First United Corporation Announces Third Quarter 2019 Earnings
Third Quarter 2019 Highlights:
- Consolidated net income was
$4.5 million , or$3.4 million after excluding insurance proceeds received, compared to$2.8 million for the third quarter of 2018 - Basic and diluted net income per common share were both
$.63 , or$.48 after excluding insurance proceeds received, compared to$.39 for the third quarter of 2018 - Net interest income increased
$.3 million over the third quarter of 2018 - Net interest margin, on an FTE basis, was 3.62%, compared to 3.79% for the third quarter of 2018
- Cost of deposits of .74% remained low
- Revenue remained diversified with fee income representing 30% of net revenue
- Loan production and deposit growth remain strong
- Voluntary employee separation program introduced in the third quarter of 2019 is projected to reduce 2020 salaries and benefits by approximately
$1.4 million , with approximately$.1 million of net severance expense expected to be recognized in the fourth quarter 2019
Commenting on the Bank's results,
Financial Highlights Comparing the Nine and Three Months of 2019 and 2018:
- Net interest income increased
$1.8 million and$.3 million for the first nine months of 2019 and the third quarter of 2019, respectively, when compared to the same time periods of 2018. - Stable margin despite pricing pressures
- New loan production priced at higher rates
- Continued focus on growing low cost, core deposits
- The ratio of the allowance for loan losses ("ALL") to loans outstanding was 1.20% at
September 30, 2019 and 1.07% atSeptember 30, 2018 . - Specific allocation on large commercial loan in first nine months of 2019
- Provision for loan losses was
$.7 million and$1.2 million for the nine-month periods endedSeptember 30, 2019 and 2018, respectively - Reduced provision expense recorded for the third quarter of 2019, compared to
$.5 million for the third quarter of 2018 due to loan balances and improved credit quality - Other operating income increased during the first nine months of 2019 when compared to the same period of 2018, due to the receipt of
$1.1 million of insurance death benefit proceeds. - Other operating expenses increased for the first nine months of 2019 when compared to the first nine months of 2018.
- Salaries and benefits increased
$.3 million in the first nine months of 2019 when compared to the same period of 2018 due to merit increases effective inApril 2019 and increased life and health insurance costs related to increased claims. - Voluntary employee separation program introduced in the third quarter is projected to result in a
$1.4 million reduction in salaries and benefits for 2020, with approximately$.1 million of net severance expense expected to be recognized in fourth quarter 2019 - Equipment, occupancy and data processing expenses increased
$.9 million in the first nine months of 2019 when compared to the same period of 2018, due to completion of rebranding and branch modernization as well as new technology services implemented - OREO expenses increased in the first nine months of 2019 when compared to the same period of 2018 due to valuation allowance write-downs on properties as a result of new appraisals and reduce selling prices.
- Other miscellaneous expenses for the first nine months of 2019, such as marketing, legal and professional, consulting, dues and licenses, contract labor and miscellaneous loan fees, decreased when compared to the same period of 2018.
Income Statement Overview
Consolidated net income was
Consolidated net income was
Balance Sheet Overview
Total assets at
Comparing
During the first nine months of 2019, commercial loan production of
Total deposits increased
The book value of the Corporation's common stock was
Net- Interest Income (Tax-Equivalent Basis)
Net interest income, on an FTE basis, increased
Comparing the first nine months of 2019 to the same period of 2018, the increase in interest income was due to a
Interest expense on our interest-bearing liabilities increased by
Net interest income, on an FTE basis, increased
Comparing the third quarter of 2019 to the same period of 2018, the increase in interest income was primarily due to a
Interest expense on our interest-bearing liabilities increased by
The average balance on interest-bearing deposits increased by
During the third quarter of 2019, we discontinued selling a special time deposit product and reduced the special rates on a money market special in response to the Fed Funds rate cuts. We anticipate that we will continue to see margin compression in the fourth quarter as lending pricing pressures continue in each of our markets that we serve.
Asset Quality
The ALL was
The ratio of net recoveries to average loans for the nine months ended
Non-accrual loans totaled
Non-accrual loans that have been subject to partial charge-offs totaled
Accruing loans past due 30 days or more decreased to .67% of the loan portfolio at
Non-Interest Income and Non-Interest Expense
Total other operating income, including gains, increased
Other operating expenses increased
Total other operating income, including gains, increased
Other operating expenses increased slightly by
The effective income tax rate as a percentage of income decreased in the first nine months of 2019 when compared to the first nine months of 2018 primarily due to the tax exempt BOLI death benefit proceeds of
ABOUT
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements do not represent historical facts, but are statements about management's beliefs, plans and objectives about the future, as well as its assumptions and judgments concerning such beliefs, plans and objectives. These statements are evidenced by terms such as "anticipate," "estimate," "should," "expect," "believe," "intend," and similar expressions. Although these statements reflect management's good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. These projections involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. For a discussion of these risks and uncertainties, see the section of the periodic reports that
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Stock Symbol : FUNC |
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Financial Highlights - Unaudited |
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(Dollars in thousands, except per share data) |
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Three Months Ended |
Nine Months Ended |
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2019 |
2018 |
2019 |
2019 |
2019 |
2018 |
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Results of Operations: |
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Interest income |
$ 14,600 |
$ 13,264 |
$ 14,411 |
$ 14,072 |
$ 43,083 |
$ 38,350 |
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Interest expense |
3,004 |
2,008 |
2,884 |
2,726 |
8,614 |
5,644 |
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Net interest income |
11,596 |
11,256 |
11,527 |
11,346 |
34,469 |
32,706 |
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Provision for loan losses |
(13) |
471 |
333 |
349 |
669 |
1,187 |
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Other operating income |
5,028 |
3,797 |
3,909 |
3,707 |
12,644 |
11,208 |
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Net gains |
40 |
9 |
30 |
14 |
84 |
190 |
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Other operating expense |
11,246 |
11,089 |
11,741 |
10,690 |
33,677 |
32,405 |
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Income before taxes |
$ 5,431 |
$ 3,502 |
$ 3,392 |
$ 4,028 |
$ 12,851 |
$ 10,512 |
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Income tax expense |
938 |
739 |
790 |
877 |
2,605 |
2,227 |
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Net income |
$ 4,493 |
$ 2,763 |
$ 2,602 |
$ 3,151 |
$ 10,246 |
$ 8,285 |
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Per share data: |
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Basic/ Diluted Net Income |
$ 0.63 |
$ 0.39 |
$ 0.37 |
$ 0.44 |
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Dividends declared per share |
$ 0.13 |
$ 0.09 |
$ 0.09 |
$ 0.09 |
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Book value |
$ 18.20 |
$ 16.32 |
$ 17.75 |
$ 17.27 |
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Tangible book value per share |
$ 16.65 |
$ 14.76 |
$ 16.20 |
$ 15.71 |
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Closing market value |
$ 22.00 |
$ 18.80 |
$ 19.71 |
$ 17.26 |
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High |
$ 23.24 |
$ 20.95 |
$ 20.49 |
$ 17.99 |
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Low |
$ 19.03 |
$ 18.25 |
$ 17.10 |
$ 15.45 |
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Shares outstanding at period end |
7,107,666 |
7,084,478 |
7,105,775 |
7,088,987 |
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Performance ratios: (Year to Date Period End, annualized) |
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Return on average assets |
0.97% |
0.84% |
0.83% |
0.91% |
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Return on average shareholders' equity |
10.96% |
9.94% |
9.47% |
10.64% |
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Net interest margin |
3.67% |
3.71% |
3.70% |
3.72% |
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Efficiency ratio |
68.30% |
72.10% |
69.93% |
69.40% |
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2019 |
2018 |
2018 |
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Financial Condition at period end: |
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Assets |
$ 1,440,964 |
$ 1,384,516 |
$ 1,347,906 |
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Earning assets |
$ 1,223,358 |
$ 1,235,066 |
$ 1,193,334 |
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Gross loans |
$ 997,284 |
$ 1,007,714 |
$ 964,060 |
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$ 295,255 |
$ 306,921 |
$ 292,794 |
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Acquisition and Development |
$ 113,790 |
$ 118,360 |
$ 113,689 |
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Commercial and Industrial |
$ 111,291 |
$ 111,466 |
$ 98,510 |
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Residential Mortgage |
$ 441,084 |
$ 436,907 |
$ 425,469 |
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Consumer |
$ 35,864 |
$ 34,060 |
$ 33,598 |
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Investment securities |
$ 231,680 |
$ 231,651 |
$ 232,371 |
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Total deposits |
$ 1,136,787 |
$ 1,067,527 |
$ 1,024,575 |
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Noninterest bearing |
$ 283,067 |
$ 262,250 |
$ 264,317 |
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Interest bearing |
$ 853,720 |
$ 805,277 |
$ 760,258 |
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Shareholders' equity |
$ 129,336 |
$ 117,066 |
$ 115,581 |
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Capital ratios: |
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Tier 1 to risk weighted assets |
15.82% |
14.87% |
15.34% |
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Common Equity Tier 1 to risk weighted assets |
13.32% |
12.45% |
12.82% |
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Tier 1 Leverage |
11.68% |
11.47% |
11.72% |
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Total risk based capital |
16.95% |
15.91% |
16.35% |
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Asset quality: |
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Net (recoveries)/charge-offs for the quarter |
$ (9) |
$ 200 |
$ (84) |
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Nonperforming assets: (Period End) |
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Nonaccrual loans |
$ 11,713 |
$ 4,922 |
$ 4,824 |
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Loans 90 days past due and accruing |
22 |
430 |
$ 559 |
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Total nonperforming loans and 90 day past due |
$ 11,735 |
$ 5,352 |
$ 5,383 |
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Restructured loans |
$ 4,134 |
$ 4,864 |
$ 4,992 |
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Other real estate owned |
$ 4,721 |
$ 6,598 |
$ 7,482 |
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Allowance for loan losses to gross loans |
1.20% |
1.10% |
1.07% |
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Nonperforming and 90 day past due loans to total loans |
1.18% |
0.54% |
0.56% |
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Nonperforming loans and 90 day past due loans to total assets |
0.81% |
0.39% |
0.40% |
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