Accessibility StatementSkip Navigation OAKLAND, Md., Nov. 14, 2025 /PRNewswire/ -- First United Corporation (NASDAQ: FUNC) and First United Bank & Trust today announced that Carissa L. Rodeheaver, Chairman of the Board, President, and Chief Executive Officer, will retire at the conclusion of the 2026 annual meeting of shareholders currently scheduled for May 7, 2026. To facilitate the succession of management, effective January 1, 2026, Ms. Rodeheaver will serve as Executive Chairman of the Corporation and ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For quarterly period ended September 30, 2025 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 ( ...

NEW YORK, NY - NOVEMBER 16: Traders work on the floor of the New York Stock Exchange (NYSE) on November 16, 2017 in New York City. U.S. stocks closed higher on Thursday following strong quarterly earnings by Cisco Systems, Wal-Mart and other companies. The Dow Jones industrial average rose over 180 points. (Photo by Spencer Platt/Getty Images)Getty ImagesFinding good stocks in today’s inflated market is even more difficult during earnings season, when noise and narratives fuel heightened speculation.Instead ...

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]

分组1 - First United Corporation (FUNC) reported quarterly earnings of $1.07 per share, exceeding the Zacks Consensus Estimate of $0.89 per share, and showing an increase from $0.89 per share a year ago, resulting in an earnings surprise of +20.22% [1] - The company achieved revenues of $22.8 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 3.01%, and up from $20.14 million in the same quarter last year [2] - Over the last four quarters, First United has consistently surpassed consensus EPS and revenue estimates [2] 分组2 - The stock has added approximately 0.9% since the beginning of the year, while the S&P 500 has gained 13.3%, indicating underperformance relative to the broader market [3] - The current consensus EPS estimate for the upcoming quarter is $0.95 on revenues of $22.73 million, and for the current fiscal year, it is $3.65 on revenues of $87.59 million [7] - The Zacks Industry Rank for Banks - Northeast, to which First United belongs, is currently in the top 29% of over 250 Zacks industries, suggesting a favorable industry outlook [8]

Group 1 - First United Corporation's Board of Directors declared a cash dividend of $0.26 per share, payable on November 3, 2025, to shareholders of record as of October 17, 2025 [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 has several wholly-owned subsidiaries, including OakFirst Loan Center, Inc. and OakFirst Loan Center, LLC, which are finance companies [1] Group 2 - The Bank also owns interests in real estate entities formed for holding, servicing, and disposing of properties acquired through foreclosure [1] - First United Corporation has a 99.9% interest in Liberty Mews Limited Partnership, focused on low-income housing development in Garrett County, Maryland [1] - Additionally, the Corporation holds a 99.9% non-voting membership interest in MCC FUBT Fund, LC, aimed at low-income housing in Allegany County, Maryland [1]

Core Viewpoint - First United Corporation (FUNC) has received a Zacks Rank 2 (Buy) upgrade due to an upward trend in earnings estimates, indicating potential for stock price increase [1][4][6]. Earnings Estimates and Ratings - The Zacks rating system is primarily driven by changes in a company's earnings picture, with the Zacks Consensus Estimate tracking EPS estimates from sell-side analysts [2][3]. - The recent upgrade reflects a positive outlook on First United's earnings, which is expected to lead to buying pressure and an increase in stock price [4][6]. Impact of Earnings Estimate Revisions - There is a strong correlation between earnings estimate revisions and near-term stock price movements, making the tracking of these revisions crucial for investment decisions [5][7]. - First United's earnings estimate for the fiscal year ending December 2025 is projected at $3.65 per share, with a 4.3% increase in the Zacks Consensus Estimate over the past three months [9]. 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 [8]. - First United's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [10][11].

Group 1 - First United Corporation (FUNC) has seen a stock increase of 22.1%, indicating positive performance for shareholders [1] - The company is based in Maryland and operates as a small bank [1] Group 2 - Crude Value Insights provides an investment service focused on oil and natural gas, emphasizing cash flow and growth potential [1] - The service includes a 50+ stock model account and in-depth cash flow analyses of exploration and production (E&P) firms [2]

PART I. [FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited consolidated financial statements and management's discussion and analysis for the interim period [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited consolidated financial statements, including statements of financial condition, operations, comprehensive income, changes in equity, and cash flows, for the periods ended June 30, 2025 and 2024 [Consolidated Statements of Financial Condition](index=4&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) The statements show growth in total assets, net loans, and deposits, reflecting increased shareholders' equity Key Financial Condition Metrics | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Total Assets | $2,007,471 | $1,973,022 | $34,449 | | Net Loans | $1,482,904 | $1,462,181 | $20,723 | | Total Deposits | $1,614,207 | $1,574,829 | $39,378 | | Total Liabilities | $1,816,324 | $1,793,727 | $22,597 | | Total Shareholders' Equity | $191,147 | $179,295 | $11,852 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Net income significantly increased for both three and six months ended June 30, 2025, driven by higher net interest income and reduced credit loss expense Consolidated Operations Summary (6 Months) | Metric (in thousands, except per share) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6 Months) | | :-------------------------------------- | :--------------------------- | :--------------------------- | :-------------------- | | Total Interest Income | $48,933 | $45,011 | $3,922 | | Total Interest Expense | $16,210 | $15,961 | $249 | | Net Interest Income | $32,723 | $29,050 | $3,673 | | Total Credit Loss Expense | $1,516 | $2,140 | $(624) | | Net Income | $11,790 | $8,612 | $3,178 | | Basic Net Income Per Share | $1.82 | $1.31 | $0.51 | | Diluted Net Income Per Share | $1.81 | $1.31 | $0.50 | | Dividends Declared Per Share | $0.44 | $0.40 | $0.04 | Consolidated Operations Summary (3 Months) | Metric (in thousands, except per share) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3 Months) | | :-------------------------------------- | :--------------------------- | :--------------------------- | :-------------------- | | Total Interest Income | $24,871 | $23,113 | $1,758 | | Total Interest Expense | $8,164 | $7,875 | $289 | | Net Interest Income | $16,707 | $15,238 | $1,469 | | Total Credit Loss Expense | $860 | $1,194 | $(334) | | Net Income | $5,984 | $4,914 | $1,070 | | Basic Net Income Per Share | $0.92 | $0.75 | $0.17 | | Diluted Net Income Per Share | $0.92 | $0.75 | $0.17 | | Dividends Declared Per Share | $0.22 | $0.20 | $0.02 | [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income substantially increased for both three and six months ended June 30, 2025, primarily due to positive other comprehensive income Consolidated Comprehensive Income (6 Months) | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6 Months) | | :-------------------- | :--------------------------- | :--------------------------- | :-------------------- | | Net Income | $11,790 | $8,612 | $3,178 | | Other Comprehensive Income/(Loss), net of tax | $2,271 | $(233) | $2,504 | | Comprehensive Income | $14,061 | $8,379 | $5,682 | Consolidated Comprehensive Income (3 Months) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3 Months) | | :-------------------- | :--------------------------- | :--------------------------- | :-------------------- | | Net Income | $5,984 | $4,914 | $1,070 | | Other Comprehensive Income/(Loss), net of tax | $2,382 | $(1,338) | $3,720 | | Comprehensive Income | $8,366 | $3,576 | $4,790 | [Consolidated Statements of Changes in Shareholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Total shareholders' equity increased significantly in 2025, driven by net income and positive other comprehensive income, contrasting with 2024 Shareholders' Equity Changes | Metric (in thousands) | June 30, 2025 | June 30, 2024 | | :-------------------- | :------------ | :------------ | | Balance at January 1 | $179,295 | $161,873 | | Net Income | $11,790 | $8,612 | | Other Comprehensive Income/(Loss) | $2,271 | $(233) | | Stock Based Compensation | $495 | $433 | | Common Stock Issued | $150 | $144 | | Common Stock Repurchase | $0 | $(4,032) | | Dividends Declared | $(2,854) | $(2,620) | | Balance at June 30 | $191,147 | $164,177 | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities decreased in 2025, while investing activities shifted to cash usage, and financing activities provided significant net cash inflow Consolidated Cash Flow Activities | Cash Flow Activity (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net Cash Provided by Operating Activities | $7,960 | $10,751 | | Net Cash (Used in)/Provided by Investing Activities | $(29,398) | $27,893 | | Net Cash Provided by/(Used in) Financing Activities | $22,224 | $(43,305) | | Increase/(Decrease) in Cash and Cash Equivalents | $786 | $(4,661) | | Cash and Cash Equivalents at End of Period | $79,113 | $45,092 | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures and explanations for the figures presented in the consolidated financial statements, covering various accounting and financial aspects [Note 1 – Basis of Presentation](index=11&type=section&id=Note%201%20%E2%80%93%20Basis%20of%20Presentation) Financial statements are prepared under GAAP, consolidating First United Corporation and its subsidiaries, with management estimates affecting reported amounts - The consolidated financial statements include First United Corporation, First United Bank & Trust, First United Statutory Trust I & II, OakFirst Loan Center, LLC & Inc., First OREO Trust, and FUBT OREO I, LLC. All significant inter-company accounts and transactions have been eliminated[25](index=25&type=chunk) [Note 2 – Accounting Statements Issued but Not Yet Adopted](index=11&type=section&id=Note%202%20%E2%80%93%20Accounting%20Statements%20Issued%20but%20Not%20Yet%20Adopted) The Corporation is preparing to adopt new FASB ASUs on Income Tax Disclosures and Expense Disaggregation, neither expected to significantly impact financial statements - ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," effective for annual periods beginning after December 15, 2024, will require additional categories of information in rate reconciliation tables and disaggregated income taxes paid. The Corporation will adopt this ASU in its annual report for the period ending December 31, 2025, and does not believe it will have a significant impact[27](index=27&type=chunk) - ASU No. 2024-03, "Income Statement- Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses," effective for annual periods beginning after December 15, 2026, will require disaggregated disclosure of income statement expenses in tabular format. This ASU is not expected to have a significant impact on the financial statements[28](index=28&type=chunk)[29](index=29&type=chunk) [Note 3 – Earnings Per Share](index=13&type=section&id=Note%203%20%E2%80%93%20Earnings%20Per%20Share) Basic and diluted earnings per share calculations are detailed, showing an increase year-over-year for both three and six months ended June 30, 2025 Earnings Per Share (6 Months) | Metric (in thousands, except per share) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------- | :--------------------------- | :--------------------------- | | Net Income | $11,790 | $8,612 | | Basic Earnings Per Share | $1.82 | $1.31 | | Diluted Earnings Per Share | $1.81 | $1.31 | | Weighted Average Basic Shares Outstanding | 6,482 | 6,585 | | Weighted Average Diluted Shares Outstanding | 6,498 | 6,596 | Earnings Per Share (3 Months) | Metric (in thousands, except per share) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :-------------------------------------- | :--------------------------- | :--------------------------- | | Net Income | $5,984 | $4,914 | | Basic Earnings Per Share | $0.92 | $0.75 | | Diluted Earnings Per Share | $0.92 | $0.75 | | Weighted Average Basic Shares Outstanding | 6,489 | 6,527 | | Weighted Average Diluted Shares Outstanding | 6,506 | 6,537 | [Note 4 – Investments](index=14&type=section&id=Note%204%20%E2%80%93%20Investments) This note details the investment securities portfolio, distinguishing AFS and HTM categories, with an ACL of **$59 thousand** for one HTM municipal bond Investment Securities Portfolio | Investment Category (in thousands) | Amortized Cost (June 30, 2025) | Fair Value (June 30, 2025) | Gross Unrealized Losses (June 30, 2025) | | :--------------------------------- | :----------------------------- | :------------------------- | :-------------------------------------- | | **Available for Sale:** | | | | | U.S. treasuries | $3,865 | $4,014 | $0 | | U.S. government agencies | $7,000 | $6,229 | $771 | | Residential mortgage-backed agencies | $24,915 | $21,265 | $3,669 | | Commercial mortgage-backed agencies | $38,217 | $30,151 | $8,066 | | Collateralized mortgage obligations | $20,171 | $17,468 | $2,718 | | Obligations of states and political subdivisions | $8,557 | $8,303 | $254 | | Corporate bonds | $1,000 | $911 | $89 | | Collateralized debt obligations | $18,738 | $15,241 | $3,497 | | **Total Available for Sale** | **$122,463** | **$103,582** | **$19,064** | | **Held to Maturity:** | | | | | U.S. government agencies | $68,447 | $59,304 | $9,143 | | Residential mortgage-backed agencies | $33,363 | $30,392 | $3,003 | | Commercial mortgage-backed agencies | $21,042 | $15,648 | $5,394 | | Collateralized mortgage obligations | $47,751 | $39,287 | $8,464 | | Obligations of states and political subdivisions | $4,407 | $3,865 | $715 | | **Total Held to Maturity** | **$175,010** | **$148,496** | **$26,719** | - At June 30, 2025 and December 31, 2024, the Corporation recorded an Allowance for Credit Losses (ACL) of approximately **$59 thousand** related to one municipal bond in its Held-to-Maturity (HTM) security portfolio[39](index=39&type=chunk) - At June 30, 2025, AFS investment securities with an aggregate fair value of **$85.2 million** and HTM investment securities with an aggregate book value of **$166.6 million** were pledged as collateral[43](index=43&type=chunk) [Note 5 – Loans and Related Allowance for Credit Losses](index=20&type=section&id=Note%205%20%E2%80%93%20Loans%20and%20Related%20Allowance%20for%20Credit%20Losses) This note provides a comprehensive overview of the Corporation's loan portfolio, its segmentation, credit quality indicators, and the methodology for calculating the Allowance for Credit Losses (ACL) [Loan Portfolio Composition and Aging](index=20&type=section&id=Loan%20Portfolio%20Composition%20and%20Aging) The loan portfolio increased to **$1.502 billion** at June 30, 2025, with decreases in non-accrual loans and accruing loans past due 30 days or more Loan Portfolio Composition | Loan Segment (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Commercial Real Estate | $550,717 | $526,364 | | Acquisition and Development | $98,937 | $95,314 | | Commercial and Industrial | $281,484 | $287,534 | | Residential Mortgage | $521,968 | $518,815 | | Consumer | $49,375 | $52,766 | | **Total Loans** | **$1,502,481**| **$1,480,793** | Loan Portfolio Aging | Loan Status (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------- | :------------ | :---------------- | | Current | $1,494,680 | $1,471,129 | | 30-59 Days Past Due | $1,507 | $1,058 | | 60-89 Days Past Due | $1,947 | $2,757 | | 90 Days+ Past Due | $535 | $918 | | Non-Accrual Loans | $3,812 | $4,931 | | **Total Loans** | **$1,502,481**| **$1,480,793** | - Accruing loans past due **30 days** or more constituted **0.27%** of the loan portfolio at June 30, 2025, a decrease from **0.32%** at December 31, 2024[45](index=45&type=chunk) [Allowance for Credit Losses (ACL) Methodology and Activity](index=21&type=section&id=Allowance%20for%20Credit%20Losses%20(ACL)%20Methodology%20and%20Activity) The ACL increased to **$19.044 million** at June 30, 2025, calculated using systematic methodology, specific analysis, and quantitative analysis with economic forecasts - The Corporation's ACL methodology includes segmentation by homogeneous loan types, specific analysis for individually evaluated loans (generally based on collateral value or discounted cash flows), and quantitative analysis using discounted cash flows with economic forecasts (e.g., unemployment, CPI, Housing Affordability Index, Gross State Product)[59](index=59&type=chunk)[60](index=60&type=chunk) Allowance for Credit Losses by Segment | ACL Segment (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------- | :------------ | :---------------- | | Commercial Real Estate | $6,166 | $5,272 | | Acquisition and Development | $1,043 | $909 | | Commercial and Industrial | $4,226 | $4,205 | | Residential Mortgage | $6,902 | $7,010 | | Consumer | $707 | $774 | | **Total ACL** | **$19,044** | **$18,170** | Allowance for Credit Losses Activity | ACL Activity (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | | Beginning Balance | $18,170 | $17,480 | | Loan Charge-offs | $(778) | $(2,099) | | Recoveries Collected | $267 | $330 | | Credit Loss Expense | $1,385 | $2,212 | | **Ending Balance** | **$19,044** | **$17,923** | [Credit Quality Indicators and Loan Modifications](index=27&type=section&id=Credit%20Quality%20Indicators%20and%20Loan%20Modifications) The Corporation uses internal credit risk grading and monitors loan modifications, with **$898 thousand** in loans modified in H1 2025, all post-modification payments made - The Corporation's internal credit risk grading system includes 'Pass' (high quality, performing), 'Special Mention' (potential weaknesses), 'Substandard' (inadequately protected, jeopardized liquidation), 'Doubtful' (highly questionable collection), and 'Loss' (worthless asset)[66](index=66&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk) Loan Modifications by Type | Loan Type (in thousands) | 6 Months Ended June 30, 2025 (Term Extension) | Percentage of Total Loan Type | | :----------------------- | :-------------------------------------------- | :---------------------------- | | Owner-occupied commercial real estate | $874 | 0.38% | | Commercial and industrial | $24 | 0.01% | | **Total** | **$898** | | - Borrowers for whom loan modifications were made in the six-month period ended June 30, 2025, have made all contractual payments[80](index=80&type=chunk) [Note 6 – Fair Value of Financial Instruments](index=37&type=section&id=Note%206%20%E2%80%93%20Fair%20Value%20of%20Financial%20Instruments) This note outlines fair value measurements using a three-level hierarchy, with most recurring investment securities classified as Level 2, and CDOs, equity, OREO as Level 3 - The fair value hierarchy consists of Level 1 (unadjusted quoted prices in active markets for identical assets/liabilities), Level 2 (quoted prices not active, or observable inputs directly or indirectly), and Level 3 (unobservable inputs significant to valuation assumptions)[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) Fair Value Measurements | Asset Category (in thousands) | Fair Value (June 30, 2025) | Level 1 | Level 2 | Level 3 | | :---------------------------- | :------------------------- | :------ | :------ | :------ | | **Recurring:** | | | | | | U.S. treasuries | $4,014 | | $4,014 | | | U.S. government agencies | $6,229 | | $6,229 | | | Residential mortgage-backed agencies | $21,265 | | $21,265 | | | Commercial mortgage-backed agencies | $30,151 | | $30,151 | | | Collateralized mortgage obligations | $17,468 | | $17,468 | | | Obligations of states and political subdivisions | $8,303 | | $8,303 | | | Corporate bonds | $911 | | $911 | | | Collateralized debt obligations | $15,241 | | | $15,241 | | Equity investments not held for trading with readily determinable fair values | $1,008 | $1,008 | | | | Financial derivatives | $266 | | $266 | | | **Non-recurring:** | | | | | | Equity investment | $4,088 | | | $4,088 | | Other real estate owned | $176 | | | $176 | - There were no transfers of assets between any of the fair value hierarchy levels for the six- or three-month periods ended June 30, 2025 or 2024[95](index=95&type=chunk) [Note 7 – Accumulated Other Comprehensive Loss](index=44&type=section&id=Note%207%20%E2%80%93%20Accumulated%20Other%20Comprehensive%20Loss) Accumulated OCL decreased significantly to **$(27.977 million)** at June 30, 2025, driven by positive other comprehensive income from AFS securities and pension adjustments Accumulated Other Comprehensive Loss Components | Component (in thousands) | Balance - January 1, 2025 | Balance - June 30, 2025 | Change | | :----------------------- | :------------------------ | :---------------------- | :----- | | Investment securities with credit related impairment AFS | $(2,592) | $(2,295) | $297 | | Investment securities- all other AFS | $(13,792) | $(12,079) | $1,713 | | Investment securities- HTM | $(4,696) | $(4,463) | $233 | | Cash Flow Hedge | $372 | $223 | $(149) | | Pension Plan | $(9,723) | $(9,546) | $177 | | SERP | $183 | $183 | $0 | | **Total Accumulated OCL** | **$(30,248)** | **$(27,977)** | **$2,271** | Other Comprehensive Income/(Loss) by Component | Component of OCI (in thousands) | 6 Months Ended June 30, 2025 (Net of Tax) | 6 Months Ended June 30, 2024 (Net of Tax) | | :------------------------------ | :---------------------------------------- | :---------------------------------------- | | AFS securities with credit related impairment | $297 | $(542) | | AFS securities – all other | $1,713 | $(987) | | HTM securities | $233 | $236 | | Cash flow hedges | $(149) | $3 | | Pension Plan | $177 | $999 | | SERP | $0 | $58 | | **Total Other Comprehensive Income/(Loss)** | **$2,271** | **$(233)** | [Note 8 – Equity Compensation Plan Information](index=50&type=section&id=Note%208%20%E2%80%93%20Equity%20Compensation%20Plan%20Information) This note details equity compensation plans, including stock awards and RSUs, providing recognized compensation expense and unrecognized expense for unvested RSUs - The First United Corporation **2018** Equity Compensation Plan authorizes the issuance of up to **325,000** shares of common stock[105](index=105&type=chunk) Equity Compensation Expense | Compensation Type (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------- | :--------------------------- | :--------------------------- | | Director Stock Compensation | $166 | $135 | | Employee Stock Compensation | $19 | $6 | | RSU Compensation Expense (2022 grant) | $26 | $55 | | RSU Compensation Expense (2023 grant) | $55 | $55 | | RSU Compensation Expense (2024 grant) | $57 | $9 | | RSU Compensation Expense (2025 grant) | $45 | $0 | - Unrecognized compensation expense related to RSUs that have not vested was **$82.755 thousand** (2023 grant), **$217.074 thousand** (2024 grant), and **$361.176 thousand** (2025 grant) as of June 30, 2025[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) [Note 9 – Derivative Financial Instruments](index=52&type=section&id=Note%209%20%E2%80%93%20Derivative%20Financial%20Instruments) The Corporation uses interest rate swaps as cash flow hedges, with **$15.0 million** notional amount remaining, creating an effective fixed rate of **4.66%** on junior subordinated debt - The Corporation uses interest rate swap agreements as cash flow hedges to modify the repricing characteristics of certain interest-bearing liabilities[119](index=119&type=chunk) - As of June 30, 2025, **$15.0 million** notional amount of interest rate swap contracts remain, creating an effective fixed interest rate of **4.66%** on junior subordinated debt until March 2026[120](index=120&type=chunk) Fair Value of Interest Rate Swap Contracts | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Fair Value of Interest Rate Swap Contracts | $266 | $455 | [Note 10 – Regulatory Capital Requirements](index=55&type=section&id=Note%2010%20%E2%80%93%20Regulatory%20Capital%20Requirements) The Bank remains 'well capitalized' at June 30, 2025, with all capital ratios exceeding required thresholds for capital adequacy and well-capitalized status Regulatory Capital Ratios | Capital Ratio | June 30, 2025 | December 31, 2024 | Required for Capital Adequacy | Required to be Well Capitalized | | :----------------------------------- | :------------ | :---------------- | :---------------------------- | :------------------------------ | | Total Capital (to risk-weighted assets) | 14.99 % | 14.59 % | 8.00 % | 10.00 % | | Tier 1 Capital (to risk-weighted assets) | 13.74 % | 13.35 % | 6.00 % | 8.00 % | | Common Equity Tier 1 Capital (to risk-weighted assets) | 13.74 % | 13.35 % | 4.50 % | 6.50 % | | Tier 1 Capital (to average assets) | 10.87 % | 10.70 % | 4.00 % | 5.00 % | - As of June 30, 2025, the Bank was considered "well capitalized" under the regulatory framework for prompt corrective action[125](index=125&type=chunk) [Note 11 – Deposits](index=55&type=section&id=Note%2011%20%E2%80%93%20Deposits) Total deposits increased by **$39.4 million** to **$1.614 billion** at June 30, 2025, driven by brokered time deposits and money market accounts Deposit Composition | Deposit Type (in thousands) | June 30, 2025 (Balance) | June 30, 2025 (Percent) | December 31, 2024 (Balance) | December 31, 2024 (Percent) | | :-------------------------- | :---------------------- | :---------------------- | :-------------------------- | :-------------------------- | | Non-Interest-bearing deposits | $425,784 | 26% | $426,737 | 27% | | Interest-bearing deposits: | | | | | | Demand | $347,752 | 22% | $386,803 | 25% | | Money market-retail | $476,917 | 30% | $447,149 | 28% | | Money market-brokered | $6 | 0% | $1 | 0% | | Savings deposits | $166,637 | 10% | $170,972 | 11% | | Time deposits-retail | $147,111 | 9% | $143,167 | 9% | | Time deposits-brokered | $50,000 | 3% | $0 | 0% | | **Total Deposits** | **$1,614,207** | **100%** | **$1,574,829** | **100%** | - In January 2025, **$50.0 million** in brokered time deposits were obtained to fund the repayment of overnight borrowings[204](index=204&type=chunk) [Note 12 – Borrowed Funds](index=55&type=section&id=Note%2012%20%E2%80%93%20Borrowed%20Funds) Total borrowings decreased by **$14.455 million** to **$171.883 million** at June 30, 2025, primarily due to reduced overnight borrowings Borrowed Funds Outstanding | Borrowing Type (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------- | :------------ | :---------------- | | **Short-term borrowings:** | | | | Securities sold under agreements to repurchase | $21,812 | $15,409 | | Overnight borrowings | $29,142 | $50,000 | | **Total Short-term Borrowings** | **$50,954** | **$65,409** | | **Long-term borrowings:** | | | | FHLB advances | $90,000 | $90,000 | | Junior subordinated debt | $30,929 | $30,929 | | **Total Long-term Borrowings**| **$120,929** | **$120,929** | | **Total Borrowings Outstanding**| **$171,883** | **$186,338** | - At June 30, 2025, repurchase agreements were secured by **$28.3 million** in investment securities issued by government-related agencies[129](index=129&type=chunk) [Note 13 – Segment Reporting](index=56&type=section&id=Note%2013%20%E2%80%93%20Segment%20Reporting) The Corporation operates in Community Banking and Wealth Management segments, both showing increased net income for the six months ended June 30, 2025 - The Corporation's two primary operating segments are Community Banking and Wealth Management[130](index=130&type=chunk) Segment Net Income (6 Months) | Segment (in thousands) | Net Income (6 Months Ended June 30, 2025) | Net Income (6 Months Ended June 30, 2024) | | :--------------------- | :---------------------------------------- | :---------------------------------------- | | Community Banking | $9,612 | $6,513 | | Wealth Management | $2,178 | $2,099 | | **Total** | **$11,790** | **$8,612** | Segment Net Income (3 Months) | Segment (in thousands) | Net Income (3 Months Ended June 30, 2025) | Net Income (3 Months Ended June 30, 2024) | | :--------------------- | :---------------------------------------- | :---------------------------------------- | | Community Banking | $4,919 | $3,915 | | Wealth Management | $1,065 | $999 | | **Total** | **$5,984** | **$4,914** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=63&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial performance and condition, highlighting key drivers, trends, and balance sheet analysis [Introduction](index=63&type=section&id=Introduction) This introduction sets the context for Management's Discussion and Analysis, reviewing material changes and significant factors affecting financial condition and results - The discussion and analysis reviews material changes and significant factors affecting the financial condition and results of operations of First United Corporation and its consolidated subsidiaries[147](index=147&type=chunk) [Forward-Looking Statements](index=63&type=section&id=Forward-Looking%20Statements) This section clarifies that the report contains forward-looking statements, which involve risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements about management's beliefs, plans, and objectives, which are not guarantees of future performance and involve risks and uncertainties[149](index=149&type=chunk) [First United Corporation (Company Overview)](index=63&type=section&id=First%20United%20Corporation) First United Corporation, a Maryland financial holding company, reported total assets of **$2.0 billion**, net loans of **$1.5 billion**, and deposits of **$1.6 billion** at June 30, 2025 - First United Corporation is a Maryland financial holding company, parent to First United Bank & Trust and other subsidiaries[150](index=150&type=chunk) Key Financial Metrics | Metric (in billions) | June 30, 2025 | | :------------------- | :------------ | | Total Assets | $2.0 | | Net Loans | $1.5 | | Deposits | $1.6 | | Shareholders' Equity | $0.1911 | [Results of Operations](index=64&type=section&id=Results%20of%20Operations) Net income significantly increased for Q2 and H1 2025, driven by higher net interest income and reduced credit loss expense, partially offset by rising operating expenses [Overview](index=64&type=section&id=Overview) Consolidated net income increased to **$6.0 million** for Q2 2025 and **$11.8 million** for H1 2025, primarily due to increased net interest income and decreased credit loss expense Consolidated Net Income and EPS (Q2) | Metric (in millions, except per share) | Q2 2025 | Q2 2024 | YoY Change (Q2) | | :------------------------------------- | :------ | :------ | :-------------- | | Net Income | $6.0 | $4.9 | $1.1 | | Basic EPS | $0.92 | $0.75 | $0.17 | | Diluted EPS | $0.92 | $0.75 | $0.17 | Consolidated Net Income and EPS (6 Months) | Metric (in millions, except per share) | 6 Months 2025 | 6 Months 2024 | YoY Change (6 Months) | | :------------------------------------- | :------------ | :------------ | :-------------------- | | Net Income | $11.8 | $8.6 | $3.2 | | Basic EPS | $1.82 | $1.31 | $0.51 | | Diluted EPS | $1.81 | $1.31 | $0.50 | - The **$1.1 million** increase in quarterly net income was primarily driven by a **$1.5 million** increase in net interest income, a **$0.3 million** decrease in provision for credit loss, and a **$0.2 million** increase in non-interest income, partially offset by increases in non-interest expense of **$0.6 million** and income tax expense of **$0.4 million**[154](index=154&type=chunk) [Net Interest Income](index=66&type=section&id=Net%20Interest%20Income) Net interest income increased by **$1.5 million** for Q2 2025 and **$3.7 million** for H1 2025 (FTE basis), driven by loan growth and repricing, with net interest margin at **3.61%** for H1 2025 Net Interest Income and Margin (6 Months, FTE) | Metric (in thousands, FTE basis) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change | | :------------------------------- | :--------------------------- | :--------------------------- | :--------- | | Interest Income | $49,036 | $45,126 | $3,910 | | Interest Expense | $16,210 | $15,961 | $249 | | Net Interest Income | $32,826 | $29,165 | $3,661 | | Net Interest Margin % | 3.61 % | 3.31 % | 0.30 % | Net Interest Income and Margin (3 Months, FTE) | Metric (in thousands, FTE basis) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change | | :------------------------------- | :--------------------------- | :--------------------------- | :--------- | | Interest Income | $24,925 | $23,171 | $1,754 | | Interest Expense | $8,164 | $7,875 | $289 | | Net Interest Income | $16,761 | $15,296 | $1,465 | | Net Interest Margin % | 3.65 % | 3.49 % | 0.16 % | - Interest and fees on loans increased by **$2.1 million** in Q2 2025 compared to Q2 2024, driven by repricing of adjustable-rate loans and **$74.1 million** growth in average loan balances[168](index=168&type=chunk) [Provision for Credit Losses](index=73&type=section&id=Provision%20for%20Credit%20Losses) Net provision expense for credit losses decreased to **$1.5 million** for H1 2025 and **$0.9 million** for Q2 2025, primarily due to prior year charge-offs Net Provision Expense for Credit Losses (6 Months) | Metric (in millions) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------- | :--------------------------- | :--------------------------- | | Net Provision Expense | $1.5 | $2.1 | | **YoY Change** | **$(0.6)** | | Net Provision Expense for Credit Losses (Q2) | Metric (in millions) | Q2 2025 | Q2 2024 | | :------------------- | :------ | :------ | | Net Provision Expense | $0.9 | $1.2 | | **YoY Change** | **$(0.3)**| | - The decreased provision expense in the first six months of 2025 was primarily related to **$1.1 million** in charge-offs on a non-accrual commercial loan relationship that occurred in 2024[173](index=173&type=chunk) [Other Income](index=74&type=section&id=Other%20Income) Other operating income increased by **$0.2 million** in Q2 2025 and **$0.3 million** for H1 2025, driven by higher wealth management income and gains on residential mortgage sales Other Operating Income (6 Months) | Other Income Category (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------- | | Service charges on deposit accounts | $1,124 | $1,112 | $12 | | Trust department | $4,709 | $4,443 | $266 | | Debit card income | $1,904 | $1,931 | $(27) | | Bank owned life insurance | $690 | $660 | $30 | | Brokerage commissions | $791 | $857 | $(66) | | **Total Other Income** | **$9,762** | **$9,575** | **$187** | Other Operating Income (3 Months) | Other Income Category (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------- | | Service charges on deposit accounts | $577 | $556 | $21 | | Trust department | $2,386 | $2,255 | $131 | | Debit card income | $983 | $999 | $(16) | | Bank owned life insurance | $349 | $334 | $15 | | Brokerage commissions | $370 | $362 | $8 | | **Total Other Income** | **$4,940** | **$4,782** | **$158** | - The increase in other operating income was driven by a **$0.1 million** increase in wealth management income (Q2) and **$0.2 million** (6 months) reflecting higher market valuations and expanded client relationships, and a **$0.1 million** increase in gains on sales of residential mortgages[156](index=156&type=chunk)[157](index=157&type=chunk) [Other Operating Expenses](index=74&type=section&id=Other%20Operating%20Expenses) Total other operating expenses increased by **$0.6 million** in Q2 2025 and **$0.3 million** for H1 2025, driven by OREO expenses, data processing, and professional services Other Operating Expenses (6 Months) | Expense Category (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change | | :------------------------------ | :--------------------------- | :--------------------------- | :--------- | | Salaries and employee benefits | $14,650 | $14,413 | $237 | | Equipment expense | $1,143 | $1,558 | $(415) | | Occupancy expense of premises | $1,364 | $1,606 | $(242) | | Data processing expense | $3,103 | $2,740 | $363 | | Other real estate owned expense, net | $300 | $100 | $200 | | **Total Other Operating Expenses** | **$25,550** | **$25,245** | **$305** | Other Operating Expenses (3 Months) | Expense Category (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change | | :------------------------------ | :--------------------------- | :--------------------------- | :--------- | | Salaries and employee benefits | $7,319 | $7,256 | $63 | | Equipment expense | $565 | $635 | $(70) | | Occupancy expense of premises | $675 | $652 | $23 | | Data processing expense | $1,600 | $1,422 | $178 | | Other real estate owned expense, net | $208 | $14 | $194 | | **Total Other Operating Expenses** | **$12,974** | **$12,364** | **$610** | - For the six months ended June 30, 2025, non-interest expense increased by **$0.3 million**, partially offset by a **$0.7 million** decrease in occupancy and equipment expenses related to accelerated depreciation expense recognized in Q1 2024 due to branch closures[159](index=159&type=chunk) [Provision for Income Taxes](index=74&type=section&id=Provision%20for%20Income%20Taxes) The provision for income taxes is based on the estimated effective tax rate, which was **24.7%** for the six-month period ended June 30, 2025 - The effective income tax rates as a percentage of income for the six-month periods ended June 30, 2025 and June 30, 2024 were **24.7%** and **24.3%**, respectively[178](index=178&type=chunk) [GAAP and Non-GAAP Financial Measures](index=76&type=section&id=GAAP%20and%20Non-GAAP%20Financial%20Measures) This section presents GAAP and non-GAAP financial measures, with non-GAAP adjustments primarily related to accelerated depreciation expenses in 2024 Selected GAAP and Non-GAAP Financial Measures (6 Months) | Metric (in thousands, except per share) | 6 Months Ended June 30, 2025 (GAAP) | 6 Months Ended June 30, 2024 (GAAP) | 6 Months Ended June 30, 2024 (Non-GAAP) | | :-------------------------------------- | :---------------------------------- | :---------------------------------- | :------------------------------------ | | Net Income | $11,790 | $8,612 | $9,037 | | Diluted EPS | $1.81 | $1.31 | $1.37 | | Return on Average Assets | 1.20% | 0.89% | 0.98% | | Return on Average Equity | 12.78% | 10.51% | 11.55% | - Non-GAAP adjustments for **2024** primarily relate to accelerated depreciation expenses and their income tax effect, which increased adjusted net income and diluted EPS compared to GAAP figures[180](index=180&type=chunk) [Financial Condition](index=78&type=section&id=Financial%20Condition) This section analyzes the balance sheet, loan and investment portfolios, deposits, borrowings, liquidity, market risk, and capital resources, showing overall growth and strong capital [Balance Sheet Overview](index=78&type=section&id=Balance%20Sheet%20Overview) Total assets increased by **$34.4 million** to **$2.0 billion** at June 30, 2025, driven by gross loans and investment portfolio growth, with increased deposits and decreased short-term borrowings Balance Sheet Summary | Metric (in millions) | June 30, 2025 | December 31, 2024 | Change | | :------------------- | :------------ | :---------------- | :----- | | Total Assets | $2.0 | $1.97 | $0.034 | | Gross Loans | $1.502 | $1.481 | $0.021 | | Investment Portfolio | $0.278 | $0.270 | $0.008 | | Total Liabilities | $1.816 | $1.794 | $0.022 | | Total Deposits | $1.614 | $1.575 | $0.039 | | Short-term Borrowings | $0.051 | $0.065 | $(0.014) | - Total assets increased by **$34.4 million** to **$2.0 billion** at June 30, 2025, from December 31, 2024, primarily due to a **$21.7 million** increase in gross loans and a **$9.6 million** increase in the investment portfolio[181](index=181&type=chunk)[182](index=182&type=chunk) [Loan Portfolio](index=78&type=section&id=Loan%20Portfolio) The total loan portfolio increased by **$21.7 million** to **$1.502 billion** at June 30, 2025, with growth in commercial real estate and residential mortgages, and decreased non-accrual loans Loan Portfolio Composition and Changes | Loan Type (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :----------------------- | :------------ | :---------------- | :----- | | Commercial real estate | $550,717 | $526,364 | $24,353| | Acquisition and development | $98,937 | $95,314 | $3,623 | | Commercial and industrial | $281,484 | $287,534 | $(6,050)| | Residential mortgage | $521,968 | $518,815 | $3,153 | | Consumer | $49,375 | $52,766 | $(3,391)| | **Total Loans** | **$1,502,481**| **$1,480,793** | **$21,698**| - New commercial loan production for Q2 2025 was approximately **$65.1 million**, with a pipeline of **$32.3 million** and unfunded commitments of **$47.0 million**[184](index=184&type=chunk) - Non-accrual loans totaled **$3.8 million** at June 30, 2025, a decrease from **$4.9 million** at December 31, 2024, primarily due to principal reductions and a payoff of a residential mortgage loan[186](index=186&type=chunk) [Risk Elements of Loan Portfolio](index=81&type=section&id=Risk%20Elements%20of%20Loan%20Portfolio) Risk elements show decreased non-accrual loans and improved ACL coverage ratios at June 30, 2025, indicating stronger credit quality Loan Portfolio Risk Elements | Risk Element (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Total non-accrual loans | $3,812 | $4,931 | | Accruing Loans Past Due 90 days or more | $535 | $918 | | Total non-accrual and accruing loans past due 90 days or more | $4,347 | $5,849 | | Total non-performing assets | $10,184 | $11,713 | | Non-accrual loans to total loans (%) | 0.25% | 0.33% | | Non-performing loans to total loans (%) | 0.29% | 0.39% | | Allowance for credit losses to non-accrual loans (%) | 499.58% | 368.49% | | Allowance for credit losses to non-performing assets (%) | 187.00% | 155.13% | [Allowance for Credit Losses](index=82&type=section&id=Allowance%20for%20Credit%20Losses) The ACL increased to **$19.044 million** at June 30, 2025, reflecting credit loss expense partially offset by net charge-offs, with stress testing providing a range of outcomes Allowance for Credit Losses Activity and Ratios | ACL Activity (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | | Balance, January 1 | $18,170 | $17,480 | | Total charge-offs | $(778) | $(2,099) | | Total recoveries | $267 | $330 | | Net losses | $(511) | $(1,769) | | Credit loss expense | $1,385 | $2,212 | | **Balance at end of period**| **$19,044** | **$17,923** | | ACL to gross loans outstanding (%) | 1.27 % | 1.26 % | - The ACL "base case" model is derived from economic forecasts and stress-tested to develop a range of potential outcomes, which for the period ended June 30, 2025, would produce a **15%** reduction or a **58%** increase in reserves based on best-case and worst-case scenarios, respectively[194](index=194&type=chunk) [Investment Securities](index=83&type=section&id=Investment%20Securities) AFS investment securities fair value increased by **$9.1 million** to **$103.6 million** at June 30, 2025, with a net unrealized loss of **$18.9 million** in the AFS portfolio Investment Securities Portfolio Summary | Investment Category (in thousands) | Amortized Cost (June 30, 2025) | Fair Value (June 30, 2025) | Amortized Cost (Dec 31, 2024) | Fair Value (Dec 31, 2024) | | :--------------------------------- | :----------------------------- | :------------------------- | :---------------------------- | :------------------------ | | **Available for Sale:** | | | | | | Total available for sale | $122,463 | $103,582 | $116,114 | $94,494 | | **Held to Maturity:** | | | | | | Total held to maturity | $175,010 | $148,496 | $175,556 | $144,760 | - At June 30, 2025, the securities classified as available-for-sale included a net unrealized loss of **$18.9 million**[199](index=199&type=chunk) - Approximately **$88.3 million** of the available-for-sale portfolio was valued using Level 2 pricing, and **$15.2 million** (collateralized debt obligations) was valued using Level 3 inputs, with **$3.5 million** in net unrealized losses[203](index=203&type=chunk) [Deposits](index=85&type=section&id=Deposits) Total deposits increased by **$39.4 million** to **$1.614 billion** at June 30, 2025, driven by brokered time deposits and money market accounts, with **76%** insured Deposit Composition by Type | Deposit Type (in thousands) | June 30, 2025 (Balance) | June 30, 2025 (Percent) | December 31, 2024 (Balance) | December 31, 2024 (Percent) | | :-------------------------- | :---------------------- | :---------------------- | :-------------------------- | :-------------------------- | | Non-Interest-bearing deposits | $425,784 | 26% | $426,737 | 27% | | Interest-bearing deposits: | | | | | | Demand | $347,752 | 22% | $386,803 | 25% | | Money market-retail | $476,917 | 30% | $447,149 | 28% | | Money market-brokered | $6 | 0% | $1 | 0% | | Savings deposits | $166,637 | 10% | $170,972 | 11% | | Time deposits-retail | $147,111 | 9% | $143,167 | 9% | | Time deposits-brokered | $50,000 | 3% | $0 | 0% | | **Total Deposits** | **$1,614,207** | **100%** | **$1,574,829** | **100%** | - In January 2025, **$50.0 million** in brokered time deposits were obtained to fund the repayment of overnight borrowings[204](index=204&type=chunk) Deposit Insurance Coverage | Deposit Category (in thousands) | June 30, 2025 (Balance) | June 30, 2025 (Percent) | | :------------------------------ | :---------------------- | :---------------------- | | Insured deposits | $1,232,329 | 76% | | Uninsured and fully collateralized deposits | $77,317 | 5% | | Uninsured and uncollateralized deposits | $304,561 | 19% | | Retail deposits | $796,108 | 49% | | Business deposits | $818,099 | 51% | [Borrowed Funds](index=86&type=section&id=Borrowed%20Funds) Total short-term borrowings decreased by **$14.5 million** to **$50.954 million** at June 30, 2025, primarily due to reduced overnight borrowings Borrowed Funds Composition | Borrowing Type (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------- | :------------ | :---------------- | | Overnight borrowings from Federal Reserve Discount Window | $0 | $50,000 | | Overnight borrowings from Zions Bank | $29,142 | $0 | | Securities sold under agreements to repurchase | $21,812 | $15,409 | | **Total Short-term Borrowings** | **$50,954** | **$65,409** | | FHLB advances | $90,000 | $90,000 | | Junior subordinated debt | $30,929 | $30,929 | | **Total Long-term Borrowings**| **$120,929** | **$120,929** | [Liquidity Management](index=86&type=section&id=Liquidity%20Management) The Corporation manages liquidity to meet demands, with **$653.3 million** in available sources and **$527.3 million** net availability at June 30, 2025 - The Corporation's liquidity management policy aims to fully satisfy liquidity needs through normal Bank operations, minimizing unplanned asset sales or emergency borrowings[211](index=211&type=chunk) Available Liquidity Sources | Liquidity Source (in thousands) | Total Availability | Amount Used | Net Availability | | :------------------------------ | :----------------- | :---------- | :--------------- | | **Internal Sources:** | | | | | Excess cash | $51,753 | $0 | $51,753 | | Unpledged securities | $30,804 | $0 | $30,804 | | **External Sources:** | | | | | Federal Reserve (discount window) | $88,378 | $0 | $88,378 | | Correspondent unsecured lines of credit | $140,000 | $29,142 | $110,858 | | FHLB | $342,381 | $96,921 | $245,460 | | **Total** | **$653,316** | **$126,063**| **$527,253** | [Market Risk and Interest Sensitivity](index=87&type=section&id=Market%20Risk%20and%20Interest%20Sensitivity) The Corporation is asset sensitive, meaning rising interest rates would generally increase net interest income, with NII simulation showing potential increases with rising rates - The Corporation's primary market risk is interest rate fluctuation, managed through interest sensitivity gap analysis and simulation models[215](index=215&type=chunk) - At June 30, 2025, the Corporation was asset sensitive, indicating that rising interest rates would generally increase net interest income[216](index=216&type=chunk) Estimated Change in Net Interest Income (Interest Rate Sensitivity) | Interest Rate Change (basis points) | Estimated Change in Net Interest Income (June 30, 2025, in thousands) | | :---------------------------------- | :-------------------------------------------------------------------- | | +400 | $5,917 | | +300 | $5,508 | | +200 | $4,401 | | +100 | $2,468 | | -100 | $(2,974) | | -200 | $(5,475) | | -300 | $(8,341) | | -400 | $(11,738) | [Capital Resources](index=91&type=section&id=Capital%20Resources) The Bank remains 'well capitalized' at June 30, 2025, with all capital ratios exceeding required thresholds, including Total Capital at **14.99%** and Tier 1 Capital at **10.87%** Regulatory Capital Ratios | Capital Ratio | June 30, 2025 | December 31, 2024 | Required for Capital Adequacy | Required to be Well Capitalized | | :----------------------------------- | :------------ | :---------------- | :---------------------------- | :------------------------------ | | Total Capital (to risk-weighted assets) | 14.99 % | 14.59 % | 8.00 % | 10.00 % | | Tier 1 Capital (to risk-weighted assets) | 13.74 % | 13.35 % | 6.00 % | 8.00 % | | Common Equity Tier 1 Capital (to risk-weighted assets) | 13.74 % | 13.35 % | 4.50 % | 6.50 % | | Tier 1 Capital (to average assets) | 10.87 % | 10.70 % | 4.00 % | 5.00 % | - As of June 30, 2025, the Bank was considered "well capitalized" under the regulatory framework for prompt corrective action[230](index=230&type=chunk) [Contractual Obligations, Commitments and Off-Balance Sheet Arrangements](index=91&type=section&id=Contractual%20Obligations,%20Commitments%20and%20Off-Balance%20Sheet%20Arrangements) Commitments to extend credit increased by **$19.4 million** to **$287.3 million** at June 30, 2025, driven by new commercial loan commitments, with **$131 thousand** net credit loss expense for off-balance sheet exposures Commitments to Extend Credit | Commitment Type (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------- | :------------ | :---------------- | | Residential mortgage - home equity | $72,219 | $70,894 | | Residential mortgage - construction | $9,970 | $13,138 | | Commercial | $184,571 | $163,079 | | Consumer - personal credit lines | $4,276 | $4,224 | | Standby letters of credit | $16,261 | $16,522 | | **Total** | **$287,297** | **$267,857** | - The increase of **$19.4 million** in commitments at June 30, 2025, was due to new commercial loan commitments, including unfunded commercial real estate construction commitments (**$11.5 million**) and unfunded revolving commercial and industrial commitments (**$10.6 million**)[233](index=233&type=chunk) - Net credit loss expense for off-balance sheet exposures was approximately **$131 thousand** for the six-month period ended June 30, 2025, compared to a credit of **$(72 thousand)** in the prior year[233](index=233&ty

Group 1: Earnings Performance - First United Corporation (FUNC) reported quarterly earnings of $0.92 per share, exceeding the Zacks Consensus Estimate of $0.84 per share, and up from $0.75 per share a year ago, representing an earnings surprise of +9.52% [1] - The company has surpassed consensus EPS estimates in all four of the last quarters [2] - First United's revenues for the quarter ended June 2025 were $21.85 million, surpassing the Zacks Consensus Estimate by 2.76%, and up from $20.08 million year-over-year [2] Group 2: Stock Performance and Outlook - First United shares have increased by approximately 3.3% since the beginning of the year, compared to the S&P 500's gain of 7.1% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is $0.86 on revenues of $21.73 million, and for the current fiscal year, it is $3.50 on revenues of $86.08 million [7] Group 3: Industry Context - The Zacks Industry Rank indicates that the Banks - Northeast industry is currently in the top 30% of over 250 Zacks industries, suggesting a favorable environment for stock performance [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - The estimate revisions trend for First United was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6]