EX-99.1 2 v066913_ex99-1.htm Unassociated Document

Exhibit 99.1

FIRST UNITED CORPORATION ANNOUNCES FOURTH
QUARTER AND 2006 EARNINGS

OAKLAND, MARYLAND—February 22, 2007: First United Corporation (Nasdaq: FUNC), a financial holding company and the parent company of First United Bank & Trust, announces net income for the quarter ended December 31, 2006 of $3.5 million ($.56 earnings per share) compared to $4.2 million ($.69 earnings per share) for the fourth quarter of 2005. The Corporation’s 2006 net income was $12.6 million, an increase of 4.1% from 2005 net income of $12.1 million. Earnings per share for 2006 were $2.05 compared to $1.99 at the end of 2005.

For the year ended December 31, 2006, the Corporation’s return on average assets and average shareholders’ equity were .96% and 13.05%, respectively, compared to .95% and 13.61%, respectively, for the same period in 2005.

Total assets were $1.35 billion at December 31, 2006, a 3.8% increase from $1.3 billion at December 31, 2005. During this time period, gross loans increased $2.8 million, our investment portfolio increased approximately $33 million and the value of our bank owned life insurance increased $3.7 million. These increases were offset by decreases in cash and interest bearing deposits in banks of $3.8 million and accrued interest receivable and other assets of $2.2 million. Total liabilities increased by approximately $30 million during 2006, reflecting increases in total deposits of $15.5 million and long-term borrowings of $38 million and a decrease in short-term borrowings of $22.6 million. The increase in long-term borrowings reflects management’s decision to extend the maturities of its borrowed funds and reduce its use of short-term borrowings.

Loans were $963.7 million at December 31, 2006 compared to $960.9 million at December 31, 2005, an increase of $2.8 million (.3%). The growth was focused in our residential mortgage ($22 million) and commercial ($4 million) loan portfolios, offset by a decline in the installment ($12 million) and residential-construction ($11 million) loan portfolios. The decrease in installment loans reflects management’s continued shift towards more commercial loans and less emphasis on the highly competitive consumer loan market. At December 31 2006, approximately 82% of the commercial loan portfolio was collateralized by real estate.

Deposits were $971.4 million at December 31, 2006, compared to $955.9 million at December 31, 2005, an increase of $15.5 million. The increase in deposits resulted primarily form the Bank’s utilization of brokered certificates of deposit to fund the purchase of corporate bonds combined with the successful promotion of a 9-month certificate of deposit offered during most of 2006.

Comparing December 31, 2006 to December 31, 2005, shareholders’ equity increased 7.39%, from $92.0 million to $98.8 million, resulting in an increase in book value per share from $15.04 at December 31, 2005 to $16.09 at December 31, 2006. At December 31, 2006, there were 6,141,344 issued and outstanding shares of the Corporation’s common stock.

Net- Interest Income

Net interest income decreased $.1 million in the fourth quarter of 2006 when compared to the fourth quarter of 2005. The decrease resulted from a $2.6 million increase in interest expense offset by a $2.5 million increase in interest income. Net interest income increased $.5 million for 2006 when compared to 2005, due to a $10.5 million (15.1%) increase in interest income offset by a $9.9 million (33.7%) increase in interest expense. The increase in interest income resulted from an increase in average interest-earning assets of $28.1 million (2.4%) during 2006 when compared to 2005. This is attributable to the growth that we experienced in both our loan portfolio and our investment portfolio throughout 2006. Emphasis on adjustable rate loan products and the rising interest rate environment contributed to the increase in the average rate earned on our average earning assets of 80 basis points, from 5.98% for 2005 to 6.78% for 2006 (on a fully tax equivalent basis). Interest expense increased during 2006 when compared to 2005 due to the higher interest rate environment, and an overall increase in average interest-bearing liabilities of $32.3 million. Average deposits have increased in 2006 by approximately $32.2 million due to growth in brokered certificates of deposit and successful retail promotion of consumer deposit products. The combined effect of the increasing rate environment and the volume increases in our average interest-bearing liabilities, resulted in an 83 basis point increase in the average rate paid on our average interest-bearing liabilities from 2.76% for 2005 to 3.59% for 2006. The net result of the aforementioned factors was a 3 basis point increase in the net interest margin during 2006 to 3.52% from 3.49% for 2005.


Asset Quality

Our asset quality remains sound. The ratio of non-performing and 90 days past-due loans to total loans at December 31, 2006 was .50%, compared to .35% at December 31, 2005. The ratio of non-performing and 90 days past-due loans to total assets at December 31, 2006 was .35%, compared to .26% at December 31, 2005.

The provision for loan losses was $.6 million for the fourth quarter of 2006, compared to ($.2) million for the same period of 2005. Provision expense for 2006 was $1.2 million compared to $1.1 million for 2005. As a result of the evaluation of the loan portfolio, the allowance for loan losses increased slightly to $6.5 million at December 31, 2006, compared to $6.4 million at December 31, 2005. Management believes that the allowance at December 31, 2006 is adequate to provide for probable losses in our loan portfolio.

Non-Interest Income and Non-Interest Expense

Other operating income decreased $.9 million during the fourth quarter of 2006 when compared to the same period of 2005. This decrease was primarily attributable to a decrease in brokerage fees and a decrease in other income due to the prepayment of FHLB advances in the fourth quarter of 2005. This prepayment resulted in a $.8 million gain. For the twelve months of 2006, non-interest income was unchanged when compared to 2005 at $14.1 million.

Non-interest expense for the fourth quarter of 2006 was $8.5 million, compared to $8.9 million for the fourth quarter of 2005, a 4.5% decrease. Other operating expenses increased 2.4% for the year in 2006 when compared to the same time period of 2005. The increases for the year are due to increases in occupancy and equipment expenses and personnel expenses directly related to the growth and expansion of the Bank’s retail network and increased staffing to support our growth objectives.

ABOUT FIRST UNITED CORPORATION

First United Corporation offers full-service banking products and services through its trust company subsidiary, First United Bank & Trust, and consumer finance products through its consumer finance subsidiaries, OakFirst Loan Center, Inc. and OakFirst Loan Center, LLC. The Corporation also offers a full range of insurance products and services to customers in its market areas through First United Insurance Group, LLC. These entities operate a network of offices throughout Garrett, Allegany, Washington, and Frederick Counties in Maryland, as well as Mineral, Hardy, Berkeley, and Monongalia Counties in West Virginia. The Corporation’s website is www.mybankfirstunited.com.

FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements do not represent historical facts, but 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 First United Corporation files with the Securities and Exchange Commission entitled “Risk Factors”.
 
 

Oakland, MD
Stock Symbol : FUNC
(Dollars in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 

 
  
Three Months Ended
  
 
  
Twelve Months Ended
  
 
  
unaudited
  
 
  
unaudited
  
 
  
31-Dec
  
31-Dec
  
30-Sep
  
30-Jun
  
31-Mar
  
31-Dec
  
31-Dec
  
 
  
2006
  
2005
  
2006
  
2006
  
2006
  
2006
  
2005
  
EARNINGS SUMMARY
  
 
      
 
  
 
  
 
  
 
  
 
  
Interest income
 
$
21,193
  
$
18,681
  
$
20,560
  
$
19,539
  
$
18,977
  
$
80,269
  
$
69,756
  
Interest expense
 
$
10,890
  
$
8,310
  
$
10,380
  
$
9,225
  
$
8,840
  
$
39,335
  
$
29,413
  
Net interest income
  
$
10,303
  
$
10,371
  
$
10,180
  
$
10,314
  
$
10,137
  
$
40,934
  
$
40,343
  
Provision for loan and lease losses
  
$
586
  
$
(194
)
$
499
  
$
157
  
$
(77
)
$
1,165
  
$
1,078
  
Noninterest income
  
$
3,711
  
$
4,639
  
$
3,510
  
$
3,304
  
$
3,516
  
$
14,041
  
$
14,088
  
Noninterest expense
  
$
8,498
  
$
8,879
  
$
8,538
  
$
8,936
  
$
9,518
  
$
35,490
  
$
34,654
  
Income taxes
  
$
1,467
  
$
2,109
  
$
1,388
  
$
1,481
  
$
1,407
  
$
5,743
  
$
6,548
  
Net income
  
$
3,463
  
$
4,216
  
$
3,265
  
$
3,044
  
$
2,805
  
$
12,577
  
$
12,151
  
Cash dividends paid
 
$
1,167
  
$
1,146
  
$
1,166
  
$
1,165
  
$
1,164
  
$
4,662
  
$
4,544
  
 
                                  
 
  
Three Months Ended
            
 
  
unaudited
            
 
    
31-Dec
    
31-Dec
    
30-Sep
    
30-Jun
    
31-Mar
          
 
    
2006
    
2005
    
2006
    
2006
    
2006
          
PER COMMON SHARE
                              
Earnings per share
                                  
Basic/Diluted
  
$
0.56
  
$
0.69
  
$
0.53
  
$
0.50
  
$
0.46
          
Book value
  
$
16.09
  
$
15.04
  
$
16.10
  
$
15.34
  
$
15.25
          
Closing market value
  
$
21.90
  
$
21.24
  
$
21.25
  
$
20.65
  
$
22.83
          
                                         
Common shares
                                        
outstanding at period end
    
6,141,344
   
6,118,103
   
6,135,594
   
6,129,412
   
6,123,681
         
 
                                
 
                                
 
                              
PERFORMANCE RATIOS (Period End, annualized)
                                  
Return on average assets
    
0.96
%
  
0.95
%
  
0.93
%
  
0.90
%
  
0.87
%
        
Return on average shareholders'
                                        
equity
    
13.05
%
  
13.61
%
  
12.79
%
  
12.54
%
  
12.12
%
        
Net interest margin
    
3.52
%
  
3.49
%
  
3.57
%
  
3.59
%
  
3.57
%
        
Efficiency ratio
    
62.77
%
  
62.67
%
  
64.04
%
  
65.80
%
  
67.93
%
        
 
                                    
PERIOD END BALANCES
    
31-Dec
    
31-Dec
                              
 
    
2006
    
2005
                              
 
                                
Assets
  
$
1,348,260
  
$
1,310,991
                          
Earning assets
  
$
1,223,822
  
$
1,197,691
                          
Gross loans
  
$
963,656
  
$
960,961
                          
Consumer Real Estate
  
$
373,696
  
$
363,005
                          
Commercial
  
$
408,361
  
$
404,681
                          
Consumer
  
$
181,599
  
$
193,275
                          
Investment securities
  
$
263,272
  
$
230,095
                          
Total deposits
  
$
971,381
  
$
955,854
                          
Noninterest bearing
  
$
120,758
  
$
114,523
                          
Interest bearing
  
$
850,623
  
$
841,331
                          
Shareholders' equity
  
$
98,820
  
$
92,039
                          
 
                                
CAPITAL RATIOS
    
31-Dec
    
31-Dec
                        
Period end capital to risk-
    
2006
    
2005
                        
weighted assets:
                                  
Tier 1
    
11.82
%
  
11.47
%
                        
Total
    
12.97
%
  
12.66
%
                        
 
                                      
ASSET QUALITY
                                   
Net charge-offs for the quarter
  
$
333
  
$
682
                          
Nonperforming assets: (Period End)
                                      
Nonaccrual loans
  
$
4,133
  
$
2,393
                          
Restructured loans
  
$
522
  
$
532
                          
Loans 90 days past due
                                     
and accruing
  
$
658
  
$
989
                          
Other real estate owned
  
$
23
  
$
133
                          
Total nonperforming assets
                                      
and past due loans
  
$
14,788
  
$
11,620
                          
Allowance for credit losses
                                      
to gross loans, at period end
    
0.68
%
  
0.67
%
                        
Nonperforming and 90 day past-due loans
                                      
to total loans, at period end
    
0.50
%
  
0.35
%
                        
Nonperforming loans and 90 day past-due
                                      
loans to total assets, at period end
    
0.36
%
  
0.26
%