What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-10 compared with 2025-03-20 · 294 added, 211 removed, 1655 unchanged (23% of the section changed)

7 unchanged sentences

Notes to Consolidated Financial Statements for the years ended December 31, 2025 and 2024

REPORT OF INDEPENDENT REG ISTERED PUBLIC ACCOUNTING FIRM

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and the Board of Directors of First United Corporation

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Forecast and reversion periods as well as the application and monitoring of economic forecast models are considered assumptions applied by management.

Based on management’s review and analysis of internal, external, and model risks, management may adjust the quantitative model output with qualitative adjustments.

Based on management’s review and

analysis of internal, external, and model risks, management may adjust the quantitative model output with qualitative adjustments.

Management developed a qualitative framework in which maximum loss rates are established considering economic forecasts that serve as the basis for determining the reasonableness of the quantitative model’s output and necessary adjustments.

8 unchanged sentences

We have served as the Company's auditor since 2021.

Washington, D.C.

Franklin, Tennessee

March 10, 2026

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Investment securities – held to maturity, net of allowance for credit losses of $ 102 and $ 59 , respectively (fair value of $ 148,889 at December 31, 2025 and $ 144,760 at December 31, 2024)

Equity investments not held for trading with readily determinable fair values

Restricted investment in bank stock, at cost

11 unchanged sentences

Accrued interest receivable

Trust receivable

Liabilities and Shareholders’ Equity

38 unchanged sentences

Credit loss expense- debt securities held to maturity

Credit loss credit- unfunded commitments

Credit loss expense/(credit)- unfunded commitments

Total credit loss expense

1 unchanged sentence

Other operating income

Net losses on investments, available for sale

Net gains on investments, available for sale

Net gains on sales of residential mortgage loans

Net losses on disposal of fixed assets

Net gains/(losses)

Service charges on deposit accounts

12 unchanged sentences

Contract labor

Total OREO expense/(income), net

Total OREO expense, net

Investor relations

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Unrealized holding gains/(losses) on investments with credit related impairment

Reclassification adjustment for gains realized in income

Other comprehensive losses on investments with credit related impairment

Unrealized holding (losses)/gains on all other AFS investments

Reclassification adjustment for losses realized in income

Other comprehensive (loss)/income on all other AFS investments

Reclassification adjustment for accretable yield realized in income

Other comprehensive income/(loss) on investments with credit related impairment

Unrealized holding gains/(losses) on all other AFS investments

gains recognized in income

Other comprehensive income/(loss) on all other AFS investments

Held to maturity securities:

Unrealized holding gains on HTM investments

Unrealized holding losses on HTM investments

Reclassification adjustment for amortization realized in income

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SERP liability:

Unrealized holding gains/(losses) on SERP liability

Reclassification adjustment for amortization of unrecognized (loss)/income realized in income

Other comprehensive gains/(losses) on SERP liability

Unrealized holding (losses)/gains on SERP liability

Reclassification adjustment for amortization of unrecognized loss realized in income

Other comprehensive (loss)/gain on SERP liability

Other comprehensive income before income tax

Income tax credit related to other comprehensive income

Income tax expense related to other comprehensive income

Other comprehensive income, net of tax

8 unchanged sentences

Balance at January 1, 2024

Adoption of ASC 326- Financial Instruments- Credit Losses

Other comprehensive income, net of tax

8 unchanged sentences

Stock based compensation

Stock repurchase- 201,800 shares

Balance at December 31, 2025

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Net accretion of investment securities discounts and premiums- HTM

Net losses on sales of investment securities – available-for-sale

Net gains on sales of investment securities – available-for-sale

Amortization of deferred loan fees

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Amortization of operating lease liabilities

Decrease/(increase) in accrued interest receivable and other assets

(Decrease)/increase in accrued interest payable and other liabilities

(Increase)/decrease in accrued interest receivable and other assets

Increase/(decrease) in accrued interest payable and other liabilities

Net cash provided by operating activities

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Purchases of investment securities held-to-maturity

Purchases of equity securities with readily determinable fair market values

Proceeds from sales of other real estate owned

Proceeds from disposal of fixed assets

Net increase in FHLB stock

Net decrease/(increase) in FHLB stock

Net increase in loans

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Financing activities

Net increase/(decrease) in deposits

Net increase in deposits

Proceeds from issuance of common stock

Cash dividends paid on common stock

Net increase/(decrease) in short-term borrowings

Net (decrease)/increase in short-term borrowings

Stock repurchase

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Net cash provided by financing activities

Increase/(decrease) in cash and cash equivalents

Increase in cash and cash equivalents

Cash and cash equivalents at beginning of the year

5 unchanged sentences

Transfers from loans to other real estate owned

Transfers from bank premises and equipment to other assets

See notes to consolidated financial statements

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Summary of Significant Accounting Policies

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 (the “FRB”) under the Bank Holding Company Act of 1956, as amended, that elected financial holding company status in 2021.

First United Corporation is a Maryland corporation chartered in 1985 and a bank holding company registered with the Board of Governors of the Federal Reserve System (the “FRB”) 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 First United Bank & Trust, a Maryland trust company (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 - OakFirst Loan Center, Inc., a West Virginia corporation, and OakFirst Loan Center, LLC, a Maryland limited liability company (together with OakFirst Loan Center, Inc., (the “OakFirst Loan Centers”) - and two subsidiaries that it uses to hold real estate acquired through foreclosure or by deed in lieu of foreclosure - First OREO Trust, a Maryland statutory trust, and FUBT OREO I, LLC, a Maryland limited liability company.

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 (“Liberty Mews”), 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 (the “MCC Fund”).

The Bank has two consumer finance company subsidiaries - OakFirst Loan Center, Inc., a West Virginia corporation, and OakFirst Loan Center, LLC, a Maryland limited liability company (together with OakFirst Loan Center, Inc., (the “OakFirst Loan Centers”) - 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.

First United Corporation and its subsidiaries operate principally in four counties in Western Maryland and three counties in West Virginia.

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Principles of Consolidation

The consolidated financial statements of the Corporation include the accounts of First United Corporation, the Bank, the OakFirst Loan Centers, First OREO Trust and FUBT OREO I, LLC.

The consolidated financial statements of the Corporation include the accounts of First United Corporation, the Bank, the OakFirst Loan Centers and First OREO Trust.

All significant inter-company accounts and transactions have been eliminated.

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Additionally, loans collateralized by commercial rental properties represented 21 % of the total loan portfolio as of December 31, 2025.

Note 4, Investment Securities, discusses the types of securities in which the Corporation invests and Note 5, Loans and Related Allowance for Credit Loss, discusses the Corporation’s lending activities.

Note 5, Loans and Related Allowance for Credit Loss, discusses the Corporation’s lending activities.

At December 31, 2025, approximately 15 %, or $ 16.0 million, of our available-for-sale (“AFS”) investment portfolio was collateralized debt obligations, with the entire portfolio performing according to their contractual terms.

Note 4, Investment Securities, discusses the types of securities in which the Corporation invests.

The investment portfolio is classified and accounted for based on the guidance of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 320, Investments – Debt and Equity Securities .

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Securities purchased with the intent and ability to hold the securities to maturity are classified as held-to-maturity (“HTM”) securities and are recorded at amortized cost.

All other investment securities are classified as available-for-sale (“AFS”).

All other investment securities are classified as AFS.

These securities are held for an indefinite period of time and may be sold in response to changing market and interest rate conditions or for liquidity purposes as part of our overall asset/liability management strategy.

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Restricted Investment in Bank Stock

The Corporation owns non-marketable equity securities in a combination of the Federal Home Loan Bank (“FHLB”) of Atlanta, Atlantic Community Bankers Bank and Community Banker’s Bank.

The Corporation owns non-marketable equity securities in a combination of the Federal Home Loan Bank of Atlanta (“FHLB”), Atlantic Community Bankers Bank and Community Banker’s Bank.

These securities are carried at cost, classified as restricted securities, and periodically evaluated for impairment based on ultimate recovery of par value.

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Loans that management has the intent and ability to hold for the foreseeable future or until maturity or full repayment by the borrower are reported at their unpaid principal balance outstanding, adjusted for any deferred fees or costs pertaining to origination.

Loans that management has the intent to sell are reported at the lower of cost or fair value determined on an individual basis.

Loans that management has the intent to sell are reported at the lower of cost or fair value

determined on an individual basis.

There were $ 0.1 million and $ 0.8 million in loans held for sale at December 31, 2025 and December 31, 2024, respectively.

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Allowance for Credit Losses

An ACL is maintained to absorb losses from the Corporation’s financial assets in accordance with ASC Topic 326:

An allowance for credit losses (the “ACL”) is maintained to absorb losses from the Corporation’s financial assets in accordance with ASC Topic 326:

Financial Instruments- Credit Losses .

Allowance for Credit Losses Policy

The ACL represents an amount that, in management’s judgment, is adequate to absorb expected losses on outstanding loans at the balance sheet date based on the evaluation of the size and current risk characteristics of the loan portfolio, past events, current conditions, reasonable and supportable forecasts of future economic conditions and prepayment experience.

The ACL represents an amount that, in management’s judgment, is adequate to absorb expected losses on outstanding securities, loans, and loan commitments at the balance sheet date based on the evaluation of the size and current risk characteristics of the portfolios, past events, current conditions, reasonable and supportable forecasts of future economic conditions and prepayment experience.

The ACL is measured and recorded upon the initial recognition of a financial asset.

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However, the determination of the ACL requires significant judgment, and estimates of expected losses in the loan portfolio can vary significantly from the amounts actually observed.

While management uses available information to recognize losses, future additions to the ACL may be necessary based on changes in the loans comprising the portfolio, changes in the current and forecasted economic conditions, changes to the interest rate environment which may directly impact prepayment and curtailment rate assumptions, and changes in the financial condition of borrowers.

The adoption of CECL accounting did not result in a significant change to any other credit risk management and monitoring processes, including identification of past due or delinquent borrowers, nonaccrual practices, assessment of modified loans, or charge-off policy.

While management uses available information to recognize losses, future additions to the ACL may be necessary based on changes in the securities, loans, and loan commitments comprising the portfolios, changes in the current and forecasted economic conditions, changes to the interest rate environment which may directly impact prepayment and curtailment rate assumptions, and changes in the financial condition of borrowers.

Held-to-Maturity Securities

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In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors.

If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis

of the security.

If this assessment indicates that a credit loss

exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security.

If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis.

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Reserves for pooled loans are estimated by calculating the amount by which the outstanding principal balance exceeds the current estimate of the present value of future cash flows discounted at the loan’s original effective interest rate.

The ACL also includes an estimate of credit losses related to loans that are individually evaluated, known as Individually Evaluated Loans, or IELs.

Generally, an IEL reserve is calculated as the excess of the loan’s current outstanding principal balance, or general ledger balance if the loan is non-accrual, compared to the estimated fair value of the related collateral, less cost to sell, if any.

The ACL also includes an estimate of credit losses related to loans that are individually evaluated, known as Individually Evaluated Loans (“IEL”).

Management evaluates individual loans in all of the commercial segments for possible impairment if the loan is greater than $500,000 or is part of a relationship that is greater than $750,000 and (i) is either in non-accrual status or (ii) is risk-rated Substandard and is greater than 60 days past due.

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otherwise, loans in these segments are considered individually evaluated when they are classified as non-accrual.

Once the determination has been made that a loan is individually evaluated, the determination of whether a specific allocation of the allowance is necessary is measured by comparing the recorded investment in the loan to the fair value of the loan using one of three methods:

Once the determination has been made that a loan is an IEL, the determination of whether a specific allocation of the allowance is necessary is measured by comparing the recorded investment in the loan to the fair value of the loan using one of three methods:

(i) the present value of expected future cash flows discounted at the loan’s effective interest rate;

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The method is selected on a loan-by-loan basis, with management utilizing the fair value of collateral or the discounted cash flow method for the analyses.

If the fair value of the collateral less selling costs method is utilized for collateral securing

loans in the commercial segments, then an updated external appraisal is ordered on the collateral supporting the loan if the loan balance is greater than $500,000 and the existing appraisal is greater than 18 months old.

If the fair value of the collateral less selling costs method is utilized for collateral securing loans in the commercial segments, then an updated external appraisal is ordered on the collateral supporting the loan if the loan balance

is greater than $500,000 and the existing appraisal is greater than 18 months old.

If the loan balance is less than $500,000, then the estimated fair value of the collateral is determined by adjusting the existing appraisal by the appropriate percentage from an internally prepared appraisal discount grid.

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A loan that is considered a non-accrual or modified loan may be subject to the individually evaluated loan analysis if the commitment is $ 0.1 million or greater;

otherwise, the modified loan remains in the appropriate segment in the ACL model and associated reserves are adjusted based on changes in the discounted cash flows resulting from the modification of the modified loan.

For a discussion with respect to reserve calculations regarding individually evaluated loans, refer to the “Nonrecurring Loans” section in Note 17, Fair Value of Financial Instruments.

otherwise, the loan remains in the appropriate segment in the ACL model and associated reserves are adjusted based on changes in the discounted cash flows of the loan.

For a discussion with respect to reserve calculations regarding individually evaluated loans, refer to the “Individually evaluated loans” section in Note 17, Fair Value of Financial Instruments.

For a discussion with respect to loans modified to borrowers experiencing financial difficulty, refer to the “Loan Modifications for Borrowers Experiencing Financial Difficulty” section in Note 5, Loans and Related Allowance for Credit Losses.

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The Corporation records an ACL on unfunded commitments through a charge to provision for credit loss expense in the Corporation’s Consolidated Statement of Income.

The ACL on unfunded commitments is estimated by loan segment at each balance sheet date under the CECL model using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur, and is included in the ACL on unfunded commitments as a liability on the Corporation’s Consolidated Balance Sheet.

Loan Modifications

In situations where, for economic or legal reasons related to a borrower’s financial condition, management may grant a concession to the borrower that it would not otherwise consider, the related loan is classified as a modified loan.

In situations where, for economic or legal reasons related to a borrower experiencing financial difficulty, management may make a loan modification to the borrower that it would not otherwise consider, and the related loan is classified as a modified loan.

Management strives to identify borrowers in financial difficulty early and work with them to modify the loan to more affordable terms before their loan reaches nonaccrual status.

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When a share of capital stock is repurchased, the payment of the repurchase price reduces stated capital by the par value of that share (currently, $ 0.01 for common stock), and any excess over par value reduces capital surplus.

In 2024, the Corporation repurchased 201,800 shares of common stock at a weighted average price of $ 19.99 per share.

In 2025, the Corporation did no t repurchase any shares of common stock.

In 2024, the Corporation repurchased 201,800 shares of common stock at a weighted average price of $ 19.99 per share.

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Newly Adopted Pronouncements in 2025

In March 2023, FASB issued ASU No.

2023-02, “Investments- Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.” ASU No.

2023-02 is intended to improve the accounting and disclosures for investment in tax credit structures.

2023-02 allows entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits.

Previously, this method was only available for qualifying tax equity investments in low-income housing tax credit structures.

2023-02 became effective in 2024 and did not have a significant impact on our financial statements.

In November 2023, FASB issued ASU No.

2023-07, “Segment Reporting (Topic 280):

Improvement to Reportable Segment Disclosures.” ASU No.

2023-07 expands segment disclosure requirements for public entities to require disclosure of significant segment expense and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.

2023-07 became effective for our annual financial statements in 2024 and will be effective for interim periods starting in fiscal year 2025.

See Note 20, Segment Reporting, for updated disclosures related to ASU No.

Recently issued but not yet effective Accounting Pronouncements

In December 2023, FASB issued ASU No.

In December 2023, FASB issued Accounting Standards Update (“ASU”) No.

2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” ASU 2023-09 requires public business entities to disclose in their rate reconciliation table additional categories of information about Federal, state, and foreign income taxes and to provide more details about the reconciling items in some categories if items meet a quantitative threshold.

Improvements to Income Tax Disclosures.” ASU No.

2023-09 requires public business entities to disclose in their rate reconciliation table additional categories of information about Federal, state, and foreign income taxes and to provide more details about the reconciling items in some categories if items meet a quantitative threshold.

2023-09 also requires all entities to disclose income taxes paid, net of refunds, disaggregated by Federal, state, and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold, among other things.

2023-09 is effective in 2025 and is not expected to have a significant impact on our financial statements.

2023-09 became effective for our financial statements in 2025 and will be effective for interim periods starting in fiscal year 2026.

We elected to apply this standard on a retroactive basis.

See Note 12, Income Taxes, for updated disclosures related to ASU No.

Recently issued but not yet effective Accounting Pronouncements

In November 2024, FASB issued ASU No.

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Additionally, entities must disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

2024-03 is effective on a prospective basis for annual periods beginning in 2027, and interim periods within fiscal years beginning in 2028, though early adoption and retrospective application is permitted.

2024-03 is not expected to have a significant impact on our financial statements.

Earnings Per Common Share

Basic earnings per common share is derived by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period and does not include the effect of any potentially dilutive common stock equivalents.

Diluted earnings per share is derived by dividing net income available to common shareholders by the weighted-average number of shares outstanding, adjusted for the dilutive effect of outstanding common stock equivalents.

2024-03 is effective on a prospective basis for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, though early adoption and retrospective application is permitted.

2024-03 is not expected to have a material impact on our financial statements.

In July 2025, FASB issued ASU No.

2025-05, “Financial Instruments- Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets.” ASU No.

2025-05 provides all entities with a practical expedient in developing reasonable and supportable forecasts as part of estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606.

2025-05 is effective on a prospective basis or annual periods beginning after December 15, 2025, though early adoption and retroactive application is permitted.

2025-05 is not expected to have a material impact on our financial statements.

In September 2025, FASB issued ASU No.

2025-06, “Intangibles- Goodwill and Other Internal Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software.” ASU No.

2025-06 applies to all entities subject to internal-use software guidance in Subtopic 350-40 and website development costs in accordance with Subtopic 350-50.

The amendments in ASU No.2025-06 remove all reference to prescriptive and sequential software development stages.

Therefore, an entity is required to start capitalizing software costs when both the following occur:

1) management has authorized and committed to funding the software project and 2) it is probable that the project will be completed and the software will be used to perform the function intended.

2025-06 is effective on a prospective basis on annual periods beginning after December 15, 2027, though early adoption and retroactive application is permitted.

2025-06 is not expected to have a material impact on our financial statements.

In November 2025, FASB issued ASU No.

2025-08, “Financial Instruments- Credit Losses (topic 326):

Purchased Loans.” ASU No.

2025-08 expands the scope of the “gross-up” method, formerly applicable only to purchased credit-deteriorated (“PCD”) assets, to include acquired non-PCD loans that meet certain criteria, now referred to as “purchased seasoned loans”.

Under this model, an allowance for expected credit losses is recognized at acquisition, offsetting the loan’s amortized cost basis, thereby eliminating the day-one credit-loss expense previously required for non-PCD assets.

PSLs are defined as non-PCD loans acquired either (i) through a business combination, or (ii) purchased more than 90 days after origination when the acquirer was not involved in origination.

2025-08 is effective on a prospective basis on annual periods beginning after December 15, 2026, though early adoption and retroactive application is permitted.

2025-08 is not expected to have a material impact on our financial statements.

In November 2025, FASB issued ASU No.

2025-09, “ Derivatives and Hedging (topic 815):

Hedge Accounting Improvements.” ASU No.

2025-09 amends ASC Topic 815 to align hedge accounting more closely with an entity’s economic risk management practices.

Key amendments include (i) to allow designating a variable price component of a nonfinancial forecasted purchase or sale as the hedged risk, (ii) to allow grouping individual forecasted transactions with similar (not identical) risk exposures, (iii) a new model for hedging forecasted interest on a variable-rate debt, enabling changes in index or tenor without dedesignation, subject to simplifying assumptions, and (iv) additional clarifications related to hedge accounting of nonfinancial components, net written options, and dual-hedge strategies.

2025-09 is effective on a prospective basis on annual periods beginning after December 15, 2026, though early adoption and retroactive application is permitted.

2025-09 is not expected to have a material impact on our financial statements.

In November 2025, FASB issued ASU No.

2025-11, “Interim reporting (topic 270):

Narrow Scope Improvements.” ASU No.

2025-11 clarifies and enhances guidance under ASC Topic 270 on interim financial reporting by (i) clarifying the scope of ASC 270 such that it now explicitly applies only to entities that issue complete interim financial statements and related notes under U.S.

GAAP, (ii) establishing clear guidance on the form of interim statements and notes, incorporating a comprehensive list of required interim disclosures drawn from across the ASC, and (iii) introducing a requirement to disclose material events and changes occurring after the end of the last annual period that could impact interim results.

2025-11 is effective on a prospective basis on annual periods beginning after December 15, 2027, though early adoption and retroactive application is permitted.

2025-11 is not expected to have a material impact on our financial statements.

Earnings Per Share

Basic earnings per share is derived by dividing net income by the weighted-average number of common shares outstanding during the period and does not include the effect of any potentially dilutive common stock equivalents.

Diluted earnings per share is derived by dividing net income by the weighted-average number of shares outstanding, adjusted for the dilutive effect of outstanding common stock equivalents.

There were no anti-dilutive shares at December 31, 2025 or 2024.

The following table sets forth the calculation of basic and diluted earnings per common share for the years ended December 31, 2024 and 2023:

The following table sets forth the calculation of basic and diluted earnings per share for the years ended December 31, 2025 and 2024:

(in thousands, except for per share amount)

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The net unrealized gain or loss on AFS securities is included in computing regulatory capital.

Management believes that, as of December 31, 2024, the Corporation and Bank met all capital adequacy requirements to which they are subject.

Management believes that, as of December 31, 2025, the Bank met all capital adequacy requirements to which they are subject.

Prompt corrective action regulations provide five classifications:

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In addition, dividends paid by the Bank to First United Corporation would be prohibited if the effect thereof would cause the Bank’s capital to be reduced below applicable minimum capital requirements.

We adopted CECL effective January 1, 2023 and elected not to implement the regulatory agencies’ capital transition and opted to record the impact to our capital ratios immediately upon implementation.

Effective with the implementation of CECL, a $ 2.2 million adjustment, net of tax, was made to retained earnings.

The adjustment did not have a material impact to our capital ratios.

Investment Securities

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(in thousands)

Gross realized gains

Gross realized losses

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Total held to maturity

As of December 31, 2024 and December 31, 2023, the Corporation recorded ACL of approximately $ 59,000 and $ 45,000 , respectively, related to one bond in the HTM security portfolio.

At December 31, 2025 and December 31, 2024, the Corporation recorded ACL of approximately $ 102,000 and $ 59,000 , respectively, related to one bond in the HTM security portfolio.

The amortized cost and estimated fair value of securities by contractual maturity at December 31, 2025 are shown in the following table.

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Loans secured by 1-4 family residential real estate properties in the process of foreclosure totaled $ 0.5 million at December 31, 2025 and $ 1.6 million at December 31, 2024.

A loan that is considered a non-accrual or modified loan may be subject to the individually evaluated loan analysis if the commitment is $ 0.1 million or greater;

For a discussion with respect to reserve calculations regarding individually evaluated loans, refer to the “Nonrecurring Loans” section in Note 17, Fair Value of Financial Instruments.

A loan that is considered a non-accrual or modified loan may be subject to the individually evaluated loan analysis if the commitment is $ 100,000 or greater;

otherwise, the loan remains in the appropriate segment in the ACL model and associated reserves are adjusted based on changes in the discounted cash flows.

For a discussion with respect to reserve calculations regarding individually evaluated loans, refer to the “Individually evaluated loans” section in Note 17, Fair Value of Financial Instruments.

The Corporation maintains an ACL at a level determined to be adequate to absorb expected credit losses associated with the Corporation’s financial instruments over the life of those instruments as of the balance sheet date.

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The value of the collateral, if there is any, is less likely to be a source of repayment due to less certain collateral values.

The following table presents the amortized cost basis of collateral-dependent individually evaluated loans as of December 31, 2024:

The following tables present the amortized cost basis of loans on a nonaccrual status and loans past due 90 days or more that are still accruing as of December 31, 2025 and 2024:

(in thousands)

Nonaccrual Loans With No Allowance for Credit Loss

Total Non-Accrual Loans

Loans Past due 90+ Days Still Accruing

December 31, 2025

Commercial real estate

Non owner-occupied

All other CRE

Commercial and industrial

Residential mortgage

Residential mortgage - term

Residential mortgage – home equity

(in thousands)

Nonaccrual Loans With No Allowance for Credit Loss

Total Non-Accrual Loans

Loans Past due 90+ Days Still Accruing

December 31, 2024

Commercial real estate

All other CRE

Acquisition and development

All other A&D

Commercial and industrial

Residential mortgage

Residential mortgage - term

Residential mortgage – home equity

The following table presents the amortized cost basis of collateral-dependent individually evaluated loans as of December 31, 2025 and 2024:

December 31, 2025

(in thousands)

Other Collateral

Non-Accrual Loans with No Allowance

Commercial real estate

Commercial and industrial

Residential mortgage

December 31, 2024

(in thousands)

Other Collateral

Non-Accrual Loans with No Allowance

Commercial real estate

Commercial and industrial

Residential mortgage

The following tables present the activity in the ACL for the years ended December 31, 2025 and 2024:

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Recoveries collected

Credit loss expense/(credit)

Credit loss (credit)/expense

ACL balance at December 31, 2025

Beginning balance at January 1, 2023 prior to adoption of ASC 326

Impact of adopting ASC 326

Loan loss (credit)/expense

Beginning balance at January 1, 2024

Loan charge-offs

Recoveries collected

Credit loss expense/(credit)

ACL balance at December 31, 2024

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A specific reserve analysis is applied to certain individually evaluated loans.

These loans are evaluated quarterly generally based on collateral value, observable market value or the present value of expected future cash flows.

A specific reserve is established if the fair value is less than the loan balance.

These loans are evaluated quarterly using one of three methods:

(i) the present value of expected future cash flows discounted at the loan’s effective interest rate;

(ii) the loan’s observable market price;

or (iii) the fair value of the collateral less selling costs.

The method is selected on a loan-by-loan basis, with management utilizing the fair value of collateral or the discounted cash flow method for the analyses.

A charge-off is recognized when the loss is quantifiable.

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Quantitative Analysis.

The Corporation elected to use discounted cash flows.

The Corporation has elected to use discounted cash flows.

Economic forecasts include but are not limited to unemployment, the Consumer Price Index, the Housing Affordability Index, and Gross State Product.

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The reserve is based on the difference between the summation of the principal balances taking amortized costs into consideration and the summation of the net present values.

The Corporation has elected to forecast out the first four quarters of the credit loss estimate and revert this forecast to long-term historical averages on a straight-line basis over eight quarters.

By reverting these modeling inputs to their historical average and considering loan/borrower specific attributes, our models are intended to yield a measurement of expected credit losses that reflects our average historical loss rates for periods subsequent to the reversion period.

Qualitative Analysis.

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Additionally, management may adjust the economic forecast if it is incompatible with known market conditions based on management’s experience and perspective.

The Corporation has elected to forecast the first four quarters of the credit loss estimate and revert on a straight-line basis as permitted in ASC 326-20-30-9.

Based on the final values in the forecast and the uncertainty of a post-pandemic recovery, management has elected to revert over eight quarters.

By reverting these modeling inputs to their historical mean and considering loan/borrower specific attributes, our models are intended to yield a measurement of expected credit losses that reflects our average historical loss rates for periods subsequent to the reversion period.

The ACL is based on estimates, and actual losses may vary from current estimates.

Management believes that the granularity of the homogeneous pools and the related historical loss ratios and other qualitative factors, as well as the consistency in the application of assumptions, result in an ACL that is representative of the risk found in the components of the portfolio at any given date.

Management believes that the granularity of the homogeneous pools and the related historical loss ratios and other qualitative factors, as well as the

consistency in the application of assumptions, result in an ACL that is representative of the risk found in the components of the portfolio at any given date.

Credit Quality Indicators:

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Doubtful - Assets with all weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable.

Loss - Assets considered of such little value that its continuance on the books is not warranted.

Loss - Assets considered of such little value that their continuance on the books is not warranted.

This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical to defer writing off this basically worthless asset even though partial recovery may be affected in the future.

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The allowance may be increased, adjustments may be made in the allocation of the allowance, or partial charge-offs may be taken to further write-down the carrying value of the loan.

The following table presents the amortized cost basis, and the financial effect of loans modified to borrowers experiencing financial difficulty during the year ended December 31, 2024.

There were no modifications to borrowers experiencing financial difficulty during the year ended December 31, 2023.

The following table presents the amortized cost basis, and the financial effect of loans modified to borrowers experiencing financial difficulty for the years ended December 31, 2025 and 2024.

(in thousands)

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Year Ended December 31, 2025

Commercial and industrial

Year Ended December 31, 2024

Owner-occupied commercial real estate

Commercial and industrial

During 2024, we modified the term of two loans by extending their maturity dates.

During 2025, we modified the term of two commercial and industrial loans by extending their maturity dates.

During 2024, we modified the term of one owner-occupied commercial real estate loan and one commercial by extending maturity dates.

The Corporation monitors loan payments on performing and non-performing loans on an ongoing basis to determine if a loan is considered to have a payment default.

The loans that were modified in the year ended December 31, 2024 have made all contractual payments since modification.

The loan modifications reported above did not significantly impact our determination of the allowance for credit losses on loans during 2024.

The loans that were modified in the years ended December 31, 2025 and 2024 have made all contractual payments since modification.

The loan modifications reported above did not significantly impact our determination of the allowance for credit losses on loans during 2025 or 2024.

If a modified loan with an outstanding balance of $ 0.1 million or greater subsequently defaults and goes on non-accrual status, then the Corporation individually evaluates the loan when performing its CECL estimate to calculate the ACL.

Upon determination that a modified loan (or a portion of a modified loan) has subsequently been deemed

uncollectible, the loan (or portion of the loan) is charged off.

Upon determination that a modified loan (or a portion of a modified loan) has subsequently been deemed uncollectible, the loan (or portion of the loan) is charged off.

Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACL is adjusted by the same amount.

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Rental and other income

Total OREO expense/(income), net

Total OREO expense, net

Premises and Equipment

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Less accumulated depreciation

During the year ended December 31, 2025, the Corporation entered into a contract to sell one of its retail branch properties for $ 1.6 million.

At the time of the contracted sale, the Corporation recorded a $ 0.2 million loss to write down the property to contracted sales price less estimated closing costs.

$ 1.6 million was reclassified as real estate held for sale and is included in other assets on the consolidated statement of financial condition at December 31, 2025.

The contracted sale was finalized in February 2026.

The Corporation recorded depreciation expense of $ 2.5 million and $ 3.3 million for the years ended December 31, 2025 and 2024, respectively.

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(in thousands)

Time deposits- brokered

Time deposits- retail

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The Bank has unsecured lines of credit totaling $ 140.0 million with correspondent financial institutions and $ 83.9 million in a secured line with the Federal Reserve Discount Window to meet daily liquidity requirements.

At December 31, 2025, there were no overnight borrowings outstanding.

At December 31, 2024, there were $ 50.0 million in outstanding secured borrowings with the Federal Reserve Discount Window.

At December 31, 2023, there were no borrowings under these credit facilities.

The following is a summary of long-term borrowings at December 31, 2025 and 2024 with original maturities exceeding one year:

(in thousands)

FHLB advances bearing fixed interest rates ranging from 3.84 % to 4.04 % at December 31, 2024 and 4.53 % to 4.69 % at December 31, 2023

FHLB advances bearing fixed interest rates of 3.84 % at December 31, 2025 and ranging from 3.84 % to 4.04 % at December 31, 2024

Junior subordinated debt, bearing variable interest rate of 6.72 % at December 31, 2025 and 7.36 % at December 31, 2024

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Should this occur, the Corporation may not pay dividends or distributions on, or repurchase, redeem or acquire any shares of its capital stock.

The contractual maturities of the FHLB advances outstanding at December 31, 2024 are $ 25.0 million on September 19, 2025 and $ 65.0 million on March 20, 2026.

The contractual maturities of the junior subordinated debt outstanding at December 31, 2024 is 2034.

At December 31, 2025, the contractual maturity of the outstanding $ 65.0 million FHLB advances is March 20, 2026, and the contractual maturity of the outstanding TPS Debentures is 2034 .

The Bank has a borrowing capacity agreement with the FHLB in an amount equal to 30 % of the Bank’s assets.

The available line of credit equaled $ 599.4 million at December 31, 2025 and $ 567.4 million at December 31, 2024.

line of credit, which can be used for both short and long-term funding, can only be utilized to the extent of available collateral.

This line of credit, which can be used for both short and long-term funding, can only be utilized to the extent of available lendable collateral.

The line is secured by certain qualified mortgage, commercial and home equity loans as follows (in thousands):

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Accumulated Other Comprehensive Loss (“AOCL”)

The following table presents the changes in each component of accumulated other comprehensive loss for the years ended December 31, 2024 and 2023:

The following table presents the changes in each component of AOCL for the years ended December 31, 2025 and 2024:

(in thousands)

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Balance - January 1, 2024

Other comprehensive (loss)/income before reclassifications

Other comprehensive income/(loss) before reclassifications

Amounts reclassified from accumulated

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accretable yield recognized in income

Net unrealized losses on investments with credit-related impairment

Net unrealized gains on investments with credit-related impairment

Available for sale securities – all other:

Unrealized holding losses

Net unrealized losses on all other AFS securities

Unrealized holding gains

gains recognized in income

Net unrealized gains on all other AFS securities

Held to maturity securities:

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Net pension plan asset adjustment

Unrealized net actuarial gain

amortization of unrecognized loss

Unrealized net actuarial loss

Net SERP liability adjustment

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(in thousands)

Tax (Expense)

Tax Benefit (Expense)

For the year ended December 31, 2024

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Available for sale securities – all other:

Unrealized holding gains

losses recognized in income

Net unrealized gains on all other AFS securities

Unrealized holding losses

Net unrealized losses on all other AFS securities

Held to maturity securities:

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Net pension plan asset adjustment

Unrealized net actuarial loss

amortization of unrecognized gain

Unrealized net actuarial gain

amortization of unrecognized loss

Net SERP liability adjustment

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Interest income on taxable investment securities

Credit for income tax expense

Provision for income tax expense

Net unrealized gains on available for sale

investment securities - all other:

Gains on sales

Provision for income tax expense

Net unrealized losses on held to maturity

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Interest income on taxable investment securities

Provision for income tax expense

Credit for income tax expense

Net pension plan asset adjustment:

1 unchanged sentence

Other expense

Provision for income tax expense

Net SERP liability adjustment:

Amortization of unrecognized loss

Other expense

Provision for income tax expense

Credit for income tax expense

Total reclassifications for the period

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Interest income on taxable investment securities

Credit for income tax expense

Net unrealized losses on available for sale

investment securities - all other:

Losses on sales

Provision for income tax expense

2 unchanged sentences

Interest income on taxable investment securities

Provision for income tax expense

Credit for income tax expense

Net pension plan asset adjustment:

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Other expense

Provision for income tax expense

Credit for income tax expense

Net SERP liability adjustment:

Amortization of unrecognized gain

Amortization of unrecognized loss

Other expense

Provision for income tax expense

Credit for income tax expense

Total reclassifications for the period

The provision for income taxes consists of the following for the years ended December 31, 2024 and 2023:

The provision for income taxes from continuing operations consists of the following for the years ended December 31, 2025 and 2024:

(in thousands)

1 unchanged sentence

Deferred tax benefit:

Income tax expense for the year

Provision for income tax expense for the year

The reconciliation between the statutory federal income tax rate and effective income tax rate for the years ended December 31, 2025 and 2024 is as follows:

Federal statutory rate

Tax-exempt income on securities and loans

Tax-exempt BOLI income

State income tax, net of federal tax benefit

(in thousands)

United States Federal statutory income tax

State and local income taxes, net of Federal income tax effect (1)

Low-income housing tax credits ("LIHTC")

Non-taxable or nondeductible items

Bank owned life insurance

Other adjustments:

LIHTC investment, net amortization and tax benefit

(1) Maryland state taxes made up the majority (greater than 50 percent) of the tax effect in this category in both 2025 and 2024.

The effective tax rate differs from the United States Federal statutory rate primarily due to tax credits, state and local taxes, and non-taxable and non-deductible items.

The Corporation operates exclusively in the United States and had no foreign income, foreign income tax expense, or foreign income taxes paid for the years ended December 31, 2025 and 2024.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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Federal and state tax loss carry forwards

Low-income housing tax credits

Unrealized loss on investment securities

Lease liability

Low income housing

Other than temporary impairment on investment securities

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If the Corporation were to determine that it will not be able to realize a portion of its net deferred tax asset in the future for which there is currently no valuation allowance, an adjustment to the net deferred tax asset would be charged to earnings in the period such determination was made.

Conversely, if the Corporation were to make a

determination that it is more likely than not that the deferred tax assets for which there is a valuation allowance will be realized, the related valuation allowance would be reduced, and a benefit would be recorded.

Conversely, if the Corporation were to make a determination that it is more likely than not that the deferred tax assets for which there is a valuation allowance will be realized, the related valuation allowance would be reduced, and a benefit would be recorded.

At December 31, 2025, the Corporation had Maryland net operating losses (“NOLs”) and other MD carryforwards of $ 34.9 million for which a deferred tax asset of $ 2.6 million has been recorded.

There has been and continues to be a full valuation allowance on these NOLs based on management’s belief that it is more likely than not that these NOLs will not be realized prior to the expiration of their carry-forward periods because the Corporation will not generate sufficient taxable income in the future to fully utilize the NOLs.

The valuation allowance was $ 2.6 million at December 31, 2024 and $ 2.8 million at December 31, 2023.

The valuation allowance was $ 2.6 million at both December 31, 2025 and 2024.

Income taxes paid in the years ended December 31, 2025 and 2024 were as follows:

(in thousands)

State and local

West Virginia

Total taxes paid

For the years ended December 31, 2025 and 2024, the only state jurisdictions with cash taxes paid that equaled or exceeded 5% of total income taxes paid were Maryland and West Virginia.

The Corporation and its subsidiaries file income tax returns in the U.S.

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Any interest and penalties on income tax assessments or income tax refunds are recognized in the Consolidated Statements of Income as a components of interest expense (income) and other operating expense.

There were no amounts of accrued tax-related interest and penalties at December 31, 2024 and 2023.

There were no amounts of accrued tax-related interest and penalties at December 31, 2025 or 2024.

Furthermore, there were no net interest and penalties related to unrecognized tax benefits for the periods presented.

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In May 2024, a total of 14,325 fully vested shares of common stock were issued to directors, which had a grant date fair value of $ 21.94 per share.

In January 2023, a total of 333 fully vested shares of common stock were issued to a new director, which had a grant date fair value of $ 19.36 per share.

In October 2023, a total of 852 fully vested shares of common stock were issued to a new director, which had a grant date fair value of $ 16.26 per share.

Director stock compensation expense was $ 350,451 for the year ended December 31, 2025 and $ 292,109 for the year ended December 31, 2024.

Employee stock compensation was $ 54,226 and $ 33,279 for the years ended December 31, 2024 and 2023, respectively.

Upon completion of 12 consecutive months of employment, all full-time employees of The Bank are eligible to receive 20 shares of First United Corporation stock.

Additionally, certain employees are eligible to receive yearly stock compensation if certain criteria is met.

Total employee stock compensation expense was $ 104,120 and $ 54,226 for the years ended December 31, 2025 and 2024, respectively.

Restricted Stock Units (“RSUs”)

On March 26, 2020, pursuant to the Corporation’s Long Term Incentive Plan (the "LTIP"), which is a sub-plan of the Equity Plan, the Compensation Committee of First United Corporation’s Board of Directors (the "Committee") granted RSUs to the Corporation’s principal executive officer, its principal financial officer, and certain of its other

executive officers.

On March 26, 2020, pursuant to the Corporation’s Long Term Incentive Plan (the “LTIP”), which is a sub-plan of the Equity Plan, the Compensation Committee of First United Corporation’s Board of Directors (the “Committee”)

granted RSUs to the Corporation’s principal executive officer, its principal financial officer, and certain of its other executive officers.

An RSU contemplates the issuance of shares of common stock of First United Corporation if and when the RSU vests.

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Actual results for any goal that falls between performance levels would be interpolated to calculate a proportionate award.

For each of the performance periods ending December 31, 2023 through December 31, 2025, the RSUs performance goals are based on earnings per share and growth in tangible book value.

For the performance periods ending December 31, 2026, the RSUs performance goals are based on return on average equity and growth in tangible book value.

For each of the performance periods ended December 31, 2023 through December 31, 2025, the RSUs performance goals were based on earnings per share and growth in tangible book value.

For the performance periods ending December 31, 2026 and 2027, the RSUs performance goals are based on return on average equity and growth in tangible book value.

To receive any shares under an RSU, a grantee must be employed by the Corporation or one of its subsidiaries on the applicable vesting date, except that a grantee whose employment terminates prior to such vesting date due to death, disability or retirement will be entitled to a pro-rated portion of the shares subject to the RSUs, assuming that, in the case of performance-vesting RSUs, the performance goals had been met at their "target" levels.

In the first quarter of 2020, RSUs were granted relating to (i) 9,791 performance-vesting shares (target level) for the performance period ending December 31, 2021 (the “2019 LTIP year”) and (ii) 10,143 performance-vesting shares and 5,070 time-vesting shares (target level) for the performance period ending December 31, 2022 (the “2020 LTIP year”).

Each RSU had a grant date fair market value of $ 12.54 per share of common stock underlying the RSU.

The time-vesting RSUs will vest ratably over a three-year period that began on March 26, 2021.

On March 9, 2022, 14,688 shares subject to RSUs granted for the 2019 LTIP year were issued at maximum performance level.

On March 8, 2023, 15,216 shares subject to RSUs granted for the 2020 LTIP year were issued at maximum performance.

On March 26, 2021, 1,690 of the 5,070 time-vesting shares were issued to participants.

On March 28, 2022, 1,688 shares of the 3,380 remaining time-vesting shares were issued to participants.

On March 26, 2023, 1,692 shares of the remaining time-vesting shares were issued to participants.

Stock compensation expense was $ 15,896 for the year ended December 31, 2023.

All compensation expense related to the 2019 LTIP year was recognized as of March 31, 2022.

All compensation expense related to the 2020 LTIP plans was recognized as of March 31, 2023.

In May 2021, RSUs relating to 7,389 performance-vesting shares and 3,693 time-vesting shares (target level) for plan year 2021 were granted, which had a grant date fair market value of $ 17.93 per share of common stock underlying each RSU.

The performance period for the performance-vesting RSUs is the three-year period ending December 31, 2023.

The performance period for the performance-vesting RSUs was the three-year period ended December 31, 2023.

On March 10, 2024, it was determined that 7,389 performance-vesting RSUs failed to vest.

The time-vesting RSUs will vest ratably over a three-year period beginning on May 5, 2022.

The time-vesting RSUs vested ratably over a three-year period that began on May 5, 2022.

On May 5, 2022, 1,230 shares of the 3,693 time-vesting RSUs were issued to participants.

1 unchanged sentence

On May 5, 2024, the remaining 1,233 shares of the 3,693 time-vesting RSUs were issued to participants.

Net stock compensation expense/(credit) was $ 7,365 and ($ 51,555 ) for the years ended December 2024 and 2023.

All compensation expense related to the 2021 LTIP plans were recognized as of June 30, 2024

LTIP compensation expense in respect of the 2021 RSU awards was $ 7,365 for the year ended December 2024.

All compensation expense related to the 2021 LTIP plans was recognized as of June 30, 2024.

In March 2022, RSUs relating to 8,096 performance-vesting shares and 6,238 time-vesting shares (target level) for plan year 2022 were granted, which had a grant date fair market value of $ 21.88 per share of common stock underlying each RSU.

The performance period for the performance-vesting RSUs is the three-year period ending December 31, 2024.

The time-vesting RSUs will vest ratably over a three-year period beginning on March 9, 2023.

The performance period for the performance-vesting RSUs was the three-year period ended December 31, 2024.

The time-vesting RSUs vested ratably over a three-year period that began on March 10, 2023.

On March 10, 2023, 2,079 shares of the 6,238 time-vesting RSUs were issued to participants.

In the third quarter of 2024, it was projected that the performance-vesting shares will fail to vest;

therefore, the stock compensation expense was adjusted accordingly.

compensation (credit)/expense was ($ 57,849 ) and $ 104,580 for the years ended December 31, 2024 and 2023, respectively.

Unrecognized compensation expense as of December 31, 2024 related to unvested units was $ 11,379 .

On March 10, 2024, 2,079 additional shares of the 6,238 time-vesting RSUs were issued to participants.

On March 10, 2025, the remaining 2,080 shares of the 6,238 time-vesting RSUs were issued to participants.

In the third quarter of 2024, it was projected that the performance-vesting shares would fail to vest.

LTIP compensation expense in respect of the 2022 RSU awards was $ 26,145 and $ 104,581 for the years ended December 31, 2025 and 2024, respectively.

All compensation expense related to the 2022 LTIP plans was recognized as of March 31, 2025.

In March 2023, RSUs relating to 10,214 performance-vesting shares and 7,920 time-vesting shares (target level) for plan year 2023 were granted, which had a grant date fair market value of $ 18.25 per share of common stock underlying each RSU.

The performance period for the performance-vesting RSUs is the three-year period ending December 31, 2025.

The time-vesting RSUs will vest ratably over a three-year period beginning on March 15, 2024.

The performance period for the performance-vesting RSUs was the three-year period ended December 31, 2025.

The time-vesting RSUs will vest ratably over a three-year period that began on March 15, 2024.

On March 15, 2024, 2,639 shares of the 7,920 time-vesting RSUs were issued to participants.

Stock compensation expense was $ 110,340 and $ 82,755 for the years ended December 31, 2024 and 2023, respectively.

On March 15, 2025, 2,639 shares of the 7,920 time-vesting RSUs were issued to participants.

Subsequently, it has been determined that the performance vesting shares would fail to vest.

LTIP compensation expense in respect of the 2023 RSU awards was $ 110,340 for both of the

years ended December 31, 2025 and 2024.

Unrecognized compensation expense as of December 31, 2025 related to unvested units was $ 27,585 .

1 unchanged sentence

The performance period for the performance-vesting RSUs is the three-year period ending December 31, 2026.

The time-vesting RSUs will vest ratably over a three-year period beginning on May 20, 2025.

Stock Compensation expense was $ 66,066 for the year ended December 31, 2024.

The time-vesting RSUs will vest ratably over a three-year period that began on May 20, 2025.

On May 20, 2025, 2,219 shares of the 6,662 time-vesting RSUs were issued to participants.

LTIP compensation expense in respect of the 2024 RSU awards was $ 113,256 and $ 66,066 for the years ended December 31, 2025 and 2024, respectively.

Unrecognized compensation expense as of December 31, 2025 related to unvested units was $ 160,446 .

In February 2025, RSUs relating to 6,006 performance vesting shares and 4,797 time vesting shares (target level) for plan year 2025 were granted, which had a grant date fair market value of $ 37.59 per share of common stock underlying each RSU.

The performance period for the performance-vesting RSUs is the three year period ending December 31, 2027.

The time-vesting RSUs will vest ratably over a three year period beginning on February 25, 2026.

LTIP compensation expense in respect of the 2025 RSU awards was $ 112,868 for the year ended December 31, 2025.

Unrecognized compensation expense as of December 31, 2025 related to unvested units was $ 293,456 .

Employee Benefit Plans

49 unchanged sentences

Expected return on assets

Amortization of recognized loss/(gain)

Net pension (income)/expense in employee benefits

Amortization of recognized loss

Net (income)/expense in employee benefits

Weighted Average Assumptions used to determine benefit obligations:

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Total market value

The Large cap equities includes 194,124 shares of First United Corporation common stock at December 31, 2024 and 2023

The Large cap equities includes 157,963 and 194,124 shares of First United Corporation common stock at December 31, 2025 and 2024, respectively.

December 31, 2024

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As of December 31, 2025, the 25-year average return on pension portfolio assets was 6.63 %, exceeding the expected long-term return of 6.50 % utilized for 2025.

Considering that future equity returns are partially a function of current starting valuations and the general level of interest rates, return expectations by market analysts have risen due to the large equity pullback and interest rates rising to multiyear highs.

With equity valuations near historical averages and the monetary policy normalization process likely being near conclusion, it is considered appropriate to maintain the expected long-term rate of return of 6.50 % for 2025.

Considering that future equity returns are partially a function of current starting valuations and the general level of interest rates, return expectations and forecasts by market analysts are largely in line with historical averages.

Interest rates currently remain at or near multidecade highs and given that, fixed income assets return potential remains nearly double what it has been over the last decade.

Even with equity valuations above historical averages, the monetary policy easing process is expected to continue this year, increasing the odds of fixed income outperformance.

Therefore, it is considered appropriate to maintain the expected long-term rate of return of 6.50 % for 2026.

Estimated cash flows related to expected future benefit payments from the Pension Plan and Defined Benefit SERP are as follows:

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Additionally, First United Corporation accrued a non-elective employer contribution during 2025 for all employees other than employees who participate in the Defined Benefit SERP and Defined Contribution SERP and those employees meeting the age plus service requirement in the Pension Plan equal to 4.0 % of each employee’s salary, and 0.5 % of each employee’s salary hired before January 1, 2010, which will be paid in the first quarter of 2026.

The employee must be a plan participant and be actively employed on the last day of the plan year to share in the

discretionary profit sharing contribution, except in the case of death, disability, or retirement of the participant.

Expense charged to operations for the 401(k) Plan was $ 1.4 million in 2024 and 2023.

The employee must be a plan participant and be actively employed on the last day of the plan year to share in the discretionary profit sharing contribution, except in the case of death, disability, or retirement of the participant.

Expense charged to operations for the 401(k) Plan was $ 1.6 million in 2025 and $ 1.4 million in 2024.

Contractual Obligations, Commitments and Contingent Liabilities

1 unchanged sentence

The Corporation enters into contractual obligations in the normal course of business.

Among these obligations are FHLB advances and junior subordinated debentures, operating lease agreements for banking and subsidiaries’ offices, and for data processing and telecommunications equipment.

Among these obligations are brokered and retail time deposits, FHLB advances and junior subordinated debentures, operating lease agreements for banking and subsidiaries’ offices, and for data processing and telecommunications equipment.

At December 31, 2025, no large capital obligations are anticipated.

2 unchanged sentences

Commitments to extend credit generally have fixed expiration dates, may require payment of a fee, and contain cancellation clauses in the event of an adverse change in the customer’s credit quality.

Commitments to extend credit in the form of consumer, commercial and business as of December 31, 2024 and December 31, 2023 are as follows:

The contractual amounts of commitments to extend credit at December 31, 2025 and December 31, 2024 are as follows:

(in thousands)

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The Corporation measures fair values based on the fair value hierarchy established in ASC Paragraph 820-10-35-37.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or

liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of inputs that may be used to measure fair value under the hierarchy are as follows:

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The fair value of investments available-for-sale is determined using a market approach.

At December 31, 2024 and 2023, the U.S.

Government agencies and treasuries, residential and commercial mortgage-backed securities, and municipal bonds segments are classified as Level 2 within the valuation hierarchy.

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These assets are included as Level 3 fair values based upon the lowest level of input that is significant to the fair value measurements.

For assets and liabilities measured at fair value on a recurring and non-recurring basis, the fair value measurements by level within the fair value hierarchy used at December 31, 2024 and 2023 are as follows:

For assets measured at fair value on a recurring and non-recurring basis, the fair value measurements by level within the fair value hierarchy used at December 31, 2025 and 2024 are as follows:

Fair Value Measurements at

1 unchanged sentence

(in thousands)

Assets & Liabilities

Quoted Prices

8 unchanged sentences

Collateralized debt obligations

Equity investments not held for trading with readily determinable fair values

Financial derivative

1 unchanged sentence

Individually evaluated loans

Equity investments

Other real estate owned

2 unchanged sentences

(in thousands)

Assets & Liabilities

Quoted Prices

Identical Assets

Investment securities available-for-sale:

7 unchanged sentences

Non-recurring:

Individually evaluated loans

Equity investment

7 unchanged sentences

Discount Rate

Range of low to mid 300 and low 500

Range of upper 200 s to upper 400 s

Non-recurring:

2 unchanged sentences

Marketability Discount

Equity Investments

Market Method

Revenue Multiples

Other Real Estate Owned (1)

1 unchanged sentence

Marketability Discount

5.0 % to 15.0 %

(weighted avg 5.9 %)

(in thousands)

3 unchanged sentences

Discount Rate

Range of low to mid 300 and low to high 400

Range of low to mid 300 and low 500

Non-recurring:

Individually Evaluated Loans

Market Comparable Properties

Marketability Discount

Equity Investment

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Beginning balance January 1, 2024

Total losses realized/unrealized:

Total gains realized/unrealized:

Included in other comprehensive income

18 unchanged sentences

Investment securities - HTM

Equity investments not held for trading with readily determinable fair values

Restricted bank stock

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As a part of managing interest rate risk, the Corporation entered into interest rate swap agreements to modify the re-pricing characteristics of certain interest-bearing liabilities.

The Corporation has designated its interest rate swap agreements as cash flow hedges under the guidance of ASC Subtopic 815-30, Derivatives and Hedging – Cash Flow Hedges .

The Corporation has designated its interest rate swap

agreements as cash flow hedges under the guidance of ASC Subtopic 815-30, Derivatives and Hedging – Cash Flow Hedges .

Cash flow hedges have the effective portion of changes in the fair value of the derivative, net of taxes, recorded in net accumulated other comprehensive income.

45 unchanged sentences

Payment is typically received immediately or in the following month.

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of ASC Topic 606, for the years ended December 31, 2024 and 2023.

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of ASC Topic 606.

(in thousands)

41 unchanged sentences

Other operating income:

Net gains on investments, available for sale

Net gains on sales of residential mortgages

Net losses on disposal of fixed assets

Service charges on deposit accounts

19 unchanged sentences

Amortization of intangible assets

Intangible assets

(1) Other segment income includes net gains/(losses) on disposals of fixed assets, bank owned life insurance income, and miscellaneous income.

8 unchanged sentences

Other operating income:

Net losses on investments, available for sale

Net gains on sales of residential mortgages

4 unchanged sentences

Brokerage commissions

Other segment income (1)

Total other operating income

4 unchanged sentences

FDIC premiums

Other segment expenses (2)

Total operating expenses

6 unchanged sentences

Amortization of intangible assets

Intangible assets

(1) Other segment income includes net gains/(losses) on disposals of fixed assets, bank owned life insurance income, and miscellaneous income.

26 unchanged sentences

Components of Comprehensive Income (in thousands)

Unrealized losses on AFS securities, net of tax

Unrealized gains/(losses) on AFS securities, net of tax

Unrealized losses on cash flow hedges, net of tax

Other comprehensive loss, net of tax

Other comprehensive income/(loss), net of tax

Comprehensive income

6 unchanged sentences

Increase in accrued interest payable and other liabilities

Stock compensation

Stock based compensation

Net cash provided by operating activities

7 unchanged sentences

Net cash used in financing activities

Decrease in cash and cash equivalents

Increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data