FIRST UNITED CORP/MD/ [FUNC] Filings

10-Q 1 func-20240930x10q.htm 10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For quarterly period ended September 30, 2024

◻ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _______________ to ________________

Commission file number 0-14237

First United Corporation

(Exact name of registrant as specified in its charter)


Maryland		52-1380770
(State or other jurisdiction of incorporation or organization)		(I. R. S. Employer Identification No.)

19 South Second Street, Oakland, Maryland		21550-0009
(Address of principal executive offices)		(Zip Code)

(800) 470-4356

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbols	Name of each exchange on which registered
Common Stock	FUNC	Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):


Large Accelerated filer ◻	Accelerated Filer ◻
Non-Accelerated filer ☑	Smaller Reporting Company ☑
Emerging Growth Company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standard provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ◻ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 6,468,625 shares of common stock, par value $0.01 per share, as of October 31, 2024.

Table of Contents

INDEX TO QUARTERLY REPORT

FIRST UNITED CORPORATION


		Page
PART I. FINANCIAL INFORMATION		3
Item 1.	Financial Statements (unaudited)	3
	Consolidated Statements of Financial Condition – September 30, 2024 and December 31, 2023	3
	Consolidated Statements of Operations – for the nine and three months ended September 30, 2024 and 2023	4
	Consolidated Statements of Comprehensive Income – for the nine and three months ended September 30, 2024 and 2023	6
	Consolidated Statements of Changes in Shareholders’ Equity – for the nine and three months ended September 30, 2024 and 2023	8
	Consolidated Statements of Cash Flows – for the nine months ended September 30, 2024 and 2023	10
	Notes to Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	47
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	69
Item 4.	Controls and Procedures	69

PART II. OTHER INFORMATION		70
Item 1.	Legal Proceedings	70
Item 1A.	Risk Factors	70
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	70
Item 3.	Defaults upon Senior Securities	70
Item 4.	Mine Safety Disclosures	70
Item 5.	Other Information	70
Item 6.	Exhibits	70
SIGNATURES		71

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

First United Corporation and Subsidiaries

Consolidated Statements of Financial Condition

(In thousands, except share data - Unaudited)



	September 30, 2024		December 31, 2023

Assets
Cash and due from banks	$	61,140	$	48,343
Interest bearing deposits in banks		1,252		1,410
Cash and cash equivalents		62,392		49,753
Investment securities – available for sale (at fair value)		93,160		97,169
Investment securities – held to maturity, net of allowance for credit losses of $59 at September 30, 2024 and $45 at December 31, 2023 (fair value $149,348 at September 30, 2024 and $184,415 at December 31, 2023)		174,054		214,297
Restricted investment in bank stock, at cost		5,765		5,250
Loans held for sale		232		443
Loans		1,447,883		1,406,667
Unearned fees		(333)		(340)
Allowance for credit losses		(18,010)		(17,480)
Net loans		1,429,540		1,388,847
Premises and equipment, net		30,704		31,459
Goodwill and other intangibles		11,856		12,103
Bank owned life insurance		48,608		47,607
Deferred tax assets		9,357		11,133
Other real estate owned, net		2,860		4,493
Right of use assets		1,163		1,367
Pension asset		16,268		11,208
Accrued interest receivable		7,054		7,487
Other assets		23,113		23,244
Total Assets	$	1,916,126	$	1,905,860
Liabilities and Shareholders’ Equity
Liabilities:
Non-interest bearing deposits	$	419,437	$	427,670
Interest bearing deposits		1,120,958		1,123,307
Total deposits		1,540,395		1,550,977
Short-term borrowings		50,206		45,418
Long-term borrowings		120,929		110,929
Operating lease liability		1,343		1,556
SERP deferred compensation		10,022		9,777
Allowance for credit losses on off-balance sheet credit exposures		856		873
Accrued interest payable		1,854		612
Other liabilities		15,118		22,515
Dividends payable		1,424		1,330
Total Liabilities		1,742,147		1,743,987
Shareholders’ Equity:
Common Stock – par value $0.01 per share; Authorized 25,000,000 shares; issued and outstanding 6,468,625 shares at September 30, 2024 and 6,639,888 at December 31, 2023		65		66
Surplus		20,288		23,734
Retained earnings		184,239		173,900
Accumulated other comprehensive loss		(30,613)		(35,827)
Total Shareholders’ Equity		173,979		161,873
Total Liabilities and Shareholders’ Equity	$	1,916,126	$	1,905,860

See accompanying notes to the consolidated financial statements

Table of Contents

First United Corporation and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)


	Nine Months Ended
	September 30,
	2024		2023

	(Unaudited)
Interest income
Interest and fees on loans	$	60,457	$	50,279
Interest on investment securities
Taxable		5,088		5,339
Exempt from federal income tax		162		661
Total investment income		5,250		6,000
Other		2,561		2,686
Total interest income		68,268		58,965
Interest expense
Interest on deposits:
Savings		138		189
Interest-bearing transaction accounts		15,109		8,912
Time deposits		3,996		3,599
Total interest on deposits		19,243		12,700
Interest on short-term borrowings		1,437		93
Interest on long-term borrowings		3,310		3,496
Total Interest Expense		23,990		16,289
Net Interest income		44,278		42,676
Credit loss expense - loans		2,407		1,170
Credit loss expense - debt securities held to maturity		14		45
Credit loss credit - off-balance sheet credit exposures		(17)		(14)
Total credit loss expense		2,404		1,201
Net interest income after provision for credit losses		41,874		41,475
Other operating income
Net gains on sales of residential mortgage loans		282		322
Net gains		282		322
Other Income
Service charges on deposit accounts		1,667		1,631
Other service charges		676		706
Trust department		6,771		6,134
Debit card income		2,931		2,981
Bank owned life insurance		1,000		936
Brokerage commissions		1,154		800
Other		288		350
Total other income		14,487		13,538
Total other operating income		14,769		13,860
Other operating expenses
Salaries and employee benefits		21,573		21,130
FDIC premiums		810		724
Equipment expense		2,185		2,245
Occupancy expense of premises		2,315		2,272
Data processing expense		4,073		4,000
Marketing expense		469		522
Professional services		1,412		1,502
Contract labor		416		446
Telephone		309		341
Other real estate owned expense, net		224		281
Investor relations		228		280
Contributions		181		217
Other		3,364		3,974
Total other operating expenses		37,559		37,934
Income before income tax expense		19,084		17,401
Provision for income tax expense		4,701		4,099
Net Income	$	14,383	$	13,302
Basic net income per share	$	2.20	$	1.99
Diluted net income per share	$	2.19	$	1.98
Weighted average number of basic shares outstanding		6,546		6,698
Weighted average number of diluted shares outstanding		6,558		6,714
Dividends declared per common share	$	0.62	$	0.60

See accompanying notes to the consolidated financial statements

Table of Contents

First United Corporation and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)


	Three Months Ended
	September 30,
	2024		2023

	(Unaudited)
Interest income
Interest and fees on loans	$	21,018	$	18,055
Interest on investment securities
Taxable		1,647		1,792
Exempt from federal income tax		56		123
Total investment income		1,703		1,915
Other		536		1,194
Total interest income		23,257		21,164
Interest expense
Interest on deposits:
Savings		45		54
Interest-bearing transaction accounts		5,397		3,784
Time deposits		1,137		1,834
Total interest on deposits		6,579		5,672
Interest on short-term borrowings		467		33
Interest on long-term borrowings		983		1,475
Total Interest Expense		8,029		7,180
Net Interest income		15,228		13,984
Credit loss expense - loans		195		322
Credit loss expense - debt securities held to maturity		14		45
Credit loss expense/(credit) - off-balance sheet credit exposures		55		(104)
Total credit loss expense		264		263
Net interest income after provision for credit losses		14,964		13,721
Other operating income
Gains on sales of residential mortgage loans		141		182
Net gains		141		182
Other Income
Service charges on deposit accounts		555		569
Other service charges		236		230
Trust department		2,328		2,139
Debit card income		1,000		995
Bank owned life insurance		340		320
Brokerage commissions		297		245
Other		156		218
Total other income		4,912		4,716
Total other operating income		5,053		4,898
Other operating expenses
Salaries and employee benefits		7,160		6,964
FDIC premiums		256		254
Equipment		627		718
Occupancy		709		745
Data processing		1,333		1,388
Marketing		151		242
Professional services		477		488
Contract labor		149		155
Telephone		97		115
Other real estate owned expense, net		124		139
Investor relations		84		74
Contributions		65		74
Other		1,082		1,429
Total other operating expenses		12,314		12,785
Income before income tax expense		7,703		5,834
Provision for income tax expense		1,932		1,321
Net Income	$	5,771	$	4,513
Basic net income per common share	$	0.89	$	0.67
Diluted net income per common share	$	0.89	$	0.67
Weighted average number of basic shares outstanding		6,468		6,714
Weighted average number of diluted shares outstanding		6,482		6,728
Dividends declared per common share	$	0.22	$	0.20

See accompanying notes to the consolidated financial statements

Table of Contents

First United Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(In thousands)



	Nine Months Ended
	September 30,
	2024		2023

Comprehensive Income	(Unaudited)
Net Income	$	14,383	$	13,302
Other comprehensive income/(loss), net of tax and reclassification adjustments:
Available for sale securities:
Unrealized holding gains/(losses) on investments with credit related impairment	$	103	$	(777)
Reclassification adjustment for accretable yield realized in income		152		152
Other comprehensive loss on investments with credit related impairment		(49)		(929)

Unrealized holding gains/(losses) on all other AFS investments	$	2,044	$	(5,065)
Other comprehensive income/(loss) on all other AFS investments		2,044		(5,065)

Held to Maturity Securities
Unrealized holding gains on securities transferred to held to maturity	$	—	$	—
Reclassification adjustment for amortization realized in income		(503)		(513)
Other comprehensive income on HTM investments		503		513

Cash flow hedges:
Unrealized holding (losses)/gains on cash flow hedges	$	(319)	$	30
Other comprehensive (loss)/income on cash flow hedges		(319)		30

Pension plan liability:
Unrealized holding gains/(losses) on pension plan liability	$	4,181	$	(1,250)
Reclassification adjustment for amortization of unrecognized losses realized in income		(608)		(750)
Other comprehensive income/(loss) on pension plan liability		4,789		(500)

SERP liability:
Unrealized holding gains on SERP liability	$	—	$	—
Reclassification adjustment for amortization of unrealized (losses)/gains realized in income		(

FIRST UNITED CORP/MD/ [FUNC] Filings
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10-Q	[2024-08-07]
10-Q	[2024-05-08]
10-K	[2024-03-15]
10-Q	[2023-11-09]
10-Q	[2023-08-09]
10-Q	[2023-05-12]
10-K	[2023-03-24]
10-Q	[2022-11-10]
10-Q	[2022-08-11]
10-Q	[2022-05-09]
10-K	[2022-03-25]
10-Q	[2021-11-09]
10-Q	[2021-08-12]
10-Q	[2021-05-14]
10-K	[2021-03-25]
10-Q	[2020-11-10]
10-Q	[2020-08-10]
10-Q	[2020-05-11]
10-K	[2020-03-13]
10-Q	[2019-11-07]
10-Q	[2019-08-08]
10-Q	[2019-05-07]
10-K	[2019-03-12]
10-Q	[2018-11-08]
10-Q	[2018-08-09]
10-Q	[2018-05-09]
10-K	[2018-03-09]
10-Q	[2017-11-13]
10-Q	[2017-08-10]
10-Q	[2017-05-10]
10-K	[2017-03-08]
10-Q	[2016-11-07]
S-1	[2016-11-07]
10-Q	[2016-08-11]
10-Q	[2016-05-10]
10-K	[2016-03-09]
10-Q	[2015-11-10]
10-Q	[2015-08-10]
10-Q	[2015-05-12]
10-K	[2015-03-09]
10-Q	[2014-11-10]
10-Q	[2014-08-12]
10-Q	[2014-05-12]
10-K	[2014-03-10]
10-Q	[2013-11-08]
10-Q	[2013-08-14]
10-Q	[2013-05-13]
10-K	[2013-03-15]
10-Q	[2012-11-13]
10-Q	[2012-08-13]
10-Q	[2012-05-14]
S-1	[2012-04-02]
10-K	[2012-03-14]