First · NASDAQ:FUNC
First — First United — Shareholder Meeting (May 2011)
51 slides from First's shareholder meeting presentation, May 12, 2011
Slide 1: First United Corporation Annual Shareholders' Meeting
Bank| iS First United Corporation Annual Shareholders’ Meeting May 12,2011 _-7
Slide 2: Bill Grant
Bill Grant President, Chief Executive Officer & Chairman of the Board
Slide 3: Forward-looking statements
Forward-looking statements in this presentation relating to First United Corporation’s plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The information contained
Slide 4: First United Bank & Trust founded in 1900
First United Bank & Trust founded in 1900 Headquartered in Oakland, Garrett County, Maryland Total assets of $1.7 billion at December 31, 2010 Banking operations in Maryland and West Virginia — 28 banking offices, 32 ATMs and 1 call center Non-banking services include insurance, trust and investment
Slide 5: Strong Relationship Building Programs
- Strong Relationship Building Programs - Effective Attraction of New Customers - Exceptional Customer Retention - Robust Multi-Product Utilization - Extraordinary Community Involvement if ora
Slide 6: Carissa Rodeheaver
Carissa Rodeheaver Executive Vice President & Chief Financial Officer Witte
Slide 7: Recession and post-recessionary impacts
* Recession began in late 2007 and ended late in 2009 * Post-recessionary impacts in 2010 — Continued low interest rates — Businesses reluctant to make changes — Busii and periencing weaker cash flow ~ Savings levels lower as businesses and consumers use cash reserves — Continued global uncertainty
Slide 8: 2010 Areas of Focus
(2010 Areas of Focus * Liquidity * High Liquidity Levels * Shorter Duration of Portfolio * Credit Quality * Loan Portfolio ¢ Investment Portfolio ¢ Earnings / Capital Adequacy * Regulatory Reform
Slide 9: 2010 Areas of Focus
(2010 Areas of Focus ¢ Liquidity ¢ High Liquidity Levels ¢ Shorter Duration of Portfolio * Credit Quality * Loan Portfolio ¢ Investment Portfolio ¢ Earnings / Capital Adequacy ¢ Regulatory Reform
Slide 10: Balance Sheet - Total Asset Trends
Balance Sheet — Total Asset Trends $1,900 SETH 51,696 $1,639 $1,700 $1,500 $1,300 $1,100 $900 $700 $500 $300 2006 2007 2008 2009 2010 Cran (Unaudited) if 10 esr
Slide 11: Balance Sheet - Asset Mix
Balance Sheet - Asset Mix 2009 2010 9% io 10% 18% 6% 14% 63% 58% hand cash equivalents m= Investment securitiesand FHLB stock Loans mOtherassets u Ws he hirED
Slide 12: Trend in Loan Balances
Trend in Loan Balances Millions $1,200 $1,043 31,55 $1,122 $1,100 1,000 $900 3800 s700 600 $500 $400 ssoo 14 2008 2009 2010 Cray
Slide 13: Stable Funding Sources
Stable Funding Sources 2010 15% 17% fm Retail core deposits tail CDs < $100,000 ‘etail CDs > $100,000 Wholesale deposits ‘= Short term borrowings Long term borrowings if B esr
Slide 14: Retail Deposit Composition
Retail Deposit Composition December 2009 = Demand m Money market, savings Certificates of deposit December 2010 20% = Demand m Money market, savings Certificates of deposit att
Slide 15: Trends in Deposits
Trends in Deposits $1,500 $1304 $1,302 $1,300 sito 1] Millions 2006 2007 2008 2009 2010 qu (Cihaudited) if Witte,
Slide 16: Deposit market share by county
* % Change in $ Offices Share 2009-2010 Rank Maryland Counties: Garrett 6 78.3% $132.0 Ist Allegany 4 19.1 4.8 Be Washington (*) 3 4.7 6.9 a Frederick (*) 4 3.9 10.5 gth West Virginia Counties: Mineral 2 33.9 0.4 Ist Hardy 1 3.0 3 4th Berkeley (*) 5 12.4 45 3rd Monongalia (*) 3i 3.8 25.2, Gh (*) Gro
Slide 17: 2010 Areas of Focus
(2010 Areas of Focus ¢ Liquidity ¢ High Liquidity Levels ¢ Shorter Duration of Portfolio * Credit Quality ¢ Loan Portfolio * Investment Portfolio arnings / Capital Adequacy cE ¢ Regulatory Reform
Slide 18: Loan Portfolio Composition
Loan Portfolio Composition December 2009 10% 29% 33% 5 21 ™% December 2010 8% 16% @ Commercial Real Estate onand Development ial and Industrial Consumer Installment ate hirED
Slide 19: Commercial Real Estate Loans - 2010
Commercial Real Estate Loans - 2010 Collateral: SUTTON ceases 27% © Non-residential Owner occupied non-residential ~ Multifamily ‘© Other land development and land Farmland Residential construction Commercial construction ‘Locatio 9% 14% = MD: Garrett ™ MD: Washington , Frederick » MD: Allegany = WV
Slide 20: Significant Industry Concentrations
Significant Industry Concentrations *: *Commercial rentals 15% *Developers 11% *Hotels and lodging 10% *Contractors 9% *Residential rentals 8% *Real estate holders T% As a % of total commercial loans
Slide 21: Providing for Loan Losses
Providing for Loan Losses = Provision Net Charge-offs ‘Thousands 2009 2010 iBank! ee im
Slide 22: Providing for Loan Losses - Net Charge-Offs as % of Average Loans
Providing for Loan Losses — Net Charge-Offs as % of Average Loans | 0.15% 2008 2006 2007 2008 2009 2010
Slide 23: Reserves vs. Non-Performing Loans
[Reserves ys. Non-Performing Loans a] ‘Horming as % of Loans: ALL as % of Gross Loans Ron-pe g 2006 2007 2008 2009 2010 (Unaudited) as Witte,
Slide 24: 2010 Areas of Focus
(2010 Areas of Focus ¢ Liquidity ¢ High Liquidity Levels ¢ Shorter Duration of Portfolio * Credit Quality ¢ Loan Portfolio ¢ Investment Portfolio ¢ Earnings / Capital Adequacy ¢ Regulatory Reform
Slide 25: Investment Portfolio Composition
Investment Portfolio Composition December 2009 30 25% ed Mortgage Obligations Bonds Collateralized Debt Obligations December 2010 4% 11% 1m Municipal Bonds Collat sed Debt Obligations 25
Slide 26: Investment Portfolio - Impact of CDO's
Investment Portfolio — Impact of CDO’s ‘Thousands $2,000 OTTI losses recognized in earnings | Unrealized G (L) recognized in capital HOS QLOD Q209-_QSOF_QHOP QUID 210 QSIO_QHIO QUIT eenauated) iBank! ee im
Slide 27: 2010 Areas of Focus
(2010 Areas of Focus ¢ Liquidity ¢ High Liquidity Levels ¢ Shorter Duration of Portfolio * Credit Quality ¢ Loan Portfolio * Investment Portfolio ¢ Earnings / Capital Adequacy ¢ Regulatory Reform
Slide 28: Net Income
Net Income Millions -s10 S15 S128 2007 2008 2009 20100 Quit (Unaudited) BST hirED
Slide 29: Pre-Tax Reported Loss and non-cyclical earnings
Pre-Tax Reported Loss ($18.2) ($19.8) Impact of: NIM impact of liquidity 6.8 -- NIM impact of non-accrual — 2.2 1.3 Securities impairment 8.4 26.7 Other net losses (gains) 6.1 (0.4) Provision for loan losses 15.7 15.6 “Non-cyclical” earnings $21.0
Slide 30: Trends in Revenue Components
| Trends in Revenue Components Millions: g3 206 207 ams 20 ano Sear ey Net Interest Income = Noninterest Income (*) wie,
Slide 31: Net interest income 2009 to 2010
Net interest income - 2009 $53.2 Impact of: Liquidity (6.8) Non-accrual securities (0.7) Non-accrual loans (1.7) Lower yield on investments (0.6) Lower yield on loans (1.8) Net interest income - 2010 $41.6
Slide 32: Net Interest Margin
Net Interest Margin 4.00% 3.52% 3.51% Spe 3.50% Xo 3.00% 2.50% 2006 2007 2008 2009 2010 2 ties hiro
Slide 33: Diversified Fee Income
| Diversified Fee Income (excluding gains/osses) 2009 2010 woe. 11% 37% 19% 29% sm Service charges mse aae Trust and brokerage mw Trust and brokerage “Insurance ‘= Insurance Other Other lection benling fees Hectronic banking fees " a nya FIRST hirED
Slide 34: Operating Expense
Operating Expense 2009 8% 19% = Salaries and employee benefits ™ Occupancy, equipment and IT ~ FDIC and state assessments mAllother 2010 23%, 48% 9% 20% = Salaries and employee benefits ™ Occupancy, equipment and IT ~ FDIC and state assessments mAllother fot! ee im
Slide 35: Corporation Remains Well-Capitalized
Corporation R ins Well-Capitalized 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% Leverage Tier 1 Total Welk Capitalized = Q406 07 = Q408 = 409 Qt 10 Ql (Wnauatted)
Slide 36: 2010 Areas of Focus
(2010 Areas of Focus * Liquidity ¢ High Liquidity Levels ¢ Shorter Duration of Portfolio * Credit Quality ¢ Loan Portfolio * Investment Portfolio ¢ Earnings / Capital Adequacy * Regulatory Reform
Slide 37: Regulatory and accounting topics
* Dodd-Frank Act * Durbin Amendment * Convergence of FASB and IASB * Accounting Guidance * Risk Management
Slide 38: Khalil Gibran quote
“Progress lies not in enhancing what is, but in advancing toward what will be.” Khalil Gibran
Slide 39: Bill Grant
Bill Grant President, Chief Executive Officer & Chairman of the Board
Slide 40: Frequently Asked Questions
Frequently Asked Questions Wikio
Slide 41: Plans regarding the Capital Purchase Program (CPP)
What are the Company’s plans regarding the Capital Purchase Program (CPP)? if ora
Slide 42: Plans regarding the common stock dividend
What are the Company’s plans regarding the dividend to shareholders of the common stock? f a
Slide 43: Question 3: suspended CPP and trust preferred payments
| Question 3: | We understand that payments were suspended on the dividends for both the CPP and the trust preferred securities which the Company issued. Can you comment on this? 43 er
Slide 44: Question 4: cost of CPP and trust preferred securities
| Question 4: How can you justify paying 5% on the CPP, and over 9% on the privately issued trust preferred securities? You could get deposits in the market at a much lower rate. a atte,
Slide 45: Question: investments in new markets
| Question 3: | You mentioned last year that the Company made significant investments in new markets. How is that working out? & atte,
Slide 46: Question 6: sale of indirect portfolio
| Question 6: | I read in the Form 10-Q that First United sold a significant portion of its indirect portfolio? Please tell us why this was done. 46 er
Slide 47: Question 7: Lead Director
| Question 7: | I noticed in the proxy statement that the Company now has a “Lead Director”. Can you explain what that is, and why the position was created? a7 er
Slide 48: Question 8: strategy for restoring the Bank
| Question 8: | Aside from building your capital position, can you describe your strategy for restoring the Bank to good health, even if the economy remains stagnant? Or, is your strategy primarily dependent on a recovering economy? 48 er
Slide 49: Insider purchases of First United stock
We have recently witnessed a number of insider purchases of First United Corporation stock. What is up with that? f a
Slide 50: We continue to:
We continue to: + Provide the products of our larger competitors with the service only seen in community banks * Focus on growing and maintaining relations with our customers for the long term + Have disciplined underwriting policies + Sustain a culture that attracts and retains employees who provid
Slide 51: Thank you!
Thank you! Wikio