8-K: First United Corporation Announces Strong Fourth Quarter and Full Year 2024 Financial Results

First United Corporation reports a significant increase in net income for both the fourth quarter and the full year 2024, driven by loan growth and wealth management success.

Summary

• First United Corporation announced its financial results for the threeand twelve-month periods ended December 31, 2024.
• Consolidated net income for the fourth quarter of 2024 was $6.2 million, or $0.95 per diluted share, compared to $1.8 million, or $0.26 per diluted share, for the fourth quarter of 2023.
• For the year ended December 31, 2024, net income was $20.6 million, or $3.15 per diluted share, compared to $15.1 million, or $2.25 per diluted share, for the year ended December 31, 2023.
• Loan production was strong, with $72.2 million in commercial loan originations and $23.3 million in residential mortgage originations in the fourth quarter.
• Deposits increased by $34.4 million due to seasonal fluctuations in municipal deposit balances, partially offset by runoff of retail certificates of deposit due to competitive pricing.
• The net interest margin, on a non-GAAP, fully tax equivalent (FTE) basis, was 3.48% for the fourth quarter of 2024.
• A cash dividend of $0.22 per common share was declared in the fourth quarter.
• Total assets at December 31, 2024 were $2.0 billion, representing a $67.2 million increase since December 31, 2023.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results and strategic growth initiatives, suggesting a favorable sentiment.

Positives

• Net income increased significantly for both Q4 2024 and the full year 2024.
• Loan production was strong, particularly in commercial loan originations.
• The net interest margin remained healthy at 3.48% for Q4 2024.
• Total assets grew to $2.0 billion, indicating overall growth and stability.
• The company maintained a solid efficiency ratio, demonstrating effective expense management.
• Wealth management income increased by $1.1 million due to improving market conditions, increased annuity sales and growth in new and existing customer relationships.
• The Corporation recognized $4.2 million in losses related to the investment portfolio restructuring in the fourth quarter of 2023 to reinvest lower-yielding securities to fund higher-yielding loan production.
• The book value of the Corporation's common stock was $27.71 per basic share at December 31, 2024 compared to $24.38 per share at December 31, 2023.

Negatives

• The provision expense increased in the fourth quarter due to loan growth.
• Retail certificates of deposit saw a runoff due to competitive pricing.
• Interest expense increased due to continued pricing pressure on deposits and the use of the Bank Term Funding Program (BTFP).
• The residential mortgage production level decreased in the fourth quarter of 2024 due to the seasonality of this line of business, particularly construction lending.
• The consumer portfolio had net charge offs of 1.76% for the year ended December 31, 2024 compared to net charge offs of 1.04% for the year ended December 31, 2023.

Risks

• Intense competition in the markets could pressure margins.
• Continued pricing pressure on deposits may impact future profitability.
• Economic conditions and asset quality changes could affect future provisioning.
• Cyber security and fraud pose ongoing risks requiring resource allocation for mitigation.
• Interest rate fluctuations, particularly falling rates, could negatively impact net interest income.
• The Bank's largest risk from an interest rate risk perspective is falling rate scenarios.

Future Outlook

The company is excited to enter 2025 with a focus on investing additional resources to grow loan and deposit market share and increase wealth presence, and management intends to hold the investment portfolio relatively stable in 2025 by reinvesting proceeds from amortization and maturities into new higher yielding securities.

Management Comments

• We are proud to announce another strong quarter to conclude the 2024 year.
• Loan growth was robust during the quarter as we were able to close a few loans that had been in the pipeline for several months.
• Our wealth department was a large contributor to our success during the year as they continue to establish new and grow existing customer relationships.
• Throughout 2024 we maintained our pricing and expense discipline ending the year with a strong margin, despite the intense competition in our markets, and a solid efficiency ratio.
• Our teams collaborated and demonstrated the First United values as they worked to customize financial solutions for our customers and to support the communities that we serve.
• We are excited to enter 2025 with a focus on investing additional resources to grow our loan and deposit market share and increase our wealth presence.

Industry Context

In a competitive banking environment, First United's focus on loan growth, wealth management, and expense discipline positions it to navigate market challenges and capitalize on opportunities for expansion.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• To compare First United Corporation to industry standards, one would need to analyze its financial ratios (e.g., ROAA, ROE, efficiency ratio) against those of its peers, such as community and regional banks with similar asset sizes and geographic footprints.
• Specific competitors could include companies like WesBanco, Inc., Northwest Bancshares, Inc., or Fulton Financial Corporation, but a thorough comparison would require a deeper dive into their respective financial reports and market positions.

Stakeholder Impact

• Shareholders will benefit from increased profitability and a higher book value per share.
• Customers will gain access to customized financial solutions and community support.
• Employees will have opportunities for career development and engagement.
• Communities will benefit from the company's support of local causes and financial education.

Next Steps

• The company plans to invest additional resources to grow loan and deposit market share.
• First United aims to increase its wealth presence.
• Management intends to hold the investment portfolio relatively stable in 2025 by reinvesting proceeds from amortization and maturities into new higher yielding securities.

Key Dates