FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended September 30, 1994
Commission file number 0-14237
First United Corporation
(Exact name of registrant as specified in its charter)
Maryland 52-1380770
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification no.)
19 South Second Street, Oakland, Maryland 21550
(address of principal executive offices) (zip code)
(301) 334-9471
Registrant's telephone number, including area code
Not applicable
Former name, address and former fiscal year, if changed since
last report.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter periods that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
X Yes No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
Common stock, $.01 Par value--6,191,767 shares outstanding as of
September 30, 1994 Preferred stock, No par value--No shares
outstanding as of September 30, 1994.
-01-
INDEX
FIRST UNITED CORPORATION
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 1994
(Unaudited), December 31, 1993, and September 30, 1993
(Unaudited).
Consolidated Statements of Income (Unaudited) - Three months
ended September 30, 1994, and September 30, 1993.
Consolidated Statements of Income (Unaudited) - Nine months
ended September 30, 1994, and September 30, 1993.
Consolidated Statement of Cash Flows (Unaudited) - Nine
months ended September 30, 1994, and September 30, 1993.
Notes to Unaudited Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-k.
Item 7. Financial Data Schedule
SIGNATURES
-02-
FIRST UNITED CORPORATION
Consolidated Balance Sheet
Sept. 30, Dec. 31, Sept. 30,
ASSETS 1994 1993 1993
(Unaudited) (*) (Unaudited)
Cash and Due From Banks $16,503 $12,832 $13,306
Investments:
Available for Sale:
U.S. Treasury Securities 21,406 0 0
Obl. of Other U S Gov. Agen. 35,199 0 0
Other Investments 21,105 0 0
--------------------------
Total Available for Sale 77,710 0 0
Held to Maturity:
U.S. Treasury Securities 0 23,467 22,567
Obl. of Other U S Govt Agen 3,800 33,315 37,372
Obl. of St. and Loc. Govt 9,195 8,538 9,230
Other Investments 14,658 16,211 18,716
---------------------------
Total Held to Maturity 27,653 81,531 87,885
---------------------------
Total Investment securities 105,363 81,531 87,885
Federal Funds Sold 315 1,903 3,580
Loans 324,769 316,782 315,511
Reserve for Poss. Credit Loss (2,322) (2,306) (2,769)
--------------------------
Net Loans 322,447 314,476 312,742
Bank Premises and Equipment 8,919 8,026 8,064
Acc. Int. Rec. and Other Assets 6,571 4,612 4,932
----------------------------
TOTAL ASSETS $460,118 $423,380 $430,509
============================
* The balance sheet at December 31, 1993 has been derived from
the audited financial statements at that date.
See notes to unaudited consolidated financial statements.
() Indicates Deduction
-03-
FIRST UNITED CORPORATION
Consolidated Balance Sheet
Sept. 30, Dec. 31, Sept. 30,
1994 1993 1993
(Unaudited) (*) (Unaudited)
LIABILITIES
Deposits
Non-int. Bearing Deposits $ 48,233 $ 41,456 $ 37,602
Interest Bearing Deposits 358,284 327,071 340,463
---------------------------
Total Deposits 406,517 368,527 378,065
Res. for Taxes, Int., &
Other Liabilities 2,624 5,821 4,562
Dividends Payable 743 660 548
----------------------------
TOTAL LIABILITIES $409,884 $375,008 $383,175
SHAREHOLDER'S EQUITY
Preferred Stock -No Par Value
Authorized and Unissued; 2,000 Shares
Capital Stock -Par Value $.01 per Share:
Authorized 12,000 shares; Issued and
Outstanding 6,192 shares at Sept. 30,
1994, 6,186 outstanding at December
31, 1993, and 6,167 outstanding at
Sept. 30, 1993 $ 62 $ 62 $ 62
Surplus 23,141 23,005 22,832
Retained Earnings 27,898 25,305 24,440
Unrealized Gains (Losses) on
Avlbl. for Sale Sec. Net of Taxes (867) 0 0
---------------------------
TOTAL SHAREHOLDER'S EQUITY $50,234 $48,372 $47,334
---------------------------
TOTAL LIABILITIES AND
SHAREHOLDER'S EQUITY $460,118 $423,380 $430,509
============================
*The balance sheet at December 31, 1993 has been derived from the
audited financial statements at that date.
See Notes to unaudited consolidated financial statements.
() Indicates Deduction
-04-
FIRST UNITED CORPORATION
Consolidated Statement Of Income
(In Thousands, except per share data)
Three Months
Consolidated (All Subsidiaries) Ended Sept. 30,
1994 1993
(Unaudited)
INTEREST INCOME
Interest and fees on loans $7,131 $7,038
Interest on investment securities:
Taxable 1,069 882
Exempt from federal income tax 117 132
--------------------
$1,186 $1,014
Interest on federal funds sold (18) 57
Interest on time deposit with other banks 3 0
--------------------
TOTAL INTEREST INCOME $8,302 $8,109
INTEREST EXPENSE
Interest on deposits:
Savings $871 $595
Interest-bearing transaction acct. 606 425
Time, $100,000 or more 148 101
Other time 1,234 1,665
--------------------
TOTAL INTEREST EXPENSE $2,859 $2,786
NET INTEREST INCOME $5,443 $5,323
Provision for possible credit losses 2 21
---------------------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE CREDIT LOSSES $5,441 $5,302
OTHER OPERATING INCOME
Trust department income $213 $196
Service charges on deposit accts. 160 335
Security gains 20 0
Other income 601 341
--------------------
Total Other Operating Income $994 $872
OTHER OPERATING EXPENSES
Salaries and Employees Benefits $2,294 $1,894
Occupancy Expense of Premises 170 405
Equipment Expense 311 169
Data Processing Expense 201 89
Deposit Assess. and Related Fees 274 234
Other Expense 936 1,171
---------------------
Total Other Operating Expenses $4,186 $3,962
-05-
INCOME BEFORE TAX $2,249 $2,212
Applicable Income Taxes (725) (749)
----------------------
NET INCOME $1,524 $1,463
======================
NET INCOME PER SHARE $0.25 $0.24
======================
Av. Common Shares Outstanding 6,192 6,190
======================
See Notes A and C to Unaudited consolidated financial statements.
-06-
FIRST UNITED CORPORATION
Consolidated Statement Of Income
(In Thousands, except per share data)
Nine Months
Consolidated (All Subsidiaries) Ended Sept. 30,
1994 1993
(Unaudited)
INTEREST INCOME
Interest and fees on loans $20,909 $20,687
Interest on investment securities:
Taxable 2,763 3,036
Exempt from federal income tax 398 450
--------------------
$3,161 $3,486
Interest on federal funds sold 77 262
Interest on time deposits with other banks 3 0
--------------------
TOTAL INTEREST INCOME $24,231 $24,435
INTEREST EXPENSE
Interest on deposits:
Savings $1,782 $1,634
Int.-bearing transaction acct. 1,566 1,574
Time, $100,000 or more 369 334
Other time 4,284 5,242
--------------------
TOTAL INTEREST EXPENSE $8,001 $8,784
NET INTEREST INCOME $16,230 $15,651
Provision for possible credit losses 165 359
---------------------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE CREDIT LOSSES $16,065 $15,292
OTHER OPERATING INCOME
Trust department income $647 $556
Service charges on deposit accts. 974 1,070
Security gains 23 28
Other income 1,229 810
---------------------
Total Other Operating Income $2,873 $2,464
OTHER OPERATING EXPENSES
Salaries and Employees Benefits $6,547 $5,631
Occupancy Expense of Premises 675 877
Equipment Expense 847 650
Data Processing Expense 431 282
Deposit Assess. and Related Fees 762 691
Other Expense 2,748 3,008
---------------------
Total Other Operating Expenses $12,010 $11,139
-07-
INCOME BEFORE TAX $6,928 $6,617
Applicable Income Tax (2,242) (2,214)
---------------------
NET INCOME $4,686 $4,403
=====================
NET INCOME PER SHARE $0.76 $0.71
=====================
Av. Common Shares Outstanding 6,190 6,185
=====================
See Notes A and C to Unaudited consolidated financial statements.
-08-
FIRST UNITED CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
Nine Months
Ended Sept. 30,
OPERATING ACTIVITIES 1994 1993
(Unaudited)
Net Income $ 4,686 $ 4,403
Adjustments to rec. net income to net cash
provided by operating activities:
Provision for possible credit losses 165 359
Provision for depreciation 643 607
Net accretion & amortization of investment
security discounts & premiums 551 1,045
(Increase)in acc. int. & oth. recvbles.(1,959) 180
Decrease(increase)in accrued interest
& other payables 3,114 (1,290)
--------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 7,200 $ 5,304
INVESTING ACTIVITIES
Proceeds from maturities of available for
sale securities $ 44,286 $ 62,755
Purchases of available for sale securities (56,835) (65,971)
Proceeds form maturities of held to maturity
securities 2,171 0
Purchases of held to maturity securities (10,607) 0
Net (increase)decrease in short-term loans (2,666) 562
Net decrease(increase) in longer-term loans 11,078 (18,728)
Purchases of premises & equipment (1,536) (1,892)
-------------------
NET CASH USED IN INVESTING ACTIVITIES $(14,109) $(23,274)
FINANCING ACTIVITIES ====================
Net increase in demand deposits, NOW
accounts and savings accounts $24,478 $15,392
Net increase (decrease) in certificates of
deposit (13,512) (3,156)
Cash dividends declared (2,104) (2,184)
Proceeds form issuance of capital stock 130 247
NET CASH PROVIDED BY -------------------
FINANCING ACTIVITIES $ 8,992 $ 10,299
-------------------
Cash and cash equivalents at beg. of qtr. $ 14,735 $ 21,747
increase/(decrease) in cash & cash equiv. $ 2,083 $ (7,671)
-------------------
Cash & cash equivalents at end of qtr. $ 16,818 $ 14,076
===================
See Notes A and C to unaudited consolidated financial statements.
-09-
FIRST UNITED CORPORATION
Note to Unaudited Consolidated Financial Statements
Sept. 30, 1994
Note A -- Basis of Presentation
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-Q. Accordingly, they do not include
all the information and footnotes required for complete financial
statements. In the opinion of management, all adjustments
considered necessary for a fair presentation, consisting of
normal recurring items have been included. Operating results for
the nine month period ended Sept. 30, 1994, are not necessarily
indicative of the results that may be expected for the year
ending December 31, 1994. The enclosed consolidated financial
statements should be read in conjunction with the consolidated
financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December
31, 1993.
Per share financial information has been restated for the
100% stock dividend effective in the form of a 2:1 stock split
paid June 15, 1993, and for the 50% stock dividend effective in
the form of a 3:2 stock split paid February 8, 1994.
Note B -- Accounting Change
In May 1993 the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." The
Company adopted the provisions of the new standard for
investments held as of or acquired after January 1, 1994. In
accordance with the Statement, prior period financial statements
have not been restated to reflect the change in accounting
principle. The cumulative effect as of Sept. 30, 1994, of
adopting Statement 115 decreased shareholder's equity by $867,000
(net of $447,000 in deferred income taxes) to reflect the net
unrealized holding losses on securities classified as
available-for-sale. Previously, these securities were carried at
amortized cost or lower-of-cost-or-market.
Note C --
The consolidated financial statements of the Corporation
give retroactive effect to the merger with Myersville Bank, which
has been accounted for as a pooling of interests.
-10-
Part I. Financial Information
Item II. Management's Discussion and Analysis
Consolidated net earnings for First United Corporation during
the third quarter of 1994 amounted to $1.52 million, or $.25 per
share. This compares favorably to $1.46 million, or $.24 per
share for the same quarter of 1993. Year-to-date earnings were
$4.69 million, or $.76 per share which represents an increase of
6.43 percent over the same period in 1993. Year-to-date, Return
on Average Assets (ROAA) was 1.44 percent. The Return on Average
Equity (ROAE) was 12.60 percent for the year. In comparison, the
ROAA and ROAE for the year of 1993 was 1.41 percent and 12.54
percent, respectively.
Net interest income was $16.07 million for the first nine
months of 1994. This represents a 5.05 percent increase over the
first nine months of 1993. Loan growth and effective
asset/liability management made this growth possible. Loans were
the main source of interest income accounting for 86.62 percent
of the total interest income. Other Time Deposits were the main
source of interest expense, totalling $4.28 million of the $8.00
million in total interest expense.
Other operating income increased to $2.87 million, which
represents a $0.41 million increase or 16.60 percent over the
same period a year ago. Increased income earned in some of our
non-traditional product areas, such as Trust services, PRIMEVEST
Financial Services and Oakfirst Life Insurance Company attributed
to the rise in income.
The provision for possible credit losses was $.17 million
for the first nine months of 1994 versus $.36 million for the
first nine months of 1993. Net charge-offs year-to-date were $.15
million versus $.37 million for the same period in 1993. A
hallmark of First United Corporation is its strong emphasis on
maintaining a top quality loan portfolio, achieved through
stringent underwriting standards and a consistent loan review
process.
Non-interest expense increased from $11.14 million for the
first nine months of 1993 to $12.01 million for the same period
in 1994, representing a 7.82 percent increase. Salaries and
employee benefits were the main reasons for this increase. The
Corporation, through solid teamwork of all its staff members,
remains vigilant in its effort to increase efficiency.
-11-
Deposit growth continues to remain steady for the
Corporation during the first nine months of 1994. Total deposits
were $406.52 million, representing a 10.31 percent increase over
year end 1993. Net loans increased $7.97 million to $322.45
million.
Shareholders' equity increased to $50.23 million or a 3.85
percent increase over the end of year 1993. The Corporation
posts a healthy capital position, reflective of a risk-based
capital ratio of 17.82 percent.
The Corporation paid a cash dividend on August 1, 1994, of
$.12 per share to shareholders of record as of June 21, 1994. In
addition, a cash dividend of $0.12 per share was declared on
September 28, 1994. The dividend is payable November 1, 1994, to
shareholders of record as of October 21, 1994.
First United Corporation recently completed a survey of
customers in all regions, identifying quality services levels.
The corporation performed above its peers in almost every
category. Specifically, the staff scored well in the
friendliness they offer and in their responsiveness to inquiries.
The Corporation continues to monitor and strive for improvement
in quality service.
Myersville Bank has been busy during the last few months
introducing additional mortgage, checking, and other services.
Recently the Bank increased its ATM access to include the MAC
network, and its newest office, Riverside Center in North
Frederick, will open its doors in October.
-12-
Part II. OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
The Company did not file any reports on Form
8-K for the period ending September 30, 1994.
-13-
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
First United Corporation
Date 11/09/94 /s/ Richard G. Stanton
-------- --------------------------
Richard G. Stanton, Chairman of the
Board, President, andk Chief Executive
Officer
Date 11/09/94 /s/ Robert W. Kurtz
-------- --------------------------
Robert W. Kurtz, Executive Vice
President and Treasurer
-14-
First United Corporation
Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Dec-31-1993
<PERIOD-END> Sep-30-1994
<CASH> 16,378
<INT-BEARING-DEPOSITS> 125
<FED-FUNDS-SOLD> 315
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 77,710
<INVESTMENTS-CARRYING> 27,653
<INVESTMENTS-MARKET> 27,198
<LOANS> 324,769
<ALLOWANCE> 2,322
<TOTAL-ASSETS> 460,118
<DEPOSITS> 406,517
<SHORT-TERM> 0
<LIABILITIES-OTHER> 3,367
<LONG-TERM> 0
<COMMON> 62
0
0
<OTHER-SE> 50,172
<TOTAL-LIABILITIES-AND-EQUITY> 460,118
<INTEREST-LOAN> 20,990
<INTEREST-INVEST> 3,161
<INTEREST-OTHER> 80
<INTEREST-TOTAL> 24,231
<INTEREST-DEPOSIT> 7,853
<INTEREST-EXPENSE> 8,001
<INTEREST-INCOME-NET> 16,230
<LOAN-LOSSES> 165
<SECURITIES-GAINS> 23
<EXPENSE-OTHER> 12,010
<INCOME-PRETAX> 6,928
<INCOME-PRE-EXTRAORDINARY> 4,686
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,686
<EPS-PRIMARY> .76
<EPS-DILUTED> 0
<YIELD-ACTUAL> 5.40
<LOANS-NON> 773
<LOANS-PAST> 522
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 64
<RECOVERIES> 44
<ALLOWANCE-CLOSE> 2,322
<ALLOWANCE-DOMESTIC> 2,322
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
