Slide 1: First United Corporation Investor Presentation Fourth Quarter 2022
FIRST UNITED CORPORATION INVESTOR PRESENTATION Fourth Quarter 2022
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
Table of Contents 3 I. II. II. III. Corporate Profile Strategy & Strengths Financial Performance Appendices Pg. 4 Pg. 6 Pg. 10 Pg. 23
Slide 4: Mission Statement and Company Overview
4 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: 27 branches Business Lines: Commercial & Retail Banking, Trust Ser
Slide 5: Our Core Markets
5 Our Core Markets West Region Central Region East Region Loans (000s) $298,302 $382,055 $493,608 Deposits (000s) $137,138 $825,781 $505,607 Deposit Market Share (1) (at June 30, 2022) 2% 42% 4% Branches (2) 6 10 11 Note: Out of market loans represent $106 million and are not reflected in the above
Slide 6: Our Core Strengths
??????? ??????? ??????? 6 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 24% of operat
Slide 7: Asset Quality and Risk Management Priorities
7 ▪ Low net charge - offs and strong asset quality as a result of conservative and proactive credit culture ▪ ALL level of 1.14%; future provisioning based on loan growth and asset quality changes ▪ Diversified commercial loan portfolio and geographic footprint ▪ Disciplined loan growth strategy, co
Slide 8: Strategic Priorities: Growth, Clients and Talent
8 ▪ 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 operat
Slide 9: Innovation and Technology
9 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
Slide 10: Fourth Quarter Financial Highlights
10 10 Fourth Quarter Financial Highlights $7.0 Million Net Income $1.04 Diluted EPS 1.50% * ROAA 21.60 * ROATCE 3.63% NIM ▪ Total assets stable compared to linked quarter ▪ Consolidated net income (1) of $7.0 million in 4Q22 compared to $7.3 million in 4Q21 and $6.9 million in linked quarter ▪ Pre -
Slide 11: Year to Date Financial Highlights
11 11 Year to Date Financial Highlights $25.0 Million Net Income $3.76 Diluted EPS 1.39% ROAA 19.94 ROATCE 3.56% NIM ▪ Total assets increased by $73.8 million, or 4.3% compared to December 31, 2021, driven by strong loan growth ▪ Consolidated net income (1) of $25.0 million for the year ended Decemb
Slide 12: Generating Reliable Growth
12 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 $32.5 2018 2019 2020 2021 2022 Pre - Provision Net Revenue ($ in millions) (1) Diluted Earnings per Share (1) $
Slide 13: Solid Profitability
13 Solid Profitability ▪ Consistently improved return on assets and return on average tangible common equity enable us to fund the dividend and invest in future growth. ▪ Strategic initiatives are underway to enhance growth, maintain margin, and continue improving profitability. Core ROAA (non - GAP
Slide 14: Proactive Loan Portfolio Management
14 Proactive Loan Portfolio Management Commercial Loan Mix (12/31/2022) Loan Portfolio Mix (12/31/2022) Loan Type Balance (MMs) % Total 1 - 4 Family $444 35% CRE – OO $144 11% CRE – NOO $270 21% Multi - family $45 4% C&D $71 5% C&I $245 19% Consumer $60 5% PPP $0 0% Diverse portfolio loan types and
Slide 15: Asset Quality
15 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 ▪ Decr
Slide 16: Loan Loss Allowance (ALL)
16 Loan Loss Allowance (ALL) ALL Trends (Net Charge - Offs)/Average Loans ALL % by Segment 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% 1.14% 2018 2019 2020 2021 2022 0.11% - 0.02% 0.13% - 0.02% - 0.06% 2018 2019
Slide 17: Industry Leading Deposit Franchise
17 Industry Leading Deposit Franchise Deposit Composition (12/31/2022) CD Maturities (MMs) (12/31/2022) ▪ Stable legacy markets and growing portfolio of commercial deposit accounts ▪ Noninterest bearing deposits have grown from 8% of portfolio in 2009 to 32% as of December 31, 2022 $16 $57 $47 $1 3
Slide 18: Net Interest Margin
18 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 2022 primarily due to new loan volume, existing loans pricing at higher rates and reduced cost of interest - bearing liabil
Slide 19: Diversified Fee Income
19 Diversified Fee Income ▪ First United’s non - interest income (1) comprised 24% of operating revenue for 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 relationships ▪ First United’s
Slide 20: Expense Discipline
20 Expense Discipline ▪ Efficiency ratio has decreased 16.4% since 2018 ▪ Core processor negotiation resulted in multi - year savings ▪ Restructuring and consolidation of regional operating structure ▪ Existing operational infrastructure and technology investments positioned for continued growth ▪ E
Slide 21: Prudent Capital Management
21 Prudent Capital Management ▪ Tangible book value per share consistently grew, 8.7% CAGR from December 31, 2018 through December 31, 2022, while simultaneously taking decisive action to benefit shareholders ▪ Impacted in 2022 by economic impact in market value in the investment portfolio ▪ History
Slide 22: Strategic Targets
22 Strategic Targets Metric Actual 12/31/2021 Non - GAAP 12/31/2021 Actual 12/31/2022 Long Term Strategic Target Range (*) Strong Shareholder Return EPS Growth (YoY) 49% 79% (1) 27% 8% - 15% Dividend Payout Ratio 19.7% 16.3% 15.9% 20% - 25% ROAA 1.12% 1.35% (1) 1.39% 1.00% - 1.25% ROATCE 16.27% 19.6
Slide 23: Strong Investor Relations and Shareholder Engagement
23 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 ga
Slide 24: Appendices
24 I. II. III. IV. Management Team Board of Directors ESG Journey & Statistics Non - GAAP Reconciliation Pg. 25 Pg. 26 Pg. 27 Pg. 29 Appendices
Slide 25: Our Dedicated Management Team
25 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, sal
Slide 26: Board of Directors
26 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 & Yo
Slide 27: ESG Journey
27 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.
Slide 28: Environmental, Social and Governance Statistics
28 ▪ 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 Diver
Slide 29: Non-GAAP financial measures
29 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 30: Non-GAAP Reconciliation, continued
30 Non - GAAP Reconciliation , continued ($000s, except where otherwise noted) YTD 2018 2019 2020 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 12/31/2022 Weighted Average Common shares - basic (actual) (d) 7,078,644 7,110,022 7,003,955 6,710,463 6,995,798 6,609,275 6,616,829
Slide 31: Non-GAAP Reconciliation, continued
31 Non - GAAP Reconciliation , continued ($000s, except where otherwise noted) YTD 2018 2019 2020 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 12/31/2022 Average Assets ( c) 1,311,902$ 1,418,928$ 1,613,669$ 1,765,148$ 1,765,133$ 1,783,821$ 1,768,803$ 1,750,614$ 1,769,234$ 1,7
Slide 32: Non-GAAP Reconciliation, continued
32 Non - GAAP Reconciliation , continued ($000s, except where otherwise noted) YTD 2018 2019 2020 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 12/31/2022 Tangible common equity to tangible assets ("TCE Ratio") Total assets, as reported (k) 1,384,516 1,442,966 1,733,414 1,729,