First United (FUNC) Q1 2025 earnings summary

Executive summary

• Net income for Q1 2025 was $5.8 million ($0.89 per diluted share), up from $3.7 million in Q1 2024, but down from $6.2 million in Q4 2024.

• EPS rose to $0.90 basic and $0.89 diluted from $0.56 in the prior year period.

• Annualized return on average assets was 1.19% and return on average equity was 12.83% for Q1 2025.

• Margin expansion, solid fee income, and controlled expenses contributed to strong results despite moderate loan production and funding challenges.

• Total assets reached $2.0 billion, net loans were $1.5 billion, and deposits were $1.6 billion as of March 31, 2025.

Financial highlights

• Net interest margin was 3.56% in Q1 2025, up from 3.12% in Q1 2024 and 3.38% in Q4 2024.

• Net interest income increased by $2.2 million year-over-year, driven by higher loan yields and portfolio growth.

• Provision for credit losses was $0.7 million, down from $0.9 million in Q1 2024.

• Operating expenses decreased by $0.3 million year-over-year, mainly due to lower equipment and occupancy costs from prior branch closures.

• Deposits increased by $48.7 million, including $50 million in new brokered deposits used to repay overnight borrowings.

Outlook and guidance

• Management targets 8% loan growth for 2025, though political and economic uncertainties may temper results.

• Management expects to maintain strong capital and liquidity positions, with no material changes in risk factors or market risk procedures since year-end.

• Plans to invest in strategic hires and technology, especially for electronic banking, are expected to increase salary and data processing expenses.

• Interest rate risk is being managed with stress testing under multiple scenarios; the largest risk is in falling rate environments.

• Strategic targets include ROAA of 1.25%-1.60%, ROATCE of 13%-15%, and efficiency ratio of 53%-58%.