First · NASDAQ:FUNC
First — First United — Investor Presentation (May 2021)
39 slides from First's investor presentation, May 12, 2021
Slide 1: Investor Presentation First Quarter 2021
Investor Presentation First Quarter 2021 Dated May 12, 2021
Slide 2: Forward looking statements
2 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 fut
Slide 3: Table of Contents
3 3 Table of Contents I. First United Pg. 4 II. COVID - 19 Response Pg. 10 III. Operating and Financial Performance Pg. 15 IV. Our Commitment To Strong Governance Pg. 31 V. Appendix Pg. 34
Slide 4: I. First United
4 4 I. First United
Slide 5: Executive Summary
5 5 Executive Summary First United has proactively responded to COVID - 19 and is now re - imagining the future Execution of our strategy is producing steady profitable growth Our Board is continuing to strengthen its governance profile – The health and well - being of our associates and clients gui
Slide 6: Mission Statement and Company Overview
6 6 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, Maryland Locations: 25 branches + 1 Advisory Center Business Lines: Commercial
Slide 7: Q1 2021 Highlights
7 7 Q1 2021 Highlights Highlights • Increased pre - provision net revenue (1) to $7.9 million in 1Q21 from $6.3 million in 4Q20 and $4.9 million in 1Q20 • Fee income of $2.5 million driven by strong wealth management revenue as assets under management were $1.4 billion at March 31, 2021 due to expan
Slide 8: Our Core Markets
8 8 Our Core Markets (As of March 31, 2021) Note: Out of market loans and trust deposits represent $54 million and $50 million, respectively, and are not reflected in th e a bove table (1) Source: FDIC Market Share Data, most current. Deposit market share for each region includes the following count
Slide 9: Our Core Strengths
9 9 Our Core Strengths Engaged and Diverse Board & Management • Our diverse and experienced Board challenges management and has been conducting a robust refreshment plan, which has been in place since 2014 Core Deposit Franchise Diversified Revenue Stream Forward - Thinking Approach Robust Enterpris
Slide 10: II. COVID-19 Response
10 10 II. COVID - 19 Response
Slide 11: COVID-19 Response for Stakeholders
11 11 COVID - 19 Response for Stakeholders • Quickly responded to COVID - 19 through our well - designed and tested Business Continuity Plan, focusing on the health, safety, and financial well - being of our associates and clients • Proactive communication and outreach with shareholders , clients an
Slide 12: Active Commercial COVID-19 Modifications
12 12 Active Commercial COVID - 19 Modifications For Commercial COVID - 19 modifications updated actual and proforma Financial Statements are required at the initial deferral and after the second; evaluated interest only vs. P&I deferral, strength of guarantor, collateral coverage Risk rating impact
Slide 13: Status of PPP Loans Originated in 2020
13 13 Status of PPP Loans Originated in 2020 • 1Q21 period - end portfolio balance - $85 million from 2020 originations and $60 million from 2021 originations, 1Q21 average balance of all PPP loans - $142 million • Based on current and projected forgiveness activity, management estimates that $34 mi
Slide 14: PPP Loans Originated in 2021 by Size and Count
14 14 PPP Loans Originated in 2021 by Size and Count As of April 30, 2021, we have processed an additional 849 requests for $66 million. First time requests represent 34% of the count and 8% of the total amount requested. Total net fees (fees assessed less deferred expenses) of $2.7 million, of whic
Slide 15: III. Operating and Financial Performance
15 15 III. Operating and Financial Performance
Slide 16: Key Initiatives and Strategic Priorities
16 16 Key Initiatives and Strategic Priorities Optimize shareholder return through a keen focus on future growth, profitability, efficiencies, the client experience, and a reimagined future Create Exceptional Client Experience • Provide seamless client experience across all business lines using inte
Slide 17: Strong Risk Management, Monitoring and Mitigation
17 17 Strong Risk Management, Monitoring and Mitigation Underlies all strategic priorities Asset Quality • Low net charge - offs and strong asset quality as a result of conservative and proactive credit culture • Maintaining protective provision of $5.4 million recorded in 2020 related to qualitativ
Slide 18: Our Strategic Plan is Generating Reliable Growth
18 18 $14.7 $15.5 $17.8 $23.2 $7.9 2017 2018 2019 2020 1Q21 $1,039 $1,068 $1,142 $1,422 $1,468 2017 2018 2019 2020 Mar-21 $882 $996 $1,039 $1,168 $1,199 2017 2018 2019 2020 Mar-21 $1,054 Our Strategic Plan is Generating Reliable Growth… Pre - tax Pre - Provision Income ($ in millions) (*) Tangible B
Slide 19: As Well As Solid Profitability
19 19 4.52% 9.39% 10.44% 10.89% 18.23% 2017 2018 2019 2020 1Q21 * 0.40% 0.81% 0.93% 0.86% 1.36% 2017 2018 2019 2020 1Q21 * …As Well As Solid Profitability • First United has consistently improved return on assets and return on average equity enabling us to fund the dividend and invest in future grow
Slide 20: Proactive Loan Portfolio Management
20 20 Total 1 - 4 Family CRE - OO CRE - NOO Multi - family C&D C&I Consumer PPP Proactive Loan Portfolio Management • Diverse portfolio loan types and industries reduce Commercial portfolio risk • Focus on risk mitigation and managing of concentrations – CRE / Total Capital: 227% – ADC / Total Capit
Slide 21: Construction and Development Portfolio
21 21 Commercial Acquisition and Development Commercial Construction 1 - 4 Family Commercial Construction Amortizing Consumer Lot Loans 1 - 4 Family Residential Construction Construction and Development Portfolio • Geographically diverse construction and development portfolio mitigates risk to portf
Slide 22: Asset Quality
22 22 $37 $45 $53 $53 $50 Q1 20 Q2 20 Q3 20 Q4 20 1Q21 Asset Quality NPAs / Total Assets Criticized Loans by Segment Criticized loans (Rolling quarters ended 1Q21, in millions) Nonaccrual Loans / Total Loans 1.37% 0.95% 1.40% 0.35% 0.66% 2017 2018 2019 2020 1Q21 Underwriting and Monitoring • Apprais
Slide 23: Loan Loss Allowance
23 23 Loan Loss Allowance (“ALL”) Provision Expense (Rolling Quarters ended 1Q21) ALL Trends ALL % by Segment (Rolling Quarters ending 1Q21, excluding PPP loans) 1.12% 1.10% 1.19% 1.41% 1.38% 2017 2018 2019 2020 1Q21 Excluding PPP Loans, which are guaranteed, ALL = 1.57% 0.28% 0.11% - 0.02% 0.13% 0.
Slide 24: Industry Leading Deposit Franchise
24 24 Industry Leading Deposit Franchise • The strength of our deposit franchise is driven by both our stable legacy markets and our growing portfolio of commercial deposit accounts • Community office upgrades and forward - thinking technology enhancements have driven an increase in low - cost depos
Slide 25: Net Interest Margin
25 25 3.37% 3.74% 3.68% 3.34% 3.11% 2017 2018 2019 2020 1Q21 85.8% 94.3% 92.1% 82.1% 81.7% 2017 2018 2019 2020 1Q21 Net Interest Margin • Disciplined loan and deposit pricing has produced a strong margin that is in line with our peers • Margin contraction was primarily due to core loans adjusting do
Slide 26: Diversified Fee Income an Advantage to First United
26 26 Diversified Fee Income an Advantage to First United • Federal Reserve actions early in 2020 have led to industry - wide decreases in net interest margin – Fee - based business provides stable growth and a diversified revenue stream not directly tied to interest rates, as well as opportunities
Slide 27: Expense Discipline
27 27 71.1% 70.2% 68.4% 64.3% 56.1% 2017 2018 2019 2020 Mar-21 Expense Discipline • Significant portion of earnings improvement can be attributed to expense reductions • First United’s investment in its wealth management business line generates additional expenses; even so, efficiency ratio has decr
Slide 28: Prudent Capital Management
28 28 Prudent Capital Management $13.78 $14.97 $16.17 $17.17 $16.89 2017 2018 2019 2020 Mar-21 Growing Tangible Book – TBV/S 16.24% 14.87% 15.70% FUNC ISS Peer Median Proxy Peer Median Total RBC Ratio Note: ISS and Proxy peer groups are defined in the Appendix to this presentation • Management has c
Slide 29: Total Shareholder Return
29 29 Total Shareholder Return Source: S&P Global Market Intelligence; includes price change and reinvested cash dividends (1) SNL U.S. $1B - $5B Bank Index (2) Peer groups are defined in the Appendix to this presentation. Peer group refers to median unless stated otherwise • Our long - term perform
Slide 30: Strategic Targets Post-COVID
30 30 Strategic Targets Post - COVID - 19 Metric Actual 12/31/2019 Actual 12/31/2020 Long Term Strategic Target Range Strong Shareholder Return EPS Growth (YoY) 23% 7% 2% - 15% Dividend Payout Ratio 21.7% 26.3% 20% - 25% ROAA 0.93% 0.86% 1.00% - 1.25% ROAE 10.44% 10.89% 10% - 14% TCE Ratio 8.03% 6.9
Slide 31: IV. Our Commitment to Strong Corporate Governance
31 31 IV. Our Commitment to Strong Corporate Governance
Slide 32: Our Governance Enhancements
32 32 Our Governance Enhancements Board Declassification • In response to feedback from our institutional investors and market views on best - in - class governance practices, First United's Board has proposed this change at the 2021 annual meeting: • Declassify the Board , instituting annual electi
Slide 33: Strong Investor Relations and Shareholder Communications and Engagement
33 33 Strong Investor Relations and Shareholder Communications and Engagement Clear long - term strategic plan with performance targets x Dedicated Investor Relations contact x Investor conferences and prospective investor engagement x Members of the Board and senior management routinely engage with
Slide 34: V. Appendix
34 34 V. Appendix
Slide 35: Our Dedicated Management Team
35 35 Our Dedicated Management Team Our management team has the right set of skills and experience to effectively execute on our strategy and continue driving shareholder returns Carissa Rodeheaver CEO & Chair • 27 - year career with First United with in depth industry, sales, wealth management, fin
Slide 36: Board of Directors
36 36 Board of Directors Our directors know our markets and customers and are leaders in the communities we serve Note: Includes Sanu Chadha and Christy DiPietro who joined the board in January 2021. Name / Affiliation Unique Expertise Carissa Rodeheaver CEO & Chair • Certified Public Accountant, AB
Slide 37: Non-GAAP Reconciliation
37 37 Non - GAAP Reconciliation 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 stockholders’ equity, return on average tangible commo n e quity, e
Slide 38: Non-GAAP Reconciliation, continued
38 38 Non - GAAP Reconciliation, continued ($000s, except where otherwise noted) YTD LTM 2017 2018 2019 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 3/31/2021 3/31/2021 Return on Average Assets (quarter and YTD annualized) Average Assets ( c) 1,322,013$ 1,311,902$ 1,418,928$ 1,613,669$ 1,444,456$ 1,
Slide 39: Selected Peer Groups
39 39 Selected Peer Groups • Proxy peers can be found in First United’s 2021 definitive proxy statement found here: https://www.sec.gov/Archives/edgar/data/763907/000110465920048280/tm2016149d1_defc14a.htm – Proxy peers include: ACNB, ASRV, CFFI, CHMG, CVLY, CZFS, CZNC, EVBN, FDBC, FRAF, MVBF, NKSH,