FIRST UNITED CORPORATION ANNOUNCES SECOND QUARTER 2026 FINANCIAL RESULTS

FIRST UNITED CORPORATION ANNOUNCES SECOND QUARTER 2026 FINANCIAL RESULTS OAKLAND, Md., July 20, 2026 /PRNewswire/ -- First United Corporation (the "Corporation", "we", "us", and "our") (NASDAQ: FUNC), a bank holding company and the parent company of First United Bank & Trust (the "Bank"), today announced financial results for the three- and six-month periods ended June 30, 2026. Consolidated net income was $5.7 million on a Generally Accepted Accounting Principles ("GAAP") basis for the second quarter of 2026, or $0.87 per diluted share, compared to $6.0 million, or $0.92 per diluted share, for the second quarter of 2025 and $6.7 million, or $1.03 per diluted share, for the first quarter of 2026. Net income for the first six months of 2026 was $12.3 million, or $1.90 per diluted share, compared to $11.8 million, or $1.81 per diluted share, for the same period of 2025. Non-GAAP net income was $7.3 million and $13.9 million for the three- and six-months ended June 30, 2026, respectively. Annualized Return on Average Assets and Return on Average Equity for the six-month period ended June 30, 2026 were 1.20% and 11.92%, respectively.

According to Jason Rush, President and CEO, "We delivered solid results this quarter. Earnings benefited from a stronger net interest margin and steady growth in income from our wealth franchise. While we recorded a one-time consulting expense of approximately $2.2 million, we believe the investment in technology and pricing initiatives will position us for improved efficiency in future years to come. Loan growth was steady in the second quarter and our loan pipelines remain robust going into the third quarter. Expense control will continue to be a focus across the organization."

Second Quarter Financial Highlights:

Income Statement Overview

On a GAAP basis, net income for the second quarter of 2026 was $5.7 million, inclusive of a $1.7 million, net of tax, third party consulting expense incurred for core contract negotiations. This compares to $6.7 million in the first quarter of 2026 and $6.0 million for the second quarter of 2025. Excluding this expense item, net income was $7.3 million on a non-GAAP basis.

Q2 2026

Q1 2026

Q2 2025

Net Income, GAAP (millions)

$ 5.7

$ 6.7

$ 6.0

Net Income, non-GAAP (millions)

$ 7.3

$ 6.6

$ 6.0

Diluted net income per share, GAAP

$ 0.87

$ 1.03

$ 0.92

Diluted net income per share, non-GAAP

$ 1.13

$ 1.02

$ 0.92

Second Quarter 2026 Compared to Second Quarter 2025

Consolidated net income decreased by $0.3 million for the second quarter of 2026 when compared to the second quarter of 2025. The decrease was driven by an increase in other expense as a result of a one-time, non-GAAP $1.7 million, net of tax, consulting expense related to the core contract negotiations. This increase was partially offset by a $1.9 million increase in net interest income, an increase of $0.3 million in non-interest income, inclusive of gains, and a $0.1 million decrease in provision for credit losses. Comparing the second quarter of 2026 to the same period of 2025, interest and fees on loans increased by $1.5 million as a result of new loans booked at higher rates and the continued repricing of adjustable-rate loans. Interest expense decreased by $0.6 million when comparing year-over-year quarterly expense as a result of the repayment of a $25.0 million brokered certificate of deposit in January 2026 and $65.0 million in Federal Home Loan Bank ("FHLB") borrowings in March 2026. Other operating income increased by $0.3 million driven by an increase in trust and brokerage income of $0.3 million as a result of increased production and favorable market values on assets under management. Other operating expenses increased by $2.8 million driven by the one-time, non-GAAP item discussed above, a $0.8 million increase in salaries and benefits as a result of filling open positions in late 2025 and 2026, normal merit increases in April 2026 and increased incentive payouts, partially offset by reduced life and health insurance expense due to reduced claims and an increase in the reduction of costs associated with loan originations related to increased loan production.

Second Quarter 2026 Compared to First Quarter 2026

Compared to the linked quarter, net income decreased by $1.0 million driven by the increased other expenses as a result of the one-time expense discussed above, partially offset by an increase in net interest income of $0.5 million and a $0.1 million decrease in provision expense. Non-interest income was stable when comparing the second quarter of 2026 to the first quarter of 2026.

Year to date 2026 compared to Year to date 2025

Net income for the six months ended June 30, 2026 was $12.3 million on a GAAP basis, inclusive of a $1.7 million, net of tax, consulting fee incurred on core contract negotiations completed in the second quarter, and $13.9 million on a non-GAAP basis compared to GAAP and non-GAAP basis income of $11.8 million for the six months ended June 30, 2025. The year-over-year increase of $0.5 million was attributable to a $3.9 million increase in net interest income an increase in other non-interest income of $0.7 million, inclusive of net gains, as a result of increased trust and brokerage income of $0.5 million, increased bank owned life insurance ("BOLI") income of $0.2 million related to a one-time death benefit received in the first quarter of 2026, partially offset by an increase in other operating expenses of $3.9 million driven by the aforementioned consulting fee, increased salaries and benefits of $1.7 million and an increase in data processing expenses of $0.3 million. Salaries and benefits increased due to increased salaries as a result of new hires and annual merit increases in April 2026 and increased incentive payouts, partially offset by an increase in the reduction of costs associated with loan originations related to increased loan production.

Net Interest Income and Net Interest Margin

Second Quarter 2026 Compared to Second Quarter 2025

Net interest income, on a non-GAAP, FTE basis, increased by $1.9 million for the second quarter of 2026 when compared to the second quarter of 2025. This increase was driven by an increase of $1.3 million in interest income. Interest income on loans increased by $1.5 million due to the increase of 15 basis points in overall yield on the loan portfolio as new loans were booked at higher rates during 2025 and 2026 as well as the upward repricing of adjustable-rate loans. Investment income remained stable as management continued to reinvest cashflows back into the portfolio resulting in an increase in yield of 12 basis points. Interest income on federal funds sold decreased by $0.3 million due to a decrease of $22.2 million in average cash balances held at the Federal Reserve Bank as a result of loan growth in the second quarter of 2026. Interest expense decreased by $0.6 million in the second quarter of 2026 when compared to the second quarter of 2025. Interest on deposits increased slightly by $0.2 million despite an $84.4 million increase in average deposit balances, primarily in interest bearing demand and money market deposits. Long-term borrowing interest expense decreased $0.8 million due to a decrease of average balances of $90.0 million for the second quarter of 2026 when compared to the same period of 2025 primarily related to the repayment of $65.0 million and $25.0 million of FHLB advances at their maturities in March of 2026 and September of 2025, respectively.

Second Quarter 2026 Compared to First Quarter 2026

Comparing the second quarter of 2026 to the first quarter of 2026, net interest income, on a non-GAAP, FTE basis, increased by $0.5 million. Interest income increased by $0.5 million driven by an increase in average loan balances of $66.1 million in the second quarter of 2026. Interest expense was stable when comparing the second quarter of 2026 to the first quarter of 2026. Long-term borrowing expense decreased by $0.5 million due to the repayment of $65.0 million in maturing FHLB advances in March of 2026. Management's strategic focus on margin management during the second quarter of 2026 resulted in a 15 basis point increase in the net interest margin to 3.98% compared to 3.83% for the first quarter of 2026.

Year to date 2026 compared to Year to date 2025

Comparing the six months ended June 30, 2026 to the six months ended June 30, 2025, net interest income, on a non-GAAP, FTE basis, increased by $4.0 million. Interest income increased by $3.0 million, primarily driven by an increase of $2.3 million on interest and fees on loans as average loan balances increased by $39.9 million and an increase in yield by 14 basis points. Interest expense on deposits increased slightly by $0.2 million despite an increase in average deposit balances of $89.7 million driven by increases of $26.5 million in demand deposit accounts, $86.2 million in retail money market balances, partially offset by decreases in savings balances of $10.8 million and $15.0 million in brokered time deposits. Interest expense on short-term borrowings remained stable and interest expense on long-term borrowings decreased by $1.2 million as a result of a decrease in average balances of $62.0 million, primarily due to the repayment of $65.0 million of FHLB advances at their maturities in March 2026. The net interest margin for the six months ended June 30, 2026 was 3.89% compared to 3.61% for the six months ended June 30, 2025.

Non-Interest Income

Second Quarter 2026 Compared to Second Quarter 2025

Other operating income increased by $0.4 million driven by an increase in trust and brokerage income of $0.3 million as a result of increased production of new accounts as well as favorable market values in assets under management. Net gains decreased by $0.1 million as new residential mortgage production was booked in house as compared to selling to secondary market outlets.

Second Quarter 2026 Compared to First Quarter 2026

On a linked quarter basis, other operating income, including net gains, remained flat. Net gains decreased by $0.1 million related to the gain on the sale of a branch office recognized in the first quarter of 2026. BOLI income decreased by $0.2 million and was attributable to the receipt of a one-time death benefit received in the first quarter of 2026. These decreases were offset by an increase in debit card income of $0.1 million due to normal fluctuations and an increase in trust and brokerage income of $0.1 million.

Year to date 2026 compared to Year to date 2025

Comparing the six months ended June 30, 2026 to the same period of 2025, other operating income, inclusive of net gains, increased by $0.7 million, driven by an increase in trust and brokerage income of $0.5 million as a result of increased production of new business as well as favorable market values in assets under management, as well as an increase in BOLI income of $0.2 million as previously mentioned.

Non-Interest Expense

Second Quarter 2026 Compared to Second Quarter 2025

Other operating expenses increased by $2.8 million driven by a $0.8 million increase in salaries and benefits as a result of filling open positions throughout 2025, normal merit increases in April 2026 and increased incentive payouts, partially offset by reduced life and health insurance expense due to reduced claims and increased reductions in costs associated with loan originations. Professional services expenses increased by $2.1 million due to the $1.7 million, net of tax, third party consulting fee discussed above. These increases were partially offset by reductions in check fraud-related expenses and OREO expenses.

Second Quarter 2026 Compared to First Quarter 2026

Other operating expenses increased by $2.1 million driven by the one-time, non-GAAP $1.7 million, net of tax, consulting fee incurred with core contract negotiations. All other expenses were stable when comparing the second quarter of 2026 to the first quarter of 2026 as we continue a strategic focus on expense control.

Year to date 2026 compared to Year to date 2025

Comparing the six months ended June 30, 2026 to the same period of 2025, other operating expenses increased by $3.9 million driven by the one-time, non-GAAP expense previously discussed, a $1.7 million increase in salaries and benefits as a result of new hires late in 2025 and early 2026, normal merit increases in April 2026 and increased incentive payouts, partially offset by reduced life and health insurance expense due to reduced claims and increased reductions in costs associated with loan originations and a $0.3 million increase in equipment, occupancy and data processing expenses as a result of new software implementation. These increases were partially offset by reductions in OREO expenses and other miscellaneous expenses such as check fraud expenses, employee benefits expenses and miscellaneous expense related to share repurchase tax recorded in the second quarter of 2025.

The effective income tax rates, as a percentage of income, for the six-month periods ended June 30, 2026 and 2025 were 24.1% and 24.7%, respectively.

Balance Sheet Overview

Total assets at June 30, 2026 were $2.1 billion, representing a $5.4 million decrease since December 31, 2025. During the six months of 2026, cash and interest-bearing deposits in other banks decreased by $46.4 million. The investment portfolio decreased by $0.2 million. The decreases were partially offset by increases in gross loans of $50.4 million as well as an increase in pension assets of $3.2 million due to increased market values.

Total liabilities at June 30, 2026 were $1.9 billion, representing a $14.1 million decrease since December 31, 2025. Total deposits increased by $0.4 million when compared to December 31, 2025. In January 2026, a $25.0 million brokered certificate of deposit with an interest rate of 4.23% matured and was repaid. Savings and money market accounts increased by $27.6 million due primarily to the expansion of current and new relationships throughout the first six months of 2026. Non-interest-bearing demand deposits decreased by $11.6 million and interest-bearing demand deposits increased by $13.3 million. Retail time deposits decreased by $3.9 million since December 31, 2025. Short-term borrowings increased by $50.0 million at June 30, 2026 compared to December 31, 2025 as a result of overnight borrowings in anticipation of loan funding. These borrowings were subsequently fully repaid in July.

Outstanding loans of $1.6 billion at June 30, 2026 reflected a $50.4 million increase since December 31, 2025.

Loan Type

(in millions)

Change since

March 31, 2026

Change since

December 31, 2025

Commercial

$16.6

$31.9

Residential Mortgages

$20.8

$10.2

Consumer

$ 9.3

$ 8.3

Gross Loans

$46.7

$50.4

Since December 31, 2025, commercial real estate loans increased by $55.0 million as a result of new business relationships as well as additional growth in existing relationships; acquisition and development loans increased by $11.9 million; commercial and industrial loans decreased by $35.0 million as a result of payoffs related to approximately $15.0 million due to competitive pricing, approximately $5.3 million related to sales of businesses, approximately $8.0 million as a result of a refinance to another institution, and the payoff of a floorplan line of credit. Residential mortgage loans increased by $10.2 million as a result of robust mortgage production booked in house as opposed to the selling to the secondary market outlets, offset slightly by normal amortization; and consumer loans increased by $8.3 million related to the purchase of a consumer loan pool in the second quarter of 2026.

New commercial loan production for the second quarter of 2026 was approximately $66.0 million. The pipeline of commercial loans as of June 30, 2026 was robust, and unfunded committed commercial construction loans totaled approximately $42.0 million. Commercial amortization and payoffs were approximately $71.6 million through June 30, 2026, due primarily to pay-offs of short-term commercial loans as well as normal amortizations of the commercial loan portfolio.

New consumer mortgage loan production for the second quarter of 2026 was approximately $33.9 million, with most of this production comprised of in-house mortgages. The pipeline of in-house, portfolio loans as of June 30, 2026 was $20.0 million. Unfunded commitments related to residential construction loans totaled $20.7 million at June 30, 2026.

Total deposits of $1.7 billion at June 30, 2026 remained flat when compared to December 31, 2025.

Deposit Type

(in millions)

Change since

March 31, 2026

Change since

December 31, 2025

Non-Interest-Bearing

($9.9)

($11.6)

Interest-Bearing Demand

$14.6

$13.3

Savings and Money Market

($16.8)

$27.6

Time Deposits- Brokered

$ -

($25.0)

Time Deposits- Retail

($3.1)

($3.9)

Total Deposits

($15.2)

$0.4

In January 2026, a $25.0 million brokered certificate of deposit, with an interest rate of 4.23%, was repaid at its maturity. Savings and money market accounts increased by $27.6 million due primarily to the expansion of current and new relationships throughout the first six months of 2026. Non-interest-bearing demand deposits decreased by $11.6 million, offset by an increase in interest-bearing demand deposits of $13.3 million, primarily related to municipality accounts. Retail time deposits decreased by $3.9 million since December 31, 2025.

The book value of the Corporation's common stock was $32.91 per share at June 30, 2026 compared to $31.33 per share at December 31, 2025. At June 30, 2026, there were 6,453,836 basic outstanding shares and 6,462,604 diluted outstanding shares of common stock. The increase in the book value at June 30, 2026 was due to the undistributed net income of $9.0 million for the first six months of 2026.

Asset Quality

The allowance for credit losses ("ACL") was $20.6 million at June 30, 2026 compared to $19.0 million at June 30, 2025 and $19.5 million at December 31, 2025. The provision for credit losses was $0.8 million for the quarter ended June 30, 2026 compared to $0.9 million for both the quarters ended March 31, 2026 and June 30, 2025. Provision for credit losses was $1.7 million and $1.5 million for the first six months of 2026 and 2025, respectively. Asset quality remained strong during the first six months of 2026. Net charge-offs of $0.1 million were recorded for the quarter ended June 30, 2026 compared to net charge-offs of $0.2 million for both the quarter ended June 30, 2025 and the quarter ended March 31, 2026. The ratio of the ACL to loans outstanding was 1.31% at June 30, 2026 compared to 1.28% at December 31, 2025 and 1.27% at June 30, 2025.

The ratio of net charge offs to average loans was 0.04% and 0.07% for the six-month periods ended June 30, 2026 and 2025, respectively. The commercial and industrial portfolio had net charge offs of (0.10%) and (0.25%) for the six-month periods ended June 30, 2026 and 2025, respectively. Net charge offs in consumer loans decreased in the first six months of 2026 when compared to the first six months of 2025 from (0.96%) to (0.86%). The decrease was primarily driven by charge-offs in unsecured consumer loans in 2025. Details of the ratios, by loan type, are shown below. Our special assets team continues to actively collect on charged-off loans, resulting in overall low net charge-off ratios.

Ratio of Net (Charge Offs)/Recoveries to Average Loans

06/30/2026

06/30/2025

Loan Type

(Charge Off) / Recovery

Commercial Real Estate

0.00 %

Acquisition & Development

0.03 %

0.13 %

Commercial & Industrial

(0.10 %)

(0.25 %)

Residential Mortgage

0.01 %

Consumer

(0.86 %)

(0.96 %)

Total Net Charge Offs

(0.04 %)

(0.07 %)

Non-accrual loans totaled $4.5 million at June 30, 2026 compared to $4.2 million at December 31, 2025. The slight increase in non-accrual balances at June 30, 2026 was related to one commercial loan moving to non-accrual status in the first quarter.

Non-accrual loans that have been subject to partial charge-offs totaled $0.1 million at June 30, 2026 and $0.2 million at December 31, 2025. Loans secured by 1-4 family residential real estate properties in the process of foreclosure totaled $1.2 million at June 30, 2026 and $0.5 million at December 31, 2025. The increase was due to one mortgage loan of approximately $1.1 million that moved in the second quarter. As a percentage of the loan portfolio, accruing loans past due 30 days or more increased to 0.50% at June 30, 2026 compared to 0.32% at December 31, 2025 and 0.27% as of June 30, 2025. This increase was attributable to one large commercial loan.

ABOUT FIRST UNITED CORPORATION

First United Corporation is a Maryland corporation chartered in 1985 and a financial holding company registered with the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956, as amended, that elected financial holding company status in 2021. The Corporation's primary business is serving as the parent company of the Bank, First United Statutory Trust I ("Trust I") and First United Statutory Trust II ("Trust II" and together with Trust I, "the Trusts"), both Connecticut statutory business trusts. The Trusts were formed for the purpose of selling trust-preferred securities that qualified as Tier 1 capital. The Bank has two consumer finance company subsidiaries- Oak First Loan Center, Inc., a West Virginia corporation, and OakFirst Loan Center, LLC, a Maryland limited liability company – and one subsidiary that it uses to hold real estate acquired through foreclosure or by deed in lieu of foreclosure – First OREO Trust, a Maryland statutory trust. In addition, the Bank owns 99.9% of the limited partnership interests in Liberty Mews Limited Partnership, a Maryland limited partnership formed for the purpose of acquiring, developing and operating low-income housing units in Garrett County, Maryland, and a 99.9% non-voting membership interest in MCC FUBT Fund, LLC, an Ohio limited liability company formed for the purpose of acquiring, developing and operating low-income housing units in Allegany County, Maryland and Mineral County, West Virginia. The Corporation's website is www.mybank.com

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements do not represent historical facts, but are statements about management's beliefs, plans and objectives about the future, as well as its assumptions and judgments concerning such beliefs, plans and objectives. These statements are evidenced by terms such as "anticipate," "estimate," "should," "expect," "believe," "intend," and similar expressions. Although these statements reflect management's good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. The beliefs, plans and objectives on which forward-looking statements are based involve risks and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. For a discussion of these risks and uncertainties, see the section of the periodic reports that First United Corporation files with the Securities and Exchange Commission entitled "Risk Factors". In addition, investors should understand that the Corporation is required under generally accepted accounting principles to evaluate subsequent events through the filing of the consolidated financial statements included in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 and the impact that any such events have on our critical accounting assumptions and estimates made as of June 30, 2026, which could require us to make adjustments to the amounts reflected in this press release.

FIRST UNITED CORPORATION

Oakland, MD

Stock Symbol : FUNC

Financial Highlights - Unaudited

(Dollars in thousands, except per share data)

Three Months Ended

Six Months Ended

June 30,

2026

2025

2026

2025

Results of Operations:

Interest income

$ 26,169

$ 24,871

$ 51,880

$ 48,933

Interest expense

7,583

8,164

15,220

16,210

Net interest income

18,586

16,707

36,660

32,723

Provision for credit losses

781

860

1,660

1,516

Other operating income

5,319

4,940

10,527

9,762

Net gains

146

171

238

Other operating expense

15,765

12,974

29,458

25,550

Income before taxes

$ 7,398

$ 7,959

$ 16,240

$ 15,657

Income tax expense

1,731

1,975

3,910

3,867

Net income

$ 5,667

$ 5,984

$ 12,330

$ 11,790

Per share data:

Basic net income per share

$ 0.88

$ 0.92

$ 1.91

$ 1.82

Diluted net income per share

$ 0.87

$ 0.92

$ 1.90

$ 1.81

Adjusted Basic net income (1)

$ 1.14

$ 0.92

$ 2.16

$ 1.82

Adjusted Diluted net income (1)

$ 1.13

$ 0.92

$ 2.15

$ 1.81

Dividends declared per share

$ 0.26

$ 0.22

$ 0.52

$ 0.44

Book value

$ 32.91

$ 29.43

Diluted book value

$ 32.86

$ 29.38

Tangible book value per share

$ 31.16

$ 27.64

Diluted Tangible book value per share

$ 31.12

$ 27.59

Closing market value

$ 44.11

$ 31.01

Market Range:

High

$ 45.98

$ 32.09

Low

$ 36.27

$ 25.90

Shares outstanding at period end: Basic

6,453,836

6,494,611

Shares outstanding at period end: Diluted

6,462,604

6,506,493

Performance ratios: (Year to Date Period End, annualized)

Return on average assets

1.20 %

Adjusted return on average assets (1)

1.36 %

1.20 %

Return on average shareholders' equity

11.92 %

12.78 %

Adjusted return on average shareholders' equity (1)

13.49 %

12.78 %

Net interest margin (Non-GAAP), includes tax exempt income of $138 and $103

3.89 %

3.61 %

Net interest margin GAAP

3.87 %

3.60 %

Efficiency ratio - non-GAAP (2)

57.49 %

59.66 %

(1) See reconciliation of this non-GAAP financial measure provided elsewhere herein.

(2) Efficiency ratio is a non-GAAP measure calculated by dividing total operating

expenses by the sum of tax equivalent net interest income and other operating

income, less gains/(losses) on sales of securities and/or fixed assets and costs

incurred on core contract renewal.

June 30,

December 31,

2026

2025

Financial Condition at period end:

Assets

$ 2,082,092

$ 2,087,453

Earning assets

$ 1,854,045

$ 1,807,780

Gross loans

$ 1,572,131

$ 1,521,704

Commercial Real Estate

$ 625,821

$ 570,808

Acquisition and Development

$ 102,211

$ 90,272

Commercial and Industrial

$ 242,013

$ 277,034

Residential Mortgage

$ 547,118

$ 536,912

Consumer

$ 54,968

$ 46,678

Investment securities

$ 279,300

$ 279,534

Total deposits

$ 1,735,513

$ 1,735,149

Noninterest bearing

$ 441,365

$ 453,036

Interest bearing

$ 1,294,148

$ 1,282,113

Shareholders' equity

$ 212,374

$ 203,634

Capital ratios:

Tier 1 to risk weighted assets

15.26 %

15.36 %

Common Equity Tier 1 to risk weighted assets

13.48 %

13.52 %

Tier 1 Leverage

12.70 %

12.21 %

Total risk based capital

16.51 %

16.61 %

Asset quality:

Net charge-offs for the quarter

$ (96)

$ (99)

Nonperforming assets: (Period End)

Nonaccrual loans

$ 4,514

$ 4,192

Loans 90 days past due and accruing

391

477

Total nonperforming loans and 90 day past due

$ 4,905

$ 4,669

Other real estate owned

$ -

$ 1,083

Other repossessed assets

$ 2,780

$ 2,802

Modified loans

$ 1,199

$ 1,209

Allowance for credit losses to gross loans

1.31 %

1.28 %

Allowance for credit losses to non-accrual loans

456.16 %

464.46 %

Allowance for credit losses to non-performing assets

267.94 %

227.61 %

Non-performing and 90 day past due loans to total loans

0.31 %

Non-performing loans and 90 day past due loans to total assets

0.24 %

0.22 %

Non-accrual loans to total loans

0.29 %

0.28 %

Non-performing assets to total assets

0.37 %

0.41 %

FIRST UNITED CORPORATION

Oakland, MD

Stock Symbol : FUNC

Financial Highlights - Unaudited

June 30,

March 31,

December 31,

September 30,

June 30,

March 31,

(Dollars in thousands, except per share data)

2026

2025

Results of Operations:

Interest income

$ 26,169

$ 25,711

$ 26,153

$ 25,762

$ 24,871

$ 24,062

Interest expense

7,583

7,637

8,166

8,359

8,164

8,046

Net interest income

18,586

18,074

17,987

17,403

16,707

16,016

Provision for credit losses

781

879

717

510

860

656

Other operating income

5,319

5,208

5,330

5,074

4,940

4,822

Net gains

132

(97)

261

146

Other operating expense

15,765

13,693

14,869

12,986

12,974

12,576

Income before taxes

$ 7,398

$ 8,842

$ 7,634

$ 9,242

$ 7,959

$ 7,698

Income tax expense

1,731

2,179

1,857

2,294

1,975

1,892

Net income

$ 5,667

$ 6,663

$ 5,777

$ 6,948

$ 5,984

$ 5,806

Per share data:

Basic net income per share

$ 0.88

$ 1.03

$ 0.89

$ 1.07

$ 0.92

$ 0.90

Diluted net income per share

$ 0.87

$ 1.03

$ 0.89

$ 1.07

$ 0.92

$ 0.89

Adjusted basic net income (1)

$ 1.14

$ 1.02

$ 1.10

$ 1.07

$ 0.92

$ 0.90

Adjusted diluted net income (1)

$ 1.13

$ 1.02

$ 1.10

$ 1.07

$ 0.92

$ 0.89

Dividends declared per share

$ 0.26

$ 0.22

Book value

$ 32.91

$ 31.84

$ 31.33

$ 30.65

$ 29.43

$ 28.35

Diluted book value

$ 32.86

$ 31.78

$ 31.27

$ 30.59

$ 29.38

$ 28.27

Tangible book value per share

$ 31.16

$ 30.08

$ 29.56

$ 28.87

$ 27.64

$ 26.55

Diluted Tangible book value per share

$ 31.12

$ 30.02

$ 29.50

$ 28.82

$ 27.59

$ 26.47

Closing market value

$ 44.11

$ 36.64

$ 37.19

$ 36.77

$ 31.01

$ 30.02

Market Range:

High

$ 45.98

$ 40.53

$ 40.79

$ 38.41

$ 32.09

$ 41.61

Low

$ 36.27

$ 35.02

$ 33.63

$ 32.02

$ 25.90

$ 29.38

Shares outstanding at period end: Basic

6,453,836

6,446,717

6,499,476

6,496,908

6,494,611

6,478,634

Shares outstanding at period end: Diluted

6,462,604

6,459,155

6,511,358

6,508,790

6,506,493

6,497,454

Performance ratios: (Year to Date Period End, annualized)

Return on average assets

1.20 %

1.29 %

1.21 %

1.24 %

1.20 %

1.19 %

Adjusted return on average assets (1)

1.36 %

1.28 %

1.24 %

1.20 %

1.19 %

Return on average shareholders' equity

11.92 %

13.06 %

12.70 %

13.23 %

12.78 %

12.83 %

Adjusted return on average shareholders' equity (1)

13.49 %

12.99 %

13.39 %

13.23 %

12.78 %

12.83 %

Net interest margin (Non-GAAP), includes tax exempt income of $138 and $103

3.89 %

3.83 %

3.67 %

3.64 %

3.61 %

3.56 %

Net interest margin GAAP

3.87 %

3.82 %

3.66 %

3.63 %

3.60 %

3.55 %

Efficiency ratio - non-GAAP (2)

57.49 %

58.45 %

58.19 %

58.73 %

59.66 %

59.95 %

(1) See reconciliation of this non-GAAP financial measure provided elsewhere herein.

(2) Efficiency ratio is a non-GAAP measure calculated by dividing total operating expenses

by the sum of tax equivalent net interest income and other operating income, less

gains/(losses) on sales of securities and/or fixed assets and costs incurred on core contract

renewal.

June 30,

March 31,

December 31,

September 30,

June 30,

March 31,

2026

2025

Financial Condition at period end:

Assets

$ 2,082,092

$ 2,039,010

$ 2,087,453

$ 2,023,974

$ 2,007,471

$ 1,979,753

Earning assets

$ 1,854,045

$ 1,810,557

$ 1,807,780

$ 1,784,056

$ 1,789,747

$ 1,762,891

Gross loans

$ 1,572,131

$ 1,525,466

$ 1,521,704

$ 1,496,762

$ 1,502,481

$ 1,479,869

Commercial Real Estate

$ 625,821

$ 609,491

$ 570,808

$ 554,418

$ 550,717

$ 532,764

Acquisition and Development

$ 102,211

$ 97,785

$ 90,272

$ 93,968

$ 98,937

$ 94,063

Commercial and Industrial

$ 242,013

$ 246,192

$ 277,034

$ 279,079

$ 281,484

$ 282,370

Residential Mortgage

$ 547,118

$ 526,314

$ 536,912

$ 521,317

$ 521,968

$ 520,072

Consumer

$ 54,968

$ 45,684

$ 46,678

$ 47,980

$ 49,375

$ 50,600

Investment securities

$ 279,300

$ 282,711

$ 279,534

$ 278,898

$ 279,541

$ 275,143

Total deposits

$ 1,735,513

$ 1,750,703

$ 1,735,149

$ 1,678,902

$ 1,614,207

$ 1,623,574

Noninterest bearing

$ 441,365

$ 451,303

$ 453,036

$ 429,986

$ 425,784

$ 422,415

Interest bearing

$ 1,294,148

$ 1,299,400

$ 1,282,113

$ 1,248,916

$ 1,188,423

$ 1,201,159

Shareholders' equity

$ 212,374

$ 205,262

$ 203,634

$ 199,099

$ 191,147

$ 183,694

Capital ratios:

Tier 1 to risk weighted assets

15.26 %

15.82 %

15.36 %

15.59 %

15.22 %

14.87 %

Common Equity Tier 1 to risk weighted assets

13.48 %

13.94 %

13.52 %

13.68 %

13.32 %

12.97 %

Tier 1 Leverage

12.70 %

12.23 %

12.21 %

12.10 %

12.08 %

11.94 %

Total risk based capital

16.51 %

17.07 %

16.61 %

16.84 %

16.47 %

16.10 %

Asset quality:

Net (charge-offs)/recoveries for the quarter

$ (96)

$ (198)

$ (99)

$ (435)

$ (151)

$ (360)

Nonperforming assets: (Period End)

Nonaccrual loans

$ 4,514

$ 4,695

$ 4,192

$ 3,825

$ 3,813

$ 4,026

Loans 90 days past due and accruing

391

477

801

535

233

Total nonperforming loans and 90 day past due

$ 4,905

$ 4,761

$ 4,669

$ 4,626

$ 4,348

$ 4,259

Other real estate owned

$ -

$ 1,083

$ 2,718

$ 3,035

$ 3,062

Other repossessed assets

$ 2,780

$ 2,692

$ 2,802

$ 3,043

$ 2,802

Modified/restructured loans

$ 1,199

$ 1,955

$ 1,209

$ 998

$ 1,198

$ 1,021

Allowance for credit losses to gross loans

1.31 %

1.28 %

1.27 %

1.25 %

Allowance for credit losses to non-accrual loans

456.16 %

424.94 %

464.46 %

499.06 %

499.45 %

458.69 %

Allowance for credit losses to non-performing assets

267.94 %

233.73 %

227.61 %

183.78 %

186.98 %

182.43 %

Non-performing and 90 day past due loans to total loans

0.31 %

0.29 %

Non-performing loans and 90 day past due loans to total assets

0.24 %

0.23 %

0.22 %

0.23 %

0.22 %

Non-accrual loans to total loans

0.29 %

0.31 %

0.28 %

0.26 %

0.25 %

0.27 %

Non-performing assets to total assets

0.37 %

0.42 %

0.41 %

0.51 %

Consolidated Statement of Condition

(Dollars in thousands - Unaudited)

June 30, 2026

March 31, 2026

December 31, 2025

Assets

Cash and due from banks

84,195

89,220

129,830

Interest bearing deposits in banks

993

627

1,782

Cash and cash equivalents

85,188

89,847

131,612

Investment securities – available for sale (at fair value)

107,997

109,004

107,144

Investment securities – held to maturity (at cost)

170,259

172,672

171,361

Equity investments with readily determinable fair market values

1,044

1,035

1,029

Restricted investment in bank stock, at cost

1,621

4,630

Loans held for sale

—

132

130

Loans

1,572,131

1,525,466

1,521,704

Unearned fees

(592)

(512)

(476)

Allowance for credit losses

(20,591)

(19,951)

(19,470)

Net loans

1,550,948

1,505,003

1,501,758

Premises and equipment, net

29,550

30,020

29,665

Goodwill and other intangible assets

11,279

11,361

11,444

Bank owned life insurance

50,501

50,125

50,360

Deferred tax assets

8,072

9,141

8,730

Other real estate owned, net

—

1,083

Operating lease asset

862

939

1,015

Pension asset

24,044

20,036

20,798

Accrued interest receivable and other assets

40,727

36,991

46,694

Total Assets

2,082,092

2,039,010

2,087,453

Liabilities and Shareholders' Equity

Liabilities:

Non-interest bearing deposits

441,365

451,303

453,036

Interest bearing deposits

1,294,148

1,299,400

1,282,113

Total deposits

1,735,513

1,750,703

1,735,149

Short-term borrowings

69,233

19,588

17,661

Long-term borrowings

30,929

95,929

Operating lease liability

1,009

1,095

1,180

Allowance for credit loss on off balance sheet exposures

1,463

1,418

1,218

Accrued interest payable and other liabilities

29,893

28,323

30,992

Dividends payable

1,678

1,692

1,690

Total Liabilities

1,869,718

1,833,748

1,883,819

Shareholders' Equity:

Common Stock – par value $0.01 per share; Authorized 25,000,000 shares;

issued and outstanding 6,453,836 shares at June 30, 2026; 6,494,611 at June

30, 2025; and 6,499,476 at December 31, 2025

Surplus

19,514

19,360

21,551

Retained earnings

216,262

212,255

207,284

Accumulated other comprehensive loss

(23,466)

(26,417)

(25,266)

Total Shareholders' Equity

212,374

205,262

203,634

Total Liabilities and Shareholders' Equity

2,082,092

2,039,010

2,087,453

Historical Income Statement

2026

2025

Year to date

In thousands

(Unaudited)

Interest income

Interest and fees on loans

23,779

22,502

90,328

23,219

23,060

22,294

21,755

Interest on investment securities

Taxable

1,907

1,880

7,210

1,845

1,826

1,776

1,763

Exempt from federal income tax

218

Total investment income

1,966

1,939

7,428

1,904

1,883

1,833

1,808

Other

424

1,270

3,092

1,030

819

744

499

Total interest income

26,169

25,711

100,848

26,153

25,762

24,871

24,062

Interest expense

Interest on deposits

7,033

6,631

27,524

7,044

7,009

6,788

6,683

Interest on short-term borrowings

Interest on long-term borrowings

524

995

5,136

1,105

1,333

1,355

1,343

Total interest expense

7,583

7,637

32,735

8,166

8,359

8,164

8,046

Net interest income

18,586

18,074

68,113

17,987

17,403

16,707

16,016

Credit loss expense/(credit)

Loans

736

679

2,345

480

728

657

Debt securities held to maturity

—

Off balance sheet credit exposures

200

355

237

(13)

132

(1)

Provision for credit losses

781

879

2,743

717

510

860

656

Net interest income after provision for credit losses

17,805

17,195

65,370

17,270

16,893

15,847

15,360

Other operating income

Net gains on investments, available for sale

—

Gains on sale of residential mortgage loans

533

132

163

146

Gains/(Losses) on disposal of fixed assets

—

(228)

(229)

—

Net gains/(losses)

132

402

(97)

261

146

Other Income

Service charges on deposit accounts

568

547

2,255

568

563

577

547

Other service charges

204

189

845

207

218

214

206

Trust department

2,684

2,554

9,824

2,667

2,448

2,386

2,323

Debit card income

1,046

931

4,057

1,173

980

983

921

Bank owned life insurance

376

539

1,408

364

355

348

341

Brokerage commissions

388

382

1,445

308

346

370

421

Other

332

164

Total other income

5,319

5,208

20,166

5,330

5,074

4,940

4,822

Total other operating income

5,358

5,340

20,568

5,233

5,335

5,086

4,914

Other operating expenses

Salaries and employee benefits

8,157

8,201

29,347

7,108

7,589

7,319

7,331

FDIC premiums

274

279

1,051

273

266

267

245

Equipment

525

521

2,217

559

515

565

578

Occupancy

690

725

2,860

817

679

675

689

Data processing

1,739

1,664

6,243

1,623

1,517

1,600

1,503

Marketing

193

234

904

288

182

196

238

Professional services

2,702

570

2,449

745

639

589

476

Contract labor

189

166

634

178

127

166

163

Telephone

380

Other real estate owned

123

2,235

1,866

208

Investor relations

306

132

Contributions

344

120

Other

978

989

4,435

1,140

1,167

1,083

1,045

Total other operating expenses

15,765

13,693

53,405

14,869

12,986

12,974

12,576

Income before income tax expense

7,398

8,842

32,533

7,634

9,242

7,959

7,698

Provision for income tax expense

1,731

2,179

8,018

1,857

2,294

1,975

1,892

Net Income

5,667

6,663

24,515

5,777

6,948

5,984

5,806

Basic net income per common share

0.88

1.03

3.78

0.89

1.07

0.92

0.90

Diluted net income per common share

0.87

1.03

3.77

0.89

1.07

0.92

0.89

Weighted average number of basic shares outstanding

6,451

6,483

6,490

6,499

6,496

6,489

6,474

Weighted average number of diluted shares outstanding

6,461

6,494

6,504

6,510

6,508

6,506

6,490

Dividends declared per common share

0.26

0.96

0.26

0.22

Non-GAAP Financial Measures (unaudited)

Reconciliation of as reported (GAAP) and non-GAAP financial measures

The following tables below provide a reconciliation of certain financial measures calculated under generally accepted

accounting principles ("GAAP") (as reported) and non-GAAP. A non-GAAP financial measure is a numerical measure of

historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required

to be disclosed in the most directly comparable measure calculated and presented in accordance with GAAP in the United

States. The Company's management believes the presentation of non-GAAP financial measures provide investors with a

greater understanding of the Company's operating results in addition to the results measured in accordance with GAAP.

While management uses these non-GAAP measures in its analysis of the Company's performance, this information should not

be viewed as a substitute for financial results determined in accordance with GAAP or considered to be more important than

financial results determined in accordance with GAAP.

The following non-GAAP financial measures exclude gains on disposal of fixed assets and consulting fees incurred with core

processing contract in 2026.

Three months ended June 30,

Six months ended June 30,

2026

2025

2026

2025

(in thousands, except for per share amount)

Net income - as reported

5,667

5,984

12,330

11,790

Adjustments:

Gain on disposal of fixed assets

—

(46)

—

Consulting fee on core processing contract

2,179

—

2,179

—

Income tax effect of adjustments

(527)

—

(516)

—

Adjusted net income (non-GAAP)

7,319

5,984

13,947

11,790

Basic earnings per share - as reported

0.88

0.92

1.91

1.82

Adjustments:

Gain on disposal of fixed assets

—

(0.01)

—

Consulting fee on core processing contract

0.26

—

0.26

—

Adjusted basic earnings per share (non-GAAP)

1.14

0.92

2.16

1.82

Diluted earnings per share - as reported

0.87

0.92

1.90

1.81

Adjustments:

Gain on disposal of fixed assets

—

(0.01)

—

Consulting fee on core processing contract

0.26

—

0.26

—

Adjusted diluted earnings per share (non-GAAP)

1.13

0.92

2.15

1.81

As of or for the three months ended

As of or for the six months ended

June 30,

(in thousands, except per share data)

2026

2025

2026

2025

Per Share Data

Basic net income per share - as reported

0.88

0.92

1.91

1.82

Basic net income per share - non-GAAP

1.14

0.92

2.16

1.82

Diluted net income per share - as reported

0.87

0.92

1.90

1.81

Diluted net income per share - non-GAAP

1.13

0.92

2.15

1.81

Basic book value per share

32.91

29.43

Diluted book value per share

32.86

29.38

As of or for the six months ended

Significant Ratios:

June 30,

2026

2025

Return on Average Assets - as reported

1.20 %

Adjustments:

Gain on disposal of fixed assets

(0.01 %)

Consulting fee on core processing contract

0.17 %

Adjusted Return on Average Assets (non-GAAP)

1.36 %

1.20 %

Return on Average Equity - as reported

11.92 %

12.78 %

Gain on disposal of fixed assets

(0.03 %)

Consulting fee on core processing contract

1.60 %

Adjusted Return on Average Equity (non-GAAP)

13.49 %

12.78 %

Three Months Ended

June 30

2026

2025

(dollars in thousands)

Average

Balance

Interest

Average

Yield/Rate

Average

Balance

Interest

Average

Yield/Rate

Assets

Loans

1,549,332

23,812

6.16

1,489,485

22,304

6.01

Investment Securities:

Taxable

291,217

1,907

2.63

283,914

1,776

2.51

Non taxable

7,488

106

5.68

7,424

101

5.46

Total

298,705

2,013

2.70

291,338

1,877

2.58

Federal funds sold

28,424

344

4.85

50,675

628

4.97

Interest-bearing deposits with other banks

861

2.80

3,799

2.11

Other interest earning assets

2,656

11.18

5,815

6.62

Total earning assets

1,879,978

26,249

5.60

1,841,112

24,925

5.43

Allowance for credit losses

(20,249)

(18,685)

Non-earning assets

179,343

175,323

Total Assets

2,039,072

1,997,750

Liabilities and Shareholders' Equity

Deposits

Interest-bearing demand deposits

389,083

1,600

1.65

357,725

1,520

1.70

Interest-bearing money markets- retail

560,943

3,753

2.68

473,262

3,578

3.03

Interest-bearing money markets- brokered

—

496

4.04

Savings deposits

159,161

0.11

168,854

0.11

Time deposits - retail

148,020

1,370

3.71

147,433

1,122

3.05

Time deposits - brokered

25,000

267

4.28

50,000

518

4.16

Total deposits

1,282,208

7,033

2.20

1,197,770

6,788

2.27

Short-term borrowings

19,922

0.52

19,811

0.43

Long-term borrowings

30,929

524

6.80

120,929

1,355

4.49

Total interest-bearing liabilities

1,333,059

7,583

2.28

1,338,510

8,164

2.45

Non-interest-bearing deposits

463,149

440,779

Other liabilities

32,586

29,889

Shareholders' Equity

210,278

188,572

Total Liabilities and Shareholders' Equity

2,039,072

1,997,750

Net interest income and spread

18,666

3.32

16,761

2.98

Net interest margin

3.98

3.65

Six Months Ended

June 30,

2026

2025

(dollars in thousands)

Average

Balance

Interest

Average

Yield/

Rate

Average

Balance

Interest

Average

Yield/

Rate

Assets

Loans

1,526,255

46,326

6.12

1,486,334

44,072

5.98

Investment Securities:

Taxable

291,027

3,787

2.62

284,612

3,539

2.51

Non taxable

7,493

211

5.68

6,977

182

5.26

Total

298,520

3,998

2.70

291,589

3,721

2.57

Federal funds sold

78,697

1,513

3.88

46,213

1,012

4.42

Interest-bearing deposits with other banks

1,602

3.65

3,174

2.22

Other interest earning assets

3,946

152

7.77

5,795

196

6.82

Total earning assets

1,909,020

52,018

5.49

1,833,105

49,036

5.39

Allowance for credit losses

(19,990)

(18,550)

Non-earning assets

178,742

174,298

Total Assets

2,067,772

1,988,853

Liabilities and Shareholders' Equity

Deposits

Interest-bearing demand deposits

392,655

3,268

1.68

366,170

3,173

1.75

Interest-bearing money markets- retail

554,931

7,428

2.70

468,732

7,125

3.07

Interest-bearing money markets- brokered

2.40

316

3.83

Savings deposits

159,415

0.10

170,178

0.10

Time deposits - retail

149,015

2,294

3.10

145,984

2,176

3.01

Time deposits - brokered

28,039

592

4.26

43,059

903

4.23

Total deposits

1,284,139

13,664

2.15

1,194,439

13,471

2.27

Short-term borrowings

19,259

0.39

21,423

0.39

Long-term borrowings

58,940

1,519

5.20

120,929

2,698

4.50

Total interest-bearing liabilities

1,362,338

15,220

2.25

1,336,791

16,210

2.45

Non-interest-bearing deposits

463,856

435,362

Other liabilities

32,985

30,682

Shareholders' Equity

208,593

186,018

Total Liabilities and Shareholders' Equity

2,067,772

1,988,853

Net interest income and spread

36,798

3.24

32,826

2.94

Net interest margin

3.89

3.61

SOURCE First United Corporation