2023
Annual Report
Together, Together, Your Your TomorrowTomorrowHappens.Happens. We know our responsibility to those who
have a vested interest in our success.
We seek to make decisions that balance
the needs of our partners and the
constituents we serve.
We understand the importance of
considering regulatory, economic,
environmental, and social risks when
making business decisions.
We strive to balance these considerations
through our deep commitment to
stakeholder engagement.
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SUMMARY OF SELECTED FINANCIAL DATA
(Dollars in thousands, except per share data)
Results of Operations:
Tax-equivalent interest income
Interest expense
Tax-equivalent net interest income
Tax-equivalent adjustment
Total credit loss expense/(credit)
Net interest income after expense/(credit) for credit losses
Noninterest income
Operating noninterest income
Non-operating noninterest income:
2023
2022
% Change
$
81,783
24,286
57,497
627
1,620
55,250
14,469
18,331
$
63,362
4,789
58,573
940
(627)
58,260
18,050
17,878
29.07%
407.12%
-1.84%
-33.30%
-358.37%
-5.17%
-19.84%
2.53%
Net (losses)/gains-other
$
(3,862)
$
172
-2345.35%
Noninterest expenses
Operating noninterest expenses
Income before income taxes
Income tax expense
Net Income
Common Dividends paid
Net Income per FTE (Pre-tax)
Per Share Data:
Basic net income per common share
Diluted net income per common share
Common Dividends paid
Book value (at year end)
Tangible book value (at year end)
Financial Condition (at year end):
Assets
Deposits
Net loans
Investment Securities
Shareholders' equity
Performance Ratios (for the year):
Return on average equity
Return on average assets
Yield on average interest-earning assets
Rate on average interest-bearing liabilities
Net interest spread
Net interest margin
Efficiency ratio
Capital and Credit Quality Ratios:
Average equity to average assets
Total risk-based capital ratio
Tier 1 to Risk Weighted Assets
Tier 1 to Average Assets (leverage)
Common Equity Tier 1 to Risk Weighted Assets
Allowance for credit losses to total loans (as %)
Nonperforming and 90 days past due loans to total assets (as %)
Net charge-offs to average loans (as %)
50,243
50,243
43,129
43,129
19,476
4,416
15,060
5,217
60,863
$
33,181
8,133
25,048
3,986
104,343
$
$
$
$
$
$
2.25
2.25
0.78
24.38
22.56
$
$
$
$
$
3.77
3.76
0.60
22.77
20.91
$
1,905,860
1,550,977
1,388,847
311,466
161,873
$
1,848,169
1,570,733
1,264,684
361,548
151,793
9.65
0.77
4.63
1.95
2.68
3.26
65.12
8.01
15.64
14.42
11.30
12.44
1.24
0.47
(0.07)
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
18.19
1.39
3.85
0.44
3.41
3.56
56.40
7.59
16.12
15.06
11.46
12.96
1.14
0.46
(0.06)
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
16.49%
16.49%
-41.30%
-45.70%
-39.88%
30.88%
-41.67%
-40.32%
-40.16%
30.00%
7.07%
7.89%
3.12%
-1.26%
9.82%
-13.85%
6.64%
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Dear Associates, Customers, Communities and Shareholders,
Amid the chaos that characterized 2023, community banking emerged
as a beacon of stability. While bank failures and economic turmoil
rocked the financial industry, First United stood strong, thanks to our
commitment to uncommon service and customized financial solutions.
As a community bank, we understand the importance of being
responsive to the needs of our customers. By remaining nimble, staying
true to our values and leveraging our expertise, we were able to serve
as a trusted partner who offered the personalized guidance needed
during these everchanging circumstances.
We believe that our role as a community bank goes beyond just
financial transactions; it is about
building relationships and fostering
trust within our local communities.
We believe in the power of local
connections and the value in
helping others. We understand the
role we play in creating a thriving
community, and we embody the spirit
of innovation. In doing so, First United
has proven itself to be a reliable and
trustworthy ally.
We believe that
community banks
are, and always will
be, the lifeblood of
the communities
they serve and the
stability amidst
the chaos of the
economic, political,
and regulatory
environments.
Despite the industry chaos and
economic challenges of 2023, your
Company reported non-GAAP net
income of $18.8 million, exclusive of
non-core expenses of $3.7 million, net
of tax. Including these expenses, net income was $15.1 million and was
driven by strong loan growth, tight margin control and steady wealth
and debit card income.
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Challenges compared to 2022 included rapidly rising deposit costs,
proactive maintenance of our allowance for credit losses, and increased
expenses resulting from the competitive labor markets, unusually high
health insurance claims and increased check fraud expense. We also
executed on two long-term strategies involving a restructure of the balance
sheet as we sold investments at a loss and consolidated our branch
network.
While we recognized $3.7 million in after-tax, non-core expenses in the
fourth quarter due to execution of these strategies, we believe we will reap
the rewards in future earnings. The increased efficiency ratio of 65.12%
reflected these strategies as well as the reduced net interest income from
margin contraction.
Quickly following the industry events in the first quarter of 2023 that resulted
in several bank closures and liquidity concerns for the industry, your
management team took precautionary actions and increased liquidity on
the balance sheet. Pricing challenges and the cost of the additional liquidity
resulted in net interest margin compression. However, when compared
to peers, First United performed admirably in the face of these difficulties,
and we ended 2023 with a net interest margin of 3.26%. This represented
a margin decrease of only .30% in 2023 in an interest rate environment
that was impacted by the Federal Reserve’s increase of over 5.0% in the
overnight borrowing rate.
We took precautionary
actions and increased
liquidity to provide peace of
mind for our stakeholders.
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The team remained vigilant and nimble throughout the year, focused
on providing peace of mind, a safe and secure banking option and the
stability of a 124-year-old trusted community bank.
Our balance sheet remained strong through this commotion, upheld
by excess capital, strong cash positions and high-quality investments
and loans. While deposit levels declined due to the competitive pricing
landscape and inflationary spending, steady residential and commercial
loan demand resulted in $127.2 million in loan growth, and high levels of
production in our wealth division provided a diversified revenue stream
not directly tied to interest rates. The result was a growth of total assets
to $1.9 billion at December 31, 2023.
As of February 29, 2024, our total shareholder return, including price
changes and reinvested cash dividends, was 24.71% for one-year,
61.76% for three-years and 63.03% for five-years. Based on a closing
price of $22.10 per share on February 29, 2024, the current dividend of
$.20 per share annualized, resulted in a dividend yield of 3.62%.
Looking ahead, we will continue to hire and retain passionate, diverse
individuals who will foster collaboration and communication. We will
leverage technology to enhance efficiency and user experience, aiming
to broaden the utilization of our products and services.
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We also aim to strengthen our relationships with community-oriented business
owners and broaden our outreach initiatives to increase our non-interest
income as a percentage of overall revenue, reducing our reliance on the net
interest margin. Along with continued focus on resource optimization, we
will also look to enhance market share and execute tactics to optimize our
geographic presence.
Despite the ever-changing
circumstances we face, First United
remains steadfast in our dedication
to helping individuals and businesses
navigate times of uncertainty. By
continually fostering strong
relationships and offering a
comprehensive range of financial
services for all aspects of financial
well-being, we will work to support our
customers in achieving their financial
goals and objectives.
Our unwavering
commitment is not
just a testament to
our resilience, but
also a reflection of
the positive influence
that community
banking has on our
communities.
Our unwavering commitment is not just a testament to our resilience, but
also a reflection of the positive influence that community banking has on our
communities. We remain dedicated to our role as a community bank and
understand the importance of strong leadership to drive growth, not just for our
Company, but also for the economic prosperity of the communities we serve.
We are
and always will be your bank, our bank,
MY BANK.
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While it might be old-fashioned, we believe that community banks
are, and always will be, the lifeblood of the communities they serve
and the stability amidst the chaos of the economic, political, and
regulatory environments. We also believe that our focus on delivering an
uncommon commitment to service and customized financial solutions
will continue to be the foundation of delivering a profitable long-term
total return to you, our shareholders.
We thank you, our investors, for your steadfast support of First United
and we thank our passionate, loyal associates who remain devoted
to delivering excellent service and being trusted financial advisors.
Finally, we thank our customers who give their best for their businesses,
their families, their communities, and their futures, for their belief in
community banking. We are proud to be a community bank. We are and
always will be your bank, our bank, MY BANK!
Carissa L. Rodeheaver
Chairman of the Board, President
and Chief Executive Officer
Brian R. Boal
Lead Director, Principal,
Boal & Associates, PC
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John F. Barr
Sanu B. Chadha
Christy M. DiPietro
Kevin R. Hessler
Patricia A. Milon
Beth E. Moran
I. Robert Rudy
Marisa A. Shockley
Hoye Andrew Walls, III
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Board of Directors Guide.
Serve.
Thrive.
Strong Focus on Local Business
We guide business and commercial customers to reach
greater heights with personalized advice and an extensive
selection of financial services. Our suite of cash flow
management, lending, and liquidity solutions, equips you with
the necessary tools to propel your business towards success. By
partnering with the responsive community bankers at First United,
your business will thrive and make a positive impact on our local
communities, showcasing that our collective future is bright.
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Guide.
Serve.
Thrive.
Welcoming all customers
With 22 community offices strategically
located for easy access, our focus
is promoting financial stability in the
communities we serve. Welcoming
customers with warmth and treating
you like family, our retail banking
associates provide our customers
financial well-being and access to a comprehensive range
of services, including deposits, personal and home loans,
credit cards, and introductions to our financial planning and
brokerage offerings.
Earning Trust
First United’s Wealth Management division offers a wide array
of planning services tailored to individuals and families,
as well as investment and advisory solutions designed
for everyday business needs. Our team of experts
has earned the trust of clients for over 60 years by
providing dependable, sincere, and reliable advice
aimed at maximizing your earnings and ensuring
a financially secure future. Our team is here
to guide you every step of the way with a
personalized plan, so you can rest easy
knowing your financial future is in
good hands.
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Engaging with Each Other and Our Communities
Attracting, hiring, and retaining a diverse group of employees is
crucial for our success. This not only brings a variety of skills and
ideas to the table but also enhances employee engagement and
strengthens our connection with the communities
we serve. We strive to foster a culture where all
employees feel empowered to share their ideas
and are appreciated for their unique abilities.
By building stronger relationships with our
customers, we can uncover new opportunities
in the marketplace and enhance the customer
experience.
Focused on
providing
peace of mind, a
safe and secure
banking option and
the stability of a
124-year-old trusted
community bank.
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We take pride in seeing our communities thrive. Our associates share an
unwavering desire to help others and contribute to the advancements
of the communities we serve. Lending a hand in any way
we can, we look to nurture meaningful connections and
customize solutions to provide our communities with an
uncommon commitment to service.
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Dreams
Foundation
Our commitment to our communities goes beyond
providing innovative banking products and services.
We established the First United Community Dreams
Foundation with the strong belief that a flourishing
community forms the basis of exceptional quality of life.
Our philosophy centers around
nurturing, supporting, and
partnering with individuals and
groups dedicated to improving
the quality of life, making them
safer and more enjoyable
places to live, work, and play.
Vibrant & Equitable Neighborhoods
Education & Prosperous Future
Healthy Families & Safe, Affordable Housing
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In 2023,
the Dreams
Foundation is
proud to have
awarded over
$60,000 in funding
to organizations
within our area of
operation.
Please contact our transfer agent, Computershare, if you need assistance in any of the following areas:
• Change in registration
• Reporting lost certificates
• Non-receipt or loss of dividend checks
•
Information on dividend reinvestment plan
Computershare
Phone
1-781-575-2622 or Toll Free 1-866-298-7858
Computershare
P.O. Box 43078
Providence, RI 02940-3078
Courier Delivery:
Computershare
150 Royall St., Suite 101
Canton, MA 02021
Return envelopes for the proxy:
P.O. Box 43101, Providence, RI 02940-5067
Questions & Inquiries via our website
http://www.computershare.com/investor
Hearing Impaired #: TDD: 1-800-952-9245
First United-Direct Line:
1-866-298-7858
TDD for Hearing Impaired: 1-800-952-9245
1-781-575-2622
Foreign Shareowners:
TDD for Hearing Impaired: 1-781-575-2692
Shareholders’ Meeting
The Annual Shareholders’ Meeting will be held Thursday, May 9, 2024, at 9:00 a.m.
Wisp Hotel - Crawford Room
290 Marsh Hill Road
McHenry, MD 21541
SEC Form 10-K
The Corporation files an annual report on Form 10-K with the Securities and Exchange Commission.
This statement can be found on our investor relations website at http://investors.MyBank.com
or you may request to receive a copy by calling us at 1-888-692-2654. A statement may also be
requested by mail, without charge, to any shareholder who requests it in writing to:
Tonya K. Sturm
Corporate Secretary
First United Corporation
c/o First United Bank & Trust
19 South Second Street
Oakland, MD 21550
Want to stay up-to-date? Sign up for shareholder communications at www.MyBank.com/shareholder
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