First United (US:FUNC)2025-05-07 20:05PART I. FINANCIAL INFORMATION Item 1. Financial Statements Presents unaudited consolidated financial statements for Q1 2025 and 2024, detailing financial condition, operations, cash flows, and accounting policies Consolidated Statements of Financial Condition Total assets grew to $1.98 billion, with shareholders' equity increasing to $183.7 million from retained earnings Consolidated Statements of Financial Condition (in thousands) | Account | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Assets | $1,979,753 | $1,973,022 | | Net loans | $1,460,945 | $1,462,181 | | Total investment securities (AFS & HTM) | $274,142 | $269,991 | | Cash and cash equivalents | $84,431 | $78,327 | | Total Liabilities | $1,796,059 | $1,793,727 | | Total deposits | $1,623,574 | $1,574,829 | | Total borrowings (Short & Long-term) | $141,271 | $186,338 | | Total Shareholders' Equity | $183,694 | $179,295 | Consolidated Statements of Operations Q1 2025 net income rose to $5.8 million, driven by 16% higher net interest income and reduced credit loss expense Quarterly Performance Summary (in thousands, except per share data) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $16,016 | $13,812 | +16.0% | | Total Credit Loss Expense | $656 | $946 | -30.7% | | Total Other Operating Income | $4,914 | $4,875 | +0.8% | | Total Other Operating Expenses | $12,576 | $12,881 | -2.4% | | Net Income | $5,806 | $3,698 | +57.0% | | Diluted EPS | $0.89 | $0.56 | +58.9% | Consolidated Statements of Cash Flows Operating cash flow nearly doubled to $7.0 million, with investing activities using $3.2 million, resulting in a $6.1 million cash increase Cash Flow Summary (in thousands) | Activity | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $6,965 | $3,588 | | Net cash (used in)/provided by investing activities | ($3,190) | $28,292 | | Net cash provided by financing activities | $2,329 | $5,299 | | Increase in cash and cash equivalents | $6,104 | $37,179 | Notes to Consolidated Financial Statements Provides detailed disclosures on investment and loan portfolios, ACL, fair value, regulatory capital, and segment reporting - The loan portfolio is segmented into commercial real estate, acquisition and development, commercial and industrial, residential mortgage, and consumer loans for risk management and ACL calculation4142 Loan Portfolio Composition (in thousands) | Loan Segment | March 31, 2025 (in thousands) | Dec 31, 2024 (in thousands) | | :--- | :--- | :--- | | Commercial Real Estate | $532,764 | $526,364 | | Acquisition and Development | $94,063 | $95,314 | | Commercial and Industrial | $282,370 | $287,534 | | Residential Mortgage | $520,072 | $518,815 | | Consumer | $50,600 | $52,766 | | Total Loans | $1,479,869 | $1,480,793 | Allowance for Credit Losses (ACL) Activity (in thousands) | ACL Activity | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Beginning Balance | $18,170 | $17,480 | | Loan charge-offs | ($542) | ($618) | | Recoveries collected | $182 | $159 | | Credit loss expense | $657 | $961 | | Ending Balance | $18,467 | $17,982 | Bank Capital Ratios | Ratio | March 31, 2025 | Required to be Well Capitalized | | :--- | :--- | :--- | | Total Capital (to risk-weighted assets) | 14.83% | 10.00% | | Tier 1 Capital (to risk-weighted assets) | 13.58% | 8.00% | | Common Equity Tier 1 Capital | 13.58% | 6.50% | | Tier 1 Capital (to average assets) | 10.76% | 5.00% | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 performance, noting a $2.1 million net income increase, strong liquidity, and managed interest rate risk Results of Operations Q1 2025 net income rose to $5.8 million, driven by a $2.2 million increase in net interest income and lower credit loss provisions - The $2.1 million increase in quarterly net income was driven by a $2.2 million rise in net interest income and a $0.3 million decrease in credit loss provisions151 Net Interest Income and Margin (Non-GAAP, FTE) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net Interest Income | $16,065 | $13,869 | | Net Interest Margin % | 3.56% | 3.12% | - The provision for credit losses decreased to $0.7 million in Q1 2025, primarily due to prior year's provisions for $12.1 million in non-accrual commercial loans162 Financial Condition Total assets reached $2.0 billion, with deposits growing by $48.7 million and non-accrual loans decreasing to $4.0 million - Total assets increased by $6.7 million to $2.0 billion, driven by a $48.7 million rise in deposits used to repay short-term borrowings169170 - Non-accrual loans decreased from $4.9 million to $4.0 million due to principal reductions173 Risk Elements of Loan Portfolio (in thousands) | Metric | March 31, 2025 (in thousands) | Dec 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total non-accrual loans | $4,026 | $4,931 | | Total Non-performing assets | $10,123 | $11,713 | | Non-performing assets to total assets | 0.51% | 0.59% | | Allowance for credit losses to non-accrual loans | 458.69% | 368.49% | Liquidity Management, Market Risk, and Capital Resources The company maintains strong liquidity with $558.6 million in available funding and robust capital, exceeding regulatory thresholds Sources of Liquidity (in thousands) | Source | Total Availability (in thousands) | Amount Used (in thousands) | Net Availability (in thousands) | | :--- | :--- | :--- | :--- | | Internal Sources | $93,458 | $0 | $93,458 | | External Sources | $561,375 | $96,214 | $465,161 | | Total | $654,833 | $96,214 | $558,619 | - The company is asset sensitive, expecting net interest income to increase by $3.5 million over the next year with a +100 basis point rate shock206215 - The Bank's capital ratios, including 14.83% Total Capital and 13.58% Tier 1 Capital, significantly exceed 'well capitalized' regulatory thresholds221 Item 3. Quantitative and Qualitative Disclosures about Market Risk As a 'smaller reporting company', the company is exempt from providing detailed quantitative and qualitative market risk disclosures - As a 'smaller reporting company' under SEC rules, First United Corporation is not required to include information for this item226 Item 4. Controls and Procedures Management concluded disclosure controls are effective, with no material changes to internal control over financial reporting in Q1 2025 - Management, including PEO and PFO, concluded that disclosure controls and procedures are effective at a reasonable assurance level as of March 31, 2025228 - No material changes to internal control over financial reporting occurred during Q1 2025229 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reported no legal proceedings during the period - There are no legal proceedings to report232 Item 1A. Risk Factors No material changes to risk factors have occurred since the prior disclosure in the 2024 Form 10-K - Management believes no material changes in risk factors have occurred since the 2024 Form 10-K disclosure233 Item 5. Other Information Officer Julie Peterson terminated a non-Rule 10b5-1 trading arrangement for monthly stock purchases during Q1 2025 - Company officer Julie Peterson terminated a 'non-Rule 10b5-1 trading arrangement' for monthly stock purchases during the quarter237 Item 6. Exhibits This section lists exhibits filed with the report, including PEO/PFO certifications and Inline XBRL data files - Exhibits include Sarbanes-Oxley Act certifications (Exhibits 31.1, 31.2, 32) and Inline XBRL documents (Exhibit 101 series)241