Oakland, Maryland, October 19, 2026 /PRNewswire/ — First United Corporation (the “Company,” “we,” or “us”) (Nasdaq: FUNC), a bank holding company and parent of First United Bank & Trust (the “Bank”), today announced its financial results for the three and nine months ended September 30, 2026.
In the third quarter of 2026, consolidated net income under GAAP was $7.2 million, with diluted earnings per share of $1.11; for the same period last year, these figures were $6.9 million and $1.07, respectively, and for the second quarter of 2026, they were $5.7 million and $0.88. For the first nine months of 2026, net income was $19.5 million, with diluted earnings per share of $3.01; for the same period last year, these figures were $18.7 million and $2.88, respectively. On a non-GAAP basis, net income for the third quarter of 2026 was $7.2 million, and for the first nine months, it was $21.1 million. The annualized average return on assets and annualized average return on shareholders' equity for the first nine months of 2026 were 1.26% and 12.37%, respectively.
Jason Rush, Chairman of the Board, President, and CEO, said: “We delivered another strong quarter, benefiting from improved net interest margin, continued growth in wealth management revenue, and steady loan growth. Entering the fourth quarter, our loan pipeline remains robust, providing positive momentum to close out the year. Credit quality remains strong. However, given persistent inflationary pressures and uncertainty around interest rate outlooks, we believe maintaining a prudent allowance strategy is prudent. We will also continue to focus on expense management and actively seek opportunities to enhance efficiency across the company.”
Q3 Financial Highlights:
- In the third quarter of 2026, the net interest margin, calculated on a non-GAAP, fully tax-equivalent (FTE) basis, was 4.05%, reflecting higher loan yields and lower funding costs.
- This quarter saw strong loan disbursements, with $115 million in commercial loans and $34.7 million in residential mortgages disbursed.
- The provision expense for the third quarter was $1.9 million, primarily due to steady growth in loans and unused commitments, as well as ongoing economic and political uncertainty.
- Operating expenses decreased by $2 million compared to the previous quarter, due to a one-time, after-tax consulting fee of $1.7 million recognized in the second quarter related to negotiations for the core processing system contract.
- In the third quarter, a cash dividend of $0.28 per share was announced.
Profit and Loss Overview
Under GAAP, net profit for the third quarter of 2026 was $7.2 million, higher than the $5.7 million in the second quarter of 2026; the second-quarter results included a one-time, after-tax third-party consulting fee of $1.7 million related to core contract negotiations. Net profit for the third quarter of 2025 was $6.9 million.
Third quarter of 2026 compared to the third quarter of 2025
The consolidated net income for the third quarter of 2026 increased by $200,000 compared to the third quarter of 2025. The growth was primarily driven by a $2.2 million increase in net interest income and a $300,000 increase in non-interest income (including gains), offset by a $1.4 million increase in credit loss provisions and an $800,000 increase in other operating expenses. Loan interest and fees rose by $1.8 million compared to the same period in 2025, due to steady loan growth and continued repricing of floating-rate loans. Interest expense decreased by $1 million during the same period, resulting from the repayment of $50 million in brokered certificates of deposit maturing in January and July 2026, and the repayment of $65 million in Federal Home Loan Bank (FHLB) borrowings in March 2026. Other operating income increased slightly by $300,000, primarily due to a $300,000 rise in trust and brokerage income, driven by increased new account openings and favorable market value appreciation of managed assets. Other operating expenses increased by $800,000, mainly due to a $500,000 rise in compensation and benefits, resulting from new hires to build out teams in the Western and Eastern regions, a routine salary increase in April 2026, and higher life and health insurance costs due to increased claims. Equipment, facilities, and data processing expenses rose by $300,000 due to the implementation of new loan origination software at the end of 2025. Other expenses, such as marketing and contract labor, increased slightly but were offset by declines in professional services fees, expenses related to other real estate owned (OREO), and charitable contributions.
Third quarter of 2026 compared to the second quarter of 2026
Net profit increased by $1.5 million compared to the previous quarter, primarily due to a $1 million increase in net interest income, driven by higher loan yields and lower funding costs; other operating income rose by $200,000, including net gains. The increase in net gains resulted from gains on the sale of mortgage loans in the secondary market and proceeds received related to the sale of a branch at the end of 2025. Other miscellaneous income increased due to a one-time cash incentive related to check fees and higher other expenses in the second quarter from one-time third-party fees associated with core contract negotiations. Credit loss provisions increased by $1.2 million due to growth in loans and unused commitments during the third quarter, as well as ongoing economic and political uncertainty.
First nine months of 2026 compared to the first nine months of 2025
For the nine months ended September 30, 2026, net income under GAAP was $19.5 million, including a post-tax consulting fee of $1.7 million related to the completion of core contract negotiations in the second quarter; non-GAAP net income was $21.1 million. This represents an increase of $0.8 million compared to GAAP and non-GAAP net income of $18.7 million for the first nine months of 2025, primarily due to a $6.1 million increase in net interest income, driven by continued higher yields on interest-earning assets and lower overall funding costs; an additional $1.0 million in other non-interest income, including net gains, primarily from an $0.8 million increase in trust and brokerage income and a $0.3 million increase in Bank-Owned Life Insurance (BOLI) income, the latter related to a one-time death benefit received in the first quarter of 2026; partially offset by a $4.7 million increase in other operating expenses, including the aforementioned consulting fee, a $2.2 million increase in compensation and benefits, and a $0.6 million increase in equipment, facilities, and data processing costs, primarily due to the implementation of new loan origination software at the end of 2025. The increase in compensation and benefits was driven by new hires to build out teams in the Western and Eastern regions, the annual salary adjustment in April 2026, increased incentives tied to accrued annual bonus estimates, and higher life and health insurance costs due to increased claims, partially offset by lower costs associated with loan origination.
Net interest income and net interest margin
Third quarter of 2026 compared to the third quarter of 2025
On a non-GAAP, FTE basis, net interest income for the third quarter of 2026 increased by $2.2 million compared to the third quarter of 2025. The growth was primarily driven by a $1.2 million increase in interest income. Loan interest income rose by $1.8 million due to a $78.8 million increase in the average balance of the loan portfolio and ongoing repricing of floating-rate loans, which raised the overall loan portfolio yield by 16 basis points. Investment income remained stable year-over-year. Interest income from federal funds sold decreased by $500,000, as average cash balances held at the Federal Reserve declined by $18.5 million to support loan growth in the third quarter of 2026. Interest expense for the third quarter of 2026 decreased by $1 million compared to the third quarter of 2025. Deposit interest expense declined by $200,000 despite a $65.1 million increase in average deposit balances, primarily concentrated in interest-bearing demand deposits and money market deposits, especially the company’s value money market products, as customers sought to maintain liquidity. Long-term borrowings interest expense decreased by $800,000 due to an $86.7 million reduction in average balances during the third quarter of 2026 compared to the same period last year, primarily related to the repayment of $25 million and $65 million in FHLB advances that matured in September 2025 and March 2026, respectively.
Third quarter of 2026 compared to the second quarter of 2026
Compared to the second quarter of 2026, net interest income increased by $1 million on a non-GAAP, FTE basis. Interest income rose by $800,000 due to a $31.3 million increase in average loan balances and a 9-basis-point improvement in yield. Interest expense decreased by $200,000. Despite a $2.6 million increase in average deposit balances, the company continued to focus on funding costs, resulting in a 9-basis-point decline in funding cost. Management’s strategic focus on spread management during the third quarter of 2026 led to a 7-basis-point increase in net interest margin to 4.05%, up from 3.98% in the second quarter.
First nine months of 2026 compared to the first nine months of 2025
For the nine months ended September 30, 2026, net interest income increased by $6.2 million on a non-GAAP, FTE basis. Interest income rose by $4.2 million, primarily driven by a $4.1 million increase in loan interest and fees, resulting from a $53 million increase in average loan balances and a 15-basis-point improvement in yields. Interest expense on interest-bearing liabilities decreased by $2 million, despite a $79.6 million increase in average deposit balances, which included a $28.7 million increase in demand deposits and an $84.1 million increase in retail money market balances, partially offset by a $9.4 million decrease in savings deposits and a $24.7 million decrease in brokered time deposits. Interest expense on short-term borrowings remained stable, while interest expense on long-term borrowings decreased by $2 million due to a $70.3 million reduction in average balances, primarily from the repayment of $65 million in FHLB advances in March 2026. The net interest margin for the first nine months of 2026 was 3.94%, compared to 3.64% for the same period in 2025.
Non-interest income
Third quarter of 2026 compared to the third quarter of 2025
Other operating income (including net gains) increased by $300,000, primarily due to a $300,000 increase in trust and brokerage income, driven by higher new account openings and favorable market value changes in managed assets. Net gains decreased by $100,000 due to an increase in residential mortgage production better suited for retention in the company’s loan portfolio rather than sale into the secondary market. Debit card income, service fee income, and BOLI income remained stable across quarters.
Third quarter of 2026 compared to the second quarter of 2026
Other operating income, including net gains, increased by $200,000 compared to the previous quarter. Net gains increased by $100,000 due to the receipt of previously recognized proceeds from branch sales and higher mortgage sale gains. Check fees increased by $100,000 due to a one-time cash incentive received in the third quarter.
First nine months of 2026 compared to the first nine months of 2025
For the nine months ended September 30, 2026, other operating income (including net gains) increased by $1 million. The growth was primarily driven by an $800,000 increase in trust and brokerage income due to higher new business origination and favorable market value changes in managed assets, a $100,000 increase in debit card income, and a $300,000 increase in the aforementioned BOLI income, partially offset by a decline in net gains as newly originated residential mortgages were retained internally rather than sold into the secondary market.
Non-interest fees
Third quarter of 2026 compared to the third quarter of 2025
Other operating expenses increased by $800,000, primarily due to a $500,000 rise in compensation and benefits resulting from new hires to build out teams in the Western and Eastern regions, the standard salary adjustment in April 2026, and higher life and health insurance costs driven by increased claims in the third quarter; this was partially offset by lower costs related to loan origination. Equipment, facilities, and data processing expenses increased by $300,000 due to the implementation of new loan origination software at the end of 2025. These increases were partially offset by decreases in professional services, OREO expenses, and charitable contributions.
Third quarter of 2026 compared to the second quarter of 2026
Other operating expenses decreased by $2 million due to a one-time, after-tax consulting fee of $1.7 million recognized in the second quarter related to core contract negotiations. All other expenses remained stable compared to the second quarter of 2026, as the company continues to prioritize expense control as a strategic focus.
First nine months of 2026 compared to the first nine months of 2025
For the nine months ended September 30, 2026, other operating expenses increased by $4.7 million, primarily due to a $2.2 million increase in one-time third-party consulting fees, compensation, and benefits related to core contract negotiations, and a $600,000 increase in equipment, facilities, and data processing costs, primarily driven by the implementation of a new loan origination software at the end of 2025. The increase in compensation and benefits was attributable to new hires, annual salary adjustments, higher incentives tied to accrued annual bonus provisions, and increased life and health insurance costs due to higher claims, partially offset by lower costs associated with loan origination.
The effective income tax rates for the nine months ended September 30, 2026, and September 30, 2025, were 24.1% and 24.7%, respectively.
Balance Sheet Overview
As of September 30, 2026, total assets amounted to $2.1 billion, an increase of $10.6 million from December 31, 2025. For the first nine months of 2026, total loans increased by $83.7 million, and pension assets rose by $2.3 million due to higher market values. These increases were partially offset by a $56.7 million decrease in cash and other interest-bearing bank deposits, an $8.3 million reduction in the portfolio due to principal and interest cash flows, and a decline in bank stock investments—primarily related to the reduction in FHLB stock following full repayment of the loan in March 2026.
As of September 30, 2026, total liabilities amounted to $1.9 billion, an increase of $200,000 compared to December 31, 2025. Total deposits increased by $52.6 million compared to December 31, 2025. Non-interest-bearing demand deposits rose slightly by $2.1 million, while savings and money market accounts increased by $45 million, primarily due to the expansion of existing and new customer relationships during the first nine months of 2026. Interest-bearing demand deposits increased by $61 million, largely related to municipal accounts. $50 million in brokered certificates of deposit were fully repaid upon maturity in January and July 2026. Retail time deposits decreased by $5.5 million compared to December 31, 2025. Overnight borrowings made in anticipation of loan originations increased short-term borrowings by $15.2 million compared to December 31, 2025, but these borrowings were fully repaid by October 2026.
As of September 30, 2026, the outstanding loan balance was $1.6 billion, an increase of $83.7 million from December 31, 2025.
Since December 31, 2025, commercial real estate loans increased by $45.7 million due to new business relationships and further growth in existing relationships; acquisition and development loans increased by $34.1 million; commercial and industrial loans decreased by $40.7 million due to approximately $15 million in early repayments driven by competitive pricing, approximately $7.3 million in repayments from business sales, approximately $18 million in repayments from refinancing with another institution, and the payoff of a construction line of credit. Residential mortgage loans increased by $27.2 million due to a significant volume of mortgages retained in the internal portfolio rather than sold into the secondary market, partially offset by normal amortization. Consumer loans increased by $17.4 million due to the purchase of approximately $18 million in consumer loan pools during the second and third quarters of 2026, partially offset by normal repayments.
In the third quarter of 2026, new commercial loans amounted to approximately $115 million. As of September 30, 2026, the commercial loan pipeline totaled $138 million, and the total unused commitments for commercial construction loans were approximately $37 million. As of September 30, 2026, the total amortization and repayments of commercial loans amounted to approximately $137 million, primarily due to early repayments of short-term commercial loans and normal amortization of the commercial loan portfolio.
In the third quarter of 2026, new consumer mortgage loans originated amounted to approximately $34.7 million, the majority of which were internally originated. As of September 30, 2026, the pipeline of internally held mortgage loans totaled $29.8 million. Undrawn commitments related to residential construction loans amounted to $26 million as of September 30, 2026.
As of September 30, 2026, total deposits amounted to $1.8 billion, an increase of $52.6 million since December 31, 2025.
Interest-bearing demand deposits increased by $61 million, primarily related to municipal accounts; non-interest-bearing demand deposits increased by $2.1 million, and savings and money market accounts increased by $45 million, primarily due to the expansion of existing and new customer relationships through the first nine months of 2026, particularly driven by the company’s value money market products as customers continue to favor liquid funds; retail time deposits decreased by $5.5 million compared to December 31, 2025; brokered CDs were fully repaid upon maturity in January and July 2026.
As of September 30, 2026, the company’s common stock book value was $33.15 per share, an increase from $31.33 per share as of December 31, 2025. As of September 30, 2026, the company had 6,456,055 basic outstanding shares and 6,464,823 diluted outstanding shares. The increase in book value was primarily due to $14.4 million in net income retained during the first nine months of 2026.
Asset quality
As of September 30, 2026, the allowance for credit losses (ACL) was $21.8 million; as of September 30, 2025, it was $19.1 million, and as of December 31, 2025, it was $19.5 million. Credit loss provision for the third quarter of 2026 was $1.9 million, compared to $800,000 in the second quarter of 2026 and $500,000 in the third quarter of 2025. Credit loss provision for the first nine months of 2026 was $3.6 million, compared to $2 million for the same period in 2025. The increase in provision for the third quarter was primarily driven by robust loan growth, an increase of approximately $39 million in unused commitments during the quarter, and ongoing economic and political uncertainty. Asset quality remained strong for the first nine months of 2026. Net charge-offs for the third quarter of 2026 were $100,000; for the third quarter of 2025, they were $400,000, and for the second quarter of 2026, they were $100,000. The ACL as a percentage of outstanding loan balances was 1.36% as of September 30, 2026, up from 1.28% as of December 31, 2025, and September 30, 2025.
For the nine months ended September 30, 2026, and September 30, 2025, net charge-offs as a percentage of average loans were 0.04% and 0.08%, respectively. The net charge-off rate for the commercial and industrial loan portfolio was 0.06% and 0.41% for the same respective nine-month periods. The net recovery rate for the acquisition and development loan portfolio was 0.02% and 0.42%. The decline in net recoveries was primarily due to recoveries recognized in 2025 related to a relationship previously charged off in 2016. The net charge-off rate for consumer loans decreased from 1.06% in the first nine months of 2025 to 0.91% in the first nine months of 2026, primarily due to charge-offs of unsecured consumer loans in 2025. Detailed ratios by loan type are provided below. The company’s special assets team continues to actively pursue collection on charged-off loans, resulting in overall net charge-off rates remaining at low levels.
As of September 30, 2026, the total non-performing loans amounted to $3.2 million, down from $4.2 million as of December 31, 2025. The decrease in non-performing loan balance as of September 30, 2026, was primarily due to a large repayment on a commercial and industrial loan.
As of September 30, 2026, the total amount of impaired loans partially written off was $41,000; as of December 31, 2025, it was $200,000. Loans secured by 1- to 4-family residential real estate in foreclosure proceedings amounted to $1.3 million as of September 30, 2026, and $500,000 as of December 31, 2025. The increase is primarily attributable to a single residential mortgage loan of approximately $1.1 million. As a percentage of the loan portfolio, loans past due 30 days or more but still accruing interest rose to 0.45% as of September 30, 2026, compared to 0.32% as of December 31, 2025, and 0.26% as of September 30, 2025. This increase is attributable to a large non-owner-occupied commercial real estate loan.
Loans modified under ASU 2022-02 increased from $1.2 million as of December 31, 2025, to $6.9 million as of September 30, 2026, due to a $5.9 million commercial and industrial loan that completed a term extension arrangement in the third quarter of 2026.
About First United Corporation
First United Corporation is a Maryland corporation established in 1985, registered as a financial holding company with the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956, and elected financial holding company status in 2021. The company’s primary business is serving as the parent company of the bank, First United Statutory Trust I (“Trust I”), and First United Statutory Trust II (“Trust II,” collectively referred to as the “Trusts”). Both trusts are Connecticut statutory business trusts established for the purpose of issuing trust preferred securities qualifying as Tier 1 capital. The bank owns two consumer finance company subsidiaries—OakFirst Loan Center, Inc. (a West Virginia corporation) and OakFirst Loan Center, LLC (a Maryland limited liability company)—as well as a subsidiary for holding real estate acquired through foreclosure or deed in lieu of foreclosure—First OREO Trust, a Maryland statutory trust. Additionally, the bank holds a 99.9% limited partnership interest in Liberty Mews Limited Partnership, a Maryland partnership formed to acquire, develop, and operate low-income housing units in Garrett County, Maryland; and a 99.9% non-voting membership interest in MCC FUBT Fund, LLC, an Ohio limited liability company formed to acquire, develop, and operate low-income housing units in Allegany County, Maryland, and Mineral County, West Virginia. The company’s website is www.mybank.com.
Forward-looking statements
This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts but rather statements regarding management’s beliefs, plans, and objectives for the future, and the assumptions and judgments underlying those beliefs, plans, and objectives. These statements are often identifiable by words such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” or similar expressions. Although these statements reflect management’s good faith beliefs and predictions, they do not constitute guarantees of future performance and may not materialize. The beliefs, plans, and objectives underlying forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those described in the statements. For a discussion of these risks and uncertainties, please refer to the “Risk Factors” section in First United Corporation’s periodic filings with the U.S. Securities and Exchange Commission. In addition, investors should understand that the Company is required under generally accepted accounting principles to evaluate subsequent events and their impact on key accounting assumptions and estimates as of September 30, 2026, prior to filing its Form 10-Q consolidated financial statements for the quarter ended September 30, 2026; this may require the Company to adjust the amounts presented in this press release.