First United Corp. Net Income Jumps 37% on Strong Loan Growth

TL;DR

**FUNC is crushing it with loan growth and lower credit losses, making it a solid regional bank play.**

AI Summary

FIRST UNITED CORP/MD/ (FUNC) reported a significant increase in net income for the six months ended June 30, 2025, reaching $11.79 million, up 36.9% from $8.612 million in the same period of 2024. This was driven by a robust 12.6% increase in total interest income to $48.933 million, primarily from a rise in interest and fees on loans to $44.049 million from $39.439 million. Net interest income also saw a healthy jump of 12.6% to $32.723 million. The company managed to reduce its total credit loss expense by 29.2% to $1.516 million, contributing to higher profitability. Total assets grew to $2.007 billion as of June 30, 2025, from $1.973 billion at December 31, 2024, with net loans increasing to $1.482 billion. Total deposits also increased by $39.378 million in the six months ended June 30, 2025, reaching $1.614 billion. Shareholders' equity improved to $191.147 million from $179.295 million at year-end 2024, reflecting strong earnings and a positive shift in accumulated other comprehensive loss.

Why It Matters

This strong performance by First United Corporation signals a healthy regional banking environment, particularly for investors seeking exposure to community banks with growing loan portfolios. The increase in net income and deposits suggests effective management in a competitive landscape, potentially leading to higher shareholder returns through continued dividend growth, which increased from $0.40 to $0.44 per share year-over-year. For employees, this indicates stability and potential for growth within the company. Customers benefit from a financially sound institution, while the broader market sees a positive indicator for regional economic activity, especially in lending. The reduction in credit loss expense also suggests prudent risk management.

Risk Assessment

Risk Level: low — The company's risk level appears low, evidenced by a significant reduction in credit loss expense by 29.2% to $1.516 million for the six months ended June 30, 2025, compared to $2.140 million in the prior year. Additionally, the allowance for credit losses on loans increased to $19.044 million from $18.170 million, indicating a conservative approach to potential loan defaults despite loan growth.

Analyst Insight

Investors should consider FUNC as a stable regional banking investment, given its strong net income growth and effective credit risk management. Monitor future loan growth and interest rate trends, as these will continue to be key drivers for the company's net interest income.

Financial Highlights

debt To Equity

9.51

revenue

$48.933M

operating Margin

N/A

total Assets

$2.007B

total Debt

$172.883M

net Income

$11.79M

eps

$1.82

gross Margin

N/A

cash Position

$79.113M

revenue Growth

+12.6%

Revenue Breakdown

Key Numbers

• $11.79M — Net Income (Increased 36.9% for six months ended June 30, 2025, from $8.612M in 2024.)
• $48.933M — Total Interest Income (Increased 12.6% for six months ended June 30, 2025, from $45.011M in 2024.)
• $1.516M — Total Credit Loss Expense (Decreased 29.2% for six months ended June 30, 2025, from $2.140M in 2024.)
• $1.482B — Net Loans (Increased from $1.462B at December 31, 2024, to June 30, 2025.)
• $1.614B — Total Deposits (Increased from $1.574B at December 31, 2024, to June 30, 2025.)
• $1.82 — Basic Net Income Per Share (Increased from $1.31 for six months ended June 30, 2024, to $1.82 in 2025.)
• $0.44 — Dividends Declared Per Share (Increased from $0.40 for six months ended June 30, 2024, to $0.44 in 2025.)
• $2.007B — Total Assets (Increased from $1.973B at December 31, 2024, to June 30, 2025.)
• $191.147M — Total Shareholders' Equity (Increased from $179.295M at December 31, 2024, to June 30, 2025.)
• 6,494,611 — Shares Outstanding (As of July 31, 2025.)

Key Players & Entities

• FIRST UNITED CORP/MD/ (company) — Registrant
• First United Bank & Trust (company) — Subsidiary of First United Corporation
• Nasdaq Stock Market (regulator) — Exchange where FUNC Common Stock is registered
• Financial Accounting Standards Board (regulator) — Issued ASUs impacting financial reporting
• Securities and Exchange Commission (regulator) — Regulates financial reporting for public companies
• $11.79 million (dollar_amount) — Net Income for six months ended June 30, 2025
• $8.612 million (dollar_amount) — Net Income for six months ended June 30, 2024
• $48.933 million (dollar_amount) — Total interest income for six months ended June 30, 2025
• $1.516 million (dollar_amount) — Total credit loss expense for six months ended June 30, 2025
• $1.482 billion (dollar_amount) — Net loans as of June 30, 2025

FAQ

Risk Factors

• Credit Risk [high — financial]: The company holds $1.483 billion in net loans as of June 30, 2025. While the allowance for credit losses has increased to $19.044 million from $18.170 million at year-end 2024, and credit loss expense decreased by 29.2%, the overall loan portfolio represents a significant exposure to potential defaults and economic downturns.
• Interest Rate Sensitivity [medium — market]: Fluctuations in interest rates can impact net interest income and the fair value of investment securities. The company holds $174.951 million in investment securities held to maturity and $103.582 million in available-for-sale securities, which are subject to market interest rate risk.
• Cybersecurity and Data Breaches [high — operational]: As a financial institution, the company is a target for cyberattacks. A successful breach could lead to significant financial losses, reputational damage, and regulatory penalties. The company's reliance on technology for operations makes it vulnerable.
• Regulatory Compliance [medium — regulatory]: The banking industry is heavily regulated. Changes in regulations or failure to comply with existing ones can result in fines, sanctions, and increased operating costs. The company must continually adapt to evolving regulatory requirements.
• Liquidity Risk [medium — financial]: While total deposits increased to $1.614 billion, a sudden and significant withdrawal of deposits or inability to access funding sources could impair the company's ability to meet its obligations and fund its operations.

Industry Context

First United Corporation operates within the community banking sector, characterized by a focus on local markets and personalized customer service. The industry is highly competitive, with traditional banks, credit unions, and increasingly, fintech companies vying for market share. Key trends include digital transformation, evolving customer expectations for seamless online and mobile experiences, and a dynamic interest rate environment impacting net interest margins.

Regulatory Implications

As a financial institution, First United Corporation is subject to stringent regulatory oversight from bodies like the Federal Reserve and the FDIC. Compliance with capital requirements, lending standards, and consumer protection laws is paramount. Any shifts in regulatory policy, such as changes to reserve requirements or capital adequacy ratios, could impact the company's operations and profitability.

What Investors Should Do

1. Monitor loan growth and credit quality trends.
2. Analyze net interest margin trends.
3. Evaluate the impact of investment securities on overall financial health.
4. Assess the effectiveness of cost management strategies.

Key Dates

• 2025-06-30: Six Months Ended — Reported net income of $11.79 million, a 36.9% increase year-over-year, driven by strong interest income growth.
• 2025-06-30: Consolidated Statements of Financial Condition — Total assets reached $2.007 billion, with net loans at $1.483 billion and total deposits at $1.614 billion.
• 2024-12-31: Year-End Financials — Provided the comparative baseline for the current period's growth in assets, loans, deposits, and equity.

Glossary

Net Interest Income

The difference between interest income generated by the bank and the interest paid out to its depositors and lenders. (A key measure of a bank's profitability from its core lending and borrowing activities. FUNC saw a 12.6% increase in net interest income.)

Allowance for Credit Losses

An estimate of the amount of loans in a portfolio that are expected to be uncollectible. (Reflects the bank's assessment of potential loan defaults. FUNC reduced its credit loss expense by 29.2%.)

Accumulated Other Comprehensive Loss

A component of shareholders' equity that includes unrealized gains and losses on certain investments and foreign currency translations that are not included in net income. (A negative balance indicates unrealized losses. FUNC saw a positive shift, reducing its accumulated other comprehensive loss.)

Interest Bearing Deposits

Customer deposits that earn interest, such as savings accounts, money market accounts, and certificates of deposit. (A significant source of funding for banks. FUNC's interest-bearing deposits increased to $1.188 billion.)

Non-Interest Bearing Deposits

Customer deposits that do not earn interest, such as checking accounts. (Another key funding source for banks. FUNC's non-interest-bearing deposits remained relatively stable at $425.784 million.)

Year-Over-Year Comparison

Compared to the six months ended June 30, 2024, First United Corporation has demonstrated robust growth in the current period. Total interest income rose by 12.6% to $48.933 million, directly contributing to a significant 36.9% increase in net income to $11.79 million. The company also successfully reduced its credit loss expense by 29.2%, indicating improved asset quality or a more favorable economic outlook. Total assets grew modestly by 1.7%, while net loans and total deposits saw increases of 1.4% and 2.5% respectively, reflecting steady business expansion.

Key Financial Figures

• $0.01 — 4,611 shares of common stock, par value $0.01 per share, as of July 31, 2025 . Table

Filing Documents

• func-20250630x10q.htm (10-Q) — 7690KB
• func-20250630xex31d1.htm (EX-31.1) — 14KB
• func-20250630xex31d2.htm (EX-31.2) — 14KB
• func-20250630xex32.htm (EX-32) — 7KB
• 0001558370-25-011377.txt ( ) — 31700KB
• func-20250630.xsd (EX-101.SCH) — 65KB
• func-20250630_cal.xml (EX-101.CAL) — 95KB
• func-20250630_def.xml (EX-101.DEF) — 375KB
• func-20250630_lab.xml (EX-101.LAB) — 621KB
• func-20250630_pre.xml (EX-101.PRE) — 526KB
• func-20250630x10q_htm.xml (XML) — 10343KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 3 Item 1.

Financial Statements (unaudited)

Financial Statements (unaudited) 3 Consolidated Statements of Financial Condition – June 30, 2025 and December 31, 2024 3 Consolidated Statements of Operations – for the six and three months ended June 30, 2025 and 2024 4 Consolidated Statements of Comprehensive Income – for the six and three months ended June 30, 2025 and 2024 6 Consolidated Statements of Changes in Shareholders' Equity – for the six and three months ended June 30, 2025 and 2024 8 Consolidated Statements of Cash Flows – for the six months ended June 30, 2025 and 2024 9

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 10 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 46 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 65 Item 4.

Controls and Procedures

Controls and Procedures 65

OTHER INFORMATION

PART II. OTHER INFORMATION 66 Item 1.

Legal Proceedings

Legal Proceedings 66 Item 1A.

Risk Factors

Risk Factors 66 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 66 Item 3. Defaults upon Senior Securities 66 Item 4. Mine Safety Disclosures 66 Item 5. Other Information 66 Item 6. Exhibits 67

SIGNATURES

SIGNATURES 68 2 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements First United Corporation and Subsidiaries Consolidated Statements of Financial Condition (In thousands, except share data - Unaudited) June 30, 2025 December 31, 2024 Assets Cash and due from banks $ 77,313 $ 77,020 Interest bearing deposits in banks 1,800 1,307 Cash and cash equivalents 79,113 78,327 Investment securities – available for sale (at fair value) 103,582 94,494 Investment securities – held to maturity, net of allowance for credit losses of $ 59 at June 30, 2025 and December 31, 2024 (fair value $ 148,496 at June 30, 2025 and $ 144,760 at December 31, 2024) 174,951 175,497 Equity investments not held for trading with readily determinable fair values 1,008 — Restricted investment in bank stock, at cost 5,815 5,768 Loans held for sale 110 806 Loans 1,502,481 1,480,793 Unearned fees ( 533 ) ( 442 ) Allowance for credit losses ( 19,044 ) ( 18,170 ) Net loans 1,482,904 1,462,181 Premises and equipment, net 29,644 30,081 Goodwill and other intangibles 11,609 11,773 Bank owned life insurance 49,642 48,952 Deferred tax assets 9,151 9,989 Other real estate owned, net 3,035 3,062 Repossessed assets 2,802 2,802 Right of use assets 1,058 1,204 Pension asset 18,537 17,824 Accrued interest receivable 7,160 7,473 Other assets 27,350 22,789 Total Assets $ 2,007,471 $ 1,973,022 Liabilities and Shareholders' Equity Liabilities: Non-interest bearing deposits $ 425,784 $ 426,737 Interest bearing deposits 1,188,423 1,148,092 Total deposits 1,614,207 1,574,829 Short-term borrowings 50,954 65,409 Long-term borrowings 120,929 120,929 Operating lease liability 1,231 1,384 SERP deferred compensation 8,465 8,335 Allowance for credit losses on off-balance sheet credit exposures 995 863 Accrued interest payable 935 489 Other liabilities 17,179 20,065 Dividends payable 1,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1 – Basis of Presentation The financial information is presented in accordance with generally accepted accounting principles and general practice for financial institutions in the United States of America ("GAAP"). First United Corporation has prepared these unaudited condensed consolidated financial statements in accordance with GAAP for interim financial information, rules of the Securities and Exchange Commission that permit reduced disclosure for interim periods, and Article 8 of Regulation S-X. Operating results for the six- and three-month periods ended June 30, 2025 are not necessarily indicative of the results that may be expected for the full year or for any future interim period. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in First United Corporation's Annual Report on Form 10-K for the year ended December 31, 2024. In preparing financial statements, management is required to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities as of the date of financial statements. In addition, these estimates and assumptions affect revenues and expenses in the financial statements and, as such, actual results could differ from those estimates. In the opinion of management, all adjustments (all of which are of a normal recurring nature) that are necessary for a fair statement are reflected in the unaudited condensed consolidated financial statements. Principles of Consolidation The consolidated financial statements include the accounts of First United Corporation, First United Bank & Trust (the "Bank"), First United Statutory Trust I, First United Statutory Trust II, OakFirst Loan Center, LLC, OakFirst Loan Center, Inc., First OREO Trust and FUBT OREO I, LLC. All significant inter-company accounts and transactions

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