Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____to _____ Commission file number 0-14237 First United Corporation (Exact name of registrant as specified in its charter) | Maryland | 52-1380770 | | --- | ...

Company Overview - First United Corporation (FUNC) is headquartered in Oakland and operates in the Finance sector [3] - The stock has experienced a price change of -2.99% since the beginning of the year [3] Dividend Information - FUNC currently pays a dividend of $0.26 per share, resulting in a dividend yield of 2.86% [3] - The company's annualized dividend of $1.04 has increased by 13% from the previous year [4] - Over the last 5 years, FUNC has raised its dividend 3 times, achieving an average annual increase of 13.06% [4] - The current payout ratio for FUNC is 26%, indicating that it pays out 26% of its trailing 12-month earnings per share as dividends [4] Earnings Growth - For the fiscal year, FUNC anticipates solid earnings growth, with the Zacks Consensus Estimate for 2026 projected at $4.25 per share, reflecting a year-over-year growth rate of 7.05% [5] Investment Appeal - FUNC is considered a compelling investment opportunity due to its attractive dividend and strong Zacks Rank of 2 (Buy) [6] - The company is positioned well as a dividend option, especially compared to the Banks - Northeast industry's yield of 2.31% and the S&P 500's yield of 1.36% [3]

Core Viewpoint - First United Corporation (FUNC) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which have a strong correlation with near-term stock price movements [4][6]. - Rising earnings estimates for First United suggest an improvement in the company's underlying business, likely leading to an increase in stock price [5]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a proven track record of Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [7]. - The upgrade of First United to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10]. Earnings Estimate Revisions - First United is expected to earn $4.25 per share for the fiscal year ending December 2026, with no year-over-year change, but the Zacks Consensus Estimate has increased by 1.2% over the past three months [8].

Financial Performance - GAAP net income for the year 2025 was $24.5 million, or $3.77 per diluted share, an increase from $20.6 million, or $3.15 per diluted share in 2024[2]. - Non-GAAP net income for the year 2025 was $25.8 million, or $3.97 per diluted share, compared to $21.0 million, or $3.21 per diluted share in 2024[2]. - Net income for the twelve months ended December 31, 2025, was $24,515,000, representing a 19.0% increase from $20,569,000 in 2024[36]. - Basic net income per share for Q4 2025 was $0.89, down from $0.95 in Q4 2024[36]. - Reported net income for Q4 2025 was $5,777,000, a decrease of 6.6% from $6,186,000 in Q4 2024, while the adjusted net income increased to $7,181,000 from $6,186,000[47]. Income and Expenses - Year-to-date net interest income for 2025 increased by $8.1 million, driven by an $8.6 million increase in interest and fees on loans[9]. - Interest income for Q4 2025 was $26,153,000, an increase of 10.1% from $23,725,000 in Q4 2024[36]. - Net interest income for the twelve months ended December 31, 2025, was $68,113,000, up 13.5% from $59,978,000 in 2024[36]. - Total interest income for 2025 reached $100,848,000, an increase from $91,993,000 in 2024, representing a growth of approximately 9.9%[43]. - Total interest expense for 2025 was $32,735,000, compared to $32,015,000 in 2024, reflecting an increase of approximately 2.2%[43]. Asset and Liability Management - Total assets at December 31, 2025 were $2.1 billion, reflecting a $114.4 million increase since December 31, 2024[21]. - Total liabilities at December 31, 2025 were $1.9 billion, representing a $90.1 million increase since December 31, 2024[22]. - Total deposits increased by $160.3 million when compared to December 31, 2024, with brokered time deposits rising by $50.0 million[22]. - Total assets increased to $2,087,453,000 in 2025, compared to $1,973,022,000 in 2024, reflecting a growth of 5.8%[37]. - Total deposits rose to $1,735,149,000 in 2025, a 10.2% increase from $1,574,829,000 in 2024[38]. Loan and Credit Quality - Commercial loan originations for Q4 2025 were $108.0 million, with residential mortgage originations at $25.3 million[4]. - Outstanding loans increased by $40.9 million to $1.5 billion at December 31, 2025 compared to December 31, 2024[23]. - The allowance for credit losses was $19.5 million at December 31, 2025, compared to $18.2 million at December 31, 2024[29]. - The ratio of net charge-offs to average loans was 0.07% for the year ended December 31, 2025, down from 0.16% in 2024[30]. - Non-performing assets to total assets decreased to 0.41% in 2025 from 0.59% in 2024, showing improved asset quality[38]. Operational Efficiency - The efficiency ratio improved to 58.19% in 2025 from 61.31% in 2024, indicating better operational efficiency[36]. - The provision for credit losses increased to $717,000 from $510,000 in the previous quarter, indicating a rise in expected credit losses[40]. - Return on average assets was reported at 1.21%, slightly down from 1.24% in the previous quarter[40]. - Return on average shareholders' equity decreased to 12.70% from 13.23% in the prior quarter[40]. - The efficiency ratio improved to 58.19%, down from 58.73% in the prior quarter, indicating better cost management[40]. Shareholder Returns - A cash dividend of $0.26 per share was declared in Q4 2025[4]. - The company declared dividends of $0.26 per share in Q4 2025, compared to $0.22 per share in Q4 2024, reflecting a 18.2% increase[36]. - Dividends declared per common share increased to $0.96 in 2025 from $0.84 in 2024, representing a growth of approximately 14.3%[43]. - Basic book value per share rose to $31.33 in Q4 2025 from $27.71 in Q4 2024, indicating a solid increase in shareholder equity[47].

Core Insights - First United Corporation reported a GAAP net income of $24.5 million for the year ended December 31, 2025, an increase from $20.6 million in 2024, translating to $3.77 per diluted share compared to $3.15 per diluted share in the previous year [1] - The company achieved record core earnings of $25.8 million, or $3.97 per diluted share, for the year, driven by a strong net interest margin and disciplined expense management [2][5] - The fourth quarter of 2025 saw a GAAP net income of $5.8 million, down from $6.2 million in Q4 2024, primarily due to increased non-interest expenses [4][6] Financial Performance - Year-to-date net income for 2025 increased by $3.9 million compared to 2024, with net interest income rising by $8.1 million due to higher loan yields and new loan production [10][13] - The net interest margin on a non-GAAP basis was 3.75% for Q4 2025, reflecting increased loan yields and stable funding costs [8][11] - Total assets reached $2.1 billion, a $114.4 million increase from the previous year, with gross loans increasing by $40.9 million [22][24] Income Statement Overview - For Q4 2025, net interest income was $17.987 million, up from $15.700 million in Q4 2024, while other operating income increased to $5.330 million from $4.924 million [37] - Operating expenses for Q4 2025 rose by $2.8 million compared to Q4 2024, largely due to increased OREO expenses and salaries [18][20] Balance Sheet Overview - Total liabilities increased to $1.9 billion, with total deposits rising by $160.3 million compared to December 31, 2024 [23][39] - The book value of common stock increased to $31.33 per share at December 31, 2025, up from $27.71 per share in 2024 [29] Asset Quality - The allowance for credit losses was $19.5 million at December 31, 2025, compared to $18.2 million in 2024, with a stable ratio of ACL to loans outstanding at 1.28% [30][31] - Non-accrual loans decreased to $4.2 million at December 31, 2025, down from $4.9 million in 2024, indicating improved asset quality [34]

Group 1 - First United Corporation declared a cash dividend of $0.26 per share, payable on February 2, 2026, to shareholders of record as of January 16, 2026 [1] - First United Corporation is the parent company of First United Bank & Trust, which operates as a Maryland trust company with commercial banking powers [1] - The Bank's subsidiaries include OakFirst Loan Center, Inc. and OakFirst Loan Center, LLC, both finance companies, and First OREO Trust, which manages real estate acquired through foreclosure [1] Group 2 - The Corporation holds a 99.9% interest in Liberty Mews Limited Partnership, focused on low-income housing development in Garrett County, Maryland [1] - Additionally, the Corporation owns a 99.9% non-voting membership interest in MCC FUBT Fund, LC, aimed at low-income housing in Allegany County, Maryland [1]

Core Points - Carissa L. Rodeheaver, Chairman, President, and CEO of First United Corporation, will retire after the 2026 annual meeting, with a transition to Executive Chairman starting January 1, 2026 [1][2] - Under Rodeheaver's leadership since 2016, First United has experienced transformative growth, record financial performance, and a steady increase in stock price [2][3] - Jason B. Rush will succeed Rodeheaver as President and CEO effective January 1, 2026, having served as Senior Vice President and COO since 2017 [4][5] Company Performance - First United Corporation achieved record financial performance and maintained a balanced approach to growth and risk management during Rodeheaver's tenure [2][3] - As of September 30, 2025, the Corporation reported assets of $2 billion [6] Leadership and Initiatives - Rodeheaver has been instrumental in enhancing shareholder value, advancing digital transformation, and fostering a culture of integrity and community engagement [3][5] - The establishment of the First United Community Dreams Foundation and the launch of the financial education platform, Finture, were key initiatives during her leadership [3] Succession Planning - The Board of Directors has a succession plan in place, with Jason B. Rush set to take over leadership roles, ensuring continuity in management [4][5] - Following her retirement, Rodeheaver will remain available in an advisory capacity to support the transition [5]

Financial Performance - Consolidated net income for Q3 2025 was $6.9 million, or $1.07 per share, up from $5.8 million, or $0.89 per share, in Q3 2024[170] - Basic net income per share for the nine months ended September 30, 2025, was $2.89, up from $2.20 in the same period of 2024, representing a growth of 31.4%[197] - Return on Average Assets for the nine months ended September 30, 2025, was 1.24%, an increase from 0.99% in the same period of 2024[197] Income and Expenses - Net interest income increased by $5.8 million for the first nine months of 2025, driven by a $6.4 million rise in interest income due to higher loan rates[172] - Operating expenses increased by $0.7 million in Q3 2025, with salaries and employee benefits accounting for a $0.4 million rise due to merit increases and staffing[175] - Other operating expenses for the first nine months of 2025 increased by $1.0 million, mainly due to a $0.7 million rise in salaries and employee benefits[176] Assets and Liabilities - Total assets as of September 30, 2025, were $2.0 billion, with net loans at $1.5 billion and deposits at $1.7 billion[168] - Total liabilities at September 30, 2025, were $1.8 billion, reflecting an increase of $31.1 million since December 31, 2024[199] - Total deposits increased by $104.1 million compared to December 31, 2024, driven by new brokered time deposits and increases in savings and money market accounts[199] Interest Income and Margin - Interest income for Q3 2025 was $25.8 million, compared to $23.3 million in Q3 2024, reflecting a year-over-year increase[179] - Net interest margin for the nine months ended September 30, 2025, was 3.64%, up from 3.34% in the same period of 2024[179] - The net interest margin for the third quarter of 2025 was 3.69%, compared to 3.46% in the same quarter of 2024[183] Credit Quality - Provision for credit losses decreased by $0.4 million in the first nine months of 2025, attributed to strong credit quality and lower charge-offs[172] - Net credit loss expense for the first nine months of 2025 was $2.0 million, a decrease from $2.4 million in the same period of 2024, attributed to strong credit quality[191] - Non-accrual loans decreased to $3.8 million at September 30, 2025, down from $4.9 million at December 31, 2024, due to principal paydowns and a charge-off of $0.5 million[203] Capital Ratios - As of September 30, 2025, the Bank's Total Capital ratio was 15.42%, exceeding the required 8.00% for capital adequacy[251] - The Tier 1 Capital ratio was reported at 14.17% as of September 30, 2025, above the required 6.00%[251] - The Bank was considered "well capitalized" under the regulatory framework for prompt corrective action as of both September 30, 2025, and December 31, 2024[251] Loan Production - New commercial loan production for Q3 2025 was approximately $29.8 million, with year-to-date production at $139.0 million, up from $117.0 million for the same period in 2024[201] - New consumer mortgage loan production for Q3 2025 was approximately $20.8 million, primarily consisting of in-house mortgages[202] Investment Portfolio - The total amortized cost basis of the available-for-sale investment portfolio was $123.2 million, with a fair value of $105.1 million as of September 30, 2025[216] - The total fair value of investment securities available for sale increased by $10.6 million since December 31, 2024, due to reinvestment into higher yield securities[216] - The company reported a net unrealized loss of $18.1 million on available-for-sale securities, reflecting the difference between fair value and amortized cost[216]

Core Insights - U.S. stocks experienced a rise, driven by strong quarterly earnings from companies like Cisco Systems and Wal-Mart, with the Dow Jones industrial average increasing by over 180 points [2] Company Analysis - First United Corp (FUNC) is highlighted as a stock pick, currently priced at $36 per share, with a compounded annual growth in revenue and net operating profit after tax (NOPAT) of 7% and 18% since 2014, respectively [5] - The NOPAT margin for First United has improved from 8% in 2014 to 23% in the trailing twelve months (TTM), while invested capital turns increased from 0.4 to 0.5 during the same period [5] - The return on invested capital (ROIC) for First United has risen from 4% in 2014 to 12% in the TTM, indicating strong operational efficiency [5] Valuation Insights - At its current price, FUNC has a price-to-economic book value (PEBV) ratio of 0.6, suggesting that the market anticipates a permanent decline of 40% in NOPAT from TTM levels, which is viewed as overly pessimistic given the company's historical growth [6] - Even with a conservative scenario where NOPAT margin decreases to 14% and revenue grows by 3% annually through 2034, the stock could be valued at $47 per share, representing a 31% upside [7] - If First United's profits grow in line with historical levels, the potential upside for the stock is even greater [8] Financial Adjustments - Adjustments made to First United's financial filings included nearly $10 million in income statement adjustments, resulting in a net effect of removing under $5 million in non-operating expenses [9] - Adjustments to the balance sheet totaled just under $90 million, with a net increase of over $40 million in invested capital, notably including adjustments for other comprehensive income [10] - Valuation adjustments amounted to just under $20 million, with a net increase of under $5 million, primarily due to overfunded pensions [10]

Financial Performance - Net income for Q3 2025 was $6.9 million, or $1.07 per diluted share, up from $5.8 million, or $0.89 per diluted share in Q3 2024, representing a 19% year-over-year increase[2] - For the first nine months of 2025, net income was $18.7 million, up from $14.4 million in the same period of 2024, marking a 30% increase[8] - Net income for September 2025 was $6,948,000, compared to $5,984,000 in June 2025, reflecting a growth of 16.19%[39] - Net income for Q3 2025 was $6,948,000, an increase of 20.3% from $5,771,000 in Q3 2024[48] - Adjusted net income (non-GAAP) for the nine months ended September 30, 2025, was $18,738,000, up 26.5% from $14,808,000 in the same period of 2024[48] Interest Income and Expenses - Net interest income increased by $2.2 million in Q3 2025 compared to Q3 2024, driven by a $2.0 million increase in interest and fees on loans due to higher rates and loan repricing[5] - The net interest margin on a non-GAAP, fully tax equivalent basis was 3.69% for Q3 2025, reflecting increased loan yields and stable funding costs[6] - Net interest income for the three months ended September 30, 2025, was $17,403,000, an increase of 14.4% from $15,228,000 in the same period of 2024[35] - Total interest income for Q3 2025 reached $25,762,000, an increase of 3.6% from $24,871,000 in Q2 2025[43] - The total interest expense for Q3 2025 was $8,359,000, an increase from $8,164,000 in Q2 2025, reflecting a growth of 2.4%[43] Assets and Liabilities - Total assets reached $2.0 billion as of September 30, 2025, an increase of $51.0 million since December 31, 2024[19] - Total liabilities increased by $31.1 million to $1.8 billion as of September 30, 2025, with total deposits rising by $104.1 million[20] - Total assets at the end of September 30, 2025, reached $2,023,974,000, up from $1,973,022,000 at the end of December 2024, representing a growth of 2.6%[36] - Total deposits increased to $1,678,902,000 as of September 30, 2025, compared to $1,574,829,000 at the end of December 2024, marking a rise of 6.6%[37] Loans and Credit Quality - Outstanding loans increased by $16.0 million to $1.5 billion as of September 30, 2025[21] - The allowance for credit losses was $19.1 million at September 30, 2025, compared to $18.0 million a year earlier, with a provision for credit losses of $0.5 million for Q3 2025[28] - The ratio of net charge-offs to average loans was 0.08% for the nine months ended September 30, 2025, down from 0.18% for the same period in 2024[29] - Non-accrual loans decreased to $3.8 million at September 30, 2025, from $4.9 million at December 31, 2024[30] - Non-performing loans and loans 90 days past due represented 0.31% of total loans as of September 30, 2025, compared to 0.39% in the previous year[37] Shareholder Information - A cash dividend of $0.26 per common share was declared in Q3 2025[6] - The book value of common stock increased to $30.65 per share at September 30, 2025, compared to $27.71 per share at December 31, 2024, driven by undistributed net income of $14.2 million[27] - Shareholders' equity increased to $199,099,000 at the end of September 30, 2025, up from $179,295,000 at the end of December 2024, indicating a growth of 11.1%[37] Operational Efficiency - Operating expenses for Q3 2025 increased by $0.7 million year-over-year, primarily due to a $0.4 million rise in salaries and employee benefits[15] - The efficiency ratio (non-GAAP) improved to 58.73% for the nine months ended September 30, 2025, down from 62.46% in the same period of 2024[35] - The return on average assets for September 2025 was 1.24%, consistent with the previous quarter[39] - Return on Average Assets (ROAA) for the nine months ended September 30, 2025, improved to 1.24%, up from 0.99% in 2024[50] - Return on Average Equity (ROAE) for the nine months ended September 30, 2025, increased to 13.23%, compared to 11.52% in 2024[50] Future Outlook - The company plans to expand its market presence through strategic partnerships and new product offerings in the upcoming quarters[41]