8-K: First United Corporation Reports Strong 2024 Performance and Q1 2025 Results at Annual Shareholder Meeting

First United Corporation highlighted its strong 2024 financial performance and first quarter 2025 results at its annual shareholder meeting, emphasizing growth in net income, disciplined expense management, and a commitment to shareholder value.

Summary

• First United Corporation held its Annual Meeting of Shareholders on May 7, 2025.
• The company reported a solid net income growth for 2024, with net income reaching $20.6 million, or $3.15 per diluted share, compared to $15.1 million, or $2.25 per diluted share, in the previous year.
• This growth was attributed to an increased net interest margin achieved through disciplined pricing strategies and strong wealth management revenue.
• Total assets increased by $67.2 million, or 3.5%, to $1.97 billion as of December 31, 2024.
• Non-GAAP net income for 2024 was $21.0 million, or $3.21 diluted earnings per share, excluding non-core expenses of $0.4 million related to branch closures.
• The net interest margin increased by 12 basis points to 3.38% in 2024.
• The efficiency ratio improved to 61.31% on a non-GAAP basis due to reduced operating expenses.
• For the first quarter of 2025, the company reported non-GAAP earnings of $5.8 million, or $0.89 diluted earnings per share.
• The net interest margin for Q1 2025 improved to 3.56%.
• The company's loan portfolio is well-diversified, with 1-4 family residential mortgages comprising the highest percentage at 35%.
• The company's tangible book value per share has grown by 35% since December 31, 2021, reaching $26.55 as of March 31, 2025.
• The company outperformed the S&P Bank Index and proxy peers over one-, three-, and five-year periods in terms of total shareholder return.
• The board of directors declared a quarterly dividend of $0.20 per share for the first half of 2024, increasing to $0.22 per share for the second half.
• The company maintains a repurchase plan with the ability to buy back up to 600,000 additional shares.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, strategic initiatives, and a focus on shareholder value. While acknowledging economic uncertainties, the overall tone is optimistic and confident.

Positives

• The company experienced solid net income growth in 2024.
• The net interest margin increased, driven by disciplined pricing strategies.
• Wealth management production and revenue growth contributed to the company's financial performance.
• The company demonstrated a keen focus on managing operating expenses, resulting in an improved efficiency ratio.
• The company maintained prudent risk management, resulting in high asset quality.
• The company's capital and liquidity remained strong, providing a solid foundation for continued growth.
• The company's tangible book value per share has grown significantly.
• The company's total shareholder return outperformed the S&P Bank Index and proxy peers.
• The company increased its dividend payments to shareholders.
• The company has a well-diversified loan portfolio.

Negatives

• The company experienced a rise of 5.25% in interest rates from March 2022 to July 2023.
• The company experienced a pause during the first quarter of 2025 as the Fed continued to contemplate the proper action given the current uncertainties.
• The company incurred $0.4 million in non-core expenses related to branch closures during the first quarter of 2024.
• Provision for credit losses increased by $1.3 million when compared to 2023, primarily due to moving two commercial loans to non-accrual status in the first quarter and a subsequent charge-off in the second quarter.
• Loan growth was offset by amortization and payoffs in Q1 2025.
• Declining market values of assets under management resulted in lower fees in Q1 2025.
• Operating expenses increased during the first quarter of 2025 when compared to the fourth quarter of 2024 driven by an increase in salaries and benefits due to the reversal of incentive payments in the fourth quarter of 2024 related to lower loan growth than budgeted.

Risks

• Political and economic uncertainties, including tariffs and interest rate fluctuations, could impact customers and markets.
• Competitive pressures in loan and deposit pricing could affect the net interest margin.
• Cyber-security and fraud risks require ongoing monitoring and investment.
• The company faces the risk of economic, regulatory and political environments and those that are inherent in our industry.
• The company faces the risk of balance sheet concentrations, diversification and credit quality of our loan, deposit and investment portfolios, monitored our interest rate sensitivity and maintained a strong liquidity position.

Future Outlook

First United's strategic priorities for 2025 center around retaining and developing associates, optimizing and diversifying the balance sheet and earnings streams, and utilizing data to better identify and satisfy customer needs.

Management Comments

• Carissa Rodeheaver stated that the company showed strong performance in 2024 and for the first quarter of this volatile start to 2025.
• Carissa Rodeheaver emphasized the company's disciplined approach to managing the Bank with a genuine care for the well-being of its stakeholders.
• Tonya Sturm noted that earnings for the first quarter of 2025 continued a steady trajectory.
• Carissa Rodeheaver stated that risk management has been, and always will be, a cornerstone of our strategic priorities.

Industry Context

The announcement reflects a community bank navigating a complex economic environment with rising interest rates, inflation, and political uncertainty, while focusing on efficiency, technology, and shareholder value. The company's performance is being compared to the S&P Bank Index and a peer group.

Comparison to Industry Standards

• First United's total shareholder return outperformed the S&P Bank Index and its 2024 proxy peers over one-, three-, and five-year periods.
• The company's capital ratios remain strong and well in excess of regulatory well-capitalized levels.
• The company's efficiency ratio of 61.31% in 2024 and 59.95% in Q1 2025 is being compared to a strategic target of 53% 58%.

Management Changes

Stakeholder Impact

• Shareholders benefit from increased net income, dividend payments, and total shareholder return.
• Associates benefit from employee growth, training, and productivity initiatives.
• Customers benefit from customized financial solutions and personalized service.
• Communities benefit from the company's support of community initiatives and economic growth in market areas.

Next Steps

• The company plans to invest in technology and human resources during the remainder of the year to enhance product delivery and position for future growth and efficiencies.
• The company will continue to actively manage loan and deposit pricing, capitalize on fee income, and invest in technology to create operational efficiencies.
• The company will continue to maintain a repurchase plan with the ability to buy back up to 600,000 additional shares.
• The company will continue to focus on maintaining our deposit base and identifying opportunities to grow low-cost deposits in our market areas.

Key Dates

Keywords

financial performance, net income, net interest margin, wealth management, operating expenses, efficiency ratio, asset quality, capital management, shareholder return, dividends, loan portfolio, deposits, risk management, First United Corporation, bank