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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| First United Corporation | NASDAQ:FUNC | NASDAQ | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.03 | 0.08% | 35.56 | 14.25 | 56.97 | 35.89 | 35.565 | 35.57 | 16,422 | 21:30:00 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (Commission file number) | (IRS Employer | ||
| incorporation or organization) | Identification No.) |
(Address of principal executive offices) (Zip Code)
(
(Registrant’s telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbols | Name of each exchange on which registered |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
INFORMATION TO BE INCLUDED IN THE REPORT
Item 2.02. Results of Operation and Financial Condition.
On October 21, 2024, First United Corporation (the “Corporation”) issued a press release describing its financial results for the three- and nine-month periods ended September 30, 2024. A copy of the press release is furnished herewith as Exhibit 99.1.
The information contained in this Item 2.02 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 7.01. Regulation FD Disclosure.
On October 21, 2024, the Corporation published an investor presentation that discusses certain aspects of its financial results for the three- and nine- months ended September 30, 2024. A copy of the presentation is furnished herewith as Exhibit 99.2.
The information contained in this Item 7.01 shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The exhibits filed or furnished with this report are listed in the following Exhibit Index:
| Exhibit No. | Description | |
| 99.1 | Press release dated October 21, 2024 (furnished herewith) | |
| 99.2 | Investor presentation dated October 21, 2024 (furnished herewith) | |
| 104 | Cover page interactive data file (embedded within the iXBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FIRST UNITED CORPORATION | ||
| Dated: October 21, 2024 | By: | /s/ Tonya K. Sturm |
| Tonya K. Sturm | ||
| Senior Vice President & CFO | ||
Exhibit 99.1
FIRST UNITED CORPORATION ANNOUNCES
THIRD QUARTER 2024 FINANCIAL RESULTS
OAKLAND, MARYLAND— October 21, 2024: First United Corporation (the “Corporation, “we”, “us”, and “our”) (NASDAQ: FUNC), a bank holding company and the parent company of First United Bank & Trust (the “Bank”), today announced financial results for the three- and nine-month periods ended September 30, 2024. Consolidated net income was $5.8 million for the third quarter of 2024, or $0.89 per diluted share, compared to $4.5 million, or $0.67 per diluted share, for the third quarter of 2023 and $4.9 million, or $0.75 per diluted share, for the second quarter of 2024. Year-to-date income was $14.4 million, or $2.19 per diluted share, compared to $13.3 million, or $1.98 per diluted share, for both of the nine-month periods ended September 30, 2024 and 2023.
According to Carissa Rodeheaver, Chairman, President and CEO, “Earnings for the third quarter were marked by stable net interest income, non-interest income and expenses. Provision expense decreased as compared to prior quarters this year as we saw improvements in our asset quality contributing to our increased net income. We continue to remain disciplined in our pricing despite competitive pressure as we build our balance sheet for current earnings and protect our long-term profitability. Our team of dedicated associates worked diligently during the quarter to maintain, build and support high levels of production and to assist our customers with their financial needs in this volatile economic environment.”
Financial Highlights:
| · | Net interest margin, on a non-GAAP, fully tax equivalent (“FTE”) basis, was 3.46% for the third quarter of 2024 | |
| · | Loan production was strong, with $52.1 million in commercial loan originations and $19.9 million in residential mortgage originations | |
| · | Provision expense decreased in the third quarter due to continued strong asset quality and improvement in qualitative factors | |
| · | Deposits increased slightly due to seasonal fluctuations in municipal deposit balances, partially offset by runoff of retail certificates of deposit due to competitive pricing | |
| · | We repaid $15.0 million of higher cost brokered certificates of deposit | |
| · | Non-interest income, including net gains, increased slightly due to increases in gains on sales of residential mortgages and wealth management income | |
| · | Non-interest expense was stable for the quarter and continues to be a focus for management | |
| · | We obtained $90.0 million in new FHLB borrowings at a weighted average interest rate of 3.89%. Portions of the proceeds from the borrowings were used to repay $41.4 million of principal and accrued interest of Bank Term Funding Program (“BTFP”) borrowings and $40.0 million in FHLB borrowings that matured in September 2024 | |
| · | We declared a cash dividend of $0.22 per common share in the third quarter, representing a 10% increase over the linked quarter |
Income Statement Overview
On a GAAP basis, net income for the third quarter of 2024 was $5.8 million. This compares to $4.9 million for the second quarter of 2024 and $4.5 million for the third quarter of 2023.
| Q3 2024 | Q2 2024 | Q3 2023 | ||||||||||
| Net Income, GAAP (millions) | $ | 5.8 | $ | 4.9 | $ | 4.5 | ||||||
| Basic and diluted net income per share, GAAP | $ | 0.89 | $ | 0.75 | $ | 0.67 | ||||||
The $1.3 million increase in quarterly net income year over year was primarily driven by a $1.2 million increase in net interest income. The increase in net interest income was related to the $3.0 million increase in interest on loans due to new loans being booked at higher rates and the repricing of adjustable-rate loans. This increase was partially offset by the $0.9 million increase in interest paid on deposits due to continued competitive pricing pressures. An increase of $0.4 million in interest expense on short-term borrowings related to the BTFP was offset by the $0.5 million reduction in interest expense on long-term borrowings related to the repayment of $80.0 million of FHLB advances in the first nine months of 2024. Comparing the third quarter of 2024 to the same period in 2023, other activity was a $0.2 million increase in wealth management income due to improving market conditions and growth of new relationships and a decrease in operating expenses of $0.5 million driven by reductions in check fraud related expenses, occupancy and equipment, data processing, and marketing expenses, partially offset by increased salaries and benefits. The provision for income tax was up $0.6 million when comparing the two quarters due to increased net income before tax.
Compared to the linked quarter, net income increased by $0.9 million due primarily to a $0.9 million decrease in provision for credit losses during the third quarter. This decrease was driven by reduced net charge offs due to the $1.1 million charge off booked in the second quarter of 2024 and improvement in qualitative factors related to the reduction of non-accrual balances during the quarter, partially offset by strong loan growth during the third quarter. Net interest income and operating expenses were stable and operating income increased by $0.2 million compared to the linked quarter.
Year-to-date net income for the first nine months of 2024 was $14.4 million compared to $13.3 million for the same period in 2023. The increased net income was driven by a year-over-year increase of $1.6 million in net interest income driven by a $9.3 million increase in interest income primarily related to increased interest and fees on loans, partially offset by a $7.7 million increase in interest expense due to continued pricing pressure on deposits and our use of the BTFP. This increase was partially offset by a $1.2 million increase in provision for credit losses driven by net charge-offs of $1.1 million in the commercial and industrial portfolio related to one non-accrual credit where collateral was sold through a liquidation auction at depressed prices. Operating income increased $0.9 million, primarily as the result of increased wealth management income. Operating expenses decreased by $0.4 million and was driven by reductions in professional services, pension benefits expense, a $0.5 million reduction in check fraud expense, and other miscellaneous expenses partially offset by a $0.4 million increase in salaries and benefits.
Net Interest Income and Net Interest Margin
Net interest income, on a non-GAAP, FTE basis, increased by $1.2 million for the third quarter of 2024 when compared to the third quarter of 2023. This increase was driven by a $2.0 million increase in interest income. Interest income on loans increased by $3.0 million due to the increase in average balances of $69.7 million and a 58 basis point increase in the overall yield on the loan portfolio as new loans were booked at higher rates as well as adjustable-rate loans repricing in correlation to the elevated rate environment. Investment income decreased by $0.3 million due to a decrease of $63.2 million in average balances related to the balance sheet restructuring of our investment portfolio in the fourth quarter of 2023 and the maturity of $37.5 million in U.S. Treasury bonds in the first four months of 2024. The overall yield on the investment portfolio increased by 14 basis points primarily driven by the increased rate on the trust preferred portfolio and the maturity and sale of lower rate investments. Average cash balances declined $42.0 million as cash from the investment portfolio and on balance sheet liquidity was shifted to fund higher yielding loans. Interest expense increased by $0.8 million year over year due to an increase of 9 basis points on interest paid on deposit accounts. The average deposit balances decreased by $7.4 million when compared to the third quarter of 2023 due primarily to the decrease of $13.1 million in retail time deposits, a $60.2 million decrease in brokered time deposits and a $32.3 million decrease in savings accounts, which was mostly offset by an increase of $96.6 million in money market accounts and a slight increase of $1.6 million in interest-bearing demand deposits.
Comparing the third quarter of 2024 to the second quarter of 2024, net interest income, on a non-GAAP, FTE basis, remained stable. Interest income increased by $0.1 million during the quarter. Interest income on loans increased by $0.8 million related to the overall increase of 9 basis points in yield and $18.2 million in average balances during the third quarter. This was partially offset by a $0.6 million decrease in interest income on cash balances related to a decreased yield of 88 basis points and decreased balances of $33.3 million during the quarter as cash was used to fund loan growth. Interest expense increased by $0.2 million, driven primarily by the $0.2 increase in deposit expense related to the increase in average balances of $21.6 million in money market accounts, which was partially offset by the $15.8 million decrease in average balances of brokered certificates of deposit related to the maturity and repayment of a $15.0 million brokered certificate of deposit (“CD”) in August 2024.
Comparing the nine months ended September 30, 2024 to the nine months ended September 30, 2023, net interest income, on a non-GAAP, FTE basis, increased by $1.2 million. Interest income increased by $8.9 million. Average loan balances increased by $98.3 million and the overall yield increased by 61 basis points in correlation with the elevated rate environment as new loans were booked at higher rates as well as the repricing of adjustable-rate loans. Interest expense on deposits increased by $6.5 million while the average deposit balances increased by $24.7 million, driven by increases of $77.7 million in money market balances and $13.7 million in retail time deposits, partially offset by decreases in savings balances of $44.1 million and brokered time deposits of $26.0 million. Interest expense on short-term borrowings increased by $1.3 million due to the Bank’s utilization of the BTFP program since January 2024. The increased interest expense resulted in an overall increase of 75 basis points on the cost of interest-bearing liabilities. The net interest margin for the nine months ended September 30, 2024 was 3.34% compared to 3.30% for the nine months ended September 30, 2023.
Non-Interest Income
Other operating income, including net gains, for the third quarter of 2024 increased by $0.2 million when compared to the same period of 2023. The increase was driven by an increase of $0.2 million in trust and brokerage income due to improving market conditions, increased annuity sales and growth in new and existing customer relationships. Gains on sales of mortgages declined slightly when comparing the third quarter of 2024 to the same period of 2023 primarily due to reduced activity in the elevated interest rate environment. Service charge income and debit card income remained stable.
On a linked quarter basis, other operating income, including net gains, increased by $0.2 million. This increase was primarily attributable to a $0.1 million increase in gains on sales of mortgage loans due to increased activity in the third quarter and a $0.1 million cash incentive received in connection with check fees collected.
Other operating income for the nine months ended September 30, 2024 increased by $0.9 million when compared to the same period of 2023. This increase was primarily due to the $1.0 million increase in trust and brokerage income due to improving market conditions, increased annuity sales and growth in new and existing customer relationships. Service charge and debit card income were both stable when comparing the first nine months of 2024 to the same period of 2023.
Non-Interest Expense
Non-interest expenses decreased by $0.5 million in the third quarter of 2024 when compared to the third quarter of 2023. The decrease was related to a $0.2 million decrease in occupancy, equipment and data processing expenses, a $0.3 million decrease in check fraud related expenses as well as decreases in other miscellaneous expenses such as marketing, contributions, net other real estate owned (“OREO”) expenses, and pension benefit expenses. These decreases were partially offset by a $0.2 million increase in salaries and benefits related to increased executive and employee incentive accruals, 401(k) plan expense and wellness costs offset by overall reduced salaries and wages.
Non-interest expense was stable when compared to the linked quarter. Decreases in salaries and benefits, data processing, FDIC assessments, marketing, debit card, schools and seminars, and investor relations expenses were offset by slight increases in professional services, occupancy, OREO expenses due to a gain booked in the second quarter of 2024, and contract labor.
For the nine months ended September 30, 2024, non-interest expenses decreased by $0.4 million when compared to the nine months ended September 30, 2023. The decrease was primarily attributable to a $0.5 million decrease in check fraud expenses and decreases in professional services, equipment, net OREO expense, line rentals, pension benefit expenses, and other miscellaneous expenses such as marketing, contributions, contract labor, and investor relations. These decreases were partially offset by increased occupancy, data processing expenses and salaries and benefits related to increased incentives, 401K expense, wellness expense and loan origination costs, offset by reductions in life and health insurance costs.
The effective income tax rates as a percentage of income for the nine months ended September 30, 2024 and September 30, 2023 were 24.6% and 23.6%, respectively.
Balance Sheet Overview
Total assets at September 30, 2024 were $1.9 billion, representing a $10.3 million increase since December 31, 2023. During the first nine months of 2024, cash and interest-bearing deposits in other banks increased by $12.6 million. The investment portfolio decreased by $44.3 million due to the maturities of $37.5 million of U.S. Treasury bonds during the year and normal principal amortization of our mortgage-backed securities (“MBS”) portfolio. Cash from the investment maturities was shifted to gross loans which increased by $41.2 million and other real estate OREO decreased by $1.6 million due to sales of properties. Pension assets increased by $5.1 million due to increased market values. Deferred tax assets decreased by $1.8 million due to the increased fair values of available for sale securities and pension assets compared to December 31, 2023.
Total liabilities at September 30, 2024 were $1.7 billion, representing a $1.8 million decrease since December 31, 2023. Total deposits decreased by $10.6 million when compared to December 31, 2023 related to decreases in savings deposits of $14.8 million, non-interest-bearing demand deposits of $8.2 million, retail time deposits of $23.7 million and the repayment of $30.0 million in brokered certificates of deposits, partially offset by increases in interest-bearing demand deposits of $31.6 million and money markets of $34.6 million. Short-term borrowings increased by $4.8 million since December 31, 2023, which were comprised of $29.0 million in overnight borrowings from the Federal Reserve offset by a shift of approximately $22.0 million in overnight investment sweep balances to FDIC insured accounts as a result of management’s strategy to release pledging of investment securities for municipalities to provide additional liquidity. Long-term borrowings increased by $10.0 million in the first nine months of 2024 when compared to December 31, 2023. Maturities of FHLB advances of $40.0 million in March and $40.0 million in September were fully repaid. During the third quarter and after the Fed announcement to reduce rates by 50 basis points, management made the strategic decision to reduce funding costs and borrowed $90.0 million in three new FHLB advances with maturities of 12 and 18-months and a weighted average rate of 3.89%. $41.1 million was utilized to prepay the principal and accrued interest of the BTFP borrowings at a rate of 4.87% that was scheduled to mature in January of 2025 and approximately $30.0 million was utilized to repay overnight borrowings related to the repayment of the September $40.0 million maturity. The remainder is currently held in overnight cash investments.
Total available for sale and held to maturity securities totaled $267.2 million at September 30, 2024, representing a $44.3 million decrease when compared to December 31, 2023. In the first nine months of 2024, $37.5 million in U.S. Treasury bonds matured and the proceeds were used to repay the $40.0 million maturing FHLB advance. Additionally, there were $2.7 million of maturities in our municipal portfolio and $5.7 million of other principal amortizations in our MBS portfolio year to date that were used for loan funding.
Outstanding loans of $1.4 billion at September 30, 2024 reflected growth of $24.9 million since June 30, 2024 and $41.2 million for the first nine months of 2024.
Loan Type (in millions) | Change since June 30, 2024 | Change since December 31, 2023 | ||||||
| Commercial | $ | 19.1 | $ | 28.4 | ||||
| Residential Mortgages | $ | 7.8 | $ | 19.3 | ||||
| Consumer | $ | (2.0 | ) | $ | (6.5 | ) | ||
| Gross Loans | $ | 24.9 | $ | 41.2 | ||||
Since December 31, 2023, commercial real estate loans increased by $9.1 million, acquisition and development loans increased by $15.8 million, commercial and industrial loans increased by $3.4 million, residential mortgage loans increased $19.3 million, and consumer loans decreased by $6.5 million.
New commercial loan production for the three months ended September 30, 2024 was approximately $52.1 million. The pipeline of commercial loans at September 30, 2024 was $19.5 million. At September 30, 2024, unfunded, committed commercial construction loans totaled approximately $8.3 million. Commercial amortization and payoffs were approximately $92.8 million through September 30, 2024, due primarily to pay-offs of short-term commercial loans as well as normal amortizations of the commercial loan portfolio.
New consumer mortgage loan production for the third quarter of 2024 was approximately $19.9 million, with most of this production comprised of mortgages to be held on balance sheet. The pipeline of in-house, portfolio loans as of September 30, 2024 was $12.8 million. The residential mortgage production level increased in the third quarter of 2024 due to the seasonality of this line of business, particularly construction lending. Unfunded commitments related to residential construction loans totaled $11.9 million at September 30, 2024.
Total deposits at September 30, 2024 decreased by $10.6 million when compared to December 31, 2023.
Deposit Type (in millions) | Change since June 30, 2024 | Change since December 31, 2023 | ||||||
| Non-Interest-Bearing | $ | (4.5 | ) | $ | (8.2 | ) | ||
| Interest-Bearing Demand | $ | 9.4 | $ | 31.6 | ||||
| Savings and Money Market | $ | 15.0 | $ | 19.8 | ||||
| Time Deposits | $ | (16.6 | ) | $ | (53.7 | ) | ||
| Total Deposits | $ | 3.3 | $ | (10.6 | ) | |||
Interest-bearing demand deposits increased by $31.6 million year-to-date, primarily related to the shift of approximately $22.0 million in overnight investment sweep balances into FDIC insured accounts due to management’s strategy to release pledging of investment securities for municipalities to provide additional liquidity as well as seasonal fluctuations in municipal deposit balances compared to December 2023. Money market accounts increased by $34.6 million due primarily to the expansion of current relationships and new relationships during the first nine months. Traditional savings accounts decreased by $14.8 million and time deposits decreased by $53.7 million. The decrease in time deposits was due to a decrease of $23.7 million in retail CDs related to maturities of a nine-month special CD promotion in 2023 and the maturity and repayment of $30.0 million in brokered CDs during the year. The Bank has worked closely with customers as these CDs mature to transition them to other deposit and wealth management products offered by the Bank.
Short-term borrowings increased by $4.8 million compared to December 31, 2023, which were comprised of $29.0 million in overnight borrowings from the Federal Reserve offset by a shift of approximately $22.0 million in overnight investment sweep balances into FDIC insured accounts due to management’s strategy to release pledging of investment securities for municipalities to provide additional liquidity. Long-term borrowings increased by $10.0 million in the first nine months of 2024 when compared to December 31, 2023. Maturities of FHLB advances of $40.0 million in March and $40.0 million in September were fully repaid. During the third quarter and after the Fed announcement to reduce rates by 50 basis points, management made the strategic decision to reduce funding costs and borrowed $90.0 million in three new FHLB advances with maturities of 12 and 18-months and a weighted average rate of 3.89%. $41.1 million was utilized to prepay the principal and accrued interest of the BTFP borrowing at a rate of 4.87% that was scheduled to mature in January of 2025 and approximately $30.0 million was utilized to repay overnight borrowings related to the repayment of the September $40.0 million maturity. The remainder is currently held in overnight cash investments.
The book value of the Corporation’s common stock was $26.90 per basic share at September 30, 2024 compared to $24.38 per share at December 31, 2023. At September 30, 2024, there were 6,468,625 of basic outstanding shares and 6,482,648 of diluted outstanding shares of common stock. During the first nine months of 2024, the Company purchased and retired 201,800 shares of First United Corporation stock as part of its previously announced stock repurchase plan at an average price of $19.99 per share. The increase in the book value at September 30, 2024 was due to the undistributed net income of $10.3 million for the first nine months of 2024.
Asset Quality
The allowance for credit losses (“ACL”) was $18.0 million at September 30, 2024 compared to $17.1 million recorded at September 30, 2023 and $17.5 million at December 31, 2023. The provision for credit losses was $0.3 million for the quarter ended September 30, 2024 compared to $0.3 million for the quarter ended September 30, 2023 and $1.2 million for the second quarter of 2024. The increased provision expense recorded year to date in 2024 was primarily related to $1.1 million in net charge-offs related to one non-accrual commercial loan relationship, partially offset by improving qualitative risk factors of our loan portfolio. Net charge-offs of $0.1 million were recorded for the quarter ended September 30, 2024 and September 30, 2023. The ratio of the ACL to loans outstanding was 1.24% at September 30, 2024, September 30, 2023 and December 31, 2023.
The ratio of year-to-date net charge offs to average loans was 0.18% for the nine-month period ended September 30, 2024, and 0.07% for the nine-month period ended September 30, 2023. The commercial and industrial portfolio had net charge offs of 0.53% for the nine-month period ended September 30, 2024 compared to a net charge offs of 0.07% for the nine-month period ended September 30, 2023. This shift was due primarily to charge offs of equipment loan balances on one non-accrual commercial relationship during 2024. The consumer portfolio had net charge offs of 2.04% for the nine-month period ended September 30, 2024 compared to net charge offs of 1.15% for the nine-month period ended September 30, 2023. The increase in net charge offs in consumer loans in 2024 was primarily driven by approximately $0.4 million in charge offs of overdrawn demand deposit balances during the first quarter of 2024 and student loan accounts in the second quarter. Details of the ratios, by loan type, are shown below. Our special assets team continues to actively collect on charged-off loans, resulting in overall low net charge-off ratios.
| Ratio of Net (Charge Offs)/Recoveries to Average Loans | ||||||||
| Loan Type | 9/30/2024 (Charge Off) / Recovery | 9/30/2023 (Charge Off) / Recovery | ||||||
| Commercial Real Estate | 0.01 | % | (0.02 | )% | ||||
| Acquisition & Development | 0.08 | % | 0.01 | % | ||||
| Commercial & Industrial | (0.53 | )% | (0.07 | )% | ||||
| Residential Mortgage | 0.01 | % | 0.00 | % | ||||
| Consumer | (2.04 | )% | (1.15 | )% | ||||
| Total Net (Charge Offs)/Recoveries | (0.18 | )% | (0.07 | )% | ||||
Non-accrual loans totaled $8.1 million at September 30, 2024 compared to $4.0 million at December 31, 2023. The increase in non-accrual balances at September 30, 2024 was related to two commercial and industrial loan relationships totaling $12.1 million that were moved to non-accrual during the first quarter of 2024. Subsequent to being moved to non-accrual, one of the borrowers sold a piece of collateral to reduce outstanding balances by approximately $5.5 million and the bank recognized approximately $1.1 million in net charge-offs and $3.0 million in principal reductions on the other commercial and industrial credit from the liquidation of collateral at depressed prices.
Non-accrual loans that have been subject to partial charge-offs totaled $1.2 million at September 30, 2024 and $0.1 million at December 31, 2023. Loans secured by 1-4 family residential real estate properties in the process of foreclosure totaled $1.6 million at September 30, 2024 and $1.8 million at December 31, 2023. As a percentage of the loan portfolio, accruing loans past due 30 days or more was 0.37% at September 30, 2024 compared to 0.24% at December 31, 2023 and 0.27% as of September 30, 2023.
ABOUT FIRST UNITED CORPORATION
First United Corporation is a Maryland corporation chartered in 1985 and a financial holding company registered with the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956, as amended, that elected financial holding company status in 2021. The Corporation’s primary business is serving as the parent company of the Bank, First United Statutory Trust I (“Trust I”) and First United Statutory Trust II (together with Trust I, “the Trusts”), both Connecticut statutory business trusts. The Trusts were formed for the purpose of selling trust preferred securities that qualified as Tier 1 capital. The Bank has two consumer finance company subsidiaries- Oak First Loan Center, Inc., a West Virginia corporation, and OakFirst Loan Center, LLC, a Maryland limited liability company – and two subsidiaries that it uses to hold real estate acquired through foreclosure or by deed in lieu of foreclosure – First OREO Trust, a Maryland statutory trust, and FUBT OREO I, LLC, a Maryland limited liability company. In addition, the Bank owns 99.9% of the limited partnership interests in Liberty Mews Limited Partnership, a Maryland limited partnership formed for the purpose of acquiring, developing and operating low-income housing units in Garrett County, Maryland, and a 99.9% non-voting membership interest in MCC FUBT Fund, LLC, an Ohio limited liability company formed for the purpose of acquiring, developing and operating low-income housing units in Allegany County, Maryland. The Corporation’s website is www.mybank.com.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements do not represent historical facts, but are statements about management's beliefs, plans and objectives about the future, as well as its assumptions and judgments concerning such beliefs, plans and objectives. These statements are evidenced by terms such as "anticipate," "estimate," "should," "expect," "believe," "intend," and similar expressions. Although these statements reflect management's good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. The beliefs, plans and objectives on which forward-looking statements are based involve risks and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. For a discussion of these risks and uncertainties, see the section of the periodic reports that First United Corporation files with the Securities and Exchange Commission entitled "Risk Factors". In addition, investors should understand that the Corporation is required under generally accepted accounting principles to evaluate subsequent events through the filing of the consolidated financial statements included in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 and the impact that any such events have on our critical accounting assumptions and estimates made as of September 30, 2024, which could require us to make adjustments to the amounts reflected in this press release.
FIRST UNITED CORPORATION
Oakland, MD
Stock Symbol : FUNC
Financial Highlights - Unaudited
| (Dollars in thousands, except per share data) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Results of Operations: | ||||||||||||||||
| Interest income | $ | 23,257 | $ | 21,164 | $ | 68,268 | $ | 58,965 | ||||||||
| Interest expense | 8,029 | 7,180 | 23,990 | 16,289 | ||||||||||||
| Net interest income | 15,228 | 13,984 | 44,278 | 42,676 | ||||||||||||
| Provision for credit losses | 264 | 263 | 2,404 | 1,201 | ||||||||||||
| Other operating income | 4,912 | 4,716 | 14,487 | 13,538 | ||||||||||||
| Net gains | 141 | 182 | 282 | 322 | ||||||||||||
| Other operating expense | 12,314 | 12,785 | 37,559 | 37,934 | ||||||||||||
| Income before taxes | $ | 7,703 | $ | 5,834 | $ | 19,084 | $ | 17,401 | ||||||||
| Income tax expense | 1,932 | 1,321 | 4,701 | 4,099 | ||||||||||||
| Net income | $ | 5,771 | $ | 4,513 | $ | 14,383 | $ | 13,302 | ||||||||
| Per share data: | ||||||||||||||||
| Basic net income per share | $ | 0.89 | $ | 0.67 | $ | 2.20 | $ | 1.99 | ||||||||
| Diluted net income per share | $ | 0.89 | $ | 0.67 | $ | 2.19 | $ | 1.98 | ||||||||
| Adjusted Basic net income (1) | $ | 0.89 | $ | 0.67 | $ | 2.26 | $ | 1.99 | ||||||||
| Adjusted Diluted net income (1) | $ | 0.89 | $ | 0.67 | $ | 2.25 | $ | 1.98 | ||||||||
| Dividends declared per share | $ | 0.22 | $ | 0.20 | $ | 0.62 | $ | 0.60 | ||||||||
| Book value | $ | 26.90 | $ | 23.08 | ||||||||||||
| Diluted book value | $ | 26.84 | $ | 23.03 | ||||||||||||
| Tangible book value per share | $ | 25.06 | $ | 21.27 | ||||||||||||
| Diluted Tangible book value per share | $ | 25.01 | $ | 21.22 | ||||||||||||
| Closing market value | $ | 29.84 | $ | 16.23 | ||||||||||||
| Market Range: | ||||||||||||||||
| High | $ | 30.77 | $ | 17.34 | ||||||||||||
| Low | $ | 20.40 | $ | 13.70 | ||||||||||||
| Shares outstanding at period end: Basic | 6,468,625 | 6,715,170 | ||||||||||||||
| Shares outstanding at period end: Diluted | 6,482,648 | 6,728,482 | ||||||||||||||
| Performance ratios: (Year to Date Period End, annualized) | ||||||||||||||||
| Return on average assets | 0.99 | % | 0.93 | % | ||||||||||||
| Adjusted return on average assets (1) | 1.01 | % | 0.93 | % | ||||||||||||
| Return on average shareholders' equity | 11.52 | % | 11.44 | % | ||||||||||||
| Adjusted return on average shareholders' equity (1) | 11.78 | % | 11.44 | % | ||||||||||||
| Net interest margin (Non-GAAP), includes tax exempt income of $176 and $578 | 3.34 | % | 3.30 | % | ||||||||||||
| Net interest margin GAAP | 3.32 | % | 3.25 | % | ||||||||||||
| Efficiency ratio - non-GAAP (1) | 62.46 | % | 66.41 | % | ||||||||||||
(1) Efficiency ratio is a non-GAAP measure calculated by dividing total operating expenses by the sum of tax equivalent net interest income and other operating income, less gains/(losses) on sales of securities and/or fixed assets.
| September 30, | December 31 | |||||||
| 2024 | 2023 | |||||||
| Financial Condition at period end: | ||||||||
| Assets | $ | 1,916,126 | $ | 1,905,860 | ||||
| Earning assets | $ | 1,722,346 | $ | 1,725,236 | ||||
| Gross loans | $ | 1,447,883 | $ | 1,406,667 | ||||
| Commercial Real Estate | $ | 502,828 | $ | 493,703 | ||||
| Acquisition and Development | $ | 92,909 | $ | 77,060 | ||||
| Commercial and Industrial | $ | 277,994 | $ | 274,604 | ||||
| Residential Mortgage | $ | 519,168 | $ | 499,871 | ||||
| Consumer | $ | 54,984 | $ | 61,429 | ||||
| Investment securities | $ | 267,214 | $ | 311,466 | ||||
| Total deposits | $ | 1,540,395 | $ | 1,550,977 | ||||
| Noninterest bearing | $ | 419,437 | $ | 427,670 | ||||
| Interest bearing | $ | 1,120,958 | $ | 1,123,307 | ||||
| Shareholders' equity | $ | 173,979 | $ | 161,873 | ||||
| Capital ratios: | ||||||||
| Tier 1 to risk weighted assets | 14.61 | % | 14.42 | % | ||||
| Common Equity Tier 1 to risk weighted assets | 12.66 | % | 12.44 | % | ||||
| Tier 1 Leverage | 11.88 | % | 11.30 | % | ||||
| Total risk based capital | 15.83 | % | 15.64 | % | ||||
| Asset quality: | ||||||||
| Net charge-offs for the quarter | $ | (109 | ) | $ | (195 | ) | ||
| Nonperforming assets: (Period End) | ||||||||
| Nonaccrual loans | $ | 8,073 | $ | 3,956 | ||||
| Loans 90 days past due and accruing | 538 | 543 | ||||||
| Total nonperforming loans and 90 day past due | $ | 8,611 | $ | 4,499 | ||||
| Other real estate owned | $ | 2,860 | $ | 4,493 | ||||
| Modified loans | $ | 1,016 | $ | - | ||||
| Allowance for credit losses to gross loans | 1.24 | % | 1.24 | % | ||||
| Allowance for credit losses to non-accrual loans | 223.09 | % | 441.86 | % | ||||
| Allowance for credit losses to non-performing assets | 157.00 | % | 194.40 | % | ||||
| Non-performing and 90 day past due loans to total loans | 0.59 | % | 0.32 | % | ||||
| Non-performing loans and 90 day past due loans to total assets | 0.45 | % | 0.24 | % | ||||
| Non-accrual loans to total loans | 0.56 | % | 0.28 | % | ||||
| Non-performing assets to total assets | 0.60 | % | 0.47 | % | ||||
FIRST UNITED CORPORATION
Oakland, MD
Stock Symbol : FUNC
Financial Highlights - Unaudited
| September 30, | June 30, | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||||||
| (Dollars in thousands, except per share data) | 2024 | 2024 | 2024 | 2023 | 2023 | 2023 | 2023 | |||||||||||||||||||||
| Results of Operations: | ||||||||||||||||||||||||||||
| Interest income | $ | 23,257 | $ | 23,113 | $ | 21,898 | $ | 22,191 | $ | 21,164 | $ | 19,972 | $ | 17,829 | ||||||||||||||
| Interest expense | 8,029 | 7,875 | 8,086 | 7,997 | 7,180 | 5,798 | 3,311 | |||||||||||||||||||||
| Net interest income | 15,228 | 15,238 | 13,812 | 14,194 | 13,984 | 14,174 | 14,518 | |||||||||||||||||||||
| Provision for credit losses | 264 | 1,194 | 946 | 419 | 263 | 395 | 543 | |||||||||||||||||||||
| Other operating income | 4,912 | 4,782 | 4,793 | 4,793 | 4,716 | 4,483 | 4,339 | |||||||||||||||||||||
| Net gains/(losses) | 141 | 59 | 82 | (4,184 | ) | 182 | 86 | 54 | ||||||||||||||||||||
| Other operating expense | 12,314 | 12,364 | 12,881 | 12,309 | 12,785 | 12,511 | 12,638 | |||||||||||||||||||||
| Income before taxes | $ | 7,703 | $ | 6,521 | $ | 4,860 | $ | 2,075 | $ | 5,834 | $ | 5,837 | $ | 5,730 | ||||||||||||||
| Income tax expense | 1,932 | 1,607 | 1,162 | 317 | 1,321 | 1,423 | 1,355 | |||||||||||||||||||||
| Net income | $ | 5,771 | $ | 4,914 | $ | 3,698 | $ | 1,758 | $ | 4,513 | $ | 4,414 | $ | 4,375 | ||||||||||||||
| Per share data: | ||||||||||||||||||||||||||||
| Basic net income per share | $ | 0.89 | $ | 0.75 | $ | 0.56 | $ | 0.26 | $ | 0.67 | $ | 0.66 | $ | 0.66 | ||||||||||||||
| Diluted net income per share | $ | 0.89 | $ | 0.75 | $ | 0.56 | $ | 0.26 | $ | 0.67 | $ | 0.66 | $ | 0.65 | ||||||||||||||
| Adjusted basic net income (1) | $ | 0.89 | $ | 0.75 | $ | 0.62 | $ | 0.82 | $ | 0.67 | $ | 0.66 | $ | 0.66 | ||||||||||||||
| Adjusted diluted net income (1) | $ | 0.89 | $ | 0.75 | $ | 0.62 | $ | 0.82 | $ | 0.67 | $ | 0.66 | $ | 0.65 | ||||||||||||||
| Dividends declared per share | $ | 0.22 | $ | 0.22 | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.62 | $ | 0.20 | ||||||||||||||
| Book value | $ | 26.90 | $ | 25.39 | $ | 24.89 | $ | 24.38 | $ | 23.08 | $ | 23.12 | $ | 22.85 | ||||||||||||||
| Diluted book value | $ | 26.84 | $ | 25.34 | $ | 24.86 | $ | 24.33 | $ | 23.03 | $ | 23.07 | $ | 22.81 | ||||||||||||||
| Tangible book value per share | $ | 25.06 | $ | 23.55 | $ | 23.08 | $ | 22.56 | $ | 21.27 | $ | 21.29 | $ | 21.01 | ||||||||||||||
| Diluted Tangible book value per share | $ | 25.01 | $ | 23.49 | $ | 23.05 | $ | 22.51 | $ | 21.22 | $ | 21.25 | $ | 20.96 | ||||||||||||||
| Closing market value | $ | 29.84 | $ | 20.42 | $ | 22.91 | $ | 23.51 | $ | 16.23 | $ | 14.26 | $ | 16.89 | ||||||||||||||
| Market Range: | ||||||||||||||||||||||||||||
| High | $ | 30.77 | $ | 22.88 | $ | 23.85 | $ | 23.51 | $ | 17.34 | $ | 17.01 | $ | 20.41 | ||||||||||||||
| Low | $ | 20.40 | $ | 19.40 | $ | 21.21 | $ | 16.12 | $ | 13.70 | $ | 12.56 | $ | 16.75 | ||||||||||||||
| Shares outstanding at period end: Basic | 6,468,625 | 6,465,601 | 6,648,645 | 6,639,888 | 6,715,170 | 6,711,422 | 6,688,710 | |||||||||||||||||||||
| Shares outstanding at period end: Diluted | 6,482,648 | 6,479,624 | 6,657,239 | 6,653,200 | 6,728,482 | 6,724,734 | 6,703,252 | |||||||||||||||||||||
| Performance ratios: (Year to Date Period End, annualized) | ||||||||||||||||||||||||||||
| Return on average assets | 0.99 | % | 0.89 | % | 0.76 | % | 0.78 | % | 0.93 | % | 0.95 | % | 0.94 | % | ||||||||||||||
| Adjusted return on average assets (1) | 1.01 | % | 0.98 | % | 0.85 | % | 0.94 | % | 0.93 | % | 0.95 | % | 0.94 | % | ||||||||||||||
| Return on average shareholders' equity | 11.52 | % | 10.48 | % | 9.07 | % | 9.68 | % | 11.44 | % | 11.43 | % | 11.87 | % | ||||||||||||||
| Adjusted return on average shareholders' equity (1) | 11.78 | % | 11.52 | % | 10.11 | % | 11.87 | % | 11.44 | % | 11.43 | % | 11.87 | % | ||||||||||||||
| Net interest margin (Non-GAAP), includes tax exempt income of $176 and $578 | 3.34 | % | 3.31 | % | 3.12 | % | 3.26 | % | 3.30 | % | 3.39 | % | 3.53 | % | ||||||||||||||
| Net interest margin GAAP | 3.32 | % | 3.29 | % | 3.10 | % | 3.22 | % | 3.25 | % | 3.34 | % | 3.48 | % | ||||||||||||||
| Efficiency ratio - non-GAAP (1) | 62.46 | % | 63.48 | % | 65.71 | % | 65.12 | % | 66.41 | % | 66.00 | % | 67.02 | % | ||||||||||||||
(1) Efficiency ratio is a non-GAAP measure calculated by dividing total operating expenses by the sum of tax equivalent net interest income and other operating income, less gains/(losses) on sales of securities and/or fixed assets.
| September 30, | June 30, | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||||||
| 2024 | 2024 | 2024 | 2023 | 2023 | 2023 | 2023 | ||||||||||||||||||||||
| Financial Condition at period end: | ||||||||||||||||||||||||||||
| Assets | $ | 1,916,126 | $ | 1,868,599 | $ | 1,912,953 | $ | 1,905,860 | $ | 1,928,201 | $ | 1,928,393 | $ | 1,937,442 | ||||||||||||||
| Earning assets | $ | 1,722,346 | $ | 1,695,425 | $ | 1,695,962 | $ | 1,725,236 | $ | 1,717,244 | $ | 1,707,522 | $ | 1,652,688 | ||||||||||||||
| Gross loans | $ | 1,447,883 | $ | 1,422,975 | $ | 1,412,327 | $ | 1,406,667 | $ | 1,380,019 | $ | 1,350,038 | $ | 1,289,080 | ||||||||||||||
| Commercial Real Estate | $ | 502,828 | $ | 506,273 | $ | 492,819 | $ | 493,703 | $ | 491,284 | $ | 483,485 | $ | 453,356 | ||||||||||||||
| Acquisition and Development | $ | 92,909 | $ | 88,215 | $ | 83,424 | $ | 77,060 | $ | 79,796 | $ | 79,003 | $ | 76,980 | ||||||||||||||
| Commercial and Industrial | $ | 277,994 | $ | 260,168 | $ | 274,722 | $ | 274,604 | $ | 254,650 | $ | 249,683 | $ | 241,959 | ||||||||||||||
| Residential Mortgage | $ | 519,168 | $ | 511,354 | $ | 501,990 | $ | 499,871 | $ | 491,686 | $ | 475,540 | $ | 456,198 | ||||||||||||||
| Consumer | $ | 54,984 | $ | 56,965 | $ | 59,372 | $ | 61,429 | $ | 62,603 | $ | 62,327 | $ | 60,587 | ||||||||||||||
| Investment securities | $ | 267,214 | $ | 267,151 | $ | 278,716 | $ | 311,466 | $ | 330,053 | $ | 350,844 | $ | 357,061 | ||||||||||||||
| Total deposits | $ | 1,540,395 | $ | 1,537,071 | $ | 1,563,453 | $ | 1,550,977 | $ | 1,575,069 | $ | 1,579,959 | $ | 1,591,285 | ||||||||||||||
| Noninterest bearing | $ | 419,437 | $ | 423,970 | $ | 422,759 | $ | 427,670 | $ | 429,691 | $ | 466,628 | $ | 468,554 | ||||||||||||||
| Interest bearing | $ | 1,120,958 | $ | 1,113,101 | $ | 1,140,694 | $ | 1,123,307 | $ | 1,145,378 | $ | 1,113,331 | $ | 1,122,731 | ||||||||||||||
| Shareholders' equity | $ | 173,979 | $ | 164,177 | $ | 165,481 | $ | 161,873 | $ | 154,990 | $ | 155,156 | $ | 152,868 | ||||||||||||||
| Capital ratios: | ||||||||||||||||||||||||||||
| Tier 1 to risk weighted assets | 14.61 | % | 14.51 | % | 14.58 | % | 14.42 | % | 14.60 | % | 14.40 | % | 14.90 | % | ||||||||||||||
| Common Equity Tier 1 to risk weighted assets | 12.66 | % | 12.54 | % | 12.60 | % | 12.44 | % | 12.60 | % | 12.40 | % | 12.82 | % | ||||||||||||||
| Tier 1 Leverage | 11.88 | % | 11.69 | % | 11.48 | % | 11.30 | % | 11.25 | % | 11.25 | % | 11.47 | % | ||||||||||||||
| Total risk based capital | 15.83 | % | 15.75 | % | 15.83 | % | 15.64 | % | 15.81 | % | 15.60 | % | 16.15 | % | ||||||||||||||
| Asset quality: | ||||||||||||||||||||||||||||
| Net (charge-offs)/recoveries for the quarter | $ | (109 | ) | $ | (1,309 | ) | $ | (459 | ) | $ | (195 | ) | $ | (83 | ) | $ | (398 | ) | $ | (245 | ) | |||||||
| Nonperforming assets: (Period End) | ||||||||||||||||||||||||||||
| Nonaccrual loans | $ | 8,073 | $ | 9,438 | $ | 16,007 | $ | 3,956 | $ | 3,479 | $ | 2,972 | $ | 3,258 | ||||||||||||||
| Loans 90 days past due and accruing | 538 | 526 | 120 | 543 | 145 | 160 | 87 | |||||||||||||||||||||
| Total nonperforming loans and 90 day past due | $ | 8,611 | $ | 9,964 | $ | 16,127 | $ | 4,499 | $ | 3,624 | $ | 3,132 | $ | 3,345 | ||||||||||||||
| Other real estate owned | $ | 2,860 | $ | 2,978 | $ | 4,402 | $ | 4,493 | $ | 4,878 | $ | 4,482 | $ | 4,598 | ||||||||||||||
| Modified loans | $ | 1,016 | $ | 893 | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||
| Allowance for credit losses to gross loans | 1.24 | % | 1.26 | % | 1.27 | % | 1.24 | % | 1.24 | % | 1.25 | % | 1.31 | % | ||||||||||||||
| Allowance for credit losses to non-accrual loans | 223.09 | % | 189.90 | % | 112.34 | % | 441.86 | % | 492.84 | % | 568.81 | % | 517.83 | % | ||||||||||||||
| Allowance for credit losses to non-performing assets | 157.00 | % | 138.49 | % | 87.59 | % | 194.40 | % | 473.12 | % | 539.79 | % | 212.40 | % | ||||||||||||||
| Non-performing and 90 day past due loans to total loans | 0.59 | % | 0.70 | % | 1.14 | % | 0.32 | % | 0.26 | % | 0.23 | % | 0.26 | % | ||||||||||||||
| Non-performing loans and 90 day past due loans to total assets | 0.45 | % | 0.53 | % | 0.84 | % | 0.24 | % | 0.19 | % | 0.16 | % | 0.17 | % | ||||||||||||||
| Non-accrual loans to total loans | 0.56 | % | 0.66 | % | 1.13 | % | 0.28 | % | 0.25 | % | 0.22 | % | 0.25 | % | ||||||||||||||
| Non-performing assets to total assets | 0.60 | % | 0.69 | % | 1.07 | % | 0.47 | % | 0.44 | % | 0.39 | % | 0.41 | % | ||||||||||||||
| (Dollars in thousands - Unaudited) | September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | ||||||||||||
| Assets | ||||||||||||||||
| Cash and due from banks | $ | 61,140 | $ | 43,635 | $ | 85,578 | $ | 48,343 | ||||||||
| Interest bearing deposits in banks | 1,252 | 1,457 | 1,354 | 1,410 | ||||||||||||
| Cash and cash equivalents | 62,392 | 45,092 | 86,932 | 49,753 | ||||||||||||
| Investment securities – available for sale (at fair value) | 93,160 | 92,954 | 95,580 | 97,169 | ||||||||||||
| Investment securities – held to maturity (at cost) | 174,054 | 174,197 | 183,136 | 214,297 | ||||||||||||
| Restricted investment in bank stock, at cost | 5,765 | 3,395 | 3,390 | 5,250 | ||||||||||||
| Loans held for sale | 232 | 447 | 175 | 443 | ||||||||||||
| Loans | 1,447,883 | 1,422,975 | 1,412,327 | 1,406,667 | ||||||||||||
| Unearned fees | (333 | ) | (306 | ) | (314 | ) | (340 | ) | ||||||||
| Allowance for credit losses | (18,010 | ) | (17,923 | ) | (17,982 | ) | (17,480 | ) | ||||||||
| Net loans | 1,429,540 | 1,404,746 | 1,394,031 | 1,388,847 | ||||||||||||
| Premises and equipment, net | 30,704 | 29,688 | 30,268 | 31,459 | ||||||||||||
| Goodwill and other intangible assets | 11,856 | 11,938 | 12,021 | 12,103 | ||||||||||||
| Bank owned life insurance | 48,608 | 48,267 | 47,933 | 47,607 | ||||||||||||
| Deferred tax assets | 9,357 | 11,214 | 10,736 | 11,948 | ||||||||||||
| Other real estate owned, net | 2,860 | 2,978 | 4,402 | 4,493 | ||||||||||||
| Operating lease asset | 1,163 | 1,230 | 1,299 | 1,367 | ||||||||||||
| Accrued interest receivable and other assets | 46,435 | 42,453 | 43,050 | 41,124 | ||||||||||||
| Total Assets | $ | 1,916,126 | $ | 1,868,599 | $ | 1,912,953 | $ | 1,905,860 | ||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||||
| Liabilities: | ||||||||||||||||
| Non-interest bearing deposits | $ | 419,437 | $ | 423,970 | $ | 422,759 | $ | 427,670 | ||||||||
| Interest bearing deposits | 1,120,958 | 1,113,101 | 1,140,694 | 1,123,307 | ||||||||||||
| Total deposits | 1,540,395 | 1,537,071 | 1,563,453 | 1,550,977 | ||||||||||||
| Short-term borrowings | 50,206 | 62,564 | 79,494 | 45,418 | ||||||||||||
| Long-term borrowings | 120,929 | 70,929 | 70,929 | 110,929 | ||||||||||||
| Operating lease liability | 1,343 | 1,412 | 1,484 | 1,556 | ||||||||||||
| Allowance for credit loss on off balance sheet exposures | 856 | 801 | 858 | 873 | ||||||||||||
| Accrued interest payable and other liabilities | 26,994 | 30,352 | 29,925 | 32,904 | ||||||||||||
| Dividends payable | 1,424 | 1,293 | 1,329 | 1,330 | ||||||||||||
| Total Liabilities | 1,742,147 | 1,704,422 | $ | 1,747,472 | 1,743,987 | |||||||||||
| Shareholders’ Equity: | ||||||||||||||||
| Common Stock – par value $0.01 per share; Authorized 25,000,000 shares; issued and outstanding 6,4668,625 shares at September 30, 2024 and 6,639,888 at December 31, 2023 | 65 | 65 | 66 | 66 | ||||||||||||
| Surplus | 20,288 | 20,280 | 23,865 | 23,734 | ||||||||||||
| Retained earnings | 184,239 | 179,892 | 176,272 | 173,900 | ||||||||||||
| Accumulated other comprehensive loss | (30,613 | ) | (36,060 | ) | (34,722 | ) | (35,827 | ) | ||||||||
| Total Shareholders’ Equity | 173,979 | 164,177 | 165,481 | 161,873 | ||||||||||||
| Total Liabilities and Shareholders’ Equity | $ | 1,916,126 | $ | 1,868,599 | $ | 1,912,953 | $ | 1,905,860 | ||||||||
| 2024 | 2023 | |||||||||||||||||||||||||||
| Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||
| In thousands | (Unaudited) | |||||||||||||||||||||||||||
| Interest income | ||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 21,018 | $ | 20,221 | $ | 19,218 | $ | 19,290 | $ | 18,055 | $ | 16,780 | $ | 15,444 | ||||||||||||||
| Interest on investment securities | ||||||||||||||||||||||||||||
| Taxable | 1,647 | 1,697 | 1,744 | 1,834 | 1,792 | 1,779 | 1,768 | |||||||||||||||||||||
| Exempt from federal income tax | 56 | 53 | 53 | 53 | 123 | 268 | 270 | |||||||||||||||||||||
| Total investment income | 1,703 | 1,750 | 1,797 | 1,887 | 1,915 | 2,047 | 2,038 | |||||||||||||||||||||
| Other | 536 | 1,142 | 883 | 1,014 | 1,194 | 1,145 | 347 | |||||||||||||||||||||
| Total interest income | 23,257 | 23,113 | 21,898 | 22,191 | 21,164 | 19,972 | 17,829 | |||||||||||||||||||||
| Interest expense | ||||||||||||||||||||||||||||
| Interest on deposits | 6,579 | 6,398 | 6,266 | 6,498 | 5,672 | 4,350 | 2,678 | |||||||||||||||||||||
| Interest on short-term borrowings | 467 | 509 | 461 | 54 | 33 | 29 | 31 | |||||||||||||||||||||
| Interest on long-term borrowings | 983 | 968 | 1,359 | 1,445 | 1,475 | 1,419 | 602 | |||||||||||||||||||||
| Total interest expense | 8,029 | 7,875 | 8,086 | 7,997 | 7,180 | 5,798 | 3,311 | |||||||||||||||||||||
| Net interest income | 15,228 | 15,238 | 13,812 | 14,194 | 13,984 | 14,174 | 14,518 | |||||||||||||||||||||
| Credit loss expense/(credit) | ||||||||||||||||||||||||||||
| Loans | 195 | 1,251 | 961 | 530 | 322 | 434 | 414 | |||||||||||||||||||||
| Debt securities held to maturity | 14 | — | — | — | 45 | — | — | |||||||||||||||||||||
| Off balance sheet credit exposures | 55 | (57 | ) | (15 | ) | (111 | ) | (104 | ) | (39 | ) | 129 | ||||||||||||||||
| Provision for credit losses | 264 | 1,194 | 946 | 419 | 263 | 395 | 543 | |||||||||||||||||||||
| Net interest income after provision for credit losses | 14,964 | 14,044 | 12,866 | 13,775 | 13,721 | 13,779 | 13,975 | |||||||||||||||||||||
| Other operating income | ||||||||||||||||||||||||||||
| Net losses on investments, available for sale | — | — | — | 1 | — | — | — | |||||||||||||||||||||
| Gains on sale of residential mortgage loans | 141 | 59 | 82 | 59 | 182 | 86 | 54 | |||||||||||||||||||||
| Losses on disposal of fixed assets | — | — | — | (29 | ) | — | — | — | ||||||||||||||||||||
| Net gains/(losses) | 141 | 59 | 82 | 31 | 182 | 86 | 54 | |||||||||||||||||||||
| Other Income | ||||||||||||||||||||||||||||
| Service charges on deposit accounts | 555 | 556 | 556 | 567 | 569 | 546 | 516 | |||||||||||||||||||||
| Other service charges | 236 | 225 | 215 | 223 | 230 | 244 | 232 | |||||||||||||||||||||
| Trust department | 2,328 | 2,255 | 2,188 | 2,148 | 2,139 | 2,025 | 1,970 | |||||||||||||||||||||
| Debit card income | 1,000 | 999 | 932 | 1,120 | 995 | 1,031 | 955 | |||||||||||||||||||||
| Bank owned life insurance | 340 | 334 | 326 | 325 | 320 | 311 | 305 | |||||||||||||||||||||
| Brokerage commissions | 297 | 362 | 495 | 360 | 245 | 258 | 297 | |||||||||||||||||||||
| Other | 156 | 51 | 81 | 50 | 218 | 68 | 64 | |||||||||||||||||||||
| Total other income | 4,912 | 4,782 | 4,793 | 4,793 | 4,716 | 4,483 | 4,339 | |||||||||||||||||||||
| Total other operating income | 5,053 | 4,841 | 4,875 | 4,824 | 4,898 | 4,569 | 4,393 | |||||||||||||||||||||
| Other operating expenses | ||||||||||||||||||||||||||||
| Salaries and employee benefits | 7,160 | 7,256 | 7,157 | 6,390 | 6,964 | 6,870 | 7,296 | |||||||||||||||||||||
| FDIC premiums | 256 | 285 | 269 | 268 | 254 | 277 | 193 | |||||||||||||||||||||
| Equipment | 627 | 635 | 923 | 912 | 718 | 747 | 780 | |||||||||||||||||||||
| Occupancy | 709 | 652 | 954 | 1,169 | 745 | 742 | 785 | |||||||||||||||||||||
| Data processing | 1,333 | 1,422 | 1,318 | 1,384 | 1,388 | 1,306 | 1,306 | |||||||||||||||||||||
| Marketing | 151 | 184 | 134 | 311 | 242 | 160 | 120 | |||||||||||||||||||||
| Professional services | 477 | 449 | 486 | 631 | 488 | 520 | 494 | |||||||||||||||||||||
| Contract labor | 149 | 84 | 183 | 170 | 155 | 157 | 134 | |||||||||||||||||||||
| Telephone | 97 | 103 | 109 | 125 | 115 | 116 | 110 | |||||||||||||||||||||
| Other real estate owned | 124 | 14 | 86 | (370 | ) | 139 | 18 | 124 | ||||||||||||||||||||
| Investor relations | 84 | 91 | 53 | 65 | 74 | 123 | 83 | |||||||||||||||||||||
| Contributions | 65 | 66 | 50 | 12 | 74 | 79 | 64 | |||||||||||||||||||||
| Other | 1,082 | 1,123 | 1,159 | 1,242 | 1,429 | 1,396 | 1,149 | |||||||||||||||||||||
| Total other operating expenses | 12,314 | 12,364 | 12,881 | 12,309 | 12,785 | 12,511 | 12,638 | |||||||||||||||||||||
| Income before income tax expense | 7,703 | 6,521 | 4,860 | 6,290 | 5,834 | 5,837 | 5,730 | |||||||||||||||||||||
| Provision for income tax expense | 1,932 | 1,607 | 1,162 | 317 | 1,321 | 1,423 | 1,355 | |||||||||||||||||||||
| Net Income | $ | 5,771 | $ | 4,914 | $ | 3,698 | $ | 5,973 | $ | 4,513 | $ | 4,414 | $ | 4,375 | ||||||||||||||
| Basic net income per common share | $ | 0.89 | $ | 0.75 | $ | 0.56 | $ | 0.26 | $ | 0.67 | $ | 0.66 | $ | 0.66 | ||||||||||||||
| Diluted net income per common share | $ | 0.89 | $ | 0.75 | $ | 0.56 | $ | 0.26 | $ | 0.67 | $ | 0.66 | $ | 0.65 | ||||||||||||||
| Weighted average number of basic shares outstanding | 6,468 | 6,527 | 6,642 | 6,649 | 6,714 | 6,704 | 6,675 | |||||||||||||||||||||
| Weighted average number of diluted shares outstanding | 6,482 | 6,537 | 6,655 | 6,663 | 6,728 | 6,718 | 6,697 | |||||||||||||||||||||
| Dividends declared per common share | $ | 0.22 | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.20 | ||||||||||||||
Non-GAAP Financial Measures (unaudited)
Reconciliation of as reported (GAAP) and non-GAAP financial measures
The following tables below provide a reconciliation of certain financial measures calculated under generally accepted accounting principles ("GAAP") (as reported) and non-GAAP. A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed in the most directly comparable measure calculated and presented in accordance with GAAP in the United States. The Company’s management believes the presentation of non-GAAP financial measures provide investors with a greater understanding of the Company’s operating results in addition to the results measured in accordance with GAAP. While management uses these non-GAAP measures in its analysis of the Company’s performance, this information should not be viewed as a substitute for financial results determined in accordance with GAAP or considered to be more important than financial results determined in accordance with GAAP.
The following non-GAAP financial measures exclude accelerated depreciation expenses related to the branch closures.
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (in thousands, except for per share amount) | ||||||||||||||||
| Net income - as reported | $ | 5,771 | $ | 4,513 | $ | 14,383 | $ | 13,302 | ||||||||
| Adjustments: | ||||||||||||||||
| Accelerated depreciation expenses | — | — | 562 | — | ||||||||||||
| Income tax effect of adjustments | — | — | (137 | ) | — | |||||||||||
| Adjusted net income (non-GAAP) | $ | 5,771 | $ | 4,513 | $ | 14,808 | $ | 13,302 | ||||||||
| Diluted earnings per share - as reported | $ | 0.89 | $ | 0.67 | $ | 2.19 | $ | 1.99 | ||||||||
| Adjustments: | ||||||||||||||||
| Accelerated depreciation expenses | — | — | 0.08 | — | ||||||||||||
| Income tax effect of adjustments | — | — | (0.02 | ) | — | |||||||||||
| Adjusted basic and diluted earnings per share (non-GAAP) | $ | 0.89 | $ | 0.67 | $ | 2.25 | $ | 1.99 | ||||||||
| As of or for the three months ended | As of or for the nine months ended | |||||||||||||||
| September 30, | Septmber 30, | |||||||||||||||
| (in thousands, except per share data) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Per Share Data | ||||||||||||||||
| Basic net income per share (1) - as reported | $ | 0.89 | $ | 0.67 | $ | 2.20 | $ | 1.99 | ||||||||
| Basic net income per share (1) - non-GAAP | 0.89 | 0.67 | 2.26 | 1.99 | ||||||||||||
| Diluted net income per share (1) - as reported | $ | 0.89 | $ | 0.67 | $ | 2.19 | $ | 1.98 | ||||||||
| Diluted net income per share (1) - non-GAAP | 0.89 | 0.67 | 2.25 | 1.98 | ||||||||||||
| Basic book value per share | $ | 26.90 | $ | 23.08 | ||||||||||||
| Diluted book value per share | $ | 26.84 | $ | 23.03 | ||||||||||||
Significant Ratios:
| As of or for the nine months ended | ||||||||
| September 30, | ||||||||
| Return on Average Assets (1) - as reported | 0.99 | % | 0.93 | % | ||||
| Accelerated depreciation expenses | 0.03 | % | — | |||||
| Income tax effect of adjustments | -0.01 | % | — | |||||
| Adjusted Return on Average Assets (1) (non-GAAP) | 1.01 | % | 0.93 | % | ||||
| Return on Average Equity (1) - as reported | 11.52 | % | 11.44 | % | ||||
| Accelerated depreciation expenses | 0.34 | % | — | |||||
| Income tax effect of adjustments | (0.08 | %) | — | |||||
| Adjusted Return on Average Equity (1) (non-GAAP) | 11.78 | % | 11.44 | % | ||||
| (1) See reconcilation of this non-GAAP financial measure provided elsewhere herein. |
| Three Months Ended | ||||||||||||||||||||||||
| September 30 | ||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||
| (dollars in thousands) | Average Balance | Interest | Average Yield/Rate | Average Balance | Interest | Average Yield/Rate | ||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Loans | $ | 1,433,508 | $ | 21,035 | 5.84 | % | $ | 1,363,821 | $ | 18,071 | 5.26 | % | ||||||||||||
| Investment Securities: | ||||||||||||||||||||||||
| Taxable | 276,343 | 1,646 | 2.37 | % | 333,468 | 1,792 | 2.13 | % | ||||||||||||||||
| Non taxable | 7,795 | 100 | 5.10 | % | 13,826 | 219 | 6.28 | % | ||||||||||||||||
| Total | 284,138 | 1,746 | 2.44 | % | 347,294 | 2,011 | 2.30 | % | ||||||||||||||||
| Federal funds sold | 33,372 | 451 | 5.38 | % | 75,404 | 1,093 | 5.75 | % | ||||||||||||||||
| Interest-bearing deposits with other banks | 2,179 | 26 | 4.75 | % | 1,812 | 25 | 5.47 | % | ||||||||||||||||
| Other interest earning assets | 3,987 | 59 | 5.89 | % | 4,771 | 76 | 6.32 | % | ||||||||||||||||
| Total earning assets | 1,757,184 | 23,317 | 5.28 | % | 1,793,102 | 21,276 | 4.71 | % | ||||||||||||||||
| Allowance for credit losses | (18,197 | ) | (17,110 | ) | ||||||||||||||||||||
| Non-earning assets | 173,875 | 178,115 | ||||||||||||||||||||||
| Total Assets | $ | 1,912,862 | $ | 1,954,107 | ||||||||||||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||||||||||||
| Interest-bearing demand deposits | $ | 370,040 | $ | 1,604 | 1.72 | % | $ | 368,409 | $ | 1,354 | 1.46 | % | ||||||||||||
| Interest-bearing money markets - retail | 422,393 | 3,793 | 3.57 | % | 325,810 | 2,430 | 2.96 | % | ||||||||||||||||
| Interest-bearing money markets - brokered | 1 | — | 0.10 | % | — | — | — | % | ||||||||||||||||
| Savings deposits | 176,799 | 44 | 0.10 | % | 209,070 | 54 | 0.10 | % | ||||||||||||||||
| Time deposits - retail | 141,354 | 1,021 | 2.87 | % | 154,503 | 918 | 2.36 | % | ||||||||||||||||
| Time deposits - brokered | 8,641 | 117 | 5.39 | % | 68,850 | 916 | 5.28 | % | ||||||||||||||||
| Short-term borrowings | 57,553 | 467 | 3.23 | % | 49,190 | 33 | 0.27 | % | ||||||||||||||||
| Long-term borrowings | 73,864 | 983 | 5.29 | % | 110,929 | 1,475 | 5.28 | % | ||||||||||||||||
| Total interest-bearing liabilities | 1,250,645 | 8,029 | 2.55 | % | 1,286,761 | 7,180 | 2.21 | % | ||||||||||||||||
| Non-interest-bearing deposits | 459,309 | 478,673 | ||||||||||||||||||||||
| Other liabilities | 32,155 | 32,327 | ||||||||||||||||||||||
| Shareholders’ Equity | 170,753 | 156,346 | ||||||||||||||||||||||
| Total Liabilities and Shareholders’ Equity | $ | 1,912,862 | $ | 1,954,107 | ||||||||||||||||||||
| Net interest income and spread | $ | 15,288 | 2.73 | % | $ | 14,096 | 2.50 | % | ||||||||||||||||
| Net interest margin | 3.46 | % | 3.12 | % | ||||||||||||||||||||
| Nine Months Ended | ||||||||||||||||||||||||
| September 30, | ||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||
| (dollars in thousands) | Average Balance | Interest | Average Yield/ Rate | Average Balance | Interest | Average Yield/ Rate | ||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Loans | $ | 1,418,964 | $ | 60,506 | 5.70 | % | $ | 1,320,674 | $ | 50,323 | 5.09 | % | ||||||||||||
| Investment Securities: | ||||||||||||||||||||||||
| Taxable | 288,977 | 5,087 | 2.35 | % | 337,014 | 5,339 | 2.12 | % | ||||||||||||||||
| Non taxable | 7,800 | 289 | 4.95 | % | 21,963 | 1,183 | 7.20 | % | ||||||||||||||||
| Total | 296,777 | 5,376 | 2.42 | % | 358,977 | 6,522 | 2.43 | % | ||||||||||||||||
| Federal funds sold | 54,624 | 2,246 | 5.49 | % | 66,708 | 2,502 | 5.01 | % | ||||||||||||||||
| Interest-bearing deposits with other banks | 1,628 | 75 | 6.15 | % | 2,827 | 70 | 3.31 | % | ||||||||||||||||
| Other interest earning assets | 4,161 | 240 | 7.70 | % | 3,643 | 114 | 4.18 | % | ||||||||||||||||
| Total earning assets | 1,776,154 | 68,443 | 5.15 | % | 1,752,829 | 59,531 | 4.54 | % | ||||||||||||||||
| Allowance for loan losses | (18,020 | ) | (16,311 | ) | ||||||||||||||||||||
| Non-earning assets | 185,660 | 174,411 | ||||||||||||||||||||||
| Total Assets | $ | 1,943,794 | $ | 1,910,929 | ||||||||||||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||||||||||||
| Interest-bearing demand deposits | $ | 362,102 | 4,541 | 1.68 | % | $ | 358,883 | $ | 3,375 | 1.26 | % | |||||||||||||
| Interest-bearing money markets - retail | 402,314 | 10,567 | 3.51 | % | 324,583 | 5,537 | 2.28 | % | ||||||||||||||||
| Interest-bearing money markets - brokered | 37 | 1 | 3.61 | % | — | — | — | % | ||||||||||||||||
| Savings deposits | 183,096 | 138 | 0.10 | % | 227,179 | 189 | 0.11 | % | ||||||||||||||||
| Time deposits - retail | 148,458 | 3,155 | 2.84 | % | 134,732 | 1,750 | 1.74 | % | ||||||||||||||||
| Time deposits - brokered | 20,967 | 841 | 5.36 | % | 46,918 | 1,849 | 5.27 | % | ||||||||||||||||
| Short-term borrowings | 70,755 | 1,437 | 2.71 | % | 51,780 | 93 | 0.24 | % | ||||||||||||||||
| Long-term borrowings | 82,571 | 3,310 | 5.35 | % | 89,394 | 3,496 | 5.23 | % | ||||||||||||||||
| Total interest-bearing liabilities | 1,270,300 | 23,990 | 2.52 | % | 1,233,469 | 16,289 | 1.77 | % | ||||||||||||||||
| Non-interest-bearing deposits | 473,610 | 490,891 | ||||||||||||||||||||||
| Other liabilities | 33,134 | 31,108 | ||||||||||||||||||||||
| Shareholders’ Equity | 166,750 | 155,461 | ||||||||||||||||||||||
| Total Liabilities and Shareholders’ Equity | $ | 1,943,794 | $ | 1,910,929 | ||||||||||||||||||||
| Net interest income and spread | $ | 44,453 | 2.63 | % | $ | 43,242 | 2.77 | % | ||||||||||||||||
| Net interest margin | 3.34 | % | 3.30 | % | ||||||||||||||||||||
Exhibit 99.2
INVESTOR PRESENTATION Third Quarter 2024 MyBank.com
2 Forward looking statements This presentation contains forward - looking statements as defined by the Private Securities Litigation Reform Act of 1995 . Forward - looking statements do not represent historical facts, but are statements about management's beliefs, plans and objectives about the future, as well as its assumptions and judgments concerning such beliefs, plans and objectives . These statements are evidenced by terms such as "anticipate," "estimate," "should," "expect," "believe," "intend," and similar expressions . Although these statements reflect management's good faith beliefs and projections, they are not guarantees of future performance and they may not prove true . The beliefs, plans and objectives on which forward - looking statements are based involve risks and uncertainties that could cause actual results to differ materially from those addressed in the forward - looking statements . For a discussion of these risks and uncertainties, see the section of the periodic reports that First United Corporation files with the Securities and Exchange Commission entitled "Risk Factors . Whether actual results will conform to expectations and predictions is subject to known and unknown risks and uncertainties . Actual results could be materially different from management’s expectations . This presentation should be read in conjunction with our Annual Report on Form 10 - K, as amended, for the year ended December 31 , 2023 , including the sections of the report entitled “Risk Factors”, as well as the reports and other documents that we subsequently file with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at www . sec . gov or at our website at www . mybank . com . Except as required by law, we do not intend to publish updates or revisions of any forward - looking statements we make to reflect new information, future events or otherwise .
3 Table of Contents I. II. III. Corporate Overview Financial Performance Appendices Pg. 4 Pg. 10 Pg. 32
4 Our Mission To enrich the lives of our associates, customers, communities and shareholders through uncommon commitment to service and customized financial solutions. Corporate Overview Founded: 1900 Headquarters: Oakland, MD Locations: 22 branches Business Lines: ▪ Commercial & Retail Banking ▪ Trust Services ▪ Wealth Management Ticker: FUNC (Nasdaq) Website: www.MyBank.com Overview West Virginia Maryland • Pittsburgh, PA • Washington, DC • Columbus, OH • Baltimore, MD • Richmond, VA Morgantown, WV භ • Philadelphia, PA • Harrisburg, PA Winchester, VA භ Star denotes Oakland, Maryland Headquarters
5 East Region Central Region West Region $560,561 $435,411 $322,331 Loans (000s) $486,660 $772,673 $140,967 Deposits (000s) 4% 45% 3% Deposit Market Share (1) (at June 30, 2024) 10 9 3 Branches Note: Out of market loans represent $114 million and are not reflected in this table (1) Source: FDIC Market Share Data, most current. Deposit market share for each region includes the following counties: West : Monongalia, WV Central: Garrett, MD; Allegany, MD; Mineral, WV East: Washington, MD; Frederick, MD; Berkeley, WV Core Markets
6 6 Core Strengths ▪ Diversified revenue stream driven by trust and brokerage fee income provides protection during times of low interest rates Diversified Revenue Stream ▪ Stable legacy markets produce steady low - cost funding ▪ Technology and business relationships drive growth Core Deposit Franchise ▪ Diverse and experienced Board with the skills to oversee risks, strategic initiatives and governance best practices ▪ Ongoing Board succession strategy Engaged & Diverse Leadership ▪ Supporting local causes with financial education, consultation and robust products and services ▪ Knowledgeable associates committed to helping clients & the communities we serve Culture of Engagement ▪ Well - established operational infrastructure will support future growth ▪ Expense management focus, hybrid work environment and technology drive cost savings Expense Structure ▪ Strong underwriting guidelines and risk management framework ▪ Focus on risk mitigation, loan concentration management and information security Robust Enterprise Risk Management ▪ Innovative and dynamic approach to attracting and retaining clients ▪ Investment in FinTech funds provides early exposure to new technology Forward - Thinking Approach ▪ Regulatory capital ratios significantly above regulatory requirements ▪ Significant access to liquidity sources Financial Strength
7 7 Total Shareholder Return 1-Year 3-Year 5-Year First United 95.3 % 82.7 % 58.1 % S&P US Small Cap Banks 50.2 % 3.3 % 37.3 % 2024 Proxy Peer Group 28.82 % 4.5 % 14.4 % ▪ Average daily volume increased ▪ 9,687 shares 2023 (1 year ending 9.30.23) ▪ 20,459 shares 2024 (1 year ending 9.30.24) ▪ Dividend increased 10% in third quarter 2024
8 Risk Management, Monitoring & Mitigation Underlies all Strategic Priorities ▪ Low net charge - offs and strong asset quality resulting from conservative and proactive credit culture ▪ ACL level of 1.24%; future provisioning based on loan growth, economic environment and asset quality changes ▪ Diversified commercial loan portfolio and geographic footprint ▪ Disciplined loan growth strategy, concentration management, stress testing and exception tracking and monitoring ▪ Well - defined loan approval levels ▪ Centralized risk rating and monitoring of risk rating migration and delinquency trends ▪ Robust annual third - party loan review ▪ Maintaining a slightly asset sensitive balance sheet and positioning for down rate environment ▪ Limiting longer - term investment exposure and actively managing loan and deposit terms ▪ Focused on capturing core, low - cost deposits ▪ Monitoring dynamic and static rate ramp scenarios ▪ Board regularly briefed on cyber - security matters ▪ Robust information security training programs for associates and Board ▪ Regular third - party review and testing of information security, compliance processes and cybersecurity controls ▪ No security breaches to - date ▪ Adaptive fraud detection and management ▪ Strong capital levels well above regulatory “well - capitalized” definition ▪ Conservative dividend payout policy to improve TCE and maintain capital during turbulent economic environment ▪ Capital stress tests indicate Bank is well positioned to absorb potential losses ▪ Stock repurchase program approved by board ▪ Loan to deposit ratio of 94% ▪ Liquidity contingency plan in place and funds position monitored daily ▪ Liquidity stress testing performed quarterly with strong liquidity under various scenarios ▪ Available borrowing capacity of $353 million through correspondent lines of credit, FHLB and the Federal Reserve ▪ Strong, stable low - cost core deposit franchise of 91% of total deposit portfolio Cyber - Security & Fraud Monitoring Asset Quality Capital Liquidity Management Interest Rate Sensitivity
9 Strategic Pillars & Key Objectives Culture & Human Capital ▪ Attract and hire passionate, diverse talent to engage with clients and prospects across broader geographics. ▪ Drive associate retention and foster career development through mentoring initiatives, leadership programs, and educational opportunities. ▪ Expand associate engagement , cross - functional collaboration , and communication . ▪ Enhance succession plan by fostering forward - thinking strategies that promote innovation and long - term growth. Product & Service Revenue Diversification ▪ Increase non - interest income as a percentage of revenue to reduce dependence on net interest margin. ▪ Expand business development training and outreach efforts to drive strategic sales growth and deepen community - oriented business owner relationships . ▪ Revamp customer segmentation to focus on expanding product and service utilization by the existing customer base. ▪ Improve brand awareness in growth markets. Resource Optimization ▪ Optimize balance sheet mix to maximize profitability. ▪ Expand net interest margin through a disciplined approach to loan and deposit portfolio repricing. ▪ Effectively manage Capital through repurchase opportunities and effective investor communication . ▪ Improve efficiency by utilizing technology, leveraging data, artificial intelligence, and digital alternatives. ▪ Reduce monetary loss and administrative costs associated with cyber security and fraud. ▪ Allocate resources to enhance market share and execute tactics to optimize geographic presence. ▪ Cultivate relationships for potential future bank and wealth expansion. Effective use of technology, marketing and communications, and an environmental focus underlies all strategic priorities.
10 Third Quarter Financial Highlights $5.8 Million Net Income (1) $0.89 Diluted EPS (1) 1.20% * ROAA (1) 14.45 * ROATCE (1) 3.46% NIM ▪ Total assets increased $47.5 million compared to June 30, 2024 ▪ Consolidated net income (1) of $5.8 million in 3Q24 compared to $4.5 million in 3Q23 and $4.9 million in linked quarter; pre - provision net revenue of $8.0 million compared to $6.1 million and $7.7, respectively ▪ Net interest income, on a non - GAAP, FTE basis* remained stable in 3Q24 compared to 2Q24; increased interest income was offset by increased interest expense ▪ Asset quality remains stable with the ratio of the allowance for credit losses (“ACL”) to loans outstanding at 1.24% in 3Q24 and 1.26% in the linked quarter ▪ Efficiency ratio of 60.52% (1) for the third quarter of 2024 compared to 61.39% for the linked quarter; decrease primarily attributable to the stable net interest income, non - interest expense and increased non - interest income (1) See Appendix for a reconciliation of these non - GAAP financial measure * 3Q2024 Annualized
11 Year to Date Financial Highlights $14.8 Million Net Income (1) $2.26 Diluted EPS (1) 1.01% * ROAA (1) 12.69% * ROATCE (1) 3.34% NIM ▪ Total assets increased $10.3 million compared to December 31, 2023 ▪ Consolidated net income (1) of $14.8 million as of September 30, 2024 compared to $13.3 million as of September 30, 2023; pre - provision net revenue of $22.1 million as of September 30, 2024 compared to $18.6 million as of September 30, 2023 ▪ Net interest income, on a non - GAAP, FTE basis* increased slightly by 2.80% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023; increased interest income o ffset by an increase in interest expense due to the continued competitive deposit landscape ▪ Asset quality remains stable with the ratio of the allowance for credit losses (“ACL”) to loans outstanding at 1.24% at September 30, 2024 compared to 1.26% at December 31, 2023 ▪ Efficiency ratio of 62.46% (1) as of September 30, 2024 compared to 66.42% September 30, 2023; decrease primarily attributable to the increase in net interest income, reduced expenses and increased non - interest income (1) See Appendix for a reconciliation of these non - GAAP financial measure * 3Q2024 Annualized
12 Long - Term Growth Pre - Provision Net Revenue ($ in millions) (1) $23.2 $30.8 $32.5 $25.9 $22.1 2020 2021 2022 2023 3Q2024 (1) See Appendix for a reconciliation of these non - GAAP financial measures $1.97 $3.54 $3.76 $2.80 $2.26 2020 2021 2022 2023 3Q2024 Diluted Earnings per Share (1) Total Deposits ($ in millions) $1,422 $1,469 $1,571 $1,551 $1,540 2020 2021 2022 2023 3Q2024 Total Gross Loans, including PPP ($ in millions) $1,168 $1,154 $1,279 $1,407 $1,448 2020 2021 2022 2023 3Q2024 $114 PPP $8 PPP
13 Solid Profitability (1) See Appendix for a reconciliation of these non - GAAP financial measures Long - term Strategic Target 13% - 15% Long - term Strategic Target 1.25% - 1.60% Core ROAA (non - GAAP (1) ) Core ROATCE (non - GAAP (1) ) 0.86% 1.35% 1.39% 0.97% 1.01% 2020 2021 2022 2023 3Q2024 11.92% 19.78% 19.94% 12.92% 12.69% 2020 2021 2022 2023 3Q2024
14 Total 1 - 4 Family 36% CRE - NOO 21% C&I 19% CRE - OO 11% C&D 6% Consumer 4% Multi - family 3% Loan Diversification Loan Portfolio Mix (09/30/2024) RE/Rental/Leasing NOO 22% RE/Rental/ Leasing OO, C&I 19% All Other 19% Accommodations 12% Services 7% RE/Rental/Leasing Multifamily 5% Trade 3% Construction - Developers 1% Health Care / Social Assistance 4% RE/Rental/Leasing - Developers 5% Construction - All Other 3% Commercial Loan Mix (09/30/2024)
15 Commercial Industry Mix by Origination Year Commercial Industry Mix by Origination Prior to 2000 2000 - 2005 2006 - 2010 2011 - 2015 2016 - 2020 2021 - Current Total RE / Rental / Leasing - NOO -$ 4,237,633$ 832,798$ 7,736,621$ 73,936,436$ 120,156,906$ 206,900,392$ RE / Rental / Leasing - OO, C&I 10,681 29,466 914,549 8,988,354 47,775,853 120,406,884 178,125,787 RE / Rental / Leasing - Multifamily - 41,564 2,022,256 9,592,647 14,238,011 23,230,732 49,125,210 RE / Rental / Leasing - Developers - 48,504 76,198 - 1,869,444 41,823,228 43,817,374 Construction - All Other 38,500 67,247 75,708 1,771,957 5,683,516 17,214,616 24,851,544 Construction - Developers - - 2,201,744 75,708 381,297 8,814,639 11,473,387 Accommodations - 1,420,409 3,661,495 10,554,231 46,939,784 25,904,955 88,480,873 Services - 2,091,276 369,125 8,743,640 13,834,644 39,731,415 64,770,099 Health Care / Social Assistance - 1,858,371 4,848,386 7,694,077 23,076,254 37,477,089 Trade - 227,596 146,964 1,356,710 9,172,075 14,896,209 25,799,555 All Other 39,214 286,793 1,011,992 837,757 23,524,181 145,929,394 171,629,332 Totals 88,395$ 8,450,488$ 13,171,201$ 54,506,012$ 245,049,317$ 581,185,230$ 902,450,643$
16 Commercial Real Estate Focus on risk mitigation and managing of concentrations ▪ CRE / Total Capital: 233% ▪ ADC / Total Capital: 42% * There are no office buildings located in metropolitan markets or over four stories. ** There are no major/big box retail tenants. OFFICE* Geography Note Book Balance Number of loans Avg Loan Balance Note Book Balance Number of loans Avg Loan Balance Note Book Balance Number of loans Avg Loan Balance Central 10,993,308$ 33 333,131$ 6,454,763$ 6 1,075,794$ 17,448,072$ 39 447,386$ East 5,012,144$ 13 385,550$ 28,778,842$ 13 2,213,757$ 33,790,986$ 26 1,299,653$ OOM 78,067$ 1 78,067$ -$ 0 -$ 78,067$ 1 78,067$ West 7,642,809$ 16 477,676$ 40,069,051$ 17 2,357,003$ 47,711,861$ 33 1,445,814$ Grand Total 23,726,328$ 63 376,608$ 75,302,657$ 36 2,091,740$ 99,028,985$ 99 1,000,293$ % of Gross Loans 1.64% 5.20% 6.84% % of CRE 4.72% 14.98% 19.69% RETAIL** Geography Note Book Balance Number of loans Avg Loan Balance Note Book Balance Number of loans Avg Loan Balance Note Book Balance Number of loans Avg Loan Balance Central 9,019,604$ 19 474,716$ 359,012$ 3 119,671$ 9,378,616$ 22 148,763$ East 7,949,473$ 11 722,679$ 40,383,239$ 7 5,769,034$ 48,332,713$ 18 2,511,626$ OOM 2,764,429$ 2 1,382,214$ 15,402,906$ 4 3,850,727$ 18,167,335$ 6 3,651,356$ West 2,594,406$ 6 432,401$ 13,048,951$ 10 1,304,895$ 15,643,356$ 16 1,145,259$ Grand Total 22,327,911$ 38 587,577$ 69,194,108$ 24 2,883,088$ 91,522,020$ 62 1,476,162$ % of Gross Loans 1.54% 4.78% 6.32% % of CRE 4.44% 13.76% 18.20% CRE - Owner Occupied CRE - Non-Owner Occupied Total CRE - Owner Occupied CRE - Non-Owner Occupied Total
17 Variable Rate Loans and Repricing * Includes personal lines of credit and home equity lines Loan Type Reprices Monthly % to Total Type Repricing Repricing 2024 % to Total Type RepricingRepricing 2025 % to Total Type Repricing Repricing 2026 + % to Total Type Repricing Grand Total Commercial Loans 37,055,518$ 18.3% 10,893,889$ 55.2% 14,366,060$ 30.8% 104,232,906$ 29.7% 166,548,374$ Commercial Lines of Credit 73,717,766 36.5% - 0.0% - 0.0% 402,121 0.1% 74,119,887 Commercial Floor Plans 32,042,458 15.9% - 0.0% - 0.0% - 0.0% 32,042,458 Mortgage - 0.0% 8,839,689 44.8% 32,236,691 69.2% 246,578,857 70.2% 287,655,237 Home Equity Lines (no Locks) 10,807,348 5.4% - 0.0% - 0.0% - 0.0% 10,807,348 Other Consumer Lines* 48,352,742 23.9% - 0.0% - 0.0% - 0.0% 48,352,742 Totals 201,975,832$ 100.0% 19,733,579$ 100.0% 46,602,751$ 100.0% 351,213,884$ 100.0% 619,526,047$
18 Credit Quality ALL / ACL Trends (Net Charge - Offs)/Average Loans Nonaccrual Loans / Total Loans NPAs / Total Assets 0.35% 0.21% 0.27% 0.28% 0.56% 2020 2021 2022 2023 3Q2024 0.99% 0.60% 0.46% 0.48% 0.60% 2020 2021 2022 2023 3Q2024 1.41% 1.38% 1.14% 1.24% 1.24% 2020 2021 2022 2023 3Q2024 0.13% - 0.02% --- - 0.06% - 0.07% - 0.18% 2020 2021 2022 2023 3Q2024 Nonaccrual loans decreased by $6.6 million in Q2 as compared to Q1 due to repayment of $5.5 million and a $1.1 million charge - of f on one C&I relationship.
19 Investment Portfolio Duration Book Yield Portfolio % Par (000s) Sector 6.75 2.28% 28% 78,388 Treasury/Agency 4.98 2.46% 19% 51,715 Fixed MBS 6.42 1.89% 26% 71,902 CMO 6.40 4.40% 5% 12,645 Municipal 1.90 5.76% 1% 1,000 Corporate 4.48 1.98% 21% 57,649 Other 5.82 2.26% 100.0 $273,299 TOTAL Ratings: 100% of municipal holdings are rated A or better* $277.4 Million Thereafter 2028 2027 2026 2025 2024 Year $142,497 $17,975 $32,673 $30,053 $26,094 $8,414 Annual Cashflow ($000’s) Base Case Portfolio Total Cashflow Treasury/ Agency CMO Fixed MBS Other Municipal Corporate The Other category above of $57.6 million includes agency backed multi - family, commercial mortgage - backed securities. Trust Preferred securities are not included in total above.
20 Shocked Investment Portfolio Unrealized Gains / Losses Capital Impact Up400 Up300 Up200 Up100 BaseCase Dn100 Dn200 Intent - 29,001 - 26,025 - 22,365 - 18,639 - 14,879 - 11,173 - 7,567 AFS - 58,573 - 51,428 - 42,761 - 33,780 - 24,765 - 14,722 - 4,796 HTM - 87,574 - 77,453 - 65,126 - 52,419 - 39,644 - 25,895 - 12,363 Total Corp Excess Above Well - Capitalized (After Proforma Sale) Regulatory Well - Capitalized Thresholds Federal Reserve Minimum RBC Thresholds Bank Difference Bank Pro - Forma AFS + HTM Sale Bank As Reported Corp Difference Corp Pro - Forma AFS + HTM Sale Corp As Reported (35,488) 164,425 199,913 (35,488) 189,826 225,314 Tier 1 Capital (36,099) 182,642 218,741 (35,737) 208,502 244,240 Total Risk Based Capital (RBC) 4.20% 6.50% 4.50% (1.99%) 11.29% 13.28% (1.96%) 10.70% 12.66% CET 1 Ratio 4.71% 8.00% 6.00% (1.99%) 11.29% 13.28% (1.90%) 12.71% 14.61% Tier 1 Ratio 3.96% 10.00% 8.00% (1.99%) 12.54% 14.53% (1.87%) 13.96% 15.83% Total RBC Ratio 5.01% 5.00% 4.00% (1.90%) 8.78% 10.68% (1.87%) 10.01% 11.88% Leverage Ratio Locally held TIF bonds of $1.8 million and Trust Preferred securities of $18.7 million have been excluded from the sale impac t
21 Deposits 30% 34% 32% 28% 27% 14% 16% 23% 23% 25% 40% 39% 36% 37% 39% 16% 11% 8% 10% 9% 0% 0% 0% 2% 0% 2020 2021 2022 2023 3Q2024 NIB Demand IB Demand MMA & Savings CDs - Retail CDs - Brokered $1.57 $1.42 $1.54 $1.57 $1.58 Deposit Composition ($ in billions as of 09/30/2024) 82% 79% 81% 91% 94% Loan to Deposit Ratio 2020 2021 2022 2023 3Q2024 Deposit levels relatively flat due to fierce competition for deposits and recent inflationary spending by consumers, businesses and municipalities. % Balance Deposit Type 77% $1,181,065,681 Insured Deposits 18% $286,067,910 Uninsured – Uncollateralized Deposits 5% $73,263,491 Uninsured - Collateralized Deposits % Balance (MMs) Deposit Type 50% $764,128,593 Retail Deposits 50% $776,268,489 Business Deposits
22 Funding 45% 45% 10% Commercial Deposits Retail Deposits Borrowings Funding Mix Brokered/Wholesale Maturities $40 $25 $25 March 2026 March 2026 September 2025 Dollars (in millions) FHLB Advance FHLB Advance 3.83% Federal Home Loan Bank 4.04% 3.83% Brokered CD Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank
23 Net Interest Margin (1) See Appendix for a reconciliation of these non - GAAP financial measures 3.99% 3.63% 3.85% 4.63% 5.15% 0.91% 0.51% 0.44% 1.92% 2.52% 3.34% 3.28% 3.56% 3.26% 3.34% 0.49% 0.24% 0.21% 1.16% 1.62% -0.5% 0.5% 1.5% 2.5% 3.5% 4.5% 5.5% 2020 2021 2022 2023 3Q2024 Yield on Earning Assets Cost of Interest-bearing Liabilities Net Interest Margin Cost of Deposits
24 Diversified Fee Income (1) See Appendix for a reconciliation of these non - GAAP financial measures Composition 53% Trust and Brokerage 17% Service Charges 1% Net Gain on Loan Sales 22% Debit Card Income 6% Bank - owned Life Insurance 1% Other Noninterest Income Non - Interest Income Mix 3Q2024 Trust & Brokerage Assets Under Management (MMs) ▪ First United’s non - interest income (1) comprised 25% of operating revenue as of September 30, 2024 ▪ Fee - based business provides stable growth, and a diversified revenue stream not directly tied to interest rates, as well as opportunities to build client relationships ▪ First United’s diverse array of products provides opportunities to fully engage with customers and produce stable increases to earnings $1,377 $1,482 $1,359 $1,532 $1,653 2020 2021 2022 2023 3Q2024
25 Committed to Efficiency & Innovation (1) See Appendix for a reconciliation of these non - GAAP financial measures Efficient operational platforms and fraud protection ▪ Mortgage Bot ▪ SecureLOCK Premium Debit Card Fraud ▪ Credit Insights/ Savvy Money Cross Marketing Tool ▪ ProfitStars forecasting model ▪ Automated Loan Booking ▪ Vericast Consumer Loan Lead Generator ▪ Customer Service Center Enhancements ▪ U1 - Connect Customer Relationship Management Software Efficiency Ratio (1) Strategic Target 53% - 58% FinTech Investments ▪ Provision IAM ▪ FinTech Funds Planned solutions for a seamless and secure client experience: ▪ Zelle for Business ▪ Online Banking External Transfer ▪ New Customer Relationship Management Tool ▪ Consumer Online and Mobile Banking Digital Platform Upgrade ▪ Business Online and Mobile Banking Digital Platform Upgrade ▪ Check Fraud Prevention Solution Decrease in first nine months of 2024 due primarily to increased net interest income related to loans repricing to higher rates, controlled expenses and increased non - interest income related to wealth. 64.6% 57.5% 56.4% 65.1% 62.5% 2020 2021 2022 2023 3Q2024
26 Liquidity Position Net Availability ($ in thousands) Amount Used ($ in thousands) Amount Available ($ in thousands) Liquidity Sources (09/30/2024) Internal Sources $40,486 $40,486 Excess Cash $31,876 $31,876 Unpledged Securities (BV) External Sources $54,998 $29,000 $83,998 Federal Reserve (Discount Window) $140,000 $158,092 $0 $92,914 $0 $140,000 $251,006 $0 Correspondent Unsecured Lines of Credit FHLB Bank Term Funding Program $425,452 $121,914 $547,366 Total Funding Sources
27 Interest Rate Risk (1) Standard Model Assumptions Interest Rate Risk Sensitivity ▪ The Bank’s interest rate risk position is stress tested under three interest rate ramp scenarios to determine the impact on net interest income, net income and capital under dynamic and static balance sheet conditions. ▪ The Bank’s net interest income position at a slightly asset sensitive position. ▪ The Bank’s largest risk from an interest rate risk perspective is falling rate scenarios. ▪ Assumptions regarding offering rates, loan and investment prepayment speeds, beta and decay rates are reviewed and adjusted on a quarterly basis. Management Outlook & Strategy ▪ Disciplined loan pricing ▪ Manage deposit pricing on relationship and exception basis ▪ Deposit acquisition through short - term CD promotions and adjustable - rate money market products for businesses, municipalities and consumers ▪ Actively reducing deposit rates concurrent with market adjustments ▪ $25 million FHLB advance maturing in September 2025 ▪ $25 million FHLB advance maturing in March 2026 ▪ $40 million FHLB advance maturing in March 2026 +400 +300 +200 +100 Flat - 100 - 200 - 300 - 400 7.4% 7.5% 6.3% 3.7% (3.8%) (7.7%) (11.9%) (15.6%) Net Interest Income (09/30/24) 4.1% 4.8% 4.4% 2.7% (2.9%) (6.0%) (8.9%) (12.8%) Net Interest Income (06/30/24) (21.8%) (15.5%) (10.1%) (3.8%) 1.8% 1.0% (3.1%) (9.7%) EVE (06/30/24) 12 Month Sensitivity Shock
28 Capital Management CET1 Ratio Leverage Ratio Tier 1 Ratio Total Risk - Based Capital Ratio Regulatory Well - Capitalized 10% 5% 8% 6.5% 14.83% 14.64% 15.06% 14.42% 14.61% 2020 2021 2022 2023 3Q2024 16.08% 15.89% 16.12% 15.64% 15.83% 2020 2021 2022 2023 3Q2024 10.36% 10.80% 11.46% 11.30% 11.88% 2020 2021 2022 2023 3Q2024 12.61% 12.50% 12.96% 12.44% 12.66% 2020 2021 2022 2023 3Q2024
29 Capital Management Tangible Book Value / Share TCE Ratio $17.17 $19.61 $20.90 $22.56 $25.06 2020 2021 2022 2023 3Q2024 6.97% 7.56% 7.59% 7.91% 8.51% 2020 2021 2022 2023 3Q2024
30 Strategic Targets Long Term Strategic Target Range (*) Non - GAAP 12/31/2023 Actual 12/31/2023 Actual 12/31/2022 Metric 8% - 12% - 26% (1) - 40% 27% EPS Growth (YoY) Strong Shareholder Return 20% - 25% 34.6% 34.6% 15.9% Dividend Payout Ratio 1.25% - 1.60% 0.97% (1) 0.78% 1.39% ROAA 13% - 15% 12.92% (1) 10.51% 19.94% ROATCE 8% - 10% 7.91% 7.91% 7.59% TCE Ratio 6% - 8% 0.0% 0.0% 3.3% Revenue Growth (YoY) High Quality, Diversified Revenue Stream 21% - 23% 24.8% 24.8% 23.7% Non - Int Inc / Revenue 3.5% - 3.8% 3.26% 3.26% 3.56% N IM 7% - 10% 9.9% 9.9% 10.9% % Loan Growth Balance Sheet Growth 70% - 76% 74% 74% 69% Loans / Assets 85% - 90% 91% 91% 81% Loans / Deposits 53% - 58% 65.1% (1) 65.1% (1) 56.4% Efficiency Ratio (adjusted for non - core items) Highly Efficient Operations 0.50% - 1.00% 0.32% 0.32% 0.30% NPLs / Loans Robust Risk Enterprise Management 0.10% - 0.50% - 0.07% - 0.07% - 0.06% Net Charge Offs / Avg. Total Loans (*) Targets reviewed on an annual basis – Revised July 2024 (1) See Appendix for a reconciliation of these non - GAAP financial measures
31 Strong Investor Relations & Shareholder Engagement Members of the Board and senior management routinely engage with shareholders and other stakeholders, and management regularly updates the Board in the context of ongoing investor discussions. These engagements help the Board and management gather feedback on a variety of topics, including strategic and financial performance, ESG disclosure, executive compensation, Board composition, and leadership structure. Clear long - term strategic plan with performance targets x Dedicated Investor Relations contact x Investor conferences and prospective investor engagement x Investor presentations and periodic outreach to institutional and retail shareholders x How to contact your Board: Shareholders and interested parties wishing to contact our Board may send a letter to First United Co rporation Board of Directors, c/o Tonya K. Sturm, Secretary, First United Corporation, 19 South Second Street, Oakland, Maryland, 21550 - 00 09 or by e - mail at tsturm@mybank.com. The Secretary will deliver all shareholder communications directly to the Board for consideratio n.
32 I. II. III. IV. Management Team Board of Directors ESG Journey & Statistics Non - GAAP Reconciliation Pg. 33 Pg. 34 Pg. 37 Pg. 39 Appendices
33 Management Team Carissa L. Rodeheaver Chairman of the Board, President & CEO 33+ years career with First United with in - depth industry, wealth management, financial and operational experience Jason B. Rush SVP & Chief Operating Officer 30+ years with in - depth industry, retail, risk and compliance and operations experience Tonya K. Sturm SVP & Chief Financial Officer, Corp. Secretary & Treasurer 35+ years of banking, audit, credit, retail, risk and compliance and financial and operational experience R.L. Fisher SVP & Chief Revenue Officer 25+years with in - depth industry, retail, commercial and mortgage banking experience Keith R. Sanders SVP & Chief Wealth Officer 30+ years specializing in wealth management, estate planning, trust administration and financial planning Our leadership team reflects the diversity of thought from the communities we serve, executes on our strategy and drives shareholder returns. Julie W. Peterson SVP & Chief Credit Officer 30+ years with in - depth industry, commercial banking, and credit experience
34 34 John F. Barr Independent Director Chairman of the Board, Ellsworth Electric, Inc. Sanu Chadha Independent Director Managing Partner, M&S Consulting Christy DiPietro Independent Director, Audit Chair Chartered Financial Analyst, Hidden Cove Advisory Patricia Milon Independent Director Principal, Milford Advisory Group, LLC I. Robert Rudy Independent Director President, I.R. Rudy’s, Inc. Marisa Shockley Independent Director , Compensation Chair Retired H. Andrew Walls, III Independent Director President, MPB Print & Sign Superstore Member, MEGBA, LLC Beth E. Moran Independent Director, The Law Offices of Beth E. Moran Brian Boal Lead Independent Director, Nomination & Governance Chair Boal & Associates, PC Carissa L. Rodeheaver Chairman of the Board, President & CEO First United Corporation and First United Bank & Trust Board of Directors Kevin Hessler Independent Director , Principal, LSWG, Inc.
35 Board of Directors Thoughtful Evaluation and Evolution Our Board is comprised of a diverse group of directors who bring a variety of perspectives, experience, and characteristics to First United. Director Diversity 55% 91% of our directors are gender and/or racially diverse of our directors are independent 0 - 5 5 - 10 10+ TENURE >60 50 - 60 <50 AGE Our Nominating and Governance Committee is responsible for determining directorship criteria, identifying and evaluating candidates for the Board, and regularly assessing the Board’s governance practices. x Policy to interview a diverse slate of candidates x 100% Independent Board Committees x Majority Voting Standard for Director Elections x Annual Committee and Self - Evaluations x Balanced Tenure, with four directors added in the past four years x Retirement policy, at the age of 75 x Routine shareholder & stakeholder engagement
36 Board of Directors The First United board of directors brings a diverse range of skills, experiences, and backgrounds to the work of overseeing ris k and strategy. With experience in fields such as banking, government, accounting, investing, project management, technology, and a range of local entreprene uri al businesses, they apply these diverse backgrounds to their work on behalf of our shareholders. Director Skills Matrix Walls Shockley 1 Rudy Rodeheaver Moran Milon Hessler 1 DiPietro 1 Chadha Boal 1 Barr x x x x x x x x Executive Leadership x x x Public Company Board Experience x x Information Technology x x x x x x Financial Services/ Banking x x x x Asset Management x x x Brokerage/ Investment Banking x x x x x x x x x x x Strategic Planning x x x x x Accounting/Finance x x x x Regulatory x x x x x x x x Risk Management x x Legal Expertise x x x x x x x Governance Board Tenure and Age 18 10 31 11 1 4 .5 3 3 10 10 Tenure 63 59 71 58 60 61 67 62 47 51 70 Age 1 Qualifies as a Financial Expert for proxy purposes. Brokered CD
37 Continuous Progress We continue to advance our ESG profile over time, recognizing the importance of our key stakeholders – including our customers a nd our communities – to our business. Over the past few years, we have implemented several important enhancements to align our ESG profile with our long - term investors’ expectations for best - in - class corporate governance. x Enhanced structure to more strongly align pay and performance Compensation x Enhanced Board oversight of Environment & Social issues x Enhanced Disclosure on Environment & Social issues x Continued progress on FUNC ESG strategy ESG Governance x Revised stock ownership guidelines for Directors and Executives x Declassified the Board of Directors Adopted Proxy Access x Shareholder access to change By - laws x Management majority vote proposal received strong shareholder support (albeit short of super - majority threshold needed) x Ongoing Board refreshment x Adopted right to call a special meeting. x Adopted mandatory director retirement policy x Adopted plurality voting standard for contested director elections x Enhanced shareholder engagement program x Modernized NGC Charter x Adopted a diversity policy for director refreshment x Formalized LID role & responsibilities
38 ESG at First United ▪ LED lighting installed throughout branch network and operations center ▪ Recycling, focus on reduced printing (65% reduction since pre - COVID) ▪ Leveraging virtual meeting opportunities to reduce travel footprint ▪ 46% of deposit customers and 11% of loan customers enrolled in electronic statements ▪ 15 tons of paper securely shredded and recycled, 1,800 pounds of electronics and computers and 500 pounds of toner cartridges recycled Environmental ▪ Created Diversity Engagement team, led by our newly appointed Director of Diversity and Engagement ▪ Developed a formal workforce Diversity and Inclusion Policy ▪ Formalized a policy requiring a diverse slate of candidates for each future open board seat ▪ First United Community Dreams Foundation supporting financial literacy, education, affordable housing and neighborhoods ▪ Formed a Veteran Employee Resource Group and hold an annual Veterans Day Celebration ▪ Formalized a paid time off policy for community volunteerism Social ▪ Adopting best - in - class governance practices and shareholder rights ▪ Recent Enhancements – Board refreshment, Board declassification, Proxy access and Shareholder access to change By - laws ▪ Future Enhancements under consideration - Majority Voting Standard Governance
39 This presentation includes certain non - GAAP financial measures, including pre - provision net revenue, net income, earnings per share (basic and diluted), return on average assets, return on average tangible common equity, tangible common equity, tangible assets, the ratio of tangible common equity to tangible assets, tangible book value per share, net interest margin, and efficiency ratio . These non - GAAP financial measures and any other non - GAAP financial measures that are discussed in this presentation should not be considered in isolation, and should be considered as additions to, and not substitutes for or superior to, measures of financial performance prepared in accordance with GAAP . There are a number of limitations related to the use of these non - GAAP financial measures versus their nearest GAAP equivalents . For example, other companies may calculate non - GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of the Company’s non - GAAP financial measures as tools for comparison . The following is a reconciliation of the non - GAAP financial measures used in (or conveyed orally during) this presentation to their most directly comparable GAAP financial measures . Non - GAAP Reconciliation ($000s, except where otherwise noted) YTD 2020 2021 2022 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 9/30/2024 Pre-Provision Net Revenue ("PPNR") Pre-tax income, as reported 17,788$ 26,309$ 33,181$ 19,476$ 5,730$ 5,837$ 5,834$ 2,075$ 4,860$ 6,521$ 7,703$ 19,084$ Add back: Provision expense 5,401 (817) (643) 1,619 543 394 263 419 946 1,192 266 2,404$ Add back: FHLB penalty, gross - 2,368 - - - - - - - - -$ Add back: Contribution 1,000 - - - - - - - - -$ Add back: Insurance reimbursement (1,375) - - - - - - - - -$ Add back: Settlement expense, gross - 3,300 - - - - - - - - -$ Add back: Securities loss 4,214 4,214 - - -$ Add back: Branch closure expenses 623 623 562 - 562$ Pre-Provision Net Revenue, as adjusted 23,189$ 30,785$ 32,538$ 25,932$ 6,273$ 6,231$ 6,097$ 7,331$ 6,368$ 7,713$ 7,969$ 22,050$ Net Income Net income, as reported 13,841$ 19,770$ 25,048$ 15,060$ 4,375$ 4,414$ 4,513$ 1,758$ 3,698$ 4,914$ 5,770$ 14,382$ Less: Preferred stock dividends - - - - - - - - - - -$ Net income, available to common shareholders,as reported (a) 13,841$ 19,770$ 25,048$ 15,060$ 4,375$ 4,414$ 4,513$ 1,758$ 3,698$ 4,914$ 5,770$ 14,382$ Add back: FHLB penalty, net of tax - 1,790 - - - - - - - - - - Add back: Contribution, net of tax 770 - - - - - - - - - - Add back: Insurance reimbursement, net of tax (1,059) - - - - - - - - - - Add back: Settlement expense, net of tax - 2,565 - - - - - - - - - - Add back: Securities loss 3,259 3,259 - - - - Add back: Branch closure expenses 482 482 425 - - 425 Net income, as adjusted (b) 13,841$ 23,836$ 25,048$ 18,801$ 4,375$ 4,414$ 4,513$ 5,499$ 4,123$ 4,914$ 5,770$ 14,807$
40 Non - GAAP Reconciliation , continued ($000s, except where otherwise noted) YTD 2020 2021 2022 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 9/30/2024 Weighted Average Common shares - basic (actual) (d) 7,003,955 6,710,463 6,649,740 6,685,676 6,675,181 6,703,805 6,714,267 6,649,493 6,643,898 6,526,553 6,467,597 6,546,016 Weighted Average Common shares - diluted (actual) (e) 7,013,164 6,716,587 6,661,055 6,701,243 6,697,102 6,717,527 6,727,579 6,662,765 6,655,637 6,536,546 6,481,620 6,557,934 Earnings Per Share - Basic Earnings Per Share - Basic, as reported (a)/(d) 1.98$ 2.95$ 3.77$ 2.25$ 0.66$ 0.66$ 0.67$ 0.26$ 0.56$ 0.75$ 0.89$ 2.20$ Add back: FHLB penalty, net of tax - 0.27 - - - - - - - - - - Add back: Contribution, net of tax 0.12 - - - - - - - - - - Add back: Insurance reimbursement, net of tax (0.16) - - - - - - - - - - Add back: Settlement expense, net of tax - 0.37 - - - - - - - - - - Add back: Securities loss 0.49 0.49 - - - - Add back: Branch closure expenses 0.07 0.07 0.06 - - 0.06 Earnings Per Share - Basic, as adjusted (b)/(d) 1.98$ 3.54$ 3.77$ 2.81$ 0.66$ 0.66$ 0.67$ 0.82$ 0.62$ 0.75$ 0.89$ 2.26$ Earnings Per Share - Diluted Earnings Per Share - Diluted, as reported (a)/(e) 1.97$ 2.95$ 3.76$ 2.24$ 0.65$ 0.66$ 0.67$ 0.26$ 0.56$ 0.75$ 0.89$ 2.20$ Add back: FHLB penalty, net of tax - 0.27 - - - - - - - - - - Add back: Contribution, net of tax 0.12 - - - - - - - - - - Add back: Insurance reimbursement, net of tax (0.16) - - - - - - - - - - Add back: Settlement expense, net of tax - 0.37 - - - - - - - - - - Add back: Securities loss 0.49 - - - 0.49 - - - - Add back: Branch closure expenses 0.07 - - - 0.07 0.06 - - 0.06 Earnings Per Share - Diluted, as adjusted (b)/(e) 1.97$ 3.54$ 3.76$ 2.80$ 0.65$ 0.66$ 0.67$ 0.82$ 0.62$ 0.75$ 0.89$ 2.26$
41 Non - GAAP Reconciliation , continued ($000s, except where otherwise noted) YTD 2020 2021 2022 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 9/30/2024 Return on Average Assets (quarter and YTD annualized) Average Assets ( c) 1,613,669$ 1,765,148$ 1,801,711$ 1,924,119$ 1,892,111$ 1,930,093$ 1,954,107$ 1,963,840$ 1,958,684$ 1,933,390$ 1,912,887$ 1,943,802$ Return on Average Assets, as reported (a)/(c) 0.86% 1.12% 1.39% 0.78% 0.94% 0.92% 0.92% 0.36% 0.76% 1.02% 1.20% 0.99% Add Back: Impact of Tax Reform Act Add back: FHLB penalty, net of tax - 0.10% 0.00% 0.00% - - - - - - Add back: Contribution, net of tax 0.04% 0.00% 0.00% - - - - - - Add back: Insurance reimbursement, net of tax -0.06% 0.00% 0.00% - - - - - - Add back: Settlement expense, net of tax - 0.15% 0.00% 0.00% - - - - - - Add back: Securities loss 0.17% 0.17% - - - - Add back: Branch closure expenses 0.02% 0.02% 0.09% 0.00% 0.00% 0.02% Return on Average Assets, as adjusted (b)/(c) 0.86% 1.35% 1.39% 0.97% 0.94% 0.92% 0.92% 0.55% 0.85% 1.02% 1.20% 1.01% Return on Average Common Stockholders' Equity Return on Average Tangible Common Stockholders' Equity Average common stockholders' equity (f) 127,101$ 132,550$ 137,685$ 155,631$ 149,416$ 155,358$ 156,346$ 156,141$ 163,944$ 165,040$ 170,778$ 166,758$ Average common stockholders' equity, as adjusted 127,101 132,550 137,685 155,631 149,416 155,358 156,346 156,141 163,944 165,040 170,778 166,758 Less: Average goodwill and intangibles 11,004 11,004 12,043 12,279 12,405 12,320 12,236 12,156 12,071 11,991 11,907 11,990 Average tangible common equity (g) 116,097$ 121,546$ 125,642$ 143,352$ 137,011$ 143,038$ 144,110$ 143,985$ 151,873$ 153,049$ 158,871$ 154,768$ Return on average common stockholders' equity, as reported (a)/(f) 10.89% 14.92% 18.19% 9.68% 11.87% 11.40% 11.45% 4.47% 9.07% 11.98% 13.44% 11.52% Add back: FHLB penalty, net of tax - 1.47% 0.00% 0.00% - - - - - - - - Add back: Contribution 0.63% 0.00% 0.00% - - - - - - - - Add back: Insurance reimbursement -1.15% 0.00% 0.00% - - - - - - - - Add back: Settlement expense, net of tax 2.11% 0.00% 0.00% - - - - - - - - Add back: Securities loss 2.10% 2.10% - - - - Add back: Branch closure expenses 0.31% 0.31% 1.04% - - 0.25% Return on average common stockholders' equity, as adjusted (b)/(f) 10.89% 17.98% 18.19% 12.09% 11.87% 11.40% 11.45% 6.88% 10.11% 11.98% 13.44% 11.78% Return on average tangible common equity, as reported (a)/(g) 11.92% 16.27% 19.94% 10.51% 12.95% 12.38% 12.42% 4.84% 9.79% 12.91% 14.45% 12.41% Add Back: Impact of Tax Reform Act 0.00% 0.00% - - - - - - - - Add back: FHLB penalty, net of tax - 1.47% 0.00% 0.00% - - - - - - - - Add back: Contribution 0.63% 0.00% 0.00% - - - - - - - - Add back: Insurance reimbursement -0.87% 0.00% 0.00% - - - - - - - - Add back: Settlement expense, net of tax - 2.11% 0.00% 0.00% - - - - - - - - Add back: Securities loss 2.10% 2.10% - - - - Add back: Branch closure expenses 0.31% 0.31% 1.04% - - 0.27% Return on average tangible common equity, as adj (b)/(g) 11.92% 19.61% 19.94% 12.92% 12.95% 12.38% 12.42% 7.25% 10.83% 12.91% 14.45% 12.69%
42 Non - GAAP Reconciliation , continued ($000s, except where otherwise noted) YTD 2020 2021 2022 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 9/30/2024 Tangible Book Value per Common Share Total common equity, as reported (h) 131,047$ 141,900$ 151,793$ 161,873$ 152,868$ 155,156$ 154,990$ 161,873$ 165,481$ 164,177$ 173,979$ 173,979$ Less: Goodwill and intangibles 11,004 12,052 12,433 12,103 12,350 12,268 12,185 12,103 12,021 11,938 11,856 11,856 Total tangible common equity (i) 120,043$ 129,848$ 139,360$ 149,770$ 140,518$ 142,888$ 142,805$ 149,770$ 153,460$ 152,239$ 162,123$ 162,123$ Common shares outstanding - basic (actual) (j) 6,992,911 6,620,955 6,666,428 6,639,888 6,688,710 6,711,422 6,715,170 6,639,888 6,648,645 6,465,601 6,468,625 6,468,625 Tangible book value per basic common share (i)/(j) 17.17$ 19.61$ 20.90$ 22.56$ 21.01$ 21.29$ 21.27$ 22.56$ 23.08$ 23.55$ 25.06$ 25.06$ Tangible common equity to tangible assets ("TCE Ratio") Total assets, as reported (k) 1,733,414 1,729,838 1,848,169 1,905,860 1,937,442 1,928,346 1,928,201 1,905,860 1,912,953 1,868,599 1,916,126 1,916,126 Less: Goodwill 11,004 12,052 12,433 12,103 12,350 12,268 12,185 12,103 12,021 11,938 11,856 11,856 Total tangible assets (l) 1,722,410$ 1,717,786$ 1,835,736$ 1,893,757$ 1,925,092$ 1,916,078$ 1,916,016$ 1,893,757$ 1,900,932$ 1,856,661$ 1,904,270$ 1,904,270$ Tangible common equity to tangible assets (k)/(l) 6.97% 7.56% 7.59% 7.91% 7.30% 7.46% 7.45% 7.91% 8.07% 8.20% 8.51% 8.51% Net interest margin (tax equivalent) Net interest income 48,546$ 52,542$ 57,631$ 56,869$ 14,516$ 14,175$ 13,984$ 14,194$ 13,812$ 15,239$ 15,229$ 44,280$ Tax equivalent adjustment 917 939 940 629 227 226 117 59 57 57 59 173$ Tax equivalent net interest income (m) 49,463$ 53,481$ 58,571$ 57,498$ 14,743$ 14,401$ 14,101$ 14,253$ 13,869$ 15,296$ 15,288$ 44,453$ Average earning assets (n) 1,480,165$ 1,629,299$ 1,647,151$ 1,766,240$ 1,692,998$ 1,771,707$ 1,793,102$ 1,806,562$ 1,787,955$ 1,763,917$ 1,757,184$ 1,776,154$ Net interest margin (tax equivalent) (m)/(n) 3.34% 3.28% 3.56% 3.26% 3.53% 3.26% 3.12% 3.13% 3.12% 3.49% 3.46% 3.34% Efficiency Ratio Noninterest expense, as reported 43,934$ 47,764$ 43,145$ 50,244$ 12,638$ 12,511$ 12,785$ 12,310$ 12,881$ 12,364$ 12,313$ 37,558$ Less: FHLB penalty, gross (2,368) - - - - - - - - - - Less: Contribution (1,000) - - - - - - - - - - Less: Settlement expense - (3,300) - - - - - - - - - - Less: Branch closure expenses 623 623 562 - - 562 Noninterest expense, adjusted (o) 43,934$ 41,096$ 43,145$ 49,621$ 12,638$ 12,511$ 12,785$ 11,687$ 12,319$ 12,364$ 12,313$ 36,996$ Net interest income 48,546$ 52,542$ 57,631$ 56,868$ 14,516$ 14,174$ 13,984$ 14,194$ 13,812$ 15,239$ 15,229$ 44,280$ Noninterest income 18,577 20,714 17,906 14,471 4,394 4,569 4,898 610 4,875 4,841 5,053 14,769 Less: Insurance reimbursement - (1,375) - - - - - Less: Securities loss (4,214) (4,214) - - - Tax equivalent adjustment 917 939 940 629 227 226 117 59 57 57 59 173 Total tax equivalent revenue (p) 68,040$ 72,820$ 76,477$ 76,182$ 19,137$ 18,969$ 18,999$ 19,077$ 18,744$ 20,137$ 20,341$ 59,222$ Efficiency ratio, as adjusted (o)/(p) 64.57% 56.44% 56.41% 65.12% 66.03% 65.94% 67.28% 61.25% 65.71% 61.39% 60.52% 62.46%
Cover |
Oct. 21, 2024 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Oct. 21, 2024 |
| Entity File Number | 0-14237 |
| Entity Registrant Name | First United Corporation |
| Entity Central Index Key | 0000763907 |
| Entity Tax Identification Number | 52-1380770 |
| Entity Incorporation, State or Country Code | MD |
| Entity Address, Address Line One | 19 South Second Street |
| Entity Address, City or Town | Oakland |
| Entity Address, State or Province | MD |
| Entity Address, Postal Zip Code | 21550 |
| City Area Code | 301 |
| Local Phone Number | 334-9471 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common Stock |
| Trading Symbol | FUNC |
| Security Exchange Name | NASDAQ |
| Entity Emerging Growth Company | false |
1 Year First United Chart |
1 Month First United Chart |
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