First United Corporation
Annual Report 2024

Plain-text annual report

Annual Report Banking for a Banking for a Better Better Tomorrow. Tomorrow. 2024 24 My Bank My Bank My bank is passionate about people. dedicated to service. always helpful. building customized solutions. trusted. here for local business. involved in this community. personal. My bank is First United. SUMMARY OF SELECTED FINANCIAL DATA (Dollars in thousands, except per share data) 2024 2023 % Change Results of Operations: Tax-equivalent interest income 92,222 $ 81,783 $ 12.76% Interest expense 32,015 24,286 31.82% Tax-equivalent net interest income 60,207 57,497 4.71% Tax-equivalent adjustment 229 627 -63.48% Total credit loss expense 2,933 1,620 81.05% Net interest income after provision for credit losses 57,045 55,250 3.25% Noninterest income 19,825 14,469 37.02% Operating noninterest income 19,411 18,331 5.89% Non-operating noninterest income: Net gains/(losses)-other 414 $ (3,862) $ -110.72% Noninterest expenses 49,640 50,243 -1.20% Operating noninterest expenses 49,640 50,243 -1.20% Income before income taxes 27,230 $ 19,476 $ 39.81% Income tax expense 6,661 4,416 50.84% Net income available to common shareholders 20,569 $ 15,060 $ 36.58% Common dividends paid 5,373 5,217 2.99% Net income per FTE (Pre-tax) 88,121 $ 60,863 $ 44.79% Per Share Data: Basic net income per common share 3.15 $ 2.25 $ 40.00% Diluted net income per common share 3.15 $ 2.25 $ 40.00% Common dividends paid 0.84 $ 0.78 $ 7.69% Book value (at year end) 27.71 $ 24.38 $ 13.66% Tangible book value (at year end) 25.89 $ 22.56 $ 14.76% Financial Condition (at year end): Assets 1,973,022 $ 1,905,860 $ 3.52% Deposits 1,574,829 1,550,977 1.54% Net loans 1,462,181 1,388,847 5.28% Investment securities 269,991 311,466 -13.32% Shareholders' equity 179,295 161,873 10.76% Performance Ratios (for the year): Return on average equity 12.16 % 9.65 % Return on average assets 1.06 % 0.77 % Yield on average interest-earning assets 5.17 % 4.63 % Rate on average interest-bearing liabilities 2.51 % 1.95 % Net interest spread 2.66 % 2.68 % Net interest margin 3.38 % 3.26 % Efficiency ratio 61.31 % 65.12 % Capital and Credit Quality Ratios: Average equity to average assets 8.69 % 7.91 % Total risk-based capital ratio 15.92 % 15.64 % Tier 1 to risk weighted assets 14.70 % 14.42 % Tier 1 to average assets (leverage) 11.88 % 11.30 % Common equity tier 1 to risk weighted assets 12.79 % 12.44 % Allowance for credit losses to total loans (as %) 1.23 % 1.24 % Nonperforming and 90 days past due loans to total assets (as %) 0.30 % 0.47 % Net charge-offs to average loans (as %) (0.16) % (0.07) % Shareholder Letter Dear Associates, Customers, Communities and Shareholders, First United Corporation demonstrated dedication to its mission in 2024, delivering customized financial solutions with unwavering discipline and focus on our core business model. This approach enabled us to steadily promote employee growth, guide customers to achieve financial goals, support community initiatives, and generate strong shareholder return. First United’s mission centers on a deep-rooted commitment to sustainability, ensuring that financial strategies are not just profitable in the short term, but also viable over time. Our strategic vision, paired with genuine care for our stakeholders’ financial well-being, creates a powerful synergy that drives success. We are focused on continuous innovation and risk management, a customer-first philosophy, and operational efficiency, requiring that we remain nimble and regularly update our services to meet evolving customer needs and technological advancements. Robust systems and processes continue to protect our customers’ assets and maintain the safety and stability of our Bank. Our customer-first approach prioritizes personalized service and responsive support, while streamlined processes benefit our customers. Our passionate associate base remains the backbone of our Company. With a steadfast commitment to helpfulness, our associates work tirelessly to deliver a personalized experience for each customer and focus on growing relationships that stand the test of time. With well-rounded expertise and continuous pursuit of individual development, our We are focused on continuous innovation and risk management, a customer-first philosophy, and operational efficiency, requiring that we remain nimble and regularly update our services to meet evolving customer needs and technological advancements. associates’ commitment to growth enables First United to stay ahead of market trends and guide customers through complex financial landscapes with confidence and clarity. Driven by a combination of solid net income growth, increasing stock price and consistent dividend payments, our 2024 performance reflected our commitment to creating long-term value, while maintaining a balanced approach to growth and risk management. For the year ended December 31, 2024, net income was $20.6 million, or $3.15 per diluted share, compared to $15.1 million, or $2.25 per diluted share for the prior year. This was driven by an increased net interest margin that was achieved through disciplined pricing strategies, as interest income was optimized and interest expense was managed, by carefully balancing competitive rates for our customers with profitable spreads for our shareholders. Strong wealth management production and revenue growth also contributed to our solid financial performance. We capitalized on a strong stock market during the year and experienced impressive growth in the clients served, a testament to our ability to nurture relationships. This was accomplished by providing personalized financial advice, financial management and a broad menu of investment products, all the while leveraging technology. Continued focus on relationship-building has not only increased the assets under management in our wealth area but also grew our diversified revenue streams. A keen focus on managing operating expenses was reflected in our improved efficiency ratio. Strategies to consolidate our branch network, streamline processes through digital transformation, and Shareholder Letter invest in associate training and productivity continued to optimize our operations without compromising the quality of our services. Maintaining prudent risk management was demonstrated in our commitment to diligent underwriting standards and diversification across sector and loan types which resulted in maintaining high asset quality. We ended the year at $2.0 billion in total assets comprised mostly of loans made to community businesses and local individuals. We rely on our local deposit base to fund these loans and are proud that we contributed to the economic growth in our market areas. Our capital remained strong, providing a solid foundation for continued growth and expansion. Our well-capitalized position was a key strength that supported our strategic initiatives and ability to weather economic uncertainties with confidence. First United’s commitment continued to extend beyond traditional banking services. Significant strides to promote financial education were accomplished through our trademarked financial educational program, Finture. Personalized steps and guidance towards a stronger financial future empowered individuals and businesses with the knowledge and skills needed to make informed financial decisions, thus, contributing to the overall economic health of our communities and enhancing the lives of those we serve. We contributed to the economic growth and financial well-being of our local communities, leading to another year of impressive returns to you, our shareholders. Our passionate and knowledgeable associates worked hard to provide customized financial solutions and to profitably grow our customer base. We contributed to the economic growth and financial well-being of our local communities, leading to another year of impressive returns to you, our shareholders. As of February 28, 2025, our total shareholder return, including price changes and reinvested cash dividends, was 70.1% for one-year, 69.9% for three-years and 98.4% over five-years, all periods outperforming our local peer group and the S&P US Small Cap Banks Index. By focusing on disciplined pricing, relationship-building, operational efficiency, prudent growth, and strong capital management, we believe that we have positioned your company well for future sustainability. We are also proud of our past and recognize and appreciate the dedication of past management teams and committed shareholders and customers. We’re not just in the banking business, we’re in the people business. Our Legacy, Your Future. Carissa L. Rodeheaver Chairman of the Board, President and Chief Executive Officer Brian R. Boal Lead Director, Principal, Boal & Associates, PC This strong foundation has brought us to where we are today, proud to celebrate First United’s 125th Anniversary throughout 2025! We stand firm in upholding our community banking values, as our success is intrinsically linked to the prosperity of our associates, customers, communities and shareholders. We remain steadfast in our commitment to serving as your trusted partner and dependable ally and thank you for your belief and commitment to community banking. We are and always will be your bank, our bank, MYBANK! 9 Board of Directors Hoye Andrew Walls, III Patricia A. Milon Sanu B. Chadha I. Robert Rudy Beth E. Moran Christy M. DiPietro Kevin R. Hessler John F. Barr Over 11,300 hours of Community Support Passion Teamwork Helpful Engaging in our Community outreach is a vital part of executing our mission and values. Our volunteers dedicate their time and skills to help educate, discuss innovative solutions, or get their hands dirty, while helping to build and grow the areas we serve. Whether we are helping one person or a thousand, our commitment remains the same. Promoting social responsibility, fostering empathy, broadening perspectives, and strengthening community bonds are reasons we are proud to be called a community bank. The financial wellness for those within our footprint, not just customers, is equally important to our success. We don’t just sell products and services; we help families and businesses today and into the future. That’s why we created the My Finture Financial Education Center, offering articles, videos and tools to help you on your journey! Associates participating in Dragonboat race for local charity. Over in Community Donations $235,000 Giving back to our Giving back to the place you call home helps to unite the community and bridge some of the social and economic gaps. We expect that our funded projects will help regions and organizations thrive for years to come. Even in times of uncertainty, our team kept showing up. We couldn’t be more grateful for the relationships we have cultivated. Over in Community Funding $65,000 The First United Community Dreams Foundation is focused on making dreams a reality. Through grants, sponsorships, and investments, our Foundation provides support to community partners in local nonprofits, institutions, schools and other 501(c)3 organizations offering critical services and programs in the various communities that we serve. Our Legacy, Your Future. Since 1900, First United Bank & Trust has supported communities with financial services. In 2025, we will officially celebrate our 125th anniversary! This significant anniversary is an incredible opportunity to share our rich history as well as our contemporary relevance. We are grateful to have experienced significant growth since 1900. From our first location as First National Bank of Oakland to our expansion east and west, we have grown to our current 22-branch network and have consistently exhibited our dedication to community banking. Many highlights will be shared throughout the year, honoring this special occasion. A balance of tradition and forward-thinking messaging and activities will be conveyed to existing customers and future generations. We also look to maintain our position as a trusted partner and showcase the Bank’s history of trust and dedication. It is “Our Legacy, Your Future.” 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 Courier Delivery: P.O. Box 43078 Computershare Providence, RI 02940-3078 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 Foreign Shareowners: 1-781-575-2622 TDD for Hearing Impaired: 1-781-575-2692 Shareholders’ Meeting: The Annual Shareholders’ Meeting will be held Wednesday, May 7, 2025, 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 MyBank.com/investors

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