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FIRST UNITED CORP/MD/ (FUNC)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered net income of $6.0M and diluted EPS of $0.92, up from $0.75 in Q2 2024 and $0.89 in Q1 2025 .
  • Net interest margin expanded to 3.65%, from 3.56% in Q1 2025 and 3.49% in Q2 2024, supported by higher loan yields and controlled funding costs .
  • Versus S&P Global consensus: EPS beat by $0.08 ($0.92 vs $0.84); Revenue modest miss by $0.32M ($20.93M vs $21.26M). Values retrieved from S&P Global.
  • Management sees stronger loan growth in H2 on robust pipelines and plans continued investment in talent and technology to improve efficiency and customer experience; dividend maintained at $0.22 per share .

What Went Well and What Went Wrong

What Went Well

  • Margin expansion on higher loan yields and stable funding costs; NIM rose to 3.65%. “The second quarter remained strong, driven by our increasing net interest margin… [and] favorable interest income in our loan portfolio” — CEO Carissa Rodeheaver .
  • Strong loan production: $65.1M commercial originations and $19.2M residential mortgage originations; commercial pipelines $32.3M and unfunded committed construction loans ~$47.0M .
  • Asset quality stable: nonaccrual loans fell to $3.8M (from $4.9M at 12/31/24), net charge-offs were $0.151M, and ACL/loans remained ~1.27% .

What Went Wrong

  • Operating expenses increased $0.4M q/q, driven by data processing, OREO, professional services, and investor relations costs .
  • Provision for credit losses rose to $0.86M vs $0.66M in Q1, tied to loan growth and higher unfunded commitments amid economic uncertainty .
  • Interest-bearing demand deposits declined $21.2M q/q (seasonal swing in municipal balances and higher spending), with ICS balances down; retail time deposits were only modestly higher .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Net Interest Income ($USD Thousands)$15,238 $16,016 $16,707
Other Operating Income ($USD Thousands)$4,782 $4,822 $4,940
Net Gains ($USD Thousands)$59 $92 $146
Provision for Credit Losses ($USD Thousands)$1,194 $656 $860
Other Operating Expense ($USD Thousands)$12,364 $12,576 $12,974
Net Income ($USD Thousands)$4,914 $5,806 $5,984
Diluted EPS ($USD)$0.75 $0.89 $0.92
Net Interest Margin (%)3.49% 3.56% 3.65%

KPIs and balance sheet indicators:

KPIQ2 2024Q1 2025Q2 2025
Book Value per Share ($)$25.39 $28.35 $29.43
Dividend per Share ($)$0.22 $0.22 $0.22
Nonaccrual Loans ($USD Thousands)$9,438 $4,026 $3,813
ACL / Loans (%)1.26% 1.25% 1.27%
Total Deposits ($USD Thousands)$1,537,071 $1,623,574 $1,614,207

Loan production and pipeline:

MetricQ1 2025Q2 2025
Commercial Originations ($USD Millions)$36.1 $65.1
Residential Mortgage Originations ($USD Millions)$11.4 $19.2
Commercial Pipeline ($USD Millions)$56.0 $32.3
Unfunded Commercial Construction Commitments ($USD Millions)$41.7 $47.0

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Loan Growth OutlookFY 2025“Working towards an 8% increase in loans; could be tempered by political uncertainties” (Q1 mgmt comment) “Expects stronger growth in the second half on strong pipelines” (Q2 mgmt comment) Maintained (qualitative)
Technology/Data Processing InvestmentFY 2025Expect higher salaries/benefits and data processing expenses through the year Operating expenses increased q/q from data processing and other items Maintained (execution underway)
DividendQ2/Q3 2025$0.22 per share declared for Q2 (payable May 1) $0.22 per share declared (payable Aug 1) Maintained
Effective Tax RateQ1 vs H1 202524.6% (Q1) 24.7% (H1) Maintained (no formal guidance provided)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Technology initiativesPlan to invest in enhanced technology; focus on electronic banking experience (Q1) Continue to add talent and focus on technologies to improve efficiencies and enhance customer experience Increasing focus/investment
Funding costs / deposit competitionFunding challenges amid inflation; competition high (Q1) Funding costs controlled; brokered CDs replaced overnight borrowings; interest-bearing demand down seasonally Improving cost discipline; mixed deposit mix
Loan growth / pipelinesRobust Q4 loan growth; locked in borrowing costs via FHLB advances (Q4) Commercial originations strong; pipelines remain healthy; expected stronger H2 growth Improving
Non-interest expensesQ4 decline; Q1 increased from salaries/benefits and occupancy Q2 increased from data processing, OREO, professional services, IR Rising structurally with tech investments
Asset qualityElevated NPLs in early 2024; improved by Q4/Q1 Nonaccruals down to $3.8M; net charge-offs low Improving

Note: No public Q2 2025 earnings call transcript was found for FUNC; themes reflect management commentary in press releases .

Management Commentary

  • “The second quarter remained strong, driven by our increasing net interest margin…We will continue to add talent when the opportunity presents itself and to focus on technologies that will improve efficiencies long-term and to enhance our customer experience.” — Carissa Rodeheaver, Chairman, President & CEO .
  • Q1 tone emphasized margin expansion, fee stability, and controlled expenses while acknowledging funding challenges amid inflation and competition; commitment to invest in electronic banking experience was reiterated .

Q&A Highlights

  • A public Q2 2025 earnings call transcript was not available. No Q&A disclosures to report for this quarter [ListDocuments (no transcript found)].

Estimates Context

MetricConsensus (S&P Global)ActualResult
EPS ($)0.84*0.92 Bold beat of $0.08*
Revenue ($USD Millions)21.26*20.93*Miss of $0.32M*

Values retrieved from S&P Global. EPS actual from company press release .

Implications: EPS beat driven by NIM expansion and higher loan yields; revenue classification differences aside, non-interest income gains and net interest income increases supported results .

Key Takeaways for Investors

  • NIM expansion to 3.65% and continued yield improvement on loans underpin earnings momentum; watch for sustainability if rate environment shifts .
  • Strong production and healthy pipelines position H2 for loan growth, but higher provision tied to growth and unfunded commitments warrants ongoing credit discipline .
  • Expense trajectory rising with technology investments and data processing; efficiency ratio trends remain favorable YTD (59.66% vs 63.48% last year) .
  • Deposit mix showed seasonal softness in interest-bearing demand; brokered CDs strategically replaced overnight borrowings, stabilizing funding costs .
  • Asset quality improved: nonaccruals down, low net charge-offs, ACL coverage consistent; continue monitoring C&I exposures where prior charge-offs occurred .
  • Dividend maintained at $0.22 per share; book value per share increased to $29.43, reflecting retained earnings and AOCI improvement .
  • Near-term trading: EPS beat and NIM expansion are positive catalysts; medium-term thesis hinges on executing growth while managing expense inflation and deposit competition .