First · NASDAQ:FUNC
First — First United — Q1 2022 Earnings Presentation
31 slides from First's earnings presentation, Apr 25, 2022
Slide 1: First United Corporation Investor Presentation First Quarter 2022
FIRST UNITED CORPORATION INVESTOR PRESENTATION First Quarter 2022
Slide 2: Forward looking statements
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
Slide 3: Table of Contents
I. II. III. Corporate Profile Financial Performance Appendix Pg. 4 Pg. 10 Pg. 23 Table of Contents
Slide 4: Mission Statement and Company Overview
Mission Statement To enrich the lives of our customers, our employees and our shareholders through uncommon commitment to service and effective financial solutions Company Overview Founded: 1900 Headquarters: Oakland, MD Locations: 26 branches Business Lines: Commercial & Retail Banking, Trust Servi
Slide 5: Our Core Markets
Our Core Markets West Region Central Region East Region Loans (000s) $285,441 $358,021 $429245 Deposits (000s) $145,509 $803,973 $541,103 Deposit Market Share (1) (at June 30, 2021) 2% 45% 4% Branches / Advisory Centers (2) 5 10 11 Note: Out of market loans represent $113 million and are not reflect
Slide 6: Our Core Strengths
??????? ??????? ??????? Our Core Strengths Diversified Revenue Stream Core Deposit Franchise Engaged and Diverse Board & Management Robust Enterprise Risk Management Expense Structure Forward - Thinking Approach Community Engagement ▪ Diversified revenue stream (non - interest income 25% of operatin
Slide 7: Asset Quality and Risk Management
▪ Low net charge - offs and strong asset quality as a result of conservative and proactive credit culture ▪ Strong reserves - ALL level of 1.30%, excluding PPP loans; future provisioning based on loan growth and asset quality changes ▪ Diversified commercial loan portfolio and geographic footprint ▪
Slide 8: Strategic Priorities
▪ Develop focused strategies utilizing data analytics to grow profitable client relationships ▪ Align marketing plan to support data analytic strategies ▪ Promote digital banking and technology platforms to client base for repetitive transactions ▪ Leverage evolving technology to streamline processe
Slide 9: Innovation and Technology
Innovation and Technology We believe in the power of innovation and technology, and are committed to providing improved digital services, efficient operational platforms, and investments towards solutions that deliver a seamless client experience and secure financial foundation. Completed projects a
Slide 10: Financial Performance
Financial Performance $5.7 Million Net Income (1) $0.86 Diluted EPS (1) 1.31% * ROAA (1) 17.79 * ROATCE (1) 3.40% NIM ▪ Total assets increased by $30.5 million, or 1.8% compared to linked quarter ▪ Consolidated net income (1) of $5.7 million in 1Q22 compared to $3.4million in 1Q21 and $7.5 million i
Slide 11: Generating Reliable Growth
Generating Reliable Growth Our strategic plan is delivering consistent growth, increasing profits and earnings per share to drive long - term shareholder return. $15.5 $17.8 $23.2 $30.8 $7.2 2018 2019 2020 2021 1Q22 Pre - Provision Net Revenue ($ in millions) (1) Diluted Earnings per Share (1) $1.51
Slide 12: Solid Profitability
Solid Profitability ▪ Consistently improved return on assets and return on average equity enable us to fund the dividend and invest in future growth. ▪ Strategic initiatives are underway to enhance growth, lower expenses, and continue improving profitability. Core ROAA (non - GAPP (1) ) Core ROATCE
Slide 13: Proactive Loan Portfolio Management
Proactive Loan Portfolio Management Commercial Loan Mix (3/31/2022) Loan Portfolio Mix (3/31/2022) Industry Balance (MMs) Average Balance (MMs) % RE/Rental/Leasing – NOO $131 $1.4 18% RE/Rental/Leasing – OO, C&I 168 .4 23% Construction – Developers 43 2.2 6% Accommodations 76 2.2 10% Services 54 .2
Slide 14: Asset Quality
Asset Quality ▪ Appraisal policy requires 18 - month updates for impaired or special assets ▪ Proactive, ongoing client engagement and experienced work - out teams ▪ Quarterly Criticized Asset Reviews ▪ Centralized risk rating, and monitoring of risk rating migration and delinquency trends ▪ Decreas
Slide 15: Loan Loss Allowance (ALL)
Loan Loss Allowance (ALL) ALL Trends Net Charge - Offs/Average Loans ALL % by Segment (excluding PPP loans) Excluding PPP loans, which are guaranteed ALL = 1.39% Excluding PPP loans, which are guaranteed ALL = 1.56% 1.10% 1.19% 1.41% 1.38% 1.29% 2018 2019 2020 2021 1Q22 0.11% - 0.02% 0.13% - 0.02% -
Slide 16: Industry Leading Deposit Franchise
Industry Leading Deposit Franchise Deposit Composition (3/31/2022) CD Maturities (MMs) (3/31/2022) ▪ Stable legacy markets and growing portfolio of commercial deposit accounts ▪ Noninterest bearing deposits have grown from 8% of portfolio in 2009 to 35% as of March 31, 2022 $42 $53 $49 $5 3 Mos. or
Slide 17: Net Interest Margin
Net Interest Margin ▪ Disciplined loan and deposit pricing has produced a strong margin that is in line with our peers ▪ Margin expansion in the latter half of 2021 and into first quarter of 2022 primarily due to new loan volume pricing at higher rates, the recognition of deferred PPP loan fees rela
Slide 18: Diversified Fee Income
Diversified Fee Income ▪ First United’s non - interest income (1) comprised 25% of operating revenue for the first quarter of 2022 ▪ Fee - based business provides stable growth and a diversified revenue stream not directly tied to interest rates, as well as opportunities to build client relationship
Slide 19: Expense Discipline
Expense Discipline ▪ Our investment in the wealth management business line generates additional expenses; even so, efficiency ratio has decreased ~15 points since 2017 ▪ Implemented several initiatives to reduce expenses and to be more competitive versus our peers ▪ Restructuring and consolidation o
Slide 20: Prudent Capital Management
Prudent Capital Management ▪ Management has consistently grown tangible book value per share (18.0% CAGR) while simultaneously taking decisive action to benefit shareholders ▪ Increasing dividend has improved shareholders’ return ▪ History of opportunistic share repurchases has benefited EPS ▪ Regul
Slide 21: Strategic Targets
Strategic Targets Metric Actual 12/31/2021 Non - GAAP 12/31/2021 Long Term Strategic Target Range Strong Shareholder Return EPS Growth (YoY) 49% 79% (1) 8% - 15% Dividend Payout Ratio 19.7% 16.3% 20% - 25% ROAA 1.12% 1.35% (1) 1.00% - 1.25% ROATCE 16.27% 19.61% (1) 14% - 15% TCE Ratio 7.56% 7.56% 8%
Slide 22: Strong Investor Relations and Shareholder Engagement
Strong Investor Relations and 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 gain
Slide 23: Appendix
I. II. III. IV. Management Team Board of Directors ESG Journey & Statistics Non - GAAP Reconciliation Pg. 24 Pg. 25 Pg. 26 Pg. 28 Appendix
Slide 24: Our Dedicated Management Team
Our leadership team reflects the diversity of thought from the communities we serve, executes on our strategy and drives shareholder returns. Our Dedicated Management Team Carissa L. Rodeheaver Chairman of the Board, President & CEO 30 - year career with First United with in - depth industry, sales,
Slide 25: Board of Directors
Board of Directors Carissa L. Rodeheaver Chairman of the Board, President & CEO First United Corporation and First United Bank & Trust John F. Barr Independent Director Owner, Ellsworth Electric, Inc. John W. McCullough Lead Director, Nomination & Governance Chair Retired as Partner of Ernst & Young
Slide 26: ESG Journey
ESG Journey Ongoing Shareholder Engagement ▪ Enhance Board oversight of Environment & Social issues ▪ Enhance Disclosure on Environment & Social issues ▪ Continue progress on FUNC ESG strategy Ongoing Board Refreshment Enhanced disclosure through investor materials, proxy statement, and website. 202
Slide 27: ESG Environmental, Social, Governance
▪ 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 ▪ Created Diversity Engagement team, led by our newly appointed Director of Diversit
Slide 28: Non-GAAP financial measures
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 equit
Slide 29: Non-GAAP Reconciliation, continued
Non - GAAP Reconciliation , continued 2018 2019 2020 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 3/31/2022 Earnings Per Share - Basic Earnings Per Share - Basic, as reported (a)/(d) 1.51$ 1.85$ 1.98$ 2.95$ 0.49$ 0.66$ 0.66$ 1.14$ 0.86$ 0.86$ Add back: FHLB penalty, net of tax - - - 0.27 - - 0.27 -
Slide 30: Non-GAAP Reconciliation, continued
Non - GAAP Reconciliation , continued ($000s, except where otherwise noted) YTD 2018 2019 2020 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 3/31/2022 Return on Average Tangible Common Stockholders' Equity Average common stockholders' equity (f) 113,659$ 125,774$ 127,101$ 132,550$ 131,541$ 127,269$ 1
Slide 31: Non-GAAP Reconciliation, continued
Non - GAAP Reconciliation , continued ($000s, except where otherwise noted) YTD 2018 2019 2020 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 3/31/2022 Tangible common equity to tangible assets ("TCE Ratio") Total assets, as reported (k) 1,384,516 1,442,966 1,733,414 1,729,838 1,781,833 1,763,806 1,70