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.
−Removed: 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, and First United Legacy Advisors, LLC, a Maryland limited liability company (“FULA”).
+Added: 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.
−Removed: FULA was formed for the purpose of providing investment advice and related services, but it is not yet active.
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 - 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.
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The financial condition and cash flow of commercial borrowers is therefore carefully analyzed during the loan approval process, and continues to be monitored throughout the duration of the loan by obtaining business financial statements, personal financial statements and income tax returns.
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frequency of this ongoing analysis depends upon the size and complexity of the credit and collateral that secures the loan.
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Title insurance protecting the Bank’s lien priority, as well as fire and casualty insurance, is also required.
−Removed: During 2021, the Bank was an active participant in selling qualifying residential mortgage loans to the secondary market outlet due to the low fixed rate environment.
During 2022, residential mortgage loans at higher rates were booked as in-house portfolio loans.
+Added: During the latter half of 2023, the Bank made the strategic decision to shift the lending of residential mortgage loans to the secondary market.
Home equity lines of credit, included within the residential mortgage portfolio, are secured by the borrower’s home and can be drawn on at the discretion of the borrower.
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Site inspections are performed to determine pre-specified stages of completion before loan proceeds are disbursed.
−Removed: These loans typically have maturities of six to 12 months and may have a fixed or variable rate.
−Removed: Permanent financing for individuals offered by the Bank includes fixed and variable rate loans with five, seven or 10-year adjustable rate mortgages.
+Added: These loans typically have maturities of six to twelve months and may have a fixed or variable rate.
+Added: Permanent financing for individuals offered by the Bank includes fixed and variable rate loans with five, seven or ten-year adjustable rate mortgages.
A variety of other consumer loans are also offered to customers, including indirect and direct auto loans, student loans, and other secured and unsecured lines of credit and term loans.
−Removed: An allowance for loan losses (“ALL”) is maintained to provide for probable losses from our lending activities.
−Removed: A complete discussion of the factors considered in determination of the ALL is included in Item 7 of Part II of this report.
+Added: An allowance for credit losses (“ACL”) is maintained to provide for probable losses from our lending activities.
+Added: A complete discussion of the factors considered in determination of the ACL is included in Item 7 of Part II of this report.
Deposit Activities
The Bank offers a full array of deposit products including checking, savings and money market accounts, regular and IRA certificates of deposit, Christmas Savings accounts, College Savings accounts, and Health Savings accounts.
−Removed: The Bank also offers the Certificate of Deposit Account Registry Service ® , or CDARS ® , program to municipalities, businesses, and consumers through which the Bank provides access to multi-million-dollar certificates of deposit and the Insured Cash Sweep ® , or ICS ® , program to municipalities, businesses, and consumers through which the Bank provides access to multi-million-dollar savings and demand deposits.
+Added: The Bank also offers the Certificate of Deposit Account Registry Service ® , or CDARS ® , program to municipalities, businesses, and consumers through which the Bank provides access to multi-million-dollar certificates of deposit and the IntraFi Cash Service ® , or ICS ® , program to municipalities, businesses, and consumers through which the Bank provides access to multi-million-dollar savings and demand deposits.
Both programs are FDIC-insured.
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Information about our income from and assets related to our banking business may be found in the Consolidated Statements of Financial Condition and the Consolidated Statements of Income and the related notes thereto included in Item 8 of Part II of this annual report.
−Removed: Tae of Contents
Wealth Management
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In those instances in which we are unable to accommodate customers’ needs, we attempt to arrange for those services to be provided by other financial services providers with which we have a relationship.
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The following tables set forth deposit data for the Maryland and West Virginia Counties in which the Bank maintains offices as of June 30, 2023, the most recent date for which comparative information is available.
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First United Bank & Trust
−Removed: Standard Bank, PaSB
−Removed: Somerset Trust Commpany
+Added: Dollar Bank, Federal Savings Bank
+Added: Somerset Trust Company
FDIC Deposit Market Share Report
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Manufacturers & Traders Trust Company
−Removed: Capital One NA
Sandy Spring Bank
Woodsboro Bank
+Added: Capital One, NA
Middletown Valley Bank
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WesBanco Bank, Inc.
+Added: Presidential Bank, FSB
Woodforest National Bank
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Jefferson Security Bank
+Added: Farmers and Merchants Trust Company of Chambersburg
FDIC Deposit Market Share Report
−Removed: Tae of Contents
Berkeley County, West Virginia:
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Harrison County, West Virginia:
−Removed: WesBanco Bank, Inc.
−Removed: The Huntington National Bank
MVB Bank, Inc.
+Added: The Huntington National Bank
+Added: WesBanco Bank, Inc.
JP Morgan Chase Bank, NA
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West Union Bank
−Removed: Summit Community Bank, Inc.
+Added: Summit Community Bank
Freedom Bank, Inc
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Citizens Bank of Morgantown, Inc.
−Removed: First Exchange Bank
Summit Community Bank, Inc.
+Added: First Exchange Bank
JP Morgan Chase Bank, NA
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FDIC Deposit Market Share Report
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For further information about competition in our market areas, see the Risk Factor entitled “ We operate in a competitive environment, and our inability to effectively compete could adversely and materially impact our financial condition and results of operations ” in Item 1A of Part I of this annual report.
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As a publicly-traded company whose common stock, par value $0.01 per share (the “Common Stock”), is registered under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and listed on The NASDAQ Global Select Market, the Corporation is also subject to regulation and supervision by the SEC and The NASDAQ Stock Market, LLC (“NASDAQ”).
−Removed: The Bank is a Maryland trust company subject to the banking laws of Maryland and to regulation by the Office of the Maryland Commissioner of Financial Regulation (the “Maryland Commissioner”), who is required by statute to make at least one examination in each calendar year (or at 18-month intervals if the Maryland Commissioner determines that an examination is unnecessary in a particular calendar year).
+Added: The Bank is a Maryland trust company subject to the banking laws of Maryland and to regulation by the Maryland Department of Labor’s Office of Financial Regulation (the “Maryland OFR”), who is required by statute to make at least one examination in each calendar year (or at 18-month intervals if the Maryland OFR determines that an examination is unnecessary in a particular calendar year).
The Bank also has offices in West Virginia, and the operations of these offices are subject to various West Virginia laws.
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In addition to the foregoing, there are a myriad of other federal and state laws and regulations that affect, or govern the business of banking, including consumer lending, deposit-taking, and trust operations.
−Removed: All non-bank subsidiaries of the Corporation are subject to examination by the FRB, and, as affiliates of the Bank, are subject to examination by the FDIC and the Maryland Commissioner.
+Added: All non-bank subsidiaries of the Corporation are subject to examination by the FRB, and, as affiliates of the Bank, are subject to examination by the FDIC and the Maryland OFR.
In addition, OakFirst Loan Center, Inc.
−Removed: is subject to licensing and regulation by the West Virginia Division of Banking, and OakFirst Loan Center, LLC is subject to licensing and regulation by the Maryland Commissioner.
−Removed: If and when FULA becomes active, management anticipates that its activities will be regulated by the SEC under the federal Investment Advisers Act of 1940, as amended.
+Added: is subject to licensing and regulation by the West Virginia Division of Banking, and OakFirst Loan Center, LLC is subject to licensing and regulation by the Maryland OFR.
Regulation of Bank Holding Companies
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Section 23B requires that transactions between the Bank and the Corporation and its non-bank affiliates be on terms and under circumstances that are substantially the same as with non-affiliates.
−Removed: Under Federal Reserve policy, the Corporation is expected to act as a source of strength to the Bank, and the Federal Reserve may charge the Corporation with engaging in unsafe and unsound practices for failure to commit resources to a subsidiary bank when required.
+Added: Under FRB policy, the Corporation is expected to act as a source of strength to the Bank, and the FRB may charge the Corporation with engaging in unsafe and unsound practices for failure to commit resources to a subsidiary bank when required.
This support may be required at times when the bank holding company may not have the resources to provide the support.
Under the prompt corrective action provisions, if a controlled bank is undercapitalized, then the regulators could require the bank holding company to guarantee the bank’s capital restoration plan.
−Removed: In addition, if the Federal Reserve believes that a bank holding company’s activities, assets or affiliates represent a significant risk to the financial safety, soundness or stability of a controlled bank, then the Federal Reserve could require the bank holding company to terminate the activities, liquidate the assets or divest the affiliates.
+Added: In addition, if the FRB believes that a bank holding company’s activities, assets or affiliates represent a significant risk to the financial safety, soundness or stability of a controlled bank, then the FRB could require the bank holding company to terminate the activities, liquidate the assets or divest the affiliates.
The regulators may require these and other actions in support of controlled banks even if such actions are not in the best interests of the bank holding company or its stockholders.
Because the Corporation is a bank holding company, it is viewed as a source of financial and managerial strength for any controlled depository institutions, like the Bank.
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In addition, under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”), depository institutions insured by the FDIC can be held liable for any losses incurred by, or reasonably anticipated to be incurred by, the FDIC in connection with (i) the default of a commonly controlled FDIC-insured depository institution or (ii) any assistance provided by the FDIC to a commonly controlled FDIC-insured depository institution in danger of default.
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The Bank will be considered to be well managed so long as it achieves a CAMEL composite rating of at least “2” as a result of its most recent examination and at least a “satisfactory” management rating (if such rating is given).
−Removed: If the Bank were to fail to meet either of these requirements, then the Corporation would be required to enter into an agreement with the Federal Reserve that would address the remediation of the condition that led to the failure.
−Removed: During the term of that agreement, which is typically 180 days but can be extended at the discretion of the Federal Reserve, the Corporation would be prohibited from commencing any additional activity or acquiring control or shares of any company that would otherwise be permissible for a financial holding company under Section 4(k) of the BHC Act.
−Removed: If the Corporation were to fail to correct that condition by the expiration of the agreement’s term, then the Federal Reserve could order the Corporation to divest its ownership of the Bank or, alternatively, terminate all financial holding company activities.
+Added: If the Bank were to fail to meet either of these requirements, then the Corporation would be required to enter into an agreement with the FRB that would address the remediation of the condition that led to the failure.
+Added: During the term of that agreement, which is typically 180 days but can be extended at the discretion of the FRB, the Corporation would be prohibited from commencing any additional activity or acquiring control or shares of any company that would otherwise be permissible for a financial holding company under Section 4(k) of the BHC Act.
+Added: If the Corporation were to fail to correct that condition by the expiration of the agreement’s term, then the FRB could order the Corporation to divest its ownership of the Bank or, alternatively, terminate all financial holding company activities.
For so long as the Corporation remains a financial holding company, the Bank must also maintain a Satisfactory or better rating under the Community Reinvestment Act (the “CRA”).
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Federal Banking Regulation
−Removed: Federal banking regulators, such as the Federal Reserve and the FDIC, may prohibit the institutions over which they have supervisory authority from engaging in activities or investments that the agencies believe are unsafe or unsound banking practices.
+Added: Federal banking regulators, such as the FRB and the FDIC, may prohibit the institutions over which they have supervisory authority from engaging in activities or investments that the agencies believe are unsafe or unsound banking practices.
Federal banking regulators have extensive enforcement authority over the institutions they regulate to prohibit or correct activities that violate law, regulation or a regulatory agreement or which are deemed to be unsafe or unsound practices.
−Removed: Enforcement actions may include the appointment of a conservator or receiver, the issuance of a cease and desist order, the termination of deposit insurance, the imposition of civil money penalties on the institution, its directors, officers, employees and institution-affiliated parties, the issuance of directives to increase capital, the issuance of formal and informal agreements, the removal of or restrictions on directors, officers, employees and institution-affiliated parties, and the enforcement of any such mechanisms through restraining orders or other court actions.
+Added: Enforcement actions may include the appointment of a conservator or receiver, the issuance of a cease and desist order, the termination of deposit insurance, the imposition of civil money penalties on the institution, its directors, officers, employees and institution-affiliated parties, the issuance of directives to increase capital, the issuance of formal and informal agreements, the removal of or additions to restrictions on directors, officers, employees and institution-affiliated parties, and the enforcement of any such mechanisms through restraining orders or other court actions.
The Bank is subject to certain restrictions on extensions of credit to executive officers, directors, and principal shareholders or any related interest of such persons, which generally require that such credit extensions be made on substantially the same terms as those available to persons who are not related to the Bank and not involve more than the normal risk of repayment.
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These standards include internal controls, information systems and internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, and compensation, fees and benefits.
−Removed: An institution that fails to meet those standards may be required by the agency to develop a plan acceptable to meet the standards.
−Removed: Failure to submit or implement such a plan
−Removed: Tae of Contents
−Removed: may subject the institution to regulatory sanctions.
+Added: An institution that fails to meet those standards may be
+Added: required by the agency to develop a plan acceptable to meet the standards.
+Added: Failure to submit or implement such a plan may subject the institution to regulatory sanctions.
We believe that the Bank meets substantially all standards that have been adopted.
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To the extent that deposits are not adequate to fund our capital requirements, we can rely on the funding sources identified below under the heading “Liquidity Management”.
−Removed: As of December 31, 2022, the Bank had $140.0 million available through unsecured lines of credit with correspondent banks, $9.6 million available through a secured line of credit with the Federal Reserve Discount Window and approximately $195.3 million available through the Federal Home Loan Bank of Atlanta (“FHLB”).
+Added: As of December 31, 2023, the Bank had $140.0 million available through unsecured lines of credit with correspondent banks, $12.2 million available through a secured line of credit with the Federal Reserve Discount Window, $69.5 million available through the FFB’s Bank Term Funding Program (“BTFP”), and approximately $145.4 million available through the Federal Home Loan Bank of Atlanta (“FHLB”).
Management is not aware of any demands, commitments, events or uncertainties that are likely to materially affect our ability to meet our future capital requirements.
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Additional information about our capital ratios is contained in “Consolidated Balance Sheet Review” section of Item 7 of Part II of this annual report under the heading “Capital Resources”.
−Removed: Tae of Contents
Prompt Corrective Action
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The FDI Act provides that an institution may be reclassified if the appropriate federal banking agency determines (after notice and opportunity for hearing) that the institution is in an unsafe or unsound condition or deems the institution to be engaging in an unsafe or unsound practice.
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The appropriate agency is also permitted to require an adequately capitalized or undercapitalized institution to comply with the supervisory provisions as if the institution were in the next lower category (but not treat a significantly undercapitalized institution as critically undercapitalized) based on supervisory information other than the capital levels of the institution.
−Removed: As of December 31, 2022, the Bank and the Corporation were “well capitalized” based on the aforementioned ratios.
+Added: As of December 31, 2023, the Bank was “well capitalized” based on the aforementioned ratios.
Liquidity Requirements
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In October 2022, the FDIC adopted a final rule to increase the initial base deposit insurance assessment rate schedules uniformly by two basis points beginning in the first quarterly assessment period of 2023.
−Removed: The increased assessment is expected to improve the likelihood that the DIF reserve ratio would reach the statutory minimum of 1.35% by the statutory deadline prescribed under the FDIC’s amended restoration plan.
+Added: The increased assessment was expected to improve the likelihood that the DIF reserve ratio would reach the statutory minimum of 1.35% by the statutory deadline prescribed under the FDIC’s amended restoration plan.
The FDIC is authorized to conduct examinations of and require reporting by FDIC-insured institutions.
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The Bank Secrecy Act (“BSA”), which is intended to require financial institutions to develop policies, procedures, and practices to prevent and deter money laundering, mandates that every national bank have a written, board-approved program that is reasonably designed to assure and monitor compliance with the BSA.
−Removed: Tae of Contents
The program must, at a minimum:
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The Bank’s mortgage lending and servicing activities are subject to various laws and regulations that are enforced by the federal banking regulators and the CFPB, such as the Truth in Lending Act, the Real Estate Settlement Procedures Act, and various rules adopted thereunder, including those relating to consumer disclosures, appraisal requirements, mortgage originator compensation, prohibitions on mandatory arbitration provisions under certain circumstances, and the obligation to credit payments and provide payoff statements within certain time periods and provide certain notices prior to interest rate and payment adjustments.
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The Bank is required to make a reasonable and good faith determination based on verified and documented information that a consumer applying for a mortgage loan has a reasonable ability to repay the loan according to its terms.
−Removed: Qualified mortgages that that are not “higher-priced” are afforded a safe harbor presumption of compliance with the ability to repay rules, while qualified mortgages that are “higher-priced” garner a rebuttable presumption of compliance with the ability to repay rules.
+Added: Qualified mortgages that are not “higher-priced” are afforded a safe harbor presumption of compliance with the ability to repay rules, while qualified mortgages that are “higher-priced” garner a rebuttable presumption of compliance with the ability to repay rules.
In general, a “qualified mortgage” is a mortgage loan without negative amortization, interest-only payments, balloon payments, or a term exceeding 30 years, where the lender determines that the borrower has the ability to repay, and where the borrower’s points and fees do not exceed 3% of the total loan amount.
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We believe that we are in compliance with the revised rule.
−Removed: Cybersecurity
−Removed: We rely on electronic communications and information systems to conduct our operations and store sensitive data.
−Removed: We employ an in-depth approach that leverages people, processes, and technology to manage and maintain cybersecurity controls.
−Removed: In addition, we employ a variety of preventative and detective tools to monitor, block, and provide alerts regarding suspicious activity, as well as to report on any suspected advanced persistent threats.
−Removed: Notwithstanding the strength of our defensive measures, the threat from cyber-attacks is severe, attacks are sophisticated and increasing in volume, and attackers respond rapidly to changes in defensive measures.
−Removed: The federal banking regulators have adopted guidelines for establishing information security standards and cybersecurity programs for implementing safeguards under the supervision of a financial institution’s board of directors.
−Removed: These guidelines, along with related regulatory materials, increasingly focus on risk management and processes related to information technology and the use of third parties in the provision of financial products and services.
−Removed: The federal banking regulators expect financial institutions to establish lines of defense and to ensure that their risk management processes address the risk posed by compromised customer credentials, and also expect financial institutions to maintain sufficient business continuity planning processes to ensure rapid recovery, resumption and maintenance of the institution's operations after a cyberattack.
−Removed: If we fail to meet the expectations set forth in this regulatory guidance, then we could be subject to various regulatory actions and we may be required to devote significant resources to any required remediation efforts.
Federal Securities Laws and NASDAQ Rules
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The Corporation is subject to information reporting requirements, proxy solicitation requirements, insider trading restrictions and other requirements of the Exchange Act, including the requirements imposed under the federal Sarbanes-Oxley Act of 2002, and rules adopted by NASDAQ.
−Removed: Among other things, loans to and other transactions with insiders are subject to restrictions and heightened disclosure, directors and certain committees of the Board must satisfy certain independence requirements, the Corporation must comply with certain
−Removed: Tae of Contents
−Removed: enhanced corporate governance requirements, and various issuances of securities by the Corporation require shareholder approval.
+Added: Among other things, loans to and other transactions with insiders are subject to restrictions and heightened disclosure, directors and certain committees of the Board must satisfy certain independence requirements, the Corporation must comply with certain enhanced corporate governance requirements, and various issuances of securities by the Corporation require shareholder approval.
Governmental Monetary and Credit Policies and Economic Controls
−Removed: The earnings and growth of the banking industry and ultimately of the Bank are affected by the monetary and credit policies of governmental authorities, including the Federal Reserve.
−Removed: An important function of the Federal Reserve is to regulate the national supply of bank credit in order to control recessionary and inflationary pressures.
−Removed: Among the instruments of monetary policy used by the Federal Reserve to implement these objectives are open market operations in U.S.
−Removed: Government securities, changes in the federal funds rate, changes in the discount rate of member bank borrowings, and changes in reserve requirements against member bank deposits.
+Added: The earnings and growth of the banking industry and ultimately of the Bank are affected by the monetary and credit policies of governmental authorities, including the FRB.
+Added: An important function of the FRB is to regulate the national supply of bank credit in order to control recessionary and inflationary pressures.
+Added: Among the instruments of monetary policy used by the FRB to implement these objectives are open market operations in U.S.
+Added: Government securities, changes
+Added: in the federal funds rate, changes in the discount rate of member bank borrowings, and changes in reserve requirements against member bank deposits.
These means are used in varying combinations to influence overall growth of bank loans, investments and deposits and may also affect interest rates charged on loans or paid on deposits.
−Removed: The monetary policies of the Federal Reserve authorities have had a significant effect on the operating results of commercial banks in the past and are expected to continue to have such an effect in the future.
−Removed: In view of changing conditions in the national economy and in the money markets, as well as the effect of actions by monetary and fiscal authorities, including the Federal Reserve, no prediction can be made as to possible future changes in interest rates, deposit levels, loan demand or their effect on our businesses and earnings.
−Removed: Management does not believe that our business activities are seasonal in nature.
−Removed: Deposit and loan demand may vary depending on local and national economic conditions, but variations will not have a material impact on our planning or policy-making strategies.
+Added: The monetary policies of the FRB authorities have had a significant effect on the operating results of commercial banks in the past and are expected to continue to have such an effect in the future.
+Added: In view of changing conditions in the national economy and in the money markets, as well as the effect of actions by monetary and fiscal authorities, including the FRB, no prediction can be made as to possible future changes in interest rates, deposit levels, loan demand or their effect on our businesses and earnings.
At December 31, 2023, we employed 338 individuals, of whom 304 were full-time employees.
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.