First United Corporation

What they do

First United Corporation operates through its subsidiary, First United Bank & Trust, offering retail and commercial banking services including deposits, loans, mortgages, and trust and brokerage services. The Bank has 23 banking offices and 30 ATMs across Maryland and West Virginia, and also owns consumer finance subsidiaries (OakFirst Loan Centers) that service existing loans, real estate holding entities, and low-income housing partnerships.

Revenue drivers

• Net interest income — Largest revenue source; second quarter 2026 saw a $1.9 million year-over-year increase driven by new loans booked at higher rates and repricing of adjustable-rate loans, partially offset by lower funding costs.
• Trust and brokerage income — Other operating income increased $0.3 million in Q2 2026 driven by increased production and favorable market values on assets under management.
• Commercial and residential loan originations — Q2 2026 had $66.0 million in commercial and $33.9 million in residential mortgage originations, contributing to loan growth and interest income.

Recent performance

For the second quarter of 2026, GAAP net income was $5.7 million, or $0.87 per diluted share, down from $6.0 million in Q2 2025 and $6.7 million in Q1 2026, reflecting a $1.7 million net-of-tax consulting expense. Six-month net income was $12.3 million, or $1.90 per diluted share, up from $11.8 million, or $1.81 per diluted share, in the prior year. Net interest margin (FTE) was 3.98% in Q2 2026. Total assets were $2.1 billion and deposits $1.7 billion at June 30, 2026.

Strategy

Management is focused on controlling expenses while investing in technology and pricing initiatives, including core processing system contract negotiations. The company is also emphasizing loan production, with robust pipelines, and growing its wealth franchise. A cash dividend of $0.26 per share was declared in Q2 2026.

Risks

• Dependence on subsidiary growth — Profitability relies on successful growth of the Bank and other subsidiaries; if they underperform, the Corporation's results are adversely affected.
• Funding and liquidity risk — The Bank depends on deposits, FHLB advances, and other funding sources; if these become unavailable or more expensive, costs could rise and constrain growth.
• Interest rate risk — Changes in market rates could affect the value of loans, deposits, and securities, and impact interest rate sensitivity of the balance sheet.
• Credit risk from commercial loans — Commercial loans are often secured by real estate or business assets, and repayment depends on borrower success; adverse local economic or real estate conditions could increase defaults.

Outlook

Management expects continued benefit from higher loan yields and reduced funding costs, with a focus on expense control. They believe the one-time consulting investment will improve efficiency in future years. Loan pipelines remain robust heading into the third quarter of 2026.