Areas We Serve
We know our responsibility to those who have a vested interest in our success.
We seek to make decisions that balance the needs of our partners and the constituents we serve.
We understand the importance of considering regulatory, economic, environmental, and social risks when making business decisions.
We strive to balance these considerations through our deep commitment to stakeholder engagement.
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SUMMARY OF SELECTED FINANCIAL DATA
(Dollars in thousands, except per share data)
Results of Operations: Tax-equivalent interest income Interest expense
Tax-equivalent net interest income
Tax-equivalent adjustment
Total credit loss expense/(credit)
Net interest income after expense/(credit) for credit losses Noninterest income
Operating noninterest income Non-operating noninterest income: Noninterest expenses
Net (losses)/gains-other
Operating noninterest expenses
2023
2022
% Change
$
81,783
$
63,362 29.07%
24,286
4,789 407.12%
57,497
58,573 -1.84%
627
940 -33.30%
1,620
(627) -358.37%
55,250
58,260 -5.17%
14,469
18,050 -19.84%
18,331
17,878
2.53%
$
(3,862)
50,243 50,243
$
172 -2345.35% 43,129 16.49% 43,129 16.49%
Income before income taxes Income tax expense
Net Income
Common Dividends paid
Net Income per FTE (Pre-tax)
Per Share Data:
Basic net income per common share Diluted net income per common share Common Dividends paid
Book value (at year end) Tangible book value (at year end)
Financial Condition (at year end):
Assets
Deposits Net loans
Investment Securities Shareholders' equity
Performance Ratios (for the year):
Return on average equity
Return on average assets
Yield on average interest-earning assets Rate on average interest-bearing liabilities Net interest spread
Net interest margin Efficiency ratio
19,476
4,416
15,060
5,217
$
60,863
$ $ $ $ $
2.25
2.25
0.78
24.38
22.56
$ 1,905,860
33,181 -41.30%
8,133 -45.70%
25,048 -39.88%
3,986
30.88%
$
104,343 -41.67%
$ $ $ $ $
3.77 -40.32%
3.76 -40.16%
0.60 30.00%
22.77 7.07%
20.91 7.89%
$ 1,848,169 3.12%
1,550,977
1,570,733 -1.26%
1,388,847
1,264,684 9.82%
311,466
161,873
361,548 151,793
-13.85% 6.64%
9.65 %
18.19 %
0.77 %
1.39 %
4.63 %
3.85 %
1.95 %
0.44 %
2.68 %
3.41 %
3.26 %
3.56 %
65.12 %
56.40 %
Capital and Credit Quality Ratios: Average equity to average assets Total risk-based capital ratio
Tier 1 to Risk Weighted Assets Tier 1 to Average Assets (leverage)
Common Equity Tier 1 to Risk Weighted Assets Allowance for credit losses to total loans (as %)
Nonperforming and 90 days past due loans to total assets (as %) Net charge-offs to average loans (as %)
8.01 %
7.59 %
15.64 %
16.12 %
14.42 %
15.06 %
11.30 %
11.46 %
12.44 %
12.96 %
1.24 %
1.14 %
0.47 %
0.46 %
(0.07) %
(0.06) %
Dear Associates, Customers, Communities and Shareholders,
Amid the chaos that characterized 2023, community banking emerged as a beacon of stability. While bank failures and economic turmoil rocked the financial industry, First United stood strong, thanks to our commitment to uncommon service and customized financial solutions.
As a community bank, we understand the importance of being responsive to the needs of our customers. By remaining nimble, staying true to our values and leveraging our expertise, we were able to serve as a trusted partner who offered the personalized guidance needed during these everchanging circumstances.
We believe that our role as a community bank goes beyond just financial transactions; it is about building relationships and fostering
trust within our local communities. We believe in the power of local connections and the value in helping others. We understand the role we play in creating a thriving community, and we embody the spirit of innovation. In doing so, First United has proven itself to be a reliable and trustworthy ally.
Despite the industry chaos and economic challenges of 2023, your Company reported non-GAAP net income of $18.8 million, exclusive of non-core expenses of $3.7 million, net
We believe that community banks are, and always will be, the lifeblood of the communities they serve and the stability amidst the chaos of the economic, political, and regulatory environments.
of tax. Including these expenses, net income was $15.1 million and was driven by strong loan growth, tight margin control and steady wealth and debit card income.
Challenges compared to 2022 included rapidly rising deposit costs, proactive maintenance of our allowance for credit losses, and increased expenses resulting from the competitive labor markets, unusually high health insurance claims and increased check fraud expense. We also executed on two long-term strategies involving a restructure of the balance sheet as we sold investments at a loss and consolidated our branch network.
While we recognized $3.7 million in after-tax, non-core expenses in the fourth quarter due to execution of these strategies, we believe we will reap the rewards in future earnings. The increased efficiency ratio of 65.12% reflected these strategies as well as the reduced net interest income from margin contraction.
Quickly following the industry events in the first quarter of 2023 that resulted in several bank closures and liquidity concerns for the industry, your management team took precautionary actions and increased liquidity on the balance sheet. Pricing challenges and the cost of the additional liquidity resulted in net interest margin compression. However, when compared to peers, First United performed admirably in the face of these difficulties, and we ended 2023 with a net interest margin of 3.26%. This represented a margin decrease of only .30% in 2023 in an interest rate environment that was impacted by the Federal Reserve's increase of over 5.0% in the overnight borrowing rate.
We took precautionary actions and increased liquidity to provide peace of mind for our stakeholders.
The team remained vigilant and nimble throughout the year, focused on providing peace of mind, a safe and secure banking option and the stability of a 124-year-old trusted community bank.
Our balance sheet remained strong through this commotion, upheld by excess capital, strong cash positions and high-quality investments and loans. While deposit levels declined due to the competitive pricing landscape and inflationary spending, steady residential and commercial loan demand resulted in $127.2 million in loan growth, and high levels of production in our wealth division provided a diversified revenue stream not directly tied to interest rates. The result was a growth of total assets to $1.9 billion at December 31, 2023.
As of February 29, 2024, our total shareholder return, including price changes and reinvested cash dividends, was 24.71% for one-year, 61.76% for three-years and 63.03% for five-years. Based on a closing price of $22.10 per share on February 29, 2024, the current dividend of $.20 per share annualized, resulted in a dividend yield of 3.62%.
Looking ahead, we will continue to hire and retain passionate, diverse individuals who will foster collaboration and communication. We will leverage technology to enhance efficiency and user experience, aiming to broaden the utilization of our products and services.
We also aim to strengthen our relationships with community-oriented business owners and broaden our outreach initiatives to increase our non-interest income as a percentage of overall revenue, reducing our reliance on the net interest margin. Along with continued focus on resource optimization, we will also look to enhance market share and execute tactics to optimize our geographic presence.
Despite the ever-changing circumstances we face, First United remains steadfast in our dedication to helping individuals and businesses navigate times of uncertainty. By continually fostering strong relationships and offering a comprehensive range of financial services for all aspects of financial well-being, we will work to support our customers in achieving their financial goals and objectives.
Our unwavering commitment is not just a testament to our resilience, but also a reflection of the positive influence that community banking has on our communities.
Our unwavering commitment is not just a testament to our resilience, but also a reflection of the positive influence that community banking has on our communities. We remain dedicated to our role as a community bank and understand the importance of strong leadership to drive growth, not just for our Company, but also for the economic prosperity of the communities we serve.
We are and always will be your bank, our bank,
MY BANK.
While it might be old-fashioned, we believe that community banks are, and always will be, the lifeblood of the communities they serve and the stability amidst the chaos of the economic, political, and regulatory environments. We also believe that our focus on delivering an uncommon commitment to service and customized financial solutions will continue to be the foundation of delivering a profitable long-term total return to you, our shareholders.
We thank you, our investors, for your steadfast support of First United and we thank our passionate, loyal associates who remain devoted to delivering excellent service and being trusted financial advisors. Finally, we thank our customers who give their best for their businesses, their families, their communities, and their futures, for their belief in community banking. We are proud to be a community bank. We are and always will be your bank, our bank, MY BANK!
Carissa L. Rodeheaver
Chairman of the Board, President and Chief Executive Officer
Brian R. Boal
Lead Director, Principal, Boal & Associates, PC
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Board of Directors
Guide.
Serve.
Thrive.
Strong Focus on Local Business
We guide business and commercial customers to reach greater heights with personalized advice and an extensive selection of financial services. Our suite of cash flow management, lending, and liquidity solutions, equips you with the necessary tools to propel your business towards success. By partnering with the responsive community bankers at First United, your business will thrive and make a positive impact on our local communities, showcasing that our collective future is bright.
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