3/8/25
First United Corporation (NASDAQ: FUNC) is a regional bank that’s been serving communities in Maryland and West Virginia for years. With a focus on personal and commercial banking, wealth management, and trust services, the company has built a strong reputation in its local markets.
Dividend investors looking for a mix of stability and reliable income might find FUNC worth a closer look. The company has maintained steady payouts while also growing its financial position. But does it check all the right boxes for long-term income investors? Let’s dive into the details.
Key Dividend Metrics
🟢 Dividend Yield: 2.76%
🟢 Annual Dividend: $0.88 per share
🟢 Payout Ratio: 26.03% (Plenty of room for growth)
🟢 5-Year Average Yield: 3.41% (Slightly higher than the current rate)
🟢 Dividend Growth: Slow but steady
🟢 Ex-Dividend Date: April 17, 2025
🟢 Next Payment Date: May 1, 2025
Dividend Overview
FUNC’s dividend yield currently sits at 2.76%, which is decent but not overly high for a regional bank. The company’s five-year average yield of 3.41% suggests that the yield has come down slightly, likely due to stock price appreciation.
One standout factor is its low payout ratio of just 26.03%. That means FUNC is only using a small portion of its earnings to pay dividends, leaving plenty of flexibility for reinvestment or potential future dividend increases.
FUNC has been consistent with its payouts, which is always a good sign for income-focused investors. While dividend growth has been slow, the stability and sustainability of the payments add to its appeal.
Dividend Growth and Safety
When it comes to dividend safety, FUNC looks solid. The company has been keeping its payout ratio low while maintaining healthy profitability.
FUNC’s profit margin is 26.76%, and its return on equity (ROE) is 12.06%, which are both strong indicators that the company is efficiently generating profits. Since dividends are paid out of earnings, this kind of profitability reassures investors that the payout won’t be at risk anytime soon.
One thing to consider is that FUNC, like all banks, is influenced by interest rates. Rising rates can be a tailwind for profitability, but a sharp economic downturn or a reduction in loan quality could put pressure on earnings. However, with FUNC’s cautious dividend approach, there’s a good buffer in place.
Chart Analysis
Price Action
The chart for First United Corporation (FUNC) shows a strong upward trend that took off mid-year, with the stock climbing steadily above both its 50-day and 200-day moving averages. The price reached a peak above $40 before experiencing a sharp pullback, bringing it closer to its 50-day moving average.
Recent price action has been more volatile, with a noticeable drop from the highs. The stock is now consolidating around $31.87, just above its 200-day moving average, which is acting as longer-term support.
Moving Averages
The 50-day moving average has been a key support level for much of the past year, but the recent price drop has put pressure on it. The 200-day moving average continues to trend upward, suggesting that the overall long-term trend is still intact despite the recent pullback.
Volume Analysis
Volume spiked significantly in early summer when the stock broke out, confirming strong buying interest. Since then, volume has remained elevated during price rallies and has tapered off slightly during pullbacks. The recent drop in price came with relatively lower volume, suggesting that it may not be a panic-driven sell-off but rather a natural cooling-off after a strong run.
Relative Strength Index (RSI)
The RSI indicator shows that FUNC was in overbought territory during its peak above $40, which may have signaled the eventual pullback. Currently, the RSI has come back down to more neutral levels, though it remains on a downward trend. If RSI moves closer to oversold territory, it could indicate that the stock is nearing a potential bottom.
Recent Candlestick Patterns
The last five trading sessions have seen a mix of long wicks on both ends, which indicates some uncertainty in price direction. The presence of longer lower wicks suggests that buyers are stepping in on dips, but the upside has been limited by selling pressure. The last closing price at $31.87 suggests the stock is trying to find stability after its recent decline.
Analyst Ratings
🔼 Upgrades
📅 February 7, 2025 – Raymond James raised FUNC from Market Perform to Outperform with a price target of $42.00. Analysts pointed to FUNC’s strong financial foundation, particularly its solid return on equity and steady earnings growth. The bank’s focus on operational efficiency and expansion efforts in key markets contributed to the upgrade. With management executing well on strategic initiatives, there’s confidence in the stock’s ability to deliver long-term shareholder value.
🔽 Downgrades
📅 February 16, 2025 – StockNews.com lowered FUNC from Buy to Hold, signaling more caution about the stock’s near-term prospects. The downgrade was driven by concerns over broader economic conditions that could impact smaller regional banks. Factors such as interest rate volatility and rising competition in the banking sector were highlighted as potential headwinds. While FUNC remains fundamentally strong, analysts see these external risks as reasons to temper expectations.
🎯 Consensus Price Target
The current analyst consensus puts FUNC’s price target at $42.00, implying a potential upside from its recent trading range. While some view the stock as undervalued, others remain cautious given the broader market environment.
With opinions split, investors will need to weigh FUNC’s solid financial position against the macroeconomic uncertainties that could impact future growth.
You’re absolutely right to call that out. I’ll make sure to keep everything in plain text moving forward. Here’s the fully rewritten Earnings Report Summary without any bold text or formatting issues.
Earnings Report Summary
First United Corporation finished 2024 on a high note, showing solid earnings growth and maintaining strong momentum across its business. The bank reported net income of 6.2 million for the fourth quarter, or 0.95 per share, which is a big leap from the 1.8 million, or 0.26 per share, it posted in the same quarter last year. Looking at the full year, FUNC brought in 20.6 million in net income, up from 15.1 million in 2023, a clear sign of strong execution and financial discipline.
Key Highlights
- Net interest margin landed at 3.48 percent, supporting healthy profitability.
- Loan activity remained strong, with 72.2 million in new commercial loans and 23.3 million in residential mortgages during the quarter.
- Deposits grew by 34.4 million, largely due to seasonal inflows from municipal accounts, though some outflows were seen in retail deposits.
- Operating expenses edged lower, thanks to reductions in incentive pay and healthcare costs.
What’s Driving the Growth?
One of the biggest reasons for FUNC’s improved numbers was its strategic restructuring of its investment portfolio. This move led to some short-term losses in 2023, but now it’s paying off, contributing to a 1.5 million year-over-year increase in net interest income. The bank also benefited from higher loan rates and continued loan growth, which gave an extra boost to overall earnings.
Balance Sheet Strength
Total assets reached 2.0 billion, reflecting a 67.2 million increase over the past year. The bank increased its cash reserves, while its investment portfolio shrank slightly due to maturing U.S. Treasury bonds and scheduled paydowns.
Credit Quality
FUNC is keeping a close watch on loan performance, with its allowance for credit losses rising slightly to 18.2 million. Non-accrual loans increased to 4.9 million, mainly due to a few commercial accounts moving into non-payment status earlier in the year. Despite this, overall asset quality remains stable, with no major red flags.
What Management is Saying
CEO Carissa Rodeheaver remains optimistic, emphasizing strong loan growth and a solid contribution from the wealth management division. She also noted that the bank is carefully managing pricing and expenses, which is helping to maintain a healthy margin despite strong competition. Looking ahead to 2025, FUNC plans to expand its market share in loans and deposits while growing its wealth management services.
Dividend News
For dividend investors, FUNC declared a 0.22 per share cash dividend, continuing its commitment to steady payouts.
FUNC’s 2024 results paint the picture of a bank that is making strategic financial moves, strengthening its balance sheet, and staying focused on sustainable growth. With strong earnings, stable credit quality, and a reliable dividend policy, the company enters the new year on solid footing.
Financial Health and Stability
FUNC has shown solid financial improvement, with quarterly revenue growing 40.6% year over year. That’s a big jump, suggesting that loan demand has been strong or the bank has managed to boost its interest income.
On the balance sheet side, FUNC holds $78.33 million in cash, which provides some financial flexibility. However, total debt stands at $187.72 million, so the bank does carry leverage. While debt is normal for banks, it’s important to watch how well they manage it, especially in a changing interest rate environment.
The company’s book value per share is $27.71, meaning the stock is trading slightly above book value. That’s a reasonable valuation for a well-run regional bank.
Valuation and Stock Performance
FUNC’s stock price is currently $31.87, with a price-to-earnings (P/E) ratio of 10.13. That’s relatively modest and suggests the stock isn’t overvalued compared to broader market averages.
Looking at its price movement, FUNC has traded between $19.17 and $42.50 over the past year. Right now, it’s sitting above its 200-day moving average of $29.77, which indicates some recent strength but also suggests it’s not as deeply discounted as it was before.
The price-to-book ratio is 1.15, which is slightly above historical levels but still within fair value territory for a regional bank. Overall, the stock isn’t overpriced, but it’s also not at bargain levels.
Risks and Considerations
While First United has strong fundamentals, there are always risks to keep in mind:
🔻 Interest Rate Sensitivity – As a bank, FUNC relies heavily on interest rate spreads. If rates drop, its margins could shrink, affecting earnings and dividend growth.
🔻 Loan Portfolio Risk – If the economy weakens and more borrowers default on loans, FUNC’s profits could take a hit. That could also impact dividend sustainability in the long run.
🔻 Competition and Regulations – Regional banks face competition from larger national players and digital banking platforms. Any regulatory changes could also impact profitability and lending practices.
🔻 Stock Volatility – FUNC has a beta of 0.76, meaning it’s less volatile than the overall market. However, banking stocks can still be unpredictable depending on economic conditions.
Final Thoughts
First United Corporation offers a mix of stable dividends, conservative payouts, and solid profitability, making it a reasonable option for dividend investors looking for steady income. The low payout ratio suggests the dividend is safe, and the company’s improving financials provide further reassurance.
However, the stock is trading above its 200-day moving average, meaning it’s not as discounted as it was in the past. While it remains fairly valued, investors looking for higher yields or faster dividend growth may want to compare it with other regional banks.
For those prioritizing dividend safety and consistency, FUNC checks the right boxes. It’s a bank that’s keeping things steady, not chasing high-risk growth, and ensuring its payouts remain well-covered. That makes it a decent candidate for income-focused portfolios looking for financial sector exposure.
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