First · NASDAQ:FUNC
First — First United — Shareholder Meeting (April 2005)
53 slides from First's shareholder meeting presentation, Apr 26, 2005
Slide 1: Shareholders' Meeting 2005
Shareholders’ Meeting 2005 First United Corporation = Uncommon commitment to service and solutions. Our Mission ~ To enrich the lives of our customers, our employees and our Shareholders through uncommon service and effective financial solutions. Our Critical Success Factors ~ Effective Communicatio
Slide 2: CEO welcome and forward-looking statements
William B. Grant Chief Executive Officer Good afternoon, fellow shareholders and special guests. Welcome to your 2005 Shareholders’ Meeting. While our financial results were not strong in 2004, I can tell you that a number of good and strategic things occurred at your Company. As we have done over t
Slide 3: Robert W. Kurtz, President and CFO
Robert W. Kurtz President and Chief Financial Officer
Slide 4: Interest rate environment
Good Afternoon. After seeing short term interest rates decreasing five and a quarter percent from 2001 to mid year 2003, the Federal Reserve began to increase those rates over the past twelve months, increasing seven times at a quarter of a percent each time. This has been good for the saver, due to
Slide 5: Net Income
Net Income As Bill alluded to, net income of $7.6 million for 2004, was down $3.1 million or 29% from 2003. There were several factors that contributed to this downturn, some strategic in nature, some one-time expenses and others that reflect the interest rate environment affecting us. Most of these
Slide 6: Asset Growth
Asset Growth During 2004, assets grew $123 million or 11%, to $1.23 billion, with loan growth representing most of that increase.
Slide 7: Loan Growth
Loan Growth In 2004, total loans grew $119 million or 15%. Unlike 2003, we had a more balanced growth between our different loan sectors. Steve will discuss more of the details during his presentation.
Slide 8: Deposit Growth
Deposit Growth On this slide we see deposits growing $100 million or 13%. With the attempt to lower our cost of funds, while emphasizing growth in our lower cost demand deposit accounts versus the higher costs associated with certificates of deposits, we were unable to generate the amount of retail
Slide 9: Net Interest Income
Net Interest Income Net interest income is basically the difference between what we earn on loans and investments, less the interest expense that is incurred on deposits and other borrowings. This chart shows a $2.6 million increase over 2003, which is slightly more than the increase experienced the
Slide 10: Net Interest Margin
Net Interest Margin Net interest margin is the result of taking net interest income and converting that spread to a percent of earning assets. During 2004, we continued to see this margin decrease from 3.6% to 3.4%. This 20 basis point compression in the margin was considerably less than what was se
Slide 11: Non-Interest Income
Non-Interest Income (fee income) In addition to income earned from loans and investments, non-interest income is our other source of income. Non-interest income grew $1.1 million or 9% in 2004.
Slide 12: Non-Interest Expense
Non-Interest Expense Non-interest expense grew $6.1 million or 20% in 2004. Forty-five percent of that increase, or $2.7 million was a one-time cost of expenses related to the early redemption of long-term borrowings. This was discussed earlier in my presentation. Excluding this $2.7 million one-tim
Slide 13: Return on Average Equity
Return on Average Equity The return on average equity or the amount of earnings as a percent of average equity, decreased to 8.91% from the 2003 ratio of 13.1%.
Slide 14: Earnings Per Share
Earnings Per Share Earnings per share or the amount of income that each share earned, ended the year at $1.25 versus $1.77 as of December 2003.
Slide 15: Efficiency Ratio
Efficiency Ratio The third and final ratio, the efficiency ratio, represents the percent of net revenue required to cover our overhead expenses. With the compression of our interest margin, along with the increase in non-interest expense, we saw this ratio increase from 63% to 71%. This means that $
Slide 16: What do we anticipate for 2005?
What do we anticipate for 2005? Your Management team is very confident that 2004 will not be a year that will set a new benchmark in financial performance at First United, but rather was one of those years where we took advantage of a few strategic initiatives and some one-time expenses that negativ
Slide 17: Steven M. Lantz, Senior Lending Officer
Steven M. Lantz Senior Vice President and Senior Lending Officer Welcome—Loan activity was balanced throughout the company last year. Our total loan growth was 119 million which compares favorably with 2003 growth of $78 million core growth net of branch acquisitions and 2002 growth of $56 million.
Slide 18: Commercial lending growth
The main driver of loan growth continues to be our commercial lending division which grew $66 million last year. As can be seen by the graph our growth trend in this division continues to be a very important revenue engine for the company. We think building full relationships with business customers
Slide 19: Residential mortgage and consumer loans
The residential mortgage area also had very good growth in 2004 accounting for $54 million growth. This far exceeds our growth of $30 million in 2003. Although our internal growth was better than expected last year we actually had 14 million dollars less loan originations than we experienced in 2003
Slide 20: Non-performing loans
As can be seen by the slide our non performing loans (those more than 90 days past due plus non accruals) as a percent of total assets increased to .37 from .36 in 2003. This slight increase is primarily a consequence of the 3 distressed commercial loans currently in the process of being liquidated.
Slide 21: Net charge-offs to average loans
The next slide represents our net charge-offs to average loans. As you can see we also had a slight increase in this category from .17 basis points in 2003 to .20 basis points in 2004. To help mitigate this trend management is proactively pursing collections on these problem loans and as we can cont
Slide 22: Frederick A. Thayer, IV, Director of Sales
Frederick A. Thayer, IV Senior Vice President and Director of Sales
Slide 23: 2004 branch network performance
Good afternoon ladies and gentlemen. I would like to take a few moments to review our 2004 performance in the branch network and to comment briefly on our plans for 2005. In terms of deposit growth, 2004 was a disappointing year for the branches. We generated approximately $15.8MM in total new depos
Slide 24: 2005 branch reorganization
For 2005, we have reorganized our staff to better position ourselves to grow. A new function, the Business Development Officer was added in late 2004. We now have two individuals serving in this capacity. They are responsible for driving new clients into the Bank, whether it is for deposits, insuran
Slide 25: 2005 strategic direction
Our strategic direction in 2005 is three-fold: A focus on deposit growth, branch expansion and Team Sales. Deposit growth is the single most important objective for the branch network in 2005. We hope to grow deposits by $65MM this year, which is no small task. Branch expansion is an integral part o
Slide 26: Val Teagarden, First United Insurance Group
Val Teagarden President and Chief Executive Officer of First United Insurance Group, LLC Good afternoon, The insurance division of First United continued to grow and evolve during 2004. The success of team work and the desire to increase our contribution to First United have been the driving goals t
Slide 27: New Location, Name and Technology
New Location: First United has expanded its insurance operations into the Frederick County area. The insurance group acquired the book of business previously owned by Taylor Insurance. We hope that this will give us a customer base to build and deepen relationships throughout the coming years. New N
Slide 28: Commissions & Contingency
Commissions & Contingency
Slide 29: Insurance revenue growth and return on revenue
The growth of your insurance group is measured in several ways. Annual Revenue growth is one measurement. It is our goal that the divisions consistently produce core growth. During 2004, we were able to increase core revenue by 7%. We also track the Annual Return on Revenue or ROR. This is referred
Slide 30: Return on Investment
In addition to the previous measurements, we utilize Return on Investment or ROI. Over the past years, the ROI has increased to 14.68%. First United Insurance Group’s goal is continued ROI growth through a combination of increased revenue and expense control. Thank you for allowing our team to grow
Slide 31: Eugene D. Helbig, Jr., Senior Trust Officer
Eugene D. Helbig, Jr. Senior Vice President and Senior Trust Officer A very pleasant good afternoon. I am proud to be here today representing First United’s Trust and Brokerage Departments. Let’s first take a look at our Trust Department. As you can see from this first slide
Slide 32: Trust Department market value
, the market value of the Trust Department grew to $435 million. This amounts to an increase of 19.5% over 2003 Market values. I am proud to report we now have nearly $100 million of assets under management in regions 4 and 5. These regions encompass Hagerstown, Frederick and Martinsburg areas.
Slide 33: Trust Department fees
Fees generated by the Trust Department grew to $3.1 million, a 25.09% increase from 2003. This growth would not have been achieved without team effort.
Slide 34: New revenue sales and contacts
This effort is evidenced by the number of New Revenue sales and contacts. In 2004 our team generated New Revenues of $903 thousand. Although $350 thousand of these fees are non-recurring, this was still a record year. We continue to monitor the frequency of our customer contacts. This follow-up and
Slide 35: Client satisfaction
shows that, overall, 89% of our clients are highly satisfied with our performance. Similarly, 95.3% of our clients would recommend First United Trust Services. These results are not achieved by accident. We spend a great deal of time and energy on Kaizen or Continuous Improvement. We are very proud
Slide 36: Managed Asset Portfolios returns
shows the returns of our Managed Asset Portfolios or MAP. This disciplined investment approach has consistently proven successful. Prime Vest, our Brokerage division, continues to grow. Last year we sold $43 million of product including $8 million of fixed annuities. The year started off very strong
Slide 37: PrimeVest gross and net revenue
Both Gross and Net Revenue continue to grow as we approach gross revenues of $1 million. Net Revenue increased by 22%. My last slide
Slide 38: Trust and PrimeVest income contribution
illustrates the contribution that Trust and Prime Vest make to the income of the Corporation. Again, a healthy increase to that of 2003. In closing, I want to acknowledge First United’s Trust and Brokerage Staff. Our focus and our strengths are in solving financial problems, very minor and very majo
Slide 39: Philip D. Frantz, Operations and Support
Philip D. Frantz Senior Vice President and Director of Operations and Support Good afternoon fellow shareholders: As my fellow associates have discussed, 2004 has been a year of growth and regulatory challenges. Our job in Operations and Support is to facilitate and support this growth. First United
Slide 40: Jeannette R. Fitzwater, Human Resources
Jeannette R. Fitzwater Senior Vice President and Director of Human Resources We all realize that selling financial services is an ever increasing competition. Our primary point of difference is truly the people behind the product. For the next few moments I plan to focus on three aspects of our “peo
Slide 41: Recruitment of Morgantown professionals
It all starts when you first recruit your staff. Just recently we had a fabulous learning experience with the recruitment of our Morgantown professionals. As we have with our banking services, we have identified our “niche” in recruiting experienced associates. The majority of our new Morgantown ass
Slide 42: Customized training program
Our second component of success is our customized training program. It includes new hire orientation, certification programs for our branch and call center staff, compliance training, classroom training and a host of other training opportunities. In a learning organization we are always searching fo
Slide 43: Job shadowing and career paths
Greater knowledge can help our associates to move forward in their careers. This year, at our associates’ suggestion, we introduced a formalized job shadowing program, whereby our team members may spend a day or two observing someone doing a job that they may wish to have someday. This third area of
Slide 44: Our associates
They live our vision each day, of providing an uncommon commitment to service and solutions. Please take a moment this afternoon to meet some of our associates who are with us today. (
Slide 45: Our point of difference
I’m sure you’ll agree that they truly are our point of difference.
Slide 46: Robin E. Murray, Director of Marketing
Robin E. Murray Senior Vice President and Director of Marketing
Slide 47: Marketing strategies and customer satisfaction
Good afternoon, at this time, I am pleased to share with you our vital marketing strategies for your Company, as well as to review the success of our Customer Service Center. Our recent marketing initiatives continue to foster personal relationships with our customers and remain dedicated to our tea
Slide 48: BancIntelligence marketing tool
Our marketing analytical tool, BancIntelligence continues to be a valuable instrument for our marketing team. This tool has assisted us in building models, such as our market prioritization model, and most recently, our retention model, so that we can better allocate our resources, to maximize our r
Slide 49: Morgantown grand opening
We have just completed our Grand Opening marketing initiatives for our entry into Morgantown. The Morgantown team, in conjunction with the marketing department, created an extremely successful kick-off to facilitate this experienced staff in engaging the customer one-on-one and providing the financi
Slide 50: Customer Call Center
Our Call Center continues to be an exceptionally valuable delivery channel for our customers and your Company. Each year, the number of inbound and outbound calls continues to climb. This team referred over $71 million dollars in sales, with 62 % resulting in new money to the bank, across all lines
Slide 51: Marketing conclusion
In conclusion, we are excited about the many opportunities that will be presented to us this year through our franchise expansion and our growth markets. Our marketing strategies in 2005 will be focused on our relationship initiatives, effective attraction of new customers, exceptional customer rete
Slide 52: Peer benchmarking against small cap banks
William B. Grant Chief Executive Officer As Bob mentioned during his remarks, our earnings slipped substantially last year, due, in large part to some strategic repositioning. As in the past, we want to share with you our comparative performance with the universe of small cap banks throughout the Co
Slide 53: Stock performance and total return
In closing, I would like to say something about our stock performance. One of the things I like to do is to go out on the internet and see what investors are saying about us. Well, as you might imagine, it is not always flattering. One of my favorite comments was “Watching our stock was like watchin