First · NASDAQ:FUNC

First — First United — Q2 2023 Earnings Presentation

41 slides from First's earnings presentation, Jul 26, 2023

  1. Slide 1: MyBank.com Investor Presentation Second Quarter 2023

    MyBank.com INVESTOR PRESENTATION Second Quarter 2023

  2. Slide 2: Forward looking statements

    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 futu

  3. Slide 3: Table of Contents

    3 I. II. II. Corporate Overview Financial Performance Appendices Pg. 4 Pg. 9 Pg. 31 Table of Contents

  4. Slide 4: Our Mission / Corporate Overview

    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 ▪ Trus

  5. Slide 5: Core Markets

    5 West Region Central Region East Region Loans (000s) $299,669 $409,087 $525,429 Deposits (000s) $130,348 $811,322 $485,502 Deposit Market Share (1) (at June 30, 2022) 2% 42% 4% Branches 5 10 11 Note: Out of market loans represent $117 million and are not reflected in this table; Brokered CDs repres

  6. Slide 6: Core Strengths

    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 Franchi

  7. Slide 7: Risk Management, Monitoring & Mitigation Underlies all Strategic Priorities

    7 Risk Management, Monitoring & Mitigation Underlies all Strategic Priorities ▪ Low net charge - offs and strong asset quality as a result of conservative and proactive credit culture ▪ ACL level of 1.25%; future provisioning based on loan growth, economic environment and asset quality changes ▪ Div

  8. Slide 8: Strategic Pillars & Key Objectives

    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 care

  9. Slide 9: Second Quarter Financial Highlights

    Second Quarter Financial Highlights $4.4 Million Net Income (1) $0.65 Diluted EPS (1) 0.92% * ROAA (1) 12.38 * ROATCE (1) 3.26% NIM ▪ Total assets decreased $7.9 million compared to March 31, 2023 ▪ Consolidated net income (1) of $4.4 million in 2Q23 compared to $5.4 million in 2Q22 and $4.4 million

  10. Slide 10: Year to Date Financial Highlights

    Year to Date Financial Highlights $8.8 Million Net Income (1) $1.31 Diluted EPS (1) 0.95% * ROAA (1) 12.42 * ROATCE (1) 3.39% NIM ▪ Total assets increased $80.2 million compared to December 31, 2022 ▪ Consolidated net income (1) of $8.8 million for the six months ended June 30, 2023 compared to $11.

  11. Slide 11: Long-Term Growth

    11 Long - Term Growth Pre - Provision Net Revenue ($ in millions) (1) $17.8 $23.2 $30.8 $32.5 $12.5 2019 2020 2021 2022 2Q2023 +5.5% YoY (1) See Appendix for a reconciliation of these non - GAAP financial measures $1.85 $1.97 $3.54 $3.76 $1.31 2019 2020 2021 2022 2Q2023 +6.2% YoY Diluted Earnings pe

  12. Slide 12: Solid Profitability

    12 Solid Profitability (1) See Appendix for a reconciliation of these non - GAAP financial measures 11.44% 11.92% 19.78% 19.94% 12.42% 2019 2020 2021 2022 2Q2023 Long - term Strategic Target 13% - 15% 0.93% 0.86% 1.35% 1.39% 0.95% 2019 2020 2021 2022 2Q2023 Long - term Strategic Target 1.25% - 1.60%

  13. Slide 13: Loan Diversification

    13 Total 1 - 4 Family 35% CRE - NOO 21% C&I 19% CRE - OO 11% C&D 6% Consumer 5% Multi - family 3% Loan Diversification Commercial Loan Mix (6/30/2023) Loan Portfolio Mix (6/30/2023) RE/Rental/Leasing NOO 24% RE/Rental/ Leasing OO, C&I 21% All Other 10% Accommodations 12% Services 8% RE/Rental/Leasin

  14. Slide 14: Commercial Industry Mix by Origination Year

    14 Commercial Industry Mix by Origination Year Commercial Industry Mix by Origination Prior to 2000 2001 - 2005 2006 - 2010 2011 - 2015 2016 - 2020 2021 - Current Total RE / Rental / Leasing - NOO -$ 4,687,207$ 3,268,496$ 12,992,723$ 77,317,744$ 97,066,524$ 195,332,693$ RE / Rental / Leasing - OO, C

  15. Slide 15: Commercial Real Estate

    15 Commercial Real Estate Focus on risk mitigation and managing of concentrations ▪ CRE / Total Capital: 238% ▪ ADC / Total Capital: 39% OFFICE * Geography Note Book Balance Number of loans Avg Loan Balance Note Book Balance Number of loans Avg Loan Balance Note Book Balance Number of loans Avg Loan

  16. Slide 16: Variable Rate Loans and Repricing

    16 Variable Rate Loans and Repricing * Includes personal lines of credit and home equity lines Loan Type Reprices Monthly % Repricing Repricing 2023 % Repricing Repricing 2024 %Repricing Repricing 2025 + % Repricing Grand Total Commercial Loans 18,194,840$ 11.5% 10,371,230$ 6.6% 30,351,223$ 19.2% 98

  17. Slide 17: Credit Quality

    17 Credit Quality ALL / ACL Trends (Net Charge - Offs)/Average Loans - 0.02% 0.13% - 0.02% - 0.02% - 0.10% 2019 2020 2021 2022 2Q2023 Nonaccrual Loans / Total Loans 1.40% 0.35% 0.21% 0.27% 0.22% 2019 2020 2021 2022 2Q2023 NPAs / Total Assets 1.30% 0.99% 0.60% 0.46% 0.39% 2019 2020 2021 2022 2Q2023 1

  18. Slide 18: Investment Portfolio

    18 Investment Portfolio Sector Par (000s) Portfolio % Book Yield Duration Treasury/Agency 119,888 32% 1.80% 5.31 Fixed MBS 68,543 19% 1.96% 5.50 CMO 83,371 23% 1.81% 6.61 Municipal 33,146 9% 4.92% 8.48 Corporate 1,000 0.3% 5.49% 3.08 Other 59,206 16% 2.02% 4.58 TOTAL 365,154 100.0 2.16% 5.85 Ratings

  19. Slide 19: Shocked Investment Portfolio Unrealized Gains / Losses Capital Impact

    19 Shocked Investment Portfolio Unrealized Gains / Losses Capital Impact Intent Dn200 Dn100 BaseCase Up100 Up200 Up300 Up400 AFS - 11,456 - 16,607 - 21,841 - 27,188 - 32,396 - 37,313 - 41,597 HTM - 3,625 - 17,047 - 31,688 - 42,154 - 53,318 - 63,715 - 72,715 Total - 15,081 - 33,655 - 53,529 - 69,342

  20. Slide 20: Deposits

    20 Deposits 26% 30% 34% 32% 30% 14% 14% 16% 23% 25% 38% 40% 39% 36% 32% 21% 16% 11% 8% 9% 1% 0% 0% 0% 4% 2019 2020 2021 2022 2Q2023 NIB Demand IB Demand MMA & Savings CDs - Retail CDs - Brokered $1.57 $1.14 $1.59 $1.42 $1.57 Deposit Composition ($ in billions as of 6/30/2023) 92% 82% 79% 81% 85% Loa

  21. Slide 21: Funding

    21 Funding 45% 48% 7% Commercial Deposits Retail Deposits Borrowings Funding Mix Brokered/Wholesale Maturities As part of our liquidity contingency funding plan, management conservatively raised on - balance sheet cash levels in March 2023 through wholesale funding due to the market disruption.

  22. Slide 22: Net Interest Margin

    22 Net Interest Margin (1) See Appendix for a reconciliation of these non - GAAP financial measures 4.41% 4.57% 3.99% 3.63% 3.85% 4.45% 0.86% 1.18% 0.91% 0.51% 0.44% 1.52% 3.74% 3.68% 3.34% 3.28% 3.56% 3.39% 0.42% 0.70% 0.49% 0.24% 0.21% 0.90% -0.5% 0.5% 1.5% 2.5% 3.5% 4.5% 2018 2019 2020 2021 2022

  23. Slide 23: Diversified Fee Income

    23 Diversified Fee Income (1) See Appendix for a reconciliation of these non - GAAP financial measures Composition Trust and Brokerage 51% Service Charges 17% Net Gain on Loan Sales 1% Debit Card Income 22% Bank - owned Life Insurance 7% Other Noninterest Income 2% Non - Interest Income Mix 2Q 2023

  24. Slide 24: Committed to Efficiency & Innovation

    24 Committed to Efficiency & Innovation 70.9% 64.6% 57.5% 56.4% 66.0% 2019 2020 2021 2022 2Q2023 (1) See Appendix for a reconciliation of these non - GAAP financial measures Efficient operational platforms and fraud protection ▪ Mortgage Bot ▪ SecureLOCK Premium Debit Card Fraud ▪ ProfitStars foreca

  25. Slide 25: Liquidity Position

    25 Liquidity Position Liquidity Sources (6/30/2023) Amount Available ($ in thousands) Amount Used ($ in thousands Net Availability ($ in thousands) Internal Sources Excess Cash $66,969 $66,969 Unpledged Securities (BV) $56,338 $56,338 External Sources Federal Reserve (Discount Window) $9,735 $9,735

  26. Slide 26: Interest Rate Risk

    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 conditi

  27. Slide 27: Capital Management

    27 Capital Management 16.29% 16.08% 15.89% 16.12% 15.60% 2019 2020 2021 2022 2Q2023 11.77% 10.36% 10.80% 11.46% 11.25% 2019 2020 2021 2022 2Q2023 12.79% 12.61% 12.50% 12.96% 12.40% 2019 2020 2021 2022 2Q2023 15.17% 14.83% 14.64% 15.06% 14.40% 2019 2020 2021 2022 2Q2023 CET1 Ratio Leverage Ratio Tier

  28. Slide 28: Capital Management

    28 Capital Management $16.17 $17.17 $19.61 $20.90 $21.29 2019 2020 2021 2022 2Q2023 8.03% 6.97% 7.56% 7.59% 7.46% 2019 2020 2021 2022 2Q2023 Tangible Book Value / Share TCE Ratio

  29. Slide 29: Strategic Targets

    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% 19.6

  30. Slide 30: Strong Investor Relations & Shareholder Engagement

    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 f

  31. Slide 31: Appendices

    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. Slide 32: Our Dedicated Management Team

    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, ris

  33. Slide 33: Board of Directors

    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 Adviso

  34. Slide 34: Board of Directors: Thoughtful Evaluation and Evolution

    34 Board of Directors Thoughtful Evaluation and Evolution Our Board is comprised of a diverse group of directors who bring a variety of perspectives, experience, and characteristics to First United. Director Diversity 50% 90% of our directors are gender and/or racially diverse of our directors are i

  35. Slide 35: Board of Directors: Director Skills Matrix

    35 Board of Directors The First United board of directors brings a diverse range of skills, experiences, and backgrounds to the work of overseeing ris k and strategy. With experience in fields such as banking, government, accounting, investing, project management, technology, and a ra nge of local e

  36. Slide 36: Continuous Progress

    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 l

  37. Slide 37: ESG at First United

    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

  38. Slide 38: Non-GAAP financial measures

    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 eq

  39. Slide 39: Non-GAAP Reconciliation, continued

    39 Non - GAAP Reconciliation , continued

  40. Slide 40: Non-GAAP Reconciliation, continued

    40 Non - GAAP Reconciliation , continued

  41. Slide 41: Non-GAAP Reconciliation, continued

    41 Non - GAAP Reconciliation , continued

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