On October 21, 2024, First United Corp (FUNC, Financial) released its 8-K filing detailing the financial results for the third quarter of 2024. The company reported a consolidated net income of $5.8 million, or $0.89 per diluted share, surpassing the analyst estimate of $0.79 per share. This marks a significant increase from $4.5 million, or $0.67 per diluted share, in the same quarter of the previous year.
Company Overview
First United Corp is a financial services provider offering a range of products including deposit accounts, loans, insurance products, and trust services. The company operates through two segments: Community Banking and Trust and Investment Services, serving both individuals and businesses.
Performance and Challenges
The third quarter of 2024 was marked by stable net interest income and a decrease in provision expenses, attributed to improvements in asset quality. Despite competitive pressures, First United Corp maintained disciplined pricing strategies to bolster its balance sheet and protect long-term profitability. However, the company faces challenges from competitive deposit pricing and a volatile economic environment.
Financial Achievements
First United Corp's financial achievements include a net interest margin of 3.46% on a non-GAAP, fully tax-equivalent basis, and strong loan production with $52.1 million in commercial loan originations. These achievements are crucial for banks as they reflect the company's ability to generate income from its core lending activities while managing interest expenses effectively.
Income Statement Highlights
Net interest income increased by $1.2 million year-over-year, driven by a $3.0 million rise in interest on loans. This was partially offset by a $0.9 million increase in interest paid on deposits. The company also reported a $0.2 million increase in wealth management income and a $0.5 million reduction in operating expenses.
Carissa Rodeheaver, Chairman, President, and CEO, stated, "Earnings for the third quarter were marked by stable net interest income, non-interest income, and expenses. Provision expense decreased as compared to prior quarters this year as we saw improvements in our asset quality contributing to our increased net income."
Balance Sheet and Cash Flow Overview
Total assets at the end of the third quarter were $1.9 billion, with a slight increase in deposits due to seasonal fluctuations. The company repaid $15.0 million of higher-cost brokered certificates of deposit and obtained $90.0 million in new FHLB borrowings to manage its funding costs effectively.
Asset Quality and Risk Management
The allowance for credit losses was $18.0 million, with a stable ratio of 1.24% to loans outstanding. The company reported net charge-offs of 0.18% for the year-to-date period, reflecting effective risk management practices.
| Metric | Q3 2024 | Q2 2024 | Q3 2023 |
|---|---|---|---|
| Net Income (millions) | $5.8 | $4.9 | $4.5 |
| Basic and Diluted EPS | $0.89 | $0.75 | $0.67 |
Analysis
First United Corp's performance in the third quarter of 2024 demonstrates its resilience in a competitive and challenging economic environment. The company's strategic focus on maintaining asset quality and managing interest expenses has contributed to its strong financial results. As the company continues to navigate market pressures, its disciplined approach to pricing and risk management will be critical in sustaining profitability and growth.
Explore the complete 8-K earnings release (here) from First United Corp for further details.
