First United (FUNC)

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First United (FUNC) - 2020 Q2 - Quarterly Report
2020-08-10 21:12
PART I. FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) First United Corporation's unaudited consolidated financial statements for Q2 2020, including key statements and accompanying notes [Consolidated Statement of Financial Condition](index=3&type=section&id=Consolidated%20Statement%20of%20Financial%20Condition) Total assets grew to **$1.64 billion** by June 30, 2020, driven by increased cash and loans, with liabilities and deposits also rising, and equity slightly decreasing Consolidated Statement of Financial Condition (in thousands) | | June 30, 2020 (Unaudited) | December 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $117,090 | $49,979 | | Net loans | $1,166,220 | $1,037,145 | | Total Assets | **$1,639,636** | **$1,442,027** | | **Liabilities and Shareholders' Equity** | | | | Total deposits | $1,351,568 | $1,142,031 | | Total Liabilities | $1,515,183 | $1,316,087 | | Total Shareholders' Equity | $124,453 | $125,940 | | Total Liabilities and Shareholders' Equity | **$1,639,636** | **$1,442,027** | [Consolidated Statement of Operations](index=4&type=section&id=Consolidated%20Statement%20of%20Operations) Net income for the six months ended June 30, 2020, decreased to **$4.3 million** due to higher loan loss provisions, while Q2 net income remained flat at **$2.6 million** Six Months Ended June 30 (in thousands, except per share data) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Net interest income | $24,543 | $22,873 | | Provision for loan losses | $4,821 | $682 | | Net Income | **$4,325** | **$5,753** | | Diluted net income per share | **$0.62** | **$0.81** | Three Months Ended June 30 (in thousands, except per share data) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Net interest income | $12,656 | $11,527 | | Provision for loan losses | $2,167 | $333 | | Net Income | **$2,570** | **$2,602** | | Diluted net income per share | **$0.37** | **$0.37** | [Consolidated Statement of Comprehensive (Loss)/Income](index=6&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20(Loss)%2FIncome) Comprehensive income for the six months ended June 30, 2020, significantly decreased to **$2.8 million**, while Q2 2020 comprehensive income increased to **$6.7 million** Comprehensive Income (in thousands) | Period | 2020 | 2019 | | :--- | :--- | :--- | | **Six Months Ended June 30** | | | | Net Income | $4,325 | $5,753 | | Other comprehensive (loss)/income | $(1,512) | $4,403 | | Comprehensive income | **$2,813** | **$10,156** | | **Three Months Ended June 30** | | | | Net Income | $2,570 | $2,602 | | Other comprehensive income | $4,120 | $1,688 | | Comprehensive income | **$6,690** | **$4,290** | [Consolidated Statement of Changes in Shareholders' Equity](index=7&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Shareholders%27%20Equity) Shareholders' equity decreased to **$124.5 million** by June 30, 2020, primarily due to stock repurchases and comprehensive loss, partially offset by net income - Total Shareholders' Equity decreased by **$1.5 million** during the first six months of 2020, from **$125.9 million** to **$124.5 million**[16](index=16&type=chunk) - Key activities impacting equity in the first half of 2020 included net income of **$4.3 million**, an other comprehensive loss of **$1.5 million**, a stock repurchase of **$2.8 million**, and common stock dividends of **$1.8 million**[16](index=16&type=chunk) [Consolidated Statement of Cash Flows](index=8&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) Cash and cash equivalents increased by **$67.1 million** for the six months ended June 30, 2020, driven by financing activities and offset by investing activities Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,827 | $1,891 | | Net cash (used in)/provided by investing activities | $(128,041) | $5,756 | | Net cash provided by financing activities | $192,325 | $7,801 | | **Increase in cash and cash equivalents** | **$67,111** | **$15,448** | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed notes explain accounting policies and significant events, including COVID-19 impact, PPP participation, loan modifications, and allowance for loan losses - The company participated in the SBA Paycheck Protection Program (PPP), processing applications until August 8, 2020, and anticipates receiving approximately **$3.5 million** in deferred loan fees[23](index=23&type=chunk) - The company implemented loan modification programs for borrowers affected by COVID-19, including deferrals of principal and interest or interest-only periods, which are not accounted for as Troubled Debt Restructurings (TDRs) under the CARES Act[28](index=28&type=chunk)[29](index=29&type=chunk) Active COVID-19 Loan Modifications as of July 31, 2020 | Loan Category | Total Balance (000s) | Modified Balance (000s) | % of Category Modified | | :--- | :--- | :--- | :--- | | Total Commercial | $594,039 | $184,920 | 31.1% | | Total Residential Mortgage | $345,358 | $26,089 | 7.6% | | Total Consumer | $103,117 | $3,444 | 3.3% | | **Total Loans** | **$1,042,514** | **$214,453** | **20.6%** | - The Allowance for Loan Losses (ALL) increased to **$17.0 million** at June 30, 2020, from **$12.5 million** at year-end 2019, primarily due to a **$4.8 million** provision for loan losses in the first half of 2020 reflecting economic uncertainty from COVID-19[48](index=48&type=chunk)[50](index=50&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and operations, highlighting COVID-19 impact, decreased net income due to loan loss provisions, PPP participation, asset growth, and a slightly lower net interest margin - Net income for the first six months of 2020 was **$4.3 million** (**$0.62** per share), down from **$5.8 million** (**$0.81** per share) in the same period of 2019. The decrease was primarily driven by a **$4.1 million** increase in the provision for loan losses due to COVID-19 related economic uncertainty[162](index=162&type=chunk) - The company responded to COVID-19 by implementing its Business Continuity Plan, participating in the Paycheck Protection Program (funding **1,176** loans for approximately **$145.9 million** as of July 31, 2020), and offering loan modifications to affected customers[153](index=153&type=chunk) - Total assets increased by **$197.6 million** to **$1.6 billion** since year-end 2019, driven by a **$136.6 million** increase in gross loans (including **$144.4 million** in PPP loans) and a **$209.5 million** increase in deposits[200](index=200&type=chunk)[201](index=201&type=chunk) - The Allowance for Loan Losses (ALL) increased to **$17.0 million** (**1.43%** of gross loans) at June 30, 2020, from **$12.5 million** at year-end 2019. Excluding PPP loans, the ALL to loans ratio was **1.62%**[211](index=211&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=64&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate fluctuation, with an asset-sensitive position as of June 30, 2020, indicating increased net interest income in a rising rate environment - The company's primary market risk is interest rate fluctuation. As of June 30, 2020, the company was asset sensitive[232](index=232&type=chunk)[233](index=233&type=chunk) Estimated Change in Net Interest Income from Interest Rate Changes (in thousands) | Rate Change | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | +400 basis points | $4,008 | $1,500 | | +200 basis points | $2,291 | $1,075 | | +100 basis points | $1,208 | $645 | | -100 basis points | $(1,656) | $(2,477) | [Controls and Procedures](index=64&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2020, with no material changes to internal control over financial reporting during the period - Based on an evaluation as of June 30, 2020, the Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures are effective at the reasonable assurance level[253](index=253&type=chunk) - No changes in internal control over financial reporting occurred during the six months ended June 30, 2020, that have materially affected, or are reasonably likely to materially affect, internal controls[254](index=254&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=65&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material legal proceedings - None[257](index=257&type=chunk) [Risk Factors](index=65&type=section&id=Item%201A.%20Risk%20Factors) The company reports no material changes in its risk factors since the 2019 Annual Report on Form 10-K - Management does not believe that any material changes in risk factors have occurred since they were last disclosed in the 2019 Form 10-K[258](index=258&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=65&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities or use of proceeds during the period - None[259](index=259&type=chunk) [Exhibits](index=65&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the quarterly report, including officer certifications and XBRL data files - Exhibits filed include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, as well as XBRL instance documents and related files[264](index=264&type=chunk)
First United (FUNC) - 2020 Q1 - Quarterly Report
2020-05-11 20:27
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 March 31, 2020 ☐ 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 ot ...
First United (FUNC) - 2019 Q4 - Annual Report
2020-03-13 21:30
PART I [Business](index=4&type=section&id=ITEM%201.%20Business) First United Corporation, a bank holding company with **$1.4 billion** in assets, offers comprehensive banking and wealth management services across 25 offices in Maryland and West Virginia, operating under extensive regulation and Basel III compliance Key Financial Metrics as of December 31, 2019 | Metric | Amount (USD) | | :--- | :--- | | Total Assets | $1.4 billion | | Net Loans | $1.0 billion | | Deposits | $1.1 billion | | Shareholders' Equity | $125.9 million | - The company operates 25 banking offices and 32 ATMs across several counties in Maryland and West Virginia, providing a complete range of retail and commercial banking services[17](index=17&type=chunk) - The Bank's Trust Department supervised approximately **$902.2 million** in assets as of December 31, 2019, an increase from **$810.0 million** in 2018[31](index=31&type=chunk) - The company faces intense competition from various financial institutions, competing by focusing on personalized services, local relationships, and tailored product offerings[32](index=32&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) - The Corporation and the Bank are subject to Basel III capital rules, including minimum capital ratios and a capital conservation buffer, with which the company was in compliance as of December 31, 2019[61](index=61&type=chunk)[68](index=68&type=chunk) - As of December 31, 2019, the Bank and the Corporation were categorized as "well capitalized" under the Prompt Corrective Action framework[78](index=78&type=chunk) [Risk Factors](index=17&type=section&id=ITEM%201A.%20Risk%20Factors) The company faces significant risks from regional economic dependence, real estate lending concentration, interest rate fluctuations, the upcoming CECL standard, cybersecurity threats, intense competition, regulatory changes, and an ongoing activist shareholder proxy contest - The company's business is geographically concentrated in Maryland and West Virginia, with a significant portion of its loan portfolio in real estate, making it vulnerable to local economic downturns[113](index=113&type=chunk) - The upcoming implementation of the Current Expected Credit Loss (CECL) accounting standard is expected to require an increase in the allowance for loan losses, potentially having a material adverse effect on financial condition[118](index=118&type=chunk) - The company faces significant competition from larger financial institutions with greater resources and access to capital markets, as well as non-bank financial service providers[126](index=126&type=chunk) - Cybersecurity threats are a major risk, as a breach in information systems could lead to legal claims, regulatory penalties, operational disruptions, and reputational damage[143](index=143&type=chunk) - The company is subject to risks from a proxy contest initiated by Driver Management Company LLC on December 3, 2019, which could be costly, disrupt operations, and divert management's attention[147](index=147&type=chunk) - The company's ability to pay dividends is restricted by the terms of its outstanding TPS Debentures, which prohibit dividend payments if the company elects to defer interest payments on the debentures[155](index=155&type=chunk) [Unresolved Staff Comments](index=25&type=section&id=ITEM%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments[162](index=162&type=chunk) [Properties](index=25&type=section&id=ITEM%202.%20Properties) The company owns its headquarters and 19 banking offices, leasing six others, with total rent expense for leased properties at **$0.4 million** in 2019 - The Corporation owns its headquarters and an operations center in Oakland, Maryland, while the Bank owns 19 of its banking offices and leases six[163](index=163&type=chunk) - Total rent expense on leased offices and properties was **$0.4 million** in 2019[163](index=163&type=chunk) [Legal Proceedings](index=25&type=section&id=ITEM%203.%20Legal%20Proceedings) The company is involved in ordinary course legal actions, but management anticipates no material adverse effect on its financial condition or operations - Management believes that losses from current legal actions, if any, will not materially and adversely affect the company's financial condition or results of operations[164](index=164&type=chunk) [Mine Safety Disclosures](index=25&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company's operations - Not applicable[165](index=165&type=chunk) PART II [Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=26&type=section&id=ITEM%205.%20Market%20for%20the%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NASDAQ under "FUNC", with dividends resumed in 2018 after a 2010 suspension, and no share repurchases in 2019 - The Corporation's common stock is listed on the NASDAQ Global Select Market under the symbol "FUNC"[168](index=168&type=chunk) - The board of directors suspended cash dividends in November 2010 and lifted this suspension in 2018, with dividend payments remaining at the discretion of the board and subject to legal and regulatory limitations[169](index=169&type=chunk) - Neither the Corporation nor its affiliates repurchased any shares of its common stock during 2019[171](index=171&type=chunk) [Selected Financial Data](index=27&type=section&id=ITEM%206.%20Selected%20Financial%20Data) This section presents a five-year financial summary, highlighting **$1.44 billion** in total assets, **$13.1 million** net income, and **$1.85** diluted EPS for 2019, with strong returns on assets and equity Selected Financial Data (2015-2019) | (Dollars in thousands, except per share data) | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Balance Sheet Data** | | | | | | | Total Assets | $1,442,027 | $1,383,760 | $1,335,867 | $1,317,675 | $1,322,988 | | Net Loans | 1,038,894 | 996,103 | 882,117 | 881,670 | 866,801 | | Deposits | 1,142,031 | 1,067,527 | 1,039,390 | 1,014,229 | 998,794 | | Shareholders' Equity | 125,940 | 117,066 | 108,390 | 113,698 | 120,771 | | **Operating Data** | | | | | | | Net Interest Income | 46,391 | 44,182 | 39,578 | 37,640 | 35,625 | | Provision for Loan Losses | 1,320 | 2,111 | 2,534 | 3,122 | 1,054 | | Net Income | $13,129 | $10,667 | $5,269 | $7,281 | $12,991 | | **Per Share Data** | | | | | | | Basic and diluted net income per common share | $1.85 | $1.51 | $0.58 | $0.84 | $1.65 | | Dividends Paid | 0.40 | 0.27 | — | — | — | | **Significant Ratios** | | | | | | | Return on Average Assets | 0.93% | 0.81% | 0.40% | 0.55% | 0.98% | | Return on Average Equity | 10.44% | 9.39% | 4.52% | 6.38% | 11.40% | | Total Risk-based Capital Ratio | 16.29% | 15.91% | 15.98% | 16.71% | 17.21% | [Management's Discussion and Analysis of Financial Condition & Results of Operations](index=28&type=section&id=ITEM%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20%26%20Results%20of%20Operations) Consolidated net income rose to **$13.1 million** in 2019, a **23% EPS increase**, driven by higher net interest income and lower loan loss provisions, alongside growth in loans and deposits, while maintaining strong capital ratios [Overview](index=45&type=section&id=Overview) Consolidated net income for 2019 reached **$13.1 million**, a **23% increase** in diluted EPS, driven by higher net interest income, reduced loan loss provisions, and increased other operating income, alongside significant loan and deposit growth 2019 vs 2018 Performance Summary | Metric | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Net Income | $13.1M | $10.7M | +$2.4M | | Diluted EPS | $1.85 | $1.51 | +23% | | Net Interest Income | $46.4M | $44.2M | +$2.2M | | Provision for Loan Losses | $1.3M | $2.1M | -$0.8M | | Other Operating Income | $16.6M | $15.0M | +$1.6M | | Other Operating Expenses | $45.4M | $43.8M | +$1.6M | - Total loans increased by **$44.4 million** to **$1.1 billion**, driven by growth in commercial real estate, commercial & industrial, and consumer loans[183](index=183&type=chunk) - Total deposits grew by **$74.5 million**, led by a **$32.4 million** increase in non-interest bearing deposits and a **$41.0 million** increase in money market accounts[187](index=187&type=chunk) [Consolidated Statement of Income Review](index=51&type=section&id=Consolidated%20Statement%20of%20Income%20Review) Fully tax equivalent net interest income increased by **$2.3 million (5.1%)**, driven by loan growth, while the provision for loan losses decreased, and other operating income rose due to BOLI death benefits, partially offset by increased operating expenses Net Interest Income (FTE Basis) | (Dollars in thousands) | 2019 | 2018 | | :--- | :--- | :--- | | Interest Income (FTE) | $58,788 | $53,090 | | Interest Expense | $11,529 | $8,112 | | Net Interest Income (FTE) | $47,259 | $44,978 | | Net Interest Margin % (FTE) | 3.68% | 3.74% | - The provision for loan losses decreased to **$1.3 million** in 2019 from **$2.1 million** in 2018, despite a specific allocation of **$2.1 million** for one large non-accrual A&D loan[227](index=227&type=chunk) - Other operating income increased by **$1.6 million**, primarily due to a **$1.1 million** gain from bank owned life insurance (BOLI) death benefit proceeds received in Q3 2019[229](index=229&type=chunk) - Other operating expenses increased by **$1.6 million**, driven by higher salaries and benefits (**$0.5 million**) and equipment, occupancy, and technology expenses (**$1.1 million**), partially offset by a **$0.2 million** decrease in FDIC premiums due to assessment credits[230](index=230&type=chunk) [Consolidated Balance Sheet Review](index=59&type=section&id=Consolidated%20Balance%20Sheet%20Review) Total assets reached **$1.4 billion** at year-end 2019, an increase of **$58.3 million**, driven by **$44.4 million** in gross loan growth and **$74.5 million** in deposit growth, while the allowance for loan losses increased to **$12.5 million** - Total assets increased by **$58.3 million** to **$1.4 billion** at December 31, 2019, primarily due to strong deposit growth of **$74.5 million**[234](index=234&type=chunk) Loan Portfolio Composition (in millions) | Loan Type | 2019 | 2018 | | :--- | :--- | :--- | | Commercial real estate | $335.5 | $306.9 | | Acquisition and development | $117.9 | $118.4 | | Commercial and industrial | $122.3 | $111.4 | | Residential mortgage | $440.2 | $436.9 | | Consumer | $36.2 | $34.1 | | **Total Loans** | **$1,052.1** | **$1,007.7** | - Non-accrual loans increased to **$10.8 million** at year-end 2019 from **$4.9 million** in 2018, primarily due to one large A&D loan totaling **$8.0 million** being moved to non-accrual status[260](index=260&type=chunk) - The allowance for loan losses (ALL) increased to **$12.5 million** (**1.19%** of total loans) at December 31, 2019, up from **$11.0 million** (**1.10%** of total loans) at year-end 2018[258](index=258&type=chunk) - The investment securities portfolio decreased by **$6.4 million**, including collateralized debt obligations (CDOs) valued using Level 3 inputs, which had unrealized losses of **$4.1 million**[271](index=271&type=chunk)[273](index=273&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=ITEM%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section incorporates market risk disclosures by reference from the "Market Risk and Interest Sensitivity" heading within Item 7 - Information regarding market risk is incorporated by reference from the 'Market Risk and Interest Sensitivity' section in Item 7[319](index=319&type=chunk) [Financial Statements and Supplementary Data](index=52&type=section&id=ITEM%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited consolidated financial statements for 2019 and 2018, with an unqualified opinion from Baker Tilly Virchow Krause, LLP on both the financial statements and internal control effectiveness - The independent auditor, Baker Tilly Virchow Krause, LLP, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2019[322](index=322&type=chunk) Consolidated Statement of Financial Condition Highlights (in thousands) | | Dec 31, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Net Loans | $1,038,894 | $996,103 | | Total Assets | $1,442,027 | $1,383,760 | | **Liabilities & Equity** | | | | Total Deposits | $1,142,031 | $1,067,527 | | Total Liabilities | $1,316,087 | $1,266,694 | | Total Shareholders' Equity | $125,940 | $117,066 | Consolidated Statement of Income Highlights (in thousands) | | Year Ended Dec 31, 2019 | Year Ended Dec 31, 2018 | | :--- | :--- | :--- | | Net Interest Income | $46,391 | $44,182 | | Provision for Loan Losses | $1,320 | $2,111 | | Net Income | $13,129 | $10,667 | - The company adopted the new lease accounting standard (ASU 2016-02) on January 1, 2019, recognizing a right-of-use asset of approximately **$2.7 million** and a lease liability of approximately **$3.3 million**[386](index=386&type=chunk)[391](index=391&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=109&type=section&id=ITEM%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting and financial disclosure - None reported[579](index=579&type=chunk) [Controls and Procedures](index=109&type=section&id=ITEM%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2019, a conclusion attested by the independent registered public accounting firm - Management concluded that the Corporation's disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2019[581](index=581&type=chunk) - Based on the COSO 2013 framework, management concluded that the Corporation's internal control over financial reporting was effective as of December 31, 2019[586](index=586&type=chunk) [Other Information](index=111&type=section&id=ITEM%209B.%20Other%20Information) The company reports no other information for this item - None[589](index=589&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=111&type=section&id=ITEM%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section details the 11 directors and executive officers, highlights the Audit Committee's financial expertise, confirms a Code of Ethics, and notes late Form 4 filings related to director dividend reinvestments - The Board of Directors consists of **11 members**, all of whom also serve on the board of the Bank[590](index=590&type=chunk) - The Board has a standing Audit Committee, and has determined that members M. Kathryn Burkey, Brian R. Boal, Robert W. Kurtz, and John W. McCullough each qualify as an "audit committee financial expert"[605](index=605&type=chunk) - The company has adopted a Code of Ethics applicable to its directors, officers, and employees, which is available on its website[613](index=613&type=chunk)[615](index=615&type=chunk) - Several directors filed late Form 4s during 2019, all related to purchases of shares under a dividend reinvestment feature of a brokerage account[616](index=616&type=chunk) [Executive Compensation](index=114&type=section&id=ITEM%2011.%20Executive%20Compensation) Director compensation for 2019 included cash and stock awards, while executive compensation, primarily base salary with no incentive awards, is detailed for the three named executive officers and includes various benefit and severance plans 2019 Director Compensation Summary | Name | Fees earned or paid in cash ($) | Stock awards ($) | Total ($) | | :--- | :--- | :--- | :--- | | John F. Barr | 23,908 | 28,292 | 52,200 | | Brian R. Boal | 26,608 | 28,292 | 54,900 | | M. Kathryn Burkey | 26,408 | 28,292 | 54,700 | | Robert W. Kurtz | 34,350 | 18,300 | 52,650 | | John W. McCullough | 23,308 | 28,292 | 51,600 | 2019 Summary Compensation Table | Name and principal position | Year | Salary ($) | Bonus ($) | All other compensation ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Carissa L. Rodeheaver, Chairman, President & CEO | 2019 | 388,907 | - | 11,077 | 399,984 | | Robert L. Fisher, II, Senior Vice President, Chief Revenue Officer | 2019 | 268,876 | - | 10,453 | 279,329 | | Jason B. Rush, Senior Vice President, Chief Operating Officer | 2019 | 203,138 | - | 8,113 | 211,251 | - No incentive awards were granted to executive officers in 2019, though each named executive officer received a **$5,000** discretionary cash bonus in 2018[633](index=633&type=chunk)[637](index=637&type=chunk) - The company has change-in-control severance agreements with its named executive officers, providing a lump sum cash payment of two times final pay and other benefits upon a qualifying termination[641](index=641&type=chunk)[665](index=665&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=123&type=section&id=ITEM%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section outlines the 2018 Equity Compensation Plan with **297,423** available securities and details beneficial stock ownership, noting directors and executive officers collectively own **4.4%**, while Driver Opportunity Partners I LP holds **5.1%** - As of December 31, 2019, **297,423** securities remained available for future issuance under the company's 2018 Equity Compensation Plan[673](index=673&type=chunk) - As of February 29, 2020, all directors and executive officers as a group beneficially owned **314,589 shares**, representing **4.4%** of the outstanding common stock[675](index=675&type=chunk) - Driver Opportunity Partners I LP reported beneficial ownership of **365,212 shares**, or **5.1%** of the outstanding common stock, as of January 10, 2020[675](index=675&type=chunk)[676](index=676&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=125&type=section&id=ITEM%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company conducts ordinary course banking transactions with directors and officers, discloses specific related party services, and confirms a majority of its Board members are independent under NASDAQ rules - The Bank engages in ordinary course banking transactions with directors, officers, and their affiliates on terms comparable to those for unrelated persons[677](index=677&type=chunk) - A company owned by director H. Andrew Walls provided printing and other services to the Corporation, with fees totaling **$186,334** in 2019[678](index=678&type=chunk) - The Board of Directors has determined that **10 of its 11 members** are "independent directors" under NASDAQ rules[681](index=681&type=chunk) [Principal Accountant Fees and Services](index=125&type=section&id=ITEM%2014.%20Principal%20Accountant%20Fees%20and%20Services) This section details **$324,350** in fees paid to Baker Tilly Virchow Krause, LLP for fiscal year 2019, primarily for audit services, all pre-approved by the Audit Committee Accountant Fees (2018-2019) | Fee Type | FY 2019 | FY 2018 | | :--- | :--- | :--- | | Audit Fees | $321,050 | $302,000 | | Audit Related Fees | $3,300 | $3,875 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | | **Total** | **$324,350** | **$305,875** | - All audit and permitted non-audit services provided by the independent registered public accounting firm were pre-approved by the Audit Committee[685](index=685&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=127&type=section&id=ITEM%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements and provides an index of all exhibits, including corporate governance documents, material contracts, certifications, and XBRL data files, filed with the Annual Report on Form 10-K - This section lists the financial statements and schedules filed with the report[687](index=687&type=chunk)[688](index=688&type=chunk) - An Exhibit Index is provided, listing all documents filed or furnished with the annual report, such as articles of incorporation, bylaws, material contracts, and certifications required by the Sarbanes-Oxley Act[689](index=689&type=chunk)[690](index=690&type=chunk)
First United (FUNC) - 2019 Q3 - Quarterly Report
2019-11-07 21:33
PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents First United Corporation's unaudited consolidated financial statements for Q3 and nine months ended September 30, 2019, including key financial statements and accompanying notes [Consolidated Statement of Financial Condition](index=3&type=section&id=Consolidated%20Statement%20of%20Financial%20Condition) As of September 30, 2019, total assets increased, driven by higher cash and deposits, while net loans slightly decreased and shareholders' equity grew Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2019 (Unaudited) | Dec 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $84,169 | $23,541 | | Net loans | $985,313 | $996,667 | | Total Assets | **$1,440,964** | **$1,384,516** | | **Liabilities & Equity** | | | | Total deposits | $1,136,787 | $1,067,527 | | Total Liabilities | $1,311,625 | $1,267,450 | | Total Shareholders' Equity | $129,339 | $117,066 | | Total Liabilities and Shareholders' Equity | **$1,440,964** | **$1,384,516** | [Consolidated Statement of Operations](index=4&type=section&id=Consolidated%20Statement%20of%20Operations) Net income for the nine months ended September 30, 2019, increased significantly, driven by higher net interest income and other operating income, with strong year-over-year growth in the third quarter Nine Months Ended September 30 (in thousands, except per share data) | Metric | 2019 (Unaudited) | 2018 | | :--- | :--- | :--- | | Net interest income | $34,469 | $32,706 | | Provision for loan losses | $669 | $1,187 | | Net Income | **$10,246** | **$8,285** | | Basic and diluted EPS | **$1.44** | **$1.17** | Three Months Ended September 30 (in thousands, except per share data) | Metric | 2019 (Unaudited) | 2018 | | :--- | :--- | :--- | | Net interest income | $11,596 | $11,256 | | Provision for loan losses | $(13) | $471 | | Net Income | **$4,493** | **$2,763** | | Basic and diluted EPS | **$0.63** | **$0.39** | [Consolidated Statement of Cash Flows](index=9&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) For the nine months ended September 30, 2019, cash and cash equivalents significantly increased, primarily driven by net cash provided by financing and investing activities, reversing the prior year's decrease Cash Flow Summary for Nine Months Ended September 30 (in thousands) | Activity | 2019 (Unaudited) | 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $6,092 | $7,605 | | Net cash provided by/(used in) investing activities | $14,721 | $(69,113) | | Net cash provided by financing activities | $39,815 | $1,313 | | **Increase/(decrease) in cash and cash equivalents** | **$60,628** | **$(60,195)** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed information on accounting policies and financial statement line items, including loan portfolios, allowance for loan losses, fair value, leases, and employee benefits - The loan portfolio is segmented into Commercial Real Estate (CRE), Acquisition and Development (A&D), Commercial and Industrial (C&I), Residential Mortgage, and Consumer loans. As of September 30, 2019, total loans were **$997.3 million**[37](index=37&type=chunk) - The Allowance for Loan Losses (ALL) increased to **$12.0 million** at September 30, 2019, from **$11.0 million** at year-end 2018. The provision for the first nine months of 2019 was **$0.7 million**[209](index=209&type=chunk) - The company adopted ASU 2016-02 (Leases) on January 1, 2019, recognizing a Right-of-Use (ROU) asset of **$2.7 million** and a lease liability of **$3.3 million** on the balance sheet[97](index=97&type=chunk)[132](index=132&type=chunk) - The company is preparing for the adoption of the Current Expected Credit Losses (CECL) model (ASU 2016-13), with an effective date for SEC filers after December 15, 2019, though a deferral for smaller reporting companies is expected[134](index=134&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 and nine-month 2019 financial results, attributing increased net income to higher net interest income, lower loan loss provision, and a BOLI death benefit, covering detailed analysis of financial condition and operations [Results of Operations](index=47&type=section&id=Results%20of%20Operations) Net income for the first nine months of 2019 increased, driven by higher net interest income and other operating income, including a BOLI death benefit, despite rising operating expenses and a decreased loan loss provision - Consolidated net income for the first nine months of 2019 was **$10.2 million** (**$1.44 per share**), up from **$8.3 million** (**$1.17 per share**) in the same period of 2018[158](index=158&type=chunk) - A key driver of increased other operating income was the receipt of **$2.1 million** in BOLI cash proceeds, which included a **$1.1 million** death benefit in the third quarter[158](index=158&type=chunk)[190](index=190&type=chunk) - In September 2019, the Corporation introduced a Voluntary Separation Program (VSP), expected to result in annual salary and benefit cost savings of approximately **$1.4 million** beginning in 2020[114](index=114&type=chunk)[164](index=164&type=chunk)[194](index=194&type=chunk) Net Interest Margin (FTE Basis) | Period | 2019 | 2018 | | :--- | :--- | :--- | | Nine Months Ended Sep 30 | 3.67% | 3.73% | | Three Months Ended Sep 30 | 3.62% | 3.79% | [Financial Condition](index=56&type=section&id=Financial%20Condition) Total assets increased since year-end 2018, driven by strong deposit growth and higher cash, while gross loans slightly decreased and shareholders' equity grew - Total assets remained stable at **$1.4 billion**, increasing **$56.4 million** from December 31, 2018[200](index=200&type=chunk) - Gross loans decreased by **$10.4 million**, with declines in Commercial Real Estate and A&D loans, while Residential Mortgage and Consumer loans saw modest increases[201](index=201&type=chunk) - Non-accrual loans increased to **$11.7 million** (**1.17% of total loans**) from **$4.9 million** at year-end, primarily due to one large A&D loan of **$7.7 million** moving to non-accrual status[43](index=43&type=chunk)[204](index=204&type=chunk) - Total deposits increased by **$69.3 million** during the first nine months of 2019, driven by growth in non-interest bearing accounts, money market accounts, and time deposits over **$100,000**[224](index=224&type=chunk) [Capital Resources](index=66&type=section&id=Capital%20Resources) The Corporation and Bank remained well-capitalized under Basel III as of September 30, 2019, with all capital ratios significantly above minimums, and elected to exclude certain comprehensive items from regulatory capital Capital Ratios as of September 30, 2019 | Ratio | Consolidated | Bank | Required (Well-Capitalized) | | :--- | :--- | :--- | :--- | | Common Equity Tier 1 Capital | 13.32% | 15.08% | 6.50% | | Tier 1 Capital | 15.82% | 15.08% | 8.00% | | Total Capital | 16.95% | 16.25% | 10.00% | | Tier 1 Leverage | 11.68% | 10.91% | 5.00% | - The Corporation and Bank made a one-time permanent election to exclude the effects of certain accumulated other comprehensive items from regulatory capital, mitigating volatility from interest rate fluctuations on the AFS securities portfolio[247](index=247&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=68&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section incorporates by reference market risk disclosures from Item 2, specifically regarding market risk and interest sensitivity - The primary market risk is interest rate fluctuation. The company was asset sensitive as of September 30, 2019, meaning net interest income is expected to increase in a rising rate environment[232](index=232&type=chunk)[233](index=233&type=chunk) Estimated Change in Net Interest Income (NII) from Rate Changes (in thousands) | Rate Change (basis points) | Estimated NII Change | | :--- | :--- | | +400 | $3,002 | | +200 | $1,782 | | +100 | $970 | | -100 | $(2,425) | [Item 4. Controls and Procedures](index=68&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2019, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2019[257](index=257&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended September 30, 2019, that have materially affected, or are reasonably likely to materially affect, internal controls[258](index=258&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=69&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - None[261](index=261&type=chunk) [Item 1A. Risk Factors](index=69&type=section&id=Item%201A.%20Risk%20Factors) Management reported no material changes in the company's risk factors since their last disclosure in the 2018 Annual Report on Form 10-K - Management does not believe that any material changes in risk factors have occurred since they were last disclosed[262](index=262&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=69&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None[263](index=263&type=chunk)
First United (FUNC) - 2019 Q2 - Quarterly Report
2019-08-08 20:50
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (800) 470-4356 19 South Second Street, Oakland, Maryland 21550-0009 (Address of principal executive offices) (Zip Code) FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For quarterly period ended June 30, 2019 ☐ 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 Co ...
First United (FUNC) - 2019 Q1 - Quarterly Report
2019-05-07 20:33
[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements for the quarter ended March 31, 2019, show an increase in total assets to $1.417 billion from $1.385 billion at year-end 2018, with net income rising to $3.15 million from $2.51 million, and reflecting the adoption of the new lease accounting standard [Consolidated Statement of Financial Condition](index=3&type=section&id=Consolidated%20Statement%20of%20Financial%20Condition) As of March 31, 2019, total assets increased to $1.417 billion, driven by a significant rise in cash and cash equivalents to $54.0 million and growth in total deposits to $1.131 billion, while shareholders' equity grew to $122.4 million Consolidated Statement of Financial Condition Highlights (in thousands) | Account | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $54,004 | $23,541 | | Net loans | $993,070 | $996,667 | | Total Assets | $1,416,901 | $1,384,516 | | **Liabilities & Equity** | | | | Total deposits | $1,130,612 | $1,067,527 | | Short-term borrowings | $39,695 | $77,707 | | Total Liabilities | $1,294,502 | $1,267,450 | | Total Shareholders' Equity | $122,399 | $117,066 | | **Total Liabilities and Shareholders' Equity** | **$1,416,901** | **$1,384,516** | [Consolidated Statement of Operations](index=4&type=section&id=Consolidated%20Statement%20of%20Operations) For the three months ended March 31, 2019, net income increased by 25.7% to $3.15 million from $2.51 million in the prior-year period, primarily driven by a 7.2% rise in net interest income to $11.35 million, with basic and diluted earnings per share increasing to $0.44 Consolidated Statement of Operations Highlights (in thousands, except per share data) | Metric | Three months ended March 31, 2019 | Three months ended March 31, 2018 | | :--- | :--- | :--- | | Net interest income | $11,346 | $10,582 | | Provision for loan losses | $349 | $447 | | Total other operating income | $3,721 | $3,710 | | Total other operating expenses | $10,690 | $10,691 | | **Net Income** | **$3,151** | **$2,506** | | **Basic and diluted EPS** | **$0.44** | **$0.35** | [Consolidated Statement of Comprehensive Income](index=5&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income) Comprehensive income for Q1 2019 significantly increased to $5.87 million from $3.33 million in the prior-year period, fueled by higher net income and a substantial rise in other comprehensive income due to net unrealized gains on pension plans Comprehensive Income (in thousands) | Component | Three months ended March 31, 2019 | Three months ended March 31, 2018 | | :--- | :--- | :--- | | Net Income | $3,151 | $2,506 | | Other comprehensive income, net of tax | $2,715 | $820 | | **Comprehensive income** | **$5,866** | **$3,326** | [Consolidated Statement of Changes in Shareholders' Equity](index=6&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Shareholders%27%20Equity) Shareholders' equity increased from $117.1 million at the beginning of 2019 to $122.4 million at March 31, 2019, primarily driven by net income and other comprehensive income, partially offset by common stock dividends - Key drivers for the increase in shareholders' equity in Q1 2019 were **net income of $3.15 million** and **other comprehensive income of $2.72 million**[13](index=13&type=chunk) [Consolidated Statement of Cash Flows](index=7&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) For the first three months of 2019, cash and cash equivalents increased by $30.5 million, primarily due to net cash provided by financing activities of $24.5 million, driven by deposit growth and reduced short-term borrowings Cash Flow Summary (in thousands) | Activity | Three months ended March 31, 2019 | Three months ended March 31, 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $997 | $3,225 | | Net cash provided by/(used in) investing activities | $4,993 | $(44,954) | | Net cash provided by/(used in) financing activities | $24,473 | $(20,797) | | **Increase/(decrease) in cash and cash equivalents** | **$30,463** | **$(62,526)** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the basis of presentation and significant accounting policies, including the adoption of the new lease accounting standard, composition of investment and loan portfolios, allowance for loan losses, fair value measurements, and employee benefit plans - The Corporation adopted ASU 2016-02, "Leases" (Topic 842) on January 1, 2019, resulting in the recognition of a **right-of-use asset of approximately $2.7 million** and a **lease liability of approximately $3.3 million** on the Consolidated Statement of Financial Condition[94](index=94&type=chunk)[131](index=131&type=chunk) - The company is preparing for the adoption of the **Current Expected Credit Losses (CECL) model (ASU 2016-13)** on January 1, 2020, with plans to run its existing allowance model in parallel for two to three quarters prior to implementation[133](index=133&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=46&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 25.7% increase in Q1 2019 net income to higher net interest income and a lower provision for loan losses, with total assets growing by $32.4 million due to strong deposit growth, despite an increase in non-accrual loans [Results of Operations](index=49&type=section&id=Results%20of%20Operations) Net income for Q1 2019 was $3.2 million ($.44 per share), up from $2.5 million ($.35 per share) in Q1 2018, driven by a $0.8 million rise in net interest income as higher loan yields outpaced increased deposit costs Key Performance Ratios | Ratio | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Return on Average Assets | 0.91% | 0.76% | | Return on Average Equity | 10.49% | 9.13% | - Net interest income (FTE basis) increased by **$0.8 million (7.4%)** year-over-year, driven by a **$1.7 million increase in interest income**, partially offset by a **$0.9 million increase in interest expense**, with the **net interest margin stable at 3.72%** for Q1 2019[157](index=157&type=chunk)[169](index=169&type=chunk) - The provision for loan losses was **$0.3 million** for Q1 2019, a slight decline from **$0.4 million** in Q1 2018, attributed to reduced historical loss factors and slower loan growth, offset by a specific reserve on one large A&D loan[158](index=158&type=chunk)[176](index=176&type=chunk) [Financial Condition](index=55&type=section&id=Financial%20Condition) Total assets grew to $1.4 billion at March 31, 2019, an increase of $32.4 million from year-end 2018, funded by a $63.1 million increase in deposits, allowing for a $38.0 million reduction in short-term borrowings, though non-accrual loans increased to $11.6 million - Total deposits increased by **$63.1 million** during Q1 2019, with **non-interest bearing deposits growing by $26.0 million** and **money market accounts increasing by $29.8 million**[207](index=207&type=chunk) - Non-accrual loans increased to **$11.6 million** at March 31, 2019, from **$4.9 million** at December 31, 2018, primarily due to a forbearance agreement on one large A&D loan totaling **$7.0 million**[41](index=41&type=chunk)[188](index=188&type=chunk) Loan Portfolio Composition (in thousands) | Loan Type | March 31, 2019 | % of Total | December 31, 2018 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Commercial real estate | $299,466 | 30% | $306,921 | 31% | | Acquisition and development | $123,326 | 12% | $118,360 | 12% | | Commercial and industrial | $109,419 | 11% | $111,466 | 11% | | Residential mortgage | $438,607 | 44% | $436,907 | 43% | | Consumer | $33,800 | 3% | $34,060 | 3% | | **Total Loans** | **$1,004,618** | **100%** | **$1,007,714** | **100%** | - The allowance for loan losses (ALL) increased to **$11.5 million** at March 31, 2019, representing **1.15% of gross loans outstanding**, up from **1.10%** at year-end 2018[193](index=193&type=chunk) [Liquidity and Capital Resources](index=64&type=section&id=Liquidity%20and%20Capital%20Resources) The Corporation maintains adequate liquidity through core deposits and access to various funding sources, remaining well-capitalized under all regulatory measures with a consolidated Total Capital ratio of 16.40% and a Tier 1 Leverage ratio of 11.56% at March 31, 2019 - At March 31, 2019, available liquidity sources included **$100.0 million in unsecured lines** with correspondent banks, **$4.2 million from the Fed Discount Window**, and approximately **$144.4 million from the FHLB**[224](index=224&type=chunk) Regulatory Capital Ratios (Consolidated) | Ratio | March 31, 2019 | Required for Adequacy | Required to be Well Capitalized | | :--- | :--- | :--- | :--- | | Total Capital (to risk-weighted assets) | 16.40% | 8.00% | 10.00% | | Tier 1 Capital (to risk-weighted assets) | 15.30% | 6.00% | 8.00% | | Common Equity Tier 1 Capital | 12.83% | 4.50% | 6.50% | | Tier 1 Capital (to average assets) | 11.56% | 4.00% | 5.00% | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=69&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The primary market risk is interest rate fluctuation, managed using interest sensitivity gap analysis and simulation models, with the company being asset sensitive as of March 31, 2019, where a 100 basis point rate increase would increase NII by an estimated $0.82 million Net Interest Income Sensitivity Analysis (in thousands) | Rate Change | Estimated Change in NII (March 31, 2019) | | :--- | :--- | | +400 basis points | $2,230 | | +200 basis points | $1,452 | | +100 basis points | $820 | | -100 basis points | $(2,079) | [Item 4. Controls and Procedures](index=69&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the Principal Executive Officer and Principal Financial Officer, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2019, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2019, the PEO and PFO concluded that the company's **disclosure controls and procedures are effective** at the reasonable assurance level[238](index=238&type=chunk) [PART II. OTHER INFORMATION](index=70&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=70&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - **There are no legal proceedings to report**[242](index=242&type=chunk) [Item 1A. Risk Factors](index=70&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2018 - Management does not believe that any **material changes in risk factors** have occurred since the last disclosure in the 2018 Form 10-K[243](index=243&type=chunk) [Item 6. Exhibits](index=70&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the quarterly report, including certifications by the Principal Executive Officer and Principal Financial Officer pursuant to the Sarbanes-Oxley Act, and XBRL data files
First United (FUNC) - 2018 Q4 - Annual Report
2019-03-12 21:04
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 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 Number) 19 South Second Street, Oakland, Maryland 21550 (Address of principal ...