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UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 24, 2023
First United Corporation
(Exact name of registrant as specified in
its charter)
Maryland |
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0-14237 |
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52-1380770 |
(State or other jurisdiction of |
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(Commission file number) |
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(IRS Employer |
incorporation or organization) |
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Identification No.) |
19 South Second Street, Oakland, Maryland 21550
(Address of principal
executive offices) (Zip Code)
(301) 334-9471
(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) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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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 |
Common Stock |
FUNC |
Nasdaq Stock Market |
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 July 24, 2023, First United Corporation (the
“Corporation”) issued a press release describing its financial results for the three-
and six-month periods ended June 30, 2023. 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 July 26, 2023, the
Corporation published an investor presentation that discusses certain aspects of its financial results for the three- and six- month periods
ended June 30, 2023. 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:
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.
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FIRST UNITED CORPORATION |
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Dated: July 26, 2023 |
By: |
/s/ |
Tonya K. Sturm |
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Tonya K. Sturm |
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Senior Vice President & CFO |
Exhibit 99.1
FIRST UNITED CORPORATION ANNOUNCES
SECOND QUARTER 2023 EARNINGS
OAKLAND, MARYLAND—July 24, 2023: First
United Corporation (NASDAQ: FUNC), a bank holding company and the parent company of First United Bank & Trust (the “Bank”),
today announced earnings results for the three- and six-month periods ended June 30, 2023. Consolidated net income was $4.4 million
for the second quarter of 2023, or $0.66 per share (basic and diluted), compared to $5.4 million, or $0.82 per share (basic and diluted),
for the second quarter of 2022 and $4.4 million, or $0.66 per basic share and $0.65 per diluted share, for the first quarter of 2023.
Year to date income was $8.8 million, or $1.32 per basic share $1.31 per diluted share, compared to $11.1 million, or $1.68 per share
(basic and diluted) for the same period of 2022.
According to Carissa Rodeheaver, President and
CEO, “Despite the challenging and competitive environment, net income for the second quarter remained stable as we saw improved
fee income and were able to hold expenses. The net interest margin declined as we expected, driven by the increased expense of our deposit
portfolio. We experienced strong loan growth in both the consumer and commercial portfolios although we expect growth to slow as we head
into the second half of the year. Asset quality, capital and available liquidity remain strong.”
Second Quarter Financial Highlights:
| · | Total
assets at June 30, 2023 decreased by $9.0 million, or 0.5%, when compared to March 31,
2023 and increased by $80.2 million, or 4.3%, when compared to December 31, 2022. Significant
changes during the second quarter included: |
| o | Cash
balances decreased by $67.3 million when compared to March 31, 2023 and increased $14.2
million when compared to December 31, 2022. The year-to-date increase in cash was related
to management’s strategic decision to obtain $80.0 million in Federal Home Loans Bank
(“FHLB”) borrowings and $61.1 million in brokered deposits in the first quarter,
offset by strong loan growth in the second quarter. |
| o | Investment
securities decreased by $6.2 million when compared to March 31, 2023 and by $10.7 million
when compared to December 31, 2022, due primarily to the normal principal amortization
in 2023. |
| o | Gross
loans increased by $61.0 million when compared to March 31, 2023 and by $70.5 million
when compared to December 31, 2022, as: |
| § | commercial
balances increased by $39.9 million during the second quarter and by $37.3 million when compared
to December 31, 2022, |
| § | residential
mortgage balances increased by $19.4 million during the second quarter and by $31.1 million
when compared to December 31, 2022; and |
| § | consumer
loans increased by $1.7 million during the second quarter and by $2.1 million when compared
to December 31, 2022. |
| o | Deposits
decreased by $11.3 million when compared to March 31, 2023 and increased by $9.2 million
when compared to December 31, 2022 due to the addition of $61.1 million in brokered
deposits, which was partially offset by decreases in other deposit balances due to customer
spending habits and two large commercial customers utilizing $39.5 million in cash in the
second quarter of 2023. |
| · | The
ratio of the allowance for credit losses (“ACL”) to loans outstanding was 1.25%
at June 30, 2023 as compared to 1.31% at March 31, 2023 and to an allowance for
loan loss (“ALL”) of 1.14% at December 31, 2022. |
| o | On
January 1, 2023, the Company adopted Accounting Standards Codification (“ASC”)
326 – Financial Instruments, Credit Losses (CECL) and increased the ACL by $2.9 million
for the Day 1 adjustment, which included $2.0 million to the ACL and $0.9 million related
to life-of-loan reserve on unfunded loan commitments. For periods prior to adoption of CECL,
the Company recognized ALL based on an incurred loss model. |
| o | Total
provision expense related to credit losses was $0.4 million for the second quarter of 2023
as compared to provision expense of $0.5 million for the first quarter of 2022 and $0.6 million
for the second quarter of 2022. |
| · | Consolidated
net income was $4.4 million for the second quarter of 2023. |
| o | Net
interest margin, on a non-GAAP, fully tax equivalent (“FTE”) basis, was 3.39%
for the second quarter of 2023 compared to 3.53% for the first quarter of 2023 and 3.46%
for the second quarter of 2022. |
| o | Non-interest
income increased by $0.2 million in the second quarter of 2023 when compared to the first
quarter of 2023, due to increases in service charges, debit card income, wealth management
and gains on sales of mortgages. |
Operating
expenses decreased by $0.1 million quarter over quarter in 2023 driven by a $0.4 million decrease in salaries and benefits, a $0.1 million
decrease in occupancy and equipment and $0.1 million decline in net expenses attributable to other real estate owned (“OREO”).
These decreases were offset by increases of $0.1 million in FDIC assessments, $0.1 million in investor relations expenses and $0.3 million
in other expenses.
Income Statement Overview
Consolidated net income was $4.4 million for
the second quarter of 2023 compared to $5.4 million for the second quarter of 2022 and $4.4 million for the first quarter of 2023. Basic
and diluted net income was $0.66 per share for the second quarter of 2023, compared to basic and diluted net income per share of $0.82
for the second quarter of 2022. For the first quarter of 2023, basic net income was $0.66 per share and diluted net income was $0.65
per share.
The decrease in net income year-over-year was
primarily driven by a $1.1 million increase in salaries and employee benefits due to an increase in health insurance costs related to
unusually high claims, as well as increased salary expense for new hires, merit increases effective April 1, 2023, increased incentive
compensation, and decreases in deferred loan costs due to decrease in loan reductions. Data processing expenses increased by $0.1 million,
FDIC premiums increased by $0.1 million and miscellaneous expenses increased by $0.7 million primarily attributable to increased pension
plan of $0.3 million, check fraud related expenses of $0.2 million, and increases in membership dues and licenses, mortgage escrow, debit
card expense, and miscellaneous loan fees, partially offset by decreases in personnel related expense and loan service fees. An increase
in net interest income of $0.2 million and a decrease in income tax expense of $0.3 million also partially offset the decrease. The provision
for credit losses was $0.4 million for the second quarter of 2023 compared to provision for loan loss of $0.6 million for the second
quarter of 2022.
Compared to the linked quarter, net income was
stable. Net interest income for the three months ended June 30, 2023 decreased by $0.3 million and was driven by an increase in
interest expense of $2.5 million, partially offset by an increase of $2.1 million in interest income. Provision for credit losses decreased
by $0.1 million due primarily to the continued strong credit quality of our loan portfolio and decreased historical loss factors, which
was offset slightly by the strong loan growth and increases in other qualitative factors related to the uncertain economic environment.
Other operating income remained stable, including service charges, wealth management income, and debit card income. Salaries and employee
benefits decreased by $0.4 million primarily due to decreases in health insurance costs and incentive compensation. Net other real estate
owned expenses decreased by $0.1 million related to gains on sales of OREO properties recognized in the second quarter of 2023. Miscellaneous
expenses increased by $0.3 million due to increases in FDIC assessments of $0.1 million, check fraud related expenses of $0.1 million,
and investor relations costs of $0.1 million.
Year to date net income for the first six months
of 2023 was $8.8 million compared to $11.1 million for the same period in 2022. The year-over-year decrease was primarily driven by a
$2.4 million in salaries and employee benefits year over year due primarily to increased salary expense of $1.1 million related to new
hires and merit increases effective April 1, 2023, increased health insurance costs of $0.8 million associated with unusually high
claims and increased incentive payouts of $0.2 million. Occupancy and equipment expense increased by $0.2 million, data processing expense
increased by $0.3 million, and FDIC assessments increased by $0.1 million. Other miscellaneous expenses, such as loan service fees, dues
and licenses, check fraud expenses, employee benefit plan expense, and miscellaneous expenses increased by $1.1 million. Provision for
credit losses increased by $0.7 million when compared to prior year. These increases were partially offset by an increase in net interest
income of $1.4 million, gains on sales of mortgages of $0.1 million, service charges on deposit accounts of $0.1 million, and debit card
income of $0.1 million.
Net Interest Income and Net Interest Margin
Net interest income, on a non-GAAP, FTE basis,
increased by $0.2 million for the second quarter of 2023 when compared to the second quarter of 2022. This increase was driven by an
increase of $5.2 million in interest income from an overall increase in yield of 86 basis points on interest earning assets and an increase
in average balances of $152.7 million. Interest income on loans increased by $3.9 million due to the increase of 81 basis points in 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
rising rate environment and an increase in average balances of $117.1 million. Investment income increased by $0.2 million. The increase
of $5.0 million in interest expense was driven by an increase of 142 basis points on interest paid on deposit accounts as well as an
increase of $126.1 million in average balances of interest-bearing deposit accounts when compared to the same period of 2022. Increased
deposit pricing is a result of the continued pressure on deposits as well as a shift in the deposit portfolio mix from non-interest-bearing
deposits to interest-bearing accounts including the Insured Cash Sweep (“ICS”) product to ensure full FDIC insurance coverage.
The net interest margin for the three months ended June 30, 2023 was 3.24% compared to 3.52% for the three months ended June 30,
2022.
Comparing the second quarter of 2023 to the first
quarter of 2023, net interest income, on a non-GAAP, FTE basis, decreased by $0.3 million This decrease was driven by an increase of
$2.1 million in interest income offset by a $2.5 million increase in interest expense. Interest paid on long-term borrowings increased
by $0.8 million due to $80.0 million in FHLB borrowings obtained during the first quarter and an increase of interest rates on variable
rate trust preferred borrowings. Interest expense on deposits increased by $1.7 million due to an increase in the average rate paid and
an increase in average deposit balances of $31.2 million during the quarter. The increase in deposit balances was attributable to the
addition of $61.1 million in brokered deposits late in the first quarter, offset by customary fluctuations in commercial and municipal
deposits in the quarter and declines due to intense competition for deposits and increased customer utilization of cash. Interest income
on loans increased by $1.3 million related to an overall increase of 21 basis points in yield.
Comparing the six months ended June 30,
2023 to the six months ended June 30, 2022, net interest income, on a non-GAAP, FTE basis, increased by $1.4 million. Interest income
increased by $8.9 million and interest expense increased by $7.5 million. The yield on earning assets increased 79 basis points to 4.45%
in 2023 compared to 3.66% in 2022 in correlation with the rising interest rate environment and new loans booked at higher rates. Interest
expense on deposits increased $6.2 million while the average balances increased $100.0 million and interest on long-term borrowings increased
$1.4 million relating to $80.0 million in FHLB borrowings obtained during the first quarter of 2023 and an increase of interest rates
on variable rate trust preferred borrowings. The increased interest expense resulted in an overall increase of 122 basis points on interest
bearing liabilities. The net interest margin for the six months ended June 30, 2023 was 3.39% compared to 3.46% for the six months
ended June 30, 2022.
Non-Interest Income
Other operating income, including gains, for
the second quarter of 2023 increased slightly by $0.1 million when compared to the same period of 2022. Increases in service charges,
debit card income, and gains on sales of mortgages were partially offset by decreases in wealth management income attributable to the
decline in market values of assets under management.
On a linked quarter basis, other operating income,
including gains on sales of mortgages, debit card income, service charges, and wealth management income, remained stable.
Other operating income for the six months ended
June 30, 2023 remained stable when compared to the same period of 2022. This increase was primarily due to the increase in gains
on sales of residential mortgage loans of $0.1 million, service charges on deposit accounts of $0.1 million, and debit card income of
$0.1 million, which was partially offset by decreases in wealth management income attributable to the decline in market values of assets
under management.
Non-Interest Expense
Operating
expenses increased by $1.9 million when comparing the second quarter of 2023 to the second quarter of 2022. This increase was
primarily driven by a $1.1 million increase in salaries and employee benefits due to an increase in health insurance costs related to
unusually high claims, as well as increased salary expense for new hires, merit increases effective April 1, 2023, and increased
incentive compensation. Data processing expenses increased by $0.1 million, FDIC premiums increased by $0.1 million and miscellaneous
expenses increased by $0.7 million primarily attributable to increased employee benefit plan costs of $0.3 million, check fraud related
expenses of $0.2 million, and increases in membership dues and licenses, mortgage escrow interest expense, debit card expense, and miscellaneous
loan fees, partially offset by decreases in personnel related expense and loan service fees.
Comparing
the second quarter of 2023 to the first quarter of 2023, operating expenses decreased by $0.1 million. Salaries and employee benefits
decreased by $0.4 million primarily due to decreases in health insurance costs, incentive compensation and reduced in loan costs. Net
OREO expenses decreased by $0.1 million related to gains on sales of OREO properties recognized in the second quarter. Miscellaneous
expenses increased by $0.3 million due to increases in FDIC assessments of $0.1 million, check fraud related expenses of $0.1 million,
and investor relations costs of $0.1 million attributable to our annual shareholder meeting and proxy.
For
the six months ended June 30, 2023, non-interest expenses increased by $3.9 million when compared to the six months ended June 30,
2022. Salaries and employee benefits increased by $2.4 million year over year due primarily to increased salary expense of $1.1 million
related to new hires and merit increases effective April 1, 2023, increased health insurance costs of $0.8 million associated with
unusually high claims and increased incentive payouts of $0.2 million. Occupancy and equipment expense increased by $0.2 million, data
processing expense increased by $0.3 million, and FDIC assessments increased by $0.1 million. Other miscellaneous expenses, such as loan
service fees, dues and licenses, check fraud expenses, employee benefit plan expense, and miscellaneous expenses increased by $1.1 million.
The effective income tax rates as a percentage
of income for the six months ended June 30, 2023 and June 30, 2022 were 24.0% and 24.5%, respectively. The decrease in the
tax rate for the 2023 period was primarily related to a new low-income housing tax credit investment in 2022 that began generating tax
credits during the fourth quarter of 2022. This tax credit will continue through 2032.
Balance Sheet Overview
Total
assets at June 30, 2023 were $1.9 billion, representing a $80.2 million increase since December 31, 2022. During the
first six months of 2023, cash and interest-bearing deposits in other banks increased by $14.2 million resulting from implementation
of the contingency funding plan and obtaining $61.1 million of brokered certificates of deposit and $80.0 million in FHLB borrowings.
Implementing the contingency funding plan and the increase in on-balance sheet liquidity was a precautionary move given the market disruption
associated with the volatile banking environment and the near-term uncertainties regarding growth in the deposit portfolio. The increase
in cash obtained from contingency funding was partially offset by the funding of loan growth during 2023. The investment portfolio decreased
by $10.7 million associated with normal principal amortization and gross loans increased by $70.5 million. Other assets, including deferred
taxes, premises and equipment, and accrued interest receivable, increased by $4.0 million as pension assets increased by $0.6 million,
equity investments increased by $0.7 million, and deferred tax assets increased by $1.2 million.
Total
liabilities at June 30, 2023 were $1.8 billion, representing a $76.9 million increase since December 31, 2022. Total
deposits increased by $9.2 million since December 31, 2022. The increase in deposits during the first six months was primarily attributable
to $61.1 million in new brokered deposits, which was partially offset by a decrease of approximately $40.0 million in non-interest-bearing
deposits due to a shift to interest bearing accounts, two large commercial customers having large deposit withdrawals totaling $39.5
million during 2023 to fund business activity, the effects of consumer and commercial spending and the competitive market for deposits.
Short term borrowings decreased by $14.5 million since December 31, 2022 due to municipalities utilizing cash in our treasury management
product for normal spending. Long term borrowings increased by $80.0 million in the first six months of 2023 when compared to December 31,
2022 due to the acquisition of $80.0 million in FHLB borrowings. The addition of brokered deposits and the FHLB borrowings was a precautionary
move as described above.
Outstanding
loans of $1.4 billion at June 30, 2023 reflected growth of $70.5 million for the first six months of 2023. Since December 31,
2022, commercial real estate loans increased by $24.7 million and acquisition and development loans increased by $8.4 million. Commercial
and industrial loans increased by $4.3 million since December 31, 2022. Growth in the commercial portfolios was driven by increased
activity with existing clients as well as cultivating new business relationships. Residential mortgage loans increased $31.1 million
related to management’s strategic decision to book new mortgage loans at higher rates to our in-house portfolio. The consumer loan
portfolio increased slightly by $2.1 million.
New
commercial loan production for the three months ended June 30, 2023 was approximately $67.6 million. The pipeline of
commercial loans as of June 30, 2023 was $22.5 million. At June 30, 2023, unfunded, committed commercial construction loans
totaled approximately $42.6 million. Commercial amortization and payoffs were approximately $99.3 million through June 30,
2023 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 second quarter of 2023 was approximately $32.3 million, with most of this production
comprised of in-house mortgages. The pipeline of in-house, portfolio loans as of June 30, 2023, was $6.2 million. The residential
mortgage production level normalized in the second quarter of 2023 due to the increasing interest rates that occurred throughout 2022
and 2023. Unfunded commitments related to residential construction loans totaled $21.0 million at June 30, 2023. Management began
shifting activity towards the secondary market in the second quarter to reduce the need for additional funding.
Total deposits at June 30, 2023 increased
by $9.2 million when compared to December 31, 2022. During the first six months of 2023, non-interest-bearing deposits decreased
by $40.0 million primarily due a shift in the deposit portfolio mix from non-interest-bearing deposits to interest-bearing accounts including
the Insured Cash Sweep (“ICS”) product to ensure full FDIC insurance coverage, consumer and commercial spending and the competitive
deposit market. Interest bearing demand deposits increased by $65.5 million and traditional savings and money market accounts decreased
by $85.3 million, which is primarily related to consumer spending habits during 2023, businesses utilizing cash, and two large customers
reducing deposits by $39.5 million for regular business purposes. Total time deposits increased by $103.0 million. This increase in time
deposits was primarily driven by management’s decision to acquire $61.1 million in brokered deposits during the first quarter of
2023 due to the heightened uncertainty in the deposit market associated with the volatile banking environment as well as increased interest
rates on a promotional nine-month CD product offered in 2023.
The
book value of the Company’s common stock was $23.12 per share at June 30, 2023 compared to $22.77 per share at December 31,
2022. At June 30, 2023, there were 6,711,422 of basic outstanding shares and 6,724,734 of diluted outstanding shares of common stock.
The increase in the book value at June 30, 2023 was due to the undistributed net income of $6.1 million for the first six months
of 2023, which was partially offset by a decrease in shareholders’ equity of $2.2 million, net of tax, due to the adoption of ASC
326- CECL.
Asset Quality
On January 1, 2023, the Company adopted
CECL, which replaced the incurred loss impairment model with an expected loss model. As a result of the CECL adoption, the Company recorded
a transition adjustment of $2.2 million, net of $0.7 million in tax, to retained earnings as of January 1, 2023 for the cumulative
effect of the adoption of CECL. The Company recorded a $2.0 million increase to the ACL related to loans and a $0.9 million increase
to the allowance for credit losses on off balance sheet exposures.
For periods prior to the adoption of CECL, the
Company recognized credit losses for loans that were collectively evaluated for impairment based on an incurred loss approach, which
limited our measurement of credit losses to credit events that were estimated to have already occurred. The ALL under the incurred model
was a valuation allowance for probable incurred losses inherent in the loan portfolio. Management made the determination by taking into
consideration historical loan loss experience, diversification of the loan portfolio, amount of secured and unsecured loans, banking
industry standards and averages, and general economic conditions. Credit losses were charged against the ALL when the loan balance was
confirmed uncollectible. Subsequent recoveries, if any, were credited to the ALL. Ultimate losses varied from current estimates. The
estimates were reviewed periodically and as adjustments became necessary, they were reported in earnings in the periods in which they
become reasonably estimable.
The
ACL was $16.9 million at June 30, 2023 compared to the ALL of $15.7 million recorded at June 30, 2022 and $14.6 million at
December 31, 2022. The provision for credit losses was $0.4 million for the quarter ended June 30, 2023, compared to provision
expense of $0.6 million for the quarter ended June 30, 2022. The provision expense recorded in the second quarter of 2023 was primarily
related to strong loan growth and increases in qualitative risk factors related to the uncertainty of the economy, inflation levels,
and rising interest rates, which was partially offset by the reduction of historical loss factors related to the strength of our overall
portfolio. Net charge-offs of $0.4 million were recorded for the quarter ended June 30, 2023 compared to net charge-offs
of $0.2 million for the quarter ended June 30, 2022. The ratio of the ACL to loans outstanding was 1.25% at June 30, 2023 compared
to 1.31% at March 31, 2023 and 1.14% at December 31, 2022.
The
ratio of year-to-date net charge offs to average loans for the six months ending June 30, 2023 was an annualized 0.10%, compared
to net charge offs to average loans of 0.07% for 2022. Details of the ratio, by loan type, are shown below. Our special assets
team continues to effectively collect on charged-off loans, resulting in ongoing overall low net charge-off ratios.
Ratio of Net (Charge Offs)/Recoveries to Average Loans |
| |
6/30/2023 | |
6/30/2022 |
Loan Type | |
(Charge Off) / Recovery | |
(Charge Off) / Recovery |
Commercial Real Estate | |
(0.04%) | |
0.00% |
Acquisition & Development | |
0.02% | |
0.03% |
Commercial & Industrial | |
(0.13%) | |
(0.04%) |
Residential Mortgage | |
0.01% | |
0.03% |
Consumer | |
(1.40%) | |
(1.45%) |
Total Net (Charge Offs)/Recoveries | |
(0.10%) | |
(0.07%) |
Non-accrual loans totaled $3.0 million at June 30,
2023 compared to $3.5 million at December 31, 2022. The decrease in non-accrual balances at June 30, 2023 was primarily driven
by principal reductions in the residential mortgage portfolio. OREO balances increased by $0.1 million since December 31, 2022 due
to the addition of a new OREO property during the second quarter, which was partially offset by sale of OREO held by the Bank at December 31,
2022.
Non-accrual loans that have been subject to partial
charge-offs totaled $0.1 million at June 30, 2023 and $0.2 million at December 31, 2022. Loans secured by 1-4 family
residential real estate properties in the process of foreclosure totaled $1.8 million at June 30, 2023. There were no loans subject
to foreclosure at December 31, 2022. As a percentage of the loan portfolio, accruing loans past due 30 days or more
was 0.18% at June 30, 2023 compared to 0.17% at March 31, 2023 and 0.16% at December 31, 2022.
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 (the “FRB”) 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 First United Bank &
Trust, a Maryland trust company (the “Bank”), First United Statutory Trust I (“Trust I”) and First United Statutory
Trust II (“Trust II” and 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 (“Limited Mews”),
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 “MCC Fund”). 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 June 30, 2023 and the impact that any such events have on our critical accounting assumptions and estimates
made as of June 30, 2023, 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
| |
Three Months Ended | | |
Six Months Ended | |
| |
June 30, | | |
June 30, | | |
June 30, | | |
June 30, | |
(Dollars in thousands, except per share data) | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Results of Operations: | |
| | | |
| | | |
| | | |
| | |
Interest income | |
$ | 19,972 | | |
$ | 14,731 | | |
$ | 37,801 | | |
$ | 28,878 | |
Interest expense | |
| 5,798 | | |
| 760 | | |
| 9,109 | | |
| 1,566 | |
Net interest income | |
| 14,174 | | |
| 13,971 | | |
| 28,692 | | |
| 27,312 | |
Provision/(credit) for credit/loan losses | |
| 395 | | |
| 631 | | |
| 938 | | |
| 210 | |
Other operating income | |
| 4,483 | | |
| 4,413 | | |
| 8,822 | | |
| 8,795 | |
Net gains | |
| 86 | | |
| 13 | | |
| 140 | | |
| 65 | |
Other operating expense | |
| 12,511 | | |
| 10,631 | | |
| 25,149 | | |
| 21,210 | |
Income before taxes | |
$ | 5,837 | | |
$ | 7,135 | | |
$ | 11,567 | | |
$ | 14,752 | |
Income tax expense | |
| 1,423 | | |
| 1,708 | | |
| 2,778 | | |
| 3,609 | |
Net income | |
$ | 4,414 | | |
$ | 5,427 | | |
$ | 8,789 | | |
$ | 11,143 | |
| |
| | | |
| | | |
| | | |
| | |
Per share data: | |
| | | |
| | | |
| | | |
| | |
Basic net income per share | |
$ | 0.66 | | |
$ | 0.82 | | |
$ | 1.32 | | |
$ | 1.68 | |
Diluted net income per share | |
$ | 0.66 | | |
$ | 0.82 | | |
$ | 1.31 | | |
$ | 1.68 | |
Dividends declared per share | |
$ | 0.20 | | |
$ | 0.15 | | |
$ | 0.40 | | |
$ | 0.30 | |
Book value | |
$ | 23.12 | | |
$ | 19.97 | | |
| | | |
| | |
Diluted book value | |
$ | 23.07 | | |
$ | 19.93 | | |
| | | |
| | |
Tangible book value per share | |
$ | 21.29 | | |
$ | 18.17 | | |
| | | |
| | |
Diluted Tangible book value per share | |
$ | 21.25 | | |
$ | 18.14 | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Closing market value | |
$ | 14.26 | | |
$ | 18.76 | | |
| | | |
| | |
Market Range: | |
| | | |
| | | |
| | | |
| | |
High | |
$ | 17.01 | | |
$ | 23.80 | | |
| | | |
| | |
Low | |
$ | 12.56 | | |
$ | 17.50 | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Shares outstanding at period end: Basic | |
| 6,711,422 | | |
| 6,656,395 | | |
| | | |
| | |
Shares outstanding at period end: Diluted | |
| 6,724,734 | | |
| 6,666,790 | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Performance ratios: (Year to Date Period End, annualized) | |
| | | |
| | | |
| | | |
| | |
Return on average assets | |
| 0.95 | % | |
| 1.26 | % | |
| | | |
| | |
Return on average shareholders' equity | |
| 11.43 | % | |
| 16.25 | % | |
| | | |
| | |
Net interest margin (Non-GAAP), includes tax exempt income of $452 and $444 | |
| 3.39 | % | |
| 3.46 | % | |
| | | |
| | |
Net interest margin GAAP | |
| 3.34 | % | |
| 3.40 | % | |
| | | |
| | |
Efficiency ratio - non-GAAP (1) | |
| 66.00 | % | |
| 57.11 | % | |
| | | |
| | |
(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.
| |
June 30 | | |
December 31 | |
| |
2023 | | |
2022 | |
Financial Condition at period end: | |
| | | |
| | |
Assets | |
$ | 1,928,393 | | |
$ | 1,848,169 | |
Earning assets | |
$ | 1,707,522 | | |
$ | 1,643,964 | |
Gross loans | |
$ | 1,350,038 | | |
$ | 1,279,494 | |
Commercial Real Estate | |
$ | 483,485 | | |
$ | 458,831 | |
Acquisition and Development | |
$ | 79,003 | | |
$ | 70,596 | |
Commercial and Industrial | |
$ | 249,683 | | |
$ | 245,396 | |
Residential Mortgage | |
$ | 475,540 | | |
$ | 444,411 | |
Consumer | |
$ | 62,327 | | |
$ | 60,260 | |
Investment securities | |
$ | 350,844 | | |
$ | 361,548 | |
Total deposits | |
$ | 1,579,959 | | |
$ | 1,570,733 | |
Noninterest bearing | |
$ | 466,628 | | |
$ | 506,613 | |
Interest bearing | |
$ | 1,113,331 | | |
$ | 1,064,120 | |
Shareholders' equity | |
$ | 155,156 | | |
$ | 151,793 | |
| |
| | | |
| | |
Capital ratios: | |
| | | |
| | |
| |
| | | |
| | |
Tier 1 to risk weighted assets | |
| 14.40 | % | |
| 15.06 | % |
Common Equity Tier 1 to risk weighted assets | |
| 12.40 | % | |
| 12.95 | % |
Tier 1 Leverage | |
| 11.25 | % | |
| 11.46 | % |
Total risk based capital | |
| 15.60 | % | |
| 16.12 | % |
| |
| | | |
| | |
Asset quality: | |
| | | |
| | |
| |
| | | |
| | |
Net charge-offs for the quarter | |
$ | (398 | ) | |
$ | (164 | ) |
Nonperforming assets: (Period End) | |
| | | |
| | |
Nonaccrual loans | |
$ | 2,972 | | |
$ | 3,495 | |
Loans 90 days past due and accruing | |
| 160 | | |
| 307 | |
Total nonperforming loans and 90 day past due | |
$ | 3,132 | | |
$ | 3,802 | |
| |
| | | |
| | |
Modified/Restructured loans | |
$ | - | | |
$ | 3,028 | |
Other real estate owned | |
$ | 4,482 | | |
$ | 4,733 | |
| |
| | | |
| | |
Allowance for credit losses to gross loans | |
| 1.25 | % | |
| 1.14 | % |
Allowance for credit losses to non-accrual loans | |
| 568.81 | % | |
| 418.77 | % |
Allowance for credit losses to non-performing assets | |
| 539.79 | % | |
| 171.48 | % |
Non-performing and 90 day past due loans to total loans | |
| 0.23 | % | |
| 0.30 | % |
Non-performing loans and 90 day past due loans to total assets | |
| 0.16 | % | |
| 0.21 | % |
Non-accrual loans to total loans | |
| 0.22 | % | |
| 0.27 | % |
Non-performing assets to total assets | |
| 0.39 | % | |
| 0.46 | % |
FIRST UNITED CORPORATION
Oakland, MD
Stock Symbol : FUNC
Financial Highlights - Unaudited
| |
June
30, | | |
March 31, | | |
December
31, | | |
September
30, | | |
June 30, | | |
March 31, | |
(Dollars in
thousands, except per share data) | |
2023 | | |
2023 | | |
2022 | | |
2022 | | |
2022 | | |
2022 | |
Results of Operations: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Interest income | |
$ | 19,972 | | |
$ | 17,829 | | |
$ | 17,359 | | |
$ | 16,185 | | |
$ | 14,731 | | |
$ | 14,147 | |
Interest expense | |
| 5,798 | | |
| 3,311 | | |
| 2,179 | | |
| 1,044 | | |
| 760 | | |
| 806 | |
Net interest income | |
| 14,174 | | |
| 14,518 | | |
| 15,180 | | |
| 15,141 | | |
| 13,971 | | |
| 13,341 | |
Provision/(credit) for credit/loan
losses | |
| 395 | | |
| 543 | | |
| (736 | ) | |
| (101 | ) | |
| 631 | | |
| (421 | ) |
Other operating income | |
| 4,483 | | |
| 4,339 | | |
| 4,479 | | |
| 4,604 | | |
| 4,413 | | |
| 4,382 | |
Net gains | |
| 86 | | |
| 54 | | |
| 11 | | |
| 96 | | |
| 13 | | |
| 52 | |
Other operating
expense | |
| 12,511 | | |
| 12,638 | | |
| 11,590 | | |
| 10,329 | | |
| 10,630 | | |
| 10,580 | |
Income before taxes | |
$ | 5,837 | | |
$ | 5,730 | | |
$ | 8,816 | | |
$ | 9,613 | | |
$ | 7,136 | | |
$ | 7,616 | |
Income tax expense | |
| 1,423 | | |
| 1,355 | | |
| 1,847 | | |
| 2,677 | | |
| 1,708 | | |
| 1,901 | |
Net income | |
$ | 4,414 | | |
$ | 4,375 | | |
$ | 6,969 | | |
$ | 6,936 | | |
$ | 5,428 | | |
$ | 5,715 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Per share data: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic net income per share | |
$ | 0.66 | | |
$ | 0.66 | | |
$ | 1.05 | | |
$ | 1.04 | | |
$ | 0.82 | | |
$ | 0.86 | |
Diluted net income per share | |
$ | 0.66 | | |
$ | 0.65 | | |
$ | 1.04 | | |
$ | 1.04 | | |
$ | 0.82 | | |
$ | 0.86 | |
Dividends declared per share | |
$ | 0.20 | | |
$ | 0.20 | | |
$ | 0.18 | | |
$ | 0.15 | | |
$ | 0.15 | | |
$ | 0.15 | |
Book value | |
$ | 23.12 | | |
$ | 22.85 | | |
$ | 22.77 | | |
$ | 19.83 | | |
$ | 19.97 | | |
$ | 20.65 | |
Diluted book value | |
$ | 23.07 | | |
$ | 22.81 | | |
$ | 22.68 | | |
$ | 19.80 | | |
$ | 19.93 | | |
$ | 20.63 | |
Tangible book value per share | |
$ | 21.29 | | |
$ | 21.01 | | |
$ | 20.91 | | |
$ | 18.03 | | |
$ | 18.17 | | |
$ | 18.83 | |
Diluted Tangible book value per share | |
$ | 21.25 | | |
$ | 20.96 | | |
$ | 20.87 | | |
$ | 18.00 | | |
$ | 18.14 | | |
$ | 18.82 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Closing market value | |
$ | 14.26 | | |
$ | 16.89 | | |
$ | 19.65 | | |
$ | 16.55 | | |
$ | 18.76 | | |
$ | 22.53 | |
Market Range: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
High | |
$ | 17.01 | | |
$ | 20.41 | | |
$ | 20.56 | | |
$ | 19.27 | | |
$ | 23.80 | | |
$ | 24.50 | |
Low | |
$ | 12.56 | | |
$ | 16.75 | | |
$ | 16.74 | | |
$ | 16.18 | | |
$ | 17.50 | | |
$ | 18.81 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Shares outstanding at period end: Basic | |
| 6,711,422 | | |
| 6,688,710 | | |
| 6,666,428 | | |
| 6,659,390 | | |
| 6,656,395 | | |
| 6,637,979 | |
Shares outstanding at period end: Diluted | |
| 6,724,734 | | |
| 6,703,252 | | |
| 6,692,039 | | |
| 6,669,785 | | |
| 6,666,790 | | |
| 6,649,604 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Performance ratios: (Year to Date Period
End, annualized) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Return on average assets | |
| 0.95 | % | |
| 0.94 | % | |
| 1.39 | % | |
| 1.35 | % | |
| 1.26 | % | |
| 1.31 | % |
Return on average shareholders' equity | |
| 11.43 | % | |
| 11.87 | % | |
| 18.19 | % | |
| 17.66 | % | |
| 16.25 | % | |
| 16.49 | % |
Net interest margin
(Non-GAAP), includes tax exempt income of $225 and
$241 | |
| 3.39 | % | |
| 3.53 | % | |
| 3.56 | % | |
| 3.53 | % | |
| 3.46 | % | |
| 3.40 | % |
Net interest margin GAAP | |
| 3.34 | % | |
| 3.48 | % | |
| 3.50 | % | |
| 3.47 | % | |
| 3.40 | % | |
| 3.34 | % |
Efficiency ratio - non-GAAP (1) | |
| 66.00 | % | |
| 67.02 | % | |
| 56.27 | % | |
| 51.49 | % | |
| 57.11 | % | |
| 58.81 | % |
(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.
| |
June 30, | | |
March 31, | | |
December 31, | | |
September 30, | | |
June 30, | | |
March 31, | |
| |
2023 | | |
2023 | | |
2022 | | |
2022 | | |
2022 | | |
2022 | |
Financial Condition at period end: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Assets | |
$ | 1,928,393 | | |
$ | 1,937,442 | | |
$ | 1,848,169 | | |
$ | 1,803,642 | | |
$ | 1,752,455 | | |
$ | 1,760,325 | |
Earning assets | |
$ | 1,707,522 | | |
$ | 1,652,688 | | |
$ | 1,643,964 | | |
$ | 1,647,303 | | |
$ | 1,608,094 | | |
$ | 1,572,737 | |
Gross loans | |
$ | 1,350,038 | | |
$ | 1,289,080 | | |
$ | 1,279,494 | | |
$ | 1,277,924 | | |
$ | 1,233,613 | | |
$ | 1,181,401 | |
Commercial Real Estate | |
$ | 483,485 | | |
$ | 453,356 | | |
$ | 458,831 | | |
$ | 437,973 | | |
$ | 421,942 | | |
$ | 391,136 | |
Acquisition and Development | |
$ | 79,003 | | |
$ | 76,980 | | |
$ | 70,596 | | |
$ | 83,107 | | |
$ | 116,115 | | |
$ | 133,031 | |
Commercial and Industrial | |
$ | 249,683 | | |
$ | 241,959 | | |
$ | 245,396 | | |
$ | 269,004 | | |
$ | 225,640 | | |
$ | 194,914 | |
Residential Mortgage | |
$ | 475,540 | | |
$ | 456,198 | | |
$ | 444,411 | | |
$ | 427,093 | | |
$ | 406,293 | | |
$ | 399,704 | |
Consumer | |
$ | 62,327 | | |
$ | 60,587 | | |
$ | 60,260 | | |
$ | 60,747 | | |
$ | 63,623 | | |
$ | 62,616 | |
Investment securities | |
$ | 350,844 | | |
$ | 357,061 | | |
$ | 361,548 | | |
$ | 366,484 | | |
$ | 373,455 | | |
$ | 385,265 | |
Total deposits | |
$ | 1,579,959 | | |
$ | 1,591,285 | | |
$ | 1,570,733 | | |
$ | 1,511,118 | | |
$ | 1,484,354 | | |
$ | 1,507,555 | |
Noninterest bearing | |
$ | 466,628 | | |
$ | 468,554 | | |
$ | 506,613 | | |
$ | 474,444 | | |
$ | 527,761 | | |
$ | 530,901 | |
Interest bearing | |
$ | 1,113,331 | | |
$ | 1,122,731 | | |
$ | 1,064,120 | | |
$ | 1,036,674 | | |
$ | 956,593 | | |
$ | 976,654 | |
Shareholders' equity | |
$ | 155,156 | | |
$ | 152,868 | | |
$ | 151,793 | | |
$ | 132,044 | | |
$ | 132,892 | | |
$ | 137,038 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Capital ratios: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Tier 1 to risk weighted assets | |
| 14.40 | % | |
| 14.90 | % | |
| 15.06 | % | |
| 14.40 | % | |
| 14.31 | % | |
| 14.55 | % |
Common Equity Tier 1 to risk weighted
assets | |
| 12.40 | % | |
| 12.82 | % | |
| 12.95 | % | |
| 12.36 | % | |
| 12.27 | % | |
| 12.45 | % |
Tier 1 Leverage | |
| 11.25 | % | |
| 11.47 | % | |
| 11.46 | % | |
| 11.23 | % | |
| 11.23 | % | |
| 10.94 | % |
Total risk based capital | |
| 15.60 | % | |
| 16.15 | % | |
| 16.12 | % | |
| 15.50 | % | |
| 15.46 | % | |
| 15.71 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Asset quality: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net (charge-offs)/recoveries for the quarter | |
$ | (398 | ) | |
$ | (245 | ) | |
$ | (164 | ) | |
$ | (89 | ) | |
$ | (179 | ) | |
$ | (244 | ) |
Nonperforming assets: (Period End) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Nonaccrual loans | |
$ | 2,972 | | |
$ | 3,258 | | |
$ | 3,495 | | |
$ | 1,943 | | |
$ | 2,149 | | |
$ | 2,332 | |
Loans 90 days
past due and accruing | |
| 160 | | |
| 87 | | |
| 307 | | |
| 569 | | |
$ | 325 | | |
| 37 | |
Total nonperforming
loans and 90 day past due | |
$ | 3,132 | | |
$ | 3,345 | | |
$ | 3,802 | | |
$ | 2,512 | | |
$ | 2,474 | | |
$ | 2,369 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Modified/restructured loans | |
$ | - | | |
$ | - | | |
$ | 3,028 | | |
$ | 3,354 | | |
$ | 3,226 | | |
$ | 3,228 | |
Other real estate owned | |
$ | 4,482 | | |
$ | 4,598 | | |
$ | 4,733 | | |
$ | 4,733 | | |
$ | 4,517 | | |
$ | 4,477 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Allowance for credit losses to gross loans | |
| 1.25 | % | |
| 1.31 | % | |
| 1.14 | % | |
| 1.22 | % | |
| 1.28 | % | |
| 1.29 | % |
Allowance for credit losses to non-accrual loans | |
| 568.81 | % | |
| 517.83 | % | |
| 418.77 | % | |
| 799.85 | % | |
| 732.29 | % | |
| 655.75 | % |
Allowance for credit losses to non-performing assets | |
| 539.79 | % | |
| 212.40 | % | |
| 171.48 | % | |
| 214.51 | % | |
| 225.10 | % | |
| 223.37 | % |
Non-performing and 90 day past due loans to total loans | |
| 0.23 | % | |
| 0.26 | % | |
| 0.30 | % | |
| 0.20 | % | |
| 0.20 | % | |
| 0.20 | % |
Non-performing loans and 90 day past due loans to total
assets | |
| 0.16 | % | |
| 0.17 | % | |
| 0.21 | % | |
| 0.14 | % | |
| 0.14 | % | |
| 0.13 | % |
Non-accrual loans to total loans | |
| 0.22 | % | |
| 0.25 | % | |
| 0.27 | % | |
| 0.15 | % | |
| 0.17 | % | |
| 0.20 | % |
Non-performing assets to total assets | |
| 0.39 | % | |
| 0.41 | % | |
| 0.46 | % | |
| 0.40 | % | |
| 0.40 | % | |
| 0.39 | % |
Consolidated Statement of Condition
(Dollars in thousands - Unaudited) | |
June 30, 2023 | | |
March 31, 2023 | | |
December 31, 2022 | |
Assets | |
| | | |
| | | |
| | |
Cash and due from banks | |
$ | 86,901 | | |
$ | 154,022 | | |
$ | 72,420 | |
Interest bearing deposits in banks | |
| 1,650 | | |
| 1,873 | | |
| 1,895 | |
Cash and cash equivalents | |
| 88,551 | | |
| 155,895 | | |
| 74,315 | |
Investment securities – available for sale (at fair value) | |
| 120,085 | | |
| 123,978 | | |
| 125,889 | |
Investment securities – held to maturity (at cost) | |
| 230,759 | | |
| 233,083 | | |
| 235,659 | |
Restricted investment in bank stock, at cost | |
| 4,490 | | |
| 4,490 | | |
| 1,027 | |
Loans held for sale | |
| 500 | | |
| 184 | | |
| — | |
Loans | |
| 1,350,038 | | |
| 1,289,080 | | |
| 1,279,494 | |
Unearned fees | |
| (327 | ) | |
| (257 | ) | |
| (174 | ) |
Allowance for credit losses | |
| (16,905 | ) | |
| (16,871 | ) | |
| (14,636 | ) |
Net loans | |
| 1,332,806 | | |
| 1,271,952 | | |
| 1,264,684 | |
Premises and equipment, net | |
| 33,532 | | |
| 34,207 | | |
| 34,948 | |
Goodwill and other intangible assets | |
| 12,268 | | |
| 12,350 | | |
| 12,433 | |
Bank owned life insurance | |
| 46,963 | | |
| 46,652 | | |
| 46,346 | |
Deferred tax assets | |
| 11,771 | | |
| 11,356 | | |
| 10,605 | |
Other real estate owned, net | |
| 4,842 | | |
| 4,598 | | |
| 4,733 | |
Operating lease asset | |
| 1,990 | | |
| 2,072 | | |
| 1,898 | |
Accrued interest receivable and other assets | |
| 39,836 | | |
| 36,625 | | |
| 35,632 | |
Total Assets | |
$ | 1,928,393 | | |
$ | 1,937,442 | | |
$ | 1,848,169 | |
| |
| | | |
| | | |
| | |
Liabilities and Shareholders’ Equity | |
| | | |
| | | |
| | |
Liabilities: | |
| | | |
| | | |
| | |
Non-interest bearing deposits | |
$ | 466,628 | | |
$ | 468,554 | | |
$ | 506,613 | |
Interest bearing deposits | |
| 1,113,331 | | |
| 1,122,731 | | |
| 1,064,120 | |
Total deposits | |
| 1,579,959 | | |
| 1,591,285 | | |
| 1,570,733 | |
Short-term borrowings | |
| 50,078 | | |
| 52,030 | | |
| 64,565 | |
Long-term borrowings | |
| 110,929 | | |
| 110,929 | | |
| 30,929 | |
Operating lease liability | |
| 2,443 | | |
| 2,536 | | |
| 2,373 | |
Allowance for credit loss on off balance sheet exposures | |
| 1,089 | | |
| 1,128 | | |
| 133 | |
Accrued interest payable and other liabilities | |
| 27,397 | | |
| 25,332 | | |
| 26,444 | |
Dividends payable | |
| 1,342 | | |
| 1,334 | | |
| 1,199 | |
Total Liabilities | |
| 1,773,237 | | |
| 1,784,574 | | |
| 1,696,376 | |
Shareholders’ Equity: | |
| | | |
| | | |
| | |
Common Stock – par value $0.01 per share; Authorized 25,000,000 shares; issued and outstanding 6,711,422 shares at June 30, 2023 and 6,666,428 at December 31, 2022 | |
| 67 | | |
| 67 | | |
| 67 | |
Surplus | |
| 24,901 | | |
| 24,529 | | |
| 24,409 | |
Retained earnings | |
| 170,298 | | |
| 167,229 | | |
| 166,343 | |
Accumulated other comprehensive loss | |
| (40,110 | ) | |
| (38,957 | ) | |
| (39,026 | ) |
Total Shareholders’ Equity | |
| 155,156 | | |
| 152,868 | | |
| 151,793 | |
Total Liabilities and Shareholders’ Equity | |
$ | 1,928,393 | | |
$ | 1,937,442 | | |
$ | 1,848,169 | |
Historical Income Statement
| |
Three Months Ended | |
| |
2023 | | |
2022 | |
| |
Q2 | | |
Q1 | | |
Q4 | | |
Q3 | | |
Q2 | | |
Q1 | |
In thousands | |
(Unaudited) | |
Interest income | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Interest and fees on loans | |
$ | 16,780 | | |
$ | 15,444 | | |
$ | 15,097 | | |
$ | 14,058 | | |
$ | 12,861 | | |
$ | 12,432 | |
Interest on investment securities | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Taxable | |
| 1,779 | | |
| 1,768 | | |
| 1,719 | | |
| 1,587 | | |
| 1,540 | | |
| 1,406 | |
Exempt from federal income tax | |
| 268 | | |
| 270 | | |
| 272 | | |
| 273 | | |
| 279 | | |
| 282 | |
Total investment income | |
| 2,047 | | |
| 2,038 | | |
| 1,991 | | |
| 1,860 | | |
| 1,819 | | |
| 1,688 | |
Other | |
| 1,145 | | |
| 347 | | |
| 271 | | |
| 267 | | |
| 51 | | |
| 27 | |
Total interest income | |
| 19,972 | | |
| 17,829 | | |
| 17,359 | | |
| 16,185 | | |
| 14,731 | | |
| 14,147 | |
Interest expense | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Interest on deposits | |
| 4,350 | | |
| 2,678 | | |
| 1,729 | | |
| 621 | | |
| 401 | | |
| 475 | |
Interest on short-term borrowings | |
| 29 | | |
| 31 | | |
| 26 | | |
| 47 | | |
| 21 | | |
| 18 | |
Interest on long-term borrowings | |
| 1,419 | | |
| 602 | | |
| 424 | | |
| 376 | | |
| 338 | | |
| 313 | |
Total interest expense | |
| 5,798 | | |
| 3,311 | | |
| 2,179 | | |
| 1,044 | | |
| 760 | | |
| 806 | |
Net interest income | |
| 14,174 | | |
| 14,518 | | |
| 15,180 | | |
| 15,141 | | |
| 13,971 | | |
| 13,341 | |
Credit loss expense | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Loans | |
| 434 | | |
| 414 | | |
| (740 | ) | |
| (108 | ) | |
| 624 | | |
| (419 | ) |
Off balance sheet credit exposures | |
| (39 | ) | |
| 129 | | |
| 4 | | |
| 7 | | |
| 7 | | |
| (2 | ) |
Provision/(credit) for credit/loan losses | |
| 395 | | |
| 543 | | |
| (736 | ) | |
| (101 | ) | |
| 631 | | |
| (421 | ) |
Net interest income after provision for loan losses | |
| 13,779 | | |
| 13,975 | | |
| 15,916 | | |
| 15,242 | | |
| 13,340 | | |
| 13,762 | |
Other operating income | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net gains on investments, available for sale | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 3 | |
Gains on sale of residential mortgage loans | |
| 86 | | |
| 54 | | |
| 14 | | |
| 3 | | |
| 7 | | |
| 21 | |
Gains/(losses) on disposal of fixed assets | |
| — | | |
| — | | |
| (1 | ) | |
| — | | |
| 6 | | |
| 28 | |
Net gains | |
| 86 | | |
| 54 | | |
| 11 | | |
| 96 | | |
| 13 | | |
| 52 | |
Other Income | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Service charges on deposit accounts | |
| 546 | | |
| 516 | | |
| 530 | | |
| 523 | | |
| 463 | | |
| 465 | |
Other service charges | |
| 244 | | |
| 232 | | |
| 239 | | |
| 241 | | |
| 232 | | |
| 213 | |
Trust department | |
| 2,025 | | |
| 1,970 | | |
| 2,006 | | |
| 2,005 | | |
| 2,044 | | |
| 2,189 | |
Debit card income | |
| 1,031 | | |
| 955 | | |
| 1,036 | | |
| 1,053 | | |
| 983 | | |
| 886 | |
Bank owned life insurance | |
| 311 | | |
| 305 | | |
| 305 | | |
| 302 | | |
| 297 | | |
| 292 | |
Brokerage commissions | |
| 258 | | |
| 297 | | |
| 244 | | |
| 272 | | |
| 313 | | |
| 220 | |
Other | |
| 68 | | |
| 64 | | |
| 119 | | |
| 208 | | |
| 81 | | |
| 117 | |
Total other income | |
| 4,483 | | |
| 4,339 | | |
| 4,479 | | |
| 4,604 | | |
| 4,413 | | |
| 4,382 | |
Total other operating income | |
| 4,569 | | |
| 4,393 | | |
| 4,490 | | |
| 4,700 | | |
| 4,426 | | |
| 4,434 | |
Other operating expenses | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Salaries and employee benefits | |
| 6,865 | | |
| 7,290 | | |
| 6,239 | | |
| 6,130 | | |
| 5,793 | | |
| 5,968 | |
FDIC premiums | |
| 277 | | |
| 193 | | |
| 157 | | |
| 150 | | |
| 155 | | |
| 174 | |
Equipment | |
| 1,047 | | |
| 1,092 | | |
| 1,053 | | |
| 1,037 | | |
| 1,029 | | |
| 1,044 | |
Occupancy | |
| 743 | | |
| 784 | | |
| 734 | | |
| 734 | | |
| 711 | | |
| 727 | |
Data processing | |
| 946 | | |
| 969 | | |
| 928 | | |
| 890 | | |
| 805 | | |
| 821 | |
Marketing | |
| 137 | | |
| 117 | | |
| 134 | | |
| 152 | | |
| 151 | | |
| 106 | |
Professional services | |
| 522 | | |
| 518 | | |
| 665 | | |
| (211 | ) | |
| 564 | | |
| 520 | |
Contract labor | |
| 159 | | |
| 139 | | |
| 136 | | |
| 159 | | |
| 158 | | |
| 165 | |
Telephone | |
| 116 | | |
| 110 | | |
| 117 | | |
| 112 | | |
| 139 | | |
| 114 | |
Other real estate owned | |
| 18 | | |
| 124 | | |
| 215 | | |
| 128 | | |
| 152 | | |
| 95 | |
Investor relations | |
| 132 | | |
| 57 | | |
| 42 | | |
| 39 | | |
| 123 | | |
| 96 | |
Contributions | |
| 79 | | |
| 64 | | |
| 104 | | |
| 121 | | |
| 42 | | |
| 21 | |
Other | |
| 1,470 | | |
| 1,181 | | |
| 1,066 | | |
| 888 | | |
| 808 | | |
| 729 | |
Total other operating expenses | |
| 12,511 | | |
| 12,638 | | |
| 11,590 | | |
| 10,329 | | |
| 10,630 | | |
| 10,580 | |
Income before income tax expense | |
| 5,837 | | |
| 5,730 | | |
| 8,816 | | |
| 9,613 | | |
| 7,136 | | |
| 7,616 | |
Provision for income tax expense | |
| 1,423 | | |
| 1,355 | | |
| 1,847 | | |
| 2,677 | | |
| 1,708 | | |
| 1,901 | |
Net Income | |
$ | 4,414 | | |
$ | 4,375 | | |
$ | 6,969 | | |
$ | 6,936 | | |
$ | 5,428 | | |
$ | 5,715 | |
Basic net income per common share | |
$ | 0.66 | | |
$ | 0.66 | | |
$ | 1.05 | | |
$ | 1.04 | | |
$ | 0.82 | | |
$ | 0.86 | |
Diluted net income per common share | |
$ | 0.66 | | |
$ | 0.65 | | |
$ | 1.04 | | |
$ | 1.04 | | |
$ | 0.82 | | |
$ | 0.86 | |
Weighted average number of basic shares outstanding | |
| 6,704 | | |
| 6,675 | | |
| 6,666 | | |
| 6,658 | | |
| 6,650 | | |
| 6,628 | |
Weighted average number of diluted shares outstanding | |
| 6,718 | | |
| 6,697 | | |
| 6,692 | | |
| 6,669 | | |
| 6,661 | | |
| 6,636 | |
Dividends declared per common share | |
$ | 0.20 | | |
$ | 0.20 | | |
$ | 0.18 | | |
$ | 0.15 | | |
$ | 0.15 | | |
$ | 0.15 | |
| |
Three Months Ended | |
| |
June 30, | |
| |
2023 | | |
2022 | |
(dollars in thousands) | |
Average Balance | | |
Interest | | |
Average Yield/Rate | | |
Average Balance | | |
Interest | | |
Average Yield/Rate | |
Assets | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Loans | |
$ | 1,317,728 | | |
$ | 16,794 | | |
| 5.11 | % | |
$ | 1,200,651 | | |
$ | 12,876 | | |
| 4.30 | % |
Investment Securities: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Taxable | |
| 337,032 | | |
| 1,779 | | |
| 2.12 | % | |
| 350,602 | | |
| 1,540 | | |
| 1.76 | % |
Non taxable | |
| 26,093 | | |
| 479 | | |
| 7.36 | % | |
| 26,879 | | |
| 500 | | |
| 7.46 | % |
Total | |
| 363,125 | | |
| 2,258 | | |
| 2.49 | % | |
| 377,481 | | |
| 2,040 | | |
| 2.17 | % |
Federal funds sold | |
| 84,629 | | |
| 1,102 | | |
| 5.22 | % | |
| 36,151 | | |
| 39 | | |
| 0.43 | % |
Interest-bearing deposits with other banks | |
| 1,735 | | |
| 19 | | |
| 4.39 | % | |
| 3,728 | | |
| 4 | | |
| 0.43 | % |
Other interest earning assets | |
| 4,490 | | |
| 25 | | |
| 2.23 | % | |
| 1,026 | | |
| 8 | | |
| 3.13 | % |
Total earning assets | |
| 1,771,707 | | |
| 20,198 | | |
| 4.57 | % | |
| 1,619,037 | | |
| 14,967 | | |
| 3.71 | % |
Allowance for loan losses | |
| (16,982 | ) | |
| | | |
| | | |
| (15,221 | ) | |
| | | |
| | |
Non-earning assets | |
| 175,369 | | |
| | | |
| | | |
| 166,785 | | |
| | | |
| | |
Total Assets | |
$ | 1,930,094 | | |
| | | |
| | | |
$ | 1,770,601 | | |
| | | |
| | |
Liabilities and Shareholders’ Equity | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Interest-bearing demand deposits | |
$ | 377,773 | | |
$ | 1,132 | | |
| 1.20 | % | |
$ | 298,571 | | |
$ | 93 | | |
| 0.12 | % |
Interest-bearing money markets | |
| 304,322 | | |
| 1,809 | | |
| 2.38 | % | |
| 282,083 | | |
| 74 | | |
| 0.11 | % |
Savings deposits | |
| 226,172 | | |
| 56 | | |
| 0.10 | % | |
| 251,187 | | |
| 18 | | |
| 0.03 | % |
Time deposits - retail | |
| 130,634 | | |
| 552 | | |
| 1.69 | % | |
| 142,013 | | |
| 216 | | |
| 0.61 | % |
Time deposits - brokered | |
| 61,081 | | |
| 801 | | |
| 5.26 | % | |
| — | | |
| — | | |
| — | % |
Short-term borrowings | |
| 47,356 | | |
| 29 | | |
| 0.25 | % | |
| 60,727 | | |
| 21 | | |
| 0.14 | % |
Long-term borrowings | |
| 110,929 | | |
| 1,419 | | |
| 5.13 | % | |
| 30,929 | | |
| 338 | | |
| 4.38 | % |
Total interest-bearing liabilities | |
| 1,258,267 | | |
| 5,798 | | |
| 1.85 | % | |
| 1,065,510 | | |
| 760 | | |
| 0.29 | % |
Non-interest-bearing deposits | |
| 484,952 | | |
| | | |
| | | |
| 539,488 | | |
| | | |
| | |
Other liabilities | |
| 31,517 | | |
| | | |
| | | |
| 30,564 | | |
| | | |
| | |
Shareholders’ Equity | |
| 155,358 | | |
| | | |
| | | |
| 136,039 | | |
| | | |
| | |
Total Liabilities and Shareholders’ Equity | |
$ | 1,930,094 | | |
| | | |
| | | |
$ | 1,771,601 | | |
| | | |
| | |
Net interest income and spread | |
| | | |
$ | 14,401 | | |
| 2.72 | % | |
| | | |
$ | 14,207 | | |
| 3.42 | % |
Net interest margin | |
| | | |
| | | |
| 3.26 | % | |
| | | |
| | | |
| 3.52 | % |
| |
Six Months Ended | |
| |
June 30, | |
| |
2023 | | |
2022 | |
(dollars in thousands) | |
Average Balance | | |
Interest | | |
Average Yield/ Rate | | |
Average Balance | | |
Interest | | |
Average Yield/ Rate | |
Assets | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Loans | |
$ | 1,298,743 | | |
$ | 32,251 | | |
| 5.01 | % | |
$ | 1,184,804 | | |
$ | 25,326 | | |
| 4.31 | % |
Investment Securities: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Taxable | |
| 338,817 | | |
| 3,547 | | |
| 2.11 | % | |
| 356,878 | | |
| 2,946 | | |
| 1.66 | % |
Non taxable | |
| 26,099 | | |
| 963 | | |
| 7.44 | % | |
| 27,447 | | |
| 1,005 | | |
| 7.38 | % |
Total | |
| 364,916 | | |
| 4,510 | | |
| 2.49 | % | |
| 384,325 | | |
| 3,951 | | |
| 2.07 | % |
Federal funds sold | |
| 62,361 | | |
| 1,409 | | |
| 4.56 | % | |
| 44,689 | | |
| 57 | | |
| 0.26 | % |
Interest-bearing deposits with other banks | |
| 3,342 | | |
| 45 | | |
| 2.72 | % | |
| 4,487 | | |
| 5 | | |
| 0.22 | % |
Other interest earning assets | |
| 3,069 | | |
| 39 | | |
| 2.56 | % | |
| 1,028 | | |
| 16 | | |
| 3.14 | % |
Total earning assets | |
| 1,732,431 | | |
| 38,254 | | |
| 4.45 | % | |
| 1,619,333 | | |
| 29,355 | | |
| 3.66 | % |
Allowance for loan losses | |
| (15,905 | ) | |
| | | |
| | | |
| (15,558 | ) | |
| | | |
| | |
Non-earning assets | |
| 172,461 | | |
| | | |
| | | |
| 172,839 | | |
| | | |
| | |
Total Assets | |
$ | 1,888,987 | | |
| | | |
| | | |
$ | 1,776,614 | | |
| | | |
| | |
Liabilities and Shareholders’ Equity | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Interest-bearing demand deposits | |
$ | 365,491 | | |
$ | 2,020 | | |
| 1.11 | % | |
$ | 291,220 | | |
$ | 182 | | |
| 0.13 | % |
Interest-bearing money markets | |
| 314,246 | | |
| 3,107 | | |
| 1.99 | % | |
| 289,377 | | |
| 137 | | |
| 0.1 | % |
Savings deposits | |
| 236,383 | | |
| 135 | | |
| 0.12 | % | |
| 247,573 | | |
| 36 | | |
| 0.03 | % |
Time deposits - retail | |
| 124,684 | | |
| 832 | | |
| 1.35 | % | |
| 148,377 | | |
| 521 | | |
| 0.71 | % |
Time deposits - brokered | |
| 35,771 | | |
| 933 | | |
| 5.26 | % | |
| — | | |
| — | | |
| — | % |
Short-term borrowings | |
| 52,332 | | |
| 60 | | |
| 0.23 | % | |
| 60,144 | | |
| 39 | | |
| 0.13 | % |
Long-term borrowings | |
| 77,338 | | |
| 2,022 | | |
| 5.27 | % | |
| 30,929 | | |
| 651 | | |
| 4.24 | % |
Total interest-bearing liabilities | |
| 1,206,245 | | |
| 9,109 | | |
| 1.52 | % | |
| 1,067,620 | | |
| 1,566 | | |
| 0.30 | % |
Non-interest-bearing deposits | |
| 497,226 | | |
| | | |
| | | |
| 541,992 | | |
| | | |
| | |
Other liabilities | |
| 30,497 | | |
| | | |
| | | |
| 29,337 | | |
| | | |
| | |
Shareholders’ Equity | |
| 155,019 | | |
| | | |
| | | |
| 137,665 | | |
| | | |
| | |
Total Liabilities and Shareholders’ Equity | |
$ | 1,888,987 | | |
| | | |
| | | |
$ | 1,776,614 | | |
| | | |
| | |
Net interest income and spread | |
| | | |
$ | 29,145 | | |
| 2.93 | % | |
| | | |
$ | 27,789 | | |
| 3.36 | % |
Net interest margin | |
| | | |
| | | |
| 3.39 | % | |
| | | |
| | | |
| 3.46 | % |
Exhibit 99.2
MyBank.com INVESTOR PRESENTATION Second Quarter 2023
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 , 2022 , 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 I. II. II. Corporate Overview Financial Performance Appendices Pg. 4 Pg. 9 Pg. 31 Table of Contents
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: 26 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 4
5 West Region Central Region East Region Loans (000s) $299,669 $409,087 $525,429 Deposits (000s) $130,348 $811,322 $485,502 Deposit Market Share (1) (at June 30, 2022) 2% 42% 4% Branches 5 10 11 Note: Out of market loans represent $117 million and are not reflected in this table; Brokered CDs represent $61 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 : Harrison, WV; Monongalia, WV Central: Garrett, MD; Allegany, MD; Mineral, WV East: Washington, MD; Frederick, MD; Berkeley, WV Core Markets
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 Risk Management, Monitoring & Mitigation Underlies all Strategic Priorities ▪ Low net charge - offs and strong asset quality as a result of conservative and proactive credit culture ▪ ACL level of 1.25%; 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, poised to take advantage of further increases in interest rates ▪ Limiting longer - term investment exposure and actively managing loan 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 this turbulent economic environment ▪ Capital stress tests indicate Bank is well positioned to absorb potential losses ▪ Loan to deposit ratio of 85% ▪ Liquidity contingency plan in place and implemented in March 2023 given market stress ▪ Liquidity stress testing performed quarterly with strong liquidity under various scenarios ▪ Available borrowing capacity of $337 million through correspondent lines of credit, FHLB and the Federal Reserve ▪ Strong, stable low - cost core deposit franchise of 87% of total deposit portfolio Cyber - Security & Fraud Monitoring Asset Quality Capital Liquidity Management Interest Rate Sensitivity
Strategic Pillars & Key Objectives Culture & Human Capital ▪ Employ more robust recruitment methods to capitalize on talent in new and existing markets ▪ Attract and hire passionate, diverse talent to engage with clients and prospects across broader geographics ▪ Promote associate retention and career development through mentoring programs, leadership, and educational opportunities ▪ Build on succession plan by fostering innovative, longer - term strategic thinking Digital & Data Analytics ▪ Provide holistic, seamless client experience across all business lines using integrated relationship teams, customized financial solutions, and personal service ▪ Prioritize and implement line of business profitability models ▪ Monitor asset quality to protect capital during period of economic uncertainty ▪ Improve efficiency through execution of technology plan ▪ Increase education , internally and externally, on sophisticated cyber and fraud scams and methods to prevent financial loss Market Awareness, Expansion & Opportunities ▪ Deepen customer engagement to expand our market penetration and increase customer profitability ▪ Seek opportunistic acquisitions in banking and wealth management ▪ Optimize retail network and utilization of real estate ▪ Expand investor relations and attract new investors to diversify shareholder mix Effective use of technology, marketing and communications, and an environmental focus underlies all strategic priorities. 8
Second Quarter Financial Highlights $4.4 Million Net Income (1) $0.65 Diluted EPS (1) 0.92% * ROAA (1) 12.38 * ROATCE (1) 3.26% NIM ▪ Total assets decreased $7.9 million compared to March 31, 2023 ▪ Consolidated net income (1) of $4.4 million in 2Q23 compared to $5.4 million in 2Q22 and $4.4 million in linked quarter; pre - provision net revenue of $6.2 million compared to $7.8 million, respectively ▪ Net interest income, on a non - GAAP, FTE basis* decreased by 2.37% in 2Q23 compared to 1Q23, driven by a 12.02% increase in interest income offset by a 75.11% increase in interest expense, driven by the competitive deposit landscape and additional liquidity funding obtained in the first quarter of 2023 ▪ Asset quality remains strong with the ratio of the allowance for credit losses (“ACL”) to loans outstanding at 1.25% in 2Q23 compared to 1.31% in linked quarter ▪ Efficiency ratio of 66.00% (1) for the second quarter of 2023 compared to 67.02% for the linked quarter; decrease due to heightened expense control (1) See Appendix for a reconciliation of these non - GAAP financial measure * 2Q2023 Annualized 9
Year to Date Financial Highlights $8.8 Million Net Income (1) $1.31 Diluted EPS (1) 0.95% * ROAA (1) 12.42 * ROATCE (1) 3.39% NIM ▪ Total assets increased $80.2 million compared to December 31, 2022 ▪ Consolidated net income (1) of $8.8 million for the six months ended June 30, 2023 compared to $11.1 million for the six months ended June 30, 2022; pre - provision net revenue of $12.5 million compared to $15.0 million, respectively ▪ Net interest income, on a non - GAAP, FTE basis* increased by 5.0%, or $1.4 million, for the six months ended June 30, 2022 compared to the six months ended June 30, 2022, driven by a 79 basis point increase in the yield on earning assets offset by a 122 basis point increase in cost of interest bearing liabilities. ▪ Net interest margin of 3.39% for six months ended June 30, 2023 compared to 3.46% for the six months ended June 30, 2022; Bank remains slightly asset sensitive ▪ The ratio of the allowance for credit losses (“ACL”) to loans outstanding was 1.25% in 1Q23 compared to 1.14% at December 31, 2022 and 1.31% in the linked quarter ▪ Efficiency ratio of 65.94% (1) year to date, impacted by lower net interest income levels, unusually high employee insurance costs and increased customer fraud expense. (1) See Appendix for a reconciliation of these non - GAAP financial measure * 2Q2023 Annualized 10
11 Long - Term Growth Pre - Provision Net Revenue ($ in millions) (1) $17.8 $23.2 $30.8 $32.5 $12.5 2019 2020 2021 2022 2Q2023 +5.5% YoY (1) See Appendix for a reconciliation of these non - GAAP financial measures $1.85 $1.97 $3.54 $3.76 $1.31 2019 2020 2021 2022 2Q2023 +6.2% YoY Diluted Earnings per Share (1) Total Deposits ($ in millions) $1,142 $1,422 $1,469 $1,571 $1,580 2019 2020 2021 2022 2Q2023 +6.9% YoY Total Gross Loans, including PPP ($ in millions) $1,039 $1,168 $1,154 $1,279 $1,350 2019 2020 2021 2022 2Q2023 +10.8% YoY $114 PPP $8 PPP
12 Solid Profitability (1) See Appendix for a reconciliation of these non - GAAP financial measures 11.44% 11.92% 19.78% 19.94% 12.42% 2019 2020 2021 2022 2Q2023 Long - term Strategic Target 13% - 15% 0.93% 0.86% 1.35% 1.39% 0.95% 2019 2020 2021 2022 2Q2023 Long - term Strategic Target 1.25% - 1.60% Core ROAA (non - GAAP (1) ) Core ROATCE (non - GAAP (1) )CR0
13 Total 1 - 4 Family 35% CRE - NOO 21% C&I 19% CRE - OO 11% C&D 6% Consumer 5% Multi - family 3% Loan Diversification Commercial Loan Mix (6/30/2023) Loan Portfolio Mix (6/30/2023) RE/Rental/Leasing NOO 24% RE/Rental/ Leasing OO, C&I 21% All Other 10% Accommodations 12% Services 8% RE/Rental/Leasing Multifamily 6% Trade 6% Construction - Developers 1% Health Care / Social Assistance 4% RE/Rental/Leasing - Developers 4% Construction - All Other 4%
14 Commercial Industry Mix by Origination Year Commercial Industry Mix by Origination Prior to 2000 2001 - 2005 2006 - 2010 2011 - 2015 2016 - 2020 2021 - Current Total RE / Rental / Leasing - NOO -$ 4,687,207$ 3,268,496$ 12,992,723$ 77,317,744$ 97,066,524$ 195,332,693$ RE / Rental / Leasing - OO, C&I 27,943 174,745 1,462,906 9,172,574 65,639,482 97,275,657 173,753,307 RE / Rental / Leasing - Multifamily - 164,355 2,374,534 10,093,649 16,075,632 19,059,646 47,767,817 RE / Rental / Leasing - Developers - 108,977 81,957 - 9,348,922 24,405,161 33,945,017 Construction - All Other 43,000 92,774 204,763 3,181,247 9,293,613 19,496,519 32,311,917 Construction - Developers - - 2,402,694 356,790 184,763 6,706,308 9,650,555 Accommodations - 1,567,065 4,319,680 11,050,930 52,968,360 22,755,850 92,661,885 Services - 2,381,145 530,626 9,469,573 17,018,610 36,531,229 65,931,183 Health Care / Social Assistance - 449,151 2,131,655 5,244,399 13,271,100 13,623,045 34,719,351 Trade - 366,326 257,382 1,653,577 11,151,683 5,507,657 18,936,625 All Other 39,508 426,598 1,378,874 1,060,549 27,264,204 100,106,920 130,276,654 Totals 110,451$ 10,418,345$ 18,413,567$ 64,276,012$ 299,534,113$ 442,534,516$ 835,287,004$ CR0
15 Commercial Real Estate Focus on risk mitigation and managing of concentrations ▪ CRE / Total Capital: 238% ▪ ADC / Total Capital: 39% 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 7,776,205$ 26 299,085$ 8,280,156$ 10 828,016$ 16,056,361$ 36 446,010$ East 9,719,716$ 16 607,482$ 17,575,845$ 9 1,952,872$ 27,295,561$ 25 1,091,822$ OOM 92,634$ 1 92,634$ 773,300$ 1 773,300$ 865,934$ 2 432,967$ West 11,441,843$ 16 715,115$ 44,433,572$ 17 2,613,740$ 55,875,415$ 33 1,693,194$ Grand Total 29,030,398$ 59 492,041$ 71,062,873$ 37 1,920,618$ 100,093,271$ 96 1,042,638$ % of Gross Loans 2.15% 5.26% 7.41% % of CRE 6.00% 14.70% 20.70% 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 9,386,000$ 19 494,000$ 691,368$ 7 98,767$ 10,077,368$ 26 148,763$ East 10,085,426$ 13 775,802$ 41,549,854$ 8 5,193,732$ 51,635,280$ 21 2,511,626$ OOM 2,901,408$ 2 1,450,704$ 15,201,386$ 3 5,067,129$ 18,102,794$ 5 3,651,356$ West 2,521,290$ 5 504,258$ 13,384,166$ 9 1,487,130$ 15,905,456$ 14 1,145,259$ Grand Total 24,894,124$ 39 638,311$ 70,826,774$ 27 2,623,214$ 95,720,898$ 66 1,450,317$ % of Gross Loans 1.84% 5.24% 7.09% % of CRE 5.15% 14.65% 19.80% CRE - Owner Occupied CRE - Non-Owner Occupied Total CRE - Owner Occupied CRE - Non-Owner Occupied Total * There are no office buildings located in metropolitan markets or over four stories. ** There are no major/big box retail tenants.CR0
16 Variable Rate Loans and Repricing * Includes personal lines of credit and home equity lines Loan Type Reprices Monthly % Repricing Repricing 2023 % Repricing Repricing 2024 %Repricing Repricing 2025 + % Repricing Grand Total Commercial Loans 18,194,840$ 11.5% 10,371,230$ 6.6% 30,351,223$ 19.2% 98,915,021$ 62.7% 157,832,314$ Commercial Lines of Credit 57,498,713 99.1% 503,969 0.9% - 0.0% - 0.0% 58,002,682 Commercial Floor Plans 27,530,536 100.0% - 0.0% - 0.0% - 0.0% 27,530,536 Mortgage - 0.0% 19,065,679 8.4% 27,036,783 11.9% 180,563,856 79.7% 226,666,317 Home Equity Lines 13,284,986 100.0% - 0.0% - 0.0% - 0.0% 13,284,986 Other Consumer Lines* 41,218,705 100.0% - 0.0% - 0.0% - 0.0% 41,218,705 Totals 157,727,779$ 30.1% 29,942,901$ 5.7% 57,390,030$ 10.9% 279,478,877$ 53.3% 524,535,540$ CR0CR1
17 Credit Quality ALL / ACL Trends (Net Charge - Offs)/Average Loans - 0.02% 0.13% - 0.02% - 0.02% - 0.10% 2019 2020 2021 2022 2Q2023 Nonaccrual Loans / Total Loans 1.40% 0.35% 0.21% 0.27% 0.22% 2019 2020 2021 2022 2Q2023 NPAs / Total Assets 1.30% 0.99% 0.60% 0.46% 0.39% 2019 2020 2021 2022 2Q2023 1.19% 1.41% 1.38% 1.14% 1.25% 2019 2020 2021 2022 2Q2023
18 Investment Portfolio Sector Par (000s) Portfolio % Book Yield Duration Treasury/Agency 119,888 32% 1.80% 5.31 Fixed MBS 68,543 19% 1.96% 5.50 CMO 83,371 23% 1.81% 6.61 Municipal 33,146 9% 4.92% 8.48 Corporate 1,000 0.3% 5.49% 3.08 Other 59,206 16% 2.02% 4.58 TOTAL 365,154 100.0 2.16% 5.85 Ratings: 100% of municipal holdings are rated A or better* * Excluding $20 million locally held TIF Bonds which are not rated (repaid at par in July 2023) $365.2 Million Year 2023 2024 2025 2026 2027 Thereafter Annual Cashflow ($000’s) $35,372 $68,529 $24,866 $29,047 $36,278 $149,510 Base Case Portfolio Total Cashflow Treasury/ Agency CMO Fixed MBS Other Municipal Corporate
19 Shocked Investment Portfolio Unrealized Gains / Losses Capital Impact Intent Dn200 Dn100 BaseCase Up100 Up200 Up300 Up400 AFS - 11,456 - 16,607 - 21,841 - 27,188 - 32,396 - 37,313 - 41,597 HTM - 3,625 - 17,047 - 31,688 - 42,154 - 53,318 - 63,715 - 72,715 Total - 15,081 - 33,655 - 53,529 - 69,342 - 85,713 - 101,028 - 114,311 Corp As Reported Corp Pro - Forma AFS + HTM Sale Corp Difference Bank As Reported Bank Pro - Forma AFS + HTM Sale Bank Difference Federal Reserve Minimum RBC Thresholds Regulatory Well - Capitalized Thresholds Corp Excess Above Well - Capitalized (After Proforma Sale) Tier 1 Capital 215,535 170,882 (44,653) 185,197 138,950 (46,247) Total Risk Based Capital (RBC) 233,529 188,876 (44,653) 203,191 156,577 (46,614) CET 1 Ratio 12.40% 10.05% (2.35%) 12.64% 9.86% (2.78%) 4.50% 6.50% 3.55% Tier 1 Ratio 14.40% 11.84% (2.56%) 12.64% 9.86% (2.78%) 6.00% 8.00% 3.84% Total RBC Ratio 15.60% 13.09% (2.51%) 13.87% 11.11% (2.76%) 8.00% 10.00% 3.098% Leverage Ratio 11.25% 8.94% (2.31%) 9.78% 7.34% (2.44%) 4.00% 5.00% 3.93% Locally held TIF bonds of $19.8 million (repaid at par in July 2023) and Trust Preferred securities of $18.7 million have bee n e xcluded from the sale impact
20 Deposits 26% 30% 34% 32% 30% 14% 14% 16% 23% 25% 38% 40% 39% 36% 32% 21% 16% 11% 8% 9% 1% 0% 0% 0% 4% 2019 2020 2021 2022 2Q2023 NIB Demand IB Demand MMA & Savings CDs - Retail CDs - Brokered $1.57 $1.14 $1.59 $1.42 $1.57 Deposit Composition ($ in billions as of 6/30/2023) 92% 82% 79% 81% 85% Loan to Deposit Ratio 2019 2020 2021 2022 2023 Deposit outflows experienced in latter half of 2022 and in January 2023 due to competitive pricing landscape and inflationary spending. No changed deposit levels directly related to March 2023 market disruption. Deposit Type Balance % Insured/Collateralized Deposits $1,350,059,866 85% Uninsured Deposits $229,899,542 15% Deposit Type Balance (MMs) % Retail Deposits $798,737,681 51% Business Deposits $781,221,727 49%
21 Funding 45% 48% 7% Commercial Deposits Retail Deposits Borrowings Funding Mix Brokered/Wholesale Maturities As part of our liquidity contingency funding plan, management conservatively raised on - balance sheet cash levels in March 2023 through wholesale funding due to the market disruption.
22 Net Interest Margin (1) See Appendix for a reconciliation of these non - GAAP financial measures 4.41% 4.57% 3.99% 3.63% 3.85% 4.45% 0.86% 1.18% 0.91% 0.51% 0.44% 1.52% 3.74% 3.68% 3.34% 3.28% 3.56% 3.39% 0.42% 0.70% 0.49% 0.24% 0.21% 0.90% -0.5% 0.5% 1.5% 2.5% 3.5% 4.5% 2018 2019 2020 2021 2022 2Q2023 Yield on Earning Assets Cost of Interest-bearing Liabilities Net Interest Margin Cost of Deposits
23 Diversified Fee Income (1) See Appendix for a reconciliation of these non - GAAP financial measures Composition Trust and Brokerage 51% Service Charges 17% Net Gain on Loan Sales 1% Debit Card Income 22% Bank - owned Life Insurance 7% Other Noninterest Income 2% Non - Interest Income Mix 2Q 2023 $1,084 $1,212 $1,377 $1,482 $1,359 $1,482 2018 2019 2020 2021 2022 2Q2023 Trust & Brokerage Assets Under Management (MMs) ▪ First United’s non - interest income (1) comprised 24% of operating revenue for 2Q2023 ▪ Fee - based business provides stable growth and a diversified revenue stream not directly tied to interest rates, as well as opportunities to build client relationships ▪ First United’s diverse array of products provides opportunities to fully engage with customers and produce stable increases to earnings
24 Committed to Efficiency & Innovation 70.9% 64.6% 57.5% 56.4% 66.0% 2019 2020 2021 2022 2Q2023 (1) See Appendix for a reconciliation of these non - GAAP financial measures Efficient operational platforms and fraud protection ▪ Mortgage Bot ▪ SecureLOCK Premium Debit Card Fraud ▪ ProfitStars forecasting model ▪ Automated Loan Booking ▪ Vericast Online Consumer Loans ▪ Customer Service Center Enhancements Efficiency Ratio (1) Strategic Target 53% - 58% FinTech Investments ▪ Exclamation Labs ▪ FinTech Funds Planned solutions for a seamless and secure client experience: ▪ Zelle for Business ▪ Online Banking External Transfer ▪ New Customer Relationship Management Tool ▪ Consumer Online and Mobile Banking Digital Platform Upgrade ▪ Business Online and Mobile Banking Digital Platform Upgrade
25 Liquidity Position Liquidity Sources (6/30/2023) Amount Available ($ in thousands) Amount Used ($ in thousands Net Availability ($ in thousands) Internal Sources Excess Cash $66,969 $66,969 Unpledged Securities (BV) $56,338 $56,338 External Sources Federal Reserve (Discount Window) $9,735 $9,735 Correspondent Unsecured Lines of Credit FHLB Bank Term Funding Program* $105,000 $217,493 $87,263 $82,500 $105,000 $134,993 $87,263 Total Funding Sources $542,798 $460,298
26 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 but has improved from prior quarter. ▪ 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 ▪ Purchased $141 million of brokered CDs and FHLB advances in March 2023 as part of an 18 - month laddered contingency funding plan - 400 - 300 - 200 - 100 Flat +100 +200 +300 +400 Net Interest Income (6/30/23) (15.2%) (9.3%) (4.6%) (1.6%) 1.2% 2.4% 3.6% 4.9% Net Interest Income (3/31/23) N/A (13.8%) (7.6%) (3.2%) 2.8% 5.6% 8.4% 12.8% EVE (3/31/23) N/A 4.4% 7.1% 4.7% (5.2%) (11.7%) (16.9%) (20.7%) 12 Month Sensitivity Shock (1) Standard Model Assumptions
27 Capital Management 16.29% 16.08% 15.89% 16.12% 15.60% 2019 2020 2021 2022 2Q2023 11.77% 10.36% 10.80% 11.46% 11.25% 2019 2020 2021 2022 2Q2023 12.79% 12.61% 12.50% 12.96% 12.40% 2019 2020 2021 2022 2Q2023 15.17% 14.83% 14.64% 15.06% 14.40% 2019 2020 2021 2022 2Q2023 CET1 Ratio Leverage Ratio Tier 1 Ratio Total Risk - Based Capital Ratio Regulatory Well - Capitalized 10% 5% 8% 6.5%
28 Capital Management $16.17 $17.17 $19.61 $20.90 $21.29 2019 2020 2021 2022 2Q2023 8.03% 6.97% 7.56% 7.59% 7.46% 2019 2020 2021 2022 2Q2023 Tangible Book Value / Share TCE Ratio
29 Strategic Targets Metric Actual 12/31/2021 Non - GAAP 12/31/2021 Actual 12/31/2022 Long Term Strategic Target Range (*) Strong Shareholder Return EPS Growth (YoY) 49% 79% (1) 27% 8% - 12% Dividend Payout Ratio 19.7% 16.3% 15.9% 20% - 25% ROAA 1.12% 1.35% (1) 1.39% 1.25% - 1.60% ROATCE 16.27% 19.61% (1) 19.94% 13% - 15% TCE Ratio 7.56% 7.56% 7.59% 8% - 10% High Quality, Diversified Revenue Stream Revenue Growth (YoY) 42.8% 72.2% (1) 3.3% 6% - 8% Non - Int Inc / Revenue 28.3% 26.9% (1) 23.7% 21% - 23% N IM 3.28% 3.28% 3.56% 3.5% - 3.8% Balance Sheet Growth % Loan Growth - 1.2% incl PPP - 1.2% incl PPP 10.9% 7% - 10% Loans / Assets 67% 67% 69% 70% - 76% Loans / Deposits 79% 79% 81% 85% - 90% Highly Efficient Operations Efficiency Ratio (adjusted for non - core items) 64.7% 56.4% (1) 56.4% 53% - 58% Robust Risk Enterprise Management NPLs / Loans 0.21% 0.21% .30% 0.50% - 1.00% (NCOs) Recoveries / Avg. Total Loans - 0.02% - 0.02% - .06% 0.10% - 0.50% (*) Targets reviewed on an annual basis – Revised June 2023 (1) See Appendix for a reconciliation of these non - GAAP financial measures
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 30 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.
31 I. II. III. IV. Management Team Board of Directors ESG Journey & Statistics Non - GAAP Reconciliation Pg. 32 Pg. 33 Pg. 36 Pg. 38 Appendices
32 Our Dedicated Management Team Carissa L. Rodeheaver Chairman of the Board, President & CEO 30+ year career with First United with in - depth industry, wealth management, financial and operational experience Jason B. Rush SVP & Chief Operating Officer 29 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 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.
33 33 John F. Barr Independent Director Owner, 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 Owner, Shockley, Inc. 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 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
34 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 50% 90% 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 Annual Committee and Self - Evaluations x Balanced Tenure, with four directors added in the past four years x Retirement policy, at the age of 72 x Routine shareholder & stakeholder engagement x Policy to interview a diverse slate of candidates x 100% Independent Board Committees x Majority Voting Standard for Director Elections
35 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 ra nge of local entrepreneurial businesses, they apply these diverse backgrounds to their work on behalf of our shareholders. Director Skills Matrix Barr Boal 1 Chadha DiPietro 1 Milon Moran Rodeheaver Rudy Shockley 1 Walls Executive Leadership x x x x x x x Public Company Board Experience x x x Information Technology x x Financial Services/ Banking x x x x x Asset Management x x x Brokerage/ Investment Banking x x x Strategic Planning x x x x x x x x x x Accounting/Finance x x x x Regulatory x x x Risk Management x x x x x x x x Legal Expertise x Governance x x x x x x Board Tenure and Age Tenure 9 9 2 2 3 .5 10 30 9 17 Age 69 50 46 62 60 61 57 70 58 62 1 Qualifies as a Financial Expert for proxy purposes.
36 Continuous Progress We continue to advance our ESG profile over time, recognizing the importance of our key stakeholders – including our customers and 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 (phased - in by 2024) x 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
37 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
38 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
39 Non - GAAP Reconciliation , continued
40 Non - GAAP Reconciliation , continued
41 Non - GAAP Reconciliation , continued
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