FUNC's Net Income Jumps 30% on Strong Loan Growth

Ticker: FUNC · Form: 10-Q · Filed: Nov 5, 2025 · CIK: 763907

Sentiment: bullish

Topics: Regional Banking, Net Income Growth, Loan Growth, Dividend Increase, Asset Quality, Financial Performance, Shareholder Equity

Related Tickers: FUNC

TL;DR

**FUNC is crushing it with a 30% net income jump and lower short-term debt – time to buy!**

AI Summary

First United Corporation (FUNC) reported a robust financial performance for the nine months ended September 30, 2025, with net income increasing by 30.28% to $18.738 million from $14.383 million in the prior year. Total interest income grew by 9.42% to $74.695 million, primarily driven by a 10.99% increase in interest and fees on loans to $67.109 million. Net interest income also saw a significant rise of 13.21% to $50.126 million. Total assets expanded by 2.58% to $2.024 billion as of September 30, 2025, up from $1.973 billion at December 31, 2024. The allowance for credit losses on loans increased to $19.089 million from $18.170 million, reflecting a cautious approach to credit risk. Total deposits increased by 6.61% to $1.679 billion, while short-term borrowings decreased substantially by 69.11% to $20.207 million. Shareholders' equity improved by 11.05% to $199.099 million, indicating stronger financial health. Basic net income per share increased to $2.89 from $2.20, and dividends declared per share rose to $0.70 from $0.62.

Why It Matters

This strong performance from First United Corporation signals a healthy regional banking environment, particularly for investors seeking dividend growth, as evidenced by the increased dividend per share. The significant reduction in short-term borrowings suggests improved liquidity management and reduced reliance on potentially volatile funding sources, which could enhance investor confidence. For customers, the growth in loans indicates continued lending activity, supporting local economic development. Competitively, FUNC's ability to grow net interest income and manage credit losses effectively positions it well against other regional banks, potentially attracting more deposits and loan demand in its operating areas.

Risk Assessment

Risk Level: medium — While net income and assets grew, the allowance for credit losses on loans increased by 5.06% to $19.089 million, and total credit loss expense rose to $2.026 million for the nine months ended September 30, 2025, compared to $2.404 million in the prior year. This indicates ongoing, albeit managed, credit risk within the loan portfolio, which could impact future profitability if economic conditions deteriorate.

Analyst Insight

Investors should consider FUNC's consistent dividend growth and strong net income performance as indicators of a stable regional bank. Monitor future credit loss provisions and loan growth rates to ensure the bank maintains its asset quality amidst expansion. This filing suggests a positive outlook, but vigilance on credit metrics is warranted.

Financial Highlights

revenue
$74,695,000
total Assets
$2,023,974,000
total Debt
$116,136,000
net Income
$18,738,000
eps
$2.89
cash Position
$95,175,000
revenue Growth
+9.42%

Revenue Breakdown

SegmentRevenueGrowth
Interest and fees on loans$67,109,000+10.99%
Interest on investment securities$5,524,000+3.87%

Key Numbers

Key Players & Entities

FAQ

What were First United Corporation's key financial highlights for the nine months ended September 30, 2025?

First United Corporation reported a net income of $18.738 million, a 30.28% increase from $14.383 million in the prior year. Total interest income rose by 9.42% to $74.695 million, and net interest income increased by 13.21% to $50.126 million.

How did First United Corporation's loan portfolio perform in the latest quarter?

Interest and fees on loans increased by 10.99% to $67.109 million for the nine months ended September 30, 2025. Net loans grew to $1.477 billion from $1.462 billion at December 31, 2024, indicating continued lending activity.

What is the trend in First United Corporation's credit loss expense?

For the nine months ended September 30, 2025, total credit loss expense was $2.026 million, a decrease from $2.404 million in the same period of 2024. However, the allowance for credit losses on loans increased to $19.089 million from $18.170 million at December 31, 2024.

Did First United Corporation increase its dividends per share?

Yes, First United Corporation declared dividends of $0.70 per share for the nine months ended September 30, 2025, an increase from $0.62 per share in the same period of 2024.

What changes occurred in First United Corporation's liabilities and shareholders' equity?

Total deposits increased by 6.61% to $1.679 billion, while short-term borrowings significantly decreased by 69.11% to $20.207 million. Total shareholders' equity improved by 11.05% to $199.099 million as of September 30, 2025.

How does First United Corporation's performance compare to the previous year's third quarter?

For the three months ended September 30, 2025, net income was $6.948 million, up from $5.771 million in the same period of 2024. Basic net income per share increased to $1.07 from $0.89.

What was the impact of investment securities on First United Corporation's income?

Net gains on investments available for sale contributed $97 thousand to other operating income for both the three and nine months ended September 30, 2025, compared to zero in the prior year periods.

What were the trends in First United Corporation's operating expenses?

Total other operating expenses increased to $38.536 million for the nine months ended September 30, 2025, from $37.559 million in the prior year. Salaries and employee benefits rose to $22.239 million from $21.573 million.

What is First United Corporation's current cash and cash equivalents position?

As of September 30, 2025, cash and cash equivalents stood at $95.175 million, an increase from $78.327 million at the beginning of the year.

How has First United Corporation's pension asset changed?

The pension asset increased to $21.382 million as of September 30, 2025, from $17.824 million at December 31, 2024, reflecting improved funding or asset performance.

Risk Factors

Industry Context

First United Corporation operates within the community banking sector, characterized by a focus on local markets and customer relationships. The industry is highly competitive, with increasing pressure from larger national banks and fintech companies. Trends include a focus on digital transformation, evolving customer expectations for seamless service, and navigating a dynamic interest rate environment.

Regulatory Implications

As a regulated financial institution, First United Corporation is subject to stringent oversight from bodies like the Federal Reserve and the FDIC. Compliance with capital adequacy ratios, consumer protection laws, and anti-money laundering regulations is paramount. Any shifts in regulatory policy, such as changes to reserve requirements or lending standards, can directly impact profitability and operational strategies.

What Investors Should Do

  1. Monitor loan growth and credit quality trends.
  2. Analyze the impact of interest rate changes on net interest margin.
  3. Evaluate the sustainability of deposit growth.
  4. Assess the company's capital adequacy and shareholder returns.

Key Dates

Glossary

Allowance for credit losses
An estimate of the amount of loans that may not be repaid by borrowers. It is a contra-asset account that reduces the carrying value of loans on the balance sheet. (The increase to $19.089 million indicates a prudent approach to potential loan defaults, reflecting management's assessment of credit risk in the loan portfolio.)
Net interest income
The difference between the interest income generated by a financial institution's interest-earning assets (like loans and securities) and the interest expense paid on its interest-bearing liabilities (like deposits and borrowings). (A 13.21% increase to $50.126 million signifies improved profitability from core lending and investment activities.)
Short-term borrowings
Debt that is due within one year, often used by banks to manage short-term liquidity needs. (A significant decrease of 69.11% to $20.207 million suggests reduced reliance on more volatile funding sources and a stronger base of customer deposits.)
Accumulated other comprehensive loss
A component of shareholders' equity that includes unrealized gains and losses on certain investments (like available-for-sale securities) and other items that are not included in net income. (The reduction in accumulated other comprehensive loss (from -$30.248M to -$25.453M) contributed positively to the growth in shareholders' equity.)
Interest bearing deposits
Deposits held by a financial institution that earn interest for the depositor. (An increase to $1.249 billion reflects growth in customer funding, which is typically a stable and lower-cost source of funds compared to other borrowings.)

Year-Over-Year Comparison

Compared to the prior year-end (December 31, 2024), First United Corporation has demonstrated significant positive momentum. Total assets grew by 2.58% to $2.024 billion, and total deposits saw a healthy increase of 6.61% to $1.679 billion. Notably, short-term borrowings were drastically reduced by 69.11%, indicating a stronger reliance on stable deposit funding. Shareholders' equity also improved by 11.05% to $199.099 million, reflecting enhanced financial health. The company's profitability for the nine months ended September 30, 2025, surged with net income up 30.28% and net interest income rising 13.21%, signaling effective operational performance.

Filing Stats: 4,398 words · 18 min read · ~15 pages · Grade level 20 · Accepted 2025-11-05 16:07:30

Key Financial Figures

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 3 Item 1.

Financial Statements (unaudited)

Financial Statements (unaudited) 3 Consolidated Statements of Financial Condition – September 30, 2025 and December 31, 2024 3 Consolidated Statements of Operations – for the nine and three months ended September 30, 2025 and 2024 4 Consolidated Statements of Comprehensive Income – for the nine and three months ended September 30, 2025 and 2024 6 Consolidated Statements of Changes in Shareholders' Equity – for the nine and three months ended September 30, 2025 and 2024 8 Consolidated Statements of Cash Flows – for the nine months ended September 30, 2025 and 2024 10

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 11 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 49 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 68 Item 4.

Controls and Procedures

Controls and Procedures 68

OTHER INFORMATION

PART II. OTHER INFORMATION 69 Item 1.

Legal Proceedings

Legal Proceedings 69 Item 1A.

Risk Factors

Risk Factors 69 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 69 Item 3. Defaults upon Senior Securities 69 Item 4. Mine Safety Disclosures 69 Item 5. Other Information 69 Item 6. Exhibits 70

SIGNATURES

SIGNATURES 71 2 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements First United Corporation and Subsidiaries Consolidated Statements of Financial Condition (In thousands, except share data - Unaudited) September 30, 2025 December 31, 2024 Assets Cash and due from banks $ 92,268 $ 77,020 Interest bearing deposits in banks 2,907 1,307 Cash and cash equivalents 95,175 78,327 Investment securities – available for sale (at fair value) 105,060 94,494 Investment securities – held to maturity, net of allowance for credit losses of $ 102 at September 30, 2025 and $ 59 at December 31, 2024 (fair value $ 149,130 at September 30, 2025 and $ 144,760 at December 31, 2024) 172,818 175,497 Equity investments not held for trading with readily determinable fair values 1,020 — Restricted investment in bank stock, at cost 4,628 5,768 Loans held for sale 861 806 Loans 1,496,762 1,480,793 Unearned fees ( 473 ) ( 442 ) Allowance for credit losses ( 19,089 ) ( 18,170 ) Net loans 1,477,200 1,462,181 Premises and equipment, net 30,369 30,081 Goodwill and other intangibles 11,526 11,773 Bank owned life insurance 49,997 48,952 Deferred tax assets 8,228 9,989 Other real estate owned, net 2,718 3,062 Repossessed assets 3,043 2,802 Right of use assets 984 1,204 Pension asset 21,382 17,824 Accrued interest receivable 7,479 7,473 Other assets 31,486 22,789 Total Assets $ 2,023,974 $ 1,973,022 Liabilities and Shareholders' Equity Liabilities: Non-interest bearing deposits $ 429,986 $ 426,737 Interest bearing deposits 1,248,916 1,148,092 Total deposits 1,678,902 1,574,829 Short-term borrowings 20,207 65,409 Long-term borrowings 95,929 120,929 Operating lease liability 1,152 1,384 SERP deferred compensation 8,530 8,335 Allowance for credit losses on off-balance sheet credit exposures 981 863 Accrued interest payable 661 489 Other liabilities 16,824 20,065

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1 – Basis of Presentation The financial information is presented in accordance with generally accepted accounting principles and general practice for financial institutions in the United States of America ("GAAP"). First United Corporation has prepared these unaudited condensed consolidated financial statements in accordance with GAAP for interim financial information, rules of the Securities and Exchange Commission that permit reduced disclosure for interim periods, and Article 8 of Regulation S-X. Operating results for the nine- and three-month periods ended September 30, 2025 are not necessarily indicative of the results that may be expected for the full year or for any future interim period. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in First United Corporation's Annual Report on Form 10-K for the year ended December 31, 2024. In preparing financial statements, management is required to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities as of the date of financial statements. In addition, these estimates and assumptions affect revenues and expenses in the financial statements and, as such, actual results could differ from those estimates. In the opinion of management, all adjustments (all of which are of a normal recurring nature) that are necessary for a fair statement are reflected in the unaudited condensed consolidated financial statements. Principles of Consolidation The consolidated financial statements include the accounts of First United Corporation, First United Bank & Trust (the "Bank"), First United Statutory Trust I, First United Statutory Trust II, OakFirst Loan Center, LLC, OakFirst Loan Center, Inc. and First OREO Trust. All significant inter-company accounts and transactions have been e

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