First · NASDAQ:FUNC
First — First United — Q2 2024 Earnings Presentation
41 slides from First's earnings presentation, Jul 23, 2024
Slide 1: Investor Presentation Second Quarter 2024
INVESTOR PRESENTATION Second Quarter 2024 MyBank.com
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
Slide 3: Table of Contents
3 Table of Contents I. II. III. Corporate Overview Financial Performance Appendices Pg. 4 Pg. 9 Pg. 31
Slide 4: Our Mission and Corporate Overview
4 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: 22 branches Business Lines: ▪ Commercial & Retail Banking ▪ Tr
Slide 5: Core Markets
5 West Region Central Region East Region Loans (000s) $322,866 $425,333 $551,787 Deposits (000s) $134,158 $791,482 $492,332 Deposit Market Share (1) (at June 30, 2023) 2% 47% 4% Branches 3 9 10 Note: Out of market loans represent $124 million and are not reflected in this table; Brokered CDs represe
Slide 6: Core Strengths
6 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 Franc
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 resulting from conservative and proactive credit culture ▪ ACL level of 1.26%; future provisioning based on loan growth, economic environment and asset quality changes ▪ Div
Slide 8: Strategic Pillars & Key Objectives
8 Strategic Pillars & Key Objectives Culture & Human Capital ▪ Attract and hire passionate, diverse talent to engage with clients and prospects across broader geographics. ▪ Drive associate retention and foster career development through mentoring initiatives, leadership programs, and educational op
Slide 9: Second Quarter Financial Highlights
9 Second Quarter Financial Highlights $4.9 Million Net Income (1) $0.75 Diluted EPS (1) 1.02% * ROAA (1) 12.91 * ROATCE (1) 3.49% NIM ▪ Total assets declined $22.3 million compared to March 31, 2024 ▪ Consolidated net income (1) of $4.9 million in 2Q24 compared to $4.4 million in 2Q23 and $3.7 milli
Slide 10: Year to Date Financial Highlights
10 Year to Date Financial Highlights $8.6 Million Net Income (1) $1.37 Diluted EPS (1) 0.98% * ROAA (1) 12.38 * ROATCE (1) 3.31% NIM ▪ Total assets declined $37.3 million compared to December 31, 2023 ▪ Consolidated net income (1) of $8.6 million as of June 30, 2024 compared to $8.8 million as of Ju
Slide 11: Long-Term Growth
11 Long - Term Growth Pre - Provision Net Revenue ($ in millions) (1) $23.2 $30.8 $32.5 $25.9 $14.1 2020 2021 2022 2023 2Q2024 (1) See Appendix for a reconciliation of these non - GAAP financial measures $1.97 $3.54 $3.76 $2.80 $1.37 2020 2021 2022 2023 2Q2024 Diluted Earnings per Share (1) Total De
Slide 12: Solid Profitability
12 Solid Profitability (1) See Appendix for a reconciliation of these non - GAAP financial measures Long - term Strategic Target 13% - 15% Long - term Strategic Target 1.25% - 1.60% Core ROAA (non - GAAP (1) ) Core ROATCE (non - GAAP (1) ) 0.86% 1.35% 1.39% 0.97% 0.98% 2020 2021 2022 2023 2Q2024 11.
Slide 13: Loan Diversification
13 Total 1 - 4 Family 36% CRE - NOO 21% C&I 19% CRE - OO 11% C&D 6% Consumer 4% Multi - family 3% Loan Diversification Loan Portfolio Mix (06/30/2024) RE/Rental/Leasing NOO 23% RE/Rental/ Leasing OO, C&I 20% All Other 17% Accommodations 12% Services 7% RE/Rental/Leasing Multifamily 5% Trade 3% Const
Slide 14: Commercial Industry Mix by Origination Year
14 Commercial Industry Mix by Origination Year Commercial Industry Mix by Origination Prior to 2000 2000 - 2005 2006 - 2010 2011 - 2015 2016 - 2020 2021 - Current Total RE / Rental / Leasing - NOO -$ 4,326,148$ 3,027,534$ 10,173,744$ 85,130,566$ 105,491,967$ 208,149,959$ RE / Rental / Leasing - OO,
Slide 15: Commercial Real Estate
15 Commercial Real Estate Focus on risk mitigation and managing of concentrations ▪ CRE / Total Capital: 234% ▪ ADC / Total Capital: 41% * 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 Bal
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 % to Total Type Repricing Repricing 2024 % to Total Type RepricingRepricing 2025 % to Total Type Repricing Repricing 2026 + % to Total Type Repricing Grand Total Commercial Loans
Slide 17: Credit Quality
17 Credit Quality ALL / ACL Trends (Net Charge - Offs)/Average Loans Nonaccrual Loans / Total Loans NPAs / Total Assets 0.35% 0.21% 0.27% 0.28% 0.66% 2020 2021 2022 2023 2Q2024 0.99% 0.60% 0.46% 0.48% 0.69% 2020 2021 2022 2023 2Q2024 1.41% 1.38% 1.14% 1.24% 1.26% 2020 2021 2022 2023 2Q2024 0.13% - 0
Slide 18: Investment Portfolio
18 Investment Portfolio Sector Par (000s) Portfolio % Book Yield Duration Treasury/Agency 78,388 28% 2.28% 6.93 Fixed MBS 51,281 18% 2.38% 5.30 CMO 73,569 26% 1.85% 6.46 Municipal 15,315 6% 3.97% 5.63 Corporate 1,000 1% 5.90% 2.14 Other 57,884 21% 1.99% 4.49 TOTAL $277,437 100.0 2.24% 5.88 Ratings:
Slide 19: Shocked Investment Portfolio Unrealized Gains / Losses
19 Shocked Investment Portfolio Unrealized Gains / Losses Capital Impact Intent Dn200 Dn100 BaseCase Up100 Up200 Up300 Up400 AFS - 10,807 - 14,454 - 18,151 - 21,876 - 25,405 - 28,789 - 31,662 HTM - 11,077 - 21,071 - 31,213 - 39,767 - 48,402 - 56,466 - 63,361 Total - 21,884 - 35,525 - 49,364 - 61,642
Slide 20: Deposits
20 Deposits 30% 34% 32% 28% 28% 14% 16% 23% 23% 24% 40% 39% 36% 37% 38% 16% 11% 8% 10% 9% 0% 0% 0% 2% 1% 2020 2021 2022 2023 2Q2024 NIB Demand IB Demand MMA & Savings CDs - Retail CDs - Brokered $1.57 $1.42 $1.54 $1.57 $1.58 Deposit Composition ($ in billions as of 06/30/2024) 82% 79% 81% 91% 93% Lo
Slide 21: Funding
21 Funding 46% 46% 8% Commercial Deposits Retail Deposits Borrowings Funding Mix Brokered/Wholesale Maturities $40 $40 $15 January 2025 September 2024 August 2024 Dollars (in millions) Bank Term Funding Program FHLB Advance FHLB Advance 4.87% 5.31% 4.70% Brokered CD Brokered CD Federal Home Loan Ban
Slide 22: Net Interest Margin
22 Net Interest Margin (1) See Appendix for a reconciliation of these non - GAAP financial measures 3.99% 3.63% 3.85% 4.63% 5.12% 0.91% 0.51% 0.44% 1.92% 2.51% 3.34% 3.28% 3.56% 3.26% 3.31% 0.49% 0.24% 0.21% 1.16% 1.59% -0.5% 0.5% 1.5% 2.5% 3.5% 4.5% 5.5% 2020 2021 2022 2023 2Q2024 Yield on Earning
Slide 23: Diversified Fee Income
23 Diversified Fee Income (1) See Appendix for a reconciliation of these non - GAAP financial measures Composition Trust and Brokerage 54% Service Charges 16% Net Gain on Loan Sales 1% Debit Card Income 20% Bank - owned Life Insurance 7% Other Noninterest Income 2% Non - Interest Income Mix 2Q2024 T
Slide 24: Committed to Efficiency & Innovation
24 Committed to Efficiency & Innovation (1) See Appendix for a reconciliation of these non - GAAP financial measures Efficient operational platforms and fraud protection ▪ Mortgage Bot ▪ SecureLOCK Premium Debit Card Fraud ▪ Credit Insights/ Savvy Money Cross Marketing Tool ▪ ProfitStars forecasting
Slide 25: Liquidity Position
25 Liquidity Position Liquidity Sources (06/30/2024) Amount Available ($ in thousands) Amount Used ($ in thousands) Net Availability ($ in thousands) Internal Sources Excess Cash $25,003 $25,003 Unpledged Securities (BV) $36,492 $36,492 External Sources Federal Reserve (Discount Window) $29,748 $29,
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
Slide 27: Capital Management
27 Capital Management CET1 Ratio Leverage Ratio Tier 1 Ratio Total Risk - Based Capital Ratio Regulatory Well - Capitalized 10% 5% 8% 6.5% 14.83% 14.64% 15.06% 14.42% 14.51% 2020 2021 2022 2023 2Q2024 16.08% 15.89% 16.12% 15.64% 15.75% 2020 2021 2022 2023 2Q2024 10.36% 10.80% 11.46% 11.30% 11.69% 20
Slide 28: Capital Management: Tangible Book Value / Share
28 Capital Management Tangible Book Value / Share TCE Ratio $17.17 $19.61 $20.90 $22.56 $23.55 2020 2021 2022 2023 2Q2024 6.97% 7.56% 7.59% 7.91% 8.20% 2020 2021 2022 2023 2Q2024
Slide 29: Strategic Targets
29 Strategic Targets Metric Actual 12/31/2022 Actual 12/31/2023 Non - GAAP 12/31/2023 Long Term Strategic Target Range (*) Strong Shareholder Return EPS Growth (YoY) 27% - 40% - 26% (1) 8% - 12% Dividend Payout Ratio 15.9% 34.6% 34.6% 20% - 25% ROAA 1.39% 0.78% 0.97% (1) 1.25% - 1.60% ROATCE 19.94%
Slide 30: Strong Investor Relations & Shareholder Engagement
30 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 gathe
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
Slide 32: Our Dedicated Management Team
32 Our Dedicated Management Team Carissa L. Rodeheaver Chairman of the Board, President & CEO 33+ years career with First United with in - depth industry, wealth management, financial and operational experience Jason B. Rush SVP & Chief Operating Officer 30+ years with in - depth industry, retail, r
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
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 55% 91% of our directors are gender and/or racially diverse of our directors are i
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 range of local en
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 a nd our communities – to our business. Over the past few years, we have implemented several important enhancements to align our ESG profile with our
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
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
Slide 39: Non-GAAP Reconciliation, continued
39 Non - GAAP Reconciliation , continued ($000s, except where otherwise noted) YTD 2020 2021 2022 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 6/30/2024 Weighted Average Common shares - basic (actual) (d) 7,003,955 6,710,463 6,649,740 6,685,676 6,675,181 6,703,805 6,714,267 6,649,493 6,643,8
Slide 40: Non-GAAP Reconciliation, continued
40 Non - GAAP Reconciliation , continued ($000s, except where otherwise noted) YTD 2020 2021 2022 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 6/30/2024 Return on Average Assets (quarter and YTD annualized) Average Assets ( c) 1,613,669$ 1,765,148$ 1,801,711$ 1,924,119$ 1,892,111$ 1,930,093$
Slide 41: Non-GAAP Reconciliation, continued
41 Non - GAAP Reconciliation , continued ($000s, except where otherwise noted) YTD 2020 2021 2022 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 6/30/2024 Tangible Book Value per Common Share Total common equity, as reported (h) 131,047$ 141,900$ 151,793$ 161,873$ 152,868$ 155,156$ 154,990$ 16