New listings include IPOs, issuers that switched from other listing venues, closed-end funds and separately listed ETPs. For the three months ended September 30, 2024 and 2023, IPOs included 15 and 4 SPACs, respectively. For the nine months ended September 30, 2024 and 2023, IPOs included 28 and 19 SPACs, respectively.
       
      (3) New listings include IPOs and represent companies listed on the Nasdaq Nordic and Nasdaq Baltic exchanges and companies on the alternative markets of Nasdaq First North.
       
      (4) Number of total listings on The Nasdaq Stock Market for the nine months ended September 30, 2024 and September 30, 2023 included 712 and 570 ETPs, respectively.
       
      (5) Represents companies listed on the Nasdaq Nordic and Nasdaq Baltic exchanges and companies on the alternative markets of Nasdaq First North.
       
      (6) The number of listed ETPs as of September 30, 2023 has been updated to reflect a revised methodology whereby an ETP listed on multiple exchanges is counted as one product, rather than formerly being counted per exchange. This change has no impact on reported AUM.
       
      (7) Trailing 12-months.
       
      (8) Includes Finnish option contracts traded on Eurex for which Nasdaq and Eurex had a revenue sharing arrangement, which ended in the fourth quarter of 2023.
       
      (9) Includes transactions executed on The Nasdaq Stock Market’s, Nasdaq BX’s and Nasdaq PSX’s systems plus trades reported through the Financial Industry Regulatory Authority/Nasdaq Trade Reporting Facility.
                     

    The MIL Network

  • MIL-OSI: Virtu Announces Third Quarter 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    NEW YORK, Oct. 24, 2024 (GLOBE NEWSWIRE) — Virtu Financial, Inc. (NASDAQ: VIRT), a leading provider of financial services and products that leverages cutting edge technology to deliver innovative, transparent trading solutions to its clients and liquidity to the global markets, today reported results for the third quarter ended September 30, 2024.

    Third Quarter 2024:

    • Net income of $119.0 million; Normalized Adjusted Net Income1 of $132.1 million
    • Basic and diluted earnings per share of $0.65 and $0.64, respectively; Normalized Adjusted EPS1 of $0.82
    • Total revenues of $706.8 million; Trading income, net, of $444.0 million; Net income Margin of 16.8%2
      • Adjusted Net Trading Income1 of $388.0 million
    • Adjusted EBITDA1 of $214.8 million; Adjusted EBITDA Margin1 of 55.4%
    • Share buybacks of $48.4 million, or 1.7 million shares, under the Share Repurchase Program3

    The Virtu Financial, Inc. Board of Directors declared a quarterly cash dividend of $0.24 per share. This dividend is payable on December 15, 2024 to shareholders of record as of December 1, 2024.

    Note 1: Non-GAAP financial measures. Please see “Non-GAAP Financial Measures and Other Items” for more information.
    Note 2: Calculated by dividing Net income by Total revenue
    Note 3: Shares repurchased calculated on a settlement date basis.

    Financial Results

    Third Quarter 2024:

    Total revenues increased 12.2% to $706.8 million for this quarter, compared to $630.2 million for the same period in 2023. Trading income, net, increased 40.5% to $444.0 million for the quarter compared to $316.1 million for the same period in 2023. Net income totaled $119.0 million for this quarter, compared to net income of $117.6 million in the prior year quarter.

    Basic and diluted earnings per share for this quarter were $0.65 and $0.64, respectively, compared to basic and diluted earnings per share of $0.63 and $0.63, respectively, for the same period in 2023.

    Adjusted Net Trading Income increased 30.2% to $388.0 million for this quarter, compared to $298.0 million for the same period in 2023. Adjusted EBITDA increased 54.0% to $214.8 million for this quarter, compared to $139.5 million for the same period in 2023. Normalized Adjusted Net Income, removing one-time and non-cash items, increased 76.8% to $132.1 million for this quarter, compared to $74.7 million for the same period in 2023.

    Assuming all non-controlling interests had been exchanged for common stock, and the Company’s Normalized Adjusted Net Income before income taxes was subject to corporation taxes, Normalized Adjusted EPS was $0.82 for this quarter, compared to $0.45 for the same period in 2023.

    Operating Segment Information

    The Company has two operating segments: Market Making and Execution Services; and one non-operating segment: Corporate.

    Market Making principally consists of market making in the cash, futures and options markets across global equities, fixed income, currencies and commodities. As a market maker, the Company commits capital on a principal basis by offering to buy securities from, or sell securities to, broker dealers, banks and institutions.

    Execution Services comprises agency-based trading and trading venues, offering execution services in global equities, options, futures and fixed income on behalf of institutions, banks and broker dealers. The Company also provides proprietary technology and infrastructure, workflow technology, and trading analytics services to select third parties. The segment also includes the results of the Company’s capital markets business, in which the Company acts as an agent for issuers in connection with at-the-market offerings and buyback programs.

    Corporate contains the Company’s investments, principally in strategic trading-related opportunities, and maintains corporate overhead expenses.

    The following tables show the trading income, net, total revenues and Adjusted Net Trading Income by segment for the three and nine months ended September 30, 2024 and 2023.

    Total revenues by segment
    (in thousands, unaudited)

        Three Months Ended September 30, 2024   Three Months Ended September 30, 2023
        Market
    Making
      Execution
    Services
      Corporate   Total   Market
    Making
      Execution
    Services
      Corporate   Total
    Trading income, net   $ 440,442   $ 3,555   $   $ 443,997   $ 310,523   $ 5,562   $   $ 316,085
    Commissions, net and technology services     12,721     118,900         131,621     6,343     103,933         110,276
    Interest and dividends income     122,065     3,164         125,229     124,803     2,890         127,693
    Other, net     1,432     108     4,453     5,993     75,682     68     360     76,110
    Total Revenues   $ 576,660   $ 125,727   $ 4,453   $ 706,840   $ 517,351   $ 112,453   $ 360   $ 630,164
                                                     
                                     
        Nine Months Ended September 30, 2024   Nine Months Ended September 30, 2023
        Market
    Making
      Execution
    Services
      Corporate   Total   Market
    Making
      Execution
    Services
      Corporate   Total
    Trading income, net   $ 1,264,214   $ 14,273   $   $ 1,278,487   $ 1,021,179   $ 13,585   $     $ 1,034,764
    Commissions, net and technology services     29,203     347,130         376,333     22,677     318,546           341,223
    Interest and dividends income     330,178     8,109         338,287     300,086     7,830           307,916
    Other, net     43,855     1,063     4,639     49,557     77,580     84     (4,171 )     73,493
    Total Revenues   $ 1,667,450   $ 370,575   $ 4,639   $ 2,042,664   $ 1,421,522   $ 340,045   $ (4,171 )   $ 1,757,396
                                                       

    Reconciliation of trading income, net to Adjusted Net Trading Income by operating segment
    (in thousands, unaudited)

        Three Months Ended September 30, 2024   Three Months Ended September 30, 2023
        Market
    Making
      Execution Services   Corporate   Total   Market
    Making
      Execution Services   Corporate   Total
    Trading income, net   $ 440,442     $ 3,555     $   $ 443,997     $ 310,523     $ 5,562     $   $ 316,085  
    Commissions, net and technology services     12,721       118,900           131,621       6,343       103,933           110,276  
    Interest and dividends income     122,065       3,164           125,229       124,803       2,890           127,693  
    Brokerage, exchange, clearance fees and payments for order flow, net     (152,316 )     (24,429 )         (176,745 )     (101,077 )     (22,168 )         (123,245 )
    Interest and dividends expense     (134,912 )     (1,158 )         (136,070 )     (132,523 )     (279 )         (132,802 )
    Adjusted Net Trading Income   $ 288,000     $ 100,032     $   $ 388,032     $ 208,069     $ 89,938     $   $ 298,007  
                                                                 
        Nine Months Ended September 30, 2024   Nine Months Ended September 30, 2023
        Market
    Making
      Execution Services   Corporate   Total   Market
    Making
      Execution Services   Corporate   Total
    Trading income, net   $ 1,264,214     $ 14,273     $   $ 1,278,487     $ 1,021,179     $ 13,585     $   $ 1,034,764  
    Commissions, net and technology services     29,203       347,130           376,333       22,677       318,546           341,223  
    Interest and dividends income     330,178       8,109           338,287       300,086       7,830           307,916  
    Brokerage, exchange, clearance fees and payments for order flow, net     (394,154 )     (73,177 )         (467,331 )     (323,868 )     (67,370 )         (391,238 )
    Interest and dividends expense     (382,200 )     (3,591 )         (385,791 )     (340,954 )     (1,942 )         (342,896 )
    Adjusted Net Trading Income   $ 847,241     $ 292,744     $   $ 1,139,985     $ 679,120     $ 270,649     $   $ 949,769  
                                                                 

    Financial Condition

    As of September 30, 2024, Virtu had $738.2 million in cash, cash equivalents and restricted cash, and total long-term debt outstanding in an aggregate principal amount of $1,769.4 million.

    Share Repurchase Program

    Since inception of the program in November 2020 through settlement date October 22, 2024, the Company repurchased approximately 49.2 million shares of Class A Common Stock and Virtu Financial Units for approximately $1,240.7 million. The Company has approximately $479.3 million remaining capacity for future purchases of shares of Class A Common Stock and Virtu Financial Units under the program.

    Earnings Conference Call Information

    Virtu Financial will host a conference call to review its third quarter 2024 financial performance today, October 24th, at 8:30 a.m. ET. Members of the public may listen to the conference call through an audio webcast through the Investor Relations section of the firm’s website ir.virtu.com/investor-relations.

    Website Information

    We routinely post important information for investors on the Investor Relations section of our website, ir.virtu.com/investor-relations and also from time to time may use social media channels, including our Twitter account (twitter.com/virtufinancial) and our LinkedIn account (linkedin.com/company/virtu-financial), as an additional means of disclosing public information to investors, the media and others interested in us. It is possible that certain information we post on our website and on social media could be deemed to be material information, and we encourage investors, the media and others interested in us to review the business and financial information we post on our website and on the social media channels identified above, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website and our social media channels is not incorporated by reference into, and is not a part of, this document.

    Non-GAAP Financial Measures and Other Items

    To supplement our unaudited condensed consolidated financial statements presented in accordance with generally accepted accounting principles (“GAAP”), we use the following non-GAAP measures of financial performance:

    • “Adjusted Net Trading Income”, which is the amount of revenue we generate from our market making activities, or trading income, net, plus commissions, net and technology services, plus interest and dividends income and expense, net, less direct costs associated with those revenues, including brokerage, exchange, clearance fees and payments for order flow, net. Management believes that this measurement is useful for comparing general operating performance from period to period. Although we use Adjusted Net Trading Income as a financial measure to assess the performance of our business, the use of Adjusted Net Trading Income is limited because it does not include certain material costs that are necessary to operate our business. Our presentation of Adjusted Net Trading Income should not be construed as an indication that our future results will be unaffected by revenues or expenses that are not directly associated with our core business activities.
    • “EBITDA”, which measures our operating performance by adjusting Net Income to exclude Financing interest expense on long-term borrowings, Debt issue cost related to debt refinancing, prepayment, and commitment fees, Depreciation and amortization, Amortization of purchased intangibles and acquired capitalized software, and Income tax expense, and “Adjusted EBITDA”, which measures our operating performance by further adjusting EBITDA to exclude severance, transaction advisory fees and expenses, termination of office leases, charges related to share-based compensation and other expenses, which includes reserves for legal matters, and Other, net, which includes gains and losses from strategic investments and the sales of businesses.
    • “Normalized Adjusted Net Income”, “Normalized Adjusted Net Income before income taxes”, “Normalized provision for income taxes”, and “Normalized Adjusted EPS”, which we calculate by adjusting Net Income to exclude certain items, and other non-cash items, assuming that all vested and unvested Virtu Financial Units have been exchanged for Class A Common Stock, and applying an effective tax rate, which was approximately 24%.
    • “Adjusted Operating Expenses”, which we calculate by adjusting total operating expenses to exclude severance, share based compensation, reserves for legal matters, termination of office leases, connectivity early termination and write-down of assets.

    Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes, and Normalized Adjusted EPS and Adjusted Operating Expenses are non-GAAP financial measures used by management in evaluating operating performance and in making strategic decisions. Additional information provided regarding the breakdown of Total Adjusted Net Trading Income by category is also a non-GAAP financial measure but is not used by the Company in evaluating operating performance and in making strategic decisions. In addition, these non-GAAP financial measures or similar non-GAAP measures are used by research analysts, investment bankers and lenders to assess our operating performance. Management believes that the presentation of Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS provide useful information to investors regarding our results of operations because they assist both investors and management in analyzing and benchmarking the performance and value of our business. Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS provide indicators of general economic performance that are not affected by fluctuations in certain costs or other items. Accordingly, management believes that these measurements are useful for comparing general operating performance from period to period. Furthermore, our credit agreement contains tests based on metrics similar to Adjusted EBITDA. Other companies may define Adjusted Net Trading Income, Adjusted EBITDA, Adjusted EBITDA Margin, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS differently, and as a result our measures of Adjusted Net Trading Income, Adjusted EBITDA, Adjusted EBITDA Margin, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS may not be directly comparable to those of other companies. Although we use these non-GAAP financial measures as financial measures to assess the performance of our business, such use is limited because they do not include certain material costs necessary to operate our business.

    Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes, Normalized Adjusted Net Income and Normalized Adjusted EPS should be considered in addition to, and not as a substitute for, Net Income in accordance with U.S. GAAP as a measure of performance. Our presentation of Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS should not be construed as an indication that our future results will be unaffected by unusual or nonrecurring items. Adjusted Net Trading Income, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes, Normalized Adjusted EPS and our EBITDA-based measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under U.S. GAAP. Some of these limitations are:

    • they do not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments;
    • our EBITDA-based measures do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payment on our debt;
    • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and our EBITDA-based measures do not reflect any cash requirement for such replacements or improvements;
    • they are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows;
    • they do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations; and
    • they do not reflect limitations on our costs related to transferring earnings from our subsidiaries to us.

    Because of these limitations, Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes, Normalized Adjusted Net Income and Normalized Adjusted EPS are not intended as alternatives to Net Income as indicators of our operating performance and should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations. We compensate for these limitations by using Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes, Normalized Adjusted Net Income and Normalized Adjusted EPS along with other comparative tools, together with U.S. GAAP measurements, to assist in the evaluation of operating performance. These U.S. GAAP measurements include Net Income, cash flows from operations and cash flow data. See below a reconciliation of each non-GAAP measure to the most directly comparable GAAP measure.

    Virtu Financial, Inc. and Subsidiaries
    Condensed Consolidated Statements of Comprehensive Income (Unaudited)
             
        Three Months Ended
    September 30,
      Nine Months Ended
    September 30,
    (in thousands, except share and per share data)     2024       2023       2024       2023  
                     
    Revenues:                
    Trading income, net   $ 443,997     $ 316,085     $ 1,278,487     $ 1,034,764  
    Interest and dividends income     125,229       127,693       338,287       307,916  
    Commissions, net and technology services     131,621       110,276       376,333       341,223  
    Other, net     5,993       76,110       49,557       73,493  
    Total revenues     706,840       630,164       2,042,664       1,757,396  
                     
    Operating Expenses:                
    Brokerage, exchange, clearance fees and payments for order flow, net     176,745       123,245       467,331       391,238  
    Communication and data processing     59,601       57,066       177,110       170,837  
    Employee compensation and payroll taxes     107,646       97,221       314,185       296,214  
    Interest and dividends expense     136,070       132,802       385,791       342,896  
    Operations and administrative     24,939       22,416       69,346       72,204  
    Depreciation and amortization     16,486       15,815       48,640       47,076  
    Amortization of purchased intangibles and acquired capitalized software     11,848       15,967       38,688       48,007  
    Termination of office leases     17       364       50       314  
    Debt issue cost related to debt refinancing, prepayment and commitment fees     1,767       1,796       27,740       5,744  
    Transaction advisory fees and expenses     69       6       264       30  
    Financing interest expense on long-term borrowings     24,492       25,361       71,154       74,499  
    Total operating expenses     559,680       492,059       1,600,299       1,449,059  
                     
    Income before income taxes and noncontrolling interest     147,160       138,105       442,365       308,337  
    Provision for income taxes     28,137       20,512       83,917       51,117  
    Net income   $ 119,023     $ 117,593     $ 358,448     $ 257,220  
                     
    Noncontrolling interest     (59,071 )     (55,678 )     (176,093 )     (120,722 )
                     
    Net income available for common stockholders   $ 59,952     $ 61,915     $ 182,355     $ 136,498  
                     
    Earnings per share:                
    Basic   $ 0.65     $ 0.63     $ 1.95     $ 1.36  
    Diluted   $ 0.64     $ 0.63     $ 1.95     $ 1.36  
                     
    Weighted average common shares outstanding                
    Basic     87,152,658       93,408,537       88,093,082       95,376,590  
    Diluted     87,536,847       93,408,537       88,340,592       95,376,590  
                     
    Comprehensive income:                
    Net income   $ 119,023     $ 117,593     $ 358,448     $ 257,220  
    Other comprehensive income                
    Foreign exchange translation adjustment, net of taxes     6,835       (4,005 )     3,745       170  
    Net change in unrealized cash flow hedges gain (loss), net of taxes     (19,568 )     (7,646 )     (30,931 )     (12,612 )
    Comprehensive income   $ 106,290     $ 105,942     $ 331,262     $ 244,778  
    Less: Comprehensive income attributable to noncontrolling interest     (54,083 )     (50,832 )     (164,990 )     (115,557 )
    Comprehensive income available for common stockholders   $ 52,207     $ 55,110     $ 166,272     $ 129,221  
                                     
    Virtu Financial, Inc. and Subsidiaries
    Reconciliation to Non-GAAP Operating Data (Unaudited)

    The following tables reconcile Condensed Consolidated Statements of Comprehensive Income to arrive at Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, and selected Operating Margins.

        Three Months Ended
    September 30,
      Nine Months Ended
    September 30,
    (in thousands, except percentages)     2024       2023       2024       2023  
                     
    Reconciliation of Trading income, net to Adjusted Net Trading Income                
    Trading income, net   $ 443,997     $ 316,085     $ 1,278,487     $ 1,034,764  
    Commissions, net and technology services     131,621       110,276       376,333       341,223  
    Interest and dividends income     125,229       127,693       338,287       307,916  
    Brokerage, exchange, clearance fees and payments for order flow, net     (176,745 )     (123,245 )     (467,331 )     (391,238 )
    Interest and dividends expense     (136,070 )     (132,802 )     (385,791 )     (342,896 )
    Adjusted Net Trading Income   $ 388,032     $ 298,007     $ 1,139,985     $ 949,769  
                     
    Reconciliation of Net Income to EBITDA and Adjusted EBITDA                
    Net income     119,023       117,593       358,448       257,220  
    Financing interest expense on long-term borrowings     24,492       25,361       71,154       74,499  
    Debt issue cost related to debt refinancing, prepayment and commitment fees     1,767       1,796       27,740       5,744  
    Depreciation and amortization     16,486       15,815       48,640       47,076  
    Amortization of purchased intangibles and acquired capitalized software     11,848       15,967       38,688       48,007  
    Provision for income taxes     28,137       20,512       83,917       51,117  
    EBITDA   $ 201,753     $ 197,044     $ 628,587     $ 483,663  
    Severance     690       1,346       3,651       5,256  
    Transaction advisory fees and expenses     69       6       264       30  
    Termination of office leases     17       364       50       314  
    Other     (5,669 )     (74,599 )     (48,334 )     (67,396 )
    Share based compensation     17,945       15,353       50,941       47,108  
    Adjusted EBITDA   $ 214,805     $ 139,514     $ 635,159     $ 468,975  
                     
    Selected Operating Margins                
    GAAP Net income Margin (1)     16.8 %     18.7 %     17.5 %     14.6 %
    Non-GAAP Net income Margin (2)     30.7 %     39.5 %     31.4 %     27.1 %
    EBITDA Margin (3)     52.0 %     66.1 %     55.1 %     50.9 %
    Adjusted EBITDA Margin (4)     55.4 %     46.8 %     55.7 %     49.4 %
                     
    1 Calculated by dividing Net income by Total revenue.                
    2 Calculated by dividing Net income by Adjusted Net Trading Income.                
    3 Calculated by dividing EBITDA by Adjusted Net Trading Income.                
    4 Calculated by dividing Adjusted EBITDA by Adjusted Net Trading Income.                
                     
    Virtu Financial, Inc. and Subsidiaries
    Reconciliation to Non-GAAP Operating Data (Unaudited)
    (Continued)

    The following tables reconcile Condensed Consolidated Statements of Comprehensive Income to arrive at Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes, Normalized Adjusted Net Income and Normalized Adjusted EPS.

        Three Months Ended
    September 30,
      Nine Months Ended
    September 30,
    (in thousands, except share and per share data)     2024       2023       2024       2023  
                     
    Reconciliation of Net Income to Normalized Adjusted Net Income                
    Net income   $ 119,023     $ 117,593     $ 358,448     $ 257,220  
    Provision for income taxes     28,137       20,512       83,917       51,117  
    Income before income taxes and noncontrolling interest   $ 147,160     $ 138,105     $ 442,365     $ 308,337  
    Amortization of purchased intangibles and acquired capitalized software     11,848       15,967       38,688       48,007  
    Debt issue cost related to debt refinancing, prepayment and commitment fees     1,767       1,796       27,740       5,744  
    Severance     690       1,346       3,651       5,256  
    Transaction advisory fees and expenses     69       6       264       30  
    Termination of office leases     17       364       50       314  
    Other     (5,669 )     (74,599 )     (48,334 )     (67,396 )
    Share based compensation     17,945       15,353       50,941       47,108  
    Normalized Adjusted Net Income before income taxes   $ 173,827     $ 98,338     $ 515,365     $ 347,400  
    Normalized provision for income taxes (1)     41,719       23,601       123,688       83,374  
    Normalized Adjusted Net Income   $ 132,108     $ 74,737     $ 391,677     $ 264,026  
                     
    Weighted Average Adjusted shares outstanding (2)     161,709,295       167,164,049       162,322,747       169,101,067  
                     
    Normalized Adjusted EPS   $ 0.82     $ 0.45     $ 2.41     $ 1.56  
                     
    (1) Reflects U.S. federal, state, and local income tax rate applicable to corporations of approximately 24% for all periods presented.
    (2) Assumes that (1) holders of all vested and unvested non-vesting Virtu Financial Units (together with corresponding shares of the Company’s Class C common stock, par value $0.00001 per share (the “Class C Common Stock”)) have exercised their right to exchange such Virtu Financial Units for shares of Class A Common Stock on a one-for-one basis, (2) holders of all Virtu Financial Units (together with corresponding shares of the Company’s Class D common stock, par value $0.00001 per share (the “Class D Common Stock”)) have exercised their right to exchange such Virtu Financial Units for shares of the Company’s Class B common stock, par value $0.00001 per share (the “Class B Common Stock”) on a one-for-one basis, and subsequently exercised their right to convert the shares of Class B Common Stock into shares of Class A Common Stock on a one-for-one basis. Includes additional shares from the dilutive impact of options, restricted stock units and restricted stock awards outstanding under the Amended and Restated 2015 Management Incentive Plan during the three and six months ended September 30, 2024 and 2023.
    Virtu Financial, Inc. and Subsidiaries
    Condensed Consolidated Statements of Financial Condition (Unaudited)
             
    (in thousands, except share data)   September 30,
    2024
      December 31,
    2023
             
    Assets        
    Cash and cash equivalents   $ 701,405   $ 820,436  
    Cash and securities segregated under regulations and other     36,823     35,024  
    Securities borrowed     2,301,690     1,722,440  
    Securities purchased under agreements to resell     708,773     1,512,114  
    Receivables from broker-dealers and clearing organizations     1,194,193     737,724  
    Receivables from customers     169,565     106,245  
    Trading assets, at fair value     7,186,027     7,358,611  
    Property, equipment and capitalized software, net     93,899     100,365  
    Operating lease right-of-use assets     190,261     229,499  
    Goodwill     1,148,926     1,148,926  
    Intangibles (net of accumulated amortization)     214,971     257,520  
    Deferred taxes     122,399     133,760  
    Assets of business held for sale     4,637      
    Other assets     327,137     303,720  
    Total assets     14,400,706     14,466,384  
             
    Liabilities and equity        
    Liabilities        
    Short-term borrowings, net     128,761      
    Securities loaned     2,109,164     1,329,446  
    Securities sold under agreements to repurchase     1,045,811     1,795,994  
    Payables to broker-dealers and clearing organizations     619,640     1,167,712  
    Payables to customers     97,774     23,229  
    Trading liabilities, at fair value     6,335,171     6,071,352  
    Tax receivable agreement obligations     196,254     216,480  
    Accounts payable and accrued expenses and other liabilities     469,796     451,293  
    Operating lease liabilities     236,253     278,317  
    Long-term borrowings, net     1,741,543     1,727,205  
    Liabilities of business held for sale     1,184      
    Total liabilities     12,981,351     13,061,028  
             
    Total equity     1,419,355     1,405,356  
             
    Total liabilities and equity   $ 14,400,706   $ 14,466,384  
             
        As of September 30, 2024
    Ownership of Virtu Financial LLC Interests:   Interests   %
    Virtu Financial, Inc. – Class A Common Stock and Restricted Stock Units     91,902,168     57.2 %
    Non-controlling Interests (Virtu Financial LLC)     68,666,792     42.8 %
    Total Virtu Financial LLC Interests     160,568,960     100.0 %
                   

    About Virtu Financial, Inc.

    Virtu is a leading financial services firm that leverages cutting-edge technology to provide execution services and data, analytics and connectivity products to its clients and deliver liquidity to the global markets. Leveraging its global market making expertise and infrastructure, Virtu provides a robust product suite including offerings in execution, liquidity sourcing, analytics and broker-neutral, multi-dealer platforms in workflow technology. Virtu’s product offerings allow clients to trade on hundreds of venues across 50+ countries and in multiple asset classes, including global equities, ETFs, foreign exchange, futures, fixed income and myriad other commodities. In addition, Virtu’s integrated, multi-asset analytics platform provides a range of pre and post-trade services, data products and compliance tools that clients rely upon to invest, trade and manage risk across global markets.

    Cautionary Note Regarding Forward-Looking Statements

    This press release may contain “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements regarding Virtu Financial, Inc.’s (“Virtu’s”, the “Company’s” or “our”) business that are not historical facts are forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which, such performance or results will be achieved. The Company assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, and if the Company does update one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect thereto or with respect to other forward-looking statements. Forward-looking statements are based on information available at the time and/or management’s good faith belief with respect to future events, and is subject to risks and uncertainties, some or all of which are not predictable or within Virtu’s control, that could cause actual performance or results to differ materially from those expressed in the statements. Those risks and uncertainties include, without limitation: risks relating to fluctuations in trading volume and volatilities in the markets in which we operate; the ability of our trading counterparties, clients, and various clearing houses to perform their obligations to us; the performance and reliability of our customized trading platform; the risk of material trading losses from our market making activities; swings in valuations in securities or other instruments in which we hold positions; increasing competition and consolidation in our industry; the risk that cash flow from our operations and other available sources of liquidity will not be sufficient to fund our various ongoing obligations, including operating expenses, short-term funding requirements, margin requirements, capital expenditures, debt service and dividend payments; potential consequences of recent SEC proposals focused on equity markets which may, if adopted, result in reduced overall and off-exchange trading volumes and market making opportunities, impose additional or heightened regulatory obligations on market makers and other market participants, and generally increase the implicit and explicit cost as well as the complexity of the U.S. equities eco-system for all participants; regulatory and legal uncertainties and potential changes associated with our industry, particularly in light of increased attention from media, regulators and lawmakers to market structure and related issues including but not limited to the retail trading environment, wholesale market making and off exchange trading more generally and payment for order flow arrangements; potential adverse results from legal or regulatory proceedings; our ability to remain technologically competitive and to ensure that the technology we utilize is not vulnerable to security risks, hacking and cyber-attacks; risks associated with third party software and technology infrastructure. For a discussion of the risks and uncertainties which could cause actual results to differ from those contained in forward-looking statements, see Virtu’s Securities and Exchange Commission filings, including but not limited to Virtu’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC.

    CONTACT         

    Investor & Media Relations
    Andrew Smith
    investor_relations@virtu.com
    media@virtu.com

    The MIL Network

  • MIL-OSI: Valley National Bancorp Announces Third Quarter 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    NEW YORK, Oct. 24, 2024 (GLOBE NEWSWIRE) — Valley National Bancorp (NASDAQ:VLY), the holding company for Valley National Bank, today reported net income for the third quarter 2024 of $97.9 million, or $0.18 per diluted common share, as compared to the second quarter 2024 net income of $70.4 million, or $0.13 per diluted common share, and net income of $141.3 million, or $0.27 per diluted common share, for the third quarter 2023. Excluding all non-core income and charges, our adjusted net income (a non-GAAP measure) was $96.8 million, or $0.18 per diluted common share, for the third quarter 2024, $71.6 million, or $0.13 per diluted common share, for the second quarter 2024, and $136.4 million, or $0.26 per diluted common share, for the third quarter 2023. See further details below, including a reconciliation of our non-GAAP adjusted net income, in the “Consolidated Financial Highlights” tables.

    Ira Robbins, CEO, commented, “The third quarter’s financial results highlight the significant progress that we continue to make towards achieving our strategic balance sheet goals. On October 23, 2024, we entered into an agreement to sell performing commercial real estate loans expected to total over $800 million at a very modest discount of approximately 1 percent to a single investor. This economically compelling transaction is expected to close in the fourth quarter 2024 and reflects the strength and desirability of our commercial real estate portfolio. We have executed on a variety of strategic transactions this year that have notably strengthened our balance sheet and enhanced our financial flexibility.”

    Mr. Robbins continued, “This quarter’s results also indicated the early stages of normalized profitability which we expect will accelerate as we enter 2025. Net interest income and non-interest income both improved meaningfully from the second quarter 2024, and our operating expenses were well-controlled and effectively unchanged on a year-over-year basis. While recent weather events weighed on the sequential provision improvement that we anticipated, our pre-provision earnings continued to improve during the third quarter and could set the stage for more stable results in the near future. And most importantly, our thoughts are with those affected by the recent hurricanes in our Florida markets and the other areas in the southeast. We are strongly committed to supporting our associates, clients and communities throughout the rebuilding and recovery process.”

    Key financial highlights for the third quarter 2024:

    • Net Interest Income and Margin: Net interest income on a tax equivalent basis of $411.8 million for the third quarter 2024 increased $8.8 million compared to the second quarter 2024 and decreased $1.8 million as compared to the third quarter 2023. Our net interest margin on a tax equivalent basis also increased by 2 basis points to 2.86 percent in the third quarter 2024 as compared to 2.84 percent for the second quarter 2024. The increases from the second quarter 2024 were mostly due to continued yield expansion on average loans and additional interest income and higher yields from targeted growth within our available for sale securities portfolio. See the “Net Interest Income and Margin” section below for more details.
    • Loan Portfolio: Total loans decreased $956.4 million, or 7.6 percent on an annualized basis, to $49.4 billion at September 30, 2024 from June 30, 2024 mostly due to the transfer of performing commercial real estate loans totaling $823.1 million, net of unearned fees, to loans held for sale at September 30, 2024 and normal repayment activity mainly within the commercial real estate non-owner occupied and multi-family loans, as we continue to actively reduce these loan categories. Our commercial and industrial loans grew $320.1 million, or 13.5 percent on an annualized basis, to $9.8 billion at September 30, 2024 from June 30, 2024 due to solid organic growth during the third quarter 2024. Residential mortgage and total consumer loans also increased modestly during the third quarter 2024. See the “Loans” section below for more details.
    • Deposits: Actual ending balances for deposits increased $283.8 million to $50.4 billion at September 30, 2024 as compared to $50.1 billion at June 30, 2024 mainly due to higher period-end direct commercial customer money market and non-interest bearing deposits, partially offset by a decline in time deposits. See the “Deposits” section below for more details.
    • Allowance and Provision for Credit Losses for Loans: The allowance for credit losses for loans totaled $564.7 million and $532.5 million at September 30, 2024 and June 30, 2024, respectively, representing 1.14 percent and 1.06 percent of total loans at each respective date. During the third quarter 2024, we recorded a provision for credit losses for loans of $75.0 million as compared to $82.1 million and $9.1 million for the second quarter 2024 and third quarter 2023, respectively. The third quarter 2024 provision reflects, among other factors, increased quantitative reserves allocated to commercial real estate loans, significant commercial and industrial loan growth and $8.0 million of qualitative reserves related to the estimated impact of Hurricane Helene, which hit Florida in late September 2024.
    • Credit Quality: Non-accrual loans totaled $296.3 million, or 0.60 percent of total loans at September 30, 2024 as compared to $303.3 million, or 0.60 percent of total loans at June 30, 2024. Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) increased to 0.35 percent of total loans at September 30, 2024 as compared to 0.14 percent at June 30, 2024 largely due to two well-secured commercial real estate loans at various stages of expected collection within the early stage delinquency categories. Net loan charge-offs totaled $42.9 million for the third quarter 2024 as compared to $36.8 million and $5.5 million for the second quarter 2024 and third quarter 2023, respectively. The loan charge-offs in the third quarter 2024 included partial charge-offs totaling a combined $30.1 million related to two commercial real estate loan relationships. See the “Credit Quality” section below for more details.
    • Non-Interest Income: Non-interest income increased $9.5 million to $60.7 million for the third quarter 2024 as compared to the second quarter 2024 mainly due to increases in other income; wealth management and trust fees; and service charges on deposits totaling $11.2 million, $2.0 million, and $1.6 million, respectively. The increases in the aforementioned categories were partially offset by a $5.8 million mark to market loss (recorded within net losses on sales of loans) associated with the performing commercial real estate loans transferred to loans held for sale at September 30, 2024, as well as lower swap fees related to commercial loan transactions (within capital market fees) and insurance commissions. The increase in other income was mostly the result of income from litigation settlements totaling $7.3 million for the third quarter 2024.
    • Non-Interest Expense: Non-interest expense decreased $8.0 million to $269.5 million for the third quarter 2024 as compared to the second quarter 2024 largely due to a $6.2 million decrease in technology, furniture and equipment expense and a $3.8 million decrease in professional and legal expenses, partially offset by higher net occupancy expense during the third quarter 2024.
    • Efficiency Ratio: Our efficiency ratio was 56.13 percent for the third quarter 2024 as compared to 59.62 percent and 56.72 percent for the second quarter 2024 and third quarter 2023, respectively. See the “Consolidated Financial Highlights” tables below for additional information regarding our non-GAAP measures.
    • Performance Ratios: Annualized return on average assets (ROA), shareholders’ equity (ROE) and tangible ROE were 0.63 percent, 5.70 percent and 8.06 percent for the third quarter 2024, respectively. Annualized ROA, ROE, and tangible ROE, adjusted for non-core income and charges, were 0.62 percent, 5.64 percent and 7.97 percent for the third quarter 2024, respectively. See the “Consolidated Financial Highlights” tables below for additional information regarding our non-GAAP measures.

    Net Interest Income and Margin

    Net interest income on a tax equivalent basis of $411.8 million for the third quarter 2024 increased $8.8 million compared to the second quarter 2024 and decreased $1.8 million as compared to the third quarter 2023. Interest income on a tax equivalent basis increased $27.1 million to $861.9 million for the third quarter 2024 as compared to the second quarter 2024. The increase was mostly due to higher yields on both new loan originations and adjustable rate loans, as well as higher yields and additional interest income from targeted purchases of taxable investments within the available for sale securities portfolio during the second and third quarter 2024. Total interest expense increased $18.3 million to $450.1 million for the third quarter 2024 as compared to the second quarter 2024 mainly due to an increase in average time deposit balances coupled with higher costs on most interest bearing deposit products. See the “Deposits” and “Other Borrowings” sections below for more details.

    Net interest margin on a tax equivalent basis of 2.86 percent for the third quarter 2024 increased by 2 basis points from 2.84 percent for the second quarter 2024 and decreased 5 basis points from 2.91 percent for the third quarter 2023. The increase as compared to the second quarter 2024 was largely driven by the higher yield on average interest earning assets largely offset by an increase in the cost of average interest bearing liabilities. The yield on average interest earning assets increased by 10 basis points to 5.98 percent on a linked quarter basis largely due to higher yielding investment purchases and new loan originations during the second and third quarter 2024. The overall cost of average interest bearing liabilities increased 7 basis points to 4.22 percent for the third quarter 2024 as compared to the second quarter 2024 largely due to higher interest rates on deposits. Our cost of total average deposits was 3.25 percent for the third quarter 2024 as compared to 3.18 percent and 2.94 percent for the second quarter 2024 and the third quarter 2023, respectively.

    Loans, Deposits and Other Borrowings

    Loans. Total loans decreased $956.4 million, or 7.6 percent on an annualized basis, to $49.4 billion at September 30, 2024 from June 30, 2024. Commercial and industrial loans grew by $320.1 million , or 13.5 percent on an annualized basis, to $9.8 billion at September 30, 2024 from June 30, 2024 largely due to our continued strategic focus on the expansion of new loan production within this category. Total commercial real estate (including construction) loans decreased $1.4 billion to $30.4 billion at September 30, 2024 from June 30, 2024. This decline was primarily driven by the transfer of $823.1 million of commercial real estate loans, net of unearned loan fees, from the loans held for investment portfolio to loans held for sale as of September 30, 2024. In addition, we remained highly selective on new originations and projects in an effort to reduce commercial real estate loan concentrations, mainly within the non-owner occupied and multifamily loan categories. Automobile loan balances increased by $60.9 million, or 13.8 percent on an annualized basis, to $1.8 billion at September 30, 2024 from June 30, 2024 mainly due to continued consumer demand generated by our indirect auto dealer network and low prepayment activity within the portfolio. Other consumer loans decreased $42.4 million, or 15.3 percent on an annualized basis, to $1.1 billion at September 30, 2024 from June 30, 2024 primarily due to the negative impact of the high level of market interest rates on the demand and usage of collateralized personal lines of credit.

    Deposits. Actual ending balances for deposits increased $283.8 million to $50.4 billion at September 30, 2024 from June 30, 2024 mainly due to an increase of $358.3 million in savings, NOW and money market deposits and an increase of $36.0 million in non-interest bearing deposits, partially offset by a decrease of $110.5 million in time deposits. Non-interest bearing deposit and savings, NOW and money market deposit balances increased at September 30, 2024 from June 30, 2024 mostly due to increases in national specialized deposits and higher direct commercial customer deposit accounts. Total indirect customer deposits (including both brokered money market and time deposits) totaled $9.1 billion in both September 30, 2024 and June 30, 2024. Non-interest bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 22 percent, 50 percent and 28 percent of total deposits as of September 30, 2024, respectively, as compared to 22 percent, 49 percent and 29 percent of total deposits as of June 30, 2024, respectively.

    Other Borrowings. Short-term borrowings, consisting of securities sold under agreements to repurchase, decreased $5.5 million to $58.3 million at September 30, 2024 from June 30, 2024. Long-term borrowings totaled $3.3 billion at September 30, 2024 and also remained relatively unchanged as compared to June 30, 2024.

    Credit Quality

    Hurricanes Helene and Milton. In the early stages of the fourth quarter 2024, the credit quality of our Florida loan portfolio has remained resilient in the aftermath of Hurricane Helene, which hit Florida in late September 2024, and Hurricane Milton, which made landfall on October 9, 2024. At this time, there have been relatively few loan concessions (mostly in the form of loan payment deferrals up to 90 days) for distressed borrowers impacted by the hurricanes. However, we continue to assess the impact of the hurricanes on our Florida client base and, where appropriate, we will work constructively with individual borrowers.

    Non-Performing Assets (NPAs). Total NPAs, consisting of non-accrual loans, other real estate owned (OREO) and other repossessed assets, decreased $7.8 million to $305.1 million at September 30, 2024 as compared to June 30, 2024. Non-accrual loans decreased $7.0 million to $296.3 million at September 30, 2024 as compared to $303.3 million at June 30, 2024. Non-accrual construction and commercial real estate loans decreased $20.7 million and $9.3 million to $24.7 million and $113.8 million, respectively, at September 30, 2024 as compared to June 30, 2024 mainly due to loan payoffs during the third quarter 2024. The decreases in these loan categories were partially offset by two new non-accrual commercial and industrial loans totaling $19.0 million, as well as moderate increases in non-accrual residential mortgage and consumer loans at September 30, 2024. OREO decreased $887 thousand at September 30, 2024 from June 30, 2024 mostly due to the sale of one commercial property, which resulted in the recognition of an immaterial loss for the third quarter 2024.

    Accruing Past Due Loans. Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) increased $102.3 million to $174.7 million, or 0.35 percent of total loans, at September 30, 2024 as compared to $72.4 million, or 0.14 percent of total loans at June 30, 2024. Loans 30 to 59 days past due increased $69.1 million to $115.1 million at September 30, 2024 as compared to June 30, 2024 mainly due to a $74.5 million increase in commercial real estate loans, partially offset by a $7.0 million decline in consumer loan delinquencies. The increase in commercial real estate loans 30 to 59 days past due was mostly due to one new delinquent loan totaling $40.9 million, which is expected to be fully repaid, subject to the borrower’s pending sale of certain collateral, as well as a few other new loan delinquencies. Loans 60 to 89 days past due increased $42.9 million to $54.8 million at September 30, 2024 as compared to June 30, 2024 mostly due to one well-secured commercial real estate loan totaling $43.9 million currently in the process of loan modification. Loans 90 days or more past due and still accruing interest decreased $9.7 million to $4.8 million at September 30, 2024 as compared to June 30, 2024 largely due to one $4.0 million construction loan that was fully repaid and one $4.2 million commercial real estate loan that migrated from this past due category to non-accrual loans during the third quarter 2024. All loans 90 days or more past due and still accruing interest are well-secured and in the process of collection.

    Allowance for Credit Losses for Loans and Unfunded Commitments. The following table summarizes the allocation of the allowance for credit losses to loan categories and the allocation as a percentage of each loan category at September 30, 2024, June 30, 2024 and September 30, 2023:

        September 30, 2024   June 30, 2024   September 30, 2023
            Allocation       Allocation       Allocation
            as a % of       as a % of       as a % of
        Allowance   Loan   Allowance   Loan   Allowance   Loan
      Allocation   Category   Allocation   Category   Allocation   Category
      ($ in thousands)
    Loan Category:                      
    Commercial and industrial loans $ 166,365   1.70 %   $ 149,243   1.57 %   $ 133,988   1.44 %
    Commercial real estate loans:                      
      Commercial real estate   249,608   0.93       246,316   0.87       191,562   0.68  
      Construction   59,420   1.70       54,777   1.54       53,485   1.40  
    Total commercial real estate loans   309,028   1.02       301,093   0.95       245,047   0.77  
    Residential mortgage loans   51,545   0.91       47,697   0.85       44,621   0.80  
    Consumer loans:                      
      Home equity   3,303   0.57       3,077   0.54       3,689   0.67  
      Auto and other consumer   18,086   0.63       18,200   0.63       14,830   0.52  
    Total consumer loans   21,389   0.62       21,277   0.62       18,519   0.55  
    Allowance for loan losses   548,327   1.11       519,310   1.03       442,175   0.88  
    Allowance for unfunded credit commitments   16,344         13,231         20,170    
    Total allowance for credit losses for loans $ 564,671       $ 532,541       $ 462,345    
    Allowance for credit losses for loans as a % total loans     1.14 %       1.06 %       0.92 %
                                 

    Our loan portfolio, totaling $49.4 billion at September 30, 2024, had net loan charge-offs totaling $42.9 million for the third quarter 2024 as compared to $36.8 million and $5.5 million for the second quarter 2024 and the third quarter 2023, respectively. Total gross loan charge-offs in the third quarter 2024 included partial charge-offs totaling $30.1 million related to two non-performing commercial real estate loan relationships that had combined specific reserves of $25.9 million within the allowance for loan losses at June 30, 2024.

    The allowance for credit losses for loans, comprised of our allowance for loan losses and unfunded credit commitments, as a percentage of total loans was 1.14 percent at September 30, 2024, 1.06 percent at June 30, 2024, and 0.92 percent at September 30, 2023. For the third quarter 2024, the provision for credit losses for loans totaled $75.0 million as compared to $82.1 million and $9.1 million for the second quarter 2024 and third quarter 2023, respectively. The provision for credit losses remained somewhat elevated for the third quarter 2024 largely due to higher quantitative reserves allocated to commercial real estate loans, commercial and industrial loan growth and $8.0 million of qualitative reserves related to the estimated impact of Hurricane Helene.

    The allowance for unfunded credit commitments increased to $16.3 million at September 30, 2024 from $13.2 million at June 30, 2024 mainly due to increases in both non-cancellable construction commitments and commercial and industrial standby letters of credit.

    As previously noted, we are currently evaluating the impact of Hurricane Milton, and we also continue to evaluate any further impact of Hurricane Helene, on our loan portfolio. While not anticipated based on information currently available, Hurricane Milton and unexpected losses from Hurricane Helene could result in a significant increase to the current hurricane related reserves within the allowance, loan charge-offs and our provision for the fourth quarter 2024.

    Capital Adequacy

    Valley’s total risk-based capital, common equity Tier 1 capital, Tier 1 capital and Tier 1 leverage capital ratios were 12.56 percent, 9.57 percent, 10.29 percent and 8.40 percent, respectively, at September 30, 2024 as compared to 12.18 percent, 9.55 percent, 9.99 percent and 8.19 percent, respectively, at June 30, 2024. The increases in the total risk-based capital, Tier 1 capital and Tier 1 leverage ratios as compared to June 30, 2024 were largely due to Valley’s issuance of 6.0 million shares of its 8.250 percent Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series C on August 5, 2024. Net proceeds to Valley after deducting underwriting discounts, commissions and offering expenses were approximately $144.7 million.

    Investor Conference Call

    Valley will host a conference call with investors and the financial community at 11:00 AM (ET) today to discuss the third quarter 2024 earnings and related matters. Interested parties should preregister using this link: https://register.vevent.com/register to receive the dial-in number and a personal PIN, which are required to access the conference call. The teleconference will also be webcast live: https://edge.media-server.com and archived on Valley’s website through Monday, December 2, 2024. Investor presentation materials will be made available prior to the conference call at www.valley.com.

    About Valley

    As the principal subsidiary of Valley National Bancorp, Valley National Bank is a regional bank with over $62 billion in assets. Valley is committed to giving people and businesses the power to succeed. Valley operates many convenient branch locations and commercial banking offices across New Jersey, New York, Florida, Alabama, California and Illinois, and is committed to providing the most convenient service, the latest innovations and an experienced and knowledgeable team dedicated to meeting customer needs. Helping communities grow and prosper is the heart of Valley’s corporate citizenship philosophy. To learn more about Valley, go to www.valley.com or call our Customer Care Center at 800-522-4100.

    Forward-Looking Statements

    The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management’s confidence and strategies and management’s expectations about our business, new and existing programs and products, acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations. These statements may be identified by such forward-looking terminology as “intend,” “should,” “expect,” “believe,” “view,” “opportunity,” “allow,” “continues,” “reflects,” “would,” “could,” “typically,” “usually,” “anticipate,” “may,” “estimate,” “outlook,” “project” or similar statements or variations of such terms. Such forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from such forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to:

    • the impact of market interest rates and monetary and fiscal policies of the U.S. federal government and its agencies in connection with the prolonged inflationary pressures, which could have a material adverse effect on our clients, our business, our employees, and our ability to provide services to our customers;
    • the impact of unfavorable macroeconomic conditions or downturns, including an actual or threatened U.S. government shutdown, debt default or rating downgrade, instability or volatility in financial markets, unanticipated loan delinquencies, loss of collateral, decreased service revenues, increased business disruptions or failures, reductions in employment, and other potential negative effects on our business, employees or clients caused by factors outside of our control, such as the outcome of the 2024 U.S. presidential election, geopolitical instabilities or events (including the Israel-Hamas war and the escalation and regional expansion thereof); natural and other disasters (including severe weather events, such as Hurricanes Helene and Milton); health emergencies; acts of terrorism; or other external events;
    • the impact of potential instability within the U.S. financial sector in the aftermath of the banking failures in 2023 and continued volatility thereafter, including the possibility of a run on deposits by a coordinated deposit base, and the impact of the actual or perceived soundness, or concerns about the creditworthiness of other financial institutions, including any resulting disruption within the financial markets, increased expenses, including Federal Deposit Insurance Corporation insurance assessments, or adverse impact on our stock price, deposits or our ability to borrow or raise capital;
    • the impact of negative public opinion regarding Valley or banks in general that damages our reputation and adversely impacts business and revenues;
    • changes in the statutes, regulations, policy, or enforcement priorities of the federal bank regulatory agencies;
    • the loss of or decrease in lower-cost funding sources within our deposit base;
    • damage verdicts or settlements or restrictions related to existing or potential class action litigation or individual litigation arising from claims of violations of laws or regulations, contractual claims, breach of fiduciary responsibility, negligence, fraud, environmental laws, patent, trademark or other intellectual property infringement, misappropriation or other violation, employment related claims, and other matters;
    • a prolonged downturn and contraction in the economy, as well as an unexpected decline in commercial real estate values collateralizing a significant portion of our loan portfolio;
    • higher or lower than expected income tax expense or tax rates, including increases or decreases resulting from changes in uncertain tax position liabilities, tax laws, regulations, and case law;
    • the inability to grow customer deposits to keep pace with loan growth;
    • a material change in our allowance for credit losses under CECL due to forecasted economic conditions and/or unexpected credit deterioration in our loan and investment portfolios;
    • the need to supplement debt or equity capital to maintain or exceed internal capital thresholds;
    • changes in our business, strategy, market conditions or other factors that may negatively impact the estimated fair value of our goodwill and other intangible assets and result in future impairment charges;
    • greater than expected technology related costs due to, among other factors, prolonged or failed implementations, additional project staffing and obsolescence caused by continuous and rapid market innovations;
    • cyberattacks, ransomware attacks, computer viruses, malware or other cybersecurity incidents that may breach the security of our websites or other systems or networks to obtain unauthorized access to personal, confidential, proprietary or sensitive information, destroy data, disable or degrade service, or sabotage our systems or networks;
    • results of examinations by the Office of the Comptroller of the Currency (OCC), the Federal Reserve Bank, the Consumer Financial Protection Bureau (CFPB) and other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for credit losses, write-down assets, reimburse customers, change the way we do business, or limit or eliminate certain other banking activities;
    • application of the OCC heightened regulatory standards for certain large insured national banks, and the expenses we will incur to develop policies, programs, and systems that comply with the enhanced standards applicable to us;
    • our inability or determination not to pay dividends at current levels, or at all, because of inadequate earnings, regulatory restrictions or limitations, changes in our capital requirements, or a decision to increase capital by retaining more earnings;
    • unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather, pandemics or other public health crises, acts of terrorism or other external events;
    • our ability to successfully execute our business plan and strategic initiatives; and
    • unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large prepayments, risk mitigation strategies, changes in regulatory lending guidance or other factors.

    A detailed discussion of factors that could affect our results is included in our SEC filings, including Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023.

    We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in our expectations, except as required by law. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

    -Tables to Follow-

    VALLEY NATIONAL BANCORP
    CONSOLIDATED FINANCIAL HIGHLIGHTS

    SELECTED FINANCIAL DATA

      Three Months Ended   Nine Months Ended
      September 30,   June 30,   September 30,   September 30,
    ($ in thousands, except for share data and stock price) 2024   2024   2023   2024   2023
    FINANCIAL DATA:                  
    Net interest income – FTE(1) $ 411,812     $ 402,984     $ 413,657     $ 1,209,643     $ 1,272,390  
    Net interest income $ 410,498     $ 401,685     $ 412,418     $ 1,205,731     $ 1,268,203  
    Non-interest income   60,671       51,213       58,664       173,299       173,038  
    Total revenue   471,169       452,898       471,082       1,379,030       1,441,241  
    Non-interest expense   269,471       277,497       267,133       827,278       822,270  
    Pre-provision net revenue   201,698       175,401       203,949       551,752       618,971  
    Provision for credit losses   75,024       82,070       9,117       202,294       29,604  
    Income tax expense   28,818       22,907       53,486       84,898       162,410  
    Net income   97,856       70,424       141,346       264,560       426,957  
    Dividends on preferred stock   6,117       4,108       4,127       14,344       12,031  
    Net income available to common shareholders $ 91,739     $ 66,316     $ 137,219     $ 250,216     $ 414,926  
    Weighted average number of common shares outstanding:                  
    Basic   509,227,538       509,141,252       507,650,668       508,904,353       507,580,197  
    Diluted   511,342,932       510,338,502       509,256,599       510,713,205       509,204,051  
    Per common share data:                  
    Basic earnings $ 0.18     $ 0.13     $ 0.27     $ 0.49     $ 0.82  
    Diluted earnings   0.18       0.13       0.27       0.49       0.81  
    Cash dividends declared   0.11       0.11       0.11       0.33       0.33  
    Closing stock price – high   9.34       8.02       10.30       10.80       12.59  
    Closing stock price – low   6.58       6.52       7.63       6.52       6.59  
    FINANCIAL RATIOS:                  
    Net interest margin   2.85 %     2.83 %     2.90 %     2.82 %     2.99 %
    Net interest margin – FTE(1)   2.86       2.84       2.91       2.83       3.00  
    Annualized return on average assets   0.63       0.46       0.92       0.57       0.93  
    Annualized return on avg. shareholders’ equity   5.70       4.17       8.56       5.20       8.72  
    NON-GAAP FINANCIAL DATA AND RATIOS:(2)                  
    Basic earnings per share, as adjusted $ 0.18     $ 0.13     $ 0.26     $ 0.50     $ 0.84  
    Diluted earnings per share, as adjusted   0.18       0.13       0.26       0.50       0.84  
    Annualized return on average assets, as adjusted   0.62 %     0.47 %     0.89 %     0.58 %     0.96 %
    Annualized return on average shareholders’ equity, as adjusted   5.64       4.24       8.26       5.27       8.94  
    Annualized return on avg. tangible shareholders’ equity   8.06       5.95       12.39       7.40       12.71  
    Annualized return on average tangible shareholders’ equity, as adjusted   7.97       6.05       11.95       7.50       13.04  
    Efficiency ratio   56.13       59.62       56.72       58.26       55.34  
                       
    AVERAGE BALANCE SHEET ITEMS:                  
    Assets $ 62,242,022     $ 61,518,639     $ 61,391,688     $ 61,674,588     $ 61,050,973  
    Interest earning assets   57,651,650       56,772,950       56,802,565       57,016,790       56,510,997  
    Loans   50,126,963       50,020,901       50,019,414       50,131,468       49,120,153  
    Interest bearing liabilities   42,656,956       41,576,344       40,829,078       41,932,616       39,802,966  
    Deposits   50,409,234       49,383,209       49,848,446       49,459,617       48,165,152  
    Shareholders’ equity   6,862,555       6,753,981       6,605,786       6,781,022       6,531,424  
                                           
      As Of
    BALANCE SHEET ITEMS: September 30,   June 30,   March 31,   December   September 30,
    (In thousands) 2024   2024   2024   2023   2023
    Assets $ 62,092,332     $ 62,058,974     $ 61,000,188     $ 60,934,974     $ 61,183,352  
    Total loans   49,355,319       50,311,702       49,922,042       50,210,295       50,097,519  
    Deposits   50,395,966       50,112,177       49,077,946       49,242,829       49,885,314  
    Shareholders’ equity   6,972,380       6,737,737       6,727,139       6,701,391       6,627,299  
                       
    LOANS:                  
    (In thousands)                  
    Commercial and industrial $ 9,799,287     $ 9,479,147     $ 9,104,193     $ 9,230,543     $ 9,274,630  
    Commercial real estate:                  
    Non-owner occupied   12,647,649       13,710,015       14,962,851       15,078,464       14,741,668  
    Multifamily   8,612,936       8,976,264       8,818,263       8,860,219       8,863,529  
    Owner occupied   5,654,147       5,536,844       4,367,839       4,304,556       4,435,853  
    Construction   3,487,464       3,545,723       3,556,511       3,726,808       3,833,269  
    Total commercial real estate   30,402,196       31,768,846       31,705,464       31,970,047       31,874,319  
    Residential mortgage   5,684,079       5,627,113       5,618,355       5,569,010       5,562,665  
    Consumer:                  
    Home equity   581,181       566,467       564,083       559,152       548,918  
    Automobile   1,823,738       1,762,852       1,700,508       1,620,389       1,585,987  
    Other consumer   1,064,838       1,107,277       1,229,439       1,261,154       1,251,000  
    Total consumer loans   3,469,757       3,436,596       3,494,030       3,440,695       3,385,905  
    Total loans $ 49,355,319     $ 50,311,702     $ 49,922,042     $ 50,210,295     $ 50,097,519  
                       
    CAPITAL RATIOS:                  
    Book value per common share $ 13.00     $ 12.82     $ 12.81     $ 12.79     $ 12.64  
    Tangible book value per common share(2)   9.06       8.87       8.84       8.79       8.63  
    Tangible common equity to tangible assets(2)   7.68 %     7.52 %     7.62 %     7.58 %     7.40 %
    Tier 1 leverage capital   8.40       8.19       8.20       8.16       8.08  
    Common equity tier 1 capital   9.57       9.55       9.34       9.29       9.21  
    Tier 1 risk-based capital   10.29       9.99       9.78       9.72       9.64  
    Total risk-based capital   12.56       12.18       11.88       11.76       11.68  
                                           
      Three Months Ended   Nine Months Ended
    ALLOWANCE FOR CREDIT LOSSES: September 30,   June 30,   September 30,   September 30,
    ($ in thousands) 2024   2024   2023   2024   2023
    Allowance for credit losses for loans                  
    Beginning balance $ 532,541     $ 487,269     $ 458,676     $ 465,550     $ 483,255  
    Impact of the adoption of ASU No. 2022-02                           (1,368 )
    Beginning balance, adjusted   532,541       487,269       458,676       465,550       481,887  
    Loans charged-off:                  
    Commercial and industrial   (7,501 )     (14,721 )     (7,487 )     (36,515 )     (37,399 )
    Commercial real estate   (33,292 )     (22,144 )     (255 )     (56,640 )     (2,320 )
    Construction   (4,831 )     (212 )           (12,637 )     (9,906 )
    Residential mortgage               (20 )           (169 )
    Total consumer   (2,597 )     (1,262 )     (1,156 )     (5,668 )     (3,024 )
    Total loans charged-off   (48,221 )     (38,339 )     (8,918 )     (111,460 )     (52,818 )
    Charged-off loans recovered:                  
    Commercial and industrial   3,162       742       3,043       4,586       6,615  
    Commercial real estate   66       150       5       457       33  
    Construction   1,535                   1,535        
    Residential mortgage   29       5       30       59       186  
    Total consumer   521       603       362       1,521       1,513  
    Total loans recovered   5,313       1,500       3,440       8,158       8,347  
    Total net charge-offs   (42,908 )     (36,839 )     (5,478 )     (103,302 )     (44,471 )
    Provision for credit losses for loans   75,038       82,111       9,147       202,423       24,929  
    Ending balance $ 564,671     $ 532,541     $ 462,345     $ 564,671     $ 462,345  
    Components of allowance for credit losses for loans:                  
    Allowance for loan losses $ 548,327     $ 519,310     $ 442,175     $ 548,327     $ 442,175  
    Allowance for unfunded credit commitments   16,344       13,231       20,170       16,344       20,170  
    Allowance for credit losses for loans $ 564,671     $ 532,541     $ 462,345     $ 564,671     $ 462,345  
    Components of provision for credit losses for loans:                  
    Provision for credit losses for loans $ 71,925     $ 86,901     $ 11,221     $ 205,549     $ 29,359  
    Provision (credit) for unfunded credit commitments   3,113       (4,790 )     (2,074 )     (3,126 )     (4,430 )
    Total provision for credit losses for loans $ 75,038     $ 82,111     $ 9,147     $ 202,423     $ 24,929  
    Annualized ratio of total net charge-offs to total average loans   0.34 %     0.29 %     0.04 %     0.27 %     0.12 %
    Allowance for credit losses for loans as a % of total loans   1.14 %     1.06 %     0.92 %     1.14 %     0.92 %
                                           
      As Of
    ASSET QUALITY: September 30,   June 30,   March 31,   December 31,   September 30,
    ($ in thousands) 2024   2024   2024   2023   2023
    Accruing past due loans:                  
    30 to 59 days past due:                  
    Commercial and industrial $ 4,537     $ 5,086     $ 6,202     $ 9,307     $ 10,687  
    Commercial real estate   76,370       1,879       5,791       3,008       8,053  
    Residential mortgage   19,549       17,389       20,819       26,345       13,159  
    Total consumer   14,672       21,639       14,032       20,554       15,509  
    Total 30 to 59 days past due   115,128       45,993       46,844       59,214       47,408  
    60 to 89 days past due:                  
    Commercial and industrial   1,238       1,621       2,665       5,095       5,720  
    Commercial real estate   43,926             3,720       1,257       2,620  
    Residential mortgage   6,892       6,632       5,970       8,200       9,710  
    Total consumer   2,732       3,671       1,834       4,715       1,720  
    Total 60 to 89 days past due   54,788       11,924       14,189       19,267       19,770  
    90 or more days past due:                  
    Commercial and industrial   1,786       2,739       5,750       5,579       6,629  
    Commercial real estate         4,242                    
    Construction         3,990       3,990       3,990       3,990  
    Residential mortgage   1,931       2,609       2,884       2,488       1,348  
    Total consumer   1,063       898       731       1,088       391  
    Total 90 or more days past due   4,780       14,478       13,355       13,145       12,358  
    Total accruing past due loans $ 174,696     $ 72,395     $ 74,388     $ 91,626     $ 79,536  
    Non-accrual loans:                  
    Commercial and industrial $ 120,575     $ 102,942     $ 102,399     $ 99,912     $ 87,655  
    Commercial real estate   113,752       123,011       100,052       99,739       83,338  
    Construction   24,657       45,380       51,842       60,851       62,788  
    Residential mortgage   33,075       28,322       28,561       26,986       21,614  
    Total consumer   4,260       3,624       4,438       4,383       3,545  
    Total non-accrual loans   296,319       303,279       287,292       291,871       258,940  
    Other real estate owned (OREO)   7,172       8,059       88       71       71  
    Other repossessed assets   1,611       1,607       1,393       1,444       1,314  
    Total non-performing assets $ 305,102     $ 312,945     $ 288,773     $ 293,386     $ 260,325  
    Total non-accrual loans as a % of loans   0.60 %     0.60 %     0.58 %     0.58 %     0.52 %
    Total accruing past due and non-accrual loans as a % of loans   0.95       0.75       0.72       0.76       0.68  
    Allowance for losses on loans as a % of non-accrual loans   185.05       171.23       163.33       152.83       170.76  
                                           

    NOTES TO SELECTED FINANCIAL DATA

    (1)   Net interest income and net interest margin are presented on a tax equivalent basis using a 21 percent federal tax rate. Valley believes that this presentation provides comparability of net interest income and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC rules.  
    (2)   Non-GAAP Reconciliations. This press release contains certain supplemental financial information, described in the Notes below, which has been determined by methods other than U.S. Generally Accepted Accounting Principles (“GAAP”) that management uses in its analysis of Valley’s performance. The Company believes that the non-GAAP financial measures provide useful supplemental information to both management and investors in understanding Valley’s underlying operational performance, business and performance trends, and may facilitate comparisons of our current and prior performance with the performance of others in the financial services industry. Management utilizes these measures for internal planning, forecasting and analysis purposes. Management believes that Valley’s presentation and discussion of this supplemental information, together with the accompanying reconciliations to the GAAP financial measures, also allows investors to view performance in a manner similar to management. These non-GAAP financial measures should not be considered in isolation or as a substitute for or superior to financial measures calculated in accordance with U.S. GAAP. These non-GAAP financial measures may also be calculated differently from similar measures disclosed by other companies.  
           
    Non-GAAP Reconciliations to GAAP Financial Measures
     
      Three Months Ended   Nine Months Ended
      September 30,   June 30,   September 30,   September 30,
    ($ in thousands, except for share data) 2024   2024   2023   2024   2023
    Adjusted net income available to common shareholders (non-GAAP):                  
    Net income, as reported (GAAP) $ 97,856     $ 70,424     $ 141,346     $ 264,560     $ 426,957  
    Add: FDIC Special assessment (a)         1,363             8,757        
    Add: Losses on available for sale and held to maturity debt securities, net (b)   1       4       443       12       476  
    Add: Restructuring charge (c)         334       (675 )     954       10,507  
    Add: Mark to market loss on commercial real estate loans transferred to loans held for sale (d)   5,794                   5,794        
    Add: Provision for credit losses for available for sale securities (e)                           5,000  
    Add: Merger related expenses (f)                           4,133  
    Less: Litigation settlements (g)   (7,334 )                 (7,334 )      
    Less: Gain on sale of commercial premium finance lending division (h)                     (3,629 )      
    Less: Net gains on sales of office buildings (h)               (6,721 )           (6,721 )
    Total non-GAAP adjustments to net income   (1,539 )     1,701       (6,953 )     4,554       13,395  
    Income tax adjustments related to non-GAAP adjustments (i)   437       (482 )     1,970       (1,269 )     (2,378 )
    Net income, as adjusted (non-GAAP) $ 96,754     $ 71,643     $ 136,363     $ 267,845     $ 437,974  
    Dividends on preferred stock   6,117       4,108       4,127       14,344       12,031  
    Net income available to common shareholders, as adjusted (non-GAAP) $ 90,637     $ 67,535     $ 132,236     $ 253,501     $ 425,943  
    __________                  
    (a) Included in the FDIC insurance expense.
    (b) Included in gains (losses) on securities transactions, net.
    (c) Represents severance expense related to workforce reductions within salary and employee benefits expense.
    (d) Included in (losses) gains on sales of loans, net.
    (e) Included in provision for credit losses for available for sale and held to maturity securities (tax disallowed).
    (f) Included in salary and employee benefits expense during the first quarter 2023.
    (g) Represents recoveries from legal settlements included in other income.
    (h) Included in gains (losses) on sales of assets, net within non-interest income.
    (i) Calculated using the appropriate blended statutory tax rate for the applicable period.
     
    Adjusted per common share data (non-GAAP):                  
    Net income available to common shareholders, as adjusted (non-GAAP) $ 90,637     $ 67,535     $ 132,236     $ 253,501     $ 425,943  
    Average number of shares outstanding   509,227,538       509,141,252       507,650,668       508,904,353       507,580,197  
    Basic earnings, as adjusted (non-GAAP) $ 0.18     $ 0.13     $ 0.26     $ 0.50     $ 0.84  
    Average number of diluted shares outstanding   511,342,932       510,338,502       509,256,599       510,713,205       509,204,051  
    Diluted earnings, as adjusted (non-GAAP) $ 0.18     $ 0.13     $ 0.26     $ 0.50     $ 0.84  
    Adjusted annualized return on average tangible shareholders’ equity (non-GAAP):                  
    Net income, as adjusted (non-GAAP) $ 96,754     $ 71,643     $ 136,363     $ 267,845     $ 437,974  
    Average shareholders’ equity $ 6,862,555     $ 6,753,981     $ 6,605,786     $ 6,781,022     $ 6,531,424  
    Less: Average goodwill and other intangible assets   2,008,692       2,016,766       2,042,486       2,016,790       2,051,727  
    Average tangible shareholders’ equity $ 4,853,863     $ 4,737,215     $ 4,563,300     $ 4,764,232     $ 4,479,697  
    Annualized return on average tangible shareholders’ equity, as adjusted (non-GAAP)   7.97 %     6.05 %     11.95 %     7.50 %     13.04 %
                                           
    Non-GAAP Reconciliations to GAAP Financial Measures (Continued)
     
      Three Months Ended   Nine Months Ended
      September 30,   June 30,   September 30,   September 30,
    ($ in thousands, except for share data) 2024   2024   2023   2024   2023
    Adjusted annualized return on average assets (non-GAAP):                  
    Net income, as adjusted (non-GAAP) $ 96,754     $ 71,643     $ 136,363     $ 267,845     $ 437,974  
    Average assets $ 62,242,022     $ 61,518,639     $ 61,391,688     $ 61,674,588     $ 61,050,973  
    Annualized return on average assets, as adjusted (non-GAAP)   0.62 %     0.47 %     0.89 %     0.58 %     0.96 %
    Adjusted annualized return on average shareholders’ equity (non-GAAP):                  
    Net income, as adjusted (non-GAAP) $ 96,754     $ 71,643     $ 136,363     $ 267,845     $ 437,974  
    Average shareholders’ equity $ 6,862,555     $ 6,753,981     $ 6,605,786     $ 6,781,022     $ 6,531,424  
    Annualized return on average shareholders’ equity, as adjusted (non-GAAP)   5.64 %     4.24 %     8.26 %     5.27 %     8.94 %
    Annualized return on average tangible shareholders’ equity (non-GAAP):                  
    Net income, as reported (GAAP) $ 97,856     $ 70,424     $ 141,346     $ 264,560     $ 426,957  
    Average shareholders’ equity $ 6,862,555     $ 6,753,981     $ 6,605,786     $ 6,781,022     $ 6,531,424  
    Less: Average goodwill and other intangible assets   2,008,692       2,016,766       2,042,486       2,016,790       2,051,727  
    Average tangible shareholders’ equity $ 4,853,863     $ 4,737,215     $ 4,563,300     $ 4,764,232     $ 4,479,697  
    Annualized return on average tangible shareholders’ equity (non-GAAP)   8.06 %     5.95 %     12.39 %     7.40 %     12.71 %
    Efficiency ratio (non-GAAP):                  
    Non-interest expense, as reported (GAAP) $ 269,471     $ 277,497     $ 267,133     $ 827,278     $ 822,270  
    Less: FDIC Special assessment (pre-tax)         1,363             8,757        
    Less: Restructuring charge (pre-tax)         334       (675 )     954       10,507  
    Less: Merger-related expenses (pre-tax)                           4,133  
    Less: Amortization of tax credit investments (pre-tax)   5,853       5,791       4,191       17,206       13,462  
    Non-interest expense, as adjusted (non-GAAP) $ 263,618     $ 270,009     $ 263,617     $ 800,361     $ 794,168  
    Net interest income, as reported (GAAP)   410,498       401,685       412,418       1,205,731       1,268,203  
    Non-interest income, as reported (GAAP)   60,671       51,213       58,664       173,299       173,038  
    Add: Losses on available for sale and held to maturity securities transactions, net (pre-tax)   1       4       443       12       476  
    Add: Mark-to-market loss on commercial real estate loans transferred to loans held for sale (pre-tax)   5,794                   5,794        
    Less: Litigation settlements (pre-tax)   (7,334 )                 (7,334 )      
    Less: Gain on sale of premium finance division (pre-tax)                     (3,629 )      
    Less: Net gains on sales of office buildings (pre-tax)               (6,721 )           (6,721 )
    Non-interest income, as adjusted (non-GAAP) $ 59,132     $ 51,217     $ 52,386     $ 168,142     $ 166,793  
    Gross operating income, as adjusted (non-GAAP) $ 469,630     $ 452,902     $ 464,804     $ 1,373,873     $ 1,434,996  
    Efficiency ratio (non-GAAP)   56.13 %     59.62 %     56.72 %     58.26 %     55.34 %
                                           
      As of
      September 30,   June 30,   March 31,   December 31,   September 30,
    ($ in thousands, except for share data) 2024   2024   2024   2023   2023
    Tangible book value per common share (non-GAAP):                  
    Common shares outstanding   509,252,936       509,205,014       508,893,059       507,709,927       507,660,742  
    Shareholders’ equity (GAAP) $ 6,972,380     $ 6,737,737     $ 6,727,139     $ 6,701,391     $ 6,627,299  
    Less: Preferred stock   354,345       209,691       209,691       209,691       209,691  
    Less: Goodwill and other intangible assets   2,004,414       2,012,580       2,020,405       2,029,267       2,038,202  
    Tangible common shareholders’ equity (non-GAAP) $ 4,613,621     $ 4,515,466     $ 4,497,043     $ 4,462,433     $ 4,379,406  
    Tangible book value per common share (non-GAAP) $ 9.06     $ 8.87     $ 8.84     $ 8.79     $ 8.63  
    Tangible common equity to tangible assets (non-GAAP):                  
    Tangible common shareholders’ equity (non-GAAP) $ 4,613,621     $ 4,515,466     $ 4,497,043     $ 4,462,433     $ 4,379,406  
    Total assets (GAAP)   62,092,332       62,058,974       61,000,188       60,934,974       61,183,352  
    Less: Goodwill and other intangible assets   2,004,414       2,012,580       2,020,405       2,029,267       2,038,202  
    Tangible assets (non-GAAP) $ 60,087,918     $ 60,046,394     $ 58,979,783     $ 58,905,707     $ 59,145,150  
    Tangible common equity to tangible assets (non-GAAP)   7.68 %     7.52 %     7.62 %     7.58 %     7.40 %
                                           

    VALLEY NATIONAL BANCORP
    CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
    (in thousands, except for share data)

      September 30,   December 31,
      2024   2023
      (Unaudited)    
    Assets      
    Cash and due from banks $ 511,945     $ 284,090  
    Interest bearing deposits with banks   527,960       607,135  
    Investment securities:      
    Equity securities   73,071       64,464  
    Trading debt securities   3,996       3,973  
    Available for sale debt securities   2,602,260       1,296,576  
    Held to maturity debt securities (net of allowance for credit losses of $1,076 at September 30, 2024 and $1,205 at December 31, 2023)   3,573,960       3,739,208  
    Total investment securities   6,253,287       5,104,221  
    Loans held for sale (includes fair value of $17,153 at September 30, 2024 and $20,640 at December 31, 2023 for loans originated for sale)   843,201       30,640  
    Loans   49,355,319       50,210,295  
    Less: Allowance for loan losses   (548,327 )     (446,080 )
    Net loans   48,806,992       49,764,215  
    Premises and equipment, net   356,649       381,081  
    Lease right of use assets   335,032       343,461  
    Bank owned life insurance   730,081       723,799  
    Accrued interest receivable   250,131       245,498  
    Goodwill   1,868,936       1,868,936  
    Other intangible assets, net   135,478       160,331  
    Other assets   1,472,640       1,421,567  
    Total Assets $ 62,092,332     $ 60,934,974  
    Liabilities      
    Deposits:      
    Non-interest bearing $ 11,153,754     $ 11,539,483  
    Interest bearing:      
    Savings, NOW and money market   25,069,405       24,526,622  
    Time   14,172,807       13,176,724  
    Total deposits   50,395,966       49,242,829  
    Short-term borrowings   58,268       917,834  
    Long-term borrowings   3,274,340       2,328,375  
    Junior subordinated debentures issued to capital trusts   57,368       57,108  
    Lease liabilities   394,971       403,781  
    Accrued expenses and other liabilities   939,039       1,283,656  
    Total Liabilities   55,119,952       54,233,583  
    Shareholders’ Equity      
    Preferred stock, no par value; 50,000,000 authorized shares:      
    Series A (4,600,000 shares issued at September 30, 2024 and December 31, 2023)   111,590       111,590  
    Series B (4,000,000 shares issued at September 30, 2024 and December 31, 2023)   98,101       98,101  
    Series C (6,000,000 shares issued at September 30, 2024)   144,654        
    Common stock (no par value, authorized 650,000,000 shares; issued 509,252,936 shares at September 30, 2024 and 507,896,910 shares at December 31, 2023)   178,661       178,187  
    Surplus   5,002,718       4,989,989  
    Retained earnings   1,551,428       1,471,371  
    Accumulated other comprehensive loss   (114,772 )     (146,456 )
    Treasury stock, at cost (186,983 common shares at December 31, 2023)         (1,391 )
    Total Shareholders’ Equity   6,972,380       6,701,391  
    Total Liabilities and Shareholders’ Equity $ 62,092,332     $ 60,934,974  
                   

    VALLEY NATIONAL BANCORP
    CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
    (in thousands, except for share data)

      Three Months Ended   Nine Months Ended
      September 30,   June 30,   September 30,   September 30,
      2024   2024   2023   2024   2023
    Interest Income                  
    Interest and fees on loans $ 786,680     $ 770,964     $ 753,638     $ 2,329,197     $ 2,124,036
    Interest and dividends on investment securities:                  
    Taxable   49,700       40,460       32,383       125,957       96,591
    Tax-exempt   4,855       4,799       4,585       14,450       15,485
    Dividends   5,929       6,341       5,299       19,098       18,001
    Interest on federal funds sold and other short-term investments   13,385       10,902       17,113       33,969       66,594
    Total interest income   860,549       833,466       813,018       2,522,671       2,320,707
    Interest Expense                  
    Interest on deposits:                  
    Savings, NOW and money market   235,371       231,597       201,916       699,474       517,524
    Time   174,741       160,442       164,336       486,248       370,398
    Interest on short-term borrowings   451       691       5,189       21,754       89,345
    Interest on long-term borrowings and junior subordinated debentures   39,488       39,051       29,159       109,464       75,237
    Total interest expense   450,051       431,781       400,600       1,316,940       1,052,504
    Net Interest Income   410,498       401,685       412,418       1,205,731       1,268,203
    (Credit) provision for credit losses for available for sale and held to maturity securities   (14 )     (41 )     (30 )     (129 )     4,675
    Provision for credit losses for loans   75,038       82,111       9,147       202,423       24,929
    Net Interest Income After Provision for Credit Losses   335,474       319,615       403,301       1,003,437       1,238,599
    Non-Interest Income                  
    Wealth management and trust fees   15,125       13,136       11,417       46,191       32,180
    Insurance commissions   2,880       3,958       2,336       9,089       7,895
    Capital markets   6,347       7,779       7,141       19,796       35,000
    Service charges on deposit accounts   12,826       11,212       10,952       35,287       31,970
    Gains (losses) on securities transactions, net   47       3       (398 )     99       197
    Fees from loan servicing   3,443       2,691       2,681       9,322       8,054
    (Losses) gains on sales of loans, net   (3,644 )     884       2,023       (1,142 )     3,752
    Gains (losses) on sales of assets, net   55       (2 )     6,653       3,747       6,938
    Bank owned life insurance   5,387       4,545       2,709       13,167       7,736
    Other   18,205       7,007       13,150       37,743       39,316
    Total non-interest income   60,671       51,213       58,664       173,299       173,038
    Non-Interest Expense                  
    Salary and employee benefits expense   138,832       140,815       137,292       421,478       431,872
    Net occupancy expense   26,973       24,252       24,675       75,548       73,880
    Technology, furniture and equipment expense   28,962       35,203       37,320       99,627       106,304
    FDIC insurance assessment   14,792       14,446       7,946       47,474       27,527
    Amortization of other intangible assets   8,692       8,568       9,741       26,672       30,072
    Professional and legal fees   14,118       17,938       17,109       48,521       55,329
    Amortization of tax credit investments   5,853       5,791       4,191       17,206       13,462
    Other   31,249       30,484       28,859       90,752       83,824
    Total non-interest expense   269,471       277,497       267,133       827,278       822,270
    Income Before Income Taxes   126,674       93,331       194,832       349,458       589,367
    Income tax expense   28,818       22,907       53,486       84,898       162,410
    Net Income   97,856       70,424       141,346       264,560       426,957
    Dividends on preferred stock   6,117       4,108       4,127       14,344       12,031
    Net Income Available to Common Shareholders $ 91,739     $ 66,316     $ 137,219     $ 250,216     $ 414,926
                                         

    VALLEY NATIONAL BANCORP
    Quarterly Analysis of Average Assets, Liabilities and Shareholders’ Equity and
    Net Interest Income on a Tax Equivalent Basis

      Three Months Ended
      September 30, 2024   June 30, 2024   September 30, 2023
      Average       Avg.   Average       Avg.   Average       Avg.
    ($ in thousands) Balance   Interest   Rate   Balance   Interest   Rate   Balance   Interest   Rate
    Assets                                  
    Interest earning assets:                              
    Loans (1)(2) $ 50,126,963   $ 786,704     6.28 %   $ 50,020,901   $ 770,987     6.17 %   $ 50,019,414   $ 753,662     6.03 %
    Taxable investments (3)   5,977,211     55,629     3.72       5,379,101     46,801     3.48       4,915,778     37,682     3.07  
    Tax-exempt investments (1)(3)   573,059     6,145     4.29       575,272     6,075     4.22       620,439     5,800     3.74  
    Interest bearing deposits with banks   974,417     13,385     5.49       797,676     10,902     5.47       1,246,934     17,113     5.49  
    Total interest earning assets   57,651,650     861,863     5.98       56,772,950     834,765     5.88       56,802,565     814,257     5.73  
    Other assets   4,590,372             4,745,689             4,589,123        
    Total assets $ 62,242,022           $ 61,518,639           $ 61,391,688        
    Liabilities and shareholders’ equity                                  
    Interest bearing liabilities:                                  
    Savings, NOW and money market deposits $ 25,017,504   $ 235,371     3.76 %   $ 24,848,266   $ 231,597     3.73 %   $ 23,016,737   $ 201,916     3.51 %
    Time deposits   14,233,209     174,741     4.91       13,311,381     160,442     4.82       14,880,311     164,336     4.42  
    Short-term borrowings   81,251     451     2.22       97,502     691     2.83       436,518     5,189     4.75  
    Long-term borrowings (4)   3,324,992     39,488     4.75       3,319,195     39,051     4.71       2,495,512     29,159     4.67  
    Total interest bearing liabilities   42,656,956     450,051     4.22       41,576,344     431,781     4.15       40,829,078     400,600     3.92  
    Non-interest bearing deposits   11,158,521             11,223,562             11,951,398        
    Other liabilities   1,563,990             1,964,752             2,005,426        
    Shareholders’ equity   6,862,555             6,753,981             6,605,786        
    Total liabilities and shareholders’ equity $ 62,242,022           $ 61,518,639           $ 61,391,688        
                                       
    Net interest income/interest rate spread (5)     $ 411,812     1.76 %       $ 402,984     1.73 %       $ 413,657     1.81 %
    Tax equivalent adjustment       (1,314 )             (1,299 )             (1,239 )    
    Net interest income, as reported     $ 410,498             $ 401,685             $ 412,418      
    Net interest margin (6)         2.85             2.83             2.90  
    Tax equivalent effect         0.01             0.01             0.01  
    Net interest margin on a fully tax equivalent basis (6)         2.86 %           2.84 %           2.91 %

    _________

    (1) Interest income is presented on a tax equivalent basis using a 21 percent federal tax rate.
    (2) Loans are stated net of unearned income and include non-accrual loans.
    (3) The yield for securities that are classified as available for sale is based on the average historical amortized cost.
    (4) Includes junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of condition.
    (5) Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities and is presented on a fully tax equivalent basis.
    (6) Net interest income as a percentage of total average interest earning assets.
       

    SHAREHOLDERS RELATIONS
    Requests for copies of reports and/or other inquiries should be directed to Tina Zarkadas, Assistant Vice President, Shareholder Relations Specialist, Valley National Bancorp, 70 Speedwell Avenue, Morristown, New Jersey, 07960, by telephone at (973) 305-3380, by fax at (973) 305-1364 or by e-mail at tzarkadas@valley.com.

    Contact:   Michael D. Hagedorn
        Senior Executive Vice President and
        Chief Financial Officer
        973-872-4885

    The MIL Network

  • MIL-OSI Europe: Encyclical Letter “Dilexit nos” of the Holy Father Francis on the human and divine love of the heart of Jesus Christ

    Source: The Holy See

    Encyclical Letter “Dilexit nos” of the Holy Father Francis on the human and divine love of the heart of Jesus Christ, 24.10.2024
    ENCYCLICAL LETTER
    DILEXIT NOS
    OF THE HOLY FATHER
    FRANCIS
    ON THE HUMAN AND DIVINE LOVE
    OF THE HEART OF JESUS CHRIST
    1. HE LOVED US”, Saint Paul says of Christ (cf.Rom8:37), in order to make us realize that nothing can ever “separate us” from that love (Rom8:39).Paul could say this with certainty because Jesus himself had told his disciples, “I have loved you” (Jn15:9, 12).Even now, the Lord says to us, “I have called you friends” (Jn15:15).His open heart has gone before us and waits for us, unconditionally, asking only to offer us his love and friendship.For “he loved us first” (cf.1 Jn4:10).Because of Jesus, “we have come to know and believe in the love that God has for us” (1 Jn4:16).
    CHAPTER ONE
    THE IMPORTANCE OF THE HEART
    2. The symbol of the heart has often been used to express the love of Jesus Christ.Some have questioned whether this symbol is still meaningful today.Yet living as we do in an age of superficiality, rushing frenetically from one thing to another without really knowing why, and ending up as insatiable consumers and slaves to the mechanisms of a market unconcerned about the deeper meaning of our lives, all of us need to rediscover the importance of the heart.[1]
    WHAT DO WE MEAN BY “THE HEART”?
    3. In classical Greek, the wordkardíadenotes the inmost part of human beings, animals and plants.For Homer, it indicates not only the centre of the body, but also the human soul and spirit.In the Iliad, thoughts and feelings proceed from the heart and are closely bound one to another.[2]The heart appears as the locus of desire and the place where important decisions take shape.[3]In Plato, the heart serves, as it were, to unite the rational and instinctive aspects of the person, since the impulses of both the higher faculties and the passions were thought to pass through the veins that converge in the heart.[4]From ancient times, then, there has been an appreciation of the fact that human beings are not simply a sum of different skills, but a unity of body and soul with a coordinating centre that provides a backdrop of meaning and direction to all that a person experiences.
    4. The Bible tells us that, “the Word of God is living and active… it is able to judge the thoughts and intentions of the heart” (Heb4:12).In this way, it speaks to us of the heart as a core that lies hidden bene ath all outward appearances, even beneath the superficial thoughts that can lead us astray.The disciples of Emmaus, on their mysterious journey in the company of the risen Christ, experienced a moment of anguish, confusion, despair and disappointment.Yet, beyond and in spite of this, something was happening deep within them: “Were not our hearts burning within us while he was talking to us on the road?” (Lk 24:32).
    5. The heart is also the locus of sincerity, where deceit and disguise have no place.It usually indicates our true intentions, what we really think, believe and desire, the “secrets” that we tell no one: in a word, the naked truth about ourselves.It is the part of us that is neither appearance or illusion, but is instead authentic, real, entirely “who we are”.That is why Samson, who kept from Delilah the secret of his strength, was asked by her, “How can you say, ‘I love you’, when your heart is not with me?” (Judg16:15).Only when Samson opened his heart to her, did she realize “that he had told her his whole secret” (Judg16:18).
    6. This interior reality of each person is frequently concealed behind a great deal of “foliage”, which makes it difficult for us not only to understand ourselves, but even more to know others: “The heart is devious above all else; it is perverse, who can understand it?” (Jer17:9).We can understand, then, the advice of the Book of Proverbs: “Keep your heart with all vigilance, for from it flow the springs of life; put away from you crooked speech” (4:23-24).Mere appearances, dishonesty and deception harm and pervert the heart.Despite our every attempt to appear as something we are not, our heart is the ultimate judge, not of what we show or hide from others, but of who we truly are.It is the basis for any sound life project; nothing worthwhile can be undertaken apart from the heart.False appearances and untruths ultimately leave us empty-handed.
    7. As an illustration of this, I would repeat a story I have already told on another occasion.“For the carnival, when we were children, my grandmother would make a pastry using a very thin batter.When she dropped the strips of batter into the oil, they would expand, but then, when we bit into them, they were empty inside.In the dialect we spoke, those cookies were called ‘lies’…My grandmother explained why: ‘Like lies, they look big, but are empty inside; they are false, unreal’”.[5]
    8. Instead of running after superficial satisfactions and playing a role for the benefit of others, we would do better to think about the really important questions in life.Who am I, really?What am I looking for?What direction do I want to give to my life, my decisions and my actions?Why and for what purpose am I in this world?How do I want to look back on my life once it ends?What meaning do I want to give to all my experiences?Who do I want to be for others?Who am I for God?All these questions lead us back to the heart.
    RETURNING TO THE HEART
    9. In this “liquid” world of ours, we need to start speaking once more about the heart and thinking about this place where every person, of every class and condition, creates a synthesis, where they encounter the radical source of their strengths, convictions, passions and decisions.Yet, we find ourselves immersed in societies of serial consumers who live from day to day, dominated by the hectic pace and bombarded by technology, lacking in the patience needed to engage in the processes that an interior life by its very nature requires.In contemporary society, people “risk losing their centre, the centre of their very selves”.[6]“Indeed, the men and women of our time often find themselves confused and torn apart, almost bereft of an inner principle that can create unity and harmony in their lives and actions.Models of behaviour that, sadly, are now widespread exaggerate our rational-technological dimension or, on the contrary, that of our instincts”.[7]No room is left for the heart.
    10. The issues raised by today’s liquid society are much discussed, but this depreciation of the deep core of our humanity – the heart – has a much longer history.We find it already present in Hellenic and pre-Christian rationalism, in post-Christian idealism and in materialism in its various guises.The heart has been ignored in anthropology, and the great philosophical tradition finds it a foreign notion, preferring other concepts such as reason, will or freedom.The very meaning of the term is imprecise and hard to situate within our human experience.Perhaps this is due to the difficulty of treating it as a “clear and distinct idea”, or because it entails the question of self-understanding, where the deepest part of us is also that which is least known.Even encountering others does not necessarily prove to be a way of encountering ourselves, inasmuch as our thought patterns are dominated by an unhealthy individualism.Many people feel safer constructing their systems of thought in the more readily controllable domain of intelligence and will.The failure to make room for the heart, as distinct from our human powers and passions viewed in isolation from one another, has resulted in a stunting of the idea of a personal centre, in which love, in the end, is the one reality that can unify all the others.
    11. If we devalue the heart, we also devalue what it means to speak from the heart, to act with the heart, to cultivate and heal the heart.If we fail to appreciate the specificity of the heart, we miss the messages that the mind alone cannot communicate; we miss out on the richness of our encounters with others; we miss out on poetry.We also lose track of history and our own past, since our real personal history is built with the heart.At the end of our lives, that alone will matter.
    12. It must be said, then, that we have a heart, a heart that coexists with other hearts that help to make it a “Thou”.Since we cannot develop this theme at length, we will take a character from one of Dostoevsky’s novels, Nikolai Stavrogin.[8]Romano Guardini argues that Stavrogin is the very embodiment of evil, because his chief trait is his heartlessness: “Stavrogin has no heart, hence his mind is cold and empty and his body sunken in bestial sloth and sensuality.He has no heart, hence he can draw close to no one and no one can ever truly draw close to him.For only the heart creates intimacy, true closeness between two persons.Only the heart is able to welcome and offer hospitality.Intimacy is the proper activity and the domain of the heart.Stavrogin is always infinitely distant, even from himself, because a man can enter into himself only with the heart, not with the mind.It is not in a man’s power to enter into his own interiority with the mind.Hence, if the heart is not alive, man remains a stranger to himself”.[9]
    13. All our actions need to be put under the “political rule” of the heart.In this way, our aggressiveness and obsessive desires will find rest in the greater good that the heart proposes and in the power of the heart to resist evil.The mind and the will are put at the service of the greater good by sensing and savouring truths, rather than seeking to master them as the sciences tend to do.The will desires the greater good that the heart recognizes, while the imagination and emotions are themselves guided by the beating of the heart.
    14. It could be said, then, that I am my heart, for my heart is what sets me apart, shapes my spiritual identity and puts me in communion with other people.The algorithms operating in the digital world show that our thoughts and will are much more “uniform” than we had previously thought.They are easily predictable and thus capable of being manipulated.That is not the case with the heart.
    15. The word “heart” proves its value for philosophy and theology in their efforts to reach an integral synthesis.Nor can its meaning be exhausted by biology, psychology, anthropology or any other science.It is one of those primordial words that “describe realities belonging to man precisely in so far as he is one whole (as a corporeo-spiritual person)”.[10]It follows that biologists are not being more “realistic” when they discuss the heart, since they see only one aspect of it; the whole is not less real, but even more real.Nor can abstract language ever acquire the same concrete and integrative meaning.The word “heart” evokes the inmost core of our person, and thus it enables us to understand ourselves in our integrity and not merely under one isolated aspect.
    16. This unique power of the heart also helps us to understand why, when we grasp a reality with our heart, we know it better and more fully.This inevitably leads us to the love of which the heart is capable, for “the inmost core of reality is love”.[11]For Heidegger, as interpreted by one contemporary thinker, philosophy does not begin with a simple concept or certainty, but with a shock: “Thought must be provoked before it begins to work with concepts or while it works with them.Without deep emotion, thought cannot begin.The first mental image would thus be goose bumps.What first stirs one to think and question is deep emotion.Philosophy always takes place in a basic mood (Stimmung)”.[12]That is where the heart comes in, since it “houses the states of mind and functions as a ‘keeper of the state of mind’.The ‘heart’ listens in a non-metaphoric way to ‘the silent voice’ of being, allowing itself to be tempered and determined by it”.[13]
    THE HEART UNITES THE FRAGMENTS
    17. At the same time, the heart makes all authentic bonding possible, since a relationship not shaped by the heart is incapable of overcoming the fragmentation caused by individualism.Two monads may approach one another, but they will never truly connect.A society dominated by narcissism and self-centredness will increasingly become “heartless”.This will lead in turn to the “loss of desire”, since as other persons disappear from the horizon we find ourselves trapped within walls of our own making, no longer capable of healthy relationships.[14]As a result, we also become incapable of openness to God.As Heidegger puts it, to be open to the divine we need to build a “guest house”.[15]
    18. We see, then, that in the heart of each person there is a mysterious connection between self-knowledge and openness to others, between the encounter with one’s personal uniqueness and the willingness to give oneself to others.We become ourselves only to the extent that we acquire the ability to acknowledge others, while only those who can acknowledge and accept themselves are then able to encounter others.
    19. The heart is also capable of unifying and harmonizing our personal history, which may seem hopelessly fragmented, yet is the place where everything can make sense.The Gospel tells us this in speaking of Our Lady, who saw things with the heart.She was able to dialogue with the things she experienced by pondering them in her heart, treasuring their memory and viewing them in a greater perspective.The best expression of how the heart thinks is found in the two passages in Saint Luke’s Gospel that speak to us of how Mary “treasured (synetérei) all these things and pondered (symbállousa) them in her heart” (cf.Lk2:19 and 51).The Greek verbsymbállein, “ponder”, evokes the image of putting two things together (“symbols”) in one’s mind and reflecting on them, in a dialogue with oneself.In Luke 2:51, the verb used isdietérei, which has the sense of “keep”.What Mary “kept” was not only her memory of what she had seen and heard, but also those aspects of it that she did not yet understand; these nonetheless remained present and alive in her memory, waiting to be “put together” in her heart.
    20. In this age of artificial intelligence, we cannot forget that poetry and love are necessary to save our humanity.No algorithm will ever be able to capture, for example, the nostalgia that all of us feel, whatever our age, and wherever we live, when we recall how we first used a fork to seal the edges of the pies that we helped our mothers or grandmothers to make at home. It was a moment of culinary apprenticeship, somewhere between child-play and adulthood, when we first felt responsible for working and helping one another.Along with the fork, I could also mention thousands of other little things that are a precious part of everyone’s life: a smile we elicited by telling a joke, a picture we sketched in the light of a window, the first game of soccer we played with a rag ball, the worms we collected in a shoebox, a flower we pressed in the pages of a book, our concern for a fledgling bird fallen from its nest, a wish we made in plucking a daisy.All these little things, ordinary in themselves yet extraordinary for us, can never be captured by algorithms.The fork, the joke, the window, the ball, the shoebox, the book, the bird, the flower: all of these live on as precious memories “kept” deep in our heart.
    21. This profound core, present in every man and woman, is not that of the soul, but of the entire person in his or her unique psychosomatic identity.Everything finds its unity in the heart, which can be the dwelling-place of love in all its spiritual, psychic and even physical dimensions.In a word, if love reigns in our heart, we become, in a complete and luminous way, the persons we are meant to be, for every human being is created above all else for love.In the deepest fibre of our being, we were made to love and to be loved.
    22. For this reason, when we witness the outbreak of new wars, with the complicity, tolerance or indifference of other countries, or petty power struggles over partisan interests, we may be tempted to conclude that our world is losing its heart.We need only to see and listen to the elderly women – from both sides – who are at the mercy of these devastating conflicts.It is heart-breaking to see them mourning for their murdered grandchildren, or longing to die themselves after losing the homes where they spent their entire lives.Those women, who were often pillars of strength and resilience amid life’s difficulties and hardships, now, at the end of their days, are experiencing, in place of a well-earned rest, only anguish, fear and outrage.Casting the blame on others does not resolve these shameful and tragic situations.To see these elderly women weep, and not feel that this is something intolerable, is a sign of a world that has grown heartless.
    23. Whenever a person thinks, questions and reflects on his or her true identity, strives to understand the deeper questions of life and to seek God, or experiences the thrill of catching a glimpse of truth, it leads to the realization that our fulfilment as human beings is found in love.In loving, we sense that we come to know the purpose and goal of our existence in this world.Everything comes together in a state of coherence and harmony.It follows that, in contemplating the meaning of our lives, perhaps the most decisive question we can ask is, “Do I have a heart?”
    FIRE
    24. All that we have said has implications for the spiritual life.For example, the theology underlying the Spiritual Exercises of Saint Ignatius Loyola is based on “affection” (affectus).The structure of the Exercises assumes a firm and heartfelt desire to “rearrange” one’s life, a desire that in turn provides the strength and the wherewithal to achieve that goal.The rules and the compositions of place that Ignatius furnishes are in the service of something much more important, namely, the mystery of the human heart.Michel de Certeau shows how the “movements” of which Ignatius speaks are the “inbreaking” of God’s desire and the desire of our own heart amid the orderly progression of the meditations.Something unexpected and hitherto unknown starts to speak in our heart, breaking through our superficial knowledge and calling it into question.This is the start of a new process of “setting our life in order”, beginning with the heart.It is not about intellectual concepts that need to be put into practice in our daily lives, as if affectivity and practice were merely the effects of – and dependent upon – the data of knowledge.[16]
    25. Where the thinking of the philosopher halts, there the heart of the believer presses on in love and adoration, in pleading for forgiveness and in willingness to serve in whatever place the Lord allows us to choose, in order to follow in his footsteps.At that point, we realize that in God’s eyes we are a “Thou”, and for that very reason we can be an “I”.Indeed, only the Lord offers to treat each one of us as a “Thou”, always and forever.Accepting his friendship is a matter of the heart; it is what constitutes us as persons in the fullest sense of that word.
    26. Saint Bonaventure tells us that in the end we should not pray for light, but for “raging fire”.[17]He teaches that, “faith is in the intellect, in such a way as to provoke affection.In this sense, for example, the knowledge that Christ died for us does not remain knowledge, but necessarily becomes affection, love”.[18]Along the same lines, Saint John Henry Newman took as his motto the phraseCor ad cor loquitur, since, beyond all our thoughts and ideas, the Lord saves us by speaking to our hearts from his Sacred Heart.This realization led him, the distinguished intellectual, to recognize that his deepest encounter with himself and with the Lord came not from his reading or reflection, but from his prayerful dialogue, heart to heart, with Christ, alive and present.It was in the Eucharist that Newman encountered the living heart of Jesus, capable of setting us free, giving meaning to each moment of our lives, and bestowing true peace: “O most Sacred, most loving Heart of Jesus, Thou art concealed in the Holy Eucharist, and Thou beatest for us still…I worship Thee then with all my best love and awe, with my fervent affection, with my most subdued, most resolved will.O my God, when Thou dost condescend to suffer me to receive Thee, to eat and drink Thee, and Thou for a while takest up Thy abode within me, O make my heart beat with Thy Heart.Purify it of all that is earthly, all that is proud and sensual, all that is hard and cruel, of all perversity, of all disorder, of all deadness.So fill it with Thee, that neither the events of the day nor the circumstances of the time may have power to ruffle it, but that in Thy love and Thy fear it may have peace”.[19]
    27. Before the heart of Jesus, living and present, our mind, enlightened by the Spirit, grows in the understanding of his words and our will is moved to put them into practice.This could easily remain on the level of a kind of self-reliant moralism.Hearing and tasting the Lord, and paying him due honour, however, is a matter of the heart. Only the heart is capable of setting our other powers and passions, and our entire person, in a stance of reverence and loving obedience before the Lord.
    THE WORLD CAN CHANGE, BEGINNING WITH THE HEART
    28. It is only by starting from the heart that our communities will succeed in uniting and reconciling differing minds and wills, so that the Spirit can guide us in unity as brothers and sisters.Reconciliation and peace are also born of the heart.The heart of Christ is “ecstasy”, openness, gift and encounter.In that heart, we learn to relate to one another in wholesome and happy ways, and to build up in this world God’s kingdom of love and justice.Our hearts, united with the heart of Christ, are capable of working this social miracle.
    29. Taking the heart seriously, then, has consequences for society as a whole.The Second Vatican Council teaches that, “every one of us needs a change of heart; we must set our gaze on the whole world and look to those tasks we can all perform together in order to bring about the betterment of our race”.[20]For “the imbalances affecting the world today are in fact a symptom of a deeper imbalance rooted in the human heart”.[21]In pondering the tragedies afflicting our world, the Council urges us to return to the heart.It explains that human beings “by their interior life, transcend the entire material universe; they experience this deep interiority when they enter into their own heart, where God, who probes the heart, awaits them, and where they decide their own destiny in the sight of God”.[22]
    30. This in no way implies an undue reliance on our own abilities.Let us never forget that our hearts are not self-sufficient, but frail and wounded.They possess an ontological dignity, yet at the same time must seek an ever more dignified life.[23]The Second Vatican Council points out that “the ferment of the Gospel has aroused and continues to arouse in human hearts an unquenchable thirst for human dignity”.[24]Yet to live in accordance with this dignity, it is not enough to know the Gospel or to carry out mechanically its demands.We need the help of God’s love.Let us turn, then, to the heart of Christ, that core of his being, which is a blazing furnace of divine and human love and the most sublime fulfilment to which humanity can aspire.There, in that heart, we truly come at last to know ourselves and we learn how to love.
    31. In the end, that Sacred Heart is the unifying principle of all reality, since “Christ is the heart of the world, and the paschal mystery of his death and resurrection is the centre of history, which, because of him, is a history of salvation”.[25]All creatures “are moving forward with us and through us towards a common point of arrival, which is God, in that transcendent fullness where the risen Christ embraces and illumines all things”.[26]In the presence of the heart of Christ, I once more ask the Lord to have mercy on this suffering world in which he chose to dwell as one of us.May he pour out the treasures of his light and love, so that our world, which presses forward despite wars, socio-economic disparities and uses of technology that threaten our humanity, may regain the most important and necessary thing of all: its heart.
    CHAPTER TWO
    ACTIONS AND WORDS OF LOVE
    32. The heart of Christ, as the symbol of the deepest and most personal source of his love for us, is the very core of the initial preaching of the Gospel.It stands at the origin of our faith, as the wellspring that refreshes and enlivens our Christian beliefs.
    ACTIONS THAT REFLECT THE HEART
    33. Christ showed the depth of his love for us not by lengthy explanations but by concrete actions.By examining his interactions with others, we can come to realize how he treats each one of us, even though at times this may be difficult to see.Let us now turn to the place where our faith can encounter this truth: the word of God.
    34. The Gospel tells us that Jesus “came to his own” (cf.Jn1:11).Those words refer to us, for the Lord does not treat us as strangers but as a possession that he watches over and cherishes.He treats us truly as “his own”.This does not mean that we are his slaves, something that he himself denies: “I do not call you servants” (Jn15:15).Rather, it refers to the sense of mutual belonging typical of friends.Jesus came to meet us, bridging all distances; he became as close to us as the simplest, everyday realities of our lives.Indeed, he has another name, “Emmanuel”, which means “God with us”, God as part of our lives, God as living in our midst.The Son of God became incarnate and “emptied himself, taking the form of a slave” (Phil2:7).
    35. This becomes clear when we see Jesus at work.He seeks people out, approaches them, ever open to an encounter with them.We see it when he stops to converse with the Samaritan woman at the well where she went to draw water (cf.Jn4:5-7).We see it when, in the darkness of night, he meets Nicodemus, who feared to be seen in his presence (cf.Jn3:1-2).We marvel when he allows his feet to be washed by a prostitute (cf.Lk7:36-50), when he says to the woman caught in adultery, “Neither do I condemn you” (Jn8:11), or again when he chides the disciples for their indifference and quietly asks the blind man on the roadside, “What do you want me to do for you?” (Mk10:51).Christ shows that God is closeness, compassion and tender love.
    36. Whenever Jesus healed someone, he preferred to do it, not from a distance but in close proximity: “He stretched out his hand and touched him” (Mt8:3).“He touched her hand” (Mt8:15).“He touched their eyes” (Mt9:29).Once he even stopped to cure a deaf man with his own saliva (cf.Mk7:33), as a mother would do, so that people would not think of him as removed from their lives.“The Lord knows the fine science of the caress.In his compassion, God does not love us with words; he comes forth to meet us and, by his closeness, he shows us the depth of his tender love”.[27]
    37. If we find it hard to trust others because we have been hurt by lies, injuries and disappointments, the Lord whispers in our ear: “Take heart, son!” (Mt9:2), “Take heart, daughter!” (Mt9:22).He encourages us to overcome our fear and to realize that, with him at our side, we have nothing to lose.To Peter, in his fright, “Jesus immediately reached out his hand and caught him”, saying, “You of little faith, why did you doubt?” (Mt14:31).Nor should you be afraid.Let him draw near and sit at your side.There may be many people we distrust, but not him.Do not hesitate because of your sins.Keep in mind that many sinners “came and sat with him” (Mt9:10), yet Jesus was scandalized by none of them.It was the religious élite that complained and treated him as “a glutton and a drunkard, a friend of tax collectors and sinners” (Mt11:19).When the Pharisees criticized him for his closeness to people deemed base or sinful, Jesus replied, “I desire mercy, not sacrifice” (Mt9:13).
    38. That same Jesus is now waiting for you to give him the chance to bring light to your life, to raise you up and to fill you with his strength.Before his death, he assured his disciples, “I will not leave you orphaned; I am coming to you.In a little while the world will no longer see me, but you will see me” (Jn14:18-19).Jesus always finds a way to be present in your life, so that you can encounter him.
    JESUS’ GAZE
    39. The Gospel tells us that a rich man came up to Jesus, full of idealism yet lacking in the strength needed to change his life.Jesus then “looked at him” (Mk10:21).Can you imagine that moment, that encounter between his eyes and those of Jesus?If Jesus calls you and summons you for a mission, he first looks at you, plumbs the depths of your heart and, knowing everything about you, fixes his gaze upon you.So it was when, “as he walked by the Sea of Galilee, he saw two brothers… and as he went from there, he saw two other brothers” (Mt4:18, 21).
    40. Many a page of the Gospel illustrates how attentive Jesus was to individuals and above all to their problems and needs.We are told that, “when he saw the crowds, he had compassion for them, because they were harassed and helpless” (Mt9:36).Whenever we feel that everyone ignores us, that no one cares what becomes of us, that we are of no importance to anyone, he remains concerned for us.To Nathanael, standing apart and busy about his own affairs, he could say, “I saw you under the fig tree before Philip called you” (Jn1:48).
    41. Precisely out of concern for us, Jesus knows every one of our good intentions and small acts of charity.The Gospel tells us that once he “saw a poor widow put in two small copper coins” in the Temple treasury (Lk21:2) and immediately brought it to the attention of his disciples.Jesus thus appreciates the good that he sees in us. When the centurion approached him with complete confidence, “Jesus listened to him and was amazed” (Mt8:10).How reassuring it is to know that, even if others are not aware of our good intentions or actions, Jesus sees them and regards them highly.
    42. In his humanity, Jesus learned this from Mary, his mother.Our Lady carefully pondered the things she had experienced; she “treasured them… in her heart” (Lk2:19, 51) and, with Saint Joseph, she taught Jesus from his earliest years to be attentive in this same way.
    JESUS’ WORDS
    43. Although the Scriptures preserve Jesus’ words, ever alive and timely, there are moments when he speaks to us inwardly, calls us and leads us to a better place.That better place is his heart.There he invites us to find fresh strength and peace: “Come to me, all who are weary and are carrying heavy burdens, and I will give you rest” (Mt11:28).In this sense, he could say to his disciples, “Abide in me” (Jn15:4).
    44. Jesus’ words show that his holiness did not exclude deep emotions.On various occasions, he demonstrated a love that was both passionate and compassionate.He could be deeply moved and grieved, even to the point of shedding tears.It is clear that Jesus was not indifferent to the daily cares and concerns of people, such as their weariness or hunger: “I have compassion for this crowd… they have nothing to eat… they will faint on the way, and some of them have come from a great distance” (Mk8:2-3).
    45. The Gospel makes no secret of Jesus’ love for Jerusalem: “As he came near and saw the city, he wept over it” (Lk19:41).He then voiced the deepest desire of his heart: “If you had only recognized on this day the things that make for peace” (Lk19:42).The evangelists, while at times showing him in his power and glory, also portray his profound emotions in the face of death and the grief felt by his friends.Before recounting how Jesus, standing before the tomb of Lazarus, “began to weep” (Jn11:35), the Gospel observes that, “Jesus loved Martha and her sister and Lazarus” (Jn11:5) and that, seeing Mary and those who were with her weeping, “he was greatly disturbed in spirit and deeply moved” (Jn11:33).The Gospel account leaves no doubt that his tears were genuine, the sign of inner turmoil.Nor do the Gospels attempt to conceal Jesus’ anguish over his impending violent death at the hands of those whom he had loved so greatly: he “began to be distressed and agitated” (Mk14:33), even to the point of crying out, “I am deeply grieved, even to death” (Mk14:34).This inner turmoil finds its most powerful expression in his cry from the cross: “My God, my God, why have you forsaken me?” (Mk15:34).
    46. At first glance, all this may smack of pious sentimentalism.Yet it is supremely serious and of decisive importance, and finds its most sublime expression in Christ crucified.The cross is Jesus’ most eloquent word of love.A word that is not shallow, sentimental or merely edifying.It is love, sheer love.That is why Saint Paul, struggling to find the right words to describe his relationship with Christ, could speak of “the Son of God, who loved me and gave himself for me” (Gal2:20).This was Paul’s deepest conviction: the knowledge that he was loved.Christ’s self-offering on the cross became the driving force in Paul’s life, yet it only made sense to him because he knew that something even greater lay behind it: the fact that “he loved me”.At a time when many were seeking salvation, prosperity or security elsewhere, Paul, moved by the Spirit, was able to see farther and to marvel at the greatest and most essential thing of all: “Christ loved me”.
    47. Now, after considering Christ and seeing how his actions and words grant us insight into his heart, let us turn to the Church’s reflection on the holy mystery of the Lord’s Sacred Heart.
    CHAPTER THREE
    THIS IS THE HEART THAT HAS LOVED SO GREATLY
    48. Devotion to the heart of Christ is not the veneration of a single organ apart from the Person of Jesus.What we contemplate and adore is the whole Jesus Christ, the Son of God made man, represented by an image that accentuates his heart.That heart of flesh is seen as the privileged sign of the inmost being of the incarnate Son and his love, both divine and human.More than any other part of his body, the heart of Jesus is “the natural sign and symbol of his boundless love”.[28]
    WORSHIPING CHRIST
    49. It is essential to realize that our relationship to the Person of Jesus Christ is one of friendship and adoration, drawn by the love represented under the image of his heart.We venerate that image, yet our worship is directed solely to the living Christ, in his divinity and his plenary humanity, so that we may be embraced by his human and divine love.
    50. Whatever the image employed, it is clear that the living heart of Christ – not its representation – is the object of our worship, for it is part of his holy risen body, which is inseparable from the Son of God who assumed that body forever.We worship it because it is “the heart of the Person of the Word, to whom it is inseparably united”.[29]Nor do we worship it for its own sake, but because with this heart the incarnate Son is alive, loves us and receives our love in return.Any act of love or worship of his heart is thus “really and truly given to Christ himself”,[30]since it spontaneously refers back to him and is “a symbol and a tender image of the infinite love of Jesus Christ”.[31]
    51. For this reason, it should never be imagined that this devotion may distract or separate us from Jesus and his love.In a natural and direct way, it points us to him and to him alone, who calls us to a precious friendship marked by dialogue, affection, trust and adoration.The Christ we see depicted with a pierced and burning heart is the same Christ who, for love of us, was born in Bethlehem, passed through Galilee healing the sick, embracing sinners and showing mercy.The same Christ who loved us to the very end, opening wide his arms on the cross, who then rose from the dead and now lives among us in glory.
    VENERATING HIS IMAGE
    52. While the image of Christ and his heart is not in itself an object of worship, neither is it simply one among many other possible images.It was not devised at a desk or designed by an artist; it is “no imaginary symbol, but a real symbol which represents the centre, the source from which salvation flowed for all humanity”.[32]
    53. Universal human experience has made the image of the heart something unique.Indeed, throughout history and in different parts of the world, it has become a symbol of personal intimacy, affection, emotional attachment and capacity for love.Transcending all scientific explanations, a hand placed on the heart of a friend expresses special affection: when two persons fall in love and draw close to one another, their hearts beat faster; when we are abandoned or deceived by someone we love, our hearts sink.So too, when we want to say something deeply personal, we often say that we are speaking “from the heart”.The language of poetry reflects the power of these experiences.In the course of history, the heart has taken on unique symbolic value that is more than merely conventional.
    54. It is understandable, then, that the Church has chosen the image of the heart to represent the human and divine love of Jesus Christ and the inmost core of his Person.Yet, while the depiction of a heart afire may be an eloquent symbol of the burning love of Jesus Christ, it is important that this heart not be represented apart from him.In this way, his summons to a personal relationship of encounter and dialogue will become all the more meaningful.[33]The venerable image portraying Christ holding out his loving heart also shows him looking directly at us, inviting us to encounter, dialogue and trust; it shows his strong hands capable of supporting us and his lips that speak personally to each of us.
    55. The heart, too, has the advantage of being immediately recognizable as the profound unifying centre of the body, an expression of the totality of the person, unlike other individual organs.As a part that stands for the whole, we could easily misinterpret it, were we to contemplate it apart from the Lord himself.The image of the heart should lead us to contemplate Christ in all the beauty and richness of his humanity and divinity.
    56. Whatever particular aesthetic qualities we may ascribe to various portrayals of Christ’s heart when we pray before them, it is not the case that “something is sought from them or that blind trust is put in images as once was done by the Gentiles”.Rather, “through these images that we kiss, and before which we kneel and uncover our heads, we are adoring Christ”.[34]
    57. Certain of these representations may indeed strike us as tasteless and not particularly conducive to affection or prayer.Yet this is of little importance, since they are only invitations to prayer, and, to cite an Eastern proverb, we should not limit our gaze to the finger that points us to the moon.Whereas the Eucharist is a real presence to be worshiped, sacred images, albeit blessed, point beyond themselves, inviting us to lift up our hearts and to unite them to the heart of the living Christ.The image we venerate thus serves as a summons to make room for an encounter with Christ, and to worship him in whatever way we wish to picture him.Standing before the image, we stand before Christ, and in his presence, “love pauses, contemplates mystery, and enjoys it in silence”.[35]
    58. At the same time, we must never forget that the image of the heart speaks to us of the flesh and of earthly realities.In this way, it points us to the God who wished to become one of us, a part of our history, and a companion on our earthly journey.A more abstract or stylized form of devotion would not necessarily be more faithful to the Gospel, for in this eloquent and tangible sign we see how God willed to reveal himself and to draw close to us.
    A LOVE THAT IS TANGIBLE
    59. On the other hand, love and the human heart do not always go together, since hatred, indifference and selfishness can also reign in our hearts.Yet we cannot attain our fulfilment as human beings unless we open our hearts to others; only through love do we become fully ourselves.The deepest part of us, created for love, will fulfil God’s plan only if we learn to love.And the heart is the symbol of that love.
    60. The eternal Son of God, in his utter transcendence, chose to love each of us with a human heart.His human emotions became the sacrament of that infinite and endless love.His heart, then, is not merely a symbol for some disembodied spiritual truth.In gazing upon the Lord’s heart, we contemplate a physical reality, his human flesh, which enables him to possess genuine human emotions and feelings, like ourselves, albeit fully transformed by his divine love.Our devotion must ascend to the infinite love of the Person of the Son of God, yet we need to keep in mind that his divine love is inseparable from his human love.The image of his heart of flesh helps us to do precisely this.
    61. Since the heart continues to be seen in the popular mind as the affective centre of each human being, it remains the best means of signifying the divine love of Christ, united forever and inseparably to his wholly human love.Pius XII observed that the Gospel, in referring to the love of Christ’s heart, speaks “not only of divine charity but also human affection”.Indeed, “the heart of Jesus Christ, hypostatically united to the divine Person of the Word, beyond doubt throbbed with love and every other tender affection”.[36]
    62. The Fathers of the Church, opposing those who denied or downplayed the true humanity of Christ, insisted on the concrete and tangible reality of the Lord’s human affections.Saint Basil emphasized that the Lord’s incarnation was not something fanciful, and that “the Lord possessed our natural affections”.[37]Saint John Chrysostom pointed to an example: “Had he not possessed our nature, he would not have experienced sadness from time to time”.[38]Saint Ambrose stated that “in taking a soul, he took on the passions of the soul”.[39]For Saint Augustine, our human affections, which Christ assumed, are now open to the life of grace: “The Lord Jesus assumed these affections of our human weakness, as he did the flesh of our human weakness, not out of necessity, but consciously and freely…lest any who feel grief and sorrow amid the trials of life should think themselves separated from his grace”.[40]Finally, Saint John Damascene viewed the genuine affections shown by Christ in his humanity as proof that he assumed our nature in its entirety in order to redeem and transform it in its entirety: Christ, then, assumed all that is part of human nature, so that all might be sanctified.[41]
    63. Here, we can benefit from the thoughts of a theologian who maintains that, “due to the influence of Greek thought, theology long relegated the body and feelings to the world of the pre-human or sub-human or potentially inhuman; yet what theology did not resolve in theory, spirituality resolved in practice.This, together with popular piety, preserved the relationship with the corporal, psychological and historical reality of Jesus.The Stations of the Cross, devotion to Christ’s wounds, his Precious Blood and his Sacred Heart, and a variety of Eucharist devotions… all bridged the gaps in theology by nourishing our hearts and imagination, our tender love for Christ, our hope and memory, our desires and feelings.Reason and logic took other directions”.[42]
    A THREEFOLD LOVE
    64. Nor do we remain only on the level of the Lord’s human feelings, beautiful and moving as they are.In contemplating Christ’s heart we also see how, in his fine and noble sentiments, his kindness and gentleness and his signs of genuine human affection, the deeper truth of his infinite divine love is revealed.In the words of Benedict XVI, “from the infinite horizon of his love, God wished to enter into the limits of human history and the human condition.He took on a body and a heart.Thus, we can contemplate and encounter the infinite in the finite, the invisible and ineffable mystery in the human heart of Jesus the Nazarene”.[43]
    65. The image of the Lord’s heart speaks to us in fact of a threefold love.First, we contemplate his infinite divine love.Then our thoughts turn to the spiritual dimension of his humanity, in which the heart is “the symbol of that most ardent love which, infused into his soul, enriches his human will”.Finally, “it is a symbol also of his sensible love”.[44]
    66. These three loves are not separate, parallel or disconnected, but together act and find expression in a constant and vital unity.For “by faith, through which we believe that the human and divine nature were united in the Person of Christ, we can see the closest bonds between the tender love of the physical heart of Jesus and the twofold spiritual love, namely human and divine”.[45]
    67. Entering into the heart of Christ, we feel loved by a human heart filled with affections and emotions like our own.Jesus’ human will freely chooses to love us, and that spiritual love is flooded with grace and charity.When we plunge into the depths of his heart, we find ourselves overwhelmed by the immense glory of his infinite love as the eternal Son, which we can no longer separate from his human love.It is precisely in his human love, and not apart from it, that we encounter his divine love: we discover “the infinite in the finite”.[46]
    68. It is the constant and unequivocal teaching of the Church that our worship of Christ’s person is undivided, inseparably embracing both his divine and his human natures.From ancient times, the Church has taught that we are to “adore one and the same Christ, the Son of God and of man, consisting of and in two inseparable and undivided natures”.[47]And we do so “with one act of adoration… inasmuch as the Word became flesh”.[48]Christ is in no way “worshipped in two natures, whereby two acts of worship are introduced”; instead, we venerate “by one act of worship God the Word made flesh, together with his own flesh”.[49]
    69. Saint John of the Cross sought to explain that in mystical experience the infinite love of the risen Christ is not perceived as alien to our lives.The infinite in some way “condescends” to enable us, through the open heart of Christ, to experience an encounter of truly reciprocal love, for “it is indeed credible that a bird of lowly flight can capture the royal eagle of the heights, if this eagle descends with the desire of being captured”.[50]He also explains that the Bridegroom, “beholding that the bride is wounded with love for him, because of her moan he too is wounded with love for her.Among lovers, the wound of one is the wound of both”.[51]John of the Cross regards the image of Christ’s pierced side as an invitation to full union with the Lord.Christ is the wounded stag, wounded when we fail to let ourselves be touched by his love, who descends to the streams of water to quench his thirst and is comforted whenever we turn to him:
    “Return, dove!
    The wounded stag
    is in sight on the hill,
    cooled by the breeze of your flight”.[52]
    TRINITARIAN PERSPECTIVES
    70. Devotion to the heart of Jesus, as a direct contemplation of the Lord that draws us into union with him, is clearly Christological in nature.We see this in the Letter to the Hebrews, which urges us to “run with perseverance the race that is set before us, looking to Jesus” (12:2).At the same time, we need to realize that Jesus speaks of himself as the way to the Father: “I am the way…No one comes to the Father except through me” (Jn14:6).Jesus wants to bring us to the Father.That is why, from the very beginning, the Church’s preaching does not end with Jesus, but with the Father.As source and fullness, the Father is ultimately the one to be glorified.[53]
    71. If we turn, for example, to the Letter to the Ephesians, we can see clearly how our worship is directed to the Father: “I bow my knees before the Father” (3:14).There is “one God and Father of all, who is above all and through all and in all” (4:6).“Give thanks to God the Father at all times and for everything” (5:20).It is the Father “for whom we exist” (1 Cor8:6).In this sense, Saint John Paul II could say that, “the whole of the Christian life is like a greatpilgrimage to the house of the Father”.[54]This too was the experience of Saint Ignatius of Antioch on his path to martyrdom: “In me there is left no spark of desire for mundane things, but only a murmur of living water that whispers within me, ‘Come to the Father’”.[55]
    72. The Father is, before all else, the Father of Jesus Christ: “Blessed be the God and Father of our Lord Jesus Christ”(Eph1:3).He is “the God of our Lord Jesus Christ, the Father of glory” (Eph1:17).When the Son became man, all the hopes and aspirations of his human heart were directed towards the Father.If we consider the way Christ spoke of the Father, we can grasp the love and affection that his human heart felt for him, this complete and constant orientation towards him.[56]Jesus’ life among us was a journey of response to the constant call of his human heart to come to the Father.[57]
    73. We know that the Aramaic word Jesus used to address the Father was “Abba”, an intimate and familiar term that some found disconcerting (cf.Jn5:18).It is how he addressed the Father in expressing his anguish at his impending death: “Abba,Father, for you all things are possible; remove this cup from me; yet, not what I want, but what you want” (Mk14:36).Jesus knew well that he had always been loved by the Father: “You loved me before the foundation of the world” (Jn17:24).In his human heart, he had rejoiced at hearing the Father say to him: “You are my Son, the Beloved; with you I am well pleased” (Mk1:11).
    74. The Fourth Gospel tells us that the eternal Son was always “close to the Father’s heart” (Jn1:18).[58]Saint Irenaeus thus declares that “the Son of God was with the Father from the beginning”.[59]Origen, for his part, maintains that the Son perseveres “in uninterrupted contemplation of the depths of the Father”.[60]When the Son took flesh, he spent entire nights conversing with his beloved Father on the mountaintop (cf.Lk6:12).He told us, “I must be in my Father’s house” (Lk2:49).We see too how he expressed his praise: “Jesus rejoiced in the Holy Spirit and said, ‘I thank you, Father, Lord of heaven and earth’ (Lk10:21).His last words, full of trust, were, “Father, into your hands I commend my spirit” (Lk23:46).
    75. Let us now turn to the Holy Spirit, whose fire fills the heart of Christ.As Saint John Paul II once said, Christ’s heart is “the Holy Spirit’s masterpiece”.[61]This is more than simply a past event, for even now “the heart of Christ is alive with the action of the Holy Spirit, to whom Jesus attributed the inspiration of his mission (cf.Lk4:18;Is61:1) and whose sending he had promised at the Last Supper.It is the Spirit who enables us to grasp the richness of the sign of Christ’s pierced side, from which the Church has sprung (cf.Sacrosanctum Concilium, 5)”.[62]In a word, “only the Holy Spirit can open up before us the fullness of the ‘inner man’, which is found in the heart of Christ.He alone can cause our human hearts to draw strength from that fullness, step by step”.[63]
    76. If we seek to delve more deeply into the mysterious working of the Spirit, we learn that he groans within us, saying “Abba!”Indeed,“the proof that you are children is that God has sent the Spirit of his Son into our hearts, crying, ‘Abba! Father!’” (Gal4:6).For “the Spirit bears witness with our spirit that we are children of God” (Rom8:16).The Holy Spirit at work in Christ’s human heart draws him unceasingly to the Father.When the Spirit unites us to the sentiments of Christ through grace, he makes us sharers in the Son’s relationship to the Father, whereby we receive “a spirit of adoption through which we cry out, ‘Abba! Father!’” (Rom8:15).
    77.Our relationship with the heart of Christ is thus changed, thanks to the prompting of the Spirit who guides us to the Father, the source of life and the ultimate wellspring of grace.Christ does not expect us simply to remain in him.His love is “the revelation of the Father’s mercy”,[64]and his desire is that, impelled by the Spirit welling up from his heart, we should ascend to the Father “with him and in him”.We give glory to the Father “through” Christ,[65]“with” Christ,[66]and “in” Christ.[67]Saint John Paul II taught that, “the Saviour’s heart invites us to return to the Father’s love, which is the source of every authentic love”.[68]This is precisely what the Holy Spirit, who comes to us through the heart of Christ, seeks to nurture in our hearts.For this reason, the liturgy, through the enlivening work of the Spirit, always addresses the Father from the risen heart of Christ.
    RECENT TEACHINGS OF THE MAGISTERIUM
    78.In numerous ways, Christ’s heart has always been present in the history of Christian spirituality.In the Scriptures and in the early centuries of the Church’s life, it appeared under the image of the Lord’s wounded side, as a fountain of grace and a summons to a deep and loving encounter.In this same guise, it has reappeared in the writings of numerous saints, past and present.In recent centuries, this spirituality has gradually taken on the specific form of devotion to the Sacred Heart of Jesus.
    79. A number of my Predecessors have spoken in various ways about the heart of Christ and exhorted us to unite ourselves to it.At the end of the nineteenth century, Leo XIII encouraged us to consecrate ourselves to the Sacred Heart, thus uniting our call to union with Christ and our wonder before the magnificence of his infinite love.[69]Some thirty years later, Pius XI presented this devotion as a “summa” of the experience of Christian faith.[70]Pius XII went on to declare that adoration of the Sacred Heart expresses in an outstanding way, as a sublime synthesis, the worship we owe to Jesus Christ.[71]
    80. More recently, Saint John Paul II presented the growth of this devotion in recent centuries as a response to the rise of rigorist and disembodied forms of spirituality that neglected the richness of the Lord’s mercy.At the same time, he saw it as a timely summons to resist attempts to create a world that leaves no room for God.“Devotion to the Sacred Heart, as it developed in Europe two centuries ago, under the impulse of the mystical experiences of Saint Margaret Mary Alacoque, was aresponse to Jansenist rigor, which ended up disregarding God’s infinite mercy…The men and women of the third millennium need the heart of Christin order to know God and to know themselves; they need it to build the civilization of love”.[72]
    81. Benedict XVI asked us to recognize in the heart of Christ an intimate and daily presence in our lives: “Every person needs a ‘centre’ for his or her own life, a source of truth and goodness to draw upon in the events, situations and struggles of daily existence.All of us, when we pause in silence, need to feel not only the beating of our own heart, but deeper still, the beating of a trustworthy presence, perceptible with faith’s senses and yet much more real: the presence of Christ, the heart of the world”.[73]
    FURTHER REFLECTIONS AND RELEVANCE FOR OUR TIMES
    82. The expressive and symbolic image of Christ’s heart is not the only means granted us by the Holy Spirit for encountering the love of Christ, yet it is, as we have seen, an especially privileged one.Even so, it constantly needs to be enriched, deepened and renewed through meditation, the reading of the Gospel and growth in spiritual maturity.Pius XII made it clear that the Church does not claim that, “we must contemplate and adore in the heart of Jesus a ‘formal’ image, that is, a perfect and absolute sign of his divine love, for the essence of this love can in no way be adequately expressed by any created image whatsoever”.[74]
    83. Devotion to Christ’s heart is essential for our Christian life to the extent that it expresses our openness in faith and adoration to the mystery of the Lord’s divine and human love.In this sense, we can once more affirm that the Sacred Heart is a synthesis of the Gospel.[75]We need to remember that the visions or mystical showings related by certain saints who passionately encouraged devotion to Christ’s heart are not something that the faithful are obliged to believe as if they were the word of God.[76]Nonetheless, they are rich sources of encouragement and can prove greatly beneficial, even if no one need feel forced to follow them should they not prove helpful on his or her own spiritual journey.At the same time, however, we should be mindful that, as Pius XII pointed out, this devotion cannot be said “to owe its origin to private revelations”.[77]
    84. The promotion of Eucharistic communion on the first Friday of each month, for example, sent a powerful message at a time when many people had stopped receiving communion because they were no longer confident of God’s mercy and forgiveness and regarded communion as a kind of reward for the perfect.In the context of Jansenism, the spread of this practice proved immensely beneficial, since it led to a clearer realization that in the Eucharist the merciful and ever-present love of the heart of Christ invites us to union with him.It can also be said that this practice can prove similarly beneficial in our own time, for a different reason.Amid the frenetic pace of today’s world and our obsession with free time, consumption and diversion, cell phones and social media, we forget to nourish our lives with the strength of the Eucharist.
    85. While no one should feel obliged to spend an hour in adoration each Thursday, the practice ought surely to be recommended.When we carry it out with devotion, in union with many of our brothers and sisters and discover in the Eucharist the immense love of the heart of Christ, we “adore, together with the Church, the sign and manifestation of the divine love that went so far as to love, through the heart of the incarnate Word, the human race”.[78]
    86. Many Jansenists found this difficult to comprehend, for they looked askance on all that was human, affective and corporeal, and so viewed this devotion as distancing us from pure worship of the Most High God.Pius XII described as “false mysticism”[79]the elitist attitude of those groups that saw God as so sublime, separate and distant that they regarded affective expressions of popular piety as dangerous and in need of ecclesiastical oversight.
    87. It could be argued that today, in place of Jansenism, we find ourselves before a powerful wave of secularization that seeks to build a world free of God.In our societies, we are also seeing a proliferation of varied forms of religiosity that have nothing to do with a personal relationship with the God of love, but are new manifestations of a disembodied spirituality.I must warn that within the Church too, a baneful Jansenist dualism has re-emerged in new forms.This has gained renewed strength in recent decades, but it is a recrudescence of that Gnosticism which proved so great a spiritual threat in the early centuries of Christianity because it refused to acknowledge the reality of “the salvation of the flesh”.For this reason, I turn my gaze to the heart of Christ and I invite all of us to renew our devotion to it.I hope this will also appeal to today’s sensitivities and thus help us to confront the dualisms, old and new, to which this devotion offers an effective response.
    88. I would add that the heart of Christ also frees us from another kind of dualism found in communities and pastors excessively caught up in external activities, structural reforms that have little to do with the Gospel, obsessive reorganization plans, worldly projects, secular ways of thinking and mandatory programmes.The result is often a Christianity stripped of the tender consolations of faith, the joy of serving others, the fervour of personal commitment to mission, the beauty of knowing Christ and the profound gratitude born of the friendship he offers and the ultimate meaning he gives to our lives.This too is the expression of an illusory and disembodied otherworldliness.
    89. Once we succumb to these attitudes, so widespread in our day, we tend to lose all desire to be cured of them.This leads me to propose to the whole Church renewed reflection on the love of Christ represented in his Sacred Heart.For there we find the whole Gospel, a synthesis of the truths of our faith, all that we adore and seek in faith, all that responds to our deepest needs.
    90. As we contemplate the heart of Christ, the incarnate synthesis of the Gospel, we can, following the example of Saint Therese of the Child Jesus, “place heartfelt trust not in ourselves but in the infinite mercy of a God who loves us unconditionally and has already given us everything in the cross of Jesus Christ”.[80]Therese was able to do this because she had discovered in the heart of Christ that God is love: “To me he has granted his infinite mercy, and through it I contemplate and adore the other divine perfections”.[81]That is why a popular prayer, directed like an arrow towards the heart of Christ, says simply: “Jesus, I trust in you”.[82]No other words are needed.
    91. In the following chapters, we will emphasize two essential aspects that contemporary devotion to the Sacred Heart needs to combine, so that it can continue to nourish us and bring us closer to the Gospel: personal spiritual experience and communal missionary commitment.
    CHAPTER FOUR
    A LOVE THAT GIVES ITSELF AS DRINK
    92. Let us now return to the Scriptures, the inspired texts where, above all, we encounter God’s revelation.There, and in the Church’s living Tradition, we hear what the Lord has wished to tell us in the course of history.By reading several texts from the Old and the New Testaments, we will gain insight into the word of God that has guided the great spiritual pilgrimage of his people down the ages.
    A GOD WHO THIRSTS FOR LOVE
    93. The Bible shows that the people that journeyed through the desert and yearned for freedom received the promise of an abundance of life-giving water: “With joy you will draw water from the wells of salvation” (Is12:3).The messianic prophecies gradually coalesced around the imagery of purifying water: “I will sprinkle clean water upon you, and you shall be clean… a new spirit I will put within you” (Ezek36:25-26).This water would bestow on God’s people the fullness of life, like a fountain flowing from the Temple and bringing a wealth of life and salvation in its wake.“I saw on the bank of the river a great many trees on the one side and on the other… and wherever that river goes, every living creature will live… and when that river enters the sea, its waters will become fresh; everything will live where the river goes” (Ezek47:7-9).
    94. The Jewish festival of Booths (Sukkot), which recalls the forty-year sojourn of Israel in the desert, gradually adopted the symbolism of water as a central element.It included a rite of offering water each morning, which became most solemn on the final day of the festival, when a great procession took place towards the Temple, the altar was circled seven times and the water was offered to God amid loud cries of joy.[83]
    95. The dawn of the messianic era was described as a fountain springing up for the people: “I will pour out a spirit of compassion and supplication on the house of David and the inhabitants of Jerusalem, and they shall look on him whom they have pierced…On that day, a fountain shall be opened for the house of David and the inhabitants of Jerusalem, to cleanse them from sin and impurity” (Zech12:10; 13:1).
    96. One who is pierced, a flowing fountain, the outpouring of a spirit of compassion and supplication: the first Christians inevitably considered these promises fulfilled in the pierced side of Christ, the wellspring of new life.In the Gospel of John, we contemplate that fulfilment.From Jesus’ wounded side, the water of the Spirit poured forth: “One of the soldiers pierced his side with a spear, and at once blood and water flowed out” (Jn19:34).The evangelist then recalls the prophecy that had spoken of a fountain opened in Jerusalem and the pierced one (Jn19:37; cf.Zech12:10).The open fountain is the wounded side of Christ.
    97. Earlier, John’s Gospel had spoken of this event, when on “the last day of the festival” (Jn7:37), Jesus cried out to the people celebrating the great procession: “Let anyone who is thirsty come to me and drink… out of his heart shall flow rivers of living water” (Jn7:37-38).For this to be accomplished, however, it was necessary for Jesus’ “hour” to come, for he “was not yet glorified” (Jn7:39).That fulfilment was to come on the cross, in the blood and water that flowed from the Lord’s side.
    98. The Book of Revelation takes up the prophecies of the pierced one and the fountain: “every eye will see him, even those who pierced him” (Rev1:7); “Let everyone who is thirsty come; let anyone who wishes take the water of life as a gift” (Rev22:17).
    99. The pierced side of Jesus is the source of the love that God had shown for his people in countless ways.Let us now recall some of his words:
    “Because you are precious in my sight and honoured, I love you” (Is43:4).
    “Can a woman forget her nursing child, or show no compassion for the child of her womb?Even if these may forget, yet I will not forget you.See, I have inscribed you on the palms of my hands” (Is49:15-16).
    “For the mountains may depart, and the hills be removed, but my steadfast love shall not depart from you, and my covenant of peace shall not be removed” (Is54:10).
    “I have loved you with an everlasting love; therefore I have continued my faithfulness to you” (Jer31:3).
    “The Lord, your God, is in your midst, a warrior who gives you victory; he will rejoice over you with gladness, he will renew you in his love; he will exult over you with loud singing” (Zeph3:17).
    100.The prophet Hosea goes so far as to speak of the heart of God, who “led them with cords of human kindness, with bands of love” (Hos11:4).When that love was spurned, the Lord could say, “My heart is stirred within me; my compassion grows warm and tender (Hos11:8).God’s merciful love always triumphs (cf.Hos11:9), and it was to find its most sublime expression in Christ, his definitive Word of love.
    101.The pierced heart of Christ embodies all God’s declarations of love present in the Scriptures.That love is no mere matter of words; rather, the open side of his Son is a source of life for those whom he loves, the fount that quenches the thirst of his people.As Saint John Paul II pointed out, “the essential elements of devotion [to the Sacred Heart] belong in a permanent fashion to the spirituality of the Church throughout her history; for since the beginning, the Church has looked to the heart of Christ pierced on the Cross”.[84]
    ECHOES OF THE WORD IN HISTORY
    102.Let us consider some of the ways that, in the history of the Christian faith, these prophecies were understood to have been fulfilled.Various Fathers of the Church, especially those in Asia Minor, spoke of the wounded side of Jesus as the source of the water of the Holy Spirit: the word, its grace and the sacraments that communicate it.The courage of the martyrs is born of “the heavenly fount of living waters flowing from the side of Christ”[85]or, in the version of Rufinus, “the heavenly and eternal streams that flow from the heart of Christ”.[86]We believers, reborn in the Spirit, emerge from the cleft in the rock; “we have come forth from the heart of Christ”.[87]His wounded side, understood as his heart, filled with the Holy Spirit, comes to us as a flood of living water. “The fount of the Spirit is entirely in Christ”.[88]Yet the Spirit whom we have received does not distance us from the risen Lord, but fills us with his presence, for by drinking of the Spirit we drink of the same Christ.In the words of Saint Ambrose: “Drink of Christ, for he is the rock that pours forth a flood of water.Drink of Christ, for he is the source of life.Drink of Christ, for he is the river whose streams gladden the city of God.Drink of Christ, for he is our peace.Drink of Christ, for from his side flows living water”.[89]
    103.Saint Augustine opened the way to devotion to the Sacred Heart as the locus of our personal encounter with the Lord.For Augustine, Christ’s wounded side is not only the source of grace and the sacraments, but also the symbol of our intimate union with Christ, the setting of an encounter of love.There we find the source of the most precious wisdom of all, which is knowledge of him.In effect, Augustine writes that John, the beloved disciple, reclining on Jesus’ bosom at the Last Supper, drew near to the secret place of wisdom.[90]Here we have no merely intellectual contemplation of an abstract theological truth.As Saint Jerome explains, a person capable of contemplation “does not delight in the beauty of that stream of water, but drinks of the living water flowing from the side of the Lord”.[91]
    104.Saint Bernard takes up the symbolism of the pierced side of the Lord and understands it explicitly as a revelation and outpouring of all of the love of his heart.Through that wound, Christ opens his heart to us and enables us to appropriate the boundless mystery of his love and mercy: “I take from the bowels of the Lord what is lacking to me, for his bowels overflow with mercy through the holes through which they stream.Those who crucified him pierced his hands and feet, they pierced his side with a lance.And through those holes I can taste wild honey and oil from the rocks of flint, that is, I can taste and see that the Lord is good…A lance passed through his soul even to the region of his heart.No longer is he unable to take pity on my weakness.The wounds inflicted on his body have disclosed to us the secrets of his heart; they enable us to contemplate the great mystery of his compassion”.[92]
    105.This theme reappears especially in William of Saint-Thierry, who invites us to enter into the heart of Jesus, who feeds us from his own breast.[93]This is not surprising if we recall that for William, “the art of arts is the art of love…Love is awakened by the Creator of nature, and is a power of the soul that leads it, as if by its natural gravity, to its proper place and end”.[94]That proper place, where love reigns in fullness, is the heart of Christ: “Lord, where do you lead those whom you embrace and clasp to your heart?Your heart, Jesus, is the sweet manna of your divinity that you hold within the golden jar of your soul (cf.Heb9:4), and that surpasses all knowledge.Happy those who, having plunged into those depths, have been hidden by you in the recess of your heart”.[95]
    106.Saint Bonaventure unites these two spiritual currents.He presents the heart of Christ as the source of the sacraments and of grace, and urges that our contemplation of that heart become a relationship between friends, a personal encounter of love.
    107.Bonaventure makes us appreciate first the beauty of the grace and the sacraments flowing from the fountain of life that is the wounded side of the Lord.“In order that from the side of Christ sleeping on the cross, the Church might be formed and the Scripture fulfilled that says: ‘They shall look upon him whom they pierced’, one of the soldiers struck him with a lance and opened his side.This was permitted by divine Providence so that, in the blood and water flowing from that wound, the price of our salvation might flow from the hidden wellspring of his heart, enabling the Church’s sacraments to confer the life of grace and thus to be, for those who live in Christ, like a cup filled from the living fount springing up to life eternal”.[96]
    108.Bonaventure then asks us to take another step, in order that our access to grace not be seen as a kind of magic or neo-platonic emanation, but rather as a direct relationship with Christ, a dwelling in his heart, so that whoever drinks from that source becomes a friend of Christ, a loving heart.“Rise up, then, O soul who are a friend of Christ, and be the dove that nests in the cleft in the rock; be the sparrow that finds a home and constantly watches over it; be the turtledove that hides the offspring of its chaste love in that most holy cleft”.[97]
    THE SPREAD OF DEVOTION TO THE HEART OF CHRIST
    109.Gradually, the wounded side of Christ, as the abode of his love and the wellspring of the life of grace, began to be associated with his heart, especially in monastic life.We know that in the course of history, devotion to the heart of Christ was not always expressed in the same way, and that its modern developments, related to a variety of spiritual experiences, cannot be directly derived from the mediaeval forms, much less the biblical forms in which we glimpse the seeds of that devotion.This notwithstanding, the Church today rejects nothing of the good that the Holy Spirit has bestowed on us down the centuries, for she knows that it will always be possible to discern a clearer and deeper meaning in certain aspects of that devotion, and to gain new insights over the course of time.
    110.A number of holy women, in recounting their experiences of encounter with Christ, have spoken of resting in the heart of the Lord as the source of life and interior peace.This was the case with Saints Lutgarde and Mechtilde of Hackeborn, Saint Angela of Foligno and Dame Julian of Norwich, to mention only a few.Saint Gertrude of Helfta, a Cistercian nun, tells of a time in prayer when she reclined her head on the heart of Christ and heard its beating.In a dialogue with Saint John the Evangelist, she asked him why he had not described in his Gospel what he experienced when he did the same.Gertrude concludes that “the sweet sound of those heartbeats has been reserved for modern times, so that, hearing them, our aging and lukewarm world may be renewed in the love of God”.[98]Might we think that this is indeed a message for our own times, a summons to realize how our world has indeed “grown old”, and needs to perceive anew the message of Christ’s love?Saint Gertrude and Saint Mechtilde have been considered among “the most intimate confidants of the Sacred Heart”.[99]
    111.The Carthusians, encouraged above all by Ludolph of Saxony, found in devotion to the Sacred Heart a means of growth in affection and closeness to Christ.All who enter through the wound of his heart are inflamed with love.Saint Catherine of Siena wrote that the Lord’s sufferings are impossible for us to comprehend, but the open heart of Christ enables us to have a lively personal encounter with his boundless love.“I wished to reveal to you the secret of my heart, allowing you to see it open, so that you can understand that I have loved you so much more than I could have proved to you by the suffering that I once endured”.[100]
    112.Devotion to the heart of Christ slowly passed beyond the walls of the monasteries to enrich the spirituality of saintly teachers, preachers and founders of religious congregations, who then spread it to the farthest reaches of the earth.[101]
    113.Particularly significant was the initiative taken by Saint John Eudes, who, “after preaching with his confrères a fervent mission in Rennes, convinced the bishop of that diocese to approve the celebration of the feast of the Adorable Heart of our Lord Jesus Christ.This was the first time that such a feast was officially authorized in the Church.Following this, between the years 1670 and 1671, the bishops of Coutances, Evreux, Bayeux, Lisieux and Rouen authorized the celebration of the feast for their respective dioceses”.[102]
    SAINT FRANCIS DE SALES
    114.In modern times, mention should be made of the important contribution of Saint Francis de Sales.Francis frequently contemplated Christ’s open heart, which invites us to dwell therein, in a personal relationship of love that sheds light on the mysteries of his life.In his writings, the saintly Doctor of the Church opposes a rigorous morality and a legalistic piety by presenting the heart of Jesus as a summons to complete trust in the mysterious working of his grace.We see this expressed in his letter to Saint Jane Francis de Chantal: “I am certain that we will remain no longer in ourselves… but dwell forever in the Lord’s wounded side, for apart from him not only can we do nothing, but even if we were able, we would lack the desire to do anything”.[103]
    115.For Francis de Sales, true devotion had nothing to do with superstition or perfunctory piety, since it entails a personal relationship in which each of us feels uniquely and individually known and loved by Christ.“This most adorable and lovable heart of our Master, burning with the love which he professes to us, [is] a heart on which all our names are written…Surely it is a source of profound consolation to know that we are loved so deeply by our Lord, who constantly carries us in his heart”.[104]With the image of our names written on the heart of Christ, Saint Francis sought to express the extent to which Christ’s love for each of us is not something abstract and generic, but utterly personal, enabling each believer to feel known and respected for who he or she is.“How lovely is this heaven, in which the Lord is its sun and his breast a fountain of love from which the blessed drink to their heart’s content!Each of us can look therein and see our name carved in letters of love, which true love alone can read and true love has written.Dear God!And what too, beloved daughter, of our loved ones?Surely they will be there too; for even if our hearts have no love, they nonetheless possess a desire for love and the beginnings of love”.[105]
    116.Francis saw this experience of Christ’s love as essential to the spiritual life, indeed one of the great truths of faith: “Yes, my beloved daughter, he thinks of you and not only, but even the smallest hair of your head: this is an article of faith and in no way must it be doubted”.[106]It follows that the believer becomes capable of complete abandonment in the heart of Christ, in which he or she finds repose, comfort and strength: “Oh God!What happiness to be thus embraced and to recline in the bosom of the Saviour.Remain thus, beloved daughter, and like another little one, Saint John, while others are tasting different kinds of food at the table of the Lord, lay your head, your soul and your spirit, in a gesture of utter trust, on the loving bosom of this dear Lord”.[107]“I hope that you are resting in the cleft of the turtledove and in the pierced side of our beloved Saviour…How good is this Lord, my beloved daughter!How loving is his Heart!Let us remain here, in this holy abode”.[108]
    117.At the same time, faithful to his teaching on the sanctification of ordinary life, Francis proposes that this experience take place in the midst of the activities, tasks and obligations of our daily existence.“You asked me how souls that are attracted in prayer to this holy simplicity, to this perfect abandonment in God, should conduct themselves in all their actions?I would reply that, not only in prayer, but also in the conduct of everyday life they should advance always in the spirit of simplicity, abandoning and completely surrendering their soul, their actions and their accomplishments to God’s will.And to do so with a love marked by perfect and absolute trust, abandoning themselves to grace and to the care of the eternal love that divine Providence feels for them”.[109]
    118.For this reason, when looking for a symbol to convey his vision of spiritual life, Francis de Sales concluded: “I have thought, dear Mother, if you agree, that we should take as our emblem a single heart pierced by two arrows, the whole enclosed in a crown of thorns”.[110]
    A NEW DECLARATION OF LOVE
    119.Under the salutary influence of this Salesian spirituality, the events of Paray-le-Monial took place at the end of the seventeenth century.Saint Margaret Mary Alacoque reported a remarkable series of apparitions of Christ between the end of December 1673 and June of 1675.Fundamental to these was a declaration of love that stood out in the first apparition.Jesus said: “My divine Heart is so inflamed with love for men, and for you in particular, that, no longer able to contain in itself the flames of its ardent charity, it must pour them out through you and be manifested to them, in order to enrich them with its precious treasures which I now reveal to you”.[111]
    120.Saint Margaret Mary’s account is powerful and deeply moving: “He revealed to me the wonders of his love and the inexplicable secrets of his Sacred Heart which he had hitherto kept hidden from me, until he opened it to me for the first time, in such a striking and sensible manner that he left me no room for doubt”.[112]In subsequent appearances, that consoling message was reiterated: “He revealed to me the ineffable wonders of his pure love and to what extremes it had led him to love mankind”.[113]
    121.This powerful realization of the love of Jesus Christ bequeathed to us by Saint Margaret Mary can spur us to greater union with him.We need not feel obliged to accept or appropriate every detail of her spiritual experience, in which, as often happens, God’s intervention combines with human elements related to the individual’s own desires, concerns and interior images.[114]Such experiences must always be interpreted in the light of the Gospel and the rich spiritual tradition of the Church, even as we acknowledge the good they accomplish in many of our brothers and sisters.In this way, we can recognize the gifts of the Holy Spirit present in those experiences of faith and love.More important than any individual detail is the core of the message handed on to us, which can be summed up in the words heard by Saint Margaret Mary: “This is the heart that so loved human beings that it has spared nothing, even to emptying and consuming itself in order to show them its love”.[115]
    122.This apparition, then, invites us to grow in our encounter with Christ, putting our trust completely in his love, until we attain full and definitive union with him.“It is necessary that the divine heart of Jesus in some way replace our own; that he alone live and work in us and for us; that his will… work absolutely and without any resistance on our part; and finally that its affections, thoughts and desires take the place of our own, especially his love, so that he is loved in himself and for our sakes.And so, this lovable heart being our all in all, we can say with Saint Paul that we no longer live our own lives, but it is he who lives within us”.[116]
    123.In the first message that Saint Margaret Mary received, this invitation was expressed in vivid, fervent and loving terms.“He asked for my heart, which I asked him to take, which he did and then placed myself in his own adorable heart, from which he made me see mine like a little atom consumed in the fiery furnace of his own”.[117]
    124.At another point, we see that the one who gives himself to us is the risen and glorified Christ, full of life and light.If indeed, at different times, he spoke of the suffering that he endured for our sake and of the ingratitude with which it is met, what we see here are not so much his blood and painful wounds, but rather the light and fire of the Lord of life.The wounds of the passion have not disappeared, but are now transfigured.Here we see the paschal mystery in all its splendour: “Once, when the Blessed Sacrament was exposed, Jesus appeared, resplendent in glory, with his five wounds that appeared as so many suns blazing forth from his sacred humanity, but above all from his adorable breast, which seemed a fiery furnace.Opening his robe, he revealed his most loving and lovable heart, which was the living source of those flames.Then it was that I discovered the ineffable wonders of his pure love, with which he loves men to the utmost, yet receives from them only ingratitude and indifference”.[118]
    SAINT CLAUDE DE LA COLOMBIÈRE
    125.When Saint Claude de La Colombière learned of the experiences of Saint Margaret Mary, he immediately undertook her defence and began to spread word of the apparitions.Saint Claude played a special role in developing the understanding of devotion to the Sacred Heart and its meaning in the light of the Gospel.
    126.Some of the language of Saint Margaret Mary, if poorly understood, might suggest undue trust in our personal sacrifices and offerings.Saint Claude insists that contemplation of the heart of Jesus, when authentic, does not provoke self-complacency or a vain confidence in our own experiences or human efforts, but rather an ineffable abandonment in Christ that fills our life with peace, security and decision.He expressed this absolute confidence most eloquently in a celebrated prayer:
    “My God, I am so convinced that you keep watch over those who hope in you, and that we can want for nothing when we look for all in you, that I am resolved in the future to live free from every care and to turn all my anxieties over to you…I shall never lose my hope.I shall keep it to the last moment of my life; and at that moment all the demons in hell will strive to tear it from me…Others may look for happiness from their wealth or their talents; others may rest on the innocence of their life, or the severity of their penance, or the amount of their alms, or the fervour of their prayers.As for me, Lord, all my confidence is confidence itself.This confidence has never deceived anyone…I am sure, therefore, that I shall be eternally happy, since I firmly hope to be, and because it is from you, O God, that I hope for it”.[119]
    127.In a note of January 1677, after mentioning the assurance he felt regarding his mission, Claude continued: “I have come to know that God wanted me to serve him by obtaining the fulfilment of his desires regarding the devotion that he suggested to a person to whom he communicates in confidence, and for whose sake he has desired to make use of my weakness.I have already used it to help several persons”.[120]
    128.It should be recognized that the spirituality of Blessed Claude de La Colombière resulted in a fine synthesis of the profound and moving spiritual experience of Saint Margaret Mary and the vivid and concrete form of contemplation found in the Spiritual Exercises of Saint Ignatius Loyola.At the beginning of the third week of the Exercises, Claude reflected:“Two things have moved me in a striking way.First, the attitude of Christ towards those who sought to arrest him.His heart is full of bitter sorrow; every violent passion is unleashed against him and all nature is in turmoil, yet amid all this confusion, all these temptations, his heart remains firmly directed to God.He does not hesitate to take the part that virtue and the highest virtue suggested to him.Second, the attitude of that same heart towards Judas who betrayed him, the apostles who cravenly abandoned him, the priests and the others responsible for the persecution he suffered; none of these things was able to arouse in him the slightest sentiment of hatred or indignation.I present myself anew to this heart free of anger, free of bitterness, filled instead with genuine compassion towards its enemies”.[121]
    SAINT CHARLES DE FOUCAULD AND SAINT THERESE OF THE CHILD JESUS
    129.Saint Charles de Foucauld and Saint Therese of the Child Jesus, without intending to, reshaped certain aspects of devotion to the heart of Christ and thus helped us understand it in an even more evangelical spirit.Let us now examine how this devotion found expression in their lives.In the following chapter, we will return to them, in order to illustrate the distinctively missionary dimension that each of them brought to the devotion.
    Iesus Caritas
    130.In Louye, Charles de Foucauld was accustomed to visit the Blessed Sacrament with his cousin, Marie de Bondy.One day she showed him an image of the Sacred Heart.[122]His cousin played a fundamental role in Charles’s conversion, as he himself acknowledged: “Since God has made you the first instrument of his mercies towards me, from you everything else began.Had you not converted me, brought me to Jesus and taught me little by little, letter by letter, all that is holy and good, where would I be today?”[123]What Marie awakened in him was an intense awareness of the love of Jesus.That was the essential thing, and centred on devotion to the heart of Jesus, in which he encountered unbounded mercy: “Let us trust in the infinite mercy of the one whose heart you led me to know”.[124]
    131.Later, his spiritual director, Father Henri Huvelin, helped Charles to deepen his understanding of the inestimable mystery of “this blessed heart of which you spoke to me so often”.[125]On 6 June 1889, Charles consecrated himself to the Sacred Heart, in which he found a love without limits.He told Christ, “You have bestowed on me so many benefits, that it would appear ingratitude towards your heart not to believe that it is disposed to bestow on me every good, however great, and that your love and your generosity are boundless”.[126]He was to become a hermit “under the name of the heart of Jesus”.[127]
    132.On 17 May 1906, the same day in which Brother Charles, alone, could no longer celebrate Mass, he wrote of his promise “to let the heart of Jesus live in me, so that it is no longer I who live, but the heart of Jesus that lives in me, as he lived in Nazareth”.[128]His friendship with Jesus, heart to heart, was anything but a privatized piety.It inspired the austere life he led in Nazareth, born of a desire to imitate Christ and to be conformed to him.His loving devotion to the heart of Jesus had a concrete effect on his style of life, and his Nazareth was nourished by his personal relationship with the heart of Christ.
    Saint Therese of the Child Jesus
    133.Like Saint Charles de Foucauld, Saint Therese of the Child Jesus was influenced by the great renewal of devotion that swept nineteenth-century France.Father Almire Pichon, the spiritual director of her family, was seen as a devoted apostle of the Sacred Heart.One of her sisters took as her name in religion “Sister Marie of the Sacred Heart”, and the monastery that Therese entered was dedicated to the Sacred Heart.Her devotion nonetheless took on certain distinctive traits with regard to the customary piety of that age.
    134.When Therese was fifteen, she could speak of Jesus as the one “whose heart beats in unison with my own”.[129]Two years later, speaking of the image of Christ’s heart crowned with thorns, she wrote in a letter: “You know that I myself do not see the Sacred Heart as everyone else.I think that the Heart of my Spouse is mine alone, just as mine is his alone, and I speak to him then in the solitude of this delightful heart to heart, while waiting to contemplate him one day face to face”.[130]
    135.In one of her poems, Therese voiced the meaning of her devotion, which had to do more with friendship and assurance than with trust in her sacrifices:
    “I need a heart burning with tenderness,
    Who will be my support forever,
    Who loves everything in me, even my weakness…
    And who never leaves me day or night…
    I must have a God who takes on my nature,
    And becomes my brother and is able to suffer! …
    Ah! I know well, all our righteousness
    Is worthless in your sight…
    So I, for my purgatory,
    Choose your burning love, O heart of my God!”[131]
    136.Perhaps the most important text for understanding the devotion of Therese to the heart of Christ is a letter that she wrote three months before her death to her friend Maurice Bellière.“When I see Mary Magdalene walking up before the many guests, washing with her tears the feet of her adored Master, whom she is touching for the first time, I feel that her hearthas understood the abysses of love and mercy of the heart of Jesus, and, sinner though she is, this heart of love was disposed not only to pardon her but to lavish on her the blessings of his divine intimacy, to lift her to the highest summits of contemplation.Ah! dear little Brother, ever since I have been given the grace to understand also the love of the heart of Jesus, I admit that it has expelled all fear from my heart.The remembrance of my faults humbles me, draws me never to depend on my strength which is only weakness, but this remembrance speaks to me of mercy and love even more”.[132]
    137.Those moralizers who want to keep a tight rein on God’s mercy and grace might claim that Therese could say this because she was a saint, but a simple person could not say the same.In that way, they excise from the spirituality of Saint Therese its wonderful originality, which reflects the heart of the Gospel.Sadly, in certain Christian circles we often encounter this attempt to fit the Holy Spirit into a certain preconceived pattern in a way that enables them to keep everything under their supervision.Yet this astute Doctor of the Church reduces them to silence and directly contradicts their reductive view in these clear words: “If I had committed all possible crimes, I would always have the same confidence; I feel that this whole multitude of offenses would be like a drop of water thrown into a fiery furnace”.[133]
    138.To Sister Marie, who praised her generous love of God, prepared even to embrace martyrdom, Therese responded at length in a letter that is one of the great milestones in the history of spirituality.This page ought to be read a thousand times over for its depth, clarity and beauty.There, Therese helps her sister, “Marie of the Sacred Heart”, to avoid focusing this devotion on suffering, since some had presented reparation primarily in terms of accumulating sacrifices and good works.Therese, for her part, presents confidence as the greatest and best offering, pleasing to the heart of Christ: “My desires of martyrdom are nothing; they are not what give me the unlimited confidence that I feel in my heart.They are, to tell the truth, the spiritual riches that render one unjust, when one rests in them with complacence and one believes that they are something great…what pleases [Jesus] is that he sees me loving my littleness and my poverty, the blind hope that I have in his mercy…That is my only treasure…If you want to feel joy, to have an attraction for suffering, it is your consolation that you are seeking…Understand that to be his victim of love, the weaker one is, without desires or virtues, the more suited one is for the workings of this consuming and transforming Love…Oh!How I would like to be able to make you understand what I feel! …It is confidence and nothing but confidence that must lead us to Love”.[134]
    139.In many of her writings, Therese speaks of her struggle with forms of spirituality overly focused on human effort, on individual merit, on offering sacrifices and carrying out certain acts in order to “win heaven”.For her, “merit does not consist in doing or in giving much, but rather in receiving”.[135]Let us read once again some of these deeply meaningful texts where she emphasizes this and presents it as a simple and rapid means of taking hold of the Lord “by his heart”.
    140.To her sister Léonie she writes, “I assure you that God is much better than you believe.He is content with a glance, a sigh of love…As for me, I find perfection very easy to practise because I have understood it is a matter of taking hold of Jesus by his heart…Look at a little child who has just annoyed his mother… If he comes to her, holding out his little arms, smiling and saying: ‘Kiss me, I will not do it again’, will his mother be able not to press him to her heart tenderly and forget his childish mischief?However, she knows her dear little one will do it again on the next occasion, but this does not matter; if he takes her again by her heart, he will not be punished”.[136]
    141.So too, in a letter to Father Adolphe Roulland she writes, “[M]y way is all confidence and love.I do not understand souls who fear a friend so tender.At times, when I am reading certain spiritual treatises in which perfection is shown through a thousand obstacles, surrounded by a crowd of illusions, my poor little mind quickly tires; I close the learned book that is breaking my head and drying up my heart, and I take up Holy Scripture.Then all seems luminous to me; a single word uncovers for my soul infinite horizons, perfection seems simple to me.I see that it is sufficient to recognize one’s nothingness and to abandon oneself like a child into God’s arms”.[137]
    142.In yet another letter, she relates this to the love shown by a parent: “I do not believe that the heart of [a] father could resist the filial confidence of his child, whose sincerity and love he knows.He realizes, however, that more than once his son will fall into the same faults, but he is prepared to pardon him always, if his son always takes him by his heart”.[138]
    RESONANCES WITHIN THE SOCIETY OF JESUS
    143.We have seen how Saint Claude de La Colombière combined the spiritual experience of Saint Margaret Mary with the aim of the Spiritual Exercises.I believe that the place of the Sacred Heart in the history of the Society of Jesus merits a few brief words.
    144.The spirituality of the Society of Jesus has always proposed an “interior knowledge of the Lord in order to love and follow him more fully”.[139]Saint Ignatius invites us in his Spiritual Exercises to place ourselves before the Gospel that tells us that, “[Christ’s] side was pierced by the lance and blood and water flowed forth”.[140]When retreatants contemplate the wounded side of the crucified Lord, Ignatius suggests that they enter into the heart of Christ.Thus we have a way to enlarge our own hearts, recommended by one who was a “master of affections”, to use the words of Saint Peter Faber in one of his letters to Saint Ignatius.[141]Father Juan Alfonso de Polanco echoed that same expression in his biography of Saint Ignatius: “He [Cardinal Gasparo Contarini] realized that in Father Ignatius he had encountered a master of affections”.[142]The colloquies that Saint Ignatius proposed are an essential part of this training of the heart, for in them we sense and savour with the heart a Gospel message and converse about it with the Lord.Saint Ignatius tells us that we can share our concerns with the Lord and seek his counsel.Anyone who follows the Exercises can readily see that they involve a dialogue, heart to heart.
    145.Saint Ignatius brings his contemplations to a crescendo at the foot of the cross and invites the retreatant to ask the crucified Lord with great affection, “as one friend to another, as a servant to his master”, what he or she must do for him.[143]The progression of the Exercises culminates in the “Contemplation to Attain Love”, which gives rise to thanksgiving and the offering of one’s “memory, understanding and will” to the heart which is the fount and origin of every good thing.[144]This interior contemplation is not the fruit of our understanding and effort, but is to be implored as a gift.
    146.This same experience inspired the great succession of Jesuit priests who spoke explicitly of the heart of Jesus: Saint Francis Borgia, Saint Peter Faber, Saint Alphonsus Rodriguez, Father Álvarez de Paz, Father Vincent Carafa, Father Kasper Drużbicki and countless others.In 1883, the Jesuits declared that, “the Society of Jesus accepts and receives with an overflowing spirit of joy and gratitude the most agreeable duty entrusted to it by our Lord Jesus Christ to practise, promote and propagate devotion to his divine heart”.[145]In September 1871, Father Pieter Jan Beckx consecrated the Society to the Sacred Heart of Jesus and, as a sign that it remains an outstanding element in the life of the Society, Father Pedro Arrupe renewed that consecration in 1972, with a conviction that he explained in these words: “I therefore wish to say to the Society something about which I feel I cannot remain silent.From my novitiate on, I have always been convinced that what we call devotion to the Sacred Heart contains a symbolic expression of what is most profound in Ignatian spirituality, and of an extraordinary efficacy –ultra quam speraverint– both for its own perfection and for its apostolic fruitfulness.I continue to have this same conviction…In this devotion I encounter one of the deepest sources of my interior life”.[146]
    147.When Saint John Paul II urged “all the members of the Society to be even more zealous in promoting this devotion, which corresponds more than ever to the expectations of our time”, he did so because he recognized the profound connection between devotion to the heart of Christ and Ignatian spirituality.For “the desire to ‘know the Lord intimately’ and to ‘have a conversation’ with him, heart to heart, is characteristic of the Ignatian spiritual and apostolic dynamism, thanks to the Spiritual Exercises, and this dynamism is wholly at the service of the love of the heart of God”.[147]
    A BROAD CURRENT OF THE INTERIOR LIFE
    148.Devotion to the heart of Christ reappears in the spiritual journey of many saints, all quite different from each other; in every one of them, the devotion takes on new hues.Saint Vincent de Paul, for example, used to say that what God desires is the heart: “God asks primarily for our heart – our heart – and that is what counts.How is it that a man who has no wealth will have greater merit than someone who has great possessions that he gives up?Because the one who has nothing does it with greater love; and that is what God especially wants…”[148]This means allowing one’s heart to be united to that of Christ.“What blessing should a Sister not hope for from God if she does her utmost to put her heart in the state of being united with the heart of our Lord!”[149]
    149.At times, we may be tempted to consider this mystery of love as an admirable relic from the past, a fine spirituality suited to other times.Yet we need to remind ourselves constantly that, as a saintly missionary once said, “this divine heart, which let itself be pierced by an enemy’s lance in order to pour forth through that sacred wound the sacraments by which the Church was formed, has never ceased to love”.[150]More recent saints, like Saint Pius of Pietrelcina, Saint Teresa of Calcutta and many others, have spoken with deep devotion of the heart of Christ.Here I would also mention the experiences of Saint Faustina Kowalska, which re-propose devotion to the heart of Christ by greatly emphasizing the glorious life of the risen Lord and his divine mercy.Inspired by her experiences and the spiritual legacy of Saint Józef Sebastian Pelczar (1842-1924),[151]Saint John Paul II intimately linked his reflections on divine mercy with devotion to the heart of Christ: “The Church seems in a singular way to profess the mercy of God and to venerate it when she directs herself to the heart of Christ.In fact, it is precisely this drawing close to Christ in the mystery of his heart which enables us to dwell on this point of the revelation of the merciful love of the Father, a revelation that constituted the central content of the messianic mission of the Son of Man”.[152]Saint John Paul also spoke of the Sacred Heart in very personal terms, acknowledging that, “it has spoken to me ever since my youth”.[153]
    150.The enduring relevance of devotion to the heart of Christ is especially evident in the work of evangelization and education carried out by the numerous male and female religious congregations whose origins were marked by this profoundly Christological devotion.Mentioning all of them by name would be an endless undertaking. Let us simply consider two examples taken at random: “The Founder [Saint Daniel Comboni] discovered in the mystery of the heart of Jesus the source of strength for his missionary commitment”.[154]“Caught up as we are in the desires of the heart of Jesus, we want people to grow in dignity, as human beings and as children of God.Our starting point is the Gospel, with all that it demands from us of love, forgiveness and justice, and of solidarity with those who are poor and rejected by the world”.[155]So too, the many shrines worldwide that are consecrated to the heart of Christ continue to be an impressive source of renewal in prayer and spiritual fervour.To all those who in any way are associated with these spaces of faith and charity I send my paternal blessing.
    THE DEVOTION OF CONSOLATION
    151.The wound in Christ’s side, the wellspring of living water, remains open in the risen body of the Saviour.The deep wound inflicted by the lance and the wounds of the crown of thorns that customarily appear in representations of the Sacred Heart are an inseparable part of this devotion, in which we contemplate the love of Christ who offered himself in sacrifice to the very end.The heart of the risen Lord preserves the signs of that complete self-surrender, which entailed intense sufferings for our sake.It is natural, then, that the faithful should wish to respond not only to this immense outpouring of love, but also to the suffering that the Lord chose to endure for the sake of that love.
    With Jesus on the cross
    152.It is fitting to recover one particular aspect of the spirituality that has accompanied devotion to the heart of Christ, namely, the interior desire to offer consolation to that heart.Here I will not discuss the practice of “reparation”, which I deem better suited to the social dimension of this devotion to be discussed in the next chapter.I would like instead to concentrate on the desire often felt in the hearts of the faithful who lovingly contemplate the mystery of Christ’s passion and experience it as a mystery which is not only recollected but becomes present to us by grace, or better, allows us to be mystically present at the moment of our redemption.If we truly love the Lord, how could we not desire to console him?
    153.Pope Pius XI wished to ground this particular devotion in the realization that the mystery of our redemption by Christ’s passion transcends, by God’s grace, all boundaries of time and space.On the cross, Jesus offered himself for all sins, including those yet to be committed, including our own sins.In the same way, the acts we now offer for his consolation, also transcending time, touch his wounded heart.“If, because of our sins too, as yet in the future but already foreseen, the soul of Jesus became sorrowful unto death, it cannot be doubted that at the same time he derived some solace from our reparation, likewise foreseen, at the moment when ‘there appeared to him an angel from heaven’ (Lk22:43), in order that his heart, oppressed with weariness and anguish, might find consolation.And so even now, in a wondrous yet true manner, we can and ought to console that Most Sacred Heart, which is continually wounded by the sins of thankless men”.[156]
    Reasons of the heart
    154.It might appear to some that this aspect of devotion to the Sacred Heart lacks a firm theological basis, yet the heart has its reasons.Here thesensus fideliumperceives something mysterious, beyond our human logic, and realizes that the passion of Christ is not merely an event of the past, but one in which we can share through faith.Meditation on Christ’s self-offering on the cross involves, for Christian piety, something much more than mere remembrance.This conviction has a solid theological grounding.[157]We can also add the recognition of our own sins, which Jesus took upon his bruised shoulders, and our inadequacy in the face of that timeless love, which is always infinitely greater.
    155.We may also question how we can pray to the Lord of life, risen from the dead and reigning in glory, while at the same time comforting him in the midst of his sufferings.Here we need to realize that his risen heart preserves its wound as a constant memory, and that the working of grace makes possible an experience that is not restricted to a single moment of the past.In pondering this, we find ourselves invited to take a mystical path that transcends our mental limitations yet remains firmly grounded in the word of God.Pope Pius XI makes this clear: “How can these acts of reparation offer solace now, when Christ is already reigning in the beatitude of heaven?To this question, we may answer in the words of Saint Augustine, which are very apposite here – ‘Give me the one who loves, and he will understand what I say’.Anyone possessed of great love for God, and who looks back to the past, can dwell in meditation on Christ, and see him labouring for man, sorrowing, suffering the greatest hardships, ‘for us men and for our salvation’, well-nigh worn out with sadness, with anguish, nay ‘bruised for our sins’ (Is53:5), and bringing us healing by those very bruises.The more the faithful ponder all these things the more clearly they see that the sins of mankind, whenever they were committed, were the reason why Christ was delivered up to death”.[158]
    156.Those words of Pius XI merit serious consideration.When Scripture states that believers who fail to live in accordance with their faith “are crucifying again the Son of God” (Heb6:6), or when Paul, offering his sufferings for the sake of others, says that, “in my flesh I am completing what is lacking in Christ’s afflictions” (Col1:24), or again, when Christ in his passion prays not only for his disciples at that time, but also for “those who will believe in me through their word” (Jn17:20), all these statements challenge our usual way of thinking.They show us that it is not possible to sever the past completely from the present, however difficult our minds find this to grasp.The Gospel, in all its richness, was written not only for our prayerful meditation, but also to enable us to experience its reality in our works of love and in our interior life.This is certainly the case with regard to the mystery of Christ’s death and resurrection.The temporal distinctions that our minds employ appear incapable of embracing the fullness of this experience of faith, which is the basis both of our union with Christ in his suffering and of the strength, consolation and friendship that we enjoy with him in his risen life.
    157.We see, then, the unity of the paschal mystery in these two inseparable and mutually enriching aspects.The one mystery, present by grace in both these dimensions, ensures that whenever we offer some suffering of our own to Christ for his consolation, that suffering is illuminated and transfigured in the paschal light of his love.We share in this mystery in our own life because Christ himself first chose to share in that life.He wished to experience first, as Head, what he would then experience in his Body, the Church: both our wounds and our consolations.When we live in God’s grace, this mutual sharing becomes for us a spiritual experience.In a word, the risen Lord, by the working of his grace, mysteriously unites us to his passion.The hearts of the faithful, who experience the joy of the resurrection, yet at the same time desire to share in the Lord’s passion, understand this.They desire to share in his sufferings by offering him the sufferings, the struggles, the disappointments and the fears that are part of their own lives.Nor do they experience this as isolated individuals, since their sufferings are also a participation in the suffering of the mystical Body of Christ, the holy pilgrim People of God, which shares in the passion of Christ in every time and place.The devotion of consolation, then, is in no way ahistorical or abstract; it becomes flesh and blood in the Church’s pilgrimage through history.
    Compunction
    158.The natural desire to console Christ, which begins with our sorrow in contemplating what he endured for us, grows with the honest acknowledgment of our bad habits, compulsions, attachments, weak faith, vain goals and, together with our actual sins, the failure of our hearts to respond to the Lord’s love and his plan for our lives.This experience proves purifying, for love needs the purification of tears that, in the end, leave us more desirous of God and less obsessed with ourselves.
    159.In this way, we see that the deeper our desire to console the Lord, the deeper will be our sincere sense of “compunction”.Compunction is “not a feeling of guilt that makes us discouraged or obsessed with our unworthiness, but a beneficial ‘piercing’ that purifies and heals the heart.Once we acknowledge our sin, our hearts can be opened to the working of the Holy Spirit, the source of living water that wells up within us and brings tears to our eyes…This does not mean weeping in self-pity, as we are so often tempted to do…To shed tears of compunction means seriously to repent of grieving God by our sins; recognizing that we always remain in God’s debt…Just as drops of water can wear down a stone, so tears can slowly soften hardened hearts.Here we see the miracle of sorrow, that ‘salutary sorrow’ which brings great peace…Compunction, then, is not our work but a grace and, as such, it must be sought in prayer.”[159]It means, “asking for sorrow in company with Christ in his sorrow, for anguish with Christ in his anguish, for tears and a deep sense of pain at the great pains that Christ endured for my sake”.[160]
    160.I ask, then, that no one make light of the fervent devotion of the holy faithful people of God, which in its popular piety seeks to console Christ.I also encourage everyone to consider whether there might be greater reasonableness, truth and wisdom in certain demonstrations of love that seek to console the Lord than in the cold, distant, calculated and nominal acts of love that are at times practised by those who claim to possess a more reflective, sophisticated and mature faith.
    Consoled ourselves in order to console others
    161.In contemplating the heart of Christ and his self-surrender even to death, we ourselves find great consolation.The grief that we feel in our hearts gives way to complete trust and, in the end, what endures is gratitude, tenderness, peace; what endures is Christ’s love reigning in our lives.Compunction, then, “is not a source of anxiety but of healing for the soul, since it acts as a balm on the wounds of sin, preparing us to receive the caress of the Lord”.[161]Our sufferings are joined to the suffering of Christ on the cross.If we believe that grace can bridge every distance, this means that Christ by his sufferings united himself to the sufferings of his disciples in every time and place.In this way, whenever we endure suffering, we can also experience the interior consolation of knowing that Christ suffers with us.In seeking to console him, we will find ourselves consoled.
    162.At some point, however, in our contemplation, we should likewise hear the urgent plea of the Lord: “Comfort, comfort my people!” (Is40:1).As Saint Paul tells us, God offers us consolation “so that we may be able to console those who are in any affliction, with the consolation by which we ourselves are consoled by God” (2 Cor1:4).
    163.This then challenges us to seek a deeper understanding of the communitarian, social and missionary dimension of all authentic devotion to the heart of Christ.For even as Christ’s heart leads us to the Father, it sends us forth to our brothers and sisters.In the fruits of service, fraternity and mission that the heart of Christ inspires in our lives, the will of the Father is fulfilled.In this way, we come full circle: “My Father is glorified by this, that you bear much fruit” (Jn15:8).
    CHAPTER FIVE
    LOVE FOR LOVE
    164.In the spiritual experiences of Saint Margaret Mary Alacoque, we encounter, along with an ardent declaration of love for Jesus Christ, a profoundly personal and challenging invitation to entrust our lives to the Lord.The knowledge that we are loved, and our complete confidence in that love, in no way lessens our desire to respond generously, despite our frailty and our many shortcomings.
    A LAMENT AND A REQUEST
    165.Beginning with his second great apparition to Saint Margaret Mary, Jesus spoke of the sadness he feels because his great love for humanity receives in exchange “nothing but ingratitude and indifference”, “coldness and contempt”.And this, he added, “is more grievous to me than all that I endured in my Passion”.[162]
    166.Jesus spoke of his thirst for love and revealed that his heart is not indifferent to the way we respond to that thirst.In his words, “I thirst, but with a thirst so ardent to be loved by men in the Most Blessed Sacrament, that this thirst consumes me; and I have not encountered anyone who makes an effort, according to my desire, to quench my thirst, giving back a return for my love”.[163]Jesus asks for love.Once the faithful heart realizes this, its spontaneous response is one of love, not a desire to multiply sacrifices or simply discharge a burdensome duty: “I received from my God excessive graces of his love, and I felt moved by the desire to respond to some of them and to respond with love for love”.[164]As my Predecessor Leo XIII pointed out, through the image of his Sacred Heart, the love of Christ “moves us to return love for love”.[165]
    EXTENDING CHRIST’S LOVE TO OUR BROTHERS AND SISTERS
    167.We need once more to take up the word of God and to realize, in doing so, that our best response to the love of Christ’s heart is to love our brothers and sisters.There is no greater way for us to return love for love.The Scriptures make this patently clear:
    “Just as you did it to one of the least of these my brethren, you did it to me” (Mt25:40).
    “For the whole law is summed up in a single commandment: ‘You shall love your neighbour as yourself’” (Gal5:14).
    “We know that we have passed from death to life because we love one another. Whoever does not love abides in death” (1Jn3:14).
    “Those who do not love a brother or sister whom they have seen, cannot love God whom they have not seen” (1 Jn4:20).
    168.Love for our brothers and sisters is not simply the fruit of our own efforts; it demands the transformation of our selfish hearts.This realization gave rise to the oft-repeated prayer: “Jesus, make our hearts more like your own”.Saint Paul, for his part, urged his hearers to pray not for the strength to do good works, but “to have the same mind among you that was in Christ Jesus” (Phil2:5).
    169.We need to remember that in the Roman Empire many of the poor, foreigners and others who lived on the fringes of society met with respect, affection and care from Christians.This explains why the apostate emperor Julian, in one of his letters, acknowledged that one reason why Christians were respected and imitated was the assistance they gave the poor and strangers, who were ordinarily ignored and treated with contempt.For Julian, it was intolerable that the Christians whom he despised, “in addition to feeding their own, also feed our poor and needy, who receive no help from us”.[166]The emperor thus insisted on the need to create charitable institutions to compete with those of the Christians and thus gain the respect of society: “There should be instituted in each city many accommodations so that the immigrants may enjoy our philanthropy… and make the Greeks accustomed to such works of generosity”.[167]Julian did not achieve his objective, no doubt because underlying those works there was nothing comparable to the Christian charity that respected the unique dignity of each person.
    170.By associating with the lowest ranks of society (cf.Mt25:31-46), “Jesusbrought the great novelty of recognizing the dignity of every person, especially those who were considered ‘unworthy’.This new principle in human history – which emphasizes that individuals are even more ‘worthy’ of our respect and love when they are weak, scorned, or suffering, even to the point of losing the human ‘figure’ – has changed the face of the world.It has given life to institutions that take care of those who find themselves in disadvantaged conditions, such as abandoned infants, orphans, the elderly who are left without assistance, the mentally ill, people with incurable diseases or severe deformities, and those living on the streets”.[168]
    171.In contemplating the pierced heart of the Lord, who “took our infirmities and bore our diseases” (Mt8:17), we too are inspired to be more attentive to the sufferings and needs of others, and confirmed in our efforts to share in his work of liberation as instruments for the spread of his love.[169]As we meditate on Christ’s self-offering for the sake of all, we are naturally led to ask why we too should not be ready to give our lives for others: “We know love by this, that he laid down his life for us – and that we ought to lay down our lives for one another” (1 Jn3:16).
    ECHOES IN THE HISTORY OF SPIRITUALITY
    172.This bond between devotion to the heart of Jesus and commitment to our brothers and sisters has been a constant in the history of Christian spirituality.Let us consider a few examples.
    Being a fountain from which others can drink
    173.Starting with Origen, various Fathers of the Church reflected on the words of John 7:38 – “out of his heart shall flow rivers of living water” – which refer to those who, having drunk of Christ, put their faith in him.Our union with Christ is meant not only to satisfy our own thirst, but also to make us springs of living water for others.Origen wrote that Christ fulfils his promise by making fountains of fresh water well up within us: “The human soul, made in the image of God, can itself contain and pour forth wells, fountains and rivers”.[170]
    174.Saint Ambrose recommended drinking deeply of Christ, “in order that the spring of water welling up to eternal life may overflow in you”.[171]Marius Victorinus was convinced that the Holy Spirit has given of himself in such abundance that, “whoever receives him becomes a heart that pours forth rivers of living water”.[172]Saint Augustine saw this stream flowing from the believer as benevolence.[173]Saint Thomas Aquinas thus maintained that whenever someone “hastens to share various gifts of grace received from God, living water flows from his heart”.[174]
    175.Although “the sacrifice offered on the cross in loving obedience renders most abundant and infinite satisfaction for the sins of mankind”,[175]the Church, born of the heart of Christ, prolongs and bestows, in every time and place, the fruits of that one redemptive passion, which lead men and women to direct union with the Lord.
    176.In the heart of the Church, the mediation of Mary, as our intercessor and mother, can only be understood as “a sharing in the one source, which is the mediation of Christ himself”,[176]the sole Redeemer.For this reason, “the Church does not hesitate to profess the subordinate role of Mary”.[177]Devotion to the heart of Mary in no way detracts from the sole worship due the heart of Christ, but rather increases it: “Mary’s function as mother of humanity in no way obscures or diminishes this unique mediation of Christ, but rather shows its power”.[178]Thanks to the abundant graces streaming from the open side of Christ, in different ways the Church, the Virgin Mary and all believers become themselves streams of living water.In this way, Christ displays his glory in and through our littleness.
    Fraternity and mysticism
    177.Saint Bernard, in exhorting us to union with the heart of Christ, draws upon the richness of this devotion to call for a conversion grounded in love.Bernard believed that our affections, enslaved by pleasures, may nonetheless be transformed and set free, not by blind obedience to a commandment but rather in response to the delectable love of Christ.Evil is overcome by good, conquered by the flowering of love: “Love the Lord your God with the full and deep affection of all your heart; love him with your mind wholly alert and intent; love him with all your strength, so much so that you would not even fear to die for love of him…Your affection for the Lord Jesus should be both sweet and intimate, to oppose the sweet enticements of the sensual life.Sweetness conquers sweetness, as one nail drives out another”.[179]
    178.Saint Francis de Sales was particularly taken by Jesus’ words, “Learn from me; for I am gentle and humble in heart” (Mt11:29).Even in the most simple and ordinary things, he said, we can “steal” the Lord’s heart.“Those who would serve him acceptably must give heed not only to lofty and important matters, but to things mean and little, since by both alike we may win his heart and love…I mean the acts of daily forbearance, the headache, the toothache, the heavy cold; the tiresome peculiarities of a husband or wife, the broken glass, the loss of a ring, a handkerchief, a glove; the sneer of a neighbour; the effort of going to bed early in order to rise early for prayer or communion, the little shyness some people feel in openly performing religious duties… Be sure that all these sufferings, small as they are, if accepted lovingly, are most pleasing to God’s goodness”.[180]Ultimately, however, our response to the love of the heart of Christ is manifested in love of our neighbour: “a love that is firm, constant, steady, unconcerned with trivial matters or people’s station in life, not subject to changes or animosity…Our Lord loves us unceasingly, puts up with so many of our defects and our flaws.Precisely because of this, we must do the same with our brothers and sisters, never tiring of putting up with them”.[181]
    179.Saint Charles de Foucauld sought to imitate Jesus by living and acting as he did, in a constant effort to do what Jesus would have done in his place.Only by being conformed to the sentiments of the heart of Christ could he fully achieve this goal.Here too we find the idea of “love for love”.In his words, “I desire sufferings in order to return love for love, to imitate him… to enter into his work, to offer myself with him, the nothingness that I am, as a sacrifice, as a victim, for the sanctification of men”.[182]The desire to bring the love of Jesus to others, his missionary outreach to the poorest and most forgotten of our world, led him to take as his emblem the words, “Iesus-Caritas”, with the symbol of the heart of Christ surmounted by a cross.[183]Nor was this a light decision: “With all my strength I try to show and prove to these poor lost brethren that our religion is all charity, all fraternity, and that its emblem is a heart”.[184]He wanted to settle with other brothers “in Morocco, in the name of the heart of Jesus”.[185]In this way, their evangelizing work could radiate outwards: “Charity has to radiate from our fraternities, as it radiates from the heart of Jesus”.[186]This desire gradually made him a “universal brother”.Allowing himself to be shaped by the heart of Christ, he sought to shelter the whole of suffering humanity in his fraternal heart: “Our heart, like that of Jesus, must embrace all men and women”.[187]“The love of the heart of Jesus for men and women, the love that he demonstrated in his passion, this is what we need to have for all human beings”.[188]
    180.Father Henri Huvelin, the spiritual director of Saint Charles de Foucauld, observed that, “when our Lord dwells in a heart, he gives it such sentiments, and this heart reaches out to the least of our brothers and sisters.Such was the heart of Saint Vincent de Paul…When our Lord lives in the soul of a priest, he makes him reach out to the poor”.[189]It is important to realize that the apostolic zeal of Saint Vincent, as Father Huvelin describes it, was also nurtured by devotion to the heart of Christ.Saint Vincent urged his confreres to “find in the heart of our Lord a word of consolation for the poor sick person”.[190]If that word is to be convincing, our own heart must first have been changed by the love and tenderness of the heart of Christ.Saint Vincent often reiterated this conviction in his homilies and counsels, and it became a notable feature of the Constitutions of his Congregation: “We should make a great effort to learn the following lesson, also taught by Christ: ‘Learn from me, for I am gentle and humble of heart’.We should remember that he himself said that by gentleness we inherit the earth.If we act on this, we will win people over so that they will turn to the Lord.That will not happen if we treat people harshly or sharply”.[191]
    REPARATION: BUILDING ON THE RUINS
    181.All that has been said thus far enables us to understand in the light of God’s word the proper meaning of the “reparation” to the heart of Christ that the Lord expects us, with the help of his grace, to “offer”.The question has been much discussed, but Saint John Paul II has given us a clear response that can guide Christians today towards a spirit of reparation more closely attuned to the Gospels.
    The social significance of reparation to the heart of Christ
    182.Saint John Paul explained that by entrusting ourselves together to the heart of Christ, “over the ruins accumulated by hatred and violence, the greatly desired civilization of love, the Kingdom of the heart of Christ, can be built”.This clearly requires that we “unite filial love for God and love of neighbour”, and indeed this is “the true reparation asked by the heart of the Saviour”.[192]In union with Christ, amid the ruins we have left in this world by our sins, we are called to build a new civilization of love.That is what it means to make reparation as the heart of Christ would have us do.Amid the devastation wrought by evil, the heart of Christ desires that we cooperate with him in restoring goodness and beauty to our world.
    183.All sin harms the Church and society; as a result, “every sin can undoubtedly be considered as a social sin” and this is especially true for those sins that “by their very matter constitute a direct attack on one’s neighbour”.[193]Saint John Paul II explained that the repetition of these sins against others often consolidates a “structure of sin” that has an effect on the development of peoples.[194]Frequently, this is part of a dominant mind-set that considers normal or reasonable what is merely selfishness and indifference.This then gives rise to social alienation: “A society is alienated if its forms of social organization, production and consumption make it more difficult to offer the gift of self and to establish solidarity between people”.[195]It is not only a moral norm that leads us to expose and resist these alienated social structures and to support efforts within society to restore and consolidate the common good.Rather, it is our “conversion of heart” that “imposes the obligation”[196]to repair these structures.It is our response to the love of the heart of Jesus, which teaches us to love in turn.
    184.Precisely because evangelical reparation possesses this vital social dimension, our acts of love, service and reconciliation, in order to be truly reparative, need to be inspired, motivated and empowered by Christ.Saint John Paul II also observed that “to build the civilization of love”,[197]our world today needs the heart of Christ.Christian reparation cannot be understood simply as a congeries of external works, however indispensable and at times admirable they may be.These need a “mystique”, a soul, a meaning that grants them strength, drive and tireless creativity.They need the life, the fire and the light that radiate from the heart of Christ.
    Mending wounded hearts
    185.Nor is a merely outward reparation sufficient, either for our world or for the heart of Christ.If each of us considers his or her own sins and their effect on others, we will realize that repairing the harm done to this world also calls for a desire to mend wounded hearts where the deepest harm was done, and the hurt is most painful.
    186.A spirit of reparation thus “leads us to hope that every wound can be healed, however deep it may be.Complete reparation may at times seem impossible, such as when goods or loved ones are definitively lost, or when certain situations have become irremediable.Yet the intention to make amends, and to do so in a concrete way, is essential for the process of reconciliation and a return to peace of heart”.[198]
    The beauty of asking forgiveness
    187.Good intentions are not enough.There has to be an inward desire that finds expression in our outward actions.“Reparation, if it is to be Christian, to touch the offended person’s heart and not be a simple act of commutative justice, presupposes two demanding things:acknowledging our guiltandasking forgiveness…It is from the honest acknowledgment of the wrong done to our brother or sister, and from the profound and sincere realization that love has been compromised, that the desire to make amends arises”.[199]
    188.We should never think that acknowledging our sins before others is somehow demeaning or offensive to our human dignity.On the contrary, it demands that we stop deceiving ourselves and acknowledge our past for what it is, marred by sin, especially in those cases when we caused hurt to our brothers and sisters.“Self-accusation is part of Christian wisdom…It is pleasing to the Lord, because the Lord accepts a contrite heart”.[200]
    189.Part of this spirit of reparation is the custom of asking forgiveness from our brothers and sisters, which demonstrates great nobility amid our human weakness.Asking forgiveness is a means of healing relationships, for it “re-opens dialogue and manifests the will to re-establish the bond of fraternal charity…It touches the heart of our brother or sister, brings consolation and inspires acceptance of the forgiveness requested. Even if the irreparable cannot be completely repaired, love can always be reborn, making the hurt bearable”.[201]
    190.A heart capable of compunction will grow in fraternity and solidarity.Otherwise, “we regress and grow old within”, whereas when “our prayer becomes simpler and deeper, grounded in adoration and wonder in the presence of God, we grow and mature.We become less attached to ourselves and more attached to Christ.Made poor in spirit, we draw closer to the poor, those who are dearest to God”.[202]This leads to a true spirit of reparation, for “those who feel compunction of heart increasingly feel themselves brothers and sisters to all the sinners of the world; renouncing their airs of superiority and harsh judgments, they are filled with a burning desire to show love and make reparation”.[203]The sense of solidarity born of compunction also enables reconciliation to take place.The person who is capable of compunction, “rather than feeling anger and scandal at the failings of our brothers and sisters, weeps for their sins.There occurs a sort of reversal, where the natural tendency to be indulgent with ourselves and inflexible with others is overturned and, by God’s grace, we become strict with ourselves and merciful towards others”.[204]
    REPARATION: AN EXTENSION OF THE HEART OF CHRIST
    191.There is another, complementary, approach to reparation, which allows us to set it in an even more direct relationship with the heart of Christ, without excluding the aspect of concrete commitment to our brothers and sisters.
    192.Elsewhere I have suggested that, “God has in some way sought to limit himself in such a way that many of the things we think of as evils, dangers or sources of suffering, are in reality part of the pains of childbirth which he uses to draw us into the act of cooperation with the Creator”.[205]This cooperation on our part can allow the power and the love of God to expand in our lives and in the world, whereas our refusal or indifference can prevent it.Several passages of the Bible express this metaphorically, as when the Lord cries out, “If only you would return to me, O Israel!” (cf.Jer4:1).Or when, confronted with rejection by his people, he says, “My heart recoils within me; my compassion grows warm and tender” (Hos11:8).
    193.Even though it is not possible to speak of new suffering on the part of the glorified Lord,“the paschal mystery of Christ… and all that Christ is – all that he did and suffered for all men – participates in the divine eternity, and so transcends all times while being made present in them all”.[206]We can say that he has allowed the expansive glory of his resurrection to be limited and the diffusion of his immense and burning love to be contained, in order to leave room for our free cooperation with his heart.Our rejection of his love erects a barrier to that gracious gift, whereas our trusting acceptance of it opens a space, a channel enabling it to pour into our hearts.Our rejection or indifference limits the effects of his power and the fruitfulness of his love in us.If he does not encounter openness and confidence in me, his love is deprived – because he himself has willed it – of its extension, unique and unrepeatable, in my life and in this world, where he calls me to make him present.Again, this does not stem from any weakness on his part but rather from his infinite freedom, his mysterious power and his perfect love for each of us.When God’s power is revealed in the weakness of our human freedom, “only faith can discern it”.[207]
    194.Saint Margaret Mary recounted that, in one of Christ’s appearances, he spoke of his heart’s passionate love for us, telling her that, “unable to contain the flames of his burning charity, he must spread them abroad”.[208]Since the Lord, who can do all things, desired in his divine freedom to require our cooperation, reparation can be understood as our removal of the obstacles we place before the expansion of Christ’s love in the world by our lack of trust, gratitude and self-sacrifice.
    An Oblation to Love
    195.To help us reflect more deeply on this mystery, we can turn once more to the luminous spirituality of Saint Therese of the Child Jesus.Therese was aware that in certain quarters an extreme form of reparation had developed, based on a willingness to offer oneself in sacrifice for others, and to become in some sense a “lightning rod” for the chastisements of divine justice.In her words, “I thought about the souls who offer themselves as victims of God’s justice in order to turn away the punishments reserved to sinners, drawing them upon themselves”.[209]However, as great and generous as such an offering might appear, she did not find it overly appealing: “I was far from feeling attracted to making it”.[210]So great an emphasis on God’s justice might eventually lead to the notion that Christ’s sacrifice was somehow incomplete or only partly efficacious, or that his mercy was not sufficiently powerful.
    196.With her great spiritual insight, Saint Therese discovered that we can offer ourselves in another way, without the need to satisfy divine justice but by allowing the Lord’s infinite love to spread freely: “O my God!Is your disdained love going to remain closed up within your heart?It seems to me that if you were to find souls offering themselves as victims of holocaust to your love, you would consume them rapidly; it seems to me, too, that you would be happy not to hold back the waves of infinite tenderness within you”.[211]
    197.While nothing need be added to the one redemptive sacrifice of Christ, it remains true that our free refusal can prevent the heart of Christ from spreading the “waves of his infinite tenderness” in this world.Again, this is because the Lord wishes to respect our freedom.More than divine justice, it was the fact that Christ’s love might be refused that troubled the heart of Saint Therese, because for her, God’s justice is understood only in the light of his love.As we have seen, she contemplated all God’s perfections through his mercy, and thus saw them transfigured and resplendent with love.In her words, “even his justice (and perhaps this even more so than the others) seems to me clothed in love”.[212]
    198.This was the origin of her Act of Oblation, not to God’s justice but to his merciful love.“I offer myself as a victim of holocaust to your merciful love, asking you to consume me incessantly, allowing the waves of infinite tenderness shut up within you to overflow into my soul, and that thus I may become a martyr of your love”.[213]It is important to realize that, for Therese, this was not only about allowing the heart of Christ to fill her heart, through her complete trust, with the beauty of his love, but also about letting that love, through her life, spread to others and thus transform the world.Again, in her words, “In the heart of the Church, my Mother, I shall be love… and thus my dream will be realized”.[214]The two aspects were inseparably united.
    199.The Lord accepted her oblation.We see that shortly thereafter she stated that she felt an intense love for others and maintained that it came from the heart of Christ, prolonged through her.So she told her sister Léonie: “I love you a thousand times more tenderly than ordinary sisters love each other, for I can love you with the heart of our celestial spouse”.[215]Later, to Maurice Bellière she wrote, “How I would like to make you understand the tenderness of the heart of Jesus, what he expects from you!”[216]
    Integrity and Harmony
    200.Sisters and brothers, I propose that we develop this means of reparation, which is, in a word, to offer the heart of Christ a new possibility of spreading in this world the flames of his ardent and gracious love.While it remains true that reparation entails the desire to “render compensation for the injuries inflicted on uncreated Love, whether by negligence or grave offense”,[217]the most fitting way to do this is for our love to offer the Lord a possibility of spreading, in amends for all those occasions when his love has been rejected or refused.This involves more than simply the “consolation” of Christ of which we spoke in the previous chapter; it finds expression in acts of fraternal love by which we heal the wounds of the Church and of the world.In this way, we offer the healing power of the heart of Christ new ways of expressing itself.
    201.The sacrifices and sufferings required by these acts of love of neighbour unite us to the passion of Christ.In this way, “by that mystic crucifixion of which the Apostle speaks, we shall receive the abundant fruits of its propitiation and expiation, for ourselves and for others”.[218]Christ alone saves us by his offering on the cross; he alone redeems us, for “there is one God; there is also one mediator between God and men, the man Christ Jesus, who gave himself as a ransom for all” (1Tim2:5-6).The reparation that we offer is a freely accepted participation in his redeeming love and his one sacrifice.We thus complete in our flesh “what is lacking in Christ’s afflictions for the sake of his body, that is, the Church” (Col1:24); and Christ himself prolongs through us the effects of his complete and loving self-oblation.
    202.Often, our sufferings have to do with our own wounded ego.The humility of the heart of Christ points us towards the path of abasement.God chose to come to us in condescension and littleness.The Old Testament had already shown us, with a variety of metaphors, a God who enters into the heart of history and allows himself to be rejected by his people.Christ’s love was shown amid the daily life of his people, begging, as it were, for a response, as if asking permission to manifest his glory.Yet “perhaps only once did the Lord Jesus refer to his own heart, in his own words.And he stresses this sole feature: ‘gentleness and lowliness’, as if to say that only in this way does he wish to win us to himself”.[219]When he said, “Learn from me, for I am gentle and humble in heart” (Mt11:29), he showed us that “to make himself known, he needs our littleness, our self-abasement”.[220]
    203.In what we have said, it is important to note several inseparable aspects.Acts of love of neighbour, with the renunciation, self-denial, suffering and effort that they entail, can only be such when they are nourished by Christ’s own love.He enables us to love as he loved, and in this way he loves and serves others through us.He humbles himself to show his love through our actions, yet even in our slightest works of mercy, his heart is glorified and displays all its grandeur.Once our hearts welcome the love of Christ in complete trust, and enable its fire to spread in our lives, we become capable of loving others as Christ did, in humility and closeness to all.In this way, Christ satisfies his thirst and gloriously spreads the flames of his ardent and gracious love in us and through us.How can we fail to see the magnificent harmony present in all this?
    204.Finally, in order to appreciate this devotion in all of its richness, it is necessary to add, in the light of what we have said about its Trinitarian dimension, that the reparation made by Christ in his humanity is offered to the Father through the working of the Holy Spirit in each of us.Consequently, the reparation we offer to the heart of Christ is directed ultimately to the Father, who is pleased to see us united to Christ whenever we offer ourselves through him, with him and in him.
    BRINGING LOVE TO THE WORLD
    205.The Christian message is attractive when experienced and expressed in its totality: not simply as a refuge for pious thoughts or an occasion for impressive ceremonies.What kind of worship would we give to Christ if we were to rest content with an individual relationship with him and show no interest in relieving the sufferings of others or helping them to live a better life?Would it please the heart that so loved us, if we were to bask in a private religious experience while ignoring its implications for the society in which we live?Let us be honest and accept the word of God in its fullness.On the other hand, our work as Christians for the betterment of society should not obscure its religious inspiration, for that, in the end, would be to seek less for our brothers and sisters than what God desires to give them.For this reason, we should conclude this chapter by recalling the missionary dimension of our love for the heart of Christ.
    206.Saint John Paul II spoke of the social dimension of devotion to the heart of Christ, but also about “reparation, which is apostolic cooperation in the salvation of the world”.[221]Consecration to the heart of Christ is thus “to be seen in relation to the Church’s missionary activity, since it responds to the desire of Jesus’ heart to spread throughout the world, through the members of his Body, his complete commitment to the Kingdom”.[222]As a result, “through the witness of Christians, love will be poured into human hearts, to build up the body of Christ which is the Church, and to build a society of justice, peace and fraternity”.[223]
    207.The flames of love of the Sacred Heart of Jesus also expand through the Church’s missionary outreach, which proclaims the message of God’s love revealed in Christ.Saint Vincent de Paul put this nicely when he invited his disciples to pray to the Lord for “this spirit, this heart that causes us to go everywhere, this heart of the Son of God, the heart of our Lord, that disposes us to go as he went…he sends us, like [the apostles], to bring fire everywhere”.[224]
    208.Saint Paul VI, addressing religious Congregations dedicated to the spread of devotion to the Sacred Heart, made the following observation.“There can be no doubt that pastoral commitment and missionary zeal will fan into flame, if priests and laity alike, in their desire to spread the glory of God, contemplate the example of eternal love that Christ has shown us, and direct their efforts to make all men and women sharers in the unfathomable riches of Christ”.[225]As we contemplate the Sacred Heart, mission becomes a matter of love.For the greatest danger in mission is that, amid all the things we say and do, we fail to bring about a joyful encounter with the love of Christ who embraces us and saves us.
    209.Mission, as a radiation of the love of the heart of Christ, requires missionaries who are themselves in love and who, enthralled by Christ, feel bound to share this love that has changed their lives.They are impatient when time is wasted discussing secondary questions or concentrating on truths and rules, because their greatest concern is to share what they have experienced.They want others to perceive the goodness and beauty of the Beloved through their efforts, however inadequate they may be.Is that not the case with any lover?We can take as an example the words with which Dante Alighieri sought to express this logic of love:
    “Io dico che, pensando al suo valore
    amor si dolce si mi si fa sentire,
    che s’io allora non perdessi ardire
    farei parlando innamorar la gente”.[226]
    210.To be able to speak of Christ, by witness or by word, in such a way that others seek to love him, is the greatest desire of every missionary of souls.This dynamism of love has nothing to do with proselytism; the words of a lover do not disturb others, they do not make demands or oblige, they only lead others to marvel at such love.With immense respect for their freedom and dignity, the lover simply waits for them to inquire about the love that has filled his or her life with such great joy.
    211.Christ asks you never to be ashamed to tell others, with all due discretion and respect, about your friendship with him.He asks that you dare to tell others how good and beautiful it is that you found him.“Everyone who acknowledges me before others, I also will acknowledge before my Father in heaven” (Mt10:32).For a heart that loves, this is not a duty but an irrepressible need: “Woe to me if I do not proclaim the Gospel!” (1 Cor9:16).“Within me there is something like a burning fire shut up in my bones; I am weary with holding it in, and I cannot” (Jer20:9).
    In communion of service
    212.We should not think of this mission of sharing Christ as something only between Jesus and me.Mission is experienced in fellowship with our communities and with the whole Church.If we turn aside from the community, we will be turning aside from Jesus.If we turn our back on the community, our friendship with Jesus will grow cold.This is a fact, and we must never forget it.Love for the brothers and sisters of our communities – religious, parochial, diocesan and others – is a kind of fuel that feeds our friendship with Jesus.Our acts of love for our brothers and sisters in community may well be the best and, at times, the only way that we can witness to others our love for Jesus Christ.He himself said, “By this everyone will know that you are my disciples, if you have love for one another” (Jn13:35).
    213.This love then becomes service within the community.I never tire of repeating that Jesus told us this in the clearest terms possible: “Just as you did it to one of the least of these my brethren, you did it to me” (Mt25:40).He now asks you to meet him there, in every one of our brothers and sisters, and especially in the poor, the despised and the abandoned members of society.What a beautiful encounter that can be!
    214.If we are concerned with helping others, this in no way means that we are turning away from Jesus.Rather, we are encountering him in another way.Whenever we try to help and care for another person, Jesus is at our side.We should never forget that, when he sent his disciples on mission, “the Lord worked with them” (Mk16:20).He is always there, always at work, sharing our efforts to do good.In a mysterious way, his love becomes present through our service.He speaks to the world in a language that at times has no need of words.
    215.Jesus is calling you and sending you forth to spread goodness in our world.His call is one of service, a summons to do good, perhaps as a physician, a mother, a teacher or a priest.Wherever you may be, you can hear his call and realize that he is sending you forth to carry out that mission.He himself told us, “I am sending you out” (Lk10:3).It is part of our being friends with him.For this friendship to mature, however, it is up to you to let him send you forth on a mission in this world, and to carry it out confidently, generously, freely and fearlessly.If you stay trapped in your own comfort zone, you will never really find security; doubts and fears, sorrow and anxiety will always loom on the horizon.Those who do not carry out their mission on this earth will find not happiness, but disappointment.Never forget that Jesus is at your side at every step of the way.He will not cast you into the abyss, or leave you to your own devices.He will always be there to encourage and accompany you.He has promised, and he will do it: “For I am with you always, to the end of the age” (Mt28:20).
    216.In your own way, you too must be a missionary, like the apostles and the first disciples of Jesus, who went forth to proclaim the love of God, to tell others that Christ is alive and worth knowing.Saint Therese experienced this as an essential part of her oblation to merciful Love: “I wanted to give my Beloved to drink and I felt myself consumed with a thirst for souls”.[227]That is your mission as well.Each of us must carry it out in his or her own way; you will come to see how you can be a missionary.Jesus deserves no less.If you accept the challenge, he will enlighten you, accompany you and strengthen you, and you will have an enriching experience that will bring you much happiness.It is not important whether you see immediate results; leave that to the Lord who works in the secret of our hearts.Keep experiencing the joy born of our efforts to share the love of Christ with others.
    CONCLUSION
    217.The present document can help us see that the teaching of the social EncyclicalsLaudato Si’andFratelli Tuttiis not unrelated to our encounter with the love of Jesus Christ.For it is by drinking of that same love that we become capable of forging bonds of fraternity, of recognizing the dignity of each human being, and of working together to care for our common home.
    218.In a world where everything is bought and sold, people’s sense of their worth appears increasingly to depend on what they can accumulate with the power of money.We are constantly being pushed to keep buying, consuming and distracting ourselves, held captive to a demeaning system that prevents us from looking beyond our immediate and petty needs.The love of Christ has no place in this perverse mechanism, yet only that love can set us free from a mad pursuit that no longer has room for a gratuitous love.Christ’s love can give a heart to our world and revive love wherever we think that the ability to love has been definitively lost.
    219.The Church also needs that love, lest the love of Christ be replaced with outdated structures and concerns, excessive attachment to our own ideas and opinions, and fanaticism in any number of forms, which end up taking the place of the gratuitous love of God that liberates, enlivens, brings joy to the heart and builds communities.The wounded side of Christ continues to pour forth that stream which is never exhausted, never passes away, but offers itself time and time again to all those who wish to love as he did.For his love alone can bring about a new humanity.
    220.I ask our Lord Jesus Christ to grant that his Sacred Heart may continue to pour forth the streams of living water that can heal the hurt we have caused, strengthen our ability to love and serve others, and inspire us to journey together towards a just, solidary and fraternal world.Until that day when we will rejoice in celebrating together the banquet of the heavenly kingdom in the presence of the risen Lord, who harmonizes all our differences in the light that radiates perpetually from his open heart.May he be blessed forever.
    Given in Rome, at Saint Peter’s, on 24 October of the year 2024, the twelfth of my Pontificate.
    FRANCIS
    ______________________________
    [1]Many of the reflections in this first chapter were inspired by the unpublished writings of the late Father Diego Fares, S.J.May the Lord grant him eternal rest.
    [2]Cf. HOMER,Iliad, XXI, 441.
    [3]Cf.Iliad, X, 244.
    [4]Cf. PLATO,Timaeus, 65 c-d; 70.
    [5]Homily at Morning Mass in Domus Sanctae Marthae, 14 October 2016:L’Osservatore Romano, 15 October 2016, p. 8.
    [6]SAINT JOHN PAUL II,Angelus, 2 July 2000:L’Osservatore Romano, 3-4 July 2000, p. 4.
    [7]ID.,Catechesis, 8 June 1994:L’Osservatore Romano, 9 June 1994, p. 5.
    [8]The Demons(1873).
    [9]ROMANO GUARDINI,Religiöse Gestalten in Dostojewskijs Werk, Mainz/Paderborn, 1989, pp. 236ff.
    [10]KARL RAHNER,“Some Theses for a Theology of Devotion to the Sacred Heart”, inTheological Investigations, vol. III, Baltimore-London, 1967, p. 332.
    [11]Ibid., p. 333.
    [12]BYUNG-CHUL HAN,Heideggers Herz.Zum Begriff der Stimmung bei Martin Heidegger, München, 1996, p. 39.
    [13]Ibid., p. 60; cf. p. 176.
    [14]Cf. ID.,Agonie des Eros, Berlin, 2012.
    [15]Cf. MARTIN HEIDEGGER,Erläuterungen zu Hölderlins Dichtung, Frankfürt a. M., 1981, p. 120.
    [16]Cf. MICHEL DE CERTEAU,L’espace du désir ou le «fondement» des Exercises Spirituels:Christus77 (1973), pp. 118-128.
    [17]Itinerarium Mentis in Deum, VII, 6.
    [18]ID.,Proemium in I Sent.,q. 3.
    [19]SAINT JOHN HENRY NEWMAN,Meditations and Devotions, London, 1912, Part III [XVI], par. 3, pp. 573-574.
    [20]Pastoral ConstitutionGaudium et Spes, 82.
    [21]Ibid., 10.
    [22]Ibid., 14.
    [23]Cf.DICASTERY FOR THE DOCTRINE OF THE FAITH, DeclarationDignitas Infinita(2 April 2024), 8.Cf.L’Osservatore Romano, 8 April 2024.
    [24]Pastoral ConstitutionGaudium et Spes, 26.
    [25]SAINT JOHN PAUL II,Angelus, 28 June 1998:L’Osservatore Romano, 30 June-1 July 1998, p. 7.
    [26]Encyclical LetterLaudato Si’(24 May 2015),83: AAS 107 (2015), 880.
    [27]Homily at Morning Mass in Domus Sanctae Marthae, 7 June 2013:L’Osservatore Romano, 8 June 2013, p. 8.
    [28]PIUS XII, Encyclical LetterHaurietis Aquas(15 May 1956), I: AAS 48 (1956), 316.
    [29]PIUS VI, ConstitutionAuctorem Fidei(28 August 1794), 63: DH 2663.
    [30]LEO XIII,Encyclical LetterAnnum Sacrum(25 May 1899): ASS 31 (1898-1899), 649.
    [31]Ibid:“Inest in Sacro Corde symbolum et expressa imago infinitæ Iesu Christi caritatis”.
    [32]Angelus, 9 June 2013:L’Osservatore Romano, 10-11 June 2013, p. 8.
    [33]We canthus understand why the Church has forbidden placing on the altar representations of the heart of Jesus or Mary alone (cf. Response of the Congregation of Sacred Rites to the Reverend Charles Lecoq, P.S.S., 5 April 1879:Decreta Authentica Congregationis Sacrorum Rituum ex Actis ejusdem Collecta, vol. III, 107-108, n. 3492).Outside the liturgy, “for private devotion” (ibid.), the symbolism of a heart can be used as a teaching aid, an aesthetic figure or an emblem that invites one to meditate on the love of Christ, but this risks taking the heart as an object of adoration or spiritual dialogue apart from the Person of Christ.On 31 March 1887, the Congregation gave another, similar response (ibid., 187, n. 3673).
    [34]ECUMENICAL COUNCIL OF TRENT, Session XXV, DecreeMandat Sancta Synodus(3 December 1563): DH 1823.
    [35]FIFTH GENERAL CONFERENCE OF THE LATIN AMERICAN AND CARIBBEAN BISHOPS,Aparecida Document(29 June 2007), n. 259.
    [36]Encyclical LetterHaurietis Aquas(15 May 1956), I: AAS 48 (1956), 323-324.
    [37]Ep. 261, 3: PG 32, 972.
    [38]In Io. homil.63, 2: PG 59, 350.
    [39]De fide ad Gratianum, II, 7, 56: PL 16, 594 (ed. 1880).
    [40]Enarr. in Ps. 87, 3: PL 37, 1111.
    [41]Cf.De fide orth. 3, 6, 20: PG 94, 1006, 1081.
    [42]OLEGARIO GONZÁLEZ DE CARDEDAL,La entraña del cristianismo, Salamanca, 2010, 70-71.
    [43]Angelus, 1 June 2008:L’Osservatore Romano, 2-3 June 2008, p. 1.
    [44]PIUS XII, Encyclical LetterHaurietis Aquas(15 May 1956), II: AAS 48 (1956), 327-328.
    [45]Ibid.: AAS 48 (1956), 343-344.
    [46]BENEDICT XVI,Angelus, 1 June 2008:L’Osservatore Romano, 2-3 June 2008, p. 1.
    [47]VIGILIUS,ConstitutionInter Innumeras Sollicitudines(14 May 553):DH 420.
    [48]ECUMENICAL COUNCIL OF EPHESUS,Anathemas of Cyril of Alexandria, 8: DH 259.
    [49]SECOND ECUMENICAL COUNCIL OF CONSTANTINOPLE, Session VIII (2 June 553), Canon 9: DH 431.
    [50]SAINT JOHN OF THE CROSS,Spiritual Canticle, red.A, Stanza 22, 4.
    [51]Ibid., Stanza 12, 8.
    [52]Ibid., Stanza 12, 1.
    [53]“There is one God, the Father, from whom are all things and for whom we exist” (1 Cor8:6).“To our God and Father be glory forever and ever. Amen”(Phil4:20).“Blessed be the God and Father of our Lord Jesus Christ, the Father of mercies and the God of all consolation”(2 Cor1:3).
    [54]Apostolic LetterTertio Millennio Adveniente(10 November 1994), 49: AAS 87 (1995), 35.
    [55]Ad Rom., 7: PG 5, 694.
    [56]“That the world may know that I love the Father” (Jn14:31); “The Father and I are one” (Jn10:30); “I am in the Father and the Father is in me” (Jn14:10).
    [57]“Iam going to the Father” (pros ton Patéra:Jn16:28).“I am coming to you” (pros se:Jn17:11).
    [58]“eis ton kolpon tou Patrós”.
    [59]Adv. Haer., III, 18, 1: PG 7, 932.
    [60]In Joh.II, 2: PG 14, 110.
    [61]Angelus, 23 June 2002:L’Osservatore Romano, 24-25 June 2002, p. 1.
    [62]SAINT JOHN PAUL II,Message on the Hundredth Anniversary of the Consecration of the Human Race to the Divine Heart of Jesus, Warsaw, 11 June 1999, Solemnity of the Sacred Heart of Jesus, 3:L’Osservatore Romano, 12 June 1999, p. 5.
    [63]ID.,Angelus, 8 June 1986:L’Osservatore Romano, 9-10 June 1986, p. 5
    [64]Homily, Visit to the Gemelli Hospital and to the Faculty of Medicine of the Catholic University of the Sacred Heart, 27 June 2014:L’Osservatore Romano, 29 June 2014, p. 7.
    [65]Eph1:5, 7; 2:18; 3:12.
    [66]Eph2:5, 6; 4:15.
    [67]Eph1:3, 4, 6, 7, 11, 13, 15; 2:10, 13, 21, 22; 3:6, 11, 21.
    [68]Message on the Hundredth Anniversary of the Consecration of the Human Race to the Divine Heart of Jesus, Warsaw, 11 June 1999, Solemnity of the Sacred Heart of Jesus, 2:L’Osservatore Romano, 12 June 1999, p. 5.
    [69]“Since there is in the Sacred Heart a symbol and the express image of the infinite love of Jesus Christ that moves us to love one another, it is fit and proper that we should consecrate ourselves to his most Sacred Heart – an act that is nothing else than an offering and a binding of oneself to Jesus Christ, for whatever honour, veneration and love is given to this divine Heart is really and truly given to Christ himself…And now, today, behold another blessed and heavenly token is offered to our sight – the most Sacred Heart of Jesus, with a cross rising from it and shining forth with dazzling splendour amidst flames of love.In that Sacred Heart all our hopes should be placed, and from it the salvation of men is to be confidently besought” (Encyclical LetterAnnum Sacrum[25 May 1899]: ASS 31 [1898-1899], 649, 651).
    [70]“For is not the sum of all religion and therefore the pattern of more perfect life, contained in that most auspicious sign and in the form of piety that follows from it inasmuch as it more readily leads the minds of men to an intimate knowledge of Christ our Lord, and more efficaciously moves their hearts to love him more vehemently and to imitate him more closely?”(Encyclical LetterMiserentissimus Redemptor[8 May 1928]: AAS 20 [1928], 167).
    [71]“For it is perfectly clear that this devotion, if we examine its proper nature, is a most excellent act of religion, inasmuch as it demands the full and absolute determination of surrendering and consecrating oneself to the love of the divine Redeemer whose wounded heart is the living sign and symbol of that love…In it, we can contemplate not only the symbol, but also, as it were, the synthesis of the whole mystery of our redemption…Christ expressly and repeatedly pointed to his heart as the symbol by which men are drawn to recognize and acknowledge his love, and at the same time constituted it as the sign and pledge of his mercy and his grace for the needs of the Church in our time” (Encyclical LetterHaurietis Aquas[15 May 1956], Proemium, III, IV: AAS 48 [1956], 311, 336, 340).
    [72]Catechesis, 8 June 1994, 2:L’Osservatore Romano, 9 June 1994, p. 5.
    [73]Angelus, 1 June 2008:L’Osservatore Romano, 2-3 June 2008, p. 1.
    [74]Encyclical LetterHaurietis Aquas(15 May 1956), IV: AAS 48 (1956), 344.
    [75]Cf.ibid.: AAS 48 (1956), 336.
    [76]“The value of private revelations is essentially different from that of the one public revelation: the latter demands faith…A private revelation… is a help which is proffered, but its use is not obligatory” (BENEDICT XVI, Apostolic ExhortationVerbum Domini[30 September 2010], 14: AAS 102 [2010]), 696).
    [77]Encyclical LetterHaurietis Aquas(15 May 1956), IV: AAS 48 (1956), 340.
    [78]Ibid.: AAS 48 (1956), 344.
    [79]Ibid.
    [80]Apostolic ExhortationC’est la Confiance(15 October 2023), 20:L’Osservatore Romano, 16 October 2023.
    [81]SAINT THERESE OF THE CHILD JESUS,Autobiography, Ms A, 83v°.
    [82]SAINT MARIA FAUSTINA KOWALSKA,Diary, 47 (22 February 1931),Marian Press, Stockbridge, 2011, p. 46.
    [83]Mishnah Sukkah, IV, 5, 9.
    [84]Letter to the Superior General of the Society of Jesus, Paray-le-Monial (France), 5 October 1986:L’Osservatore Romano, 7 October 1986, p. IX.
    [85]Acta Martyrum Lugdunensium, in EUSEBIUS OF CAESARIA,Historia Ecclesiastica, V, 1: PG 20, 418.
    [86]RUFINUS, V, 1, 22, in GCS,EusebiusII, 1, p. 411, 13ff.
    [87]SAINT JUSTIN,Dial.135,3: PG 6, 787
    [88]NOVATIAN,De Trinitate, 29: PL 3, 994; cf. SAINT GREGORY OF ELVIRA,Tractatus Origenis de libris Sanctarum Scripturarum, XX, 12: CSSL 69, 144.
    [89]Expl. Ps.1:33: PL 14, 983-984.
    [90]Cf.Tract. in Ioannem61, 6: PL 35, 1801.
    [91]Ep. ad Rufinum, 3, 4.3: PL 22, 334.
    [92]Sermones in Cant.61, 4: PL 183, 1072.
    [93]Expositio altera super Cantica Canticorum, c. 1: PL 180, 487.
    [94]WILLIAM OF SAINT-THIERRY,De natura et dignitate amoris, 1: PL 184, 379.
    [95]ID.,Meditivae Orationes, 8, 6: PL 180, 230.
    [96]SAINT BONAVENTURE,Lignum Vitae.De mysterio passionis, 30.
    [97]Ibid., 47.
    [98]Legatus divinae pietatis, IV, 4, 4: SCh 255, 66.
    [99]LÉON DEHON,Directoire spirituel des prêtres su Sacré Cœur de Jésus, Turnhout, 1936, II, ch. VII, n. 141.
    [100]Dialogue on Divine Providence, LXXV: FIORILLI M.-CARAMELLA S., eds., Bari, 1928, 144.
    [101]Cf., for example, ANGELUS WALZ,De veneratione divini cordis Iesu in Ordine Praedicatorum, Pontificium Institutum Angelicum, Rome, 1937.
    [102]RAFAEL GARCÍA HERREROS, Vida de San Juan Eudes, Bogotá, 1943, 42.
    [103]SAINT FRANCIS DE SALES,Letter to Jane Frances de Chantal, 24 April 1610.
    [104]Sermon forthe Second Sunday of Lent, 20 February 1622.
    [105]Letter to Jane Frances de Chantal, Solemnity of the Ascension, 1612.
    [106]Letter to Marie Aimée de Blonay, 18 February 1618.
    [107]Letter to Jane Frances de Chantal, late November 1609.
    [108]Letter to Jane Frances de Chantal, ca. 25 February 1610.
    [109]Entretien XIV, on religious simplicity and prudence.
    [110]Letter to Jane Frances de Chantal,10 June 1611.
    [111]SAINT MARGARET MARY ALACOQUE,Autobiography, n. 53.
    [112]Ibid.
    [113]Ibid., n. 55.
    [114]Cf. DICASTERY FOR THE DOCTRINE OF THE FAITH,Norms for Proceeding in the Discernment of Alleged Supernatural Phenomena, 17 May 2024, I, A, 12.
    [115]SAINT MARGARET MARY ALACOQUE,Autobiography, n. 92.
    [116]Letter to Sœur de la Barge, 22 October 1689.
    [117]Autobiography, n. 53.
    [118]Ibid., n. 55.
    [119]Sermon on Trust in God, inŒuvres du R.P de La Colombière, t. 5, Perisse, Lyon, 1854, p. 100.
    [120]Spiritual Exercises in London, 1-8 February 1677, inŒuvres du R.P de La Colombière, t. 7, Seguin, Avignon, 1832, p. 93.
    [121]Spiritual Exercises in Lyon, October-November 1674, ibid., p. 45.
    [122]SAINT CHARLES DE FOUCAULD,Letter to Madame de Bondy, 27 April 1897.
    [123]Letter to Madame de Bondy, 28 April 1901.Cf.Letter to Madame de Bondy, 5 April 1909: “Through you I came to know the adoration of the Blessed Sacrament, the benedictions and the Sacred Heart”.
    [124]Letter to Madame de Bondy, 7 April 1890.
    [125]Letter to l’Abbé Huvelin, 27 June 1892.
    [126]SAINT CHARLES DE FOUCAULD,Méditations sur l’Ancien Testament (1896-1897), XXX, 1-21.
    [127]ID.,Letter to l’Abbé Huvelin, 16 May 1900.
    [128]ID.,Diary, 17 May 1906.
    [129]Letter 67 to Mme. Guérin, 18 November 1888.
    [130]Letter 122 to Céline, 14 October 1890.
    [131]Poem 23, “To the Sacred Heart of Jesus”, June or October 1895.
    [132]Letter 247 to l’Abbé Maurice Bellière, 21 June 1897.
    [133]Last Conversations. Yellow Notebook, 11 July 1897, 6.
    [134]Letter 197 to Sister Marie of the Sacred Heart, 17 September 1896.This does not mean that Therese did not offer sacrifices, sorrows and troubles as a way of associating herself with the suffering of Christ, but that, in the end, she was concerned not to give these offerings an importance they did not have.
    [135]Letter 142 to Céline, 6 July 1893.
    [136]Letter 191 to Léonie, 12 July 1896.
    [137]Letter 226 to Father Roulland, 9 May 1897.
    [138]Letter 258 to l’Abbé Maurice Bellière, 18 July 1897.
    [139]Cf. SAINT IGNATIUS LOYOLA,Spiritual Exercises, 104.
    [140]Ibid., 297.
    [141]Cf.Letter to Ignatius Loyola, 23 January 1541.
    [142]De Vita P. Ignatii et Societatis Iesu initiis, ch. 8.96.
    [143]Spiritual Exercises, 54.
    [144]Ibid., 230ff.
    [145]THIRTY-THIRD GENERAL CONGREGATION OF THE SOCIETY OF JESUS, Decree 46, 1:Institutum Societatis Iesu, 2, Florence, 1893, 511.
    [146]In Him Alone is Our Hope. Texts on the Heart of Christ, St. Louis, 1984.
    [147]Letter to the Superior General of the Society of Jesus, Paray-le-Monial, 5 October 1986:L’Osservatore Romano, 6 October 1986, p. 7.
    [148]Conference to Priests, “Poverty”, 13 August 1655.
    [149]Conference to the Daughters of Charity, “Mortification, Correspondence, Meals and Journeys (Common Rules,art. 24-27), 9 December 1657.
    [150]SAINT DANIELE COMBONI,Gli scritti,Bologna, 1991, 998 (n. 3324).
    [151]Homily at the Mass of Canonization, 18 May 2003:L’Osservatore Romano, 19-20 May 2003, p. 6.
    [152]SAINT JOHN PAUL II, Encyclical LetterDives in Misericordia(30 November 1980), 1: AAS 72 (1980), 1219.
    [153]ID.,Catechesis, 20 June 1979:L’Osservatore Romano, 22 June 1979, 1.
    [154]COMBONIAN MISSIONARIES OF THE HEART OF JESUS,Rule of Life, 3.
    [155]SOCIETY OF THE SACRED HEART,Constitutions of 1982, 7.
    [156]Encyclical LetterMiserentissimus Redemptor(8 May 1928): AAS 20 (1928), 174.
    [157]The believer’s act of faith has as its object not simply the doctrine proposed, but also union with Christ himself in the reality of his divine life (cf. SAINT THOMAS AQUINAS,Summa Theologiae, II-II, q. 1, a. 2, ad 2; q. 4, a. 1).
    [158]PIUS XI, Encyclical LetterMiserentissimus Redemptor(8 May 1928): AAS 20 (1928), 174.
    [159]Homily at the Chrism Mass, 28 March 2024:L’Osservatore Romano, 28 March 2024, p. 2.
    [160]SAINT IGNATIUS LOYOLA,Spiritual Exercises, 203.
    [161]Homily at the Chrism Mass, 28 March 2024:L’Osservatore Romano, 28 March 2024, p. 2.
    [162]SAINT MARGARET MARY ALACOQUE,Autobiography, n. 55.
    [163]Letter 133 to Father Croiset.
    [164]Autobiography, n. 92.
    [165]Encyclical LetterAnnum Sacrum(25 May 1899): ASS 31 (1898-1899), 649.
    [166]IULIANUS IMP.,Ep. XLIX ad Arsacium Pontificem Galatiae, Mainz, 1828, 90-91.
    [167]Ibid.
    [168]DICASTERY FOR THE DOCTRINE OF THE FAITH, DeclarationDignitas Infinita(2 April 2024), 19:L’Osservatore Romano, 8 April 2024.
    [169]Cf. BENEDICT XVI,Letter to the Superior General of the Society of Jesus on the Fiftieth Anniversary of the Encyclical“Haurietis Aquas”(15 May 2006): AAS 98 (2006), 461.
    [170]In Num. homil.12, 1: PG 12, 657.
    [171]Epist. 29, 24: PL 16, 1060.
    [172]Adv.Arium1, 8: PL 8, 1044.
    [173]Tract. in Joannem32, 4: PL 35, 1643.
    [174]Expos. in Ev. S. Joannis, cap. VII, lectio 5.
    [175]PIUS XII, Encyclical LetterHaurietis Aquas, 15 May 1956: AAS 48 (1956), 321.
    [176]SAINT JOHN PAUL II, Encyclical LetterRedemptoris Mater(25 March 1987), 38: AAS 79 (1987), 411.
    [177]SECOND VATICAN ECUMENICAL COUNCIL, Dogmatic ConstitutionLumen Gentium, 62.
    [178]Ibid., 60.
    [179]Sermones super Cant.,XX, 4: PL 183, 869.
    [180]Introduction to the Devout Life, Part III, xxxv.
    [181]Sermon for the XVII Sunday after Pentecost.
    [182]Écrits spirituels, Paris 1947, 67.
    [183]After 19 March 1902, all his letters begin with the wordsJesus Caritasseparated by a heart surmounted by the cross.
    [184]Letter to l’Abbé Huvelin, 15 July 1904.
    [185]Letter to Dom Martin, 25 January 1903.
    [186]Cited in RENÉVOILLAUME, Les fraternités du Père de Foucauld, Paris, 1946, 173.
    [187]Méditations des saints Évangiles sur les passages relatifs à quinze vertus, Nazareth, 1897-1898,Charité(Mt13:3), 60.
    [188]Ibid.,Charité(Mt22:1), 90.
    [189]H. HUVELIN,Quelques directeurs d’âmes au XVII siècle, Paris, 1911, 97.
    [190]Conference, “Service of the Sick and Care of One’s own Health”, 11 November 1657.
    [191]Common Rules of the Congregation of the Mission, 17 May 1658, c. 2, 6.
    [192]Letter to the Superior General of the Society of Jesus, Paray-le-Monial, 5 October 1986:L’Osservatore Romano, 6 October 1986, p. 7.
    [193]SAINT JOHN PAUL II, Post-Synodal Apostolic ExhortationReconciliatio et Paenitentia(2 December 1984), 16: AAS 77 (1985), 215.
    [194]Cf. Encyclical LetterSollicitudo Rei Socialis(30 December 1987), 36: AAS 80 (1988), 561-562.
    [195]Encyclical LetterCentesimus Annus(1 May 1991), 41: AAS 83 (1991), 844-845.
    [196]Catechism of the Catholic Church, 1888.
    [197]Catechesis, 8 June 1994, 2:L’Osservatore Romano, 4 May 1994, p. 5.
    [198]Address to the Participants in the International Colloquium “Réparer L’Irréparable”, on the 350thAnniversary of the Apparitions of Jesus in Paray-le-Monial, 4 May 2024:L’Osservatore Romano, 4 May 2024, p. 12.
    [199]Ibid.
    [200]Homily at Morning Mass in Domus Sanctae Marthae, 6 March 2018:L’Osservatore Romano, 5-6 March 2018, p. 8.
    [201]Address to the Participants in the International Colloquium “Réparer L’Irréparable”, on the 350thAnniversary of the Apparitions of Jesus in Paray-le-Monial, 4 May 2024:L’Osservatore Romano, 4 May 2024, p. 12.
    [202]Homily at the Chrism Mass, 28 March 2024:L’Osservatore Romano, 28 March 2024, p. 2.
    [203]Ibid.
    [204]Ibid.
    [205]Encyclical LetterLaudato Si’(24 May 2015), 80: AAS 107 (2015), 879.
    [206]Catechism of the Catholic Church, No. 1085.
    [207]Ibid., No. 268.
    [208]Autobiography, n. 53.
    [209]Ms A, 84r.
    [210]Ibid.
    [211]Ibid.
    [212]Ms A, 83v.; cf.Letter 226 to Father Roulland, 9 May 1897.
    [213]Act of Oblation to Merciful Love, 9 June 1895, 2r-2v.
    [214]Ms B, 3v.
    [215]Letter 186 to Léonie,11 April 1896.
    [216]Letter 258 to l’Abbé Bellière, 18 July 1897.
    [217]Cf. PIUS XI, Encyclical LetterMiserentissimus Redemptor, 8 May 1928: AAS 20 (1928), 169.
    [218]Ibid.: AAS 20 (1928), 172.
    [219]SAINT JOHN PAUL II, Catechesis, 20 June 1979:L’Osservatore Romano, 22 June 1979, p. 1.
    [220]Homily at Mass in Domus Sanctae Marthae, 27 June 2014:L’Osservatore Romano, 28 June 2014, p. 8.
    [221]Message for the Centenary of the Consecration of the Human Race to the Divine Heart of Jesus, Warsaw, 11 June 1999, Solemnity of the Sacred Heart of Jesus.L’Osservatore Romano, 12 June 1999, p. 5.
    [222]Ibid.
    [223]Letter to the Archbishop of Lyon on the occasion of the Pilgrimage of Paray-le-Monial for the Centenary of the Consecration of the Human Race to the Divine Heart of Jesus, 4 June 1999:L’Osservatore Romano, 12 June 1999, p. 4.
    [224]Conference,“Repetition of Prayer”, 22 August 1655.
    [225]LetterDiserti interpretes(25 May 1965), 4:Enchiridion della Vita Consacrata, Bologna-Milano, 2001, n. 3809.
    [226]Vita NuovaXIX, 5-6: “I declare that, in thinking of its worth, love so sweet makes me feel that, if my courage did not fail me, I would speak out and make everyone else fall in love”.
    [227] Ms A, 45v.

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  • MIL-OSI: Independent Bank Corporation Reports 2024 Third Quarter Results

    Source: GlobeNewswire (MIL-OSI)

    Third Quarter Highlights

    Highlights for the third quarter of 2024 include:

    • Increases in net interest income of $0.5 million (or 4.9% annualized) from June 30, 2024;
    • An increase in tangible book value per share of $3.69 (22.3%) over the third quarter of 2023;
    • Net growth in core deposits of $100.1 million (or 8.9% annualized) from June 30, 2024;
    • Net growth in loans of $90.4 million (or 9.3% annualized) from June 30, 2024; and
    • The payment of a 24 cent per share dividend on common stock on August 15, 2024.

    GRAND RAPIDS, Mich., Oct. 24, 2024 (GLOBE NEWSWIRE) — Independent Bank Corporation (NASDAQ: IBCP) reported third quarter 2024 net income of $13.8 million, or $0.65 per diluted share, versus net income of $17.5 million, or $0.83 per diluted share, in the prior-year period.

    William B. (“Brad”) Kessel, the President and Chief Executive Officer of Independent Bank Corporation, commented: “I am proud of our team and very pleased with our third quarter 2024 results, driving organic growth on both sides of the balance sheet. Overall loans increased 9.3% (annualized), while core deposits are up 8.9% (annualized). We were able to generate net interest income growth on both a linked quarter basis and on a year over year quarterly basis. We believe that our expenses continue to be well managed, and we continue to see improved operational scale from strategic investments we have made in recent years. Our credit metrics continue to be excellent, with watch credits and non-performing assets near historic lows. These fundamentals continue to drive good growth in tangible book value per share (22%) compared to the prior year quarter. Based on a robust commercial loan pipeline, the past record of our core group of professionals and the on-going strategic initiative to add talented bankers to our team, we are optimistic about continuing these growth trends for the remainder of the year and into 2025.”

    Significant items impacting comparable third quarter 2024 and 2023 results include the following:

    • Changes in the fair value due to price of capitalized mortgage loan servicing rights (the “MSR Changes”) of  $(4.2) million ($(0.16) per diluted share, after taxes) for the three-month period ended September 30, 2024, as compared to $1.6 million ($0.06 per diluted share, after taxes) for the three-months ended September 30, 2023.

    Operating Results

    The Company’s net interest income totaled $41.9 million during the third quarter of 2024, an increase of $2.4 million, or 6.2% from the year-ago period, and an increase of $0.5 million, or 1.2%, from the second quarter of 2024. The Company’s tax equivalent net interest income as a percent of average interest-earning assets (the “net interest margin”) was 3.37% during the third quarter of 2024, compared to 3.23% in the year-ago period, and 3.40% in the second quarter of 2024. The year-over-year quarterly increase in net interest income was due to an increase in average interest-earning assets and the net interest margin. The increase in net interest income compared to the linked quarter was due to an increase in average interest earning assets that was partially offset by a decrease in the net interest margin. Average interest-earning assets were $4.99 billion in the third quarter of 2024, compared to $4.89 billion in the year ago quarter and $4.89 billion in the second quarter of 2024.

    Non-interest income totaled $9.5 million for the third quarter of 2024, compared to $15.6 million in the comparable prior year period. This change was primarily due to variances in mortgage banking related revenues.

    Net gains on mortgage loans in the third quarters of 2024 and 2023, were approximately $2.2 million and $2.1 million, respectively. The comparative quarterly increase in net gains on mortgage loans was primarily due to an increase in both gain on sale margin on mortgage loans sold and a increase in the volume of mortgage loans sold.

    Mortgage loan servicing, net, generated income (expense) of $(3.1) million and $2.7 million in the third quarters of 2024 and 2023, respectively. The significant variance in mortgage loan servicing, net is primarily due to changes in the fair value of capitalized mortgage loan servicing rights associated with changes in interest rates and the associated expected future prepayment levels and expected float rates. Mortgage loan servicing, net activity is summarized in the following table:

      Three months ended   Nine months ended
      9/30/2024   9/30/2023   9/30/2024   9/30/2023
      (In thousands)
    Mortgage loan servicing, net:              
    Revenue, net $ 2,248     $ 2,197     $ 6,681     $ 6,612  
    Fair value change due to price   (4,155 )     1,556       (1,979 )     3,364  
    Fair value change due to pay-downs   (1,223 )     (1,085 )     (3,016 )     (2,908 )
    Total $ (3,130 )   $ 2,668     $ 1,686     $ 7,068  
     

    Non-interest expenses totaled $32.6 million in the third quarter of 2024, compared to $32.0 million in the year-ago period.

    The Company recorded income tax expense of $3.5 million in the third quarter of 2024. This compares to an income tax expense of $4.1 million in the third quarter of 2023. The changes in income tax expense principally reflect changes in pre-tax earnings in 2024 relative to 2023.

    Asset Quality

    A breakdown of non-performing loans by loan type is as follows:

      9/30/2024   12/31/2023   9/30/2023
    Loan Type (Dollars in thousands)
    Commercial $ 59     $ 28     $ 31  
    Mortgage   6,525       6,425       6,137  
    Installment   666       970       801  
    Sub total   7,250       7,423       6,969  
    Less – government guaranteed loans   2,102       2,191       2,254  
    Total non-performing loans $ 5,148     $ 5,232     $ 4,715  
    Ratio of non-performing loans to total portfolio loans   0.13 %     0.14 %     0.13 %
    Ratio of non-performing assets to total assets   0.11 %     0.11 %     0.10 %
    Ratio of allowance for credit losses to total non-performing loans   1115.85 %     1044.69 %     1176.99 %
                           

    The provision for credit losses was an expense of $1.49 million and $1.35 million in the third quarters of 2024 and 2023, respectively. We recorded loan net charge offs (recoveries) of $0.31 million and $(0.18) million in the third quarters of 2024 and 2023, respectively. At September 30, 2024, the allowance for credit losses for loans totaled $57.4 million, or 1.46% of total portfolio loans compared to $54.7 million, or 1.44% of total portfolio loans at December 31, 2023.

    Balance Sheet, Capital and Liquidity

    Total assets were $5.26 billion at September 30, 2024, a decrease of $4.5 million from December 31, 2023. Loans, excluding loans held for sale, were $3.94 billion at September 30, 2024, compared to $3.79 billion at December 31, 2023.  Deposits totaled $4.63 billion at September 30, 2024, an increase of $4.0 million from December 31, 2023. This increase is primarily due to increases in savings and interest-bearing checking, reciprocal and time deposits that were partially offset by a decrease in non-interest bearings deposits and brokered time deposits.

    Cash and cash equivalents totaled $121.6 million at September 30, 2024, versus $169.8 million at December 31, 2023. Securities available for sale (“AFS”) totaled $589.0 million at September 30, 2024, versus $679.4 million at December 31, 2023.

    Total shareholders’ equity was $452.4 million at September 30, 2024, or 8.60% of total assets compared to $404.4 million or 7.68% at December 31, 2023. Tangible common equity totaled $422.5 million at September 30, 2024, or $20.22 per share compared to $374.1 million or $17.96 per share at December 31, 2023. The increase in shareholder equity as well as tangible common equity are primarily the result of earnings retention and a decrease in accumulated other comprehensive loss.

    The Company’s wholly owned subsidiary, Independent Bank, remains significantly above “well capitalized” for regulatory purposes with the following ratios:

    Regulatory Capital Ratios 9/30/2024   12/31/2023   Well
    Capitalized
    Minimum
               
    Tier 1 capital to average total assets   9.36 %     8.80 %     5.00 %
    Tier 1 common equity  to risk-weighted assets   11.74 %     11.21 %     6.50 %
    Tier 1 capital to risk-weighted assets   11.74 %     11.21 %     8.00 %
    Total capital to risk-weighted assets   13.00 %     12.46 %     10.00 %
                           

    At September 30, 2024, in addition to liquidity available from our normal operating, funding, and investing activities, we had unused credit lines with the FHLB and FRB of approximately $1.11 billion and $471.7 million, respectively. We also had approximately $771.3 million in fair value of unpledged securities AFS and HTM at September 30, 2024 which could be pledged for an estimated additional borrowing capacity at the FHLB and FRB of approximately $718.0 million.

    Share Repurchase Plan

    On December 19, 2023, the Board of Directors of the Company authorized the 2024 share repurchase plan. Under the terms of the 2024 share repurchase plan, the Company is authorized to purchase up to 1,100,000 shares, or approximately 5% of its then outstanding common stock. The repurchase plan is authorized to last through December 31, 2024. The Company did not repurchase any shares of common stock during the first nine months of 2024.

    Earnings Conference Call

    Brad Kessel, President and CEO, Gavin Mohr, CFO and Joel Rahn, EVP – Commercial Banking will review the quarterly results in a conference call for investors and analysts beginning at 11:00 am ET on Thursday, October 24, 2024.

    To participate in the live conference call, please dial 1-833-470-1428 (Access Code # 957797). Also, the conference call will be accessible through an audio webcast with user-controlled slides via the following site/URL: https://events.q4inc.com/attendee/824908063.

    A playback of the call can be accessed by dialing 1-866-813-9403 (Access Code # 159381). The replay will be available through October 31, 2024.

    About Independent Bank Corporation

    Independent Bank Corporation (NASDAQ: IBCP) is a Michigan-based bank holding company with total assets of approximately $5.3 billion. Founded as First National Bank of Ionia in 1864, Independent Bank Corporation operates a branch network across Michigan’s Lower Peninsula through one state-chartered bank subsidiary. This subsidiary (Independent Bank) provides a full range of financial services, including commercial banking, mortgage lending, consumer banking, investments and insurance. Independent Bank Corporation is committed to providing exceptional personal service and value to its customers, stockholders and the communities it serves.

    For more information, please visit our Web site at: IndependentBank.com.

    Forward-Looking Statements
    This presentation contains forward-looking statements, which are any statements or information that are not historical facts. These forward-looking statements include statements about our anticipated future revenue and expenses and our future plans and prospects.

    Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated. For example, deterioration in general business and economic conditions or turbulence in domestic or global financial markets could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding to us, lead to a tightening of credit, and increase stock price volatility. Our results could also be adversely affected by changes in interest rates; increases in unemployment rates; deterioration in the credit quality of our loan portfolios or in the value of the collateral securing those loans; deterioration in the value of our investment securities; legal and regulatory developments; changes in customer behavior and preferences; breaches in data security; and management’s ability to effectively manage the multitude of risks facing our business. Key risk factors that could affect our future results are described in more detail in our Annual Report on Form 10-K for the year ended December 31, 2023 and the other reports we file with the SEC, including under the heading “Risk Factors.” Investors should not place undue reliance on forward-looking statements as a prediction of our future results.

    Any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

    INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
    Consolidated Statements of Financial Condition
     
      September 30, 2024   December 31, 2023
      (Unaudited)
      (In thousands, except share
    amounts)
    Assets      
    Cash and due from banks $ 61,503     $ 68,208  
    Interest bearing deposits   60,057       101,573  
    Cash and Cash Equivalents   121,560       169,781  
    Securities available for sale   588,950       679,350  
    Securities held to maturity (fair value of $314,638 at September 30, 2024 and $318,606 at December 31, 2023)   343,362       353,988  
    Federal Home Loan Bank and Federal Reserve Bank stock, at cost   16,099       16,821  
    Loans held for sale, carried at fair value   14,029       12,063  
    Loans      
    Commercial   1,825,247       1,679,731  
    Mortgage   1,511,400       1,485,872  
    Installment   605,640       625,298  
    Total Loans   3,942,287       3,790,901  
    Allowance for credit losses   (57,444 )     (54,658 )
    Net Loans   3,884,843       3,736,243  
    Other real estate and repossessed assets, net   781       569  
    Property and equipment, net   35,250       35,523  
    Bank-owned life insurance   54,017       54,341  
    Capitalized mortgage loan servicing rights, carried at fair value   40,204       42,243  
    Other intangibles   1,617       2,004  
    Goodwill   28,300       28,300  
    Accrued income and other assets   130,256       132,500  
    Total Assets $ 5,259,268     $ 5,263,726  
    Liabilities and Shareholders’ Equity      
    Deposits      
    Non-interest bearing $ 1,023,739     $ 1,076,093  
    Savings and interest-bearing checking   1,947,571       1,905,701  
    Reciprocal   995,469       832,020  
    Time   620,446       524,325  
    Brokered time   39,650       284,740  
    Total Deposits   4,626,875       4,622,879  
    Other borrowings         50,026  
    Subordinated debt   39,567       39,510  
    Subordinated debentures   39,779       39,728  
    Accrued expenses and other liabilities   100,678       107,134  
    Total Liabilities   4,806,899       4,859,277  
           
    Shareholders’ Equity      
    Preferred stock, no par value, 200,000 shares authorized; none issued or outstanding          
    Common stock, no par value, 500,000,000 shares authorized; issued and outstanding: 20,893,800 shares at September 30, 2024 and 20,835,633 shares at December 31, 2023   318,216       317,483  
    Retained earnings   192,405       159,108  
    Accumulated other comprehensive loss   (58,252 )     (72,142 )
    Total Shareholders’ Equity   452,369       404,449  
    Total Liabilities and Shareholders’ Equity $ 5,259,268     $ 5,263,726  
    INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
    Consolidated Statements of Operations
     
      Three Months Ended   Nine Months Ended
      September 30,   June 30,   September 30,   September 30,
      2024   2024   2023   2024   2023
      (Unaudited)
      (In thousands, except per share amounts)
    Interest Income                                      
    Interest and fees on loans $ 58,410     $ 56,786     $ 51,419     $ 170,239     $ 143,392  
    Interest on securities                  
    Taxable   4,502       4,713       5,865       14,466       17,668  
    Tax-exempt   3,404       3,400       3,409       10,195       9,775  
    Other investments   2,018       1,439       1,739       4,898       3,481  
    Total Interest Income   68,334       66,338       62,432       199,798       174,316  
    Interest Expense                  
    Deposits   24,462       22,876       20,743       70,148       51,964  
    Other borrowings and subordinated debt and debentures   2,018       2,116       2,262       6,253       6,134  
    Total Interest Expense   26,480       24,992       23,005       76,401       58,098  
    Net Interest Income   41,854       41,346       39,427       123,397       116,218  
    Provision for credit losses   1,488       19       1,350       2,251       6,827  
    Net Interest Income After Provision for Credit Losses   40,366       41,327       38,077       121,146       109,391  
    Non-interest Income                  
    Interchange income   4,146       3,401       4,100       10,698       10,660  
    Service charges on deposit accounts   3,085       2,937       3,309       8,894       9,300  
    Net gains (losses) on assets                  
    Mortgage loans   2,177       1,333       2,099       4,874       5,475  
    Equity securities at fair value   (8 )     2,693             2,685        
    Securities available for sale   (145 )                 (414 )     (222 )
    Mortgage loan servicing, net   (3,130 )     2,091       2,668       1,686       7,068  
    Other   3,383       2,717       3,435       8,818       9,298  
    Total Non-interest Income   9,508       15,172       15,611       37,241       41,579  
    Non-interest Expense                  
    Compensation and employee benefits   20,048       21,251       19,975       62,069       59,916  
    Data processing   3,379       3,257       3,071       9,891       8,953  
    Occupancy, net   1,893       1,886       1,971       5,853       5,975  
    Interchange expense   1,149       1,127       1,119       3,373       3,222  
    Furniture, fixtures and equipment   932       948       927       2,834       2,782  
    FDIC deposit insurance   664       695       677       2,141       2,209  
    Loan and collection   657       699       520       1,868       1,718  
    Advertising   581       788       360       1,860       1,286  
    Legal and professional   687       544       543       1,717       1,623  
    Communications   519       499       568       1,633       1,871  
    Costs (recoveries) related to unfunded lending commitments   113       (137 )     451       (676 )     76  
    Other   1,961       1,776       1,854       5,546       5,610  
    Total Non-interest Expense   32,583       33,333       32,036       98,109       95,241  
    Income Before Income Tax   17,291       23,166       21,652       60,278       55,729  
    Income tax expense   3,481       4,638       4,109       11,949       10,405  
    Net Income $ 13,810     $ 18,528     $ 17,543     $ 48,329     $ 45,324  
    Net Income Per Common Share                  
    Basic $ 0.66     $ 0.89     $ 0.84     $ 2.31     $ 2.16  
    Diluted $ 0.65     $ 0.88     $ 0.83     $ 2.29     $ 2.14  
    INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
    Selected Financial Data
     
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
      (unaudited)
      (Dollars in thousands except per share data)
    Three Months Ended                  
    Net interest income $ 41,854     $ 41,346     $ 40,197     $ 40,111     $ 39,427  
    Provision for credit losses   1,488       19       744       (617 )     1,350  
    Non-interest income   9,508       15,172       12,561       9,097       15,611  
    Non-interest expense   32,583       33,333       32,193       31,878       32,036  
    Income before income tax   17,291       23,166       19,821       17,947       21,652  
    Income tax expense   3,481       4,638       3,830       4,204       4,109  
    Net income $ 13,810     $ 18,528     $ 15,991     $ 13,743     $ 17,543  
                       
    Basic earnings per share $ 0.66     $ 0.89     $ 0.77     $ 0.66     $ 0.84  
    Diluted earnings per share   0.65       0.88       0.76       0.65       0.83  
    Cash dividend per share   0.24       0.24       0.24       0.23       0.23  
                       
    Average shares outstanding   20,896,019       20,901,741       20,877,067       20,840,680       20,922,431  
    Average diluted shares outstanding   21,115,273       21,105,387       21,079,607       21,049,030       21,114,445  
                       
    Performance Ratios                  
    Return on average assets   1.04 %     1.44 %     1.24 %     1.04 %     1.34 %
    Return on average equity   12.54       17.98       15.95       14.36       18.68  
    Efficiency ratio (1)   62.82       61.49       60.26       64.27       57.52  
                       
    As a Percent of Average Interest-Earning Assets (1)                
    Interest income   5.48 %     5.45 %     5.34 %     5.29 %     5.10 %
    Interest expense   2.11       2.05       2.04       2.03       1.87  
    Net interest income   3.37       3.40       3.30       3.26       3.23  
                       
    Average Balances                  
    Loans $ 3,909,954     $ 3,849,199     $ 3,810,526     $ 3,764,752     $ 3,694,534  
    Securities   933,750       944,435       999,140       1,027,240       1,071,211  
    Total earning assets   4,985,842       4,893,367       4,910,669       4,928,697       4,892,208  
    Total assets   5,275,623       5,181,317       5,201,452       5,233,666       5,192,114  
    Deposits   4,616,119       4,531,917       4,561,645       4,612,797       4,577,796  
    Interest bearing liabilities   3,689,684       3,611,972       3,627,446       3,635,771       3,554,179  
    Shareholders’ equity   438,077       414,549       403,225       379,614       372,667  

    (1) Presented on a fully tax equivalent basis assuming a marginal tax rate of 21%.

    INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
    Selected Financial Data (continued)
     
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
      (unaudited)
      (Dollars in thousands except per share data)
    End of Period                  
    Capital                  
    Tangible common equity ratio   8.08 %     7.63 %     7.41 %     7.15 %     6.67 %
    Tangible common equity ratio excluding accumulated other comprehensive loss   8.99       8.76       8.57       8.31       8.20  
    Average equity to average assets   8.30       8.00       7.75       7.25       7.18  
    Total capital to risk-weighted assets (2)   14.25       14.21       13.85       13.71       13.58  
    Tier 1 capital to risk-weighted assets (2)   12.06       12.01       11.65       11.50       11.37  
    Common equity tier 1 capital to risk-weighted assets (2)   11.16       11.09       10.73       10.58       10.44  
    Tier 1 capital to average assets (2)   9.63       9.59       9.29       9.03       8.94  
    Common shareholders’ equity per share of common stock $ 21.65     $ 20.60     $ 19.88     $ 19.41     $ 17.99  
    Tangible common equity per share of common stock   20.22       19.16       18.44       17.96       16.53  
    Total shares outstanding   20,893,800       20,899,358       20,903,677       20,835,633       20,850,455  
                       
    Selected Balances                  
    Loans $ 3,942,287     $ 3,851,889     $ 3,839,965     $ 3,790,901     $ 3,741,486  
    Securities   932,312       936,194       963,577       1,033,338       1,043,540  
    Total earning assets   4,964,784       4,979,555       4,949,496       4,954,696       4,884,720  
    Total assets   5,259,268       5,277,500       5,231,255       5,263,726       5,200,018  
    Deposits   4,626,875       4,614,328       4,582,414       4,622,879       4,585,612  
    Interest bearing liabilities   3,682,482       3,694,025       3,677,060       3,676,050       3,573,187  
    Shareholders’ equity   452,369       430,459       415,570       404,449       374,998  

    (2) September 30, 2024 are Preliminary.

     
    Reconciliation of Non-GAAP Financial Measures
    Independent Bank Corporation

    Independent Bank Corporation believes non-GAAP measures are meaningful because they reflect adjustments commonly made by management, investors, regulators and analysts to evaluate the adequacy of common equity and performance trends.  Tangible common equity is used by the Company to measure the quality of capital.

    Reconciliation of Non-GAAP Financial Measures

      Three Months Ended
    September 30,
      Nine Months Ended
    September 30,
        2024       2023       2024       2023  
      (Dollars in thousands)
    Net Interest Margin, Fully Taxable Equivalent (“FTE”)              
                   
    Net interest income $ 41,854     $ 39,427     $ 123,397     $ 116,218  
    Add:  taxable equivalent adjustment   158       202       513       722  
    Net interest income – taxable equivalent $ 42,012     $ 39,629     $ 123,910     $ 116,940  
    Net interest margin (GAAP) (1)   3.35 %     3.21 %     3.34 %     3.25 %
    Net interest margin (FTE) (1)   3.37 %     3.23 %     3.35 %     3.26 %

    (1) Annualized.

    Tangible Common Equity Ratio

      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
      (Dollars in thousands)
    Common shareholders’ equity $ 452,369     $ 430,459     $ 415,570     $ 404,449     $ 374,998  
    Less:                  
    Goodwill   28,300       28,300       28,300       28,300       28,300  
    Other intangibles   1,617       1,746       1,875       2,004       2,141  
    Tangible common equity   422,452       400,413       385,395       374,145       344,557  
    Addition:                  
    Accumulated other comprehensive loss for regulatory purposes   52,454       65,030       65,831       66,344       86,507  
    Tangible common equity excluding other comprehensive loss adjustments $ 474,906     $ 465,443     $ 451,226     $ 440,489     $ 431,064  
                       
    Total assets $ 5,259,268     $ 5,277,500     $ 5,231,255     $ 5,263,726     $ 5,200,018  
    Less:                  
    Goodwill   28,300       28,300       28,300       28,300       28,300  
    Other intangibles   1,617       1,746       1,875       2,004       2,141  
    Tangible assets   5,229,351       5,247,454       5,201,080       5,233,422       5,169,577  
    Addition:                  
    Net unrealized losses on available for sale securities and derivatives, net of tax   52,454       65,030       65,831       66,344       86,507  
    Tangible assets excluding other comprehensive loss adjustments $ 5,281,805     $ 5,312,484     $ 5,266,911     $ 5,299,766     $ 5,256,084  
                       
    Common equity ratio   8.60 %     8.16 %     7.94 %     7.68 %     7.21 %
    Tangible common equity ratio   8.08 %     7.63 %     7.41 %     7.15 %     6.67 %
    Tangible common equity ratio excluding other comprehensive loss   8.99 %     8.76 %     8.57 %     8.31 %     8.20 %
                       
    Tangible Common Equity per Share of Common Stock:
                       
    Common shareholders’ equity $ 452,369     $ 430,459     $ 415,570     $ 404,449     $ 374,998  
    Tangible common equity $ 422,452     $ 400,413     $ 385,395     $ 374,145     $ 344,557  
    Shares of common stock outstanding (in thousands)   20,894       20,899       20,904       20,836       20,850  
                       
    Common shareholders’ equity per share of common stock $ 21.65     $ 20.60     $ 19.88     $ 19.41     $ 17.99  
    Tangible common equity per share of common stock $ 20.22     $ 19.16     $ 18.44     $ 17.96     $ 16.53  
     

    The tangible common equity ratio removes the effect of goodwill and other intangible assets from capital and total assets.  Tangible common equity per share of common stock removes the effect of goodwill and other intangible assets from common shareholders’ equity per share of common stock.

    Contact: William B. Kessel, President and CEO, 616.447.3933
      Gavin A. Mohr, Chief Financial Officer, 616.447.3929  

    The MIL Network

  • MIL-OSI: First Merchants Corporation Announces Third Quarter 2024 Earnings per Share

    Source: GlobeNewswire (MIL-OSI)

    MUNCIE, Ind., Oct. 24, 2024 (GLOBE NEWSWIRE) — First Merchants Corporation (NASDAQ – FRME)

    Third Quarter 2024 Highlights:

    • Net income available to common stockholders was $48.7 million and diluted earnings per common share totaled $0.84, compared to $55.9 million and $0.94 in the third quarter of 2023, and $39.5 million and $0.68 in the second quarter of 2024.   Excluding the loss from repositioning of the available for sale securities portfolio, adjusted net income was $55.6 million or $0.95 per share for the third quarter of 2024.
    • Strong capital position with Common Equity Tier 1 Capital Ratio of 11.25% and Tangible Common Equity to Tangible Assets Ratio of 8.76%.
    • Net interest margin was 3.23% compared to 3.16% on a linked quarter basis.
    • Total loans grew $15.5 million, or 0.5% annualized, on a linked quarter basis, and $385.1 million, or 3.1% during the last twelve months.
    • Total deposits grew by $83.7 million, or 2.3% annualized, on a linked quarter basis after normalizing for $287.7 million of deposits reclassified to held for sale.
    • Nonperforming assets to total assets were 35 basis points compared to 36 basis points on a linked quarter basis.
    • The efficiency ratio totaled 53.76% for the quarter.
    • Announced sale of five Illinois branches and certain loans and deposits to Old Second National Bank on August 27, 2024.

    “We are pleased with our third quarter results and the focused momentum that we are building,” said Mark Hardwick, Chief Executive Officer. “The pending sale of five non-core Illinois branches, restructure of the securities portfolio, and successful completion of four major technology initiatives provides us with the opportunity to reprioritize our core markets and introduce innovative customer acquisition strategies.”

    Third Quarter Financial Results:

    First Merchants Corporation (the “Corporation”) has reported third quarter 2024 net income available to common stockholders of $48.7 million compared to $55.9 million during the same period in 2023. Diluted earnings per common share for the period totaled $0.84 compared to the third quarter of 2023 result of $0.94. Excluding the $9.1 million pre-tax loss from repositioning of the available for sale securities portfolio, adjusted net income was $55.6 million, or $0.95 diluted earnings per common share for the third quarter of 2024.

    During the quarter, the Corporation signed a definitive agreement to sell five Illinois branches along with certain loans and deposits, representing an exit from suburban Chicago markets. Loans of $9.2 million, deposits of $287.7 million and fixed assets of $3.4 million have been moved to held for sale categories as of September 30, 2024. The transaction is expected to close in the fourth quarter of this year.

    Total assets equaled $18.3 billion as of quarter-end and loans totaled $12.7 billion. During the past twelve months, total loans grew by $385.1 million, or 3.1%. On a linked quarter basis, loans grew $15.5 million, or 0.5%, with growth primarily in commercial & industrial loans.

    Investments totaling $3.7 billion decreased $51.6 million, or 1.4%, during the last twelve months and decreased $90.9 million, or 9.7% annualized, on a linked quarter basis. The decline during the quarter was due to $158.9 million in sales of available for sale securities with a weighted average tax-equivalent yield of 2.85%, partially offset by an increase in the securities portfolio valuation.

    Total deposits were $14.4 billion as of quarter-end and decreased by $281.5 million, or 1.9%, over the past twelve months. The decline was primarily due to $287.7 million of deposits being reclassified to held for sale. Excluding this impact, deposits increased by $6.2 million. On a linked quarter basis, deposits grew organically by $83.7 million or 2.3%. The loan to deposit ratio increased to 88.0% at period end from 86.8% in the prior quarter, primarily due to the reclassification of deposits to held for sale as previously described.

    The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $187.8 million as of quarter-end, or 1.48% of total loans, a decrease of $1.7 million from prior quarter. Loan charge-offs, net of recoveries totaled $6.7 million and provision for loans of $5.0 million was recorded during the quarter. Reserves for unfunded commitments totaled $19.5 million and remained unchanged from the prior quarter. Non-performing assets to total assets were 35 basis points for the third quarter of 2024, a decrease of one basis point compared to 36 basis points in the prior quarter.

    Net interest income totaled $131.1 million for the quarter, an increase of $2.5 million, or 2.0%, compared to prior quarter and a decrease of $2.3 million, or 1.7%, compared to the third quarter of 2023. Fully-tax equivalent net interest margin was 3.23%, an increase of 7 basis points compared to the second quarter of 2024, and a decrease of 6 basis points compared to the third quarter of 2023. The increase in net interest margin compared to the second quarter was due to higher earning asset yields.

    Non-interest income totaled $24.9 million for the quarter, a decrease of $6.5 million, or 20.6%, compared to the second quarter of 2024 and a decrease of $3.0 million, or 6.7% from the third quarter of 2023. The decrease from second quarter of 2024 was driven by realized losses on sales of available for sale securities associated with the repositioning of the bond portfolio, partially offset by increases in gains on sales of mortgage loans and earnings on cash surrender value of life insurance.

    Non-interest expense totaled $94.6 million for the quarter, an increase of $3.2 million from the second quarter of 2024 and an increase of $0.8 million from the third quarter of 2023. The increase from the linked quarter was from higher salaries and employee benefits primarily driven by higher incentives.

    The Corporation’s total risk-based capital ratio equaled 13.18%, common equity tier 1 capital ratio equaled 11.25%, and the tangible common equity ratio totaled 8.76%. These ratios continue to reflect the Corporation’s strong liquidity and capital positions.

    CONFERENCE CALL

    First Merchants Corporation will conduct a third quarter earnings conference call and web cast at 11:30 a.m. (ET) on Thursday, October 24, 2024.

    To access via phone, participants will need to register using the following link where they will be provided a phone number and access code: (https://register.vevent.com/register/BI34430e309ed545808c7c8195f36e86b6)

    To view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/6grv3upw) during the time of the call. A replay of the webcast will be available until October 24, 2025.

    Detailed financial results are reported on the attached pages.

    About First Merchants Corporation

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

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

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

    Forward-Looking Statements

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

     
    CONSOLIDATED BALANCE SHEETS
    (Dollars In Thousands) September 30,
        2024       2023  
    ASSETS      
    Cash and due from banks $ 84,719     $ 125,173  
    Interest-bearing deposits   359,126       348,639  
    Investment securities, net of allowance for credit losses of $245,000 and $245,000   3,662,145       3,713,724  
    Loans held for sale   40,652       30,972  
    Loans   12,646,808       12,271,422  
    Less: Allowance for credit losses – loans   (187,828 )     (205,782 )
    Net loans   12,458,980       12,065,640  
    Premises and equipment   129,582       132,441  
    Federal Home Loan Bank stock   41,716       41,797  
    Interest receivable   92,055       90,011  
    Goodwill and other intangibles   733,601       741,283  
    Cash surrender value of life insurance   304,613       306,106  
    Other real estate owned   5,247       6,480  
    Tax asset, deferred and receivable   86,732       135,521  
    Other assets   348,384       340,476  
    TOTAL ASSETS $ 18,347,552     $ 18,078,263  
    LIABILITIES      
    Deposits:      
    Noninterest-bearing $ 2,334,197     $ 2,554,984  
    Interest-bearing   12,030,903       12,091,592  
    Total Deposits   14,365,100       14,646,576  
    Borrowings:      
    Federal funds purchased   30,000        
    Securities sold under repurchase agreements   124,894       152,537  
    Federal Home Loan Bank advances   832,629       713,384  
    Subordinated debentures and other borrowings   93,562       158,665  
    Total Borrowings   1,081,085       1,024,586  
    Deposits and other liabilities held for sale   288,476        
    Interest payable   18,089       16,473  
    Other liabilities   292,429       297,984  
    Total Liabilities   16,045,179       15,985,619  
    STOCKHOLDERS’ EQUITY      
    Preferred Stock, $1,000 par value, $1,000 liquidation value:      
    Authorized — 600 cumulative shares      
    Issued and outstanding – 125 cumulative shares   125       125  
    Preferred Stock, Series A, no par value, $2,500 liquidation preference:      
    Authorized — 10,000 non-cumulative perpetual shares      
    Issued and outstanding – 10,000 non-cumulative perpetual shares   25,000       25,000  
    Common Stock, $.125 stated value:      
    Authorized — 100,000,000 shares      
    Issued and outstanding – 58,117,115 and 59,398,022 shares   7,265       7,425  
    Additional paid-in capital   1,192,683       1,234,402  
    Retained earnings   1,229,125       1,132,962  
    Accumulated other comprehensive loss   (151,825 )     (307,270 )
    Total Stockholders’ Equity   2,302,373       2,092,644  
    TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 18,347,552     $ 18,078,263  
                   
                   
           
    CONSOLIDATED STATEMENTS OF INCOME Three Months Ended   Nine Months Ended
    (Dollars In Thousands, Except Per Share Amounts) September 30,   September 30,
        2024       2023       2024       2023  
    INTEREST INCOME              
    Loans receivable:              
    Taxable $ 206,680     $ 191,705     $ 606,116     $ 550,314  
    Tax-exempt   8,622       8,288       25,242       23,757  
    Investment securities:              
    Taxable   9,263       8,590       27,062       26,563  
    Tax-exempt   13,509       13,947       40,733       44,296  
    Deposits with financial institutions   2,154       5,884       11,642       9,685  
    Federal Home Loan Bank stock   855       719       2,569       2,281  
    Total Interest Income   241,083       229,133       713,364       656,896  
    INTEREST EXPENSE              
    Deposits   98,856       85,551       296,292       209,437  
    Federal funds purchased   329             455       1,420  
    Securities sold under repurchase agreements   700       797       2,377       2,624  
    Federal Home Loan Bank advances   8,544       6,896       21,715       20,775  
    Subordinated debentures and other borrowings   1,544       2,506       5,781       7,303  
    Total Interest Expense   109,973       95,750       326,620       241,559  
    NET INTEREST INCOME   131,110       133,383       386,744       415,337  
    Provision for credit losses   5,000       2,000       31,500       2,000  
    NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES   126,110       131,383       355,244       413,337  
    NONINTEREST INCOME              
    Service charges on deposit accounts   8,361       7,975       24,482       23,147  
    Fiduciary and wealth management fees   8,525       7,394       25,550       22,653  
    Card payment fees   5,121       4,716       14,360       14,425  
    Net gains and fees on sales of loans   6,764       5,517       15,159       11,548  
    Derivative hedge fees   736       516       1,488       2,336  
    Other customer fees   344       384       1,231       1,643  
    Earnings on cash surrender value of life insurance   2,755       1,761       6,276       5,145  
    Net realized losses on sales of available for sale securities   (9,114 )     (1,650 )     (9,165 )     (4,613 )
    Other income   1,374       1,229       3,457       2,874  
    Total Noninterest Income   24,866       27,842       82,838       79,158  
    NONINTEREST EXPENSES              
    Salaries and employee benefits   55,223       55,566       165,730       167,778  
    Net occupancy   6,994       6,837       21,052       20,770  
    Equipment   6,949       5,698       19,774       18,005  
    Marketing   1,836       2,369       4,807       4,780  
    Outside data processing fees   7,150       6,573       21,111       19,290  
    Printing and office supplies   378       333       1,085       1,150  
    Intangible asset amortization   1,772       2,182       5,500       6,561  
    FDIC assessments   3,720       2,981       11,285       7,117  
    Other real estate owned and foreclosure expenses   942       677       1,849       1,575  
    Professional and other outside services   3,035       3,833       10,809       12,191  
    Other expenses   6,630       6,805       19,975       20,950  
    Total Noninterest Expenses   94,629       93,854       282,977       280,167  
    INCOME BEFORE INCOME TAX   56,347       65,371       155,105       212,328  
    Income tax expense   7,160       9,005       18,052       31,021  
    NET INCOME   49,187       56,366       137,053       181,307  
    Preferred stock dividends   468       468       1,406       1,406  
    NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 48,719     $ 55,898     $ 135,647     $ 179,901  
    Per Share Data:              
    Basic Net Income Available to Common Stockholders $ 0.84     $ 0.95     $ 2.32     $ 3.04  
    Diluted Net Income Available to Common Stockholders $ 0.84     $ 0.94     $ 2.31     $ 3.03  
    Cash Dividends Paid to Common Stockholders $ 0.35     $ 0.34     $ 1.04     $ 1.00  
    Average Diluted Common Shares Outstanding (in thousands)   58,289       59,503       58,629       59,465  
                                   
                                   
     
    FINANCIAL HIGHLIGHTS
    (Dollars in thousands) Three Months Ended   Nine Months Ended
      September 30,   September 30,
        2024       2023       2024       2023  
    NET CHARGE-OFFS $ 6,709     $ 20,365     $ 48,606     $ 22,495  
                   
    AVERAGE BALANCES:              
    Total Assets $ 18,360,580     $ 18,152,239     $ 18,374,370     $ 18,115,504  
    Total Loans   12,680,166       12,287,632       12,592,907       12,264,787  
    Total Earning Assets   16,990,358       16,947,669       17,042,540       16,913,965  
    Total Deposits   14,702,454       14,735,592       14,826,056       14,627,448  
    Total Stockholders’ Equity   2,251,547       2,154,232       2,232,419       2,126,005  
                   
    FINANCIAL RATIOS:              
    Return on Average Assets   1.07 %     1.24 %     0.99 %     1.33 %
    Return on Average Stockholders’ Equity   8.66       10.38       8.10       11.28  
    Return on Tangible Common Stockholders’ Equity   13.39       16.54       12.64       18.10  
    Average Earning Assets to Average Assets   92.54       93.36       92.75       93.37  
    Allowance for Credit Losses – Loans as % of Total Loans   1.48       1.67       1.48       1.67  
    Net Charge-offs as % of Average Loans (Annualized)   0.21       0.66       0.51       0.24  
    Average Stockholders’ Equity to Average Assets   12.26       11.87       12.15       11.74  
    Tax Equivalent Yield on Average Earning Assets   5.82       5.55       5.72       5.32  
    Interest Expense/Average Earning Assets   2.59       2.26       2.56       1.90  
    Net Interest Margin (FTE) on Average Earning Assets   3.23       3.29       3.16       3.42  
    Efficiency Ratio   53.76       53.91       55.54       52.60  
    Tangible Common Book Value Per Share $ 26.64     $ 22.43     $ 26.64     $ 22.43  
                                   
                                   
     
    NONPERFORMING ASSETS
    (Dollars In Thousands) September 30,   June 30,   March 31,   December 31,   September 30,
        2024       2024       2024       2023       2023  
    Nonaccrual Loans $ 59,088     $ 61,906     $ 62,478     $ 53,580     $ 53,102  
    Other Real Estate Owned and Repossessions   5,247       4,824       4,886       4,831       6,480  
    Nonperforming Assets (NPA)   64,335       66,730       67,364       58,411       59,582  
    90+ Days Delinquent   14,105       1,686       2,838       172       89  
    NPAs & 90 Day Delinquent $ 78,440     $ 68,416     $ 70,202     $ 58,583     $ 59,671  
                       
    Allowance for Credit Losses – Loans $ 187,828     $ 189,537     $ 204,681     $ 204,934     $ 205,782  
    Quarterly Net Charge-offs   6,709       39,644       2,253       3,148       20,365  
    NPAs / Actual Assets %   0.35 %     0.36 %     0.37 %     0.32 %     0.33 %
    NPAs & 90 Day / Actual Assets %   0.43 %     0.37 %     0.38 %     0.32 %     0.33 %
    NPAs / Actual Loans and OREO %   0.51 %     0.53 %     0.54 %     0.47 %     0.48 %
    Allowance for Credit Losses – Loans / Actual Loans (%)   1.48 %     1.50 %     1.64 %     1.64 %     1.67 %
    Net Charge-offs as % of Average Loans (Annualized)   0.21 %     1.26 %     0.07 %     0.10 %     0.66 %
                                           
                                           
     
    CONSOLIDATED BALANCE SHEETS
    (Dollars In Thousands) September 30,   June 30,   March 31,   December 31,   September 30,
        2024       2024       2024       2023       2023  
    ASSETS                  
    Cash and due from banks $ 84,719     $ 105,372     $ 100,514     $ 112,649     $ 125,173  
    Interest-bearing deposits   359,126       168,528       410,497       436,080       348,639  
    Investment securities, net of allowance for credit losses   3,662,145       3,753,088       3,783,574       3,811,364       3,713,724  
    Loans held for sale   40,652       32,292       15,118       18,934       30,972  
    Loans   12,646,808       12,639,650       12,465,582       12,486,027       12,271,422  
    Less: Allowance for credit losses – loans   (187,828 )     (189,537 )     (204,681 )     (204,934 )     (205,782 )
    Net loans   12,458,980       12,450,113       12,260,901       12,281,093       12,065,640  
    Premises and equipment   129,582       133,245       132,706       133,896       132,441  
    Federal Home Loan Bank stock   41,716       41,738       41,758       41,769       41,797  
    Interest receivable   92,055       97,546       92,550       97,664       90,011  
    Goodwill and other intangibles   733,601       735,373       737,144       739,101       741,283  
    Cash surrender value of life insurance   304,613       306,379       306,028       306,301       306,106  
    Other real estate owned   5,247       4,824       4,886       4,831       6,480  
    Tax asset, deferred and receivable   86,732       107,080       101,121       99,883       135,521  
    Other assets   348,384       367,845       331,006       322,322       340,476  
    TOTAL ASSETS $ 18,347,552     $ 18,303,423     $ 18,317,803     $ 18,405,887     $ 18,078,263  
    LIABILITIES                  
    Deposits:                  
    Noninterest-bearing $ 2,334,197     $ 2,303,313     $ 2,338,364     $ 2,500,062     $ 2,554,984  
    Interest-bearing   12,030,903       12,265,757       12,546,220       12,321,391       12,091,592  
    Total Deposits   14,365,100       14,569,070       14,884,584       14,821,453       14,646,576  
    Borrowings:                  
    Federal funds purchased   30,000       147,229                    
    Securities sold under repurchase agreements   124,894       100,451       130,264       157,280       152,537  
    Federal Home Loan Bank advances   832,629       832,703       612,778       712,852       713,384  
    Subordinated debentures and other borrowings   93,562       93,589       118,612       158,644       158,665  
    Total Borrowings   1,081,085       1,173,972       861,654       1,028,776       1,024,586  
    Deposits and other liabilities held for sale   288,476                          
    Interest payable   18,089       18,554       19,262       18,912       16,473  
    Other liabilities   292,429       329,302       327,500       289,033       297,984  
    Total Liabilities   16,045,179       16,090,898       16,093,000       16,158,174       15,985,619  
    STOCKHOLDERS’ EQUITY                  
    Preferred Stock, $1,000 par value, $1,000 liquidation value:                  
    Authorized — 600 cumulative shares                  
    Issued and outstanding – 125 cumulative shares   125       125       125       125       125  
    Preferred Stock, Series A, no par value, $2,500 liquidation preference:                  
    Authorized — 10,000 non-cumulative perpetual shares                  
    Issued and outstanding – 10,000 non-cumulative perpetual shares   25,000       25,000       25,000       25,000       25,000  
    Common Stock, $.125 stated value:                  
    Authorized — 100,000,000 shares                  
    Issued and outstanding   7,265       7,256       7,321       7,428       7,425  
    Additional paid-in capital   1,192,683       1,191,193       1,208,447       1,236,506       1,234,402  
    Retained earnings   1,229,125       1,200,930       1,181,939       1,154,624       1,132,962  
    Accumulated other comprehensive loss   (151,825 )     (211,979 )     (198,029 )     (175,970 )     (307,270 )
    Total Stockholders’ Equity   2,302,373       2,212,525       2,224,803       2,247,713       2,092,644  
    TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 18,347,552     $ 18,303,423     $ 18,317,803     $ 18,405,887     $ 18,078,263  
                       
                       
     
    CONSOLIDATED STATEMENTS OF INCOME
    (Dollars In Thousands, Except Per Share Amounts) September 30,   June 30,   March 31,   December 31,   September 30,
        2024       2024       2024       2023       2023  
    INTEREST INCOME                  
    Loans receivable:                  
    Taxable $ 206,680     $ 201,413     $ 198,023     $ 197,523     $ 191,705  
    Tax-exempt   8,622       8,430       8,190       8,197       8,288  
    Investment securities:                  
    Taxable   9,263       9,051       8,748       8,644       8,590  
    Tax-exempt   13,509       13,613       13,611       13,821       13,947  
    Deposits with financial institutions   2,154       2,995       6,493       8,034       5,884  
    Federal Home Loan Bank stock   855       879       835       771       719  
    Total Interest Income   241,083       236,381       235,900       236,990       229,133  
    INTEREST EXPENSE                  
    Deposits   98,856       99,151       98,285       96,655       85,551  
    Federal funds purchased   329       126             1        
    Securities sold under repurchase agreements   700       645       1,032       827       797  
    Federal Home Loan Bank advances   8,544       6,398       6,773       6,431       6,896  
    Subordinated debentures and other borrowings   1,544       1,490       2,747       3,013       2,506  
    Total Interest Expense   109,973       107,810       108,837       106,927       95,750  
    NET INTEREST INCOME   131,110       128,571       127,063       130,063       133,383  
    Provision for credit losses   5,000       24,500       2,000       1,500       2,000  
    NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES   126,110       104,071       125,063       128,563       131,383  
    NONINTEREST INCOME                  
    Service charges on deposit accounts   8,361       8,214       7,907       7,690       7,975  
    Fiduciary and wealth management fees   8,525       8,825       8,200       8,187       7,394  
    Card payment fees   5,121       4,739       4,500       4,437       4,716  
    Net gains and fees on sales of loans   6,764       5,141       3,254       4,111       5,517  
    Derivative hedge fees   736       489       263       1,049       516  
    Other customer fees   344       460       427       237       384  
    Earnings on cash surrender value of life insurance   2,755       1,929       1,592       3,202       1,761  
    Net realized losses on sales of available for sale securities   (9,114 )     (49 )     (2 )     (2,317 )     (1,650 )
    Other income (loss)   1,374       1,586       497       (152 )     1,229  
    Total Noninterest Income   24,866       31,334       26,638       26,444       27,842  
    NONINTEREST EXPENSES                  
    Salaries and employee benefits   55,223       52,214       58,293       60,967       55,566  
    Net occupancy   6,994       6,746       7,312       9,089       6,837  
    Equipment   6,949       6,599       6,226       6,108       5,698  
    Marketing   1,836       1,773       1,198       2,647       2,369  
    Outside data processing fees   7,150       7,072       6,889       5,875       6,573  
    Printing and office supplies   378       354       353       402       333  
    Intangible asset amortization   1,772       1,771       1,957       2,182       2,182  
    FDIC assessments   3,720       3,278       4,287       7,557       2,981  
    Other real estate owned and foreclosure expenses   942       373       534       1,743       677  
    Professional and other outside services   3,035       3,822       3,952       3,981       3,833  
    Other expenses   6,630       7,411       5,934       7,552       6,805  
    Total Noninterest Expenses   94,629       91,413       96,935       108,103       93,854  
    INCOME BEFORE INCOME TAX   56,347       43,992       54,766       46,904       65,371  
    Income tax expense   7,160       4,067       6,825       4,425       9,005  
    NET INCOME   49,187       39,925       47,941       42,479       56,366  
    Preferred stock dividends   468       469       469       469       468  
    NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 48,719     $ 39,456     $ 47,472     $ 42,010     $ 55,898  
    Per Share Data:                  
    Basic Net Income Available to Common Stockholders $ 0.84     $ 0.68     $ 0.80     $ 0.71     $ 0.95  
    Diluted Net Income Available to Common Stockholders $ 0.84     $ 0.68     $ 0.80     $ 0.71     $ 0.94  
    Cash Dividends Paid to Common Stockholders $ 0.35     $ 0.35     $ 0.34     $ 0.34     $ 0.34  
    Average Diluted Common Shares Outstanding (in thousands)   58,289       58,328       59,273       59,556       59,503  
    FINANCIAL RATIOS:                  
    Return on Average Assets   1.07 %     0.87 %     1.04 %     0.92 %     1.24 %
    Return on Average Stockholders’ Equity   8.66       7.16       8.47       7.89       10.38  
    Return on Tangible Common Stockholders’ Equity   13.39       11.29       13.21       12.75       16.54  
    Average Earning Assets to Average Assets   92.54       92.81       92.91       93.62       93.36  
    Allowance for Credit Losses – Loans as % of Total Loans   1.48       1.50       1.64       1.64       1.67  
    Net Charge-offs as % of Average Loans (Annualized)   0.21       1.26       0.07       0.10       0.66  
    Average Stockholders’ Equity to Average Assets   12.26       12.02       12.17       11.58       11.87  
    Tax Equivalent Yield on Average Earning Assets   5.82       5.69       5.65       5.64       5.55  
    Interest Expense/Average Earning Assets   2.59       2.53       2.55       2.48       2.26  
    Net Interest Margin (FTE) on Average Earning Assets   3.23       3.16       3.10       3.16       3.29  
    Efficiency Ratio   53.76       53.84       59.21       63.26       53.91  
    Tangible Common Book Value Per Share $ 26.64     $ 25.10     $ 25.07     $ 25.06     $ 22.43  
                                           
                                           
     
    LOANS
    (Dollars In Thousands) September 30,   June 30,   March 31,   December 31,   September 30,
        2024       2024       2024       2023       2023  
    Commercial and industrial loans $ 4,041,217     $ 3,949,817     $ 3,722,365     $ 3,670,948     $ 3,490,953  
    Agricultural land, production and other loans to farmers   238,743       239,926       234,431       263,414       233,838  
    Real estate loans:                  
    Construction   814,704       823,267       941,726       957,545       1,022,261  
    Commercial real estate, non-owner occupied   2,251,351       2,323,533       2,368,360       2,400,839       2,360,596  
    Commercial real estate, owner occupied   1,152,751       1,174,195       1,137,894       1,162,083       1,153,707  
    Residential   2,366,943       2,370,905       2,316,490       2,288,921       2,257,385  
    Home equity   641,188       631,104       618,258       617,571       609,352  
    Individuals’ loans for household and other personal expenditures   158,480       162,089       161,459       168,388       176,523  
    Public finance and other commercial loans   981,431       964,814       964,599       956,318       966,807  
    Loans   12,646,808       12,639,650       12,465,582       12,486,027       12,271,422  
    Allowance for credit losses – loans   (187,828 )     (189,537 )     (204,681 )     (204,934 )     (205,782 )
    NET LOANS $ 12,458,980     $ 12,450,113     $ 12,260,901     $ 12,281,093     $ 12,065,640  
                                           
                                           
     
    DEPOSITS
    (Dollars In Thousands) September 30,   June 30,   March 31,   December 31,   September 30,
        2024     2024     2024     2023     2023
    Demand deposits $ 7,678,510   $ 7,757,679   $ 7,771,976   $ 7,965,862   $ 7,952,040
    Savings deposits   4,302,236     4,339,161     4,679,593     4,516,433     4,572,162
    Certificates and other time deposits of $100,000 or more   1,277,833     1,415,131     1,451,443     1,408,985     1,280,607
    Other certificates and time deposits   802,949     889,949     901,280     849,906     761,196
    Brokered certificates of deposits1   303,572     167,150     80,292     80,267     80,571
    TOTAL DEPOSITS2 $ 14,365,100   $ 14,569,070   $ 14,884,584   $ 14,821,453   $ 14,646,576

    1 – Total brokered deposits of $838.3 million, which includes brokered CD’s of $303.6 million at September 30, 2024.
    2 – Total deposits at September 30, 2024 excludes $287.7 million of deposits reclassified to Deposits and other liabilities held for sale related to the pending Illinois branch sale.

     
    CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
    (Dollars in Thousands)                      
      For the Three Months Ended
      September 30, 2024   September 30, 2023
      Average Balance   Interest
     Income /
    Expense
      Average
    Rate
      Average Balance   Interest
     Income /
    Expense
      Average
    Rate
    ASSETS                      
    Interest-bearing deposits $ 252,113   $ 2,154   3.42 %   $ 502,967   $ 5,884   4.68 %
    Federal Home Loan Bank stock   41,730     855   8.20       41,826     719   6.88  
    Investment Securities: (1)                      
    Taxable   1,789,526     9,263   2.07       1,817,219     8,590   1.89  
    Tax-exempt (2)   2,226,823     17,100   3.07       2,298,025     17,655   3.07  
    Total Investment Securities   4,016,349     26,363   2.63       4,115,244     26,245   2.55  
    Loans held for sale   31,991     483   6.04       24,227     386   6.37  
    Loans: (3)                      
    Commercial   8,699,733     164,922   7.58       8,456,527     153,993   7.28  
    Real estate mortgage   2,183,095     24,333   4.46       2,079,067     21,618   4.16  
    Installment   832,222     16,942   8.14       827,318     15,708   7.59  
    Tax-exempt (2)   933,125     10,914   4.68       900,493     10,491   4.66  
    Total Loans   12,680,166     217,594   6.86       12,287,632     202,196   6.58  
    Total Earning Assets   16,990,358     246,966   5.82 %     16,947,669     235,044   5.55 %
    Total Non-Earning Assets   1,370,222             1,204,570        
    TOTAL ASSETS $ 18,360,580           $ 18,152,239        
    LIABILITIES                      
    Interest-Bearing Deposits:                      
    Interest-bearing deposits $ 5,455,298   $ 40,450   2.97 %   $ 5,425,829   $ 37,780   2.79 %
    Money market deposits   2,974,188     25,950   3.49       2,923,798     23,607   3.23  
    Savings deposits   1,425,047     4,208   1.18       1,641,338     3,844   0.94  
    Certificates and other time deposits   2,499,655     28,248   4.52       2,106,910     20,320   3.86  
    Total Interest-Bearing Deposits   12,354,188     98,856   3.20       12,097,875     85,551   2.83  
    Borrowings   1,071,440     11,117   4.15       1,032,180     10,199   3.95  
    Total Interest-Bearing Liabilities   13,425,628     109,973   3.28       13,130,055     95,750   2.92  
    Noninterest-bearing deposits   2,348,266             2,637,717        
    Other liabilities   335,139             230,235        
    Total Liabilities   16,109,033             15,998,007        
    STOCKHOLDERS’ EQUITY   2,251,547             2,154,232        
    TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 18,360,580     109,973       $ 18,152,239     95,750    
    Net Interest Income (FTE)     $ 136,993           $ 139,294    
    Net Interest Spread (FTE) (4)         2.54 %           2.63 %
                           
    Net Interest Margin (FTE):                      
    Interest Income (FTE) / Average Earning Assets         5.82 %           5.55 %
    Interest Expense / Average Earning Assets         2.59 %           2.26 %
    Net Interest Margin (FTE) (5)         3.23 %           3.29 %
                           
    (1) Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments. Annualized amounts are computed using a 30/360 day basis.
    (2) Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2024 and 2023. These totals equal $5,883 and $5,911 for the three months ended September 30, 2024 and 2023, respectively.
    (3) Non accruing loans have been included in the average balances.
    (4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
    (5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.
     
     
    CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
    (Dollars in Thousands)                      
      For the Nine Months Ended
      September 30, 2024   September 30, 2023
      Average Balance   Interest
     Income /
    Expense
      Average
    Rate
      Average Balance   Interest
     Income /
    Expense
      Average
    Rate
    ASSETS                      
    Interest-bearing deposits $ 383,007   $ 11,642   4.05 %   $ 340,887   $ 9,685   3.79 %
    Federal Home Loan Bank stock   41,748     2,569   8.20       41,160     2,281   7.39  
    Investment Securities: (1)                      
    Taxable   1,787,119     27,062   2.02       1,872,267     26,563   1.89  
    Tax-exempt (2)   2,237,759     51,561   3.07       2,394,864     56,071   3.12  
    Total Investment Securities   4,024,878     78,623   2.60       4,267,131     82,634   2.58  
    Loans held for sale   27,735     1,242   5.97       22,398     1,046   6.23  
    Loans: (3)                      
    Commercial   8,659,088     484,979   7.47       8,515,148     444,422   6.96  
    Real estate mortgage   2,159,738     70,489   4.35       2,008,852     60,354   4.01  
    Installment   825,060     49,406   7.98       833,133     44,492   7.12  
    Tax-exempt (2)   921,286     31,952   4.62       885,256     30,072   4.53  
    Total Loans   12,592,907     638,068   6.76       12,264,787     580,386   6.31  
    Total Earning Assets   17,042,540     730,902   5.72 %     16,913,965     674,986   5.32 %
    Total Non-Earning Assets   1,331,830             1,201,539        
    TOTAL ASSETS $ 18,374,370           $ 18,115,504        
    LIABILITIES                      
    Interest-Bearing deposits:                      
    Interest-bearing deposits $ 5,487,106   $ 120,935   2.94 %   $ 5,412,482   $ 97,016   2.39 %
    Money market deposits   3,018,526     80,563   3.56       2,812,891     55,868   2.65  
    Savings deposits   1,497,620     11,485   1.02       1,730,110     10,693   0.82  
    Certificates and other time deposits   2,447,684     83,309   4.54       1,821,408     45,860   3.36  
    Total Interest-Bearing Deposits   12,450,936     296,292   3.17       11,776,891     209,437   2.37  
    Borrowings   990,022     30,328   4.08       1,144,368     32,122   3.74  
    Total Interest-Bearing Liabilities   13,440,958     326,620   3.24       12,921,259     241,559   2.49  
    Noninterest-bearing deposits   2,375,120             2,850,557        
    Other liabilities   325,873             217,683        
    Total Liabilities   16,141,951             15,989,499        
    STOCKHOLDERS’ EQUITY   2,232,419             2,126,005        
    TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 18,374,370     326,620       $ 18,115,504     241,559    
    Net Interest Income (FTE)     $ 404,282           $ 433,427    
    Net Interest Spread (FTE) (4)         2.48 %           2.83 %
                           
    Net Interest Margin (FTE):                      
    Interest Income (FTE) / Average Earning Assets         5.72 %           5.32 %
    Interest Expense / Average Earning Assets         2.56 %           1.90 %
    Net Interest Margin (FTE) (5)         3.16 %           3.42 %
                           
    (1) Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments. Annualized amounts are computed using a 30/360 day basis.
    (2) Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2024 and 2023. These totals equal $17,538 and $18,090 for the nine months ended September 30, 2024 and 2023, respectively.
    (3) Non accruing loans have been included in the average balances.                      
    (4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
    (5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.
     
     
    ADJUSTED NET INCOME AND DILUTED EARNINGS PER COMMON SHARE – NON-GAAP
    (Dollars In Thousands, Except Per Share Amounts) Three Months Ended   Nine Months Ended
      September 30,   June 30,   March 31,   December 31,   September 30,   September 30,   September 30,
        2024       2024       2024       2023       2023       2024       2023  
    Net Income Available to Common Stockholders – GAAP $ 48,719     $ 39,456     $ 47,472     $ 42,010     $ 55,898     $ 135,647     $ 179,901  
    Adjustments:                          
    PPP loan income                     (7 )     (8 )           (42 )
    Net realized losses on sales of available for sale securities   9,114       49       2       2,317       1,650       9,165       4,613  
    Non-core expenses1,2               3,481       12,682             3,481        
    Tax on adjustments   (2,220 )     (12 )     (848 )     (3,652 )     (403 )     (3,081 )     (1,121 )
    Adjusted Net Income Available to Common Stockholders – Non-GAAP $ 55,613     $ 39,493     $ 50,107     $ 53,350     $ 57,137     $ 145,212     $ 183,351  
                               
    Average Diluted Common Shares Outstanding (in thousands)   58,289       58,328       59,273       59,556       59,503       58,629       59,465  
                               
    Diluted Earnings Per Common Share – GAAP $ 0.84     $ 0.68     $ 0.80     $ 0.71     $ 0.94     $ 2.31     $ 3.03  
    Adjustments:                          
    PPP loan income                                        
    Net realized losses on sales of available for sale securities   0.15                   0.04       0.03       0.16       0.07  
    Non-core expenses1,2               0.06       0.21             0.06        
    Tax on adjustments   (0.04 )           (0.01 )     (0.06 )     (0.01 )     (0.05 )     (0.02 )
    Adjusted Diluted Earnings Per Common Share – Non-GAAP $ 0.95     $ 0.68     $ 0.85     $ 0.90     $ 0.96     $ 2.48     $ 3.08  

    1 – Non-core expenses in 4Q23 included $6.3 million from early retirement and severance costs, $4.3 million from the FDIC special assessment, and $2.1 million from a lease termination.
    2 – Non-core expenses in 1Q24 included $2.4 million from duplicative online banking conversion costs and $1.1 million from the FDIC special assessment.

     
    NET INTEREST MARGIN (“NIM”), ADJUSTED
    (Dollars in Thousands, Except Per Share Amounts)                
      Three Months Ended   Nine Months Ended
      September 30,   June 30,   March 31,   December 31,   September 30,   September 30,   September 30,
        2024       2024       2024       2023       2023       2024       2023  
    Net Interest Income (GAAP) $ 131,110     $ 128,571     $ 127,063     $ 130,063     $ 133,383     $ 386,744     $ 415,337  
    Fully Taxable Equivalent (“FTE”) Adjustment   5,883       5,859       5,795       5,853       5,911       17,538       18,090  
    Net Interest Income (FTE) (non-GAAP) $ 136,993     $ 134,430     $ 132,858     $ 135,916     $ 139,294     $ 404,282     $ 433,427  
                               
    Average Earning Assets (GAAP) $ 16,990,358     $ 17,013,984     $ 17,123,851     $ 17,222,714     $ 16,947,669     $ 17,042,540     $ 16,913,965  
    Net Interest Margin (GAAP)   3.09 %     3.02 %     2.97 %     3.02 %     3.15 %     3.03 %     3.27 %
    Net Interest Margin (FTE) (non-GAAP)   3.23 %     3.16 %     3.10 %     3.16 %     3.29 %     3.16 %     3.42 %
                                                           
                                                           
     
    RETURN ON TANGIBLE COMMON EQUITY – NON-GAAP
    (Dollars In Thousands) Three Months Ended   Nine Months Ended
      September 30,   June 30,   March 31,   December 31,   September 30,   September 30,   September 30,
        2024       2024       2024       2023       2023       2024       2023  
    Total Average Stockholders’ Equity (GAAP) $ 2,251,547     $ 2,203,361     $ 2,242,139     $ 2,130,993     $ 2,154,232     $ 2,232,419     $ 2,126,005  
    Less: Average Preferred Stock   (25,125 )     (25,125 )     (25,125 )     (25,125 )     (25,125 )     (25,125 )     (25,125 )
    Less: Average Intangible Assets, Net of Tax   (729,581 )     (730,980 )     (732,432 )     (734,007 )     (735,787 )     (730,993 )     (737,476 )
    Average Tangible Common Equity, Net of Tax (Non-GAAP) $ 1,496,841     $ 1,447,256     $ 1,484,582     $ 1,371,861     $ 1,393,320     $ 1,476,301     $ 1,363,404  
                               
    Net Income Available to Common Stockholders (GAAP) $ 48,719     $ 39,456     $ 47,472     $ 42,010     $ 55,898     $ 135,647     $ 179,901  
    Plus: Intangible Asset Amortization, Net of Tax   1,399       1,399       1,546       1,724       1,724       4,345       5,182  
    Tangible Net Income (Non-GAAP) $ 50,118     $ 40,855     $ 49,018     $ 43,734     $ 57,622     $ 139,992     $ 185,083  
                               
    Return on Tangible Common Equity (Non-GAAP)   13.39 %     11.29 %     13.21 %     12.75 %     16.54 %     12.64 %     18.10 %
                                                           
                                                           

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

    SOURCE: First Merchants Corporation, Muncie, Indiana

    The MIL Network

  • MIL-OSI: ACNB Corporation Reports 2024 Third Quarter Financial Results

    Source: GlobeNewswire (MIL-OSI)

    GETTYSBURG, Pa., Oct. 24, 2024 (GLOBE NEWSWIRE) — ACNB Corporation (NASDAQ: ACNB) (“ACNB” or the “Corporation”), financial holding company for ACNB Bank and ACNB Insurance Services, Inc., announced net income of $7.2 million, or $0.84 diluted earnings per share, for the three months ended September 30, 2024 compared to net income of $9.0 million, or $1.06 diluted earnings per share, for the three months ended September 30, 2023 and net income of $11.3 million, or $1.32 diluted earnings per share, for the three months ended June 30, 2024. Financial results for the three months ended September 30, 2024 were impacted by $1.1 million in merger-related expense due to the pending acquisition of Traditions Bancorp, Inc. Financial results for the three month period ended June 30, 2024 were impacted by a $3.2 million reversal of the provisions for credit losses and unfunded commitments.

    2024 Third Quarter Highlights

    • Return on average assets was 1.17% and return on average equity was 9.63% for the three months ended September 30, 2024. Core return on average assets1 was 1.32% and core return on average equity1 was 10.81% for the three months ended September 30, 2024.
    • Fully taxable equivalent (“FTE”) net interest margin was 3.77% for the three months ended September 30, 2024 compared to 3.82% for the three months ended June 30, 2024 and 4.01% for the three months ended September 30, 2023.
    • Total non-performing loans to total loans, net of unearned income, was 0.39% at September 30, 2024 compared to 0.19% at June 30, 2024 and 0.22% at September 30, 2023. The increase in non-performing loans to total loans, net of unearned income, for the three months ended September 30, 2024 was the result of one long-standing commercial relationship in the healthcare industry, comprised of both owner-occupied commercial real estate and commercial and industrial loans, that moved into non-performing loan status during the current quarter.
    • Net charge-offs to average loans outstanding (annualized) were 0.01% for the three months ended September 30, 2024 and 0.00% for the three months ended June 30, 2024 compared to 0.03% for the three months ended September 30, 2023.
    • Tangible common equity to tangible assets ratio1 of 10.74% at September 30, 2024 compared to 9.84% at June 30, 2024 and 8.65% at September 30, 2023. The net unrealized loss on the available for sale securities portfolio was $36.8 million at September 30, 2024 compared to a net unrealized loss of $52.7 million at June 30, 2024 and a net unrealized loss of $75.2 million at September 30, 2023.
    • ACNB and ACNB Bank capital levels remain well in excess of ACNB’s internal minimums and those required to be categorized as a well-capitalized institution by our bank regulators.

    “We are once again pleased to share strong operating results for the third quarter of 2024. Our continued focus on profitability and asset quality as evidenced by our return on average assets and return on average equity are a testament to the continued focus on our strategic objectives,” said James P. Helt, ACNB Corporation President and Chief Executive Officer.

    “During the third quarter, we were also pleased to announce the strategic acquisition of Traditions Bancorp, Inc. This acquisition will create the largest community bank in Pennsylvania with assets less than $5 billion and enhances our presence in York County and expands our branch footprint in neighboring Lancaster County. We are excited to welcome Traditions as ACNB continues to expand our market presence. This strategic acquisition will complement our current operations with profitable growth opportunities in adjacent markets while contributing to the Corporation’s established commitment of enhancing long-term shareholder value.”

    Mr. Helt continued, “As we look forward to the remainder of 2024 and the start of a new year in 2025, we are excited that our strong foundation based on community banking principles combined with the growth opportunities now before us through our strategic planning objectives will enable us to continue to deliver on our commitment to our stakeholders.”

    Net Interest Income and Margin

    Net interest income for the three months ended September 30, 2024 totaled $20.9 million, a decrease of $803 thousand, or 3.7%, compared to the three months ended September 30, 2023 driven by a decrease in the FTE net interest margin over the same period. The FTE net interest margin for the three months ended September 30, 2024 was 3.77%, a decrease of 24 basis points from 4.01% for the three months ended September 30, 2023. The decrease in FTE net interest margin was driven primarily by an increase in long-term borrowings and promotional time deposit balances and costs. Total average borrowings increased $132.5 million for the three months ended September 30, 2024 compared to the same period in September 30, 2023. The average rate paid on total borrowings was 4.31% for the three months ended September 30, 2024, an increase of 48 basis points from the three months ended September 30, 2023. Total average interest-bearing deposits decreased $54.4 million, or 3.9%, for the three months ended September 30, 2024 compared to September 30, 2023; however, average time deposit balances increased $45.9 million due to ongoing promotions. The average rate paid on interest-bearing deposits was 0.92% for the three months ended September 30, 2024, an increase of 66 basis points from the three months ended September 30, 2023.

    Net interest income for the three months ended September 30, 2024 totaled $20.9 million, a decrease of $22 thousand, or 0.1%, compared to $21.0 million for the three months ended June 30, 2024 driven by a decrease in the FTE net interest margin over the same period. The FTE net interest margin for the three months ended September 30, 2024 decreased 5 basis points from 3.82% for the three months ended June 30, 2024. The decrease in FTE net interest margin was driven primarily by the recognition of nonaccrual interest income related to a specific large relationship during the three months ended June 30, 2024 and increases in the cost of average interest-bearing deposits during the three months ended September 30, 2024. Excluding nonaccrual interest income related to the payoff of a specific large relationship, the FTE net interest margin was 3.79% for the three months ended June 30, 2024. The average rate paid on interest-bearing deposits was 0.92% for the three months ended September 30, 2024, an increase of 13 basis points from the three months ended June 30, 2024.

    Noninterest Income

    Noninterest income for the three months ended September 30, 2024 was $6.8 million, an increase of $536 thousand, or 8.5%, from the three months ended September 30, 2023. Wealth management income for the three months ended September 30, 2024 was $1.2 million, an increase of $235 thousand from the three months ended September 30, 2023 driven primarily by portfolio market appreciation, estate income and new business generation. Insurance commissions for the three months ended September 30, 2024 were $2.8 million, an increase of $158 thousand from the three months ended September 30, 2023 driven primarily by growth in commissions on policy renewals and new business in the current quarter. Gain from mortgage loans held for sale totaled $112 thousand for the three months ended September 30, 2024 compared to none for the three months ended September 30, 2023.

    Noninterest income for the three months ended September 30, 2024 increased $406 thousand, or 6.3%, from the three months ended June 30, 2024. The increase was driven primarily by increases in wealth management income driven by higher estate income and other income driven by annual check ordering incentives received during the three months ended September 30, 2024. Additionally, there was a higher volume of mortgages sold in the current quarter, which resulted in a higher gain from mortgage loans held for sale for the three months ended September 30, 2024 compared to the three months ended June 30, 2024.

    Noninterest Expense

    Noninterest expense for the three months ended September 30, 2024 was $18.2 million, an increase of $1.9 million, or 11.7%, from the three months ended September 30, 2023. The increase was driven primarily by merger-related and salaries and employee benefits expenses. The increase in merger-related expense was driven primarily by professional service expenses incurred for the Traditions acquisition and totaled $1.1 million for the three months ended September 30, 2024. Salaries and employee benefits expense increased $948 thousand driven primarily by $682 thousand in higher employee health insurance expense and $273 thousand higher base wages. In addition, equipment expense increased $144 thousand driven primarily by higher core processing expenses and incremental purchases of office equipment. Partially offsetting these increases, professional services decreased $208 thousand for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 driven primarily by lower recruiting expenses for talent acquisition and consulting expenses. Marketing and corporate relations declined $60 thousand in the current quarter primarily due to rebranding expenses incurred for the three months ended September 30, 2023.

    Noninterest expense for the three months ended September 30, 2024 increased $1.9 million, or 11.3%, from the three months ended June 30, 2024. The increase was driven primarily by merger-related and salaries and employee benefits expenses. Merger-related expense totaled $1.1 million for the three months ended September 30, 2024 compared to $23 thousand for the three months ended June 30, 2024. Salaries and employee benefits expense increased $591 thousand during the three months ended September 30, 2024 compared to the three months ended June 30, 2024 driven primarily by higher employee health insurance expense of $519 thousand. Additionally, equipment expense increased $128 thousand driven primarily by higher core processing and software maintenance expenses coupled with incremental purchases of office equipment. Professional services expense decreased $120 thousand during the three months ended September 30, 2024 compared to the three months ended June 30, 2024 driven primarily by lower transfer agent and audit expenses.

    Loans and Asset Quality

    Total loans outstanding were $1.68 billion at September 30, 2024, a decrease of $2.5 million, or 0.1%, from June 30, 2024 and an increase of $61.1 million, or 3.8%, from September 30, 2023. The decrease from June 30, 2024 was driven primarily by real estate construction. The increase from September 30, 2023 was driven primarily by growth in the commercial real estate portfolio in our core markets. Growth in the commercial real estate portfolio was spread throughout the Bank’s geographic footprint and across various property types. The commercial real estate portfolio grew $59.2 million, or 6.6%, in 2024. The collateral for these loans is primarily spread across our Pennsylvania and Maryland market areas. Despite the intense competition in the Corporation’s market areas, management continues to focus on asset quality and disciplined underwriting standards in the loan origination process.

    Asset quality metrics continue to be stable. The provision for credit losses was $81 thousand and the provision for unfunded commitments was $40 thousand for the three months ended September 30, 2024 compared to a reversal to the provision for credit losses of $3.0 million and a reversal to the provision for unfunded commitments of $259 thousand for the three months ended June 30, 2024. For the three months ended September 30, 2023, there was a provision for credit losses of $250 thousand and a $171 thousand reversal to the provision for unfunded commitments. The increase in the provision for credit losses and unfunded commitments for the three months ended September 30, 2024 compared to the prior quarter was driven primarily by a $3.2 million reversal of the provision for credit losses and unfunded commitments in the prior quarter and one long-standing commercial relationship in the healthcare industry, comprised of both owner-occupied commercial real estate and commercial and industrial loans, that moved into non-performing loan status during the current quarter.

    Non-performing loans were $6.6 million, or 0.39%, of total loans, net of unearned income, at September 30, 2024 compared to $3.1 million, or 0.19%, of total loans at June 30, 2024 and $3.6 million, or 0.22%, of total loans at September 30, 2023. The increase in non-performing loans at September 30, 2024 compared to the prior quarter was primarily the result of one long-standing commercial relationship in the healthcare industry, comprised of both owner-occupied commercial real estate and commercial and industrial loans, that moved into non-performing loan status during the current quarter. Annualized net charge-offs for the three months ended September 30, 2024 were 0.01% of total average loans compared to 0.00% and 0.03% for the three months ended June 30, 2024 and September 30, 2023, respectively.

    Deposits and Borrowings

    Deposits totaled $1.79 billion at September 30, 2024, a decrease of $47.3 million, or 2.6%, since June 30, 2024 and a decrease of $160.0 million, or 8.2%, from September 30, 2023. Included in total deposits were $1.33 billion interest-bearing deposits at September 30, 2024 which decreased $31.0 million, or 2.3%, from June 30, 2024 and decreased $58.0 million, or 4.2%, from September 30, 2023. Time deposits, included in interest-bearing deposits, increased $1.3 million, or 0.5%, and $43.5 million, or 20.4%, since June 30, 2024 and September 30, 2023, respectively. Total noninterest-bearing deposits were $463.5 million at September 30, 2024 compared to $479.7 million at June 30, 2024 and $565.5 million at September 30, 2023.

    Total borrowings were $293.1 million at September 30, 2024, a decrease of $11.2 million, or 3.7%, compared to June 30, 2024 and an increase of $139.7 million, or 91.1%, compared to September 30, 2023. A $25.0 million short-term borrowing was paid off during the quarter. The average rate on total borrowings was 4.31% for the three months ended September 30, 2024 compared to 4.48% for the three months ended June 30, 2024 and 3.83% for the three months ended September 30, 2023.

    Stockholders’ Equity, Dividends and Share Repurchases

    Total stockholders’ equity was $306.8 million at September 30, 2024 compared to $289.3 million at June 30, 2024 and $255.6 million at September 30, 2023. Tangible book value2 per share was $29.90, $27.82 and $23.80 at September 30, 2024, June 30, 2024 and September 30, 2023, respectively.

    As announced on Form 8-K on October 16, 2024, the Board of Directors approved and declared a regular quarterly cash dividend of $0.32 per share of ACNB Corporation common stock payable on December 13, 2024, to shareholders of record as of November 29, 2024. This per share amount reflects a $0.02, or 6.7%, increase over the same quarter of 2023.

    ACNB repurchased 2,642 shares of ACNB common stock during the three months ended September 30, 2024.

    About ACNB Corporation

    ACNB Corporation, headquartered in Gettysburg, PA, is the $2.42 billion financial holding company for the wholly-owned subsidiaries of ACNB Bank, Gettysburg, PA, and ACNB Insurance Services, Inc., Westminster, MD. Originally founded in 1857, ACNB Bank serves its marketplace with banking and wealth management services, including trust and retail brokerage, via a network of 27 community banking offices and two loan offices located in the Pennsylvania counties of Adams, Cumberland, Franklin, Lancaster and York and the Maryland counties of Baltimore, Carroll and Frederick. ACNB Insurance Services, Inc. is a full-service insurance agency with licenses in 46 states. The agency offers a broad range of property, casualty, health, life and disability insurance serving personal and commercial clients through office locations in Westminster and Jarrettsville, MD, and Gettysburg, PA. For more information regarding ACNB Corporation and its subsidiaries, please visit investor.acnb.com.

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

    ACNB #2024-17
    October 24, 2024

     
    ACNB Corporation Financial Highlights
    Selected Financial Data by Respective Quarter End
    (Unaudited)
                       
    (Dollars in thousands, except per share data) September 30, 2024   June 30, 2024   March 31, 2024   December 31, 2023   September 30, 2023
    BALANCE SHEET DATA                  
    Assets $ 2,420,914     $ 2,457,753     $ 2,414,288     $ 2,418,847     $ 2,388,522  
    Investment securities   483,604       483,868       490,626       517,221       501,063  
    Total loans, net of unearned income   1,677,112       1,679,600       1,664,980       1,627,988       1,615,966  
    Allowance for credit losses   (17,214 )     (17,162 )     (20,172 )     (19,969 )     (19,264 )
    Deposits   1,791,317       1,838,588       1,835,224       1,861,813       1,951,359  
    Allowance for unfunded commitments   1,349       1,310       1,569       1,719       1,962  
    Borrowings   293,091       304,286       272,605       252,174       153,388  
    Stockholders’ equity   306,755       289,331       279,920       277,461       255,638  
    INCOME STATEMENT DATA                  
    Interest and dividend income $ 27,241     $ 26,869     $ 25,974     $ 25,284     $ 24,234  
    Interest expense   6,299       5,905       5,381       3,791       2,489  
    Net interest income   20,942       20,964       20,593       21,493       21,745  
    Provision for (reversal of ) credit losses   81       (2,990 )     223       786       250  
    Provision for (reversal of) unfunded commitments   40       (259 )     (151 )     (242 )     (171 )
    Net interest income after provisions for credit losses and unfunded commitments   20,821       24,213       20,521       20,949       21,666  
    Noninterest income   6,833       6,427       5,667       970       6,297  
    Noninterest expenses   18,244       16,391       17,662       17,173       16,336  
    Income before income taxes   9,410       14,249       8,526       4,746       11,627  
    Provision for income taxes   2,206       2,970       1,758       649       2,583  
    Net income $ 7,204     $ 11,279     $ 6,768     $ 4,097     $ 9,044  
    PROFITABILITY RATIOS                  
    Total loans, net of unearned income to deposits   93.62 %     91.35 %     90.72 %     87.44 %     82.81 %
    Return on average assets (annualized)   1.17       1.86       1.12       0.68       1.52  
    Return on average equity (annualized)   9.63       16.12       9.76       6.09       13.84  
    Efficiency ratio3   60.56       58.61       66.18       62.48       56.97  
    FTE Net interest margin   3.77       3.82       3.77       3.93       4.01  
    Yield on average earning assets   4.90       4.89       4.74       4.62       4.46  
    Yield on investment securities   2.59       2.65       2.70       2.36       2.24  
    Yield on total loans   5.56       5.53       5.37       5.29       5.16  
    Cost of funds   1.19       1.12       1.02       0.71       0.47  
    PER SHARE DATA                  
    Diluted earnings per share $ 0.84     $ 1.32     $ 0.80     $ 0.48     $ 1.06  
    Cash dividends paid per share   0.32       0.32       0.30       0.30       0.28  
    Tangible book value per share3   29.90       27.82       26.70       26.44       23.80  
    Tangible book value per share(excluding AOCI)4   33.87       33.28       32.21       31.74       31.43  
    CAPITAL RATIOS5                  
    Tier 1 leverage ratio   12.46 %     12.25 %     11.91 %     11.57 %     11.97 %
    Common equity tier 1 ratio   16.07       15.78       15.40       15.16       15.30  
    Tier 1 risk based capital ratio   16.36       16.07       15.69       15.45       15.59  
    Total risk based capital ratio   18.15       17.86       17.68       17.41       17.49  
    CREDIT QUALITY                  
    Net charge-offs to average loans outstanding (annualized)   0.01 %     0.00 %     0.00 %     0.02 %     0.03 %
    Total non-performing loans to total loans, net of unearned income6   0.39       0.19       0.24       0.26       0.22  
    Total non-performing assets to total assets7   0.29       0.14       0.18       0.19       0.17  
    Allowance for credit losses to total loans, net of unearned income   1.03       1.02       1.21       1.23       1.19  
                                           
     
    Consolidated Balance Sheet
    (Unaudited)
                 
    (Dollars in thousands, except per share data)   September 30,
    2024
      June 30,
    2024
      March 31,
    2024
    ASSETS            
    Cash and due from banks   $ 24,636     $ 26,681     $ 17,395  
    Interest-bearing deposits with banks     33,456       59,593       35,740  
    Total Cash and Cash Equivalents     58,092       86,274       53,135  
    Equity securities with readily determinable fair values     947       919       918  
    Investment securities available for sale, at estimated fair value     418,079       418,364       425,114  
    Investment securities held to maturity, at amortized cost (fair value $59,038, $57,026, and $58,084)     64,578       64,585       64,594  
    Loans held for sale     1,080       1,801       88  
    Total loans, net of unearned income     1,677,112       1,679,600       1,664,980  
    Less: Allowance for credit losses     (17,214 )     (17,162 )     (20,172 )
    Loans, net     1,659,898       1,662,438       1,644,808  
    Premises and equipment, net     25,542       25,760       25,916  
    Right of use asset     2,110       2,278       2,447  
    Restricted investment in bank stocks     10,853       11,853       10,877  
    Investment in bank-owned life insurance     81,344       80,841       80,348  
    Investments in low-income housing partnerships     909       940       971  
    Goodwill     44,185       44,185       44,185  
    Intangible assets, net     8,142       8,446       8,761  
    Foreclosed assets held for resale     406       406       467  
    Other assets     44,749       48,663       51,659  
    Total Assets   $ 2,420,914     $ 2,457,753     $ 2,414,288  
                 
    LIABILITIES AND STOCKHOLDERS’ EQUITY            
    Deposits:            
    Noninterest-bearing   $ 463,501     $ 479,726     $ 499,583  
    Interest-bearing     1,327,816       1,358,862       1,335,641  
    Total Deposits     1,791,317       1,838,588       1,835,224  
    Short-term borrowings     37,769       48,974       17,303  
    Long-term borrowings     255,322       255,312       255,302  
    Lease liability     2,110       2,278       2,447  
    Allowance for unfunded commitments     1,349       1,310       1,569  
    Other liabilities     26,292       21,960       22,523  
    Total Liabilities     2,114,159       2,168,422       2,134,368  
                 
    Stockholders’ Equity:            
    Preferred Stock, $2.50 par value; 20,000,000 shares authorized; no shares outstanding at September 30, 2024, June 30, 2024 and March 31, 2024                  
    Common stock, $2.50 par value; 20,000,000 shares authorized; 8,940,133, 8,934,495, and 8,928,441 shares issued; 8,548,625, 8,545,629, and 8,539,575 shares outstanding at September 30, 2024, June 30, 2024 and March 31, 2024, respectively     22,344       22,330       22,315  
    Treasury stock, at cost; 391,508, at September 30, 2024, and 388,866 at both June 30, 2024 and March 31, 2024     (11,203 )     (11,101 )     (11,101 )
    Additional paid-in capital     98,697       98,230       97,818  
    Retained earnings     230,752       226,271       217,712  
    Accumulated other comprehensive loss     (33,835 )     (46,399 )     (46,824 )
    Total Stockholders’ Equity     306,755       289,331       279,920  
    Total Liabilities and Stockholders’ Equity   $ 2,420,914     $ 2,457,753     $ 2,414,288  
                             
     
    Consolidated Income Statements
    (Unaudited)
           
      Three Months Ended
    September 30,
      Nine Months Ended
    September 30,
    (Dollars in thousands, except per share data) 2024
      2023   2024   2023
    INTEREST AND DIVIDEND INCOME              
    Loans, including fees              
    Taxable $ 23,108     $ 20,285     $ 67,253     $ 58,130  
    Tax-exempt   311       361       943       1,069  
    Investment securities:              
    Taxable   2,617       2,477       8,193       8,451  
    Tax-exempt   284       284       852       883  
    Dividends   251       104       739       196  
    Other   670       723       2,104       2,627  
    Total Interest and Dividend Income   27,241       24,234       80,084       71,356  
    INTEREST EXPENSE              
    Deposits   3,112       928       7,915       1,887  
    Short-term borrowings   204       439       847       564  
    Long-term borrowings   2,983       1,122       8,823       2,078  
    Total Interest Expense   6,299       2,489       17,585       4,529  
    Net Interest Income   20,942       21,745       62,499       66,827  
    Provision for (reversal of) credit losses   81       250       (2,686 )     74  
    Provision for (reversal of) unfunded commitments   40       (171 )     (370 )     226  
    Net Interest Income after Provisions for (Reversal of) Credit Losses and Unfunded Commitments   20,821       21,666       65,555       66,527  
    NONINTEREST INCOME              
    Insurance commissions   2,787       2,629       7,649       7,371  
    Service charges on deposits   1,048       1,000       3,060       2,951  
    Wealth management   1,188       953       3,219       2,772  
    ATM debit card charges   828       845       2,488       2,502  
    Earnings on investment in bank-owned life insurance   503       473       1,473       1,399  
    Gain from mortgage loans held for sale   112             194       31  
    Net gains (losses) on sales or calls of investment securities               69       (739 )
    Net gains (losses) on equity securities   28       (27 )     19       (22 )
    Gain on assets held for sale         14             337  
    Other   339       410       756       873  
    Total Noninterest Income   6,833       6,297       18,927       17,475  
    NONINTEREST EXPENSES              
    Salaries and employee benefits   11,017       10,069       32,611       30,335  
    Equipment   1,698       1,554       4,997       4,784  
    Net occupancy   945       942       3,066       2,981  
    Professional services   409       617       1,554       1,600  
    FDIC and regulatory   365       388       1,088       932  
    Other tax   360       323       1,086       965  
    Intangible assets amortization   304       352       940       1,072  
    Supplies and postage   236       229       610       633  
    Marketing and corporate relations   99       159       275       472  
    Merger-related   1,137             1,160        
    Other   1,674       1,703       4,910       5,125  
    Total Noninterest Expenses   18,244       16,336       52,297       48,899  
    Income Before Income Taxes   9,410       11,627       32,185       35,103  
    Provision for income taxes   2,206       2,583       6,934       7,512  
    Net Income $ 7,204     $ 9,044     $ 25,251     $ 27,591  
    PER SHARE DATA              
    Basic earnings $ 0.85     $ 1.06     $ 2.97     $ 3.24  
    Diluted earnings $ 0.84     $ 1.06     $ 2.96     $ 3.23  
    Weighted average shares basic   8,507,140       8,517,917       8,500,860       8,518,006  
    Weighted average shares diluted   8,545,578       8,551,545       8,532,691       8,544,732  
                                   
     
    Average Balances, Income and Expenses, Yields and Rates
                         
        Three months ended   Three months ended   Three months ended   Three months ended   Three months ended
        September 30, 2024   June 30, 2024   March 31, 2024   December 31, 2023   September 30, 2023
    (Dollars in thousands)   Average
    Balance
      Interest8   Yield/
    Rate
      Average
    Balance
      Interest8   Yield/
    Rate
      Average
    Balance
      Interest8   Yield/
    Rate
      Average
    Balance
      Interest8   Yield/
    Rate
      Average
    Balance
      Interest8   Yield/
    Rate
    ASSETS                                                            
    Loans:                                                            
    Taxable   $ 1,618,879     $ 23,108     5.68 %   $ 1,612,380     $ 22,675     5.66 %   $ 1,573,109     $ 21,470     5.49 %   $ 1,559,411     $ 21,303     5.42 %   $ 1,520,134     $ 20,285     5.29 %
    Tax-exempt     62,401       394     2.51       64,276       396     2.48       65,825       404     2.47       69,058       425     2.44       73,995       457     2.45  
    Total Loans9     1,681,280       23,502     5.56       1,676,656       23,071     5.53       1,638,934       21,874     5.37       1,628,469       21,728     5.29       1,594,129       20,742     5.16  
    Investment Securities:                                                            
    Taxable     441,135       2,868     2.59       442,390       2,913     2.65       467,466       3,151     2.71       453,713       2,669     2.33       466,402       2,581     2.20  
    Tax-exempt     54,549       359     2.62       54,644       359     2.64       54,740       359     2.64       54,835       361     2.61       55,027       359     2.59  
    Total Investments10     495,684       3,227     2.59       497,034       3,272     2.65       522,206       3,510     2.70       508,548       3,030     2.36       521,429       2,940     2.24  
    Interest-bearing deposits with banks     48,794       670     5.46       50,851       684     5.41       54,156       750     5.57       50,225       691     5.46       53,324       723     5.38  
    Total Earning Assets     2,225,758       27,399     4.90       2,224,541       27,027     4.89       2,215,296       26,134     4.74       2,187,242       25,449     4.62       2,168,882       24,405     4.46  
    Cash and due from banks     21,684               21,041               20,540               21,578               23,783          
    Premises and equipment     25,716               25,903               26,102               25,983               25,980          
    Other assets     184,105               187,937               187,075               191,329               165,821          
    Allowance for credit losses     (17,147 )             (20,124 )             (19,963 )             (19,232 )             (19,101 )        
    Total Assets   $ 2,440,116             $ 2,439,298             $ 2,429,050             $ 2,406,900             $ 2,365,365          
    LIABILITIES                                                            
    Interest-bearing demand deposits   $ 518,368     $ 552     0.42 %   $ 513,163     $ 275     0.22 %   $ 512,701     $ 264     0.21 %   $ 560,510     $ 275     0.19 %   $ 571,314     $ 185     0.13 %
    Money markets     246,653       692     1.12       248,191       613     0.99       248,297       536     0.87       274,226       707     1.02       245,899       312     0.50  
    Savings deposits     318,291       26     0.03       327,274       30     0.04       335,215       29     0.03       348,244       28     0.03       366,398       30     0.03  
    Time deposits     258,053       1,842     2.84       263,045       1,725     2.64       244,481       1,331     2.19       221,778       798     1.43       212,159       401     0.75  
    Total Interest-Bearing Deposits     1,341,365       3,112     0.92       1,351,673       2,643     0.79       1,340,694       2,160     0.65       1,404,758       1,808     0.51       1,395,770       928     0.26  
    Short-term borrowings     38,666       204     2.10       37,256       304     3.28       47,084       339     2.90       56,872       334     2.33       66,942       439     2.60  
    Long-term borrowings     255,316       2,983     4.65       255,305       2,958     4.66       248,701       2,882     4.66       137,026       1,649     4.77       94,554       1,122     4.71  
    Total Borrowings     293,982       3,187     4.31       292,561       3,262     4.48       295,785       3,221     4.38       193,898       1,983     4.06       161,496       1,561     3.83  
    Total Interest-Bearing Liabilities     1,635,347       6,299     1.53       1,644,234       5,905     1.44       1,636,479       5,381     1.32       1,598,656       3,791     0.94       1,557,266       2,489     0.63  
    Noninterest-bearing demand deposits     477,350               485,351               486,648               519,797               541,995          
    Other liabilities     29,946               28,348               26,904               21,648               6,820          
    Stockholders’ Equity     297,473               281,365               279,019               266,799               259,284          
    Total Liabilities and Stockholders’ Equity   $ 2,440,116             $ 2,439,298             $ 2,429,050             $ 2,406,900             $ 2,365,365          
    Taxable Equivalent Net Interest Income         21,100               21,122               20,753               21,658               21,916      
    Taxable Equivalent Adjustment         (158 )             (158 )             (160 )             (165 )             (171 )    
    Net Interest Income       $ 20,942             $ 20,964             $ 20,593             $ 21,493             $ 21,745      
    Cost of Funds           1.19 %           1.12 %           1.02 %           0.71 %           0.47 %
    FTE Net Interest Margin           3.77 %           3.82 %           3.77 %           3.93 %           4.01 %
                                                                           
     
    Average Balances, Income and Expenses, Yields and Rates
           
      Nine Months Ended September 30, 2024   Nine Months Ended September 30, 2023
    (Dollars in thousands) Average
    Balance
      Interest11   Yield/
    Rate
      Average
    Balance
      Interest11   Yield/
    Rate
    ASSETS                      
    Loans:                      
    Taxable $ 1,601,520     $ 67,253     5.61 %   $ 1,479,690     $ 58,130     5.25 %
    Tax-exempt   64,161       1,194     2.49       75,657       1,353     2.39  
    Total Loans12   1,665,681       68,447     5.49       1,555,347       59,483     5.11  
    Investment Securities:                      
    Taxable   450,297       8,932     2.65       507,061       8,647     2.28  
    Tax-exempt   54,644       1,078     2.64       55,307       1,118     2.70  
    Total Investments13   504,941       10,010     2.65       562,368       9,765     2.32  
    Interest-bearing deposits with banks   51,258       2,104     5.48       71,645       2,627     4.90  
    Total Earning Assets   2,221,880       80,561     4.84       2,189,360       71,875     4.39  
    Cash and due from banks   21,091               30,891          
    Premises and equipment   25,939               26,415          
    Other assets   186,330               159,544          
    Allowance for credit losses   (19,071 )             (18,807 )        
    Total Assets $ 2,436,169             $ 2,387,403          
    LIABILITIES                      
    Interest-bearing demand deposits $ 514,757     $ 1,092     0.28 %   $ 580,180     $ 690     0.16 %
    Money markets   247,710       1,841     0.99       276,154       277     0.13  
    Savings deposits   326,895       84     0.03       385,753       94     0.03  
    Time deposits   255,203       4,898     2.56       234,951       826     0.47  
    Total Interest-Bearing Deposits   1,344,565       7,915     0.79       1,477,038       1,887     0.17  
    Short-term borrowings   40,993       847     2.76       47,852       564     1.58  
    Long-term borrowings   253,116       8,823     4.66       58,333       2,078     4.76  
    Total Borrowings   294,109       9,670     4.39       106,185       2,642     3.33  
    Total Interest-Bearing Liabilities   1,638,674       17,585     1.43       1,583,223       4,529     0.38  
    Noninterest-bearing demand deposits   483,095               550,206          
    Other liabilities   28,406               (2,552 )        
    Stockholders’ Equity   285,994               256,526          
    Total Liabilities and Stockholders’ Equity $ 2,436,169             $ 2,387,403          
    Taxable Equivalent Net Interest Income       62,976               67,346      
    Taxable Equivalent Adjustment       (477 )             (519 )    
    Net Interest Income     $ 62,499             $ 66,827      
    Cost of Funds         1.11 %           0.28 %
    FTE Net Interest Margin         3.79 %           4.11 %
                               

    Non-GAAP Reconciliation
    Note: The Corporation has presented the following non-GAAP financial measures because it believes that these measures provide useful and comparative information to assess trends in the Corporation’s results of operations and financial condition. These non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Corporation’s industry. Investors should recognize that the Corporation’s presentation of these non-GAAP financial measures might not be comparable to similarly-titled measures of other corporations. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures, and the Corporation strongly encourages a review of its condensed consolidated financial statements in their entirety.

        Three Months Ended
    (Dollars in thousands, except per share data)   September 30, 2024   June 30, 2024   March 31, 2024   December 31, 2023   September 30, 2023
    Tangible book value per share                    
    Stockholders’ equity   $ 306,755     $ 289,331     $ 279,920     $ 277,461     $ 255,638  
    Less: Goodwill and intangible assets     (52,327 )     (52,631 )     (52,946 )     (53,267 )     (53,619 )
    Tangible common stockholders’ equity (numerator)   $ 254,428     $ 236,700     $ 226,974     $ 224,194     $ 202,019  
    Shares outstanding, less unvested shares, end of period (denominator)     8,510,187       8,507,191       8,501,137       8,478,460       8,488,446  
    Tangible book value per share   $ 29.90     $ 27.82     $ 26.70     $ 26.44     $ 23.80  
    Tangible book value per share (excluding AOCI)                    
    Tangible common stockholders’ equity   $ 254,428     $ 236,700     $ 226,974     $ 224,194     $ 202,019  
    Less: AOCI     (33,835 )     (46,399 )     (46,824 )     (44,909 )     (64,767 )
    Tangible equity (excluding AOCI)   $ 288,263     $ 283,099     $ 273,798     $ 269,103     $ 266,786  
    Tangible book value per share (excluding AOCI)   $ 33.87     $ 33.28     $ 32.21     $ 31.74     $ 31.43  
    Tangible common equity to tangible assets (TCE/TA Ratio)                    
    Tangible common stockholders’ equity (numerator)   $ 254,428     $ 236,700     $ 226,974     $ 224,194     $ 202,019  
    Total assets   $ 2,420,914     $ 2,457,753     $ 2,414,288     $ 2,418,847     $ 2,388,522  
    Less: Goodwill and intangible assets     (52,327 )     (52,631 )     (52,946 )     (53,267 )     (53,619 )
    Total tangible assets (denominator)   $ 2,368,587     $ 2,405,122     $ 2,361,342     $ 2,365,580     $ 2,334,903  
    Tangible common equity to tangible assets     10.74 %     9.84 %     9.61 %     9.48 %     8.65 %
    Efficiency Ratio                    
    Noninterest expense   $ 18,244     $ 16,391     $ 17,662     $ 17,173     $ 16,336  
    Less: Intangible amortization     304       315       321       352       352  
    Less: Merger-related expense     1,137       23                    
    Noninterest expense (numerator)   $ 16,803     $ 16,053     $ 17,341     $ 16,821     $ 15,984  
    Net interest income   $ 20,942     $ 20,964     $ 20,593     $ 21,493     $ 21,745  
    Plus: Total noninterest income     6,833       6,427       5,667       970       6,297  
    Less: Net gains (losses) on sales or calls of securities                 69       (4,501 )      
    Less: Net gains (losses) on equity securities     28       1       (10 )     40       (27 )
    Less: Gain on assets held for sale                             14  
    Total revenue (denominator)   $ 27,747     $ 27,390     $ 26,201     $ 26,924     $ 28,055  
    Efficiency ratio     60.56 %     58.61 %     66.18 %     62.48 %     56.97 %
                                             

    Non-GAAP Reconciliation

    Note: The Corporation has presented the following non-GAAP financial measures because it believes that these measures provide useful and comparative information to assess trends in the Corporation’s results of operations and financial condition. These non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Corporation’s industry. Investors should recognize that the Corporation’s presentation of these non-GAAP financial measures might not be comparable to similarly-titled measures of other corporations. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures, and the Corporation strongly encourages a review of its condensed consolidated financial statements in their entirety.

    (Dollars in thousands)   Three Months Ended
    September 30, 2024
    Core return on average assets    
    Net income   $ 7,204  
    Merger-related expense, net of taxes     879  
    Core net income (numerator)   $ 8,083  
    Average assets (denominator)   $ 2,440,116  
    Core return on average assets     1.32 %
         
    Core return on average equity    
    Core net income (numerator)   $ 8,083  
    Average equity (denominator)   $ 297,473  
    Core return on average equity     10.81 %
             

    1 Non-GAAP financial measure. Please refer to the calculation on the pages titled “Non-GAAP Reconciliation” at the end of this document.
    2 Non-GAAP financial measure. Please refer to the calculation on the pages titled “Non-GAAP Reconciliation” at the end of this document.
    3 Non-GAAP financial measure. Please refer to the calculation on the pages titled “Non-GAAP Reconciliation” at the end of this document.
    4 Accumulated Other Comprehensive Loss.
    5 Regulatory capital ratios as of September 30, 2024 are preliminary.
    6 Non-performing Loans consists of loans on nonaccrual status and loans greater than 90 days past due and still accruing interest.
    7 Non-performing Assets consists of Non-performing Loans and Foreclosed assets held for resale.
    8 Income on interest-earning assets has been computed on a fully taxable equivalent (FTE) basis using the 21% federal income tax statutory rate.
    9 Average balances include non-accrual loans and are net of unearned income.
    10 Average balances of investment securities is computed at fair value.
    11 Income on interest-earning assets has been computed on a fully taxable equivalent basis (FTE) using the 21% federal income tax statutory rate.
    12 Average balances include non-accrual loans and are net of unearned income.
    13 Average balances of investment securities is computed at fair value.

       
    Contact: Jason H. Weber
      EVP/Treasurer &
      Chief Financial Officer
      717.339.5090
      jweber@acnb.com
       

    The MIL Network

  • MIL-OSI: HomeTrust Bancshares, Inc. Announces Financial Results for the Third Quarter of the Year Ending December 31, 2024 and an Increase in the Quarterly Dividend

    Source: GlobeNewswire (MIL-OSI)

    ASHEVILLE, N.C., Oct. 24, 2024 (GLOBE NEWSWIRE) — HomeTrust Bancshares, Inc. (NASDAQ: HTBI) (“Company”), the holding company of HomeTrust Bank (“Bank”), today announced preliminary net income for the third quarter of the year ending December 31, 2024 and an increase in its quarterly cash dividend.

    For the quarter ended September 30, 2024 compared to the quarter ended June 30, 2024:

    • net income was $13.1 million compared to $12.4 million;
    • diluted earnings per share (“EPS”) were $0.76 compared to $0.73;
    • annualized return on assets (“ROA”) was 1.17% compared to 1.13%;
    • annualized return on equity (“ROE”) was 9.76% compared to 9.58%;
    • net interest margin was 4.00% compared to 4.08%;
    • provision for credit losses was $3.0 million compared to $4.3 million; and
    • quarterly cash dividends continued at $0.11 per share totaling $1.9 million for both periods.

    For the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023:

    • net income was $40.6 million compared to $36.6 million;
    • diluted EPS were $2.37 compared to $2.18;
    • annualized ROA was 1.22% compared to 1.15%;
    • annualized ROE was 10.39% compared to 10.56%;
    • net interest margin was 4.03% compared to 4.29%;
    • provision for credit losses was $8.4 million compared to $11.7 million;
    • tax-free death benefit proceeds from life insurance were $1.1 million for both periods; and
    • cash dividends of $0.33 per share totaling $5.6 million compared to $0.30 per share totaling $5.1 million.

    Results for the nine months ended September 30, 2023 include the impact of the merger of Quantum Capital Corp. (“Quantum”) into the Company effective February 12, 2023. The addition of Quantum contributed total assets of $656.7 million, including loans of $561.9 million, and $570.6 million of deposits, all reflecting the impact of purchase accounting adjustments. Merger-related expenses of $4.7 million were recognized during the nine months ended September 30, 2023, while a $5.3 million provision for credit losses was recognized during the same period to establish allowances for credit losses on both Quantum’s loan portfolio and off-balance-sheet credit exposure.

    The Company also announced today that its Board of Directors declared a quarterly cash dividend of $0.12 per common share, reflecting a $0.01, or 9.0%, increase over the previous quarter’s dividend. This is the sixth increase of the quarterly dividend since the Company initiated cash dividends in November 2018. The dividend is payable on November 27, 2024 to shareholders of record as of the close of business on November 14, 2024.

    “We are pleased to report another quarter of strong financial results,” said Hunter Westbrook, President and Chief Executive Officer. “We maintained our top quartile net interest margin, our ninth straight quarter at 4.00% or more. In addition, noninterest income and expense were both in line with prior quarters. Our provision for credit losses of $3.0 million included an additional $2.2 million as a reserve build for the potential impact of Hurricane Helene upon our loan portfolio. We have begun working with our loan customers on payment deferrals of up to six months, and although we aren’t currently aware of any collectability issues, we will continue assessing the impact of the storm upon our customer base.

    “As you know, many of the communities we serve were affected by this storm, impacting both our employees and customers. I’d first like to thank our employees who have assisted in maintaining bank operations while also tending to their personal and familial responsibilities. It has been amazing to watch the teamwork, collaboration and personal sacrifice across all areas of the Bank as we remained functionally operational throughout the storm, including our electronic banking services and online operations. Currently, all of our banking locations are open with most of the affected areas in our markets recovering well and operating close to normal. As for our customers in the affected areas, it will take time to assess, react and recover from Hurricane Helene. We are committed to working with them to provide the banking support needed for their businesses and homes.

    “Lastly, I am thankful for the Company’s financial strength and geographic diversification which we have built over the last decade, with respect to both our employees and customer base, which provides the foundation to overcome unforeseen events such as this storm. We remain optimistic as we work together to continue the recovery.”

    WEBSITE: WWW.HTB.COM

    Comparison of Results of Operations for the Three Months Ended September 30, 2024 and June 30, 2024
    Net Income.  Net income totaled $13.1 million, or $0.76 per diluted share, for the three months ended September 30, 2024 compared to $12.4 million, or $0.73 per diluted share, for the three months ended June 30, 2024, an increase of $694,000, or 5.6%. Results for the three months ended September 30, 2024 were positively impacted by a decrease of $1.3 million in the provision for credit losses. Details of the changes in the various components of net income are further discussed below.

    Net Interest Income.  The following table presents the distribution of average assets, liabilities and equity, as well as interest income earned on average interest-earning assets and interest expense paid on average interest-bearing liabilities. All average balances are daily average balances. Nonaccruing loans have been included in the table as loans carrying a zero yield.

      Three Months Ended
      September 30, 2024   June 30, 2024
    (Dollars in thousands) Average
    Balance
    Outstanding
      Interest
    Earned /
    Paid
      Yield /
    Rate
      Average
    Balance
    Outstanding
      Interest
    Earned /
    Paid
      Yield /
    Rate
    Assets                      
    Interest-earning assets                      
    Loans receivable(1) $ 3,899,460     $ 63,305   6.46 %   $ 3,885,222     $ 62,161   6.43 %
    Debt securities available for sale   140,246       1,616   4.58       134,334       1,495   4.48  
    Other interest-earning assets(2)   144,931       1,728   4.74       140,376       1,758   5.04  
    Total interest-earning assets   4,184,637       66,649   6.34       4,159,932       65,414   6.32  
    Other assets   264,579               266,983          
    Total assets $ 4,449,216             $ 4,426,915          
    Liabilities and equity                      
    Interest-bearing liabilities                      
    Interest-bearing checking accounts $ 548,024     $ 1,278   0.93 %   $ 586,396     $ 1,445   0.99 %
    Money market accounts   1,335,798       10,757   3.20       1,298,177       10,221   3.17  
    Savings accounts   182,618       40   0.09       188,028       41   0.09  
    Certificate accounts   1,012,765       11,617   4.56       902,864       9,976   4.44  
    Total interest-bearing deposits   3,079,205       23,692   3.06       2,975,465       21,683   2.93  
    Junior subordinated debt   10,079       235   9.28       10,054       234   9.36  
    Borrowings   40,399       648   6.38       87,315       1,331   6.13  
    Total interest-bearing liabilities   3,129,683       24,575   3.12       3,072,834       23,248   3.04  
    Noninterest-bearing deposits   719,710               769,016          
    Other liabilities   65,097               63,503          
    Total liabilities   3,914,490               3,905,353          
    Stockholders’ equity   534,726               521,562          
    Total liabilities and stockholders’ equity $ 4,449,216             $ 4,426,915          
    Net earning assets $ 1,054,954             $ 1,087,098          
    Average interest-earning assets to average interest-bearing liabilities   133.71 %             135.38 %        
    Non-tax-equivalent                      
    Net interest income     $ 42,074           $ 42,166    
    Interest rate spread         3.22 %           3.28 %
    Net interest margin(3)         4.00 %           4.08 %
    Tax-equivalent(4)                      
    Net interest income     $ 42,442           $ 42,520    
    Interest rate spread         3.25 %           3.32 %
    Net interest margin(3)         4.03 %           4.11 %

    (1)  Average loans receivable balances include loans held for sale and nonaccruing loans.
    (2)  Average other interest-earning assets consist of FRB stock, FHLB stock, SBIC investments and deposits in other banks.
    (3)  Net interest income divided by average interest-earning assets.
    (4)  Tax-equivalent results include adjustments to interest income of $368 and $354 for the three months ended September 30, 2024 and June 30, 2024, respectively, calculated based on a combined federal and state tax rate of 24%.

    Total interest and dividend income for the three months ended September 30, 2024 increased $1.2 million, or 1.9%, compared to the three months ended June 30, 2024, which was driven by a $1.1 million, or 1.8%, increase in loan interest income primarily due to the difference in the number of days in each quarter. Accretion income on acquired loans of $640,000 and $678,000 was recognized during the same periods, respectively, and was included in interest income on loans.

    Total interest expense for the three months ended September 30, 2024 increased $1.3 million, or 5.7%, compared to the three months ended June 30, 2024. The increase was primarily the result of increases in the average balances of money market and certificate accounts, partially offset by a decline in average borrowings outstanding.

    The following table shows the effects that changes in average balances (volume), including the difference in the number of days in the periods compared, and average interest rates (rate) had on the interest earned on interest-earning assets and interest paid on interest-bearing liabilities:

      Increase / (Decrease)
    Due to
      Total
    Increase /
    (Decrease)
    (Dollars in thousands) Volume   Rate  
    Interest-earning assets          
    Loans receivable $ 916     $ 228     $ 1,144  
    Debt securities available for sale   83       38       121  
    Other interest-earning assets   76       (106 )     (30 )
    Total interest-earning assets   1,075       160       1,235  
    Interest-bearing liabilities          
    Interest-bearing checking accounts   (81 )     (86 )     (167 )
    Money market accounts   413       123       536  
    Savings accounts   (1 )           (1 )
    Certificate accounts   1,341       300       1,641  
    Junior subordinated debt   3       (2 )     1  
    Borrowings   (708 )     25       (683 )
    Total interest-bearing liabilities   967       360       1,327  
    Decrease in net interest income         $ (92 )


    Provision for Credit Losses.
      The provision for credit losses is the amount of expense that, based on our judgment, is required to maintain the allowance for credit losses (“ACL”) at an appropriate level under the current expected credit losses model.

    The following table presents a breakdown of the components of the provision for credit losses:

      Three Months Ended      
    (Dollars in thousands) September 30, 2024   June 30, 2024   $ Change   % Change
    Provision for credit losses                
    Loans $ 2,990     $ 4,300     $ (1,310 )   (30 )%
    Off-balance-sheet credit exposure   (15 )     (40 )     25     63  
    Total provision for credit losses $ 2,975     $ 4,260     $ (1,285 )   (30 )%

    For the quarter ended September 30, 2024, the “loans” portion of the provision for credit losses was the result of the following, offset by net charge-offs of $4.1 million during the quarter:

    • $0.4 million benefit driven by changes in the loan mix.
    • $1.2 million provision due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments. Included in this change was the addition of a $2.2 million qualitative allocation for the potential impact of Hurricane Helene upon our loan portfolio.
    • $1.9 million decrease in specific reserves on individually evaluated loans as we charged-off specific reserves which had previously been established.

    For the quarter ended June 30, 2024, the “loans” portion of the provision for credit losses was the result of the following, in addition to net charge-offs of $2.6 million during the quarter:

    • $0.1 million provision driven by changes in the loan mix.
    • $0.4 million benefit due to changes in the projected economic forecast and changes in qualitative adjustments.
    • $2.0 million increase in specific reserves on individually evaluated loans which was proportional to the increase in the associated loan balances which increased from $8.3 million to $16.3 million quarter-over-quarter, concentrated in the equipment finance and SBA portfolios.

    For the quarters ended September 30, 2024 and June 30, 2024, the amounts recorded for off-balance-sheet credit exposure were the result of changes in the balance of loan commitments, loan mix and projected economic forecast as outlined above.

    Noninterest Income.  Noninterest income for the three months ended September 30, 2024 increased $169,000, or 2.1%, when compared to the quarter ended June 30, 2024. Changes in the components of noninterest income are discussed below:

      Three Months Ended    
    (Dollars in thousands) September 30, 2024   June 30, 2024   $ Change   % Change
    Noninterest income              
    Service charges and fees on deposit accounts $ 2,336     $ 2,354     $ (18 )   (1 )%
    Loan income and fees   684       647       37     6  
    Gain on sale of loans held for sale   1,900       1,828       72     4  
    Bank owned life insurance (“BOLI”) income   828       807       21     3  
    Operating lease income   1,637       1,591       46     3  
    Other   897       886       11     1  
    Total noninterest income $ 8,282     $ 8,113     $ 169     2 %
                                 
    • Gain on sale of loans held for sale: The increase was primarily driven by residential mortgage loans sold during the period. There were $21.7 million of residential mortgage loans originated for sale which were sold during the current quarter with gains of $479,000 compared to $21.3 million sold with gains of $351,000 in the prior quarter, with the improvement in profitability due to movement in interest rates. There were $54.6 million of HELOCs sold for a gain of $414,000 compared to $32.9 million sold with gains of $457,000 in the prior quarter. There were $12.9 million in sales of the guaranteed portion of SBA commercial loans with gains of $1.0 million for the quarter compared to $12.7 million sold and gains of $1.1 million for the prior quarter. Our hedging of mandatory commitments on the residential mortgage loan pipeline resulted in a gain of $18,000 for the quarter ended September 30, 2024 versus a loss of $58,000 for the quarter ended June 30, 2024.

    Noninterest Expense.  Noninterest expense for the three months ended September 30, 2024 increased $375,000, or 1.2%, when compared to the three months ended June 30, 2024. Changes in the components of noninterest expense are discussed below:

      Three Months Ended    
    (Dollars in thousands) September 30, 2024   June 30, 2024   $ Change   % Change
    Noninterest expense              
    Salaries and employee benefits $ 17,082     $ 16,608     $ 474     3 %
    Occupancy expense, net   2,436       2,419       17     1  
    Computer services   3,192       3,116       76     2  
    Telephone, postage and supplies   547       580       (33 )   (6 )
    Marketing and advertising   408       606       (198 )   (33 )
    Deposit insurance premiums   589       531       58     11  
    Core deposit intangible amortization   567       567            
    Other   5,764       5,783       (19 )    
    Total noninterest expense $ 30,585     $ 30,210     $ 375     1 %
                                 
    • Salaries and employee benefits: The quarter-over-quarter increase was primarily the result of executive pay increases effective this quarter and additional stock incentive expense associated with the vesting of performance-based equity awards.
    • Marketing and advertising: The decrease in expense was the result of both differences in the timing of when expenses were incurred quarter-over-quarter as well as a reduction in traditional media advertising (print, billboards, etc.) in favor of digital platforms at lower costs.

    Income Taxes.  The amount of income tax expense is influenced by the amount of pre-tax income, tax-exempt income, changes in the statutory rate and the effect of changes in valuation allowances maintained against deferred tax benefits. The effective tax rates for the three months ended September 30, 2024 and June 30, 2024 were 21.9% and 21.4%, respectively.

    Comparison of Results of Operations for the Nine Months Ended September 30, 2024 and September 30, 2023
    Net Income.  Net income totaled $40.6 million, or $2.37 per diluted share, for the nine months ended September 30, 2024 compared to $36.6 million, or $2.18 per diluted share, for the nine months ended September 30, 2023, an increase of $4.0 million, or 11.0%. The results for the nine months ended September 30, 2024 were positively impacted by a decrease of $3.3 million in the provision for credit losses, a $1.4 million increase in noninterest income, and a $2.6 million decrease in noninterest expense, partially offset by a $2.0 million decrease in net interest income and a $1.3 million increase in income tax expense. Details of the changes in the various components of net income are further discussed below.

    Net Interest Income.  The following table presents the distribution of average assets, liabilities and equity, as well as interest income earned on average interest-earning assets and interest expense paid on average interest-bearing liabilities. All average balances are daily average balances. Nonaccruing loans have been included in the table as loans carrying a zero yield.

      Nine Months Ended
      September 30, 2024   September 30, 2023
    (Dollars in thousands) Average
    Balance
    Outstanding
      Interest
    Earned /
    Paid
      Yield /
    Rate
      Average
    Balance
    Outstanding
      Interest
    Earned /
    Paid
      Yield /
    Rate
    Assets                      
    Interest-earning assets                      
    Loans receivable(1) $ 3,883,040     $ 185,418   6.38 %   $ 3,684,518     $ 162,526   5.90 %
    Debt securities available for sale   133,779       4,424   4.42       155,884       3,780   3.24  
    Other interest-earning assets(2)   138,956       5,576   5.36       137,065       5,356   5.22  
    Total interest-earning assets   4,155,775       195,418   6.28       3,977,467       171,662   5.77  
    Other assets   276,516               266,867          
    Total assets $ 4,432,291             $ 4,244,334          
    Liabilities and equity                      
    Interest-bearing liabilities                      
    Interest-bearing checking accounts $ 574,954     $ 4,149   0.96 %   $ 627,200     $ 3,241   0.69 %
    Money market accounts   1,305,217       30,642   3.14       1,206,119       18,604   2.06  
    Savings accounts   187,447       124   0.09       218,683       143   0.09  
    Certificate accounts   934,702       30,778   4.40       649,755       14,967   3.08  
    Total interest-bearing deposits   3,002,320       65,693   2.92       2,701,757       36,955   1.83  
    Junior subordinated debt   10,054       705   9.37       8,428       563   8.93  
    Borrowings   76,823       3,550   6.17       158,965       6,634   5.58  
    Total interest-bearing liabilities   3,089,197       69,948   3.02       2,869,150       44,152   2.06  
    Noninterest-bearing deposits   766,110               857,315          
    Other liabilities   55,217               54,513          
    Total liabilities   3,910,524               3,780,978          
    Stockholders’ equity   521,767               463,356          
    Total liabilities and stockholders’ equity $ 4,432,291             $ 4,244,334          
    Net earning assets $ 1,066,578             $ 1,108,317          
    Average interest-earning assets to average interest-bearing liabilities   134.53 %             138.63 %        
    Non-tax-equivalent                      
    Net interest income     $ 125,470           $ 127,510    
    Interest rate spread         3.26 %           3.71 %
    Net interest margin(3)         4.03 %           4.29 %
    Tax-equivalent                      
    Net interest income     $ 126,542           $ 128,413    
    Interest rate spread         3.30 %           3.74 %
    Net interest margin(3)         4.07 %           4.32 %

    (1)  Average loans receivable balances include loans held for sale and nonaccruing loans.
    (2)  Average other interest-earning assets consist of FRB stock, FHLB stock, SBIC investments and deposits in other banks.
    (3)  Net interest income divided by average interest-earning assets.
    (4)  Tax-equivalent results include adjustments to interest income of $1,072 and $903 for the nine months ended September 30, 2024 and September 30, 2023, respectively, calculated based on a combined federal and state tax rate of 24%.

    Total interest and dividend income for the nine months ended September 30, 2024 increased $23.8 million, or 13.8%, compared to the nine months ended September 30, 2023, which was driven by a $22.9 million, or 14.1%, increase in interest income on loans. Accretion income on acquired loans of $2.0 million and $1.7 million was recognized during the same periods, respectively, and was included in interest income on loans. The overall increase in average yield on interest-earning assets was the result of both higher average balances and rising interest rates.

    Total interest expense for the nine months ended September 30, 2024 increased $25.8 million, or 58.4%, compared to the nine months ended September 30, 2023. The change was primarily the result of increases in the cost of funds across all funding sources driven by higher market interest rates and increases in the average balances of money market and certificate accounts, partially offset by a decline in average borrowings outstanding.

    The following table shows the effects that changes in average balances (volume), including the difference in the number of days in the periods compared, and average interest rates (rate) had on the interest earned on interest-earning assets and interest paid on interest-bearing liabilities:

      Increase / (Decrease)
    Due to
      Total
    Increase /
    (Decrease)
    (Dollars in thousands) Volume   Rate  
    Interest-earning assets          
    Loans receivable $ 8,927     $ 13,965     $ 22,892  
    Debt securities available for sale   (532 )     1,176       644  
    Other interest-earning assets   79       141       220  
    Total interest-earning assets   8,474       15,282       23,756  
    Interest-bearing liabilities          
    Interest-bearing checking accounts   (266 )     1,174       908  
    Money market accounts   1,557       10,481       12,038  
    Savings accounts   (20 )     1       (19 )
    Certificate accounts   6,592       9,219       15,811  
    Junior subordinated debt   109       33       142  
    Borrowings   (3,425 )     341       (3,084 )
    Total interest-bearing liabilities   4,547       21,249       25,796  
    Decrease in net interest income         $ (2,040 )

    Provision for Credit Losses.  The following table presents a breakdown of the components of the provision for credit losses:

      Nine Months Ended      
    (Dollars in thousands) September 30, 2024   September 30, 2023   $ Change   % Change
    Provision for credit losses                
    Loans $ 8,435     $ 12,120     $ (3,685 )   (30 )%
    Off-balance-sheet credit exposure   (35 )     (385 )     350     91  
    Total provision for credit losses $ 8,400     $ 11,735     $ (3,335 )   (28 )%

    For the nine months ended September 30, 2024, the “loans” portion of the provision for credit losses was the result of net charge-offs of $8.9 million during the period, partially offset by a $0.4 million benefit due to changes in the loan mix.

    For the nine months ended September 30, 2023, the “loans” portion of the provision for credit losses was the result of the following, in addition to net charge-offs of $3.9 million during the period:

    • $4.9 million provision to establish an allowance on Quantum’s loan portfolio.
    • $3.0 million provision due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.
    • $0.3 million increase in specific reserves on individually evaluated credits.

    For the nine months ended September 30, 2024 and September 30, 2023, the amounts recorded for off-balance-sheet credit exposure were the result of changes in the balance of loan commitments, loan mix and projected economic forecast as outlined above.

    Noninterest Income.  Noninterest income for the nine months ended September 30, 2024 increased $1.4 million, or 5.8%, when compared to the same period last year. Changes in the components of noninterest income are discussed below:

      Nine Months Ended    
    (Dollars in thousands) September 30, 2024   September 30, 2023   $ Change   % Change
    Noninterest income              
    Service charges and fees on deposit accounts $ 6,839     $ 6,967     $ (128 )   (2 )%
    Loan income and fees   2,009       1,913       96     5  
    Gain on sale of loans held for sale   5,185       4,213       972     23  
    BOLI income   3,470       2,844       626     22  
    Operating lease income   5,087       4,515       572     13  
    Gain (loss) on sale of premises and equipment   (9 )     982       (991 )   (101 )
    Other   2,625       2,391       234     10  
    Total noninterest income $ 25,206     $ 23,825     $ 1,381     6 %
                                 
    • Gain on sale of loans held for sale: The increase in the gain on sale of loans held for sale was primarily driven by residential mortgage and SBA loans sold during the period. During the nine months ended September 30, 2024, there were $58.3 million of residential mortgage loans originated for sale which were sold with gains of $1.1 million compared to $48.7 million sold with gains of $633,000 for the corresponding period in the prior year, with the improvement in profitability due to movement in interest rates. There were $38.5 million of sales of the guaranteed portion of SBA commercial loans with gains of $3.1 million compared to $41.1 million sold and gains of $2.6 million for the corresponding period in the prior year. There were $95.4 million of HELOCs sold during the current period for a gain of $887,000 compared to $66.4 million sold and gains of $552,000 for the corresponding period in the prior year. Our hedging of mandatory commitments on the residential mortgage loan pipeline resulted in a gain of $15,000 for the nine months ended September 30, 2024 versus a gain of $426,000 for the nine months ended September 30, 2023.
    • BOLI income: The increase was due to higher yielding policies as a result of restructuring the portfolio at the end of the prior calendar year.
    • Operating lease income: The increase in operating lease income was the result of $1.7 million in additional contractual earnings on a higher average outstanding balance of the associated contracts, partially offset by losses incurred on previously leased equipment, where we recognized a net loss of $1.3 million for the nine months ended September 30, 2024 versus a net loss of $210,000 in the same period last year.
    • Gain (loss) on sale of premises and equipment: During the nine months ended September 30, 2023, two properties were sold for a combined gain of $982,000. No material disposal activity occurred during the nine months ended September 30, 2024.

    Noninterest Expense.  Noninterest expense for the nine months ended September 30, 2024 decreased $2.6 million, or 2.8%, when compared to the same period last year. Changes in the components of noninterest expense are discussed below:

      Nine Months Ended    
    (Dollars in thousands) September 30, 2024   September 30, 2023   $ Change   % Change
    Noninterest expense              
    Salaries and employee benefits $ 50,666     $ 49,436     $ 1,230     2 %
    Occupancy expense, net   7,292       7,556       (264 )   (3 )
    Computer services   9,396       9,386       10      
    Telephone, postage and supplies   1,712       1,942       (230 )   (12 )
    Marketing and advertising   1,659       1,555       104     7  
    Deposit insurance premiums   1,674       1,878       (204 )   (11 )
    Core deposit intangible amortization   1,896       2,324       (428 )   (18 )
    Merger-related expenses         4,741       (4,741 )   (100 )
    Other   16,364       14,490       1,874     13  
    Total noninterest expense $ 90,659     $ 93,308     $ (2,649 )   (3 )%
                               
    • Salaries and employee benefits: The increase was primarily the result of pay increases, partially offset by reductions in incentive pay.
    • Core deposit intangible amortization: The intangible recorded associated with the Quantum merger is being amortized on an accelerated basis, so the rate of amortization slowed year-over-year.
    • Merger-related expenses: The prior period included expenses associated with the Company’s merger with Quantum. No such expenses were incurred in the nine months ended September 30, 2024.
    • Other: The increase period-over-period was primarily driven by $1.7 million of additional depreciation expense on equipment subject to operating leases.

    Income Taxes. The amount of income tax expense is influenced by the amount of pre-tax income, tax-exempt income, changes in the statutory rate and the effect of changes in valuation allowances maintained against deferred tax benefits. The effective tax rates for the nine months ended September 30, 2024 and September 30, 2023 were 21.3% and 21.0%, respectively.

    Balance Sheet Review
    Total assets decreased by $35.3 million to $4.6 billion and total liabilities decreased by $75.5 million to $4.1 billion, respectively, at September 30, 2024 as compared to December 31, 2023. The majority of these changes were the result of an increase in deposits, which, combined with the collection of BOLI redemption proceeds and cash and cash equivalents, were used to fund growth in loans and pay down borrowings.

    Stockholders’ equity increased $40.1 million to $540.0 million at September 30, 2024 as compared to December 31, 2023. Activity within stockholders’ equity included $40.6 million in net income and $4.5 million in stock-based compensation and stock option exercises, partially offset by $5.6 million in cash dividends declared. In addition, the improvement in the accumulated other comprehensive income was driven by a $1.6 million reduction of the unrealized loss on available for sale securities as a result of a decrease in market interest rates.

    As of September 30, 2024, the Bank was considered “well capitalized” in accordance with its regulatory capital guidelines and exceeded all regulatory capital requirements.

    Asset Quality
    The ACL on loans was $48.1 million, or 1.30% of total loans, at September 30, 2024 compared to $48.6 million, or 1.34% of total loans, at December 31, 2023. The drivers of this change are discussed in the “Comparison of Results of Operations for the Nine Months Ended September 30, 2024 and September 30, 2023 – Provision for Credit Losses” section above.

    Net loan charge-offs totaled $8.9 million for the nine months ended September 30, 2024 compared to $3.9 million for the same period last year. As discussed in previous quarters, the increase in net charge-offs has been concentrated in our equipment finance portfolio, primarily smaller over-the-road truck loans, with net charge-offs of $5.1 million during the nine months ended September 30, 2024. In response, during the first quarter of calendar year 2024 the Company elected to cease further originations within the transportation sector of equipment finance loans. In spite of the increase, annualized net charge-offs as a percentage of average assets for the loan portfolio as a whole were 0.31% for the nine months ended September 30, 2024, in line with the Company’s historical experience, as compared to 0.14% for the nine months ended September 30, 2023.

    Nonperforming assets, made up of nonaccrual loans and repossessed assets, increased by $10.4 million, or 54.0%, to $29.8 million, or 0.64% of total assets, at September 30, 2024 compared to $19.3 million, or 0.41% of total assets, at December 31, 2023. Consistent with the change in net charge-offs, equipment finance loans made up the largest portion of nonperforming assets at $8.5 million and $6.5 million, respectively, at these same dates. In addition, owner occupied commercial real estate totaled $7.2 million and $912,000, respectively, at these same dates. These increases were mainly the result of a $3.1 million medical equipment relationship and $5.1 million owner occupied commercial real estate (OO CRE) relationship; however, in both cases losses are not currently anticipated. The ratio of nonperforming loans to total loans was 0.78% at September 30, 2024 compared to 0.53% at December 31, 2023.

    The ratio of classified assets to total assets increased to 0.99% at September 30, 2024 from 0.90% at December 31, 2023 as classified assets increased $4.1 million, or 9.8%, to $46.1 million at September 30, 2024 compared to $42.0 million at December 31, 2023. The largest portfolios of classified assets at September 30, 2024 included $11.7 million of non-owner occupied commercial real estate loans, $8.4 million of equipment finance loans, $7.1 million of SBA loans, $6.0 million of 1-4 family residential real estate loans, and $6.0 million of OO CRE loans.

    About HomeTrust Bancshares, Inc.
    HomeTrust Bancshares, Inc. is the holding company for the Bank. As of September 30, 2024, the Company had assets of $4.6 billion. The Bank, founded in 1926, is a North Carolina state chartered, community-focused financial institution committed to providing value added relationship banking with over 30 locations as well as online/mobile channels. Locations include: North Carolina (the Asheville metropolitan area, the “Piedmont” region, Charlotte and Raleigh/Cary), South Carolina (Greenville and Charleston), East Tennessee (Kingsport/Johnson City, Knoxville and Morristown), Southwest Virginia (the Roanoke Valley) and Georgia (Greater Atlanta).

    Forward-Looking Statements
    This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact, but instead are based on certain assumptions including statements with respect to the Company’s beliefs, plans, objectives, goals, expectations, assumptions and statements about future economic performance and projections of financial items. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated or implied by forward-looking statements. The factors that could result in material differentiation include, but are not limited to, the impact of bank failures or adverse developments involving other banks and related negative press about the banking industry in general on investor and depositor sentiment; the remaining effects of the COVID-19 pandemic on general economic and financial market conditions and on public health, both nationally and in the Company’s market areas; natural disasters, including the effects of Hurricane Helene; expected revenues, cost savings, synergies and other benefits from merger and acquisition activities might not be realized to the extent anticipated, within the anticipated time frames, or at all, costs or difficulties relating to integration matters, including but not limited to customer and employee retention, might be greater than expected, and goodwill impairment charges might be incurred; increased competitive pressures among financial services companies; changes in the interest rate environment; changes in general economic conditions, both nationally and in our market areas; legislative and regulatory changes; and the effects of inflation, a potential recession, and other factors described in the Company’s latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other documents filed with or furnished to the Securities and Exchange Commission – which are available on the Company’s website at www.htb.com and on the SEC’s website at www.sec.gov. Any of the forward-looking statements that the Company makes in this press release or in the documents the Company files with or furnishes to the SEC are based upon management’s beliefs and assumptions at the time they are made and may turn out to be wrong because of inaccurate assumptions, the factors described above or other factors that management cannot foresee. The Company does not undertake, and specifically disclaims any obligation, to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

    Consolidated Balance Sheets (Unaudited)

    (Dollars in thousands) September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
    (1)
      September 30,
    2023
    Assets                  
    Cash $ 18,980     $ 18,382     $ 16,134     $ 18,307     $ 18,090  
    Interest-bearing deposits   274,497       275,808       364,359       328,833       306,924  
    Cash and cash equivalents   293,477       294,190       380,493       347,140       325,014  
    Certificates of deposit in other banks   29,290       32,131       33,625       34,722       35,380  
    Debt securities available for sale, at fair value   140,552       134,135       120,807       126,950       134,348  
    FHLB and FRB stock   18,384       19,637       13,691       18,393       19,612  
    SBIC investments, at cost   15,489       15,462       14,568       13,789       14,586  
    Loans held for sale, at fair value   2,968       1,614       2,764       3,359       4,616  
    Loans held for sale, at the lower of cost or fair value   189,722       224,976       220,699       198,433       200,834  
    Total loans, net of deferred loan fees and costs   3,698,892       3,701,454       3,648,152       3,640,022       3,659,914  
    Allowance for credit losses – loans   (48,131 )     (49,223 )     (47,502 )     (48,641 )     (47,417 )
    Loans, net   3,650,761       3,652,231       3,600,650       3,591,381       3,612,497  
    Premises and equipment, net   69,603       69,880       70,588       70,937       72,463  
    Accrued interest receivable   17,523       18,412       16,944       16,902       16,513  
    Deferred income taxes, net   10,100       10,512       11,222       11,796       9,569  
    BOLI   90,021       89,176       88,369       88,257       106,059  
    Goodwill   34,111       34,111       34,111       34,111       34,111  
    Core deposit intangibles, net   7,162       7,730       8,297       9,059       9,918  
    Other assets   68,130       66,667       67,183       107,404       56,477  
    Total assets $ 4,637,293     $ 4,670,864     $ 4,684,011     $ 4,672,633     $ 4,651,997  
    Liabilities and stockholders’ equity                  
    Liabilities                  
    Deposits $ 3,761,588     $ 3,707,779     $ 3,799,807     $ 3,661,373     $ 3,640,961  
    Junior subordinated debt   10,096       10,070       10,045       10,021       9,995  
    Borrowings   260,013       364,513       291,513       433,763       452,263  
    Other liabilities   65,592       64,874       69,473       67,583       64,367  
    Total liabilities   4,097,289       4,147,236       4,170,838       4,172,740       4,167,586  
    Stockholders’ equity                  
    Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued or outstanding                            
    Common stock, $0.01 par value, 60,000,000 shares authorized(2)   175       175       175       174       174  
    Additional paid in capital   175,495       172,907       172,919       172,366       171,663  
    Retained earnings   368,383       357,147       346,598       333,401       321,799  
    Unearned Employee Stock Ownership Plan (“ESOP”) shares   (4,099 )     (4,232 )     (4,364 )     (4,497 )     (4,629 )
    Accumulated other comprehensive income (loss)   50       (2,369 )     (2,155 )     (1,551 )     (4,596 )
    Total stockholders’ equity   540,004       523,628       513,173       499,893       484,411  
    Total liabilities and stockholders’ equity $ 4,637,293     $ 4,670,864     $ 4,684,011     $ 4,672,633     $ 4,651,997  

    (1)  Derived from audited financial statements.
    (2)  Shares of common stock issued and outstanding were 17,514,922 at September 30, 2024; 17,437,326 at June 30, 2024; 17,444,787 at March 31, 2024; 17,387,069 at December 31, 2023; and 17,380,307 at September 30, 2023.

    Consolidated Statements of Income (Unaudited)

      Three Months Ended   Nine Months Ended
    (Dollars in thousands) September 30,
    2024
      June 30,
    2024
      September 30,
    2024
      September 30,
    2023
    Interest and dividend income              
    Loans $ 63,305     $ 62,161     $ 185,418     $ 162,526  
    Debt securities available for sale   1,616       1,495       4,424       3,780  
    Other investments and interest-bearing deposits   1,728       1,758       5,576       5,356  
    Total interest and dividend income   66,649       65,414       195,418       171,662  
    Interest expense              
    Deposits   23,692       21,683       65,693       36,955  
    Junior subordinated debt   235       234       705       563  
    Borrowings   648       1,331       3,550       6,634  
    Total interest expense   24,575       23,248       69,948       44,152  
    Net interest income   42,074       42,166       125,470       127,510  
    Provision for credit losses   2,975       4,260       8,400       11,735  
    Net interest income after provision for credit losses   39,099       37,906       117,070       115,775  
    Noninterest income              
    Service charges and fees on deposit accounts   2,336       2,354       6,839       6,967  
    Loan income and fees   684       647       2,009       1,913  
    Gain on sale of loans held for sale   1,900       1,828       5,185       4,213  
    BOLI income   828       807       3,470       2,844  
    Operating lease income   1,637       1,591       5,087       4,515  
    Gain (loss) on sale of premises and equipment               (9 )     982  
    Other   897       886       2,625       2,391  
    Total noninterest income   8,282       8,113       25,206       23,825  
    Noninterest expense              
    Salaries and employee benefits   17,082       16,608       50,666       49,436  
    Occupancy expense, net   2,436       2,419       7,292       7,556  
    Computer services   3,192       3,116       9,396       9,386  
    Telephone, postage and supplies   547       580       1,712       1,942  
    Marketing and advertising   408       606       1,659       1,555  
    Deposit insurance premiums   589       531       1,674       1,878  
    Core deposit intangible amortization   567       567       1,896       2,324  
    Merger-related expenses                     4,741  
    Other   5,764       5,783       16,364       14,490  
    Total noninterest expense   30,585       30,210       90,659       93,308  
    Income before income taxes   16,796       15,809       51,617       46,292  
    Income tax expense   3,684       3,391       11,020       9,712  
    Net income $ 13,112     $ 12,418     $ 40,597     $ 36,580  

    Per Share Data

        Three Months Ended    Nine Months Ended
        September 30,
    2024
      June 30,
    2024
      September 30,
    2024
      September 30,
    2023
    Net income per common share(1)                
    Basic   $ 0.77     $ 0.73     $ 2.38     $ 2.19  
    Diluted   $ 0.76     $ 0.73     $ 2.37     $ 2.18  
    Average shares outstanding                
    Basic     16,931,793       16,883,028       16,891,619       16,532,335  
    Diluted     17,027,824       16,904,098       16,938,328       16,553,319  
    Book value per share at end of period   $ 30.83     $ 30.03     $ 30.83     $ 27.87  
    Tangible book value per share at end of period(2)   $ 28.57     $ 27.73     $ 28.57     $ 25.47  
    Cash dividends declared per common share   $ 0.11     $ 0.11     $ 0.33     $ 0.30  
    Total shares outstanding at end of period     17,514,922       17,437,326       17,514,922       17,380,307  

    (1)  Basic and diluted net income per common share have been prepared in accordance with the two-class method.
    (2)  See Non-GAAP reconciliations below for adjustments.

    Selected Financial Ratios and Other Data

      Three Months Ended   Nine Months Ended
      September 30,
    2024
      June 30,
    2024
      September 30,
    2024
      September 30,
    2023
    Performance ratios(1)          
    Return on assets (ratio of net income to average total assets) 1.17 %   1.13 %   1.22 %   1.15 %
    Return on equity (ratio of net income to average equity) 9.76     9.58     10.39     10.56  
    Yield on earning assets 6.34     6.32     6.28     5.77  
    Rate paid on interest-bearing liabilities 3.12     3.04     3.02     2.06  
    Average interest rate spread 3.22     3.28     3.26     3.71  
    Net interest margin(2) 4.00     4.08     4.03     4.29  
    Average interest-earning assets to average interest-bearing liabilities 133.71     135.38     134.53     138.63  
    Noninterest expense to average total assets 2.73     2.74     2.73     2.94  
    Efficiency ratio 60.74     60.08     60.17     61.66  
    Efficiency ratio – adjusted(3) 60.30     59.66     60.19     58.98  

    (1)  Ratios are annualized where appropriate.
    (2)  Net interest income divided by average interest-earning assets.
    (3)  See Non-GAAP reconciliations below for adjustments.

      At or For the Three Months Ended
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Asset quality ratios                  
    Nonperforming assets to total assets(1) 0.64 %   0.54 %   0.43 %   0.41 %   0.25 %
    Nonperforming loans to total loans(1) 0.78     0.68     0.55     0.53     0.32  
    Total classified assets to total assets 0.99     0.91     0.80     0.90     0.76  
    Allowance for credit losses to nonperforming loans(1) 166.51     194.80     235.18     251.60     400.41  
    Allowance for credit losses to total loans 1.30     1.33     1.30     1.34     1.30  
    Net charge-offs to average loans (annualized) 0.42     0.27     0.24     0.29     0.27  
    Capital ratios                  
    Equity to total assets at end of period 11.64 %   11.21 %   10.96 %   10.70 %   10.41 %
    Tangible equity to total tangible assets(2) 10.88     10.44     10.18     9.91     9.60  
    Average equity to average assets 12.02     11.78     11.51     11.03     10.84  

    (1)  Nonperforming assets include nonaccruing loans and repossessed assets. There were no accruing loans more than 90 days past due at the dates indicated. At September 30, 2024, $8.7 million, or 30.4%, of nonaccruing loans were current on their loan payments as of that date.
    (2)  See Non-GAAP reconciliations below for adjustments.

    Loans

    (Dollars in thousands) September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Commercial real estate loans                  
    Construction and land development $ 300,905     $ 316,050     $ 304,727     $ 305,269     $ 352,143  
    Commercial real estate – owner occupied   544,689       545,631       532,547       536,545       526,534  
    Commercial real estate – non-owner occupied   881,340       892,653       881,143       875,694       880,348  
    Multifamily   114,155       92,292       89,692       88,623       83,430  
    Total commercial real estate loans   1,841,089       1,846,626       1,808,109       1,806,131       1,842,455  
    Commercial loans                  
    Commercial and industrial   286,809       266,136       243,732       237,255       237,366  
    Equipment finance   443,033       461,010       462,649       465,573       470,387  
    Municipal leases   158,560       152,509       151,894       150,292       147,821  
    Total commercial loans   888,402       879,655       858,275       853,120       855,574  
    Residential real estate loans                  
    Construction and land development   63,016       70,679       85,840       96,646       103,381  
    One-to-four family   627,845       621,196       605,570       584,405       560,399  
    HELOCs   194,909       188,465       184,274       185,878       185,289  
    Total residential real estate loans   885,770       880,340       875,684       866,929       849,069  
    Consumer loans   83,631       94,833       106,084       113,842       112,816  
    Total loans, net of deferred loan fees and costs   3,698,892       3,701,454       3,648,152       3,640,022       3,659,914  
    Allowance for credit losses – loans   (48,131 )     (49,223 )     (47,502 )     (48,641 )     (47,417 )
    Loans, net $ 3,650,761     $ 3,652,231     $ 3,600,650     $ 3,591,381     $ 3,612,497  

    Deposits

    (Dollars in thousands) September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Core deposits                  
    Noninterest-bearing accounts $ 684,501     $ 683,346     $ 773,901     $ 784,950     $ 827,362  
    NOW accounts   534,517       561,789       600,561       591,270       602,804  
    Money market accounts   1,345,289       1,311,940       1,308,467       1,246,807       1,195,482  
    Savings accounts   179,762       185,499       191,302       194,486       202,971  
    Total core deposits   2,744,069       2,742,574       2,874,231       2,817,513       2,828,619  
    Certificates of deposit   1,017,519       965,205       925,576       843,860       812,342  
    Total $ 3,761,588     $ 3,707,779     $ 3,799,807     $ 3,661,373     $ 3,640,961  

    Non-GAAP Reconciliations
    In addition to results presented in accordance with generally accepted accounting principles utilized in the United States (“GAAP”), this earnings release contains certain non-GAAP financial measures, which include: the efficiency ratio, tangible book value, tangible book value per share and the tangible equity to tangible assets ratio. The Company believes these non-GAAP financial measures and ratios as presented are useful for both investors and management to understand the effects of certain items and provide an alternative view of its performance over time and in comparison to its competitors. These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for total stockholders’ equity or operating results determined in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

    Set forth below is a reconciliation to GAAP of the Company’s efficiency ratio:

        Three Months Ended   Nine Months Ended
    (Dollars in thousands)   September 30,
    2024
      June 30,
    2024
      September 30,
    2024
      September 30,
    2023
    Noninterest expense   $ 30,585     $ 30,210     $ 90,659     $ 93,308  
    Less: merger expense                       4,741  
    Noninterest expense – adjusted   $ 30,585     $ 30,210     $ 90,659     $ 88,567  
                     
    Net interest income   $ 42,074     $ 42,166     $ 125,470     $ 127,510  
    Plus: tax-equivalent adjustment     368       354       1,072       903  
    Plus: noninterest income     8,282       8,113       25,206       23,825  
    Less: BOLI death benefit proceeds in excess of cash surrender value                 1,143       1,092  
    Less: loss (gain) on sale of premises and equipment                 (9 )     982  
    Net interest income plus noninterest income – adjusted   $ 50,724     $ 50,633     $ 150,614     $ 150,164  
    Efficiency ratio   60.74 %   60.08 %   60.17 %   61.66 %
    Efficiency ratio – adjusted   60.30 %   59.66 %   60.19 %   58.98 %
                             

    Set forth below is a reconciliation to GAAP of tangible book value and tangible book value per share:

        As of
    (Dollars in thousands, except per share data)   September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Total stockholders’ equity   $ 540,004     $ 523,628     $ 513,173     $ 499,893     $ 484,411  
    Less: goodwill, core deposit intangibles, net of taxes     39,626       40,063       40,500       41,086       41,748  
    Tangible book value   $ 500,378     $ 483,565     $ 472,673     $ 458,807     $ 442,663  
    Common shares outstanding     17,514,922       17,437,326       17,444,787       17,387,069       17,380,307  
    Book value per share   $ 30.83     $ 30.03     $ 29.42     $ 28.75     $ 27.87  
    Tangible book value per share   $ 28.57     $ 27.73     $ 27.10     $ 26.39     $ 25.47  

    Set forth below is a reconciliation to GAAP of tangible equity to tangible assets:

        As of
    (Dollars in thousands)   September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Tangible equity(1)   $ 500,378     $ 483,565     $ 472,673     $ 458,807     $ 442,663  
    Total assets     4,637,293       4,670,864       4,684,011       4,672,633       4,651,997  
    Less: goodwill, core deposit intangibles, net of taxes     39,626       40,063       40,500       41,086       41,748  
    Total tangible assets   $ 4,597,667     $ 4,630,801     $ 4,643,511     $ 4,631,547     $ 4,610,249  
    Tangible equity to tangible assets   10.88 %   10.44 %   10.18 %   9.91 %   9.60 %

    (1)  Tangible equity (or tangible book value) is equal to total stockholders’ equity less goodwill and core deposit intangibles, net of related deferred tax liabilities.

    The MIL Network

  • MIL-OSI: West Bancorporation, Inc. Announces Third Quarter 2024 Financial Results and Declares Quarterly Dividend

    Source: GlobeNewswire (MIL-OSI)

    WEST DES MOINES, Iowa, Oct. 24, 2024 (GLOBE NEWSWIRE) — West Bancorporation, Inc. (Nasdaq: WTBA; the “Company”), parent company of West Bank, today reported third quarter 2024 net income of $6.0 million, or $0.35 per diluted common share, compared to second quarter 2024 net income of $5.2 million, or $0.31 per diluted common share, and third quarter 2023 net income of $5.9 million, or $0.35 per diluted common share. On October 23, 2024, the Company’s Board of Directors declared a regular quarterly dividend of $0.25 per common share. The dividend is payable on November 20, 2024, to stockholders of record on November 6, 2024.

    David Nelson, President and Chief Executive Officer of the Company, commented, “Our third quarter results include moderate growth in loans and core deposits along with an increase in quarterly net interest income and net interest margin. Our credit quality remains pristine as a result of our disciplined loan growth and credit risk management practices. The ratio of nonperforming assets to total assets remains negligible at 0.01%.”

    David Nelson added, “West Bank is focused on initiatives that will drive sustained core profitability. Those initiatives are centered around our culture of building strong relationships and providing exceptional personal service to drive growth in both commercial and consumer banking services.”

    Third Quarter 2024 Financial Highlights

        Quarter Ended
    September 30, 2024
      Nine Months Ended
    September 30, 2024
      Net income (in thousands) $5,952     $16,953  
      Return on average equity   10.41%       10.18%  
      Return on average assets   0.60%       0.59%  
      Efficiency ratio (a non-GAAP measure)   63.28%       64.16%  
      Nonperforming assets to total assets   0.01%       0.01%  
                     

    Third Quarter 2024 Compared to Second Quarter 2024 Overview

    • Loans increased $22.4 million in the third quarter of 2024, or 3.0 percent annualized. The increase is primarily due to the funding of previously committed construction loans.
    • A provision for credit losses on loans of $1.0 million was recorded in the third quarter of 2024, compared to no provision in the second quarter of 2024. A negative provision for credit losses on unfunded commitments of $1.0 million was recorded in the third quarter of 2024, compared to no provision in the second quarter of 2024. The provision for loans in the third quarter of 2024 was primarily due to changes in the forecasted loss rates due to increases in forecasted unemployment rates. The negative provision for unfunded commitments was primarily due to the decline in unfunded commitments resulting primarily from the funding of construction loans.
    • The allowance for credit losses to total loans was 0.97 percent and 0.95 percent at September 30, 2024 and June 30, 2024, respectively. Nonaccrual loans at September 30, 2024 consisted of two loans with a total balance of $233 thousand, compared to three loans with a balance of $521 thousand at June 30, 2024.
    • Deposits increased $97.6 million, or 3.1 percent, in the third quarter of 2024. Brokered deposits totaled $425.9 million at September 30, 2024, compared to $370.3 million at June 30, 2024, an increase of $55.6 million. Excluding brokered deposits, deposits increased $42.0 million during the third quarter of 2024. As of September 30, 2024, estimated uninsured deposits, which exclude deposits in the IntraFi® reciprocal network, brokered deposits and public funds protected by state programs, accounted for approximately 27.8 percent of total deposits.
    • Borrowed funds decreased to $438.8 million at September 30, 2024, compared to $525.5 million at June 30, 2024. The decrease was primarily due to the balance of federal funds purchased and other short-term borrowings decreasing to $0 as of September 30, 2024, from $85.5 million as of June 30, 2024 as a result of growth in deposits.
    • The efficiency ratio (a non-GAAP measure) was 63.28 percent for the third quarter of 2024, compared to 67.14 percent for the second quarter of 2024. The improvement in the efficiency ratio was primarily due to the increase in net interest income. In the third quarter of 2024, the increase in interest income on loans outpaced the increase in interest expense on deposits and borrowed funds.
    • Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 1.91 percent for the third quarter of 2024, compared to 1.86 percent for the second quarter of 2024. Net interest income for the third quarter of 2024 was $18.0 million, compared to $17.2 million for the second quarter of 2024.
    • The tangible common equity ratio was 5.90 percent as of September 30, 2024, compared to 5.65 percent as of June 30, 2024. The increase in the tangible common equity ratio was driven by retained net income and the decrease in accumulated other comprehensive loss, which was primarily the result of the increase in the market value of our available for sale investment portfolio.

    Third Quarter 2024 Compared to Third Quarter 2023 Overview

    • Loans increased $171.4 million at September 30, 2024, or 6.0 percent, compared to September 30, 2023. The increase is primarily due to increases in commercial real estate loans and the funding of previously committed construction loans.
    • Deposits increased to $3.3 billion at September 30, 2024, compared to $2.8 billion at September 30, 2023. Included in deposits were brokered deposits totaling $425.9 million at September 30, 2024, compared to $237.0 million at September 30, 2023. Brokered deposits were used to reduce short-term borrowed funds and to fund loan growth. Excluding brokered deposits, deposits increased $334.2 million, or 13.3 percent, as of September 30, 2024, compared to September 30, 2023. Deposit growth included a mix of public funds and commercial and consumer deposits.
    • Borrowed funds decreased to $438.8 million at September 30, 2024, compared to $705.1 million at September 30, 2023. The decrease was primarily attributable to a decrease of $261.5 million in federal funds purchased and other short-term borrowings as a result of growth in deposits.
    • The efficiency ratio (a non-GAAP measure) was 63.28 percent for the third quarter of 2024, compared to 60.83 percent for the third quarter of 2023. The increase in the efficiency ratio in the third quarter of 2024 compared to the third quarter of 2023 was primarily due to the increase in noninterest expense, partially offset by an increase in net interest income. Occupancy and equipment expense increased primarily due to the occupancy costs associated with the Company’s newly constructed headquarters.
    • Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 1.91 percent for both the third quarter of 2024 and the third quarter of 2023. Net interest income for the third quarter of 2024 was $18.0 million, compared to $16.6 million for the third quarter of 2023.

    The Company filed its report on Form 10-Q with the Securities and Exchange Commission today. Please refer to that document for a more in-depth discussion of the Company’s financial results. The Form 10-Q is available on the Investor Relations section of West Bank’s website at www.westbankstrong.com.

    The Company will discuss its results in a conference call scheduled for 2:00 p.m. Central Time on Thursday, October 24, 2024. The telephone number for the conference call is 800-715-9871. The conference ID for the conference call is 7846129. A recording of the call will be available until November 7, 2024, by dialing 800-770-2030. The conference ID for the replay call is 7846129, followed by the # key.

    About West Bancorporation, Inc. (Nasdaq: WTBA)

    West Bancorporation, Inc. is headquartered in West Des Moines, Iowa. Serving customers since 1893, West Bank, a wholly-owned subsidiary of West Bancorporation, Inc., is a community bank that focuses on lending, deposit services, and trust services for small- to medium-sized businesses and consumers. West Bank has six offices in the Des Moines, Iowa metropolitan area, one office in Coralville, Iowa, and four offices in Minnesota in the cities of Rochester, Owatonna, Mankato and St. Cloud.

    Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to the Company’s business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meanings 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. Forward-looking statements may appear throughout this report. These forward-looking statements are generally identified by the words “believes,” “expects,” “intends,” “anticipates,” “projects,” “future,” “confident,” “may,” “should,” “will,” “strategy,” “plan,” “opportunity,” “will be,” “will likely result,” “will continue” or similar references, or references to estimates, predictions or future events. Such forward-looking statements are based upon certain underlying assumptions, risks and uncertainties. Because of the possibility that the underlying assumptions are incorrect or do not materialize as expected in the future, actual results could differ materially from these forward-looking statements. Risks and uncertainties that may affect future results include: interest rate risk, including the effects of changes in interest rates; fluctuations in the values of the securities held in our investment portfolio, including as a result of changes in interest rates; competitive pressures, including from non-bank competitors such as credit unions, “fintech” companies and digital asset service providers; pricing pressures on loans and deposits; our ability to successfully manage liquidity risk; changes in credit and other risks posed by the Company’s loan portfolio, including declines in commercial or residential real estate values or changes in the allowance for credit losses dictated by new market conditions, accounting standards or regulatory requirements; the concentration of large deposits from certain clients, including those who have balances above current FDIC insurance limits; changes in local, national and international economic conditions, including the level and impact of inflation and possible recession; the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time that resulted in recent bank failures; changes in legal and regulatory requirements, limitations and costs including in response to the recent bank failures; changes in customers’ acceptance of the Company’s products and services; the occurrence of fraudulent activity, breaches or failures of our or our third-party partners’ information security controls or cyber-security related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; unexpected outcomes of existing or new litigation involving the Company; the monetary, trade and other regulatory policies of the U.S. government; acts of war or terrorism, including the ongoing Israeli-Palestinian conflict and the Russian invasion of Ukraine, widespread disease or pandemics, or other adverse external events; risks related to climate change and the negative impact it may have on our customers and their businesses; changes to U.S. tax laws, regulations and guidance; potential changes in federal policy and at regulatory agencies as a result of the upcoming 2024 presidential election; talent and labor shortages; and any other risks described in the “Risk Factors” sections of reports filed by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to revise or update such forward-looking statements to reflect current or future events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

    For more information contact:
    Jane Funk, Executive Vice President, Treasurer and Chief Financial Officer (515) 222-5766

                 
    WEST BANCORPORATION, INC. AND SUBSIDIARY            
    Financial Information (unaudited)                    
    (in thousands)                    
        As of
    CONDENSED BALANCE SHEETS   September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Assets                    
    Cash and due from banks   $ 34,157     $ 27,994     $ 27,071     $ 33,245     $ 18,819  
    Interest-bearing deposits     123,646       121,825       120,946       32,112       1,802  
    Securities available for sale, at fair value     597,745       588,452       605,735       623,919       609,365  
    Federal Home Loan Bank stock, at cost     17,195       21,065       26,181       22,957       26,691  
    Loans     3,021,221       2,998,774       2,980,133       2,927,535       2,849,777  
    Allowance for credit losses     (29,419 )     (28,422 )     (28,373 )     (28,342 )     (28,147 )
    Loans, net     2,991,802       2,970,352       2,951,760       2,899,193       2,821,630  
    Premises and equipment, net     106,771       101,965       95,880       86,399       75,675  
    Bank-owned life insurance     44,703       44,416       44,138       43,864       43,589  
    Other assets     72,547       89,046       90,981       84,069       104,329  
    Total assets   $ 3,988,566     $ 3,965,115     $ 3,962,692     $ 3,825,758     $ 3,701,900  
                         
    Liabilities and Stockholders’ Equity                    
    Deposits   $ 3,278,553     $ 3,180,922     $ 3,065,030     $ 2,973,779     $ 2,755,529  
    Federal funds purchased and other short-term borrowings           85,500       198,500       150,270       261,510  
    Other borrowings     438,814       439,998       441,183       442,367       443,552  
    Other liabilities     35,846       34,812       34,223       34,299       37,376  
    Stockholders’ equity     235,353       223,883       223,756       225,043       203,933  
    Total liabilities and stockholders’ equity   $ 3,988,566     $ 3,965,115     $ 3,962,692     $ 3,825,758     $ 3,701,900  
                         
        For the Quarter Ended
    AVERAGE BALANCES   September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Assets   $ 3,973,824     $ 3,964,109     $ 3,812,199     $ 3,706,497     $ 3,679,541  
    Loans     2,991,272       2,994,492       2,949,672       2,857,594       2,813,213  
    Deposits     3,258,669       3,123,282       2,956,635       2,878,676       2,764,184  
    Stockholders’ equity     227,513       219,771       219,835       201,920       215,230  
                                             
                 
    WEST BANCORPORATION, INC. AND SUBSIDIARY            
    Financial Information (unaudited)                    
    (in thousands)                    
        As of
    LOANS   September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Commercial   $ 512,884     $ 526,589     $ 544,293     $ 531,594     $ 529,293  
    Real estate:                    
    Construction, land and land development     520,516       496,864       465,247       413,477       399,253  
    1-4 family residential first mortgages     89,749       92,230       108,065       106,688       89,713  
    Home equity     17,140       15,264       14,020       14,618       12,429  
    Commercial     1,870,132       1,856,301       1,839,580       1,854,510       1,812,816  
    Consumer and other     14,261       15,234       12,844       10,930       10,123  
          3,024,682       3,002,482       2,984,049       2,931,817       2,853,627  
    Net unamortized fees and costs     (3,461 )     (3,708 )     (3,916 )     (4,282 )     (3,850 )
    Total loans   $ 3,021,221     $ 2,998,774     $ 2,980,133     $ 2,927,535     $ 2,849,777  
    Less: allowance for credit losses     (29,419 )     (28,422 )     (28,373 )     (28,342 )     (28,147 )
    Net loans   $ 2,991,802     $ 2,970,352     $ 2,951,760     $ 2,899,193     $ 2,821,630  
                         
    CREDIT QUALITY                    
    Pass   $ 3,016,493     $ 2,994,310     $ 2,983,618     $ 2,931,377     $ 2,853,100  
    Watch     7,956       7,651       142       144       184  
    Substandard     233       521       289       296       343  
    Doubtful                              
    Total loans   $ 3,024,682     $ 3,002,482     $ 2,984,049     $ 2,931,817     $ 2,853,627  
                         
    DEPOSITS                    
    Noninterest-bearing demand   $ 525,332     $ 530,441     $ 521,377     $ 548,726     $ 551,688  
    Interest-bearing demand     438,402       443,658       449,946       481,207       417,802  
    Savings and money market – non-brokered     1,481,840       1,483,264       1,315,698       1,315,741       1,249,309  
    Money market – brokered     123,780       97,259       119,840       124,335       99,282  
    Total nonmaturity deposits     2,569,354       2,554,622       2,406,861       2,470,009       2,318,081  
    Time – non-brokered     407,109       353,269       381,646       322,694       299,683  
    Time – brokered     302,090       273,031       276,523       181,076       137,765  
    Total time deposits     709,199       626,300       658,169       503,770       437,448  
    Total deposits   $ 3,278,553     $ 3,180,922     $ 3,065,030     $ 2,973,779     $ 2,755,529  
                         
    BORROWINGS                    
    Federal funds purchased and other short-term borrowings   $     $ 85,500     $ 198,500     $ 150,270     $ 261,510  
    Subordinated notes, net     79,828       79,762       79,697       79,631       79,566  
    Federal Home Loan Bank advances     315,000       315,000       315,000       315,000       315,000  
    Long-term debt     43,986       45,236       46,486       47,736       48,986  
    Total borrowings   $ 438,814     $ 525,498     $ 639,683     $ 592,637     $ 705,062  
                         
    STOCKHOLDERS’ EQUITY                    
    Preferred stock   $     $     $     $     $  
    Common stock     3,000       3,000       3,000       3,000       3,000  
    Additional paid-in capital     34,960       34,322       33,685       34,197       33,487  
    Retained earnings     275,724       273,981       272,997       271,369       271,025  
    Accumulated other comprehensive loss     (78,331 )     (87,420 )     (85,926 )     (83,523 )     (103,579 )
    Total stockholders’ equity   $ 235,353     $ 223,883     $ 223,756     $ 225,043     $ 203,933  
                                             
                     
    WEST BANCORPORATION, INC. AND SUBSIDIARY                
    Financial Information (unaudited)                    
    (in thousands)                    
        For the Quarter Ended
    CONSOLIDATED STATEMENTS OF INCOME   September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Interest income:                    
    Loans, including fees   $ 42,504     $ 41,700     $ 40,196     $ 38,208     $ 36,756  
    Securities:                    
    Taxable     3,261       3,394       3,416       3,521       3,427  
    Tax-exempt     806       808       810       869       880  
    Interest-bearing deposits     2,041       1,666       148       85       29  
    Total interest income     48,612       47,568       44,570       42,683       41,092  
    Interest expense:                    
    Deposits     26,076       23,943       21,559       20,024       17,156  
    Federal funds purchased and other short-term borrowings     115       1,950       2,183       2,024       3,165  
    Subordinated notes     1,112       1,105       1,108       1,114       1,113  
    Federal Home Loan Bank advances     2,748       2,718       2,325       2,482       2,329  
    Long-term debt     601       622       645       678       695  
    Total interest expense     30,652       30,338       27,820       26,322       24,458  
    Net interest income     17,960       17,230       16,750       16,361       16,634  
    Credit loss expense                       500       200  
    Net interest income after credit loss expense     17,960       17,230       16,750       15,861       16,434  
    Noninterest income:                    
    Service charges on deposit accounts     459       462       460       476       463  
    Debit card usage fees     500       490       458       488       495  
    Trust services     828       794       776       782       831  
    Increase in cash value of bank-owned life insurance     287       278       274       275       262  
    Loan swap fees                             431  
    Realized securities losses, net                       (431 )      
    Other income     285       322       331       308       340  
    Total noninterest income     2,359       2,346       2,299       1,898       2,822  
    Noninterest expense:                    
    Salaries and employee benefits     6,823       7,169       6,489       6,468       6,696  
    Occupancy and equipment     1,926       1,852       1,447       1,499       1,359  
    Data processing     771       754       714       723       703  
    Technology and software     722       731       700       676       573  
    FDIC insurance     711       631       519       475       439  
    Professional fees     239       244       257       235       254  
    Director fees     223       236       199       240       196  
    Other expenses     1,477       1,577       1,543       1,845       1,685  
    Total noninterest expense     12,892       13,194       11,868       12,161       11,905  
    Income before income taxes     7,427       6,382       7,181       5,598       7,351  
    Income taxes     1,475       1,190       1,372       1,073       1,445  
    Net income   $ 5,952     $ 5,192     $ 5,809     $ 4,525     $ 5,906  
                         
    Basic earnings per common share   $ 0.35     $ 0.31     $ 0.35     $ 0.27     $ 0.35  
    Diluted earnings per common share   $ 0.35     $ 0.31     $ 0.35     $ 0.27     $ 0.35  
                                             
         
    WEST BANCORPORATION, INC. AND SUBSIDIARY    
    Financial Information (unaudited)        
    (in thousands)        
        For the Nine Months Ended
    CONSOLIDATED STATEMENTS OF INCOME   September 30, 2024   September 30, 2023
    Interest income:        
    Loans, including fees   $ 124,400     $ 104,715  
    Securities:        
    Taxable     10,071       10,175  
    Tax-exempt     2,424       2,648  
    Interest-bearing deposits     3,855       84  
    Total interest income     140,750       117,622  
    Interest expense:        
    Deposits     71,578       46,772  
    Federal funds purchased and other short-term borrowings     4,248       7,508  
    Subordinated notes     3,325       3,328  
    Federal Home Loan Bank advances     7,791       5,212  
    Long-term debt     1,868       2,132  
    Total interest expense     88,810       64,952  
    Net interest income     51,940       52,670  
    Credit loss expense           200  
    Net interest income after credit loss expense     51,940       52,470  
    Noninterest income:        
    Service charges on deposit accounts     1,381       1,383  
    Debit card usage fees     1,448       1,492  
    Trust services     2,398       2,286  
    Increase in cash value of bank-owned life insurance     839       769  
    Loan swap fees           431  
    Gain from bank-owned life insurance           691  
    Other income     938       1,116  
    Total noninterest income     7,004       8,168  
    Noninterest expense:        
    Salaries and employee benefits     20,481       20,592  
    Occupancy and equipment     5,225       4,008  
    Data processing     2,239       2,067  
    Technology and software     2,153       1,665  
    FDIC insurance     1,861       1,275  
    Professional fees     740       791  
    Director fees     658       652  
    Other expenses     4,597       5,400  
    Total noninterest expense     37,954       36,450  
    Income before income taxes     20,990       24,188  
    Income taxes     4,037       4,576  
    Net income   $ 16,953     $ 19,612  
             
    Basic earnings per common share   $ 1.01     $ 1.17  
    Diluted earnings per common share   $ 1.00     $ 1.17  
                     
                 
    WEST BANCORPORATION, INC. AND SUBSIDIARY            
    Financial Information (unaudited)                            
                                 
        As of and for the Quarter Ended   For the Nine Months Ended
    COMMON SHARE DATA   September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
      September 30,
    2024
      September 30,
    2023
    Earnings per common share (basic)   $ 0.35     $ 0.31     $ 0.35     $ 0.27     $ 0.35     $ 1.01     $ 1.17  
    Earnings per common share (diluted)     0.35       0.31       0.35       0.27       0.35       1.00       1.17  
    Dividends per common share     0.25       0.25       0.25       0.25       0.25       0.75       0.75  
    Book value per common share(1)     13.98       13.30       13.31       13.46       12.19          
    Closing stock price     19.01       17.90       17.83       21.20       16.31          
    Market price/book value(2)     135.98 %     134.59 %     133.96 %     157.50 %     133.80 %        
    Price earnings ratio(3)     13.65       14.36       12.77       19.79       11.75          
    Annualized dividend yield(4)     5.26 %     5.59 %     5.61 %     4.72 %     6.13 %        
                                 
    REGULATORY CAPITAL RATIOS                            
    Consolidated:                            
    Total risk-based capital ratio     11.95 %     11.85 %     11.78 %     11.88 %     11.96 %        
    Tier 1 risk-based capital ratio     9.39       9.30       9.23       9.30       9.37          
    Tier 1 leverage capital ratio     8.15       8.08       8.36       8.50       8.58          
    Common equity tier 1 ratio     8.83       8.74       8.67       8.74       8.80          
    West Bank:                            
    Total risk-based capital ratio     12.73 %     12.66 %     12.63 %     12.76 %     12.89 %        
    Tier 1 risk-based capital ratio     11.86       11.79       11.76       11.89       12.01          
    Tier 1 leverage capital ratio     10.29       10.25       10.65       10.86       11.00          
    Common equity tier 1 ratio     11.86       11.79       11.76       11.89       12.01          
                                 
    KEY PERFORMANCE RATIOS AND OTHER METRICS                            
    Return on average assets(5)     0.60 %     0.53 %     0.61 %     0.48 %     0.64 %     0.59 %     0.72 %
    Return on average equity(6)     10.41       9.50       10.63       8.89       10.89       10.18       12.22  
    Net interest margin(7)(13)     1.91       1.86       1.88       1.87       1.91       1.88       2.05  
    Yield on interest-earning assets(8)(13)     5.16       5.13       4.99       4.87       4.70       5.10       4.56  
    Cost of interest-bearing liabilities     3.84       3.83       3.70       3.60       3.38       3.79       3.09  
    Efficiency ratio(9)(13)     63.28       67.14       62.04       64.66       60.83       64.16       59.52  
    Nonperforming assets to total assets(10)     0.01       0.01       0.01       0.01       0.01          
    ACL ratio(11)     0.97       0.95       0.95       0.97       0.99          
    Loans/total assets     75.75       75.63       75.20       76.52       76.98          
    Loans/total deposits     92.15       94.27       97.23       98.44       103.42          
    Tangible common equity ratio(12)     5.90       5.65       5.65       5.88       5.51          
                                                     
    (1) Includes accumulated other comprehensive loss.
    (2) Closing stock price divided by book value per common share.
    (3) Closing stock price divided by annualized earnings per common share (basic).
    (4) Annualized dividend divided by period end closing stock price.
    (5) Annualized net income divided by average assets.
    (6) Annualized net income divided by average stockholders’ equity.
    (7) Annualized tax-equivalent net interest income divided by average interest-earning assets.
    (8) Annualized tax-equivalent interest income on interest-earning assets divided by average interest-earning assets.
    (9) Noninterest expense (excluding other real estate owned expense and write-down of premises) divided by noninterest income (excluding net securities gains/losses and gains/losses on disposition of premises and equipment) plus tax-equivalent net interest income.
    (10) Total nonperforming assets divided by total assets.
    (11) Allowance for credit losses on loans divided by total loans.
    (12) Common equity less intangible assets (none held) divided by tangible assets.
    (13) A non-GAAP measure.
       

    NON-GAAP FINANCIAL MEASURES

    This report contains references to financial measures that are not defined in GAAP. Such non-GAAP financial measures include the Company’s presentation of net interest income and net interest margin on a fully taxable equivalent (FTE) basis and the presentation of the efficiency ratio on an adjusted and FTE basis, excluding certain income and expenses. Management believes these non-GAAP financial measures provide useful information to both management and investors to analyze and evaluate the Company’s financial performance. These measures are considered standard measures of comparison within the banking industry. Additionally, management believes providing measures on a FTE basis enhances the comparability of income arising from taxable and nontaxable sources. 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. These non-GAAP disclosures should not be considered an alternative to the Company’s GAAP results. The following table reconciles the non-GAAP financial measures of net interest income and net interest margin on a fully taxable equivalent basis and efficiency ratio on an adjusted and FTE basis.

             
    (in thousands)   For the Quarter Ended   For the Nine Months Ended
        September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
      September 30,
    2024
      September 30,
    2023
    Reconciliation of net interest income and net interest margin on a FTE basis to GAAP:                            
    Net interest income (GAAP)   $ 17,960     $ 17,230     $ 16,750     $ 16,361     $ 16,634     $ 51,940     $ 52,670  
    Tax-equivalent adjustment (1)     29       55       82       95       113       166       396  
    Net interest income on a FTE basis (non-GAAP)     17,989       17,285       16,832       16,456       16,747       52,106       53,066  
    Average interest-earning assets     3,749,688       3,731,674       3,595,954       3,487,799       3,478,053       3,692,647       3,458,606  
    Net interest margin on a FTE basis (non-GAAP)     1.91 %     1.86 %     1.88 %     1.87 %     1.91 %     1.88 %     2.05 %
                                 
    Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP:                            
    Net interest income on a FTE basis (non-GAAP)   $ 17,989     $ 17,285     $ 16,832     $ 16,456     $ 16,747     $ 52,106     $ 53,066  
    Noninterest income     2,359       2,346       2,299       1,898       2,822       7,004       8,168  
    Adjustment for realized securities losses, net                       431                    
    Adjustment for losses on disposal of premises and equipment, net     26       21             24       3       47       5  
    Adjusted income     20,374       19,652       19,131       18,809       19,572       59,157       61,239  
    Noninterest expense     12,892       13,194       11,868       12,161       11,905       37,954       36,450  
    Efficiency ratio on an adjusted and FTE basis (non-GAAP) (2)     63.28 %     67.14 %     62.04 %     64.66 %     60.83 %     64.16 %     59.52 %
                                                             
    (1) Computed on a tax-equivalent basis using a federal income tax rate of 21 percent, adjusted to reflect the effect of the nondeductible interest expense associated with owning tax-exempt securities and loans. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results, as it enhances the comparability of income arising from taxable and nontaxable sources.
    (2) The efficiency ratio expresses noninterest expense as a percent of fully taxable equivalent net interest income and noninterest income, excluding specific noninterest income and expenses. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the Company’s financial performance. It is a standard measure of comparison within the banking industry. A lower ratio is more desirable.

    The MIL Network

  • MIL-OSI: Kearny Financial Corp. Announces First Quarter Fiscal 2025 Results and Declaration of Cash Dividend

    Source: GlobeNewswire (MIL-OSI)

    FAIRFIELD, N.J., Oct. 24, 2024 (GLOBE NEWSWIRE) — Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), reported net income for the quarter ended September 30, 2024 of $6.1 million, or $0.10 per diluted share, compared to a GAAP net loss of $90.1 million, or $1.45 per diluted share, for the quarter ended June 30, 2024. The net loss for the quarter ended June 30, 2024 included a goodwill impairment of $95.3 million, as previously disclosed. Excluding this item, net income for the quarter ended September 30, 2024 increased $496,000 from adjusted net income of $5.6 million for the quarter ended June 30, 2024.

    The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.11 per share, payable on November 20, 2024, to stockholders of record as of November 6, 2024.

    Craig L. Montanaro, President and Chief Executive Officer, commented, “I’m pleased to report that this quarter saw our net interest margin reach its inflection point and begin to ascend. Despite four basis points of quarterly compression, each successive month of the quarter reflected an increase in our net interest margin. The recent fed funds rate reduction of 50 basis points has already begun translating into a cost of funds benefit in October. Additional fed funds rate cuts, which the market is anticipating, will be a positive catalyst for our liability-sensitive balance sheet.”

    Mr. Montanaro continued, “Regarding asset quality, our loan portfolio remains strong. Minimal exposure to New York City rent-regulated multifamily and office real estate, coupled with our robust commercial real estate ACL coverage ratios and peer-leading charge-off ratios, leaves us well-positioned in the current environment.”

    Balance Sheet

    • Total assets were $7.77 billion at September 30, 2024, an increase of $88.9 million, or 1.2%, from June 30, 2024.
    • Investment securities totaled $1.20 billion at September 30, 2024, a decrease of $5.5 million, or 0.5%, from June 30, 2024.
    • Loans receivable totaled $5.78 billion at September 30, 2024, an increase of $51.5 million, or 0.9%, from June 30, 2024, primarily reflecting growth in one- to four-family residential mortgage loans and construction loans.
    • Deposits were $5.47 billion at September 30, 2024, an increase of $312.4 million, or 6.1%, from June 30, 2024. This increase was largely the result of a reallocation from Federal Home Loan Bank (“FHLB”) advances into brokered certificates of deposits, due to the relatively more favorable economics of brokered deposits compared to advances.
    • Borrowings were $1.48 billion at September 30, 2024, a decrease of $229.9 million, or 13.4%, from June 30, 2024, primarily reflecting a decrease in FHLB borrowings offset by an increase in brokered certificates of deposits, as noted above.
    • At September 30, 2024, the Company maintained available secured borrowing capacity with the FHLB and the Federal Reserve Discount Window of $2.06 billion, an increase of $240.0 million from June 30, 2024, and represents 26.5% of total assets.

    Earnings

    Net Interest Income and Net Interest Margin

    • Net interest margin contracted four basis points to 1.80% for the quarter ended September 30, 2024. The decrease for the quarter was driven by increases in the cost and average balances of interest-bearing deposits and a decrease in the average balance of interest-earning assets, partially offset by decreases in the average balances of interest-bearing borrowings and higher yields on interest-earning assets.
    • For the quarter ended September 30, 2024, net interest income decreased $830,000 to $32.4 million from $33.3 million for the quarter ended June 30, 2024. Included in net interest income for the quarters ended September 30, 2024 and June 30, 2024, respectively, was purchase accounting accretion of $649,000 and $612,000, and loan prepayment penalty income of $52,000 and $366,000.

    Non-Interest Income

    • Non-interest income decreased $1.2 million to income of $4.6 million for the quarter ended September 30, 2024, from $5.8 million for the quarter ended June 30, 2024. Included in non-interest income for the quarter ended June 30, 2024 was a non-recurring contract renewal bonus of $750,000 and $1.1 million in non-recurring payments on two life insurance policies, partially offset by a $392,000 non-recurring exchange charge related to the December 2023 Bank Owned Life Insurance (“BOLI”) restructure. No such non-recurring items were recorded during the quarter ended September 30, 2024.
    • Income from BOLI decreased $642,000 to $2.6 million for the quarter ended September 30, 2024 from $3.2 million for the quarter ended June 30, 2024, primarily driven by the non-recurring items recorded for the quarter ended June 30, 2024, as disclosed above.

    Non-Interest Expense

    • For the quarter ended September 30, 2024, non-interest expense decreased $96.8 million, or 76.5%, to $29.8 million from $126.6 million for the quarter ended June 30, 2024, driven by a non-cash goodwill impairment recognized in the prior comparative period. Excluding the goodwill impairment, adjusted non-interest expense increased $605,000 from $29.2 million, primarily driven by increases in salary and benefits expense and other expense.
    • Salary and benefits expense increased $232,000 primarily driven by annual merit increases and higher payroll taxes, partially offset by a non-recurring decrease in stock-based compensation.
    • Other expense increased $344,000 primarily driven by an increase of $243,000 in the provision for credit losses on off balance sheet commitments.

    Income Taxes

    • Income tax expense totaled $1.1 million for the quarter ended September 30, 2024, compared to an income tax benefit of $917,000 for the quarter ended June 30, 2024. The increase in income tax expense was primarily due to higher pre-tax income in the current quarter, coupled with a partial reversal of the deferred tax liability associated with the previously recorded goodwill impairment in the prior quarter.

    Asset Quality

    • The balance of non-performing assets remained steady at $39.9 million, or 0.51% of total assets, at September 30, 2024, and $39.9 million, or 0.52% of total assets, at June 30, 2024, respectively.
    • Net charge-offs totaled $124,000, or 0.01% of average loans, on an annualized basis, for the quarter ended September 30, 2024, compared to $3.5 million, or 0.25% of average loans, on an annualized basis, for the quarter ended June 30, 2024.
    • For the quarter ended September 30, 2024, the Company recorded a provision for credit losses of $108,000, compared to $3.5 million for the quarter ended June 30, 2024. The provision for credit loss expense for the quarter ended September 30, 2024 was primarily driven by loan growth.
    • The allowance for credit losses (“ACL”) was $44.9 million, or 0.78% of total loans, at September 30, 2024 and remained unchanged from June 30, 2024.

    Capital

    • For the quarter ended September 30, 2024, book value per share decreased $0.06, or 0.5%, to $11.64 while tangible book value per share decreased $0.05, or 0.5%, to $9.85.
    • At September 30, 2024, total stockholders’ equity included after-tax net unrealized losses on securities available for sale of $76.0 million, partially offset by after-tax unrealized gains on derivatives of $11.0 million. After-tax net unrecognized losses on securities held to maturity of $8.2 million were not reflected in total stockholders’ equity.
    • At September 30, 2024, the Company’s tangible equity to tangible assets ratio equaled 8.31% and the regulatory capital ratios of both the Company and the Bank were in excess of the levels required by federal banking regulators to be classified as “well-capitalized” under regulatory guidelines.

    This earnings release should be read in conjunction with Kearny Financial Corp.’s Q1 2025 Investor Presentation, a copy of which is available through the Investor Relations link located at the bottom of the page of our website at www.kearnybank.com and via a Current Report on Form 8-K on the website of the Securities and Exchange Commission at www.sec.gov.

    Statements contained in this news release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time. The Company does not undertake and specifically disclaims any obligation to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.

    Category: Earnings

    For further information contact:
    Keith Suchodolski, Senior Executive Vice President and Chief Operating Officer, or
    Sean Byrnes, Executive Vice President and Chief Financial Officer
    Kearny Financial Corp.
    (973) 244-4500

     
    Linked-Quarter Comparative Financial Analysis
     
    Kearny Financial Corp.
    Consolidated Balance Sheets
    (Unaudited)
     
    (Dollars and Shares in Thousands,
    Except Per Share Data)
    September 30,
    2024
    June 30,
    2024
    Variance
    or Change
    Variance
    or Change Pct.
    Assets        
    Cash and cash equivalents $ 155,574   $ 63,864   $ 91,710   143.6 %
    Securities available for sale   1,070,811     1,072,833     (2,022 ) -0.2 %
    Securities held to maturity   132,256     135,742     (3,486 ) -2.6 %
    Loans held-for-sale   8,866     6,036     2,830   46.9 %
    Loans receivable   5,784,246     5,732,787     51,459   0.9 %
    Less: allowance for credit losses on loans   (44,923 )   (44,939 )   (16 ) —%
    Net loans receivable   5,739,323     5,687,848     51,475   0.9 %
    Premises and equipment   45,189     44,940     249   0.6 %
    Federal Home Loan Bank stock   57,706     80,300     (22,594 ) -28.1 %
    Accrued interest receivable   29,467     29,521     (54 ) -0.2 %
    Goodwill   113,525     113,525       %
    Core deposit intangible   1,805     1,931     (126 ) -6.5 %
    Bank owned life insurance   300,186     297,874     2,312   0.8 %
    Deferred income taxes, net   50,131     50,339     (208 ) -0.4 %
    Other assets   67,540     98,708     (31,168 ) -31.6 %
    Total assets $ 7,772,379   $ 7,683,461   $ 88,918   1.2 %
             
    Liabilities        
    Deposits:        
    Non-interest-bearing $ 592,099   $ 598,366   $ (6,267 ) -1.0 %
    Interest-bearing   4,878,413     4,559,757     318,656   7.0 %
    Total deposits   5,470,512     5,158,123     312,389   6.1 %
    Borrowings   1,479,888     1,709,789     (229,901 ) -13.4 %
    Advance payments by borrowers for taxes   17,824     17,409     415   2.4 %
    Other liabilities   52,618     44,569     8,049   18.1 %
    Total liabilities   7,020,842     6,929,890     90,952   1.3 %
             
    Stockholders’ Equity        
    Common stock   646     644     2   0.3 %
    Paid-in capital   493,523     493,680     (157 ) %
    Retained earnings   342,522     343,326     (804 ) -0.2 %
    Unearned ESOP shares   (20,430 )   (20,916 )   486   2.3 %
    Accumulated other comprehensive loss   (64,724 )   (63,163 )   (1,561 ) -2.5 %
    Total stockholders’ equity   751,537     753,571     (2,034 ) -0.3 %
    Total liabilities and stockholders’ equity $ 7,772,379   $ 7,683,461   $ 88,918   1.2 %
             
    Consolidated capital ratios        
    Equity to assets   9.67 %   9.81 %   -0.14 %  
    Tangible equity to tangible assets (1)   8.31 %   8.43 %   -0.12 %  
             
    Share data        
    Outstanding shares   64,580     64,434     146   0.2 %
    Book value per share $ 11.64   $ 11.70   $ (0.06 ) -0.5 %
    Tangible book value per share (2) $ 9.85   $ 9.90   $ (0.05 ) -0.5 %
                         
    _________________________
    (1) Tangible equity equals total stockholders’ equity reduced by goodwill and core deposit intangible assets. Tangible assets equals total assets reduced by goodwill and core deposit intangible assets.
    (2) Tangible book value equals total stockholders’ equity reduced by goodwill and core deposit intangible assets.
     
     
    Kearny Financial Corp.
    Consolidated Statements of Income (Loss)
    (Unaudited)
     
    (Dollars and Shares in Thousands,
    Except Per Share Data)
    Three Months Ended Variance
    or Change
    Variance
    or Change Pct.
    September 30,
    2024
    June 30,
    2024
    Interest income        
    Loans $ 66,331   $ 65,819   $ 512   0.8 %
    Taxable investment securities   14,384     14,802     (418 ) -2.8 %
    Tax-exempt investment securities   71     80     (9 ) -11.3%
    Other interest-earning assets   2,466     2,289     177   7.7 %
    Total interest income   83,252     82,990     262   0.3 %
             
    Interest expense        
    Deposits   35,018     32,187     2,831   8.8 %
    Borrowings   15,788     17,527     (1,739 ) -9.9 %
    Total interest expense   50,806     49,714     1,092   2.2 %
    Net interest income   32,446     33,276     (830 ) -2.5 %
    Provision for credit losses   108     3,527     (3,419 ) -96.9 %
    Net interest income after provision for credit losses   32,338     29,749     2,589   8.7 %
             
    Non-interest income        
    Fees and service charges   635     580     55   9.5 %
    Gain on sale of loans   200     111     89   80.2 %
    Income from bank owned life insurance   2,567     3,209     (642 ) -20.0 %
    Electronic banking fees and charges   391     1,130     (739 ) -65.4 %
    Other income   833     776     57   7.3 %
    Total non-interest income   4,626     5,806     (1,180 ) -20.3 %
             
    Non-interest expense        
    Salaries and employee benefits   17,498     17,266     232   1.3 %
    Net occupancy expense of premises   2,798     2,738     60   2.2 %
    Equipment and systems   3,860     3,785     75   2.0 %
    Advertising and marketing   342     480     (138 ) -28.8 %
    Federal deposit insurance premium   1,563     1,532     31   2.0 %
    Directors’ compensation   361     360     1   0.3 %
    Goodwill impairment       97,370     (97,370 ) -100.0 %
    Other expense   3,364     3,020     344   11.4 %
    Total non-interest expense   29,786     126,551     (96,765 ) -76.5 %
    Income (loss) before income taxes   7,178     (90,996 )   98,174   107.9 %
    Income taxes   1,086     (917 )   2,003   -218.4 %
    Net income (loss) $ 6,092   $ (90,079 ) $ 96,171   106.8 %
             
    Net income (loss) per common share (EPS)        
    Basic $ 0.10   $ (1.45 ) $ 1.55    
    Diluted $ 0.10   $ (1.45 ) $ 1.55    
             
    Dividends declared        
    Cash dividends declared per common share $ 0.11   $ 0.11   $    
    Cash dividends declared $ 6,896   $ 6,903   $ (7 )  
    Dividend payout ratio   113.2 %   -7.7 %   120.9 %  
             
    Weighted average number of common shares outstanding        
    Basic   62,389     62,254     135    
    Diluted   62,420     62,254     166    
                         
     
    Kearny Financial Corp.
    Average Balance Sheet Data
    (Unaudited)
     
    (Dollars in Thousands) Three Months Ended Variance
    or Change
    Variance
    or Change Pct.
    September 30,
    2024
    June 30,
    2024
    Assets        
    Interest-earning assets:        
    Loans receivable, including loans held for sale $ 5,761,593   $ 5,743,008   $ 18,585   0.3 %
    Taxable investment securities   1,314,945     1,343,541     (28,596 ) -2.1 %
    Tax-exempt investment securities   12,244     13,737     (1,493 ) -10.9 %
    Other interest-earning assets   131,981     128,257     3,724   2.9 %
    Total interest-earning assets   7,220,763     7,228,543     (7,780 ) -0.1 %
    Non-interest-earning assets   467,670     466,537     1,133   0.2 %
    Total assets $ 7,688,433   $ 7,695,080   $ (6,647 ) -0.1 %
             
    Liabilities and Stockholders’ Equity        
    Interest-bearing liabilities:        
    Deposits:        
    Interest-bearing demand $ 2,282,608   $ 2,310,521   $ (27,913 ) -1.2 %
    Savings   668,240     631,622     36,618   5.8 %
    Certificates of deposit   1,755,589     1,613,798     141,791   8.8 %
    Total interest-bearing deposits   4,706,437     4,555,941     150,496   3.3 %
    Borrowings:        
    Federal Home Loan Bank advances   1,325,583     1,507,192     (181,609 ) -12.0 %
    Other borrowings   237,011     228,461     8,550   3.7 %
    Total borrowings   1,562,594     1,735,653     (173,059 ) -10.0 %
    Total interest-bearing liabilities   6,269,031     6,291,594     (22,563 ) -0.4 %
    Non-interest-bearing liabilities:        
    Non-interest-bearing deposits   599,095     589,438     9,657   1.6 %
    Other non-interest-bearing liabilities   69,629     62,978     6,651   10.6 %
    Total non-interest-bearing liabilities   668,724     652,416     16,308   2.5 %
    Total liabilities   6,937,755     6,944,010     (6,255 ) -0.1 %
    Stockholders’ equity   750,678     751,070     (392 ) -0.1 %
    Total liabilities and stockholders’ equity $ 7,688,433   $ 7,695,080   $ (6,647 ) -0.1 %
             
    Average interest-earning assets to average interest-bearing liabilities   115.18 %   114.89 %   0.29 % 0.3 %
     
     
    Kearny Financial Corp.
    Performance Ratio Highlights
    (Unaudited)
      Three Months Ended Variance
    or Change
      September 30,
    2024
    June 30,
    2024
    Average yield on interest-earning assets:      
    Loans receivable, including loans held for sale 4.61 % 4.58 % 0.03 %
    Taxable investment securities 4.38 % 4.41 % -0.03 %
    Tax-exempt investment securities (1) 2.32 % 2.32 % %
    Other interest-earning assets 7.47 % 7.14 % 0.33 %
    Total interest-earning assets 4.61 % 4.59 % 0.02 %
           
    Average cost of interest-bearing liabilities:      
    Deposits:      
    Interest-bearing demand 3.13 % 3.06 % 0.07 %
    Savings 1.05 % 0.63 % 0.42 %
    Certificates of deposit 3.51 % 3.35 % 0.16 %
    Total interest-bearing deposits 2.98 % 2.83 % 0.15 %
    Borrowings:      
    Federal Home Loan Bank advances 3.82 % 3.86 % -0.04 %
    Other borrowings 5.28 % 5.24 % 0.04 %
    Total borrowings 4.04 % 4.04 % %
    Total interest-bearing liabilities 3.24 % 3.16 % 0.08 %
           
    Interest rate spread (2) 1.37 % 1.43 % -0.06 %
    Net interest margin (3) 1.80 % 1.84 % -0.04 %
           
    Non-interest income to average assets (annualized) 0.24 % 0.30 % -0.06 %
    Non-interest expense to average assets (annualized) 1.55 % 6.58 % -5.03 %
           
    Efficiency ratio (4) 80.35 % 323.81 % -243.46 %
           
    Return on average assets (annualized) 0.32 % -4.68 % 5.00 %
    Return on average equity (annualized) 3.25 % -47.97 % 51.22 %
    Return on average tangible equity (annualized) (5) 3.89 % 3.33 % 0.56 %
     
    _________________________
    (1) The yield on tax-exempt investment securities has not been adjusted to reflect their tax-effective yield.
    (2) Interest income divided by average interest-earning assets less interest expense divided by average interest-bearing liabilities.
    (3) Net interest income divided by average interest-earning assets.
    (4) Non-interest expense divided by the sum of net interest income and non-interest income.
    (5) Average tangible equity equals total average stockholders’ equity reduced by average goodwill and average core deposit intangible assets.
     
     
    Five-Quarter Financial Trend Analysis
     
    Kearny Financial Corp.
    Consolidated Balance Sheets
     
    (Dollars and Shares in Thousands,
    Except Per Share Data)
    September 30,
    2024
    June 30,
    2024
    March 31,
    2024
    December 31,
    2023
    September 30,
    2023
      (Unaudited) (Audited) (Unaudited) (Unaudited) (Unaudited)
    Assets          
    Cash and cash equivalents $ 155,574   $ 63,864   $ 71,027   $ 73,860   $ 57,219  
    Securities available for sale   1,070,811     1,072,833     1,098,655     1,144,175     1,215,633  
    Securities held to maturity   132,256     135,742     139,643     141,959     143,730  
    Loans held-for-sale   8,866     6,036     4,117     14,030     3,934  
    Loans receivable   5,784,246     5,732,787     5,758,336     5,745,629     5,736,049  
    Less: allowance for credit losses on loans   (44,923 )   (44,939 )   (44,930 )   (44,867 )   (46,872 )
    Net loans receivable   5,739,323     5,687,848     5,713,406     5,700,762     5,689,177  
    Premises and equipment   45,189     44,940     45,053     45,928     46,868  
    Federal Home Loan Bank stock   57,706     80,300     81,347     83,372     81,509  
    Accrued interest receivable   29,467     29,521     31,065     30,258     29,766  
    Goodwill   113,525     113,525     210,895     210,895     210,895  
    Core deposit intangible   1,805     1,931     2,057     2,189     2,323  
    Bank owned life insurance   300,186     297,874     296,493     256,064     294,491  
    Deferred income taxes, net   50,131     50,339     47,225     46,116     56,500  
    Other real estate owned               11,982     12,956  
    Other assets   67,540     98,708     100,989     136,242     129,865  
    Total assets $ 7,772,379   $ 7,683,461   $ 7,841,972   $ 7,897,832   $ 7,974,866  
               
    Liabilities          
    Deposits:          
    Non-interest-bearing $ 592,099   $ 598,366   $ 586,089   $ 584,130   $ 595,141  
    Interest-bearing   4,878,413     4,559,757     4,622,961     4,735,500     4,839,027  
    Total deposits   5,470,512     5,158,123     5,209,050     5,319,630     5,434,168  
    Borrowings   1,479,888     1,709,789     1,722,178     1,667,055     1,626,933  
    Advance payments by borrowers for taxes   17,824     17,409     17,387     16,742     16,907  
    Other liabilities   52,618     44,569     44,279     46,427     47,324  
    Total liabilities   7,020,842     6,929,890     6,992,894     7,049,854     7,125,332  
               
    Stockholders’ Equity          
    Common stock   646     644     644     645     652  
    Paid-in capital   493,523     493,680     493,187     493,297     497,269  
    Retained earnings   342,522     343,326     440,308     439,755     460,464  
    Unearned ESOP shares   (20,430 )   (20,916 )   (21,402 )   (21,889 )   (22,375 )
    Accumulated other comprehensive loss   (64,724 )   (63,163 )   (63,659 )   (63,830 )   (86,476 )
    Total stockholders’ equity   751,537     753,571     849,078     847,978     849,534  
    Total liabilities and stockholders’ equity $ 7,772,379   $ 7,683,461   $ 7,841,972   $ 7,897,832   $ 7,974,866  
               
    Consolidated capital ratios          
    Equity to assets   9.67 %   9.81 %   10.83 %   10.74 %   10.65 %
    Tangible equity to tangible assets (1)   8.31 %   8.43 %   8.34 %   8.26 %   8.20 %
               
    Share data          
    Outstanding shares   64,580     64,434     64,437     64,445     65,132  
    Book value per share $ 11.64   $ 11.70   $ 13.18   $ 13.16   $ 13.04  
    Tangible book value per share (2) $ 9.85   $ 9.90   $ 9.87   $ 9.85   $ 9.77  
     
    _________________________
    (1) Tangible equity equals total stockholders’ equity reduced by goodwill and core deposit intangible assets. Tangible assets equals total assets reduced by goodwill and core deposit intangible assets.
    (2) Tangible book value equals total stockholders’ equity reduced by goodwill and core deposit intangible assets.
     
     
    Kearny Financial Corp.
    Supplemental Balance Sheet Highlights
    (Unaudited)
     
    (Dollars in Thousands) September 30,
    2024
    June 30,
    2024
    March 31,
    2024
    December 31,
    2023
    September 30,
    2023
    Loan portfolio composition:          
    Commercial loans:          
    Multi-family mortgage $ 2,646,187   $ 2,645,851   $ 2,645,195   $ 2,651,274   $ 2,699,151  
    Nonresidential mortgage   950,771     948,075     965,539     947,287     946,801  
    Commercial business   145,984     142,747     147,326     144,134     149,229  
    Construction   227,327     209,237     229,457     221,933     230,703  
    Total commercial loans   3,970,269     3,945,910     3,987,517     3,964,628     4,025,884  
    One- to four-family residential mortgage   1,768,230     1,756,051     1,741,644     1,746,065     1,689,051  
    Consumer loans:          
    Home equity loans   44,741     44,104     42,731     43,517     42,896  
    Other consumer   2,965     2,685     3,198     2,728     2,644  
    Total consumer loans   47,706     46,789     45,929     46,245     45,540  
    Total loans, excluding yield adjustments   5,786,205     5,748,750     5,775,090     5,756,938     5,760,475  
    Unaccreted yield adjustments   (1,959 )   (15,963 )   (16,754 )   (11,309 )   (24,426 )
    Loans receivable, net of yield adjustments   5,784,246     5,732,787     5,758,336     5,745,629     5,736,049  
    Less: allowance for credit losses on loans   (44,923 )   (44,939 )   (44,930 )   (44,867 )   (46,872 )
    Net loans receivable $ 5,739,323   $ 5,687,848   $ 5,713,406   $ 5,700,762   $ 5,689,177  
               
    Asset quality:          
    Nonperforming assets:          
    Accruing loans – 90 days and over past due $   $   $   $   $  
    Nonaccrual loans   39,854     39,882     39,546     28,089     37,912  
    Total nonperforming loans   39,854     39,882     39,546     28,089     37,912  
    Nonaccrual loans held-for-sale               9,700      
    Other real estate owned               11,982     12,956  
    Total nonperforming assets $ 39,854   $ 39,882   $ 39,546   $ 49,771   $ 50,868  
               
    Nonperforming loans (% total loans)   0.69 %   0.70 %   0.69 %   0.49 %   0.66 %
    Nonperforming assets (% total assets)   0.51 %   0.52 %   0.50 %   0.63 %   0.64 %
               
    Classified loans $ 119,534   $ 118,700   $ 115,772   $ 94,676   $ 98,616  
               
    Allowance for credit losses on loans (ACL):          
    ACL to total loans   0.78 %   0.78 %   0.78 %   0.78 %   0.81 %
    ACL to nonperforming loans   112.72 %   112.68 %   113.61 %   159.73 %   123.63 %
    Net charge-offs $ 124   $ 3,518   $ 286   $ 4,110   $ 2,107  
    Average net charge-off rate (annualized)   0.01 %   0.25 %   0.02 %   0.29 %   0.15 %
     
     
    Kearny Financial Corp.
    Supplemental Balance Sheet Highlights
    (Unaudited)
     
    (Dollars in Thousands) September 30,
    2024
    June 30,
    2024
    March 31,
    2024
    December 31,
    2023
    September 30,
    2023
    Funding composition:          
    Deposits:          
    Non-interest-bearing deposits $ 592,099   $ 598,367   $ 586,089   $ 584,130   $ 595,141  
    Interest-bearing demand   2,247,685     2,308,915     2,349,032     2,347,262     2,236,573  
    Savings   681,709     643,481     630,456     646,182     689,163  
    Certificates of deposit (retail)   1,215,746     1,199,127     1,235,261     1,283,676     1,300,382  
    Certificates of deposit (brokered and listing service)   733,273     408,234     408,212     458,380     612,909  
    Interest-bearing deposits   4,878,413     4,559,757     4,622,961     4,735,500     4,839,027  
    Total deposits   5,470,512     5,158,124     5,209,050     5,319,630     5,434,168  
               
    Borrowings:          
    Federal Home Loan Bank advances   1,209,888     1,534,789     1,457,178     1,432,055     1,456,933  
    Overnight borrowings   270,000     175,000     265,000     235,000     170,000  
    Total borrowings   1,479,888     1,709,789     1,722,178     1,667,055     1,626,933  
               
    Total funding $ 6,950,400   $ 6,867,913   $ 6,931,228   $ 6,986,685   $ 7,061,101  
               
    Loans as a % of deposits   105.1 %   110.4 %   109.8 %   107.4 %   104.8 %
    Deposits as a % of total funding   78.7 %   75.1 %   75.2 %   76.1 %   77.0 %
    Borrowings as a % of total funding   21.3 %   24.9 %   24.8 %   23.9 %   23.0 %
               
    Uninsured deposits:          
    Uninsured deposits (reported) (1) $ 1,799,726   $ 1,772,623   $ 1,760,740   $ 1,813,122   $ 1,734,288  
    Uninsured deposits (adjusted) (2) $ 773,375   $ 764,447   $ 718,026   $ 694,510   $ 683,265  
     
    _________________________
    (1) Uninsured deposits of Kearny Bank.
    (2) Uninsured deposits of Kearny Bank adjusted to exclude deposits of its wholly-owned subsidiary and holding company and collateralized deposits of state and local governments.
     
     
    Kearny Financial Corp.
    Consolidated Statements of Income (Loss)
    (Unaudited)
     
      Three Months Ended
    (Dollars and Shares in Thousands,
    Except Per Share Data)
    September 30,
    2024
    June 30,
    2024
    March 31,
    2024
    December 31,
    2023
    September 30,
    2023
    Interest income          
    Loans $ 66,331   $ 65,819   $ 64,035   $ 63,384   $ 62,769  
    Taxable investment securities   14,384     14,802     15,490     16,756     16,265  
    Tax-exempt investment securities   71     80     85     84     87  
    Other interest-earning assets   2,466     2,289     2,475     2,401     2,047  
    Total interest income   83,252     82,990     82,085     82,625     81,168  
               
    Interest expense          
    Deposits   35,018     32,187     32,320     30,340     27,567  
    Borrowings   15,788     17,527     15,446     16,446     14,441  
    Total interest expense   50,806     49,714     47,766     46,786     42,008  
    Net interest income   32,446     33,276     34,319     35,839     39,160  
    Provision for credit losses   108     3,527     349     2,105     245  
    Net interest income after provision for credit losses   32,338     29,749     33,970     33,734     38,915  
               
    Non-interest income          
    Fees and service charges   635     580     657     624     748  
    Loss on sale and call of securities               (18,135 )    
    Gain (loss) on sale of loans   200     111     (712 )   104     215  
    Loss on sale of other real estate owned               (974 )    
    Income from bank owned life insurance   2,567     3,209     3,039     1,162     1,666  
    Electronic banking fees and charges   391     1,130     464     396     367  
    Other income   833     776     755     811     1,014  
    Total non-interest income   4,626     5,806     4,203     (16,012 )   4,010  
               
    Non-interest expense          
    Salaries and employee benefits   17,498     17,266     16,911     17,282     17,761  
    Net occupancy expense of premises   2,798     2,738     2,863     2,674     2,758  
    Equipment and systems   3,860     3,785     3,823     3,814     3,801  
    Advertising and marketing   342     480     387     301     228  
    Federal deposit insurance premium   1,563     1,532     1,429     1,495     1,524  
    Directors’ compensation   361     360     360     393     393  
    Goodwill impairment       97,370              
    Other expense   3,364     3,020     3,286     3,808     3,309  
    Total non-interest expense   29,786     126,551     29,059     29,767     29,774  
    Income (loss) before income taxes   7,178     (90,996 )   9,114     (12,045 )   13,151  
    Income taxes   1,086     (917 )   1,717     1,782     3,309  
    Net income (loss) $ 6,092   $ (90,079 ) $ 7,397   $ (13,827 ) $ 9,842  
               
    Net income (loss) per common share (EPS)          
    Basic $ 0.10   $ (1.45 ) $ 0.12   $ (0.22 ) $ 0.16  
    Diluted $ 0.10   $ (1.45 ) $ 0.12   $ (0.22 ) $ 0.16  
               
    Dividends declared          
    Cash dividends declared per common share $ 0.11   $ 0.11   $ 0.11   $ 0.11   $ 0.11  
    Cash dividends declared $ 6,896   $ 6,903   $ 6,844   $ 6,882   $ 6,989  
    Dividend payout ratio   113.2 %   -7.7 %   92.5 %   -49.8 %   71.0 %
               
    Weighted average number of common shares outstanding          
    Basic   62,389     62,254     62,205     62,299     63,014  
    Diluted   62,420     62,254     62,211     62,299     63,061  
                                   
     
    Kearny Financial Corp.
    Average Balance Sheet Data
    (Unaudited)
     
      Three Months Ended
    (Dollars in Thousands) September 30,
    2024
    June 30,
    2024
    March 31,
    2024
    December 31,
    2023
    September 30,
    2023
    Assets          
    Interest-earning assets:          
    Loans receivable, including loans held-for-sale $ 5,761,593   $ 5,743,008   $ 5,752,477   $ 5,726,321   $ 5,788,074  
    Taxable investment securities   1,314,945     1,343,541     1,382,064     1,509,165     1,516,393  
    Tax-exempt investment securities   12,244     13,737     14,614     15,025     15,483  
    Other interest-earning assets   131,981     128,257     125,155     139,740     130,829  
    Total interest-earning assets   7,220,763     7,228,543     7,274,310     7,390,251     7,450,779  
    Non-interest-earning assets   467,670     466,537     577,411     554,335     568,723  
    Total assets $ 7,688,433   $ 7,695,080   $ 7,851,721   $ 7,944,586   $ 8,019,502  
               
    Liabilities and Stockholders’ Equity          
    Interest-bearing liabilities:          
    Deposits:          
    Interest-bearing demand $ 2,282,608   $ 2,310,521   $ 2,378,831   $ 2,301,169   $ 2,245,831  
    Savings   668,240     631,622     635,226     664,926     719,508  
    Certificates of deposit   1,755,589     1,613,798     1,705,513     1,824,316     1,968,512  
    Total interest-bearing deposits   4,706,437     4,555,941     4,719,570     4,790,411     4,933,851  
    Borrowings:          
    Federal Home Loan Bank advances   1,325,583     1,507,192     1,428,801     1,513,497     1,386,473  
    Other borrowings   237,011     228,461     210,989     142,283     158,098  
    Total borrowings   1,562,594     1,735,653     1,639,790     1,655,780     1,544,571  
    Total interest-bearing liabilities   6,269,031     6,291,594     6,359,360     6,446,191     6,478,422  
    Non-interest-bearing liabilities:          
    Non-interest-bearing deposits   599,095     589,438     581,870     597,294     612,251  
    Other non-interest-bearing liabilities   69,629     62,978     65,709     62,387     66,701  
    Total non-interest-bearing liabilities   668,724     652,416     647,579     659,681     678,952  
    Total liabilities   6,937,755     6,944,010     7,006,939     7,105,872     7,157,374  
    Stockholders’ equity   750,678     751,070     844,782     838,714     862,128  
    Total liabilities and stockholders’ equity $ 7,688,433   $ 7,695,080   $ 7,851,721   $ 7,944,586   $ 8,019,502  
               
    Average interest-earning assets to average
    interest-bearing liabilities
      115.18 %   114.89 %   114.39 %   114.65 %   115.01 %
                                   
     
    Kearny Financial Corp.
    Performance Ratio Highlights
      Three Months Ended
      September 30,
    2024
    June 30,
    2024
    March 31,
    2024
    December 31,
    2023
    September 30,
    2023
    Average yield on interest-earning assets:          
    Loans receivable, including loans held-for-sale 4.61 % 4.58 % 4.45 % 4.43 % 4.34 %
    Taxable investment securities 4.38 % 4.41 % 4.48 % 4.44 % 4.29 %
    Tax-exempt investment securities (1) 2.32 % 2.32 % 2.32 % 2.25 % 2.25 %
    Other interest-earning assets 7.47 % 7.14 % 7.91 % 6.87 % 6.26 %
    Total interest-earning assets 4.61 % 4.59 % 4.51 % 4.47 % 4.36 %
               
    Average cost of interest-bearing liabilities:          
    Deposits:          
    Interest-bearing demand 3.13 % 3.06 % 3.08 % 2.91 % 2.58 %
    Savings 1.05 % 0.63 % 0.46 % 0.44 % 0.47 %
    Certificates of deposit 3.51 % 3.35 % 3.11 % 2.82 % 2.49 %
    Total interest-bearing deposits 2.98 % 2.83 % 2.74 % 2.53 % 2.23 %
    Borrowings:          
    Federal Home Loan Bank advances 3.82 % 3.86 % 3.55 % 3.82 % 3.54 %
    Other borrowings 5.28 % 5.24 % 5.22 % 5.65 % 5.46 %
    Total borrowings 4.04 % 4.04 % 3.77 % 3.97 % 3.74 %
    Total interest-bearing liabilities 3.24 % 3.16 % 3.00 % 2.90 % 2.59 %
               
    Interest rate spread (2) 1.37 % 1.43 % 1.51 % 1.57 % 1.77 %
    Net interest margin (3) 1.80 % 1.84 % 1.89 % 1.94 % 2.10 %
               
    Non-interest income to average assets (annualized) 0.24 % 0.30 % 0.21 % -0.81 % 0.20 %
    Non-interest expense to average assets (annualized) 1.55 % 6.58 % 1.48 % 1.50 % 1.49 %
               
    Efficiency ratio (4) 80.35 % 323.81 % 75.43 % 150.13 % 68.97 %
               
    Return on average assets (annualized) 0.32 % -4.68 % 0.38 % -0.70 % 0.49 %
    Return on average equity (annualized) 3.25 % -47.97 % 3.50 % -6.59 % 4.57 %
    Return on average tangible equity (annualized) (5) 3.89 % 3.33 % 4.68 % -8.84 % 6.07 %
                         
    _________________________
    (1) The yield on tax-exempt investment securities has not been adjusted to reflect their tax-effective yield.
    (2) Interest income divided by average interest-earning assets less interest expense divided by average interest-bearing liabilities.
    (3) Net interest income divided by average interest-earning assets.
    (4) Non-interest expense divided by the sum of net interest income and non-interest income.
    (5) Average tangible equity equals total average stockholders’ equity reduced by average goodwill and average core deposit intangible assets.
     

    The following tables provide a reconciliation of certain financial measures calculated in accordance with Generally Accepted Accounting Principles (“GAAP”) (as reported) and non-GAAP measures. These non-GAAP measures provide additional information which allow readers to evaluate the ongoing performance of the Company. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company’s GAAP financial information. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders.

     
    Kearny Financial Corp.
    Reconciliation of GAAP to Non-GAAP
    (Unaudited)
     
      Three Months Ended
    (Dollars and Shares in Thousands,
    Except Per Share Data)
    September 30,
    2024
    June 30,
    2024
    March 31,
    2024
    December 31,
    2023
    September 30,
    2023
    Adjusted net income:          
    Net income (loss) (GAAP) $ 6,092   $ (90,079 ) $ 7,397   $ (13,827 ) $ 9,842  
    Non-recurring transactions – net of tax:          
    Net effect of sale and call of securities               12,876      
    Net effect of bank-owned life insurance restructure       392         6,286      
    Goodwill impairment       95,283              
    Adjusted net income $ 6,092   $ 5,596   $ 7,397   $ 5,335   $ 9,842  
               
    Calculation of pre-tax, pre-provision net revenue:          
    Net income (loss) (GAAP) $ 6,092   $ (90,079 ) $ 7,397   $ (13,827 ) $ 9,842  
    Adjustments to net income (GAAP):          
    Provision for income taxes   1,086     (917 )   1,717     1,782     3,309  
    Provision for credit losses   108     3,527     349     2,105     245  
    Pre-tax, pre-provision net revenue (non-GAAP) $ 7,286   $ (87,469 ) $ 9,463   $ (9,940 ) $ 13,396  
               
    Adjusted earnings per share:          
    Weighted average common shares – basic   62,389     62,254     62,205     62,299     63,014  
    Weighted average common shares – diluted   62,420     62,330     62,211     62,367     63,061  
               
    Earnings per share – basic (GAAP) $ 0.10   $ (1.45 ) $ 0.12   $ (0.22 ) $ 0.16  
    Earnings per share – diluted (GAAP) $ 0.10   $ (1.45 ) $ 0.12   $ (0.22 ) $ 0.16  
               
    Adjusted earnings per share – basic (non-GAAP) $ 0.10   $ 0.09   $ 0.12   $ 0.09   $ 0.16  
    Adjusted earnings per share – diluted (non-GAAP) $ 0.10   $ 0.09   $ 0.12   $ 0.09   $ 0.16  
               
    Pre-tax, pre-provision net revenue per share:          
    Pre-tax, pre-provision net revenue per share – basic
      (non-GAAP)
    $ 0.12   $ (1.41 ) $ 0.15   $ (0.16 ) $ 0.21  
    Pre-tax, pre-provision net revenue per share – diluted
      (non-GAAP)
    $ 0.12   $ (1.40 ) $ 0.15   $ (0.16 ) $ 0.21  
               
    Adjusted return on average assets:          
    Total average assets $ 7,688,433   $ 7,695,080   $ 7,851,721   $ 7,944,586   $ 8,019,502  
               
    Return on average assets (GAAP)   0.32 %   -4.68 %   0.38 %   -0.70 %   0.49 %
    Adjusted return on average assets (non-GAAP)   0.32 %   0.29 %   0.38 %   0.27 %   0.49 %
               
    Adjusted return on average equity:          
    Total average equity $ 750,678   $ 751,070   $ 844,782   $ 838,714   $ 862,128  
               
    Return on average equity (GAAP)   3.25 %   -47.97 %   3.50 %   -6.59 %   4.57 %
    Adjusted return on average equity (non-GAAP)   3.25 %   2.98 %   3.50 %   2.54 %   4.57 %
                                   
     
    Kearny Financial Corp.
    Reconciliation of GAAP to Non-GAAP
    (Unaudited)
     
      Three Months Ended
    (Dollars and Shares in Thousands,
    Except Per Share Data)
    September 30,
    2024
    June 30,
    2024
    March 31,
    2024
    December 31,
    2023
    September 30,
    2023
    Adjusted return on average tangible equity:          
    Total average equity $ 750,678   $ 751,070   $ 844,782   $ 838,714   $ 862,128  
    Less: average goodwill   (113,525 )   (113,525 )   (210,895 )   (210,895 )   (210,895 )
    Less: average other intangible assets   (1,886 )   (2,006 )   (2,138 )   (2,277 )   (2,411 )
    Total average tangible equity $ 635,267   $ 635,539   $ 631,749   $ 625,542   $ 648,822  
               
    Return on average tangible equity (non-GAAP)   3.89 %   3.33 %   4.68 %   -8.84 %   6.07 %
    Adjusted return on average tangible equity (non-GAAP)   3.89 %   3.58 %   4.68 %   3.41 %   6.07 %
               
    Adjusted non-interest expense ratio:          
    Non-interest expense (GAAP) $ 29,786   $ 126,551   $ 29,059   $ 29,767   $ 29,774  
    Non-recurring transactions:          
    Goodwill impairment       (97,370 )            
    Non-interest expense (non-GAAP) $ 29,786   $ 29,181   $ 29,059   $ 29,767   $ 29,774  
               
    Non-interest expense ratio (GAAP)   1.55 %   6.58 %   1.48 %   1.50 %   1.49 %
    Adjusted non-interest expense ratio (non-GAAP)   1.55 %   1.52 %   1.48 %   1.50 %   1.49 %
               
    Adjusted efficiency ratio:          
    Non-interest expense (non-GAAP) $ 29,786   $ 29,181   $ 29,059   $ 29,767   $ 29,774  
               
    Net interest income (GAAP) $ 32,446   $ 33,276   $ 34,319   $ 35,839   $ 39,160  
    Total non-interest income (GAAP)   4,626     5,806     4,203     (16,012 )   4,010  
    Non-recurring transactions:          
    Net effect of sale and call of securities               18,135      
    Net effect of bank-owned life insurance restructure       392         573      
    Total revenue (non-GAAP) $ 37,072   $ 39,474   $ 38,522   $ 38,535   $ 43,170  
               
    Efficiency ratio (GAAP)   80.35 %   323.81 %   75.43 %   150.13 %   68.97 %
    Adjusted efficiency ratio (non-GAAP)   80.35 %   73.92 %   75.43 %   77.25 %   68.97 %

    The MIL Network

  • MIL-OSI: Billion Dollar Commercial Drone Market Poised for Continued Growth, Driven by A.I. Technological Advances

    Source: GlobeNewswire (MIL-OSI)

    PALM BEACH, Fla., Oct. 24, 2024 (GLOBE NEWSWIRE) — FN Media Group News Commentary – The commercial drone market is experiencing significant growth due to increasing demand from various industries such as construction, agriculture, security, military applications and so much more. Drones offer benefits like cost savings, improved efficiency, and enhanced safety for businesses. Market size is projected to reach USD12.3 billion by 2025, driven by technological advancements and regulatory approvals. AI is driving market transformation… The global commercial drones market size is estimated to grow by USD $126.87 billion from 2024-2028, according to a report from Technavio. The market is estimated to grow at a CAGR of 57.74% during the forecast period. Rising applications of drones is driving market growth, with a trend towards new developments and launches of commercial drones. The report continued: “The commercial drones market is experiencing significant growth due to the continuous introduction of new drones, components, and software solutions by vendors. Companies across various industries are integrating drones into their operations for managing assets, monitoring sites, inspecting facilities, and capturing real-time data… featuring advanced autonomous flight technology and Artificial Intelligence, ensuring safe and stable flight in challenging environments. Such innovations increase the availability of advanced drone products and software solutions, fueling the adoption of commercial drones in the forecast period.” Active Tech Companies in the markets today include ZenaTech, Inc. (NASDAQ: ZENA), C3 AI (NYSE: AI), NVIDIA Corporation (NASDAQ: NVDA), SoundHound AI, Inc. (NASDAQ: SOUN), AeroVironment (NASDAQ: AVAV).

    “The Commercial Drone Market is experiencing significant growth, particularly in sectors like… Agriculture. Drones equipped with high-quality Cameras are trending, with VAPOR Helicopter leading the way. Artificial Intelligence and Machine Learning are revolutionizing Decision making in industries, from Inspection activities to Farm management. Hybrid drones, combining features of Quadcopters, Octocopters, and Hexacopters, are gaining popularity. In Agriculture, drones help reduce costs, increase Yield, and monitor crops using services like Raptor Maps. Filmmakers and Ecommerce sectors also benefit from aerial photography and warehouse management. The Commercial Drone Market is experiencing significant growth as Quadcopters, Octocopters, and Hexacopters find increasing applications in various sectors. Challenges in flight control, firmware, middleware, computer vision, and environmental awareness are being addressed through technological advances in electronics, computing, microcontrollers, and processors.”

    ZenaTech Inc. (NASDAQ:ZENA) Issues Big Development News Today on Adding Patent Assets to the Company – Get the full details by visiting: https://www.financialnewsmedia.com/news-zena/

    Additional Groundbreaking ZenaTech Inc. Developments this week include:

    ZenaTech Announced a Software Company Acquisition Adding Significant Capabilities to Building AI Drones – ZenaTech also announced that it has entered into an agreement to acquire ZooOffice Inc., the holding company for software companies Jadian and DeskFlex, from ZenaTech’s former parent company. The acquisition of these two software companies will provide important compliance and inspection software as well as scheduling and mapping software that will be incorporated into ZenaTech’s ZenaDrone AI drone solutions. This transaction further expands ZenaTech’s portfolio of SaaS software solutions and customer base and is expected to add to recurring revenue in the government sector among others. The acquisition is subject to shareholder and regulatory approvals that may be required.

    “Adding Jadian and DeskFlex software capabilities to the ZenaTech portfolio is part of our strategy to offer full stack, integrated AI drone solutions targeted to multiple sectors such as Agriculture. Jadian’s compliance software will be integrated with ZenaDrone drone hardware and sensors to help farmers track and manage regulatory and environmental requirements such as crop traceability, fertilizer and pesticide use, water conservation, and greenhouse gas emissions. Deskflex scheduling and mapping software will add value integrated into our property management sector solutions,” said CEO Shaun Passley, Ph.D. Read this full release at: https://finance.yahoo.com/news/zenatech-announces-software-company-acquisition-113000656.html

    Other recent developments in the technology industry include:

    C3 AI (NYSE: AI) recently announced the newly re-branded C3 AI Asset Performance Suite, a collection of powerful, purpose-built AI applications that work together to help enterprises maximize value and improve sustainability performance. The C3 AI Asset Performance Suite includes C3 AI Reliability, C3 AI Process Optimization, and C3 AI Energy Management. These applications offer enterprises optimized asset performance through improvements in operational efficiency across business units.

    “C3 AI is the leader in AI-powered predictive maintenance, and our customers are some of the most satisfied in the industry because our technology makes a positive impact on their bottom line and continually maximizes their investments,” said Thomas M. Siebel, CEO, C3 AI. “This re-brand of the C3 AI Asset Performance Suite is in recognition that customers realize the most value by deploying applications that work in concert together and address entire value chains; in this case, with predictive maintenance, process optimization, and energy management.”

    SoundHound AI, Inc. (NASDAQ: SOUN), a global leader in voice artificial intelligence, recently announced its SoundHound Chat AI voice assistant has launched new customization tools to help transform how automotive brands interact with their customers within the vehicle. The new features are currently being piloted with some of SoundHound’s OEM partners.

    In addition to the core features offered from SoundHound Chat AI’s best-in-class voice assistant – which integrates generative AI capabilities with car controls and real-time domains like flight times, navigation, and weather – OEMs will be able to take control with customizations that work for their loyal consumers and align closely with their identity as an automaker. This new layer of customization will provide drivers with a more engaging and informative experience, allowing them to explore vehicle features and functionalities with greater ease and effectiveness.

    AeroVironment (NASDAQ: AVAV) recently announced that the U.S. Army has awarded a $54.9 million delivery order for the production of Switchblade® loitering munition systems. The recently announced award includes an additional contract ceiling of $743 million with $54.9 million in new funding. This contract is issued as part of a broader, previously executed, indefinite delivery, indefinite quantity contract, and ensures continued support for both the U.S. Army and several allied partners, including Lithuania, Romania, and Sweden.

    Work on this contract will be performed in Simi Valley, California, with an estimated completion date of June 30, 2026. The award, which leverages fiscal 2023 and 2024 Army funds along with Foreign Military Sales, highlights AV’s ongoing commitment to delivering proven, battlefield-ready technology that meets the evolving needs of modern armed forces.

    NVIDIA Corporation (NASDAQ: NVDA) recently announced that it has contributed foundational elements of its NVIDIA Blackwell accelerated computing platform design to the Open Compute Project (OCP) and broadened NVIDIA Spectrum-X™ support for OCP standards.

    At this year’s OCP Global Summit, NVIDIA will be sharing key portions of the NVIDIA GB200 NVL72 system electro-mechanical design with the OCP community — including the rack architecture, compute and switch tray mechanicals, liquid-cooling and thermal environment specifications, and NVIDIA NVLink™ cable cartridge volumetrics — to support higher compute density and networking bandwidth.

    NVIDIA has already made several official contributions to OCP across multiple hardware generations, including its NVIDIA HGX™ H100 baseboard design specification, to help provide the ecosystem with a wider choice of offerings from the world’s computer makers and expand the adoption of AI.

    About FN Media Group:

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    The MIL Network

  • MIL-OSI Economics: The Managing Director’s Global Policy Agenda, Annual Meeting 2024: Secure A Soft Landing And Break From The Low Growth–High Debt Path

    Source: International Monetary Fund

    Summary

    The global economy has proven resilient, and a soft landing is within reach. Inflation has moderated thanks to tight monetary policy and fading supply shocks, and growth is expected to remain steady. But uncertainty remains significant, with risks tilted to the downside; medium-term growth prospects are lackluster; public debt has reached record highs and is expected to approach 100 percent of GDP by 2030; and geoeconomic fragmentation threatens to undo decades of gains from cross-border economic integration. At the same time, transformative changes—the green transition, demographic shifts, and digitalization, including artificial intelligence—are poised to reshape the global economy, creating challenges but also opportunities. Against this background, the key policy priorities are to secure a soft landing and break from the low growth-high debt path, and address other medium-term challenges. Monetary policy should ensure inflation returns durably to the target, and fiscal policy needs to decisively pivot toward consolidation to rebuild buffers and safeguard debt sustainability. Growth-enhancing reforms are urgently needed to lift growth prospects by boosting investment, job creation, and productivity. Domestic policies must be complemented by multilateral efforts to support countries with debt vulnerabilities, protect gains from economic integration, accelerate climate action, and harness benefits of new technologies while mitigating the risks. As it has done since its founding 80 years ago, the IMF will continue to adapt to serve its members with tailored policy advice, financial lifelines when needed, and capacity development. The Fund will remain a strong advocate for multilateralism and economic integration as foundations on which to build a resilient and inclusive global economy.

    Subject: Artificial intelligence, Balance of payments, Capital flows, Climate change, Credit, Debt sustainability, Digitalization, Environment, External debt, Fiscal policy, Inflation, Money, Poverty, Poverty reduction strategy, Prices, Revenue mobilization, Technology

    Keywords: Republic of, Advanced Economies, Artificial intelligence, Artificial intelligence, Capital flows, Capital flows, Climate change, Climate change, Credit, Debt sustainability, Debt sustainability, Digitalization, Digitalization, Economic integration, Economic integration, Global, Growth, Inflation, Inflation, Integrated Policy Framework, Integrated Policy Framework, Moldova, Poverty reduction strategy, Poverty reduction strategy, Reforms, Revenue mobilization, Revenue mobilization, Senegal

    MIL OSI Economics

  • MIL-OSI Global: Colorado’s Amendment 80 wants to make school choice ‘a right’ when it already is – an expert in educational policy explains the disconnect

    Source: The Conversation – USA – By Christopher Lubienski, Professor of Education Policy, Indiana University

    In November, Colorado voters will decide whether the state’s constitution should be amended to specify a right to school choice.

    But school choice is already guaranteed by state statute and federal courts. So why is this initiative being posed at all?

    Even the initiative’s backers acknowledge that Colorado already has “one of the best school choice statutes in the nation.” Moreover, the ability for parents to choose private schools has been affirmed by the U.S. Supreme Court for at least a century.

    I have been studying school choice for almost three decades and can say Amendment 80 raises serious questions about the strategies being used by the school choice advocates who put it on the ballot.

    School choice in Colorado

    School choice options have expanded rapidly across the U.S. in recent years. Currently, it is estimated that over 3.5 million students now attend charter schools, and in the past three years, nine states have approved new programs that provide public funds for private schooling.

    In 1993, Colorado became one of the first states to authorize charter schools. Charter schools are publicly funded but privately or independently managed. They are now legal in 45 states.

    Likewise, Colorado law enables parents to choose public schools outside their district — an open-enrollment option that is also quite common throughout the U.S., permitted in 43 states.

    But a new wave of school choice policies is emerging from conservative legislatures. Several red states, like Utah, Iowa and Indiana, recently created policies to fund universal or near-universal private school choice. These programs – vouchers or education savings accounts – use taxpayer funds to pay for private school tuition and, with education savings accounts, other educational expenses as well. Unlike charter schools, which are technically public schools and accountable to public authorities, these programs funding private schools have few if any regulations on the schools receiving taxpayer dollars.

    Colorado is in a different category altogether.

    Indeed, Colorado voters have repeatedly rejected ballot measures to implement private school choice. That mirrors voters across the country, who tend to reject these intiatives, often resoundingly.

    Moreover, Colorado’s original state constitution explicitly prohibits sending public funds to private schools.

    In essence, Colorado is a trailblazer when it comes to funding school choice in the public sector – but not the private sector. Like all Americans, Coloradans have every right under federal law to choose a private school at their own expense.

    Amendment 80 would give children the ‘right’ to choose from neighborhood, charter, private and home schools, as well as ‘future innovations in education.’
    Ed Andrieski/AP Photo

    Who supports Amendment 80

    Amendment 80 reflects a familiar political divide when it comes to school choice policies.

    Republicans largely support more parental prerogatives to choose schools, including private schools, and fewer restrictions on those schools.

    Democrats tend to oppose unregulated choice and programs that fund private schools, and support accountability measures for schools that receive public funds.

    There are, of course, exceptions to this partisan divide.

    Some Democrats, including Colorado Gov. Jared Polis, who founded two charter schools, have objected to efforts to regulate charters.

    Meanwhile, some conservatives, including Christian homeschoolers, have expressed concerns about government involvement in private schooling, which they fear could lead to regulation.

    The proposal frames school choice as a child’s right, leading some to worry it will give a student’s wishes legal predominance over their parents’.

    Those skeptics may have a point. Rather than push directly for school vouchers, backers of Amendment 80 simply make the seemingly innocuous assertion that school choice is a “right.”

    School choice as a ‘right’

    The fact that advocates for this measure are framing the issue this way – rather than as an effective taxpayer-funded policy, for example – is telling.

    While there are different forms of school choice, like charter and magnet schools, the modern private school choice movement emerged as a way for Southern segregationists to avoid integration.

    The movement gained momentum in the 1990s by asserting that choice leads to better educational outcomes, and that it gives low-income students an equitable opportunity to attend better schools.

    Those claims have not stood up.

    Every rigorous study of statewide voucher programs in the past 10 years has shown that they do not improve student outcomes. In fact, they have led to some of the largest learning losses ever measured — comparable to the losses from the COVID-19 pandemic.

    Rather than simply giving low-income students opportunities beyond their segregated schools, charter schools lead to higher levels of segregation.

    Additionally, statewide private school choice programs, such as what one might envision arising from Amendment 80, are budget-busters for state treasuries and for rural schools as they channel public funds away from high-need areas to affluent families using these programs.

    In light of that track record, it is not surprising to see choice advocates move away from their earlier equity claims and focus instead on “rights” — even when such a right can lead to worse educational outcomes for kids.

    But even if the rhetorical strategy around Amendment 80 is clear, the question still stands: Why push to enshrine rights that are already effectively available through both Colorado law and U.S. Supreme Court rulings?

    The full text of Amendment 80 that appears on the November 2024 ballot in Colorado.
    Colorado Secretary of State

    Public funds for private schools

    Michael Fields, the president of Advance Colorado, the organization that promoted the proposal, noted that the idea is to “preserve” and “protect families’ ability to choose the best educational options for themselves.”

    Elsewhere, he said, “It’s really just cementing the school choice laws that we have in Colorado right now into the constitution.”

    Essentially he is arguing that Amendment 80 would confirm the status quo in Colorado.

    But the actual language of the initiative tells a different story.

    Rather than simply affirming an existing right to choose a public, charter or homeschool, the more important issue here is the right to choose a private school.

    Of course, this right already exists. Since at least 1925, parents across the U.S. have been guaranteed the right to choose private schools for their children, but at their own expense.

    If Amendment 80 passes, I expect we will see the argument that such a right is meaningless without funding to support the choice of private schools. After all, when people talk about the right to public education or health care, the underlying assumption is that there is no cost barrier to exercising that right, which is funded by taxpayers.

    Recent rulings by the U.S. Supreme Court suggest Colorado’s prohibition on the use of public funds for “church or sectarian” schools could be challenged in court. Adding a right to private school choice to the state’s constitution through Amendment 80 appears to be designed to provide the basis for such a challenge.

    Early voting is happening now in Colorado. Find your polling place here.

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

    ref. Colorado’s Amendment 80 wants to make school choice ‘a right’ when it already is – an expert in educational policy explains the disconnect – https://theconversation.com/colorados-amendment-80-wants-to-make-school-choice-a-right-when-it-already-is-an-expert-in-educational-policy-explains-the-disconnect-240896

    MIL OSI – Global Reports

  • MIL-OSI: TopLine Credit Union Foundation Awards $36,500 in Scholarships

    Source: GlobeNewswire (MIL-OSI)

    MAPLE GROVE, Minn., Oct. 24, 2024 (GLOBE NEWSWIRE) — In its tenth year, TopLine Credit Union Foundation has awarded a total of $36,500 in scholarship money to 35 TopLine members who are continuing their education, and $1,500 in scholarship funds to support post-secondary educational needs and goals of students in Nigeria through partnership with African Education and Health Initiative (AFEDHI), a local non-profit organization with a vision to assist African students with access to education, books and school supplies.

    TopLine Credit Union Foundation received 127 applications. Any TopLine member pursuing post-secondary education by attending a college or university, graduate school, or a 2-to-4-year community, vocational or technical college in the fall of 2024 was eligible.

    Scholarship applicants needed to complete a one-page application form and submit an essay (500 words or less) that answered the question: “Discuss a hobby, interest, or passion that is important to you. How has this influenced your personal growth and academic journey?”

    As one of our scholarship recipients commented, “Unlike most twin sisters, I grew up not just as a sibling, but as a caregiver. Her ability to navigate the world was often reliant on my hearing, and I was responsible for filling her in on our learning in school. From an early age, I became my sister’s advocate and ally. I witnessed firsthand the challenges she faced in navigating a predominantly hearing world. My sister’s journey has shown me the significance of empathy, understanding, and hard work, ultimately steering me toward my aspiration to become an audiologist. I hope to create a space where people feel heard, empowered, and understood, much like I’ve strived to do for my sister.”

    “It’s was so rewarding to read all the personal stories written by applicants based on the influences they have experienced to help them along their personal growth and academic journeys,” said Vicki Roscoe Erickson, President, TopLine Credit Union Foundation. “Our foundation board had an extremely difficult decision of just selecting 35 scholarship recipients, and we celebrate their dedication and drive as they embark on their learning journey.”

    TopLine Credit Union Foundation, guided by its mission of “working within the community to build a better tomorrow,” will continue to support the cooperative spirit of “people helping people” by living the mantra – to care, connect and contribute in the communities they serve.

    Scholarship recipients will be recognized with a reception at the credit union, on TopLine Credit Union Foundation’s website page and on their Facebook page.

    TopLine Credit Union Foundation, a 501(c)(3) non-profit organization, is dedicated to providing members with an array of financial education opportunities and counseling for members of all ages, awarding scholarships, contributing to community charitable organizations and sponsoring other community give-back efforts. Since inception in 2014, TopLine Credit Union Foundation has given out $175,000 in scholarship monies to assist with the affordability of post-secondary education. Donations are tax deductible to the extent allowed by law. For further information visit www.TopLinecu.com/foundation, email Foundation@TopLinecu.com, call 763-391-9494, or stop by any branch location or write to: 9353 Jefferson Hwy, Maple Grove, MN 55369. Federal Tax ID # is 46-4335752.

    CONTACT:
    Vicki Roscoe Erickson
    President, TopLine Credit Union Foundation
    verickson@toplinecu.com
    763.391.0872

    A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/70b1950d-0cdb-42e0-a7bf-213f59799195

    The MIL Network