Exhibit 99.1
FIRST UNITED ANNOUNCES FIRST QUARTER EARNINGS
First United Corporation, (Nasdaq: FUNC) a financial holding company and the
parent company of First United Bank & Trust, has announced net income for the
first quarter of 2003 of $2.45 million or $.40 earnings per share compared to
$2.33 million or $.38 earnings per share for the same time period of 2002. This
is a net income increase of 5.39% and an earnings per share increase of 5.26%.
Book value per share was $13.14 as of March 31, 2003, as compared to $11.87 as
of March 31, 2002. Returns on average assets for the three months ended March
31, 2003 and 2002 were 1.03 % and 1.17% respectively. Returns on average
shareholders' equity were 12.44% and 13.06% for the three months ended March 31,
2003 and 2002 respectively. The efficiency ratio, a ratio that measures the
percent of revenue supporting overhead expenses, was 62.39% as of March 31,
2003, which is higher than the 61.31% reported as of March 31, 2002.
First United's risk based capital ratio at March 31, 2003 was 14.84%, which is
well above the regulatory minimum of 8.00%, and the regulatory level to be
considered well capitalized of 10.00%. This ratio was 16.11% at March 31, 2002.
Balance Sheet Review
Comparing March 31, 2003 balances with March 31, 2002, total assets were $984.98
million as compared to $804.44 million, a 22.44% increase. Gross loans and
leases increased $89.92 million to a total of $685.91 million, or 15.09%. Total
deposits increased $94.57 million or 15.71% to a total of $696.71 million.
Shareholder's equity increased $7.7 million or 10.76% during the same 12-month
period.
During the first quarter of 2003, gross loans and leases increased $20.08
million or 3.02% to a total of $685.91 million. The growth during the first
quarter was due primarily to growth of $18.58 million within the commercial
lending portfolio. "The historically high refinancings that occurred in 2002 in
the consumer mortgage portfolio continued throughout the first quarter of 2003
causing residential mortgage loans to decrease $5.02 million during the first
quarter of 2003", stated Mr. Grant. Consumer installment loans increased $4.90
million for the same time period.
During the first quarter of 2003 deposits grew $46.85 million. This growth was
attributed to growth in brokered deposits of $35.00 million and $11.85 million
in core deposits.
Net Interest Income
Net interest income was $8.09 million for the first quarter of 2003. This is an
increase of $.28 million as compared to the same time period of 2002. Although
interest income remained flat when compared to the first quarter of 2003,
interest expense decreased 3.85% when comparing the same time periods. In
comparing March 31, 2003 ratios with March 31, 2002, the yield on average
earnings assets was
6.46% as compared to 7.72%, and the average cost of funds was 2.73% as compared
to 3.46%. First United's net interest margin has decreased from 4.26% to 3.71%
during this same 12-month period.
Operating Income
For the first quarter of 2003 total operating income totaled $3.07 million as
compared to $2.33 million for the same time period of 2002. This is an increase
of $.74 million or 31.56%. Items affecting this increase were net securities
gains as well as increases in service charges on deposit accounts.
The net securities gains included gains on the sale of securities of $.88
million and $.35 million in write-downs on two securities exhibiting
other-than-temporary impairment. In this historically low interest rate
environment, First United chose to sell several mortgage-backed securities that
were exhibiting accelerated payback thus resulting in reduced yield for the
Corporation. The proceeds from these sales were reinvested in securities in
which the underlying collateral is consumer mortgage loans originated at lower
interest rates; therefore, being less likely to experience accelerated payback.
"These securities sales were executed to better position the Corporation during
what appears to be a longer than originally anticipated period of low interest
rates. First United accepted a slightly lower coupon on the securities and
extended the average life of the investments to slightly greater than four years
as compared to the average life of one year for the original investment", stated
William B. Grant and Chairman of the Board. Unrelated to the sale of securities
was a write-down on two securities under an interpretation of the
other-than-temporary impairment rules. Mr. Grant continued, "These were the same
securities that were adjusted at year-end 2002. The adjustment on the securities
was caused by the continued record low-rate environment, and the impact it has
on securities such as these. While we believe there is no credit risk associated
with the securities, their value has been adversely impacted by low interest
rates. It is expected that the market value of the securities will increase with
a rise in interest rates."
Operating Expense
Total operating expense was $7.11 million for the first quarter of 2003, as
compared to $6.34 million for the same time period in 2002. The largest item in
this category, salaries and employee benefits increased $.54 million or 15.40%
in 2003 as compared to the same time period in 2002. Increased incentive
payments related to employee performance and increased pension costs contributed
to this increase.
Asset Quality
First United's asset quality continues to be high. The provision for probable
credit losses was $.66 million for the first quarter of 2003. The provision for
probable credit losses for the first quarter of 2002 was $.66 million as well.
The loan delinquency ratio at March 31, 2003 was .83%, as compared to .98% at
March 31, 2002. Non-accrual loans totaled $2.10 million as of March 31, 2003 as
compared to a total of $1.73 million at March 31, 2002. "Of the $2.10 million in
non-accrual loans, there is one credit totaling $1.46 million. This credit is
well-secured, and no loss is anticipated", stated Mr. Grant. Total
non-performing loans were $7.67 million at March 31, 2003 as compared to $7.50
million at March 31, 2002. The reserve for loan and lease losses as a percentage
of gross loans equaled .92% as of March 31, 2003 as compared to .99% as of March
31, 2002.
First United Corporation offers full-service banking through its banking
subsidiary, First United Bank & Trust, and consumer finance products through its
subsidiaries, OakFirst Loan Center, Inc. and OakFirst Loan Center, LLC. These
subsidiaries operate a network of offices throughout Garrett, Allegany,
Washington, and Frederick counties in Maryland, as well as Mineral, Hardy,
Hampshire, and Berkeley counties in West Virginia. First United's website can be
located at www.mybankfirstunited.com. As of March 31, 2003 the Corporation
posted assets of $984.98 million and had 6,087,433 shares outstanding.
First United Corporation has made certain "forward-looking" statements with
respect to this earnings release. Such statements should not be construed as
guarantees of future performance. Actual results may differ from
"forward-looking" information as a result of any number of unforeseeable
factors, which include, but are not limited to, the effect of prevailing
economic conditions, the overall direction of government policies, unforeseeable
changes in the general interest rate environment, competitive factors in the
marketplace, business risk associated with credit extensions and trust
activities, and other risk factors. These and other factors could lead to actual
results, which differ, materially from management's statements regarding actual
performance.
FIRST UNITED CORPORATION
Oakland, MD
Stock Symbol : FUNC
(Dollars in thousands, except per share data)
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Three Months Ended
(unaudited)
March 31 March 31
2003 2002 % Change
EARNINGS SUMMARY
Interest income $ 14,240 $ 14,206 0.24%
Interest expense $ 6,146 $ 6,392 -3.85%
Net interest income $ 8,094 $ 7,814 3.58%
Provision for credit losses $ 656 $ 656 0.00%
Noninterest income $ 3,071 $ 2,334 31.56%
Noninterest expense $ 7,110 $ 6,343 12.09%
Income taxes $ 947 $ 822 15.20%
Net income $ 2,452 $ 2,327 5.39%
Cash dividends paid $ 1,065 $ 1,034 3.00%
PER COMMON SHARE
Earnings per share
Basic $ 0.40 $ 0.38 5.26%
Diluted $ 0.40 $ 0.38 5.26%
Book value $ 13.14 $ 11.87 10.68%
Closing market value $ 21.42 $ 15.58 37.48%
Common shares
outstanding
Basic 6,087,433 6,080,589 0.11%
Diluted 6,087,433 6,080,589 0.11%
PERFORMANCE RATIOS
Return on average assets 1.03% 1.17% -11.97%
Return on average shareholders'
equity 12.44% 13.06% -4.75%
Net interest margin 3.71% 4.26% -12.91%
Efficiency ratio 62.39% 61.31% 1.76%
PERIOD END BALANCES
Assets $ 984,976 $ 804,438 22.44%
Earning assets $ 922,862 $ 743,649 24.10%
Gross loans and leases $ 685,909 $ 595,988 15.09%
Consumer Real Estate $ 240,152 $ 220,941 8.70%
Commercial $ 261,737 $ 204,072 28.26%
Consumer $ 184,020 $ 170,975 7.63%
Investment securities $ 225,841 $ 138,909 62.58%
Total deposits $ 696,708 $ 602,135 15.71%
Noninterest bearing $ 73,496 $ 58,684 25.24%
Interest bearing $ 623,213 $ 543,451 14.68%
Shareholders' equity $ 79,969 $ 72,202 10.76%
CAPITAL RATIOS
Period end capital to risk-
weighted assets:
Tier 1 11.16% 12.67%
Total 14.84% 16.11%
ASSET QUALITY
Net charge-offs $ 524 $ 535 -2.06%
Nonperforming assets:
Nonaccrual loans $ 2,101 $ 1,725 21.80%
Restructured loans $ 564 $ --
Loans 90 days past due
and accruing $ 1,111 $ 823 34.99%
Other real estate owned $ 263 $ 271 -2.95%
Total nonperforming assets
and past due loans $ 7,672 $ 7,497 2.33%
Allowance for credit losses
to gross loans, at period end 0.92% 0.99%
Nonperforming and past-due loans
to total loans at period end 0.48% 0.43%
Nonperforming loans and past-due
loans to total assets, at period end 0.33% 0.32%
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FIRST UNITED CORPORATION
STATEMENT OF CONDITION
(In Thousands)
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3/31/2003 12/31/2002 $CHANGE % CHANGE
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ASSETS
1 Cash and due from banks 17,039 18,242 -1,204 -6.60%
2 Interest Bearing Deposits in Banks 13,238 6,207 7,031 113.27%
3 Investments:
4 U.S. Treasury securities 0 0 0 0
5 Obligations of other U.S. Government agencies 24,239 20,851 3,388 16.25%
6 Obligations of state and political subdivisions 30,482 31,348 -866 -2.76%
7 Other investments 171,120 172,195 -1,075 -0.62%
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8 Total investment securities 225,841 224,394 1,447 0.64%
9
10 Federal funds sold 4,075 0 4,075 0
11 Loans 685,909 665,826 20,084 3.02%
12 Reserve for probable credit losses -6,200 -6,068 -132 2.18%
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13 Net Loans 679,709 659,758 19,952 3.02%
14
15 Bank Premises and equipment 13,788 13,163 625 4.75%
16 Accrued interest receivable and other assets 31,287 31,913 -626 -1.96%
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17 TOTAL ASSETS 984,976 953,676 31,300 3.28%
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18
19
20
21
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22 3/31/2003 12/31/2002 $CHANGE % CHANGE
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23 LIABILITIES
24 Deposits:
25 NonInterest Bearing deposits 73,496 72,789 707 0.97%
26 Interest-bearing deposits 623,213 577,071 46,142 8.00%
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27 Total Deposits 696,708 649,860 46,848 7.21%
28
29 Fed funds purchased & other borrowed money 173,302 191,261 -17,959 -9.39%
30 Reserve for taxes, interest, and other liabilities 10,933 9,211 1,722 18.69%
31 Dividends Payable 1,064 1,062 2 0.15%
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32
33 TOTAL LIABILITIES 882,007 851,394 30,613 3.60%
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34
35 OTHER SUBORDINATED DEBT
36 Trust Preferred Securities 23,000 23,000 0 0.00%
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37
38 SHAREHOLDERS' EQUITY
39
40 Capital stock-par value: 61 61 0 -0.21%
41 Surplus 20,324 20,199 125 0.62%
42 Retained earnings 57,128 55,743 1,385 2.48%
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43 Total shareholders' equity before FASB 115 77,512 76,003 1,509 1.99%
44 Unrealized gain (loss) on available-for-sale
securities 2,457 3,280 -823 -25.09%
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45 TOTAL SHAREHOLDERS' EQUITY 79,969 79,282 686 0.87%
46
47 TOTAL LIABILITIES &
48 SHAREHOLDERS' EQUITY 984,976 953,676 31,298 3.28%
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FIRST UNITED CORPORATION
STATEMENT OF CONDITION
(In Thousands)
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3/31/2003 3/31/2002 $CHANGE % CHANGE
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ASSETS
1 Cash and due from banks 17,039 17,201 -162 -0.94%
2 Interest Bearing Deposits in Banks 13,238 4,808 8,430 175.33%
3 Investments:
4 U.S. Treasury securities 0 0 0 0
5 Obligations of other U.S. Government agencies 24,239 33,227 -8,988 -27.05%
6 Obligations of state and political subdivisions 30,482 27,410 3,072 11.21%
7 Other investments 171,120 78,272 92,848 118.62%
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8 Total investment securities 225,841 138,909 86,932 62.58%
9
10 Federal funds sold 4,075 9,790 -5,715 -58.38%
11 Loans 685,909 595,988 89,921 15.09%
12 Reserve for probable credit losses -6,200 -5,845 -355 6.07%
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13 Net Loans 679,709 590,143 89,566 15.18%
14
15 Bank Premises and equipment 13,788 11,644 2,144 18.42%
16 Accrued interest receivable and other assets 31,287 31,944 -657 -2.06%
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17 TOTAL ASSETS 984,976 804,438 180,538 22.44%
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18
19
20
21
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22 3/31/2003 3/31/2002 $CHANGE % CHANGE
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23 LIABILITIES
24 Deposits:
25 NonInterest Bearing deposits 73,496 58,684 14,812 25.24%
26 Interest-bearing deposits 623,213 543,451 79,762 14.68%
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27 Total Deposits 696,708 602,135 94,573 15.71%
28
29 Fed funds purchased & other borrowed money 173,302 97,504 75,798 77.74%
30 Reserve for taxes, interest, and other liabilities 10,933 8,565 2,368 27.65%
31 Dividends Payable 1,064 1,032 32 3.07%
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32
33 TOTAL LIABILITIES 882,007 709,236 172,771 24.36%
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34
35 OTHER SUBORDINATED DEBT
36 Trust Preferred Securities 23,000 23,000 0 0.00%
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37
38 SHAREHOLDERS' EQUITY
39
40 Capital stock-par value: 61 61 0 -0.21%
41 Surplus 20,324 20,199 125 0.62%
42 Retained earnings 57,128 51,546 5,582 10.83%
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43 Total shareholders' equity before FASB 115 77,512 71,806 5,706 7.95%
44 Unrealized gain (loss) on available-for-sale
securities 2,457 397 2,060 518.91%
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45 TOTAL SHAREHOLDERS' EQUITY 79,969 72,202 7,766 10.76%
46
47 TOTAL LIABILITIES &
48 SHAREHOLDERS' EQUITY 984,976 804,438 180,537 22.44%
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FIRST UNITED CORPORATION
STATEMENT OF INCOME
(In Thousands)
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03/31/03 03/31/02 $CHANGE % CHANGE
YTD YTD
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INTEREST INCOME
1 Interest and fees on loans 12,133 12,220 (87) -0.71%
2 Taxable 1,739 1,649 90 5.46%
3 Exempt from federal income taxes 363 312 51 16.35%
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2,102 1,961 141 7.19%
4 Interest on federal funds sold 5 25 (20) -79.26%
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5 TOTAL INTEREST INCOME 14,240 14,206 34 0.24%
INTEREST EXPENSE
6 Interest on deposits:
7 Savings 56 64 (8) -12.80%
8 Interest-bearing transaction accounts 456 310 146 47.18%
9 Time, $100,000 or more 959 1,104 (145) -13.10%
10 Other time 2,070 3,024 (954) -31.56%
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11 TOTAL INTEREST ON DEPOSITS 3,541 4,502 (961) -21.34%
Interest on Fed Funds Purchased and
12 Other borrowed money 2,605 1,890 715 37.82%
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13 TOTAL INTEREST EXPENSE 6,146 6,392 (246) -3.85%
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14 NET INTEREST INCOME 8,094 7,814 279 3.58%
15 Provision for probable credit losses 656 656 0 0.02%
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NET INTEREST INCOME AFTER PROVISION
16 FOR PROBABLE CREDIT LOSSES 7,438 7,158 280 3.92%
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OPERATING INCOME
17 Trust department income 635 682 (47) -6.89%
18 Broker/Dealer Commission 127 116 11 9.40%
19 Service charges on deposit accounts 714 585 129 22.11%
20 Insurance premium income 314 260 54 20.76%
21 Security Gains/(Losses) 530 0 530 #DIV/0!
22 Other income 751 691 60 8.66%
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23 TOTAL OPERATING INCOME 3,071 2,334 737 31.56%
OPERATING EXPENSES
24 Salaries and employee benefits 4,046 3,506 540 15.40%
25 Occupancy expense of premises 336 311 25 7.90%
26 Equipment expense 562 494 68 13.69%
27 Data processing expense 295 299 (4) -1.32%
28 OCC/FDIC Premium 48 44 4 10.16%
29 Other expense 1,823 1,689 134 7.95%
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30 TOTAL OPERATING EXPENSES 7,110 6,343 767 12.09%
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30 INCOME BEFORE INCOME TAXES 3,399 3,149 250 7.95%
31 Applicable income taxes 947 822 125 15.20%
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32 NET INCOME 2,452 2,327 125 5.39%
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