First United Corp 8-K, filed Oct 25, 2023
First United Corp/Md/ (FUNC)
About this 8-K
First United Corp filed this 8-K on October 25, 2023, reporting on events of October 23, 2023.
Items reported
- Item 2.02: Financial results
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 2.02. Results of Operation and Financial Condition.
On October 23, 2023, First United Corporation (the “Corporation”) issued a press release describing its financial results for the three- and nine-month periods ended September 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 October 25, 2023, the Corporation published an investor presentation that discusses certain aspects of its financial results for the three- and nine- month periods ended September 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:
| Exhibit No. | Description | |
| 99.1 | Press release dated October 23, 2023 (furnished herewith) | |
| 99.2 | Investor presentation dated October 25, 2023 (furnished herewith) | |
| 104 | Cover page interactive data file (embedded within the iXBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FIRST UNITED CORPORATION | ||
| Dated: October 25, 2023 | By: | /s/ Tonya K. Sturm |
| Tonya K. Sturm | ||
| Senior Vice President & CFO | ||
Exhibit 99.1
FIRST UNITED CORPORATION ANNOUNCES
THIRD QUARTER 2023 EARNINGS
OAKLAND, MARYLAND—October 23, 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 nine-month periods ended September 30, 2023. Consolidated net income was $4.5 million for the third quarter of 2023, or $0.67 per share (basic and diluted), compared to $6.9 million, or $1.04 per share (basic and diluted), for the third quarter of 2022 and $4.4 million, or $0.66 per share (basic and diluted), for the second quarter of 2023. Year to date income was $13.3 million, or $1.99 and $1.98 per basic and diluted share, respectively, compared to $18.1 million, or $2.72 per share (basic and diluted), for the same period of 2022.
According to Carissa Rodeheaver, Chairman, President and CEO, “We continue to be encouraged by the strong loan growth and the positive asset quality metrics of our loan portfolio. While we saw continued compression of our net interest margin during the quarter due to the rising funding costs, we believe the pricing is stabilizing. We remain focused on utilizing technology to bring efficiencies to our operations to control future expenses. Our team has successfully assisted our customers in navigating this volatile and unpredictable financial environment.”
Third Quarter Financial Highlights:
| · | Total assets at September 30, 2023 remained stable when compared to June 30, 2023 and increased by $80.0 million, or 4.3%, when compared to December 31, 2022. Significant changes during the third quarter included: |
| o | Cash balances decreased by $7.9 million when compared to June 30, 2023 and increased by $6.3 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 Loan Bank (“FHLB”) borrowings and $61.1 million in brokered deposits in the first quarter of 2023, offset by strong year-to-date loan growth. |
| o | Investment securities decreased by $20.8 million when compared to June 30, 2023 and by $31.5 million when compared to December 31, 2022. The decrease in the third quarter was primarily related to the redemption of a non-rated municipal tax increment fund (“TIF”) bond at par for approximately $17.3 million to fund continued loan demand. Additional decreases related to principal amortization and reductions in the fair market value of the available for sale portfolio offset by the purchase of securities for Community Reinvestment Act purposes. |
| o | Gross loans increased by $30.0 million when compared to June 30, 2023 and by $100.5 million when compared to December 31, 2022, as: |
| § | commercial balances increased by $13.6 million during the third quarter and by $50.9 million when compared to December 31, 2022, |
| § | residential mortgage balances increased by $16.1 million during the third quarter and by $47.3 million when compared to December 31, 2022; and |
| § | consumer loans increased by $0.3 million during the third quarter and by $2.3 million when compared to December 31, 2022. |
| o | Deposits decreased by $4.9 million when compared to June 30, 2023 and increased by $4.3 million when compared to December 31, 2022 due to the addition of $61.1 million in brokered deposits, the latter of which was partially offset by decreases in other deposit balances due to increased consumer, commercial and municipal spending and two relationships with planned deposit reductions of $39.5 million. |
| o | Short-term borrowings increased by $3.3 million when compared to June 30, 2023 and decreased by $11.2 million when compared to December 31, 2022. The increase in quarterly balances was due primarily to seasonal fluctuations of municipal customer balances in overnight investment sweep products. The decrease from December 31, 2022 is primarily related to one large municipal customer moving approximately $12.0 million in funds from an overnight investment sweep product to a non-interest-bearing deposit product. |
| · | The ratio of the allowance for credit losses (“ACL”) to loans outstanding was 1.24% at September 30, 2023 as compared to 1.25% at June 30, 2023 and to an allowance for loan loss (“ALL”) of 1.14% at December 31, 2022. |
| o | On January 1, 2023, the Corporation 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 Corporation recognized ALL based on an incurred loss model. |
| o | Total provision expense related to credit losses was $0.3 million for the third quarter of 2023 as compared to provision expense of $0.4 million for the second quarter of 2023 and a credit of $0.1 million for the third quarter of 2022. The low provisioning is primarily due to low historical losses, strong asset quality metrics, and improved qualitative factors such as unemployment rates and consumer spending. |
| · | Consolidated net income was $4.5 million for the third quarter of 2023. |
| o | Net interest margin, on a non-GAAP, fully tax equivalent (“FTE”) basis, was 3.30% for the nine months ended September 30, 2023 as compared to 3.53% for the same time period in 2022. |
| o | Net interest margin, on a non-GAAP, FTE basis, was 3.12% for the third quarter of 2023 compared to 3.26% for the second quarter of 2023 and 3.66% for the third quarter of 2022. |
| o | Non-interest income increased by $0.2 million in the third quarter of 2023 when compared to the second quarter of 2023 due to increases in wealth management income, gains on sales of mortgages, and an increase in check fees collected related to the receipt of incentive proceeds of $0.1 million. |
| o | Operating expenses increased by $0.3 million quarter-over-quarter in 2023 driven by a $0.1 million increase in salaries and benefits, a $0.1 million increase in net expenses attributable to other real estate owned (“OREO”), and a $0.1 million increase in data processing expenses. Increases in other operating expenses such as marketing, check fraud, and contract labor were partially offset by decreases in professional services, contract labor and investor relations. |
Income Statement Overview
Consolidated net income was $4.5 million for the third quarter of 2023 compared to $6.9 million for the third quarter of 2022 and $4.4 million for the second quarter of 2023. Basic and diluted net income was $0.67 per share for the third quarter of 2023, compared to basic and diluted net income of $1.04 per share for the third quarter of 2022 and $0.66 per share for the second quarter of 2023.
The decrease in quarterly net income, year-over-year, was primarily driven by a $1.3 million decrease in net interest income. Interest expense increased by $6.1 million year-over-year, which was partially offset by an increase in interest income of $4.9 million. The provision for credit losses was $0.3 million for the third quarter of 2023 compared to a credit to the provision of $0.1 million for the third quarter of 2022. Salaries and employee benefits increased by $0.8 million 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, a one-time severance pay-out, and decreases in deferred loan costs, partially offset by decreases in incentives and stock compensation. Data processing expenses increased by $0.1 million, FDIC premiums increased by $0.1 million and miscellaneous expenses increased by $0.6 million primarily attributable to increased net periodic pension plan costs of $0.3 million and check fraud related expenses of $0.3 million. Check fraud has been on the rise throughout 2023 industry-wide. During the third quarter, management implemented additional procedures to help mitigate this increased risk.
Compared to the linked quarter, net income increased slightly by $0.1 million due to a decrease in the provision for income taxes. Net interest income for the three months ended September 30, 2023 decreased by $0.2 million driven by an increase in interest expense of $1.4 million, partially offset by an increase of $1.2 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, including gains on sales of residential mortgages, wealth management income, and check fees collected related to the receipt of incentive proceeds of $0.1 million, increased by $0.3 million. Operating expenses increased by $0.3 million. Salaries and employee benefits increased by $0.1 million primarily due to increased life and health insurance related to continued higher claims in the third quarter. Net OREO expenses increased by $0.1 million due to gains on sales of OREO properties which were recognized in the second quarter of 2023. Increases in marketing, data processing, and contract labor were partially offset by decreases in FDIC premiums, investor relations, professional services, and equipment expenses. The provision for income taxes decreased by $0.1 million due to a slight reduction in the effective income tax rate.
Net income for the first nine months of 2023 was $13.3 million compared to $18.1 million for the same period in 2022, a $4.8 million decrease. The year-over-year decrease was driven by an increase in total operating expenses of $7.0 million. Salaries and employee benefits increased by $3.2 due primarily to increased salary expense of $1.8 million related to new hires, the competitive environment for labor and merit increases effective April 1, 2023, increased health insurance costs of $1.0 million associated with unusually high claims and decreases of $0.4 in deferred loan costs. Occupancy and equipment expense increased by $0.2 million, data processing expense increased by $0.4 million due to planned implementation of new technology, and FDIC assessments increased by $0.2 million. Other miscellaneous expenses, such as loan service fees, dues and licenses, check fraud expenses, employee benefit plan expense, and miscellaneous expenses increased by $1.7 million and professional fees increased by $0.7 million due to the one-time $0.8 million cash receipt related to reimbursement of litigation expenses that was credited to expenses in 2022. Provision for credit losses increased by $1.1 million when compared to prior year. These increases were partially offset by increases in net interest income of $0.2 million, gains on sales of mortgages of $0.2 million, service charges on deposit accounts of $0.2 million, and $0.1 million increase in miscellaneous income. Income taxes were down by $2.2 million comparing the two periods.
Net Interest Income and Net Interest Margin
Net interest income, on a non-GAAP, FTE basis, decreased by $1.3 million for the third quarter of 2023 when compared to the third quarter of 2022. This decrease was driven by an increase of $6.1 million in interest expense due to an increase of 175 basis points on interest paid on deposit accounts as well as an increase of $127.7 million in average balances of interest-bearing deposit accounts when compared to the same period of 2022. Increased deposit pricing resulted from 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. In anticipation of increasing rates, management made the decision to pre-fund the $30.4 million brokered certificate of deposit set to mature in the fourth quarter of 2023 at the same rate in order to maintain cash balances. Interest income increased by $4.9 million. Interest income on loans increased by $4.0 million due to the increase of 76 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 $123.1 million. Investment income decreased by $0.1 million as cashflow from the portfolio was used to fund higher yielding loans. The net interest margin for the three months ended September 30, 2023 was 3.12% compared to 3.66% for the three months ended September 30, 2022.
Comparing the third quarter of 2023 to the second 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 $1.1 million in interest income offset by a $1.4 million increase in interest expense. Interest expense on deposits increased by $1.3 million due to an increase of 41 basis points in the average rate paid and an increase in average deposit balances of $26.7 million during the quarter. The increase in deposits was primarily driven by the increase of $31.6 million in time deposits due to a promotional nine-month certificate of deposit special offered in 2023 as well as the pre-funding of a $30.4 million brokered deposit in the third quarter. These increases were offset by the decline of $6.9 million in non-interest bearing deposits. Interest income on loans increased by $1.3 million related to an overall increase of 15 basis points in yield.
Comparing the nine months ended September 30, 2023 to the nine months ended September 30, 2022, net interest income, on a non-GAAP, FTE basis, increased by $0.1 million. Interest income increased by $13.8 million and interest expense increased by $13.7 million. The yield on earning assets increased 80 basis points to 4.54% in 2023 compared to 3.74% in 2022 in correlation with the rising interest rate environment and new loans booked at higher rates. Interest expense on deposits increased $11.2 million while the average balances increased $108.4 million and interest on long-term borrowings increased $2.5 million related to $80.0 million in FHLB borrowings obtained during the first quarter of 2023 and an increase in interest rates on variable rate trust preferred borrowings. The increased interest expense resulted in an overall increase of 145 basis points on interest bearing liabilities. The net interest margin for the nine months ended September 30, 2023 was 3.30% compared to 3.53% for the nine months ended September 30, 2022.
Non-Interest Income
Other operating income, including gains, for the third quarter of 2023 increased by $0.2 million when compared to the same period of 2022. Increases in service charges, wealth management income, and gains on sales of mortgages were partially offset by a decrease in debit card income.
On a linked quarter basis, other operating income, including gains on sales of mortgages, service charges, wealth management income, and other miscellaneous income (primarily check fees collected due to the receipt of incentives of $0.1 million) increased by $0.3 million. These increases were partially offset by a decrease in debit card income.
Other operating income for the nine months ended September 30, 2023 increased by $0.3 million when compared to the same period of 2022. This increase was primarily due to the increase in gains on sales of mortgages of $0.3 million, service charges on deposit accounts of $0.2 million, and debit card income of $0.1 million, partially offset by a decrease of $0.1 million in wealth management income attributable to the decline in market values of assets under management.
Non-Interest Expense
Operating expenses increased by $2.5 million when comparing the third quarter of 2023 to the third quarter of 2022. This increase was primarily driven by a $0.8 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 reduced loan costs. Legal and professional expenses increased by $0.7 million attributable to the one-time $0.8 million cash receipt related to reimbursement of litigation expenses that was credited to expense in 2022. Miscellaneous expenses increased by $0.6 million due primarily to increases of $0.3 in check fraud related expenses and net periodic pension plan costs of $0.3 million. Data processing expenses, FDIC premiums, and marketing expenses each increased by $0.1 million year over year.
Comparing the third quarter of 2023 to the second quarter of 2023, operating expenses increased by $0.3 million. Salaries and employee benefits increased by $0.1 million due primarily to increased life and health insurance related to unusually high claims. Net OREO expenses increased by $0.1 million related to gains on sales of OREO properties recognized in the second quarter. Increases in data processing expense of $0.1 million, marketing expense of $0.1 million were partially offset by decreases in investor relations and FDIC premiums.
For the nine months ended September 30, 2023, non-interest expenses increased by $6.4 million when compared to the nine months ended September 30, 2022. Salaries and employee benefits increased by $3.2 million year over year due primarily to increased salary expense of $1.9 million related to new hires and merit increases effective April 1, 2023 and increased health insurance costs of $1.0 million associated with unusually high claims. Occupancy and equipment expense increased by $0.2 million, data processing expense increased by $0.4 million, and FDIC assessments increased by $0.2 million. Other miscellaneous expenses, such as loan service fees, dues and licenses, check fraud expenses, employee benefit plan expense, and miscellaneous expenses increased by $1.7 million.
The effective income tax rates as a percentage of income for the nine months ended September 30, 2023 and September 30, 2022 were 23.6% and 25.8%, 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 September 30, 2023 were $1.9 billion, representing an $80.0 million increase since December 31, 2022. During the first nine months of 2023, cash and interest-bearing deposits in other banks increased by $6.3 million as a result of management’s strategic decision to obtain $61.1 million in brokered certificates of deposit and $80.0 million in FHLB borrowings during the first quarter of 2023 to strength on-balance sheet liquidity. The increase in cash obtained from this strategic decision was partially offset by the funding of strong loan growth in 2023. The investment portfolio decreased by $31.5 million since December 31, 2022. Management elected to redeem $17.8 million from a non-rated municipal TIF bond at par to increase on-balance sheet liquidity to fund future loan growth. Additional decreases in the investment portfolio were primarily associated with normal principal amortization. Loans increased by $100.5 million since December 31, 2022 due primarily to growth in the commercial and consumer mortgage portfolios. Other assets, including deferred taxes, premises and equipment, and accrued interest receivable, increased by $2.0 million as deferred tax assets increased by $2.4 million, equity investments increased by $1.1 million, and pension assets decreased by $0.5 million.
Total liabilities at September 30, 2023 were $1.8 billion, representing a $76.9 million increase since December 31, 2022. Total deposits increased by $4.3 million since December 31, 2022. Total certificates of deposit increased by $100.5 million primarily due to an increase of $60.6 million in brokered certificates of deposits and $39.9 in retail certificates of deposit. Interest-bearing demand deposits also increased by $54.1 million due to a shift in the deposit portfolio mix from non-interest-bearing deposits to interest-bearing accounts including the ICS product to ensure full FDIC insurance coverage as well as a new municipal customer bringing approximately $40.0 million new deposits during the year. These increases were offset by decreases in non-interest-bearing deposits of $76.9 million and savings and money market accounts of $73.4 million. Short term borrowings decreased by $11.2 million since December 31, 2022 primarily due to one municipal customer moving funds from an overnight investment product to a non-interest bearing deposit product in 2023. Long term borrowings increased by $80.0 million in the first nine months of 2023 when compared to December 31, 2022 due to the acquisition of $80.0 million in FHLB borrowings.
Outstanding loans of $1.4 billion at September 30, 2023 reflected growth of $100.5 million for the first nine months of 2023. Since December 31, 2022, commercial real estate loans increased by $32.5 million, acquisition and development loans increased by $9.2 million and commercial and industrial loans increased by $9.3 million. Growth in the commercial portfolios was driven by increased activity with existing clients as well as cultivating new business relationships. Residential mortgage loans increased $47.3 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 $2.3 million.
New commercial loan production for the three months ended September 30, 2023 was approximately $40.3 million. The pipeline of commercial loans as of September 30, 2023 was $41.7 million. At September 30, 2023, unfunded, committed commercial construction loans totaled approximately $40.6 million. Commercial amortization and payoffs were approximately $144.6 million through September 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 third quarter of 2023 was approximately $27.5 million, with most of this production comprised of in-house loans. The pipeline of in-house, portfolio loans as of September 30, 2023, was $13.5 million. The residential mortgage production level normalized in the third quarter of 2023 due to the increasing interest rates. Unfunded commitments related to residential construction loans totaled $20.5 million on September 30, 2023. Management began shifting more activity towards the secondary market in the second and third quarters to reduce the need for additional funding.
Total deposits at September 30, 2023 increased by $4.3 million when compared to December 31, 2022. In March 2023, the Corporation obtained $61.1 million in new brokered deposits. In August 2023, the Corporation obtained $30.0 million of brokered deposits to pre-fund the maturity of a $30.4 million brokered certificate of deposit that matured in September 2023. In addition, retail certificates of deposit increased by $39.9 million due primarily to promotional nine-month certificate of deposit product offered in 2023. Interest-bearing demand deposits increased by $54.1 million due to a shift in the deposit portfolio mix from non-interest-bearing accounts to interest-bearing accounts including the ICS product to ensure full FDIC insurance, including approximately $40.0 million of funds from a local municipality. These increases were offset by decreases in non-interesting bearing deposits of $76.9 million, money market accounts of $27.0 million, and savings accounts of $46.3 million due to the shift to interest-bearing demand deposit accounts, two relationships 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.
The book value of the Corporation’s common stock was $23.08 per share at September 30, 2023 compared to $22.77 per share at December 31, 2022. At September 30, 2023, there were 6,715,170 of basic outstanding shares and 6,728,482 of diluted outstanding shares of common stock. The increase in the book value at September 30, 2023 was due to the undistributed net income of $9.3 million for the first nine 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 Topic 326 and other comprehensive losses of $4.5 million resulting from changes in the unrealized losses of the Corporation’s available for sale investment securities in this rising rate environment. In September 2023, the Corporation purchased and retired 1,298 shares of the Corporation’s common stock at an average price of $16.25 per share pursuant to the previously announced stock repurchase program. The program, the term of which expires on August 18, 2024 unless sooner terminated or extended by the Corporation’s Board of Directors, will be further utilized as the Board and management deem appropriate.
Asset Quality
On January 1, 2023, the Corporation adopted CECL, which replaced the incurred loss impairment model with an expected loss model. As a result of the CECL adoption, the Corporation 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 Corporation 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 Corporation 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 $17.1 million at September 30, 2023 compared to the ALL of $15.5 million recorded at September 30, 2022 and $14.6 million at December 31, 2022. The provision for credit losses was $0.3 million for the quarter ended September 30, 2023, compared to a credit to provision of $0.1 million for the quarter ended September 30, 2022. The provision expense recorded in the third 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 $0.1 million were recorded for the quarter ended September 30, 2023 and 2022. The ratio of the ACL to loans outstanding was 1.24% at September 30, 2023 compared to 1.25% at June 30, 2023 and 1.14% at December 31, 2022.
The ratio of year-to-date net charge offs to average loans for the nine months ending September 30, 2023 was an annualized 0.07%, compared to net charge offs to average loans of 0.06% 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 | ||||
| 9/30/2023 | 9/30/2022 | |||
| Loan Type | (Charge Off) / Recovery | (Charge Off) / Recovery | ||
| Commercial Real Estate | (0.02%) | 0.00% | ||
| Acquisition & Development | 0.01% | 0.00% | ||
| Commercial & Industrial | (0.07%) | (0.03%) | ||
| Residential Mortgage | 0.00% | 0.05% | ||
| Consumer | (1.15%) | (1.26%) | ||
| Total Net (Charge Offs)/Recoveries | (0.07%) | (0.06%) | ||
Non-accrual loans totaled $3.5 million at September 30, 2023 and December 31, 2022. 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 September 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 September 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 0.27% at September 30, 2023 compared to 0.18% at June 30, 2023 and an ALL to loans outstanding of 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 September 30, 2023 and the impact that any such events have on our critical accounting assumptions and estimates made as of September 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 | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| (Dollars in thousands, except per share data) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Results of Operations: | ||||||||||||||||
| Interest income | $ | 21,164 | $ | 16,185 | $ | 58,965 | $ | 45,063 | ||||||||
| Interest expense | 7,180 | 1,044 | 16,289 | 2,610 | ||||||||||||
| Net interest income | 13,984 | 15,141 | 42,676 | 42,453 | ||||||||||||
| Provision/(credit) for credit/loan losses | 263 | (101 | ) | 1,201 | 97 | |||||||||||
| Other operating income | 4,716 | 4,604 | 13,538 | 13,399 | ||||||||||||
| Net gains | 182 | 96 | 322 | 161 | ||||||||||||
| Other operating expense | 12,785 | 10,329 | 37,934 | 31,551 | ||||||||||||
| Income before taxes | $ | 5,834 | $ | 9,613 | $ | 17,401 | $ | 24,365 | ||||||||
| Income tax expense | 1,321 | 2,677 | 4,099 | 6,286 | ||||||||||||
| Net income | $ | 4,513 | $ | 6,936 | $ | 13,302 | $ | 18,079 | ||||||||
| Per share data: | ||||||||||||||||
| Basic net income per share | $ | 0.67 | $ | 1.04 | $ | 1.99 | $ | 2.72 | ||||||||
| Diluted net income per share | $ | 0.67 | $ | 1.04 | $ | 1.98 | $ | 2.72 | ||||||||
| Dividends declared per share | $ | 0.20 | $ | 0.15 | $ | 0.60 | $ | 0.45 | ||||||||
| Book value | $ | 23.08 | $ | 19.83 | ||||||||||||
| Diluted book value | $ | 23.03 | $ | 19.80 | ||||||||||||
| Tangible book value per share | $ | 21.27 | $ | 18.03 | ||||||||||||
| Diluted Tangible book value per share | $ | 21.22 | $ | 18.00 | ||||||||||||
| Closing market value | $ | 16.23 | $ | 16.55 | ||||||||||||
| Market Range: | ||||||||||||||||
| High | $ | 17.34 | $ | 19.27 | ||||||||||||
| Low | $ | 13.70 | $ | 16.18 | ||||||||||||
| Shares outstanding at period end: Basic | 6,715,170 | 6,659,390 | ||||||||||||||
| Shares outstanding at period end: Diluted | 6,728,482 | 6,669,785 | ||||||||||||||
| Performance ratios: (Year to Date Period End, annualized) | ||||||||||||||||
| Return on average assets | 0.93 | % | 1.35 | % | ||||||||||||
| Return on average shareholders' equity | 11.44 | % | 17.66 | % | ||||||||||||
| Net interest margin (Non-GAAP), includes tax exempt income of $578 and $709 | 3.30 | % | 3.53 | % | ||||||||||||
| Net interest margin GAAP | 3.25 | % | 3.47 | % | ||||||||||||
| Efficiency ratio - non-GAAP (1) | 66.41 | % | 51.49 | % | ||||||||||||
(1) Efficiency ratio is a non-GAAP measure calculated by dividing total operating expenses by the sum of tax equivalent net interest income and other operating income, less gains/(losses) on sales of securities and/or fixed assets.
| September 30 | December 31 | |||||||
| 2023 | 2022 | |||||||
| Financial Condition at period end: | ||||||||
| Assets | $ | 1,928,201 | $ | 1,848,169 | ||||
| Earning assets | $ | 1,717,244 | $ | 1,643,964 | ||||
| Gross loans | $ | 1,380,019 | $ | 1,279,494 | ||||
| Commercial Real Estate | $ | 491,284 | $ | 458,831 | ||||
| Acquisition and Development | $ | 79,796 | $ | 70,596 | ||||
| Commercial and Industrial | $ | 254,650 | $ | 245,396 | ||||
| Residential Mortgage | $ | 491,686 | $ | 444,411 | ||||
| Consumer | $ | 62,603 | $ | 60,260 | ||||
| Investment securities | $ | 330,053 | $ | 361,548 | ||||
| Total deposits | $ | 1,575,069 | $ | 1,570,733 | ||||
| Noninterest bearing | $ | 429,691 | $ | 506,613 | ||||
| Interest bearing | $ | 1,145,378 | $ | 1,064,120 | ||||
| Shareholders' equity | $ | 154,990 | $ | 151,793 | ||||
| Capital ratios: | ||||||||
| Tier 1 to risk weighted assets | 14.60 | % | 14.40 | % | ||||
| Common Equity Tier 1 to risk weighted assets | 12.60 | % | 12.36 | % | ||||
| Tier 1 Leverage | 11.25 | % | 11.23 | % | ||||
| Total risk based capital | 15.81 | % | 15.50 | % | ||||
| Asset quality: | ||||||||
| Net charge-offs for the quarter | $ | (83 | ) | $ | (89 | ) | ||
| Nonperforming assets: (Period End) | ||||||||
| Nonaccrual loans | $ | 3,479 | $ | 1,943 | ||||
| Loans 90 days past due and accruing | 145 | 569 | ||||||
| Total nonperforming loans and 90 day past due | $ | 3,624 | $ | 2,512 | ||||
| Modified/Restructured loans | $ | - | $ | 3,354 | ||||
| Other real estate owned | $ | 4,878 | $ | 4,733 | ||||
| Allowance for credit losses to gross loans | 1.24 | % | 1.22 | % | ||||
| Allowance for credit losses to non-accrual loans | 492.84 | % | 799.85 | % | ||||
| Allowance for credit losses to non-performing assets | 473.12 | % | 214.51 | % | ||||
| Non-performing and 90 day past due loans to total loans | 0.26 | % | 0.20 | % | ||||
| Non-performing loans and 90 day past due loans to total assets | 0.19 | % | 0.14 | % | ||||
| Non-accrual loans to total loans | 0.25 | % | 0.15 | % | ||||
| Non-performing assets to total assets | 0.44 | % | 0.40 | % | ||||
FIRST UNITED CORPORATION
Oakland, MD
Stock Symbol : FUNC
Financial Highlights - Unaudited
| September 30, | June 30, | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||||||
| (Dollars in thousands, except per share data) | 2023 | 2023 | 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||||||||
| Results of Operations: | ||||||||||||||||||||||||||||
| Interest income | $ | 21,164 | $ | 19,972 | $ | 17,829 | $ | 17,359 | $ | 16,185 | $ | 14,731 | $ | 14,147 | ||||||||||||||
| Interest expense | 7,180 | 5,798 | 3,311 | 2,179 | 1,044 | 760 | 806 | |||||||||||||||||||||
| Net interest income | 13,984 | 14,174 | 14,518 | 15,180 | 15,141 | 13,971 | 13,341 | |||||||||||||||||||||
| Provision/(credit) for credit/loan losses | 263 | 395 | 543 | (736 | ) | (101 | ) | 631 | (421 | ) | ||||||||||||||||||
| Other operating income | 4,716 | 4,483 | 4,339 | 4,479 | 4,604 | 4,413 | 4,382 | |||||||||||||||||||||
| Net gains | 182 | 86 | 54 | 11 | 96 | 13 | 52 | |||||||||||||||||||||
| Other operating expense | 12,785 | 12,511 | 12,638 | 11,590 | 10,329 | 10,630 | 10,580 | |||||||||||||||||||||
| Income before taxes | $ | 5,834 | $ | 5,837 | $ | 5,730 | $ | 8,816 | $ | 9,613 | $ | 7,136 | $ | 7,616 | ||||||||||||||
| Income tax expense | 1,321 | 1,423 | 1,355 | 1,847 | 2,677 | 1,708 | 1,901 | |||||||||||||||||||||
| Net income | $ | 4,513 | $ | 4,414 | $ | 4,375 | $ | 6,969 | $ | 6,936 | $ | 5,428 | $ | 5,715 | ||||||||||||||
| Per share data: | ||||||||||||||||||||||||||||
| Basic net income per share | $ | 0.67 | $ | 0.66 | $ | 0.66 | $ | 1.05 | $ | 1.04 | $ | 0.82 | $ | 0.86 | ||||||||||||||
| Diluted net income per share | $ | 0.67 | $ | 0.66 | $ | 0.65 | $ | 1.04 | $ | 1.04 | $ | 0.82 | $ | 0.86 | ||||||||||||||
| Dividends declared per share | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.18 | $ | 0.15 | $ | 0.15 | $ | 0.15 | ||||||||||||||
| Book value | $ | 23.08 | $ | 23.12 | $ | 22.85 | $ | 22.77 | $ | 19.83 | $ | 19.97 | $ | 20.65 | ||||||||||||||
| Diluted book value | $ | 23.03 | $ | 23.07 | $ | 22.81 | $ | 22.68 | $ | 19.80 | $ | 19.93 | $ | 20.63 | ||||||||||||||
| Tangible book value per share | $ | 21.27 | $ | 21.29 | $ | 21.01 | $ | 20.91 | $ | 18.03 | $ | 18.17 | $ | 18.83 | ||||||||||||||
| Diluted Tangible book value per share | $ | 21.22 | $ | 21.25 | $ | 20.96 | $ | 20.87 | $ | 18.00 | $ | 18.14 | $ | 18.82 | ||||||||||||||
| Closing market value | $ | 16.23 | $ | 14.26 | $ | 16.89 | $ | 19.65 | $ | 16.55 | $ | 18.76 | $ | 22.53 | ||||||||||||||
| Market Range: | ||||||||||||||||||||||||||||
| High | $ | 17.34 | $ | 17.01 | $ | 20.41 | $ | 20.56 | $ | 19.27 | $ | 23.80 | $ | 24.50 | ||||||||||||||
| Low | $ | 13.70 | $ | 12.56 | $ | 16.75 | $ | 16.74 | $ | 16.18 | $ | 17.50 | $ | 18.81 | ||||||||||||||
| Shares outstanding at period end: Basic | 6,715,170 | 6,711,422 | 6,688,710 | 6,666,428 | 6,659,390 | 6,656,395 | 6,637,979 | |||||||||||||||||||||
| Shares outstanding at period end: Diluted | 6,728,482 | 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 | 0.93 | % | 0.95 | % | 0.94 | % | 1.39 | % | 1.35 | % | 1.26 | % | 1.31 | % | ||||||||||||||
| Return on average shareholders' equity | 11.44 | % | 11.43 | % | 11.87 | % | 18.19 | % | 17.66 | % | 16.25 | % | 16.49 | % | ||||||||||||||
| Net interest margin (Non-GAAP), includes tax exempt income of $125 and $241 | 3.30 | % | 3.39 | % | 3.53 | % | 3.56 | % | 3.53 | % | 3.46 | % | 3.40 | % | ||||||||||||||
| Net interest margin GAAP | 3.25 | % | 3.34 | % | 3.48 | % | 3.50 | % | 3.47 | % | 3.40 | % | 3.34 | % | ||||||||||||||
| Efficiency ratio - non-GAAP (1) | 66.41 | % | 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.
| September 30, | June 30, | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||||||
| 2023 | 2023 | 2023 | 2022 | 2022 | 2022 | 2022 | ||||||||||||||||||||||
| Financial Condition at period end: | ||||||||||||||||||||||||||||
| Assets | $ | 1,928,201 | $ | 1,928,393 | $ | 1,937,442 | $ | 1,848,169 | $ | 1,803,642 | $ | 1,752,455 | $ | 1,760,325 | ||||||||||||||
| Earning assets | $ | 1,717,244 | $ | 1,707,522 | $ | 1,652,688 | $ | 1,643,964 | $ | 1,647,303 | $ | 1,608,094 | $ | 1,572,737 | ||||||||||||||
| Gross loans | $ | 1,380,019 | $ | 1,350,038 | $ | 1,289,080 | $ | 1,279,494 | $ | 1,277,924 | $ | 1,233,613 | $ | 1,181,401 | ||||||||||||||
| Commercial Real Estate | $ | 491,284 | $ | 483,485 | $ | 453,356 | $ | 458,831 | $ | 437,973 | $ | 421,942 | $ | 391,136 | ||||||||||||||
| Acquisition and Development | $ | 79,796 | $ | 79,003 | $ | 76,980 | $ | 70,596 | $ | 83,107 | $ | 116,115 | $ | 133,031 | ||||||||||||||
| Commercial and Industrial | $ | 254,650 | $ | 249,683 | $ | 241,959 | $ | 245,396 | $ | 269,004 | $ | 225,640 | $ | 194,914 | ||||||||||||||
| Residential Mortgage | $ | 491,686 | $ | 475,540 | $ | 456,198 | $ | 444,411 | $ | 427,093 | $ | 406,293 | $ | 399,704 | ||||||||||||||
| Consumer | $ | 62,603 | $ | 62,327 | $ | 60,587 | $ | 60,260 | $ | 60,747 | $ | 63,623 | $ | 62,616 | ||||||||||||||
| Investment securities | $ | 330,053 | $ | 350,844 | $ | 357,061 | $ | 361,548 | $ | 366,484 | $ | 373,455 | $ | 385,265 | ||||||||||||||
| Total deposits | $ | 1,575,069 | $ | 1,579,959 | $ | 1,591,285 | $ | 1,570,733 | $ | 1,511,118 | $ | 1,484,354 | $ | 1,507,555 | ||||||||||||||
| Noninterest bearing | $ | 429,691 | $ | 466,628 | $ | 468,554 | $ | 506,613 | $ | 474,444 | $ | 527,761 | $ | 530,901 | ||||||||||||||
| Interest bearing | $ | 1,145,378 | $ | 1,113,331 | $ | 1,122,731 | $ | 1,064,120 | $ | 1,036,674 | $ | 956,593 | $ | 976,654 | ||||||||||||||
| Shareholders' equity | $ | 154,990 | $ | 155,156 | $ | 152,868 | $ | 151,793 | $ | 132,044 | $ | 132,892 | $ | 137,038 | ||||||||||||||
| Capital ratios: | ||||||||||||||||||||||||||||
| Tier 1 to risk weighted assets | 14.60 | % | 14.40 | % | 14.90 | % | 15.06 | % | 14.40 | % | 14.31 | % | 14.55 | % | ||||||||||||||
| Common Equity Tier 1 to risk weighted assets | 12.60 | % | 12.40 | % | 12.82 | % | 12.95 | % | 12.36 | % | 12.27 | % | 12.45 | % | ||||||||||||||
| Tier 1 Leverage | 11.25 | % | 11.25 | % | 11.47 | % | 11.46 | % | 11.23 | % | 11.23 | % | 10.94 | % | ||||||||||||||
| Total risk based capital | 15.81 | % | 15.60 | % | 16.15 | % | 16.12 | % | 15.50 | % | 15.46 | % | 15.71 | % | ||||||||||||||
| Asset quality: | ||||||||||||||||||||||||||||
| Net (charge-offs)/recoveries for the quarter | $ | (83 | ) | $ | (398 | ) | $ | (245 | ) | $ | (164 | ) | $ | (89 | ) | $ | (179 | ) | $ | (244 | ) | |||||||
| Nonperforming assets: (Period End) | ||||||||||||||||||||||||||||
| Nonaccrual loans | $ | 3,479 | $ | 2,972 | $ | 3,258 | $ | 3,495 | $ | 1,943 | $ | 2,149 | $ | 2,332 | ||||||||||||||
| Loans 90 days past due and accruing | 145 | 160 | 87 | 307 | 569 | $ | 325 | 37 | ||||||||||||||||||||
| Total nonperforming loans and 90 day past due | $ | 3,624 | $ | 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 | $ | 4,878 | $ | 4,482 | $ | 4,598 | $ | 4,733 | $ | 4,733 | $ | 4,517 | $ | 4,477 | ||||||||||||||
| Allowance for credit losses to gross loans | 1.24 | % | 1.25 | % | 1.31 | % | 1.14 | % | 1.22 | % | 1.28 | % | 1.29 | % | ||||||||||||||
| Allowance for credit losses to non-accrual loans | 492.84 | % | 568.81 | % | 517.83 | % | 418.77 | % | 799.85 | % | 732.29 | % | 655.75 | % | ||||||||||||||
| Allowance for credit losses to non-performing assets | 473.12 | % | 539.79 | % | 212.40 | % | 171.48 | % | 214.51 | % | 225.10 | % | 223.37 | % | ||||||||||||||
| Non-performing and 90 day past due loans to total loans | 0.26 | % | 0.23 | % | 0.26 | % | 0.30 | % | 0.20 | % | 0.20 | % | 0.20 | % | ||||||||||||||
| Non-performing loans and 90 day past due loans to total assets | 0.19 | % | 0.16 | % | 0.17 | % | 0.21 | % | 0.14 | % | 0.14 | % | 0.13 | % | ||||||||||||||
| Non-accrual loans to total loans | 0.25 | % | 0.22 | % | 0.25 | % | 0.27 | % | 0.15 | % | 0.17 | % | 0.20 | % | ||||||||||||||
| Non-performing assets to total assets | 0.44 | % | 0.39 | % | 0.41 | % | 0.46 | % | 0.40 | % | 0.40 | % | 0.39 | % |
| (Dollars in thousands - Unaudited) | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | ||||||||||||
| Assets | ||||||||||||||||
| Cash and due from banks | $ | 78,939 | $ | 86,901 | $ | 154,022 | $ | 72,420 | ||||||||
| Interest bearing deposits in banks | 1,713 | 1,650 | 1,873 | 1,895 | ||||||||||||
| Cash and cash equivalents | 80,652 | 88,551 | 155,895 | 74,315 | ||||||||||||
| Investment securities – available for sale (at fair value) | 114,370 | 120,085 | 123,978 | 125,889 | ||||||||||||
| Investment securities – held to maturity (at cost) | 215,683 | 230,759 | 233,083 | 235,659 | ||||||||||||
| Restricted investment in bank stock, at cost | 5,251 | 4,490 | 4,490 | 1,027 | ||||||||||||
| Loans held for sale | 208 | 500 | 184 | — | ||||||||||||
| Loans | 1,380,019 | 1,350,038 | 1,289,080 | 1,279,494 | ||||||||||||
| Unearned fees | (371 | ) | (327 | ) | (257 | ) | (174 | ) | ||||||||
| Allowance for credit losses | (17,146 | ) | (16,905 | ) | (16,871 | ) | (14,636 | ) | ||||||||
| Net loans | 1,362,502 | 1,332,806 | 1,271,952 | 1,264,684 | ||||||||||||
| Premises and equipment, net | 32,766 | 33,532 | 34,207 | 34,948 | ||||||||||||
| Goodwill and other intangible assets | 12,185 | 12,268 | 12,350 | 12,433 | ||||||||||||
| Bank owned life insurance | 47,282 | 46,963 | 46,652 | 46,346 | ||||||||||||
| Deferred tax assets | 13,020 | 11,771 | 11,356 | 10,605 | ||||||||||||
| Other real estate owned, net | 4,878 | 4,842 | 4,598 | 4,733 | ||||||||||||
| Operating lease asset | 1,905 | 1,990 | 2,072 | 1,898 | ||||||||||||
| Accrued interest receivable and other assets | 37,499 | 39,836 | 36,625 | 35,632 | ||||||||||||
| Total Assets | $ | 1,928,201 | $ | 1,928,393 | $ | 1,937,442 | $ | 1,848,169 | ||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||||
| Liabilities: | ||||||||||||||||
| Non-interest bearing deposits | $ | 429,691 | $ | 466,628 | $ | 468,554 | $ | 506,613 | ||||||||
| Interest bearing deposits | 1,145,378 | 1,113,331 | 1,122,731 | 1,064,120 | ||||||||||||
| Total deposits | 1,575,069 | 1,579,959 | 1,591,285 | 1,570,733 | ||||||||||||
| Short-term borrowings | 53,330 | 50,078 | 52,030 | 64,565 | ||||||||||||
| Long-term borrowings | 110,929 | 110,929 | 110,929 | 30,929 | ||||||||||||
| Operating lease liability | 2,347 | 2,443 | 2,536 | 2,373 | ||||||||||||
| Allowance for credit loss on off balance sheet exposures | 985 | 1,089 | 1,128 | 133 | ||||||||||||
| Accrued interest payable and other liabilities | 29,207 | 27,397 | 25,332 | 26,444 | ||||||||||||
| Dividends payable | 1,344 | 1,342 | 1,334 | 1,199 | ||||||||||||
| Total Liabilities | 1,773,211 | 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 6,715,170 shares at September 30, 2023 and 6,666,428 at December 31, 2022 | 67 | 67 | 67 | 67 | ||||||||||||
| Surplus | 25,029 | 24,901 | 24,529 | 24,409 | ||||||||||||
| Retained earnings | 173,467 | 170,298 | 167,229 | 166,343 | ||||||||||||
| Accumulated other comprehensive loss | (43,573 | ) | (40,110 | ) | (38,957 | ) | (39,026 | ) | ||||||||
| Total Shareholders’ Equity | 154,990 | 155,156 | 152,868 | 151,793 | ||||||||||||
| Total Liabilities and Shareholders’ Equity | $ | 1,928,201 | $ | 1,928,393 | $ | 1,937,442 | $ | 1,848,169 | ||||||||
| Three Months Ended | ||||||||||||||||||||||||||||
| 2023 | 2022 | |||||||||||||||||||||||||||
| Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||
| In thousands | (Unaudited) | |||||||||||||||||||||||||||
| Interest income | ||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 18,055 | $ | 16,780 | $ | 15,444 | $ | 15,097 | $ | 14,058 | $ | 12,861 | $ | 12,432 | ||||||||||||||
| Interest on investment securities | ||||||||||||||||||||||||||||
| Taxable | 1,792 | 1,779 | 1,768 | 1,719 | 1,587 | 1,540 | 1,406 | |||||||||||||||||||||
| Exempt from federal income tax | 123 | 268 | 270 | 272 | 273 | 279 | 282 | |||||||||||||||||||||
| Total investment income | 1,915 | 2,047 | 2,038 | 1,991 | 1,860 | 1,819 | 1,688 | |||||||||||||||||||||
| Other | 1,194 | 1,145 | 347 | 271 | 267 | 51 | 27 | |||||||||||||||||||||
| Total interest income | 21,164 | 19,972 | 17,829 | 17,359 | 16,185 | 14,731 | 14,147 | |||||||||||||||||||||
| Interest expense | ||||||||||||||||||||||||||||
| Interest on deposits | 5,672 | 4,350 | 2,678 | 1,729 | 621 | 401 | 475 | |||||||||||||||||||||
| Interest on short-term borrowings | 33 | 29 | 31 | 26 | 47 | 21 | 18 | |||||||||||||||||||||
| Interest on long-term borrowings | 1,475 | 1,419 | 602 | 424 | 376 | 338 | 313 | |||||||||||||||||||||
| Total interest expense | 7,180 | 5,798 | 3,311 | 2,179 | 1,044 | 760 | 806 | |||||||||||||||||||||
| Net interest income | 13,984 | 14,174 | 14,518 | 15,180 | 15,141 | 13,971 | 13,341 | |||||||||||||||||||||
| Credit loss expense | ||||||||||||||||||||||||||||
| Loans | 322 | 434 | 414 | (740 | ) | (108 | ) | 624 | (419 | ) | ||||||||||||||||||
| Debt securities held to maturity | 45 | — | — | — | — | — | — | |||||||||||||||||||||
| Off balance sheet credit exposures | (104 | ) | (39 | ) | 129 | 4 | 7 | 7 | (2 | ) | ||||||||||||||||||
| Provision/(credit) for credit/loan losses | 263 | 395 | 543 | (736 | ) | (101 | ) | 631 | (421 | ) | ||||||||||||||||||
| Net interest income after provision for loan losses | 13,721 | 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 | 182 | 86 | 54 | 14 | 3 | 7 | 21 | |||||||||||||||||||||
| Gains/(losses) on disposal of fixed assets | — | — | — | (1 | ) | — | 6 | 28 | ||||||||||||||||||||
| Net gains | 182 | 86 | 54 | 11 | 96 | 13 | 52 | |||||||||||||||||||||
| Other Income | ||||||||||||||||||||||||||||
| Service charges on deposit accounts | 569 | 546 | 516 | 530 | 523 | 463 | 465 | |||||||||||||||||||||
| Other service charges | 230 | 244 | 232 | 239 | 241 | 232 | 213 | |||||||||||||||||||||
| Trust department | 2,139 | 2,025 | 1,970 | 2,006 | 2,005 | 2,044 | 2,189 | |||||||||||||||||||||
| Debit card income | 995 | 1,031 | 955 | 1,036 | 1,053 | 983 | 886 | |||||||||||||||||||||
| Bank owned life insurance | 320 | 311 | 305 | 305 | 302 | 297 | 292 | |||||||||||||||||||||
| Brokerage commissions | 245 | 258 | 297 | 244 | 272 | 313 | 220 | |||||||||||||||||||||
| Other | 218 | 68 | 64 | 119 | 208 | 81 | 117 | |||||||||||||||||||||
| Total other income | 4,716 | 4,483 | 4,339 | 4,479 | 4,604 | 4,413 | 4,382 | |||||||||||||||||||||
| Total other operating income | 4,898 | 4,569 | 4,393 | 4,490 | 4,700 | 4,426 | 4,434 | |||||||||||||||||||||
| Other operating expenses | ||||||||||||||||||||||||||||
| Salaries and employee benefits | 6,957 | 6,865 | 7,290 | 6,239 | 6,130 | 5,793 | 5,968 | |||||||||||||||||||||
| FDIC premiums | 254 | 277 | 193 | 157 | 150 | 155 | 174 | |||||||||||||||||||||
| Equipment | 1,029 | 1,047 | 1,092 | 1,053 | 1,037 | 1,029 | 1,044 | |||||||||||||||||||||
| Occupancy | 747 | 743 | 784 | 734 | 734 | 711 | 727 | |||||||||||||||||||||
| Data processing | 1,011 | 946 | 969 | 928 | 890 | 805 | 821 | |||||||||||||||||||||
| Marketing | 220 | 137 | 117 | 134 | 152 | 151 | 106 | |||||||||||||||||||||
| Professional services | 490 | 522 | 518 | 665 | (211 | ) | 564 | 520 | ||||||||||||||||||||
| Contract labor | 173 | 159 | 139 | 136 | 159 | 158 | 165 | |||||||||||||||||||||
| Telephone | 115 | 116 | 110 | 117 | 112 | 139 | 114 | |||||||||||||||||||||
| Other real estate owned | 139 | 18 | 124 | 215 | 128 | 152 | 95 | |||||||||||||||||||||
| Investor relations | 83 | 132 | 57 | 42 | 39 | 123 | 96 | |||||||||||||||||||||
| Contributions | 74 | 79 | 64 | 104 | 121 | 42 | 21 | |||||||||||||||||||||
| Other | 1,493 | 1,470 | 1,181 | 1,066 | 888 | 808 | 729 | |||||||||||||||||||||
| Total other operating expenses | 12,785 | 12,511 | 12,638 | 11,590 | 10,329 | 10,630 | 10,580 | |||||||||||||||||||||
| Income before income tax expense | 5,834 | 5,837 | 5,730 | 8,816 | 9,613 | 7,136 | 7,616 | |||||||||||||||||||||
| Provision for income tax expense | 1,321 | 1,423 | 1,355 | 1,847 | 2,677 | 1,708 | 1,901 | |||||||||||||||||||||
| Net Income | $ | 4,513 | $ | 4,414 | $ | 4,375 | $ | 6,969 | $ | 6,936 | $ | 5,428 | $ | 5,715 | ||||||||||||||
| Basic net income per common share | $ | 0.67 | $ | 0.66 | $ | 0.66 | $ | 1.05 | $ | 1.04 | $ | 0.82 | $ | 0.86 | ||||||||||||||
| Diluted net income per common share | $ | 0.67 | $ | 0.66 | $ | 0.65 | $ | 1.04 | $ | 1.04 | $ | 0.82 | $ | 0.86 | ||||||||||||||
| Weighted average number of basic shares outstanding | 6,714 | 6,704 | 6,675 | 6,666 | 6,658 | 6,650 | 6,628 | |||||||||||||||||||||
| Weighted average number of diluted shares outstanding | 6,728 | 6,718 | 6,697 | 6,692 | 6,669 | 6,661 | 6,636 | |||||||||||||||||||||
| Dividends declared per common share | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.18 | $ | 0.15 | $ | 0.15 | $ | 0.15 | ||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||
| September 30, | ||||||||||||||||||||||||
| 2023 | 2022 | |||||||||||||||||||||||
| (dollars in thousands) | Average Balance | Interest | Average Yield/Rate | Average Balance | Interest | Average Yield/Rate | ||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Loans | $ | 1,363,821 | $ | 18,071 | 5.26 | % | $ | 1,240,706 | $ | 14,073 | 4.50 | % | ||||||||||||
| Investment Securities: | ||||||||||||||||||||||||
| Taxable | 333,468 | 1,792 | 2.13 | % | 343,581 | 1,587 | 1.83 | % | ||||||||||||||||
| Non taxable | 13,826 | 219 | 6.28 | % | 26,471 | 489 | 7.33 | % | ||||||||||||||||
| Total | 347,294 | 2,011 | 2.30 | % | 370,052 | 2,076 | 2.23 | % | ||||||||||||||||
| Federal funds sold | 75,404 | 1,093 | 5.75 | % | 52,019 | 251 | 1.91 | % | ||||||||||||||||
| Interest-bearing deposits with other banks | 1,812 | 25 | 5.47 | % | 1,552 | 7 | 1.79 | % | ||||||||||||||||
| Other interest earning assets | 4,771 | 76 | 6.32 | % | 1,026 | 9 | 3.48 | % | ||||||||||||||||
| Total earning assets | 1,793,102 | 21,276 | 4.71 | % | 1,665,355 | 16,416 | 3.91 | % | ||||||||||||||||
| Allowance for loan losses | (17,110 | ) | (15,715 | ) | ||||||||||||||||||||
| Non-earning assets | 178,115 | 170,092 | ||||||||||||||||||||||
| Total Assets | $ | 1,954,107 | $ | 1,819,732 | ||||||||||||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||||||||||||
| Interest-bearing demand deposits | $ | 368,409 | $ | 1,354 | 1.46 | % | $ | 305,608 | $ | 187 | 0.24 | % | ||||||||||||
| Interest-bearing money markets | 325,810 | 2,430 | 2.96 | % | 305,185 | 210 | 0.27 | % | ||||||||||||||||
| Savings deposits | 209,070 | 54 | 0.10 | % | 253,576 | 34 | 0.05 | % | ||||||||||||||||
| Time deposits - retail | 154,503 | 918 | 2.36 | % | 134,600 | 190 | 0.56 | % | ||||||||||||||||
| Time deposits - brokered | 68,850 | 916 | 5.28 | % | — | — | — | % | ||||||||||||||||
| Short-term borrowings | 49,190 | 33 | 0.27 | % | 66,172 | 47 | 0.28 | % | ||||||||||||||||
| Long-term borrowings | 110,929 | 1,475 | 5.28 | % | 30,929 | 376 | 4.82 | % | ||||||||||||||||
| Total interest-bearing liabilities | 1,286,761 | 7,180 | 2.21 | % | 1,096,070 | 1,044 | 0.38 | % | ||||||||||||||||
| Non-interest-bearing deposits | 478,673 | 550,978 | ||||||||||||||||||||||
| Other liabilities | 32,327 | 37,499 | ||||||||||||||||||||||
| Shareholders’ Equity | 156,346 | 135,186 | ||||||||||||||||||||||
| Total Liabilities and Shareholders’ Equity | $ | 1,954,107 | $ | 1,819,733 | ||||||||||||||||||||
| Net interest income and spread | $ | 14,096 | 2.50 | % | $ | 15,372 | 3.53 | % | ||||||||||||||||
| Net interest margin | 3.12 | % | 3.66 | % | ||||||||||||||||||||
| Nine Months Ended | ||||||||||||||||||||||||
| September 30, | ||||||||||||||||||||||||
| 2023 | 2022 | |||||||||||||||||||||||
| (dollars in thousands) | Average Balance | Interest | Average Yield/ Rate | Average Balance | Interest | Average Yield/ Rate | ||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Loans | $ | 1,320,674 | $ | 50,323 | 5.09 | % | $ | 1,203,650 | $ | 39,399 | 4.38 | % | ||||||||||||
| Investment Securities: | ||||||||||||||||||||||||
| Taxable | 337,014 | 5,339 | 2.12 | % | 352,446 | 4,533 | 1.72 | % | ||||||||||||||||
| Non taxable | 21,963 | 1,183 | 7.20 | % | 27,118 | 1,494 | 7.37 | % | ||||||||||||||||
| Total | 358,977 | 6,522 | 2.43 | % | 379,564 | 6,027 | 2.12 | % | ||||||||||||||||
| Federal funds sold | 66,708 | 2,502 | 5.01 | % | 47,173 | 308 | 0.87 | % | ||||||||||||||||
| Interest-bearing deposits with other banks | 2,827 | 70 | 3.31 | % | 3,564 | 12 | 0.45 | % | ||||||||||||||||
| Other interest earning assets | 3,643 | 114 | 4.18 | % | 1,027 | 25 | 3.25 | % | ||||||||||||||||
| Total earning assets | 1,752,829 | 59,531 | 4.54 | % | 1,634,978 | 45,771 | 3.74 | % | ||||||||||||||||
| Allowance for loan losses | (16,311 | ) | (15,611 | ) | ||||||||||||||||||||
| Non-earning assets | 174,411 | 166,594 | ||||||||||||||||||||||
| Total Assets | $ | 1,910,929 | $ | 1,785,961 | ||||||||||||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||||||||||||
| Interest-bearing demand deposits | $ | 358,883 | $ | 3,375 | 1.26 | % | $ | 296,069 | $ | 369 | 0.17 | % | ||||||||||||
| Interest-bearing money markets | 324,583 | 5,537 | 2.28 | % | 294,481 | 347 | 0.16 | % | ||||||||||||||||
| Savings deposits | 227,179 | 189 | 0.11 | % | 249,596 | 70 | 0.04 | % | ||||||||||||||||
| Time deposits - retail | 134,732 | 1,750 | 1.74 | % | 143,734 | 711 | 0.66 | % | ||||||||||||||||
| Time deposits - brokered | 46,918 | 1,849 | 5.27 | % | — | — | — | % | ||||||||||||||||
| Short-term borrowings | 51,780 | 93 | 0.24 | % | 62,175 | 86 | 0.18 | % | ||||||||||||||||
| Long-term borrowings | 89,394 | 3,496 | 5.23 | % | 30,929 | 1,027 | 4.44 | % | ||||||||||||||||
| Total interest-bearing liabilities | 1,233,469 | 16,289 | 1.77 | % | 1,076,984 | 2,610 | 0.32 | % | ||||||||||||||||
| Non-interest-bearing deposits | 490,891 | 540,082 | ||||||||||||||||||||||
| Other liabilities | 31,108 | 32,057 | ||||||||||||||||||||||
| Shareholders’ Equity | 155,461 | 136,838 | ||||||||||||||||||||||
| Total Liabilities and Shareholders’ Equity | $ | 1,910,929 | $ | 1,785,961 | ||||||||||||||||||||
| Net interest income and spread | $ | 43,242 | 2.77 | % | $ | 43,161 | 3.42 | % | ||||||||||||||||
| Net interest margin | 3.30 | % | 3.53 | % | ||||||||||||||||||||
Exhibit 99.2
MyBank.com INVESTOR PRESENTATION Third 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) $316,674 $414,445 $530,420 Deposits (000s) $131,827 $805,440 $482,694 Deposit Market Share (1) (at June 30, 2023) 2% 47% 4% Branches 5 10 11 Note: Out of market loans represent $119 million and are not reflected in this table; Brokered CDs represent $60 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 resulting from conservative and proactive credit culture ▪ ACL level of 1.24%; future provisioning based on loan growth, economic environment and asset quality changes ▪ Diversified commercial loan portfolio and geographic footprint ▪ Disciplined loan growth strategy, concentration management, stress testing and exception tracking and monitoring ▪ Well - defined loan approval levels ▪ Centralized risk rating and monitoring of risk rating migration and delinquency trends ▪ Robust annual third - party loan review ▪ Maintaining a slightly asset sensitive balance sheet, 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 88% ▪ 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 $357 million through correspondent lines of credit, FHLB and the Federal Reserve ▪ Strong, stable low - cost core deposit franchise of 86% 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
Third Quarter Financial Highlights $4.5 Million Net Income (1) $0.67 Diluted EPS (1) 0.92% * ROAA (1) 12.42 * ROATCE (1) 3.12% NIM ▪ Total assets remained stable compared to June 30, 2023 ▪ Consolidated net income (1) of $4.5 million in 3Q23 compared to $5.4 million in 3Q22 and $4.4 million in linked quarter; pre - provision net revenue of $6.1 million compared to $9.5 million, respectively ▪ Net interest income, on a non - GAAP, FTE basis* decreased by 2.12% in 3Q23 compared to 2Q23, driven by a 5.34% increase in interest income offset by a 23.84% increase in interest expense, driven by the competitive deposit landscape ▪ Asset quality remains strong with the ratio of the allowance for credit losses (“ACL”) to loans outstanding at 1.24% in 3Q23 compared to 1.25% in linked quarter ▪ Efficiency ratio of 67.28% (1) for the third quarter of 2023 compared to 66.00% for the linked quarter; increase due to increased check fraud expense and higher health claims during the quarter (1) See Appendix for a reconciliation of these non - GAAP financial measure * 3Q2023 Annualized 9
Year to Date Financial Highlights $13.3 Million Net Income (1) $1.98 Diluted EPS (1) 0.93% * ROAA (1) 12.42 * ROATCE (1) 3.30% NIM ▪ Total assets increased $80.0 million compared to December 31, 2022 ▪ Consolidated net income (1) of $13.3 million for the nine months ended September 30, 2023 compared to $18.1 million for the nine months ended September 30, 2022; pre - provision net revenue of $18.6 million compared to $24.5 million, respectively ▪ Net interest income, on a non - GAAP, FTE basis* remained stable for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 due to strong loan growth throughout 2023 ▪ Net interest margin of 3.30% for nine months ended September 30, 2023 compared to 3.53% for the nine months ended September 30, 2022; the yield on earning assets increase of 80 basis points was offset by a 145 basis point increase in cost of interest - bearing liabilities ▪ The ratio of the allowance for credit losses (“ACL”) to loans outstanding was 1.24% in 3Q23 compared to 1.14% at December 31, 2022 and 1.25% in the linked quarter ▪ Efficiency ratio of 66.42% (1) year to date, impacted by unusually high employee insurance costs and increased check fraud expense. (1) See Appendix for a reconciliation of these non - GAAP financial measure * 3Q2023 Annualized 10
11 Long - Term Growth Pre - Provision Net Revenue ($ in millions) (1) $17.8 $23.2 $30.8 $32.5 $18.6 2019 2020 2021 2022 3Q2023 +5.5% YoY (1) See Appendix for a reconciliation of these non - GAAP financial measures $1.85 $1.97 $3.54 $3.76 $1.98 2019 2020 2021 2022 3Q2023 +6.2% YoY Diluted Earnings per Share (1) Total Deposits ($ in millions) $1,142 $1,422 $1,469 $1,571 $1,575 2019 2020 2021 2022 3Q2023 +6.9% YoY Total Gross Loans, including PPP ($ in millions) $1,039 $1,168 $1,154 $1,279 $1,380 2019 2020 2021 2022 3Q2023 +10.8% YoY $114 PPP $8 PPP
12 Solid Profitability (1) See Appendix for a reconciliation of these non - GAAP financial measures 11.44% 11.92% 19.78% 19.94% 12.42% 2019 2020 2021 2022 3Q2023 Long - term Strategic Target 13% - 15% 0.93% 0.86% 1.35% 1.39% 0.93% 2019 2020 2021 2022 3Q2023 Long - term Strategic Target 1.25% - 1.60% Core ROAA (non - GAAP (1) ) Core ROATCE (non - GAAP (1) )
13 Total 1 - 4 Family 35% CRE - NOO 21% C&I 19% CRE - OO 11% C&D 6% Consumer 5% Multi - family 3% Loan Diversification Loan Portfolio Mix (9/30/2023) RE/Rental/Leasing NOO 24% RE/Rental/ Leasing OO, C&I 20% All Other 17% Accommodations 12% Services 7% RE/Rental/Leasing Multifamily 6% Trade 2% Construction - Developers 1% Health Care / Social Assistance 4% RE/Rental/Leasing - Developers 4% Construction - All Other 3% Commercial Loan Mix (9/30/2023)
14 Commercial Industry Mix by Origination Year Commercial Industry Mix by Origination Prior to 2000 2000 - 2005 2006 - 2010 2011 - 2015 2016 - 2020 2021 - Current Total RE / Rental / Leasing - NOO -$ 4,599,972$ 3,212,517$ 12,748,016$ 87,396,015$ 97,867,015$ 205,823,535$ RE / Rental / Leasing - OO, C&I 25,247 42,209 1,414,160 8,807,693 55,256,145 103,024,355 168,569,809 RE / Rental / Leasing - Multifamily - 141,410 2,355,159 9,899,447 16,844,063 19,324,116 48,564,195 RE / Rental / Leasing - Developers - 97,241 80,864 - 3,215,818 31,958,012 35,351,935 Construction - All Other 40,000 80,479 186,041 3,071,417 7,063,783 17,907,597 28,349,317 Construction - Developers - - 2,363,760 87,152 1,202,548 8,685,442 12,338,902 Accommodations - 1,521,614 4,190,189 10,949,956 52,038,029 22,302,816 91,002,604 Services - 2,324,183 523,179 9,687,762 16,434,097 33,182,540 62,151,760 Health Care / Social Assistance - 432,609 2,078,859 5,179,525 12,469,611 15,534,878 35,695,483 Trade - 133,889 245,487 1,553,801 10,728,971 7,414,850 20,077,000 All Other 39,178 337,934 1,395,451 1,000,600 30,928,427 109,291,622 142,993,212 Totals 104,425$ 9,711,540$ 18,045,666$ 62,985,369$ 293,577,507$ 466,493,244$ 850,917,751$
15 Commercial Real Estate Focus on risk mitigation and managing of concentrations ▪ CRE / Total Capital: 238% ▪ ADC / Total Capital: 39% * There are no office buildings located in metropolitan markets or over four stories. ** There are no major/big box retail tenants. OFFICE* Geography Note Book Balance Number of loans Avg Loan Balance Note Book Balance Number of loans Avg Loan Balance Note Book Balance Number of loans Avg Loan Balance Central 7,643,430$ 27 283,090$ 8,162,640$ 10 816,264$ 15,806,070$ 37 427,191$ East 9,494,557$ 16 593,410$ 24,449,614$ 10 2,444,961$ 33,944,171$ 26 1,305,545$ OOM 89,787$ 1 89,787$ 767,065$ 1 767,065$ 856,852$ 2 428,426$ West 7,528,443$ 15 501,896$ 47,673,847$ 18 2,648,547$ 55,202,290$ 33 1,672,797$ Grand Total 24,756,217$ 59 419,597$ 81,053,166$ 39 2,078,286$ 105,809,383$ 98 1,079,688$ % of Gross Loans 1.79% 5.87% 7.67% % of CRE 5.04% 16.50% 21.54% 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 9,121,482$ 19 480,078$ 678,182$ 6 113,030$ 9,799,664$ 25 148,763$ East 9,937,540$ 13 764,426$ 41,323,002$ 8 5,165,375$ 51,260,542$ 21 2,511,626$ OOM 2,874,638$ 2 1,437,319$ 15,973,066$ 4 3,993,267$ 18,847,704$ 6 3,651,356$ West 2,769,129$ 6 461,522$ 13,464,557$ 10 1,346,456$ 16,233,686$ 16 1,145,259$ Grand Total 24,702,789$ 40 617,570$ 71,438,807$ 28 2,551,386$ 96,141,596$ 68 1,413,847$ % of Gross Loans 1.79% 5.18% 6.97% % of CRE 5.03% 14.54% 19.57% CRE - Owner Occupied CRE - Non-Owner Occupied Total CRE - Owner Occupied CRE - Non-Owner Occupied Total
16 Variable Rate Loans and Repricing * Includes personal lines of credit and home equity lines Loan Type Reprices Monthly % to Total Type Repricing Repricing 2023 % to Total Type Repricing Repricing 2024 % to Total Type Repricing Repricing 2025 + % to Total Type Repricing Grand Total Commercial Loans 18,124,520$ 11.3% 10,215,608$ 53.1% 29,491,841$ 46.2% 102,295,770$ 34.2% 160,127,739$ Commercial Lines of Credit 61,360,779 38.1% 475,410 2.5% - 0.0% - 0.0% 61,836,189 Commercial Floor Plans 26,140,443 16.2% - 0.0% - 0.0% - 0.0% 26,140,443 Mortgage - 0.0% 8,564,031 44.5% 34,360,047 53.8% 197,247,498 65.8% 240,171,576 Home Equity Lines (no Locks) 12,616,549 7.8% - 0.0% 27,850 0.0% - 0.0% 12,644,399 Other Consumer Lines* 42,653,499 26.5% - 0.0% - 0.0% - 0.0% 42,653,499 Totals 160,895,790$ 100.0% 19,255,049$ 100.0% 63,879,738$ 100.0% 299,543,268$ 100.0% 543,573,845$
17 Credit Quality ALL / ACL Trends (Net Charge - Offs)/Average Loans - 0.02% 0.13% - 0.02% - 0.02% - 0.07% 2019 2020 2021 2022 3Q2023 Nonaccrual Loans / Total Loans 1.40% 0.35% 0.21% 0.27% 0.25% 2019 2020 2021 2022 3Q2023 NPAs / Total Assets 1.30% 0.99% 0.60% 0.46% 0.44% 2019 2020 2021 2022 3Q2023 1.19% 1.41% 1.38% 1.14% 1.24% 2019 2020 2021 2022 3Q2023
18 Investment Portfolio Sector Par (000s) Portfoli o % Book Yield Duration Treasury/Agency 119,888 34% 1.81% 4.81 Fixed MBS 70,827 20% 216% 5.62 CMO 81,563 23% 1.80% 6.70 Municipal 15,710 5% 4.10% 6.68 Corporate 1,000 1% 5.68% 2.87 Other 58,977 17% 1.98% 4.24 TOTAL $348,015 100.0 2.03% 5.40 Ratings: 100% of municipal holdings are rated A or better* $348.0 Million Year 2023 2024 2025 2026 2027 Thereafter Annual Cashflow ($000’s) $7,497 $67,488 $24,507 $27,118 $36,534 $150,440 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 - 16,249 - 21,159 - 26,286 - 31,287 - 36,061 - 40,621 - 44,469 HTM - 16,930 - 27,357 - 38,902 - 47,102 - 56,082 - 64,522 - 71,635 Total - 33,179 - 48,516 - 65,188 - 78,389 - 92,144 - 105,143 - 116,104 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 219,027 164,020 (55,007) 188,641 133,634 (55,007) Total Risk Based Capital (RBC) 237,202 181,467 (55,735) 206,816 150,669 (56,147) CET 1 Ratio 12.60% 9.61% (2.99%) 12.85% 9.81% (3.04%) 4.50% 6.50% 3.11% Tier 1 Ratio 14.60% 11.76% (2.84%) 12.85% 9.81% (3.04%) 6.00% 8.00% 3.76% Total RBC Ratio 15.81% 13.01% (2.80%) 14.09% 11.06% (3.03%) 8.00% 10.00% 3.01% Leverage Ratio 11.25% 8.43% (2.82%) 9.81% 6.95% (2.86%) 4.00% 5.00% 3.43% Locally held TIF bonds of $1.8 million and Trust Preferred securities of $18.7 million have been excluded from the sale impac t
20 Deposits 26% 30% 34% 32% 27% 14% 14% 16% 23% 24% 38% 40% 39% 36% 35% 21% 16% 11% 8% 10% 1% 0% 0% 0% 4% 2019 2020 2021 2022 3Q2023 NIB Demand IB Demand MMA & Savings CDs - Retail CDs - Brokered $1.57 $1.14 $1.58 $1.42 $1.57 Deposit Composition ($ in billions as of 9/30/2023) 92% 82% 79% 81% 88% 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. Overall deposit levels declined slightly through September 30, 2023. Deposit Type Balance % Insured $1,185,432,212 75% Uninsured Deposits $204,745,336 13% Uninsured + Collateralized Deposits $184,891,176 12% Deposit Type Balance (MMs) % Retail Deposits $801,381,859 51% Business Deposits $773,686,864 49%
21 Funding 47% 48% 5% 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. A total of $30.0 million in brokered CDs were purchased in August to pre - fund the maturing brokered CD in September. The maturities were laddered at 9 and 12 months and were obtained at comparable rates as the rate on the maturing CD. $40 $15 $15 $40 $31 September 2024 August 2024 May 2024 March 2024 December 2023 Dollars (in millions) Brokered CD FHLB Advance Brokered CD Brokered CD FHLB Advance 4.53% 5.29% 5.33% 5.31% 4.70%
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% 4.54% 0.86% 1.18% 0.91% 0.51% 0.44% 1.77% 3.74% 3.68% 3.34% 3.28% 3.56% 3.30% 0.42% 0.70% 0.49% 0.24% 0.21% 1.07% -0.5% 0.5% 1.5% 2.5% 3.5% 4.5% 2018 2019 2020 2021 2022 3Q2023 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 50% Service Charges 17% Net Gain on Loan Sales 2% Debit Card Income 22% Bank - owned Life Insurance 7% Other Noninterest Income 2% Non - Interest Income Mix 3Q2023 $1,084 $1,212 $1,377 $1,482 $1,359 $1,464 2018 2019 2020 2021 2022 3Q2023 Trust & Brokerage Assets Under Management (MMs) ▪ First United’s non - interest income (1) comprised 26% of operating revenue for 3Q2023 ▪ Fee - based business provides stable growth and a diversified revenue stream not directly tied to interest rates, as well as opportunities to build client relationships ▪ First United’s diverse array of products provides opportunities to fully engage with customers and produce stable increases to earnings
24 Committed to Efficiency & Innovation 70.9% 64.6% 57.5% 56.4% 66.4% 2019 2020 2021 2022 3Q2023 (1) See Appendix for a reconciliation of these non - GAAP financial measures Efficient operational platforms and fraud protection ▪ Mortgage Bot ▪ SecureLOCK Premium Debit Card Fraud ▪ ProfitStars forecasting model ▪ Automated Loan Booking ▪ Vericast Online Consumer Loans ▪ Customer Service Center Enhancements ▪ U1 - Connect Customer Relationship Management Software Efficiency Ratio (1) Strategic Target 53% - 58% FinTech Investments ▪ Exclamation Labs ▪ FinTech Funds Planned solutions for a seamless and secure client experience: ▪ Zelle for Business ▪ Online Banking External Transfer ▪ New Customer Relationship Management Tool ▪ Consumer Online and Mobile Banking Digital Platform Upgrade ▪ Business Online and Mobile Banking Digital Platform Upgrade Increase at 3Q23 due to increased life and health insurance costs and increased check fraud expenses
25 Liquidity Position Liquidity Sources (9/30/2023) Amount Available ($ in thousands) Amount Used ($ in thousands) Net Availability ($ in thousands) Internal Sources Excess Cash $59,301 $59,301 Unpledged Securities (BV) $59,933 $59,933 External Sources Federal Reserve (Discount Window) $11,773 $11,773 Correspondent Unsecured Lines of Credit FHLB Bank Term Funding Program* $105,000 $230,277 $86,226 $82,500 $105,000 $147,777 $86,226 Total Funding Sources $552,510 $82,500 $470,010
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 ▪ Pre - funded December maturing $30 million brokered CD in two $15 million brokered CDs with 9 - and 12 - month maturities in third quarter - 400 - 300 - 200 - 100 Flat +100 +200 +300 +400 Net Interest Income (9/30/23) (16.0%) (9.9%) (5.6%) (2.2%) 2.1% 4.2% 6.4% 8.6% Net Interest Income (6/30/23) (15.2%) (9.3%) (4.6%) (1.6%) 1.2% 2.4% 3.6% 4.9% EVE (6/30/23) 3.4% 11.7% 11.3% 6.8% (7.7%) (16.1%) (22.4%) (28.2%) 12 Month Sensitivity Shock (1) Standard Model Assumptions
27 Capital Management 16.29% 16.08% 15.89% 16.12% 15.81% 2019 2020 2021 2022 3Q2023 11.77% 10.36% 10.80% 11.46% 11.25% 2019 2020 2021 2022 3Q2023 12.79% 12.61% 12.50% 12.96% 12.60% 2019 2020 2021 2022 3Q2023 15.17% 14.83% 14.64% 15.06% 14.60% 2019 2020 2021 2022 3Q2023 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 $21.27 2019 2020 2021 2022 3Q2023 8.03% 6.97% 7.56% 7.59% 7.45% 2019 2020 2021 2022 3Q2023 Tangible Book Value / Share TCE Ratio Decrease at 3Q23 related to increase in other accumulated comprehensive loss since December 2022.
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 Independent Director, Nomination & Governance Chair Boal & Associates, PC Carissa L. Rodeheaver Chairman of the Board, President & CEO First United Corporation and First United Bank & Trust Board of Directors Kevin Hessler Independent Director , Principal, LSWG, Inc. Picture not available
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 55% 91% of our directors are gender and/or racially diverse of our directors are independent 0 - 5 5 - 10 10+ TENURE >60 50 - 60 <50 AGE Our Nominating and Governance Committee is responsible for determining directorship criteria, identifying and evaluating candidates for the Board, and regularly assessing the Board’s governance practices. x 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 range of local en trepreneurial businesses, they apply these diverse backgrounds to their work on behalf of our shareholders. Director Skills Matrix Barr Boal 1 Chadha DiPietro 1 Hessler Milon Moran Rodeheaver Rudy Shockley 1 Walls Executive Leadership x x x x x x x x Public Company Board Experience x x x x Information Technology x x Financial Services/ Banking x 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 x Accounting/Finance x x x x x Regulatory x x x Risk Management x x x x x x x x x Legal Expertise x x Governance x x x x x x x Board Tenure and Age Tenure 9 9 2 2 .1 3 .75 10 30 9 17 Age 69 50 46 62 67 60 61 57 70 58 62 1 Qualifies as a Financial Expert for proxy purposes. Brokered CD
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 ($000s, except where otherwise noted) YTD 2019 2020 2021 2022 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 9/30/2023 Pre-Provision Net Revenue ("PPNR") Pre-tax income, as reported 16,465$ 17,788$ 26,309$ 33,181$ 7,616$ 7,136$ 9,613$ 8,816$ 5,730$ 5,837$ 5,834$ 17,401$ Add back: Provision expense 1,320 5,401 (817) (643) (419) 624 (108) (740) 543 394 263 1,200 Add back: FHLB penalty, gross - - 2,368 - - - - - - - - - Add back: Contribution 1,000 - - - - - - - - - Add back: Insurance reimbursement (1,375) - - - - - - - - - Add back: Settlement expense, gross - - 3,300 - - - - - - - - - Pre-Provision Net Revenue, as adjusted 17,785$ 23,189$ 30,785$ 32,538$ 7,197$ 7,760$ 9,505$ 8,076$ 6,273$ 6,231$ 6,097$ 18,601$ Net Income Net income, as reported 13,129$ 13,841$ 19,770$ 25,048$ 5,715$ 5,428$ 6,936$ 6,969$ 4,375$ 4,414$ 4,513$ 13,302$ Less: Preferred stock dividends - - - - - - - Net income, available to common shareholders,as reported (a) 13,129$ 13,841$ 19,770$ 25,048$ 5,715$ 5,428$ 6,936$ 6,969$ 4,375$ 4,414$ 4,513$ 13,302$ Add Back: Impact of Tax Reform Act Add back: FHLB penalty, net of tax - - 1,790 - - - - - - - - - Add back: Contribution, net of tax 770 - - - - - - - - - Add back: Insurance reimbursement, net of tax (1,059) - - - - - - - - - Add back: Settlement expense, net of tax - - 2,565 - - - - - - - - - Net income, as adjusted (b) 13,129$ 13,841$ 23,836$ 25,048$ 5,715$ 5,428$ 6,936$ 6,969$ 4,375$ 4,414$ 4,513$ 13,302$
39 Non - GAAP Reconciliation , continued ($000s, except where otherwise noted) YTD 2019 2020 2021 2022 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 9/30/2023 Weighted Average Common shares - basic (actual) (d) 7,110,022 7,003,955 6,710,463 6,649,740 6,627,564 6,650,256 6,658,392 6,662,751 6,675,181 6,703,805 6,714,267 6,697,750 Weighted Average Common shares - diluted (actual) (e) 7,110,022 7,013,164 6,716,587 6,661,055 6,636,156 6,661,061 6,668,787 6,678,218 6,697,102 6,717,527 6,727,579 6,714,069 Earnings Per Share - Basic Earnings Per Share - Basic, as reported (a)/(d) 1.85$ 1.98$ 2.95$ 3.77$ 0.86$ 0.82$ 1.04$ 1.05$ 0.66$ 0.66$ 0.67$ 1.99$ Add Back: Impact of Tax Reform Act Add back: FHLB penalty, net of tax - - 0.27 - - - - - - - - - Add back: Contribution, net of tax 0.12 - - - - - - - - - Add back: Insurance reimbursement, net of tax (0.16) - - - - - - - - - Add back: Settlement expense, net of tax - - 0.37 - - - - - - - - - Earnings Per Share - Basic, as adjusted (b)/(d) 1.85$ 1.98$ 3.54$ 3.77$ 0.86$ 0.82$ 1.04$ 1.05$ 0.66$ 0.66$ 0.67$ 1.99$ Earnings Per Share - Diluted Earnings Per Share - Diluted, as reported (a)/(e) 1.85$ 1.97$ 2.95$ 3.76$ 0.86$ 0.82$ 1.04$ 1.04$ 0.65$ 0.66$ 0.67$ 1.98$ Add Back: Impact of Tax Reform Act Add back: FHLB penalty, net of tax - - 0.27 - - - - - - - - - Add back: Contribution, net of tax 0.12 - - - - - - - - - Add back: Insurance reimbursement, net of tax (0.16) - - - - - - - - - Add back: Settlement expense, net of tax - - 0.37 - - - - - - - - - Earnings Per Share - Diluted, as adjusted (b)/(e) 1.85$ 1.97$ 3.54$ 3.76$ 0.86$ 0.82$ 1.04$ 1.04$ 0.65$ 0.66$ 0.67$ 1.98$
40 Non - GAAP Reconciliation , continued ($000s, except where otherwise noted) YTD 2019 2020 2021 2022 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 9/30/2023 Return on Average Assets (quarter and YTD annualized) Average Assets ( c) 1,418,928$ 1,613,669$ 1,765,148$ 1,801,711$ 1,769,234$ 1,770,601$ 1,819,732$ 1,845,275$ 1,892,111$ 1,930,093$ 1,954,107$ 1,910,929$ Return on Average Assets, as reported (a)/(c) 0.93% 0.86% 1.12% 1.39% 1.31% 1.23% 1.51% 1.50% 0.94% 0.92% 0.92% 0.93% Add Back: Impact of Tax Reform Act Add back: FHLB penalty, net of tax - - 0.10% 0.00% - - - - - - Add back: Contribution, net of tax 0.04% 0.00% - - - - - - Add back: Insurance reimbursement, net of tax -0.06% 0.00% - - - - - - Add back: Settlement expense, net of tax - - 0.15% 0.00% - - - - - - Return on Average Assets, as adjusted (b)/(c) 0.93% 0.86% 1.35% 1.39% 1.31% 1.23% 1.51% 1.50% 0.94% 0.92% 0.92% 0.93% Return on Average Common Stockholders' Equity Return on Average Tangible Common Stockholders' Equity Average common stockholders' equity (f) 125,774$ 127,101$ 132,550$ 137,685$ 140,517$ 136,039$ 135,186$ 140,224$ 149,416$ 155,358$ 156,346$ 155,461$ Average common stockholders' equity, as adjusted 125,774 127,101 132,550 137,685 140,517 136,039 135,186 140,224 149,416 155,358 156,346 155,461 Less: Average goodwill and intangibles 11,004 11,004 11,004 12,043 12,034 11,965 11,913 12,225 12,405 12,320 12,236 12,320 Average tangible common equity (g) 114,770$ 116,097$ 121,546$ 125,642$ 128,483$ 124,074$ 123,273$ 127,999$ 137,011$ 143,038$ 144,110$ 143,141$ Return on average common stockholders' equity, as reported (a)/(f) 10.44% 10.89% 14.92% 18.19% 16.27% 15.96% 20.52% 19.88% 11.87% 11.40% 11.45% 11.44% Add back: FHLB penalty, net of tax - - 1.47% 0.00% - - - - - - - - Add back: Contribution 0.63% 0.00% - - - - - - - Add back: Insurance reimbursement -1.15% 0.00% - - - - - - - Add back: Settlement expense, net of tax 2.11% 0.00% - - - - - - - Return on average common stockholders' equity, as adjusted (b)/(f) 10.44% 10.89% 17.98% 18.19% 16.27% 15.96% 20.52% 19.88% 11.87% 11.40% 11.45% 11.44%
41 Non - GAAP Reconciliation , continued ($000s, except where otherwise noted) YTD 2019 2020 2021 2022 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 9/30/2023 Return on Average Assets (quarter and YTD annualized) Average Assets ( c) 1,418,928$ 1,613,669$ 1,765,148$ 1,801,711$ 1,769,234$ 1,770,601$ 1,819,732$ 1,845,275$ 1,892,111$ 1,930,093$ 1,954,107$ 1,910,929$ Return on Average Assets, as reported (a)/(c) 0.93% 0.86% 1.12% 1.39% 1.31% 1.23% 1.51% 1.50% 0.94% 0.92% 0.92% 0.93% Add Back: Impact of Tax Reform Act Add back: FHLB penalty, net of tax - - 0.10% 0.00% - - - - - - Add back: Contribution, net of tax 0.04% 0.00% - - - - - - Add back: Insurance reimbursement, net of tax -0.06% 0.00% - - - - - - Add back: Settlement expense, net of tax - - 0.15% 0.00% - - - - - - Return on Average Assets, as adjusted (b)/(c) 0.93% 0.86% 1.35% 1.39% 1.31% 1.23% 1.51% 1.50% 0.94% 0.92% 0.92% 0.93% Return on Average Common Stockholders' Equity Return on average tangible common equity, as reported (a)/(g) 11.44% 11.92% 16.27% 19.94% 17.79% 17.55% 22.32% 21.60% 12.95% 12.38% 12.42% 12.42% Add Back: Impact of Tax Reform Act 0.00% - - - - - - - - Add back: FHLB penalty, net of tax - - 1.47% 0.00% - - - - - - - - Add back: Contribution 0.63% 0.00% - - - - - - - - Add back: Insurance reimbursement -0.87% 0.00% - - - - - - - - Add back: Settlement expense, net of tax - - 2.11% 0.00% - - - - - - - - Return on average tangible common equity, as adj (b)/(g) 11.44% 11.92% 19.61% 19.94% 17.79% 17.55% 22.32% 21.60% 12.95% 12.38% 12.42% 12.42% Tangible Book Value per Common Share Total common equity, as reported (h) 125,940$ 131,047$ 141,900$ 151,793$ 137,078$ 132,892$ 132,044$ 151,793$ 152,868$ 155,156$ 154,990$ 154,990$ Less: Goodwill and intangibles 11,004 11,004 12,052 12,433 12,000 11,947 11,895 12,433 12,350 12,268 12,185 12,185 Total tangible common equity (i) 114,936$ 120,043$ 129,848$ 139,360$ 125,078$ 120,945$ 120,149$ 139,360$ 140,518$ 142,888$ 142,805$ 142,805$ Common shares outstanding - basic (actual) (j) 7,110,022 6,992,911 6,620,955 6,666,428 6,637,979 6,656,395 6,659,390 6,666,428 6,688,710 6,711,422 6,715,170 6,715,170 Tangible book value per basic common share (i)/(j) 16.17$ 17.17$ 19.61$ 20.90$ 18.84$ 18.17$ 18.04$ 20.90$ 21.01$ 21.29$ 21.27$ 21.27$ Tangible common equity to tangible assets ("TCE Ratio") Total assets, as reported (k) 1,442,966 1,733,414 1,729,838 1,848,169 1,760,325 1,752,455 1,803,642 1,848,169 1,937,442 1,928,346 1,928,201 1,928,201 Less: Goodwill 11,004 11,004 12,052 12,433 12,000 11,947 11,895 12,433 12,350 12,268 12,185 12,185 Total tangible assets (l) 1,431,962$ 1,722,410$ 1,717,786$ 1,835,736$ 1,748,325$ 1,740,508$ 1,791,747$ 1,835,736$ 1,925,092$ 1,916,078$ 1,916,016$ 1,916,016$ Tangible common equity to tangible assets (k)/(l) 8.03% 6.97% 7.56% 7.59% 7.15% 6.95% 6.71% 7.59% 7.30% 7.46% 7.45% 7.45% Net interest margin (tax equivalent) Net interest income 46,391$ 48,546$ 52,542$ 57,631$ 13,341$ 13,971$ 15,139$ 15,180$ 14,516$ 14,175$ 13,984$ 42,675$ Tax equivalent adjustment 868 917 939 940 241 236 232 231 227 226 112 565 Tax equivalent net interest income (m) 47,259$ 49,463$ 53,481$ 58,571$ 13,582$ 14,207$ 15,371$ 15,411$ 14,743$ 14,401$ 14,096$ 43,240$ Average earning assets (n) 1,285,019$ 1,480,165$ 1,629,299$ 1,647,151$ 1,619,585$ 1,619,037$ 1,665,355$ 1,683,139$ 1,692,998$ 1,771,707$ 1,793,102$ 1,752,829$ Net interest margin (tax equivalent) (m)/(n) 3.68% 3.34% 3.28% 3.56% 3.40% 3.52% 3.66% 3.63% 3.53% 3.26% 3.12% 3.30% Efficiency Ratio Noninterest expense, as reported 45,389$ 43,934$ 47,764$ 43,145$ 10,578$ 10,637$ 10,336$ 11,594$ 12,638$ 12,511$ 12,785$ 37,934$ Less: FHLB penalty, gross (2,368) - - - - - - - - - Less: Contribution (1,000) - - - - - - - - - Less: Settlement expense - - (3,300) - - - - - - - - - Noninterest expense, adjusted (o) 45,389$ 43,934$ 41,096$ 43,145$ 10,578$ 10,637$ 10,336$ 11,594$ 12,638$ 12,511$ 12,785$ 37,934$ Net interest income 46,391$ 48,546$ 52,542$ 57,631$ 13,341$ 13,971$ 15,139$ 15,180$ 14,516$ 14,174$ 13,984$ 42,674$ Noninterest income 16,783 18,577 20,714 17,906 4,403 4,420 4,604 4,479 4,394 4,569 4,898 13,861$ Less: Insurance reimbursement - - (1,375) - - - - Tax equivalent adjustment 868 917 939 940 241 236 232 231 227 226 117 565 Total tax equivalent revenue (p) 64,042$ 68,040$ 72,820$ 76,477$ 17,985$ 18,627$ 19,975$ 19,890$ 19,137$ 18,969$ 18,999$ 57,100$ Efficiency ratio, as adjusted (o)/(p) 70.87% 64.57% 56.44% 56.41% 58.81% 57.10% 51.73% 58.28% 66.03% 65.94% 67.28% 66.42%