Oakland, Maryland, October 19, 2026 / PRNewswire / -- First United Corporation (hereinafter referred to as the "Company," "we," or "this Company") (Nasdaq ticker: FUNC), a bank holding company, and also the parent company of First United Bank & Trust (hereinafter referred to as the "Banks"), today announced its financial results for the three months and nine months ending September 30, 2026.
In the third quarter of 2026, the consolidated net profit, calculated in accordance with Generally Accepted Accounting Principles (GAAP), was $7.2 million, resulting in an earnings per share of $1.11 after dilution; in the same period last year, it was $6.9 million and $1.07 respectively; in the second quarter of 2026, it was $5.7 million and $0.88 respectively. The net profit for the first nine months of 2026 was $19.5 million, with an earnings per share of $3.01 after dilution; in the same period last year, it was $18.7 million and $2.88 respectively. Using a non-GAAP metric, the net profit 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 the annualized average return on shareholders' equity for the first nine months of 2026 were 1.26% and 12.37% respectively.
Chairman of the Board, President, and Chief Executive Officer Jason Rush stated: "We have once again delivered a solid quarter, benefiting from an improved net interest margin, continued growth in wealth management revenue, and steady expansion of loans. Entering the fourth quarter, we still have a sufficient pipeline of loans, which provides us with positive momentum to conclude the year on a strong note. The credit quality remains strong. However, given the ongoing inflationary pressures and uncertainties in interest rate prospects, we believe it is prudent to maintain a cautious provisioning strategy. We will also continue to focus on cost management and keep looking for opportunities to improve the efficiency of the entire company."
Financial Highlights of the Third Quarter:
- In the third quarter of 2026, the net interest margin calculated on a non-GAAP and fully tax-equivalent (FTE) basis was 4.05%, reflecting an increase in loan yields and a decrease in funding costs.
- Strong loan disbursement this quarter, with commercial loans amounting to 115 million US dollars and residential mortgage loans amounting to 34.7 million US dollars.
- Provision expenses for the third quarter amounted to $1.9 million, mainly due to the steady growth in loans and unutilized commitments, as well as ongoing economic and political uncertainties.
- Compared to the previous quarter, operating expenses decreased by $2 million. The reason for this is that a one-time, after-tax consulting fee of $1.7 million was recorded in the second quarter, which was related to negotiations for the core processing system contract.
- Announced a cash dividend of $0.28 per share for the third quarter.
Income Statement Overview
According to the GAAP criteria, the net profit for the third quarter of 2026 was 7.2 million US dollars, which is higher than the 5.7 million US dollars in the second quarter of 2026; the second-quarter results included a one-time, after-tax third-party consulting fee of 1.7 million US dollars related to core contract negotiations. The net profit for the third quarter of 2025 was 6.9 million US dollars.
Comparison of the third quarter of 2026 with the third quarter of 2025
In the third quarter of 2026, consolidated net profit increased by $200,000 compared to the third quarter of 2025. The growth mainly came from a $2.2 million increase in net interest income and a $300,000 increase in non-interest income (including gains), but this was offset by a $1.4 million increase in credit loss provisions and an $800,000 increase in other operating expenses. Compared to the same period in 2025, loan interest and fees increased by $1.8 million due to steady loan growth and continued repricing of floating-rate loans. Interest expenses decreased by $1 million during the same period because $50 million in brokerage certificates of deposit matured in January and July 2026, and $65 million in loans from the Federal Housing Loan Bank were repaid in March 2026. Other operating income increased slightly by $300,000, mainly due to a $300,000 increase in trust and brokerage income, which was attributed to an increase in new account openings and favorable market values of managed assets. Other operating expenses increased by $800,000, primarily due to a $500,000 increase in compensation and benefits, resulting from new employees hired for team building in the western and eastern regions, normal salary increases in April 2026, and rising costs of life and health insurance due to increased claims. Expenses for equipment, premises, and data processing increased by $300,000 because new loan issuance software was implemented at the end of 2025. Other expenses such as marketing and contract workers also increased slightly, but these were offset by decreases in professional service fees, expenses related to foreclosure of held real estate, and donation expenditures.
Comparison between the third quarter of 2026 and the second quarter of 2026
Compared to the previous quarter, net profit increased by $1.5 million, mainly due to a $1 million increase in net interest income, which was attributed to higher loan yields and lower funding costs; other operating income increased by $200,000, including net gains. The increase in net gains was due to profits from selling mortgage loans to the secondary market, as well as funds received related to the sale of a branch at the end of 2025. Other miscellaneous income also increased, due to one-time cash incentives related to check fees, as well as higher other expenses incurred in the second quarter due to one-time third-party fees arising from core contract negotiations. Provisions for credit losses increased by $1.2 million, due to growth in loans and unutilized commitments in the third quarter, as well as ongoing economic and political uncertainties.
Comparison of the first nine months of 2026 with the first nine months of 2025
For the nine months ending September 30, 2026, the net profit on a GAAP basis was $19.5 million, which includes $1.7 million in after-tax consulting fees generated from core contract negotiations completed in the second quarter; on a non-GAAP basis, it was $21.1 million. Compared to the net profits of $18.7 million for the same period in 2025, there was an increase of $800,000, mainly due to a $6.1 million increase in net interest income, attributed to the ongoing rise in the yield on interest-bearing assets and a decrease in overall funding costs; other non-interest income increased by $1 million, including net gains, mainly due to an $800,000 increase in trust and brokerage income, as well as a $300,000 increase in income from the bank's own life insurance (BOLI), which was related to a one-time death benefit received in the first quarter of 2026. However, this increase was partially offset by a $4.7 million increase in other operating expenses, including a $2.2 million increase in consulting fees, salaries, and benefits, as well as a $600,000 increase in equipment, premises, and data processing costs, mainly due to the implementation of new loan issuance software at the end of 2025. The increase in salaries and benefits was due to the addition of new employees for team building in the western and eastern regions, an annual salary adjustment in April 2026, incentives related to the estimated annual bonus provisions, and increased costs of life and health insurance due to more claims. These increases were partly offset by decreases in costs related to loan issuance.
Net interest income and net interest margin
Comparison of the third quarter of 2026 with the third quarter of 2025
According to non-GAAP and FTE metrics, net interest income in the third quarter of 2026 increased by $2.2 million compared to the third quarter of 2025. The growth mainly came from an increase in interest income of $1.2 million. Loan interest income increased by $1.8 million due to a $78.8 million increase in the average balance of the loan portfolio, as well as continuous upward re-pricing of floating-rate loans, which raised the overall yield of the loan portfolio by 16 basis points. Investment income remained stable year-over-year. Interest income from selling federal funds decreased by $500,000 because the average cash balance held with the Federal Reserve decreased by $18.5 million to support loan growth in the third quarter of 2026. Compared to the third quarter of 2025, interest expenses in the third quarter of 2026 decreased by $1 million. Deposit interest expenses decreased by $200,000, despite an increase in the average deposit balance by $65.1 million, which was mainly concentrated in interest-bearing demand deposits and money market deposits, especially corporate value money market products, as customers preferred to maintain liquid funds. Long-term borrowing interest expenses decreased by $800,000 because the average balance in the third quarter of 2026 was $86.7 million lower than in the same period of the previous year, mainly related to the repayment of $25 million and $65 million in FHLB advances in September 2025 and March 2026, respectively.
Comparison between the third quarter of 2026 and the second quarter of 2026
Compared to the second quarter of 2026, on a non-GAAP and FTE basis, net interest income increased by $1 million. Interest income increased by $800,000 due to a 31.3 million dollar increase in the average loan balance in the third quarter of 2026 and a 9 basis point increase in yield. Interest expenses decreased by $200,000. Despite an increase in the average deposit balance by $2.6 million, the company continued to focus on funding costs, which decreased by 9 basis points. The management's strategic focus on interest margin management in the third quarter of 2026 resulted in a net interest margin that was 7 basis points higher than in the second quarter, at 4.05%, compared to 3.98% in the second quarter.
Comparison of the first nine months of 2026 with the first nine months of 2025
In the nine months up to September 30, 2026, on a non-GAAP and FTE basis, net interest income increased by $6.2 million. The increase in interest income was mainly driven by a $4.2 million rise in loan interest and fees, due to an average loan balance of $53 million higher and a yield increase of 15 basis points. Interest expenses on interest-bearing liabilities decreased by $2 million. Although the average deposit balance increased by $79.6 million, with demand deposits increasing by $28.7 million and retail money market balances rising by $84.1 million, this was offset by a decrease of $9.4 million in savings deposits and a decrease of $24.7 million in brokerage time deposits. Short-term borrowing interest expenses remained stable, while long-term borrowing interest expenses decreased by $2 million, due to an average balance reduction of $70.3 million, mainly because of the repayment of $65 million in FHLB advances that matured in March 2026. The net interest margin for the first nine months of 2026 was 3.94%, higher than the 3.64% for the same period in 2025.
Non-interest income
Comparison of the third quarter of 2026 with the third quarter of 2025
Other operating income (including net income) increased by $300,000, mainly due to an increase of $300,000 in trust and brokerage income, which was attributed to the opening of new accounts and the favorable market value of managed assets. Net income decreased by $100,000 because the newly generated residential mortgage loans were more suitable for retention within the company's internal loan portfolio rather than being sold to the secondary market. Debit card income, service fee income, and BOLI income remained stable across quarters.
Comparison between the third quarter of 2026 and the second quarter of 2026
Compared to the previous quarter, other operating revenues (including net income) increased by $200,000. Net income increased by $100,000 due to the receipt of proceeds from the sale of branches that had previously been recognized, as well as an increase in proceeds from the sale of mortgages. Check fees increased by $100,000 due to a one-time cash incentive received in the third quarter.
Comparison of the first nine months of 2026 with the first nine months of 2025
In the nine months up to September 30, 2026, other operating revenues (including net income) increased by $1 million. The growth was mainly driven by an increase of $800,000 in trust and brokerage revenues due to more new business issuance and favorable market value of managed assets; debit card revenues increased by $100,000; and the aforementioned BOLI revenues increased by $300,000, but this was partially offset by a decline in net income, as newly issued residential mortgages were retained internally rather than sold to the secondary market.
Non-interest expenses
Comparison of the third quarter of 2026 with the third quarter of 2025
Other operating expenses increased by $800,000, mainly due to an increase of $500,000 in salaries and benefits. This was caused by the addition of new employees to build teams in the western and eastern regions, regular salary adjustments in April 2026, and increased claims processing in the third quarter, which led to higher costs for life and health insurance; however, this was partially offset by reduced costs related to loan disbursement. Expenses for equipment, premises, and data processing increased by $300,000 due to the implementation of new loan disbursement software at the end of 2025. The aforementioned increases were offset by reductions in professional services, OREO expenses, and donation expenditures.
Comparison between the third quarter of 2026 and the second quarter of 2026
Other operating expenses were reduced by $2 million, due to the inclusion in the second quarter of a one-time consulting fee of $1.7 million after taxes related to core contract negotiations. Compared to the second quarter of 2026, other expenses remain stable, and the company continues to prioritize expense control as a strategic focus.
Comparison of the first nine months of 2026 with the first nine months of 2025
In the nine months up to September 30, 2026, other operating expenses increased by $4.7 million, mainly due to one-time third-party consulting fees related to core contract negotiations amounting to $2.2 million, as well as an increase in salaries and benefits of $2.2 million, and an increase in equipment, premises, and data processing costs of $600,000. The latter was primarily due to the implementation of new loan disbursement software at the end of 2025. The reasons for the increase in salaries and benefits include the addition of new employees, annual salary adjustments, increased incentives related to the provision for expected annual bonuses, and rising costs of life and health insurance due to increased claims, which were partially offset by decreased costs related to loan disbursement.
The effective income tax rates for the nine-month periods ending September 30, 2026, and September 30, 2025, were 24.1% and 24.7%, respectively.
Balance Sheet Overview
As of September 30, 2026, the total assets amounted to $2.1 billion, an increase of $10.6 million from December 31, 2025. In the first nine months of 2026, the total loans increased by $83.7 million, and pension assets increased by $2.3 million due to rising market values. The aforementioned growth was offset by a decrease of $56.7 million in cash and other interest-bearing bank deposits, a decrease of $8.3 million in portfolio cash flows from principal and interest, as well as a reduction in bank stock investments; the latter is related to the reduction in FHLB shares after the full repayment of the loan in March 2026.
As of September 30, 2026, the total liabilities amounted to $1.9 billion, an increase of $200,000 from December 31, 2025. Compared to December 31, 2025, total deposits increased by $52.6 million. Demand deposits without interest increased slightly by $2.1 million, while savings and money market accounts grew by $45 million, mainly due to the expansion of existing and new customer relationships in the first nine months of 2026; interest-bearing demand deposits increased by $61 million, primarily related to municipal accounts. Brokerage certificates of deposit totaling $50 million were fully repaid after maturing in January and July 2026, respectively. Retail time deposits decreased by $5.5 million from December 31, 2025. Overnight loans taken to fund anticipated loan disbursements led to a short-term borrowing increase of $15.2 million from December 31, 2025, but these loans were fully repaid in 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 have increased by $45.7 million, due to new business relationships and further growth of existing relationships; acquisition and development loans have increased by $34.1 million; commercial and industrial loans have decreased by $40.7 million, with reasons including approximately $15 million repaid in advance due to competitive pricing, about $7.3 million repaid due to company sales, around $18 million repaid through refinancing with another institution, and the settlement of a financing line for a property development. Residential mortgage loans have increased by $27.2 million, as a large portion of the mortgages were retained within the internal portfolio rather than sold to the secondary market, which was partially offset by normal amortization. Consumer loans have increased by $17.4 million, due to the purchase of a consumer loan pool worth approximately $18 million in the second and third quarters of 2026, which was also 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 pipeline for commercial loans was $138 million, with an unutilized total commitment for commercial construction loans of about $37 million. Up to September 30, 2026, the total amount of amortization and repayment of commercial loans was around $137 million, mainly due to the early repayment of short-term commercial loans and the normal amortization of the commercial loan portfolio.
In the third quarter of 2026, new consumer mortgage loans amounted to approximately 34.7 million US dollars, with the majority being internally issued mortgages. As of September 30, 2026, the pipeline for internally held combination loans was 29.8 million US dollars. Unutilized commitments related to residential construction loans as of September 30, 2026, were 26 million US dollars.
As of September 30, 2026, the total deposits amounted to 1.8 billion US dollars, an increase of 52.6 million US dollars compared to December 31, 2025.
Interest-free demand deposits increased by $2.1 million, and savings and money market accounts increased by $45 million, mainly due to the expansion of existing and new customer relationships in the first nine months of 2026, especially with the company's value-added money market products, as customers continue to prefer liquid funds; interest-bearing demand deposits increased by $61 million, mainly related to municipal accounts. Brokerage certificates of deposit were fully repaid after maturity in January and July 2026, respectively. Retail time deposits decreased by $5.5 million compared to December 31, 2025.
As of September 30, 2026, the book value of the company's common stock was $33.15 per share, an increase from $31.33 per share as of December 31, 2025. On September 30, 2026, the company had 6,456,055 outstanding common shares, and after dilution, there were 6,464,823 outstanding shares. The increase in book value was mainly due to an undistributed net profit of $14.4 million in the first nine months of 2026.
Asset Quality
As of September 30, 2026, the loan loss provision ( 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. The credit loss provision for the third quarter of 2026 was $1.9 million, compared to $0.8 million in the second quarter of 2026 and $0.5 million in the third quarter of 2025. The provision for the first nine months of 2026 was $3.6 million, whereas in 2025 it was $2 million. The increase in the provision during the third quarter was mainly due to the robust growth of loans, as well as an unutilized commitment of approximately $39 million during this quarter and ongoing economic and political uncertainties. The quality of assets remained strong during the first nine months of 2026. The net write-offs in the third quarter of 2026 were $100,000; in the third quarter of 2025 they were $400,000, and in the second quarter of 2026 they were $100,000. The proportion of ACL over the outstanding loan balance was 1.36% as of September 30, 2026, which is higher than the 1.28% recorded on December 31, 2025, and September 30, 2025.
For the nine-month periods ending September 30, 2026, and September 30, 2025, the proportion of net write-offs to average loans was 0.04% and 0.08%, respectively. The net write-off rates for the commercial and industrial loan portfolios were 0.06% and 0.41% during these same nine-month periods. The net recovery rates for the acquisition and development loan portfolios were 0.02% and 0.42%, respectively. The decrease in net recovery was mainly due to recoveries related to a loan that was previously written off in 2016 being recognized in 2025. Compared to the first nine months of 2025, the net write-off rate for consumer loans decreased from 1.06% to 0.91% in the first nine months of 2026, primarily due to write-offs of unsecured consumer loans in 2025. Details of the ratios for each loan type are provided below. The company's special assets team continues to actively pursue the recovery of written-off loans, thus maintaining an overall net write-off rate at a low level.
As of September 30, 2026, the total amount of non-performing loans was $3.2 million, which is lower than the $4.2 million at December 31, 2025. The decrease in the balance of non-performing loans on September 30, 2026, was mainly related to a large repayment of a commercial and industrial loan.
As of September 30, 2026, the total amount of non-performing loans that have been partially written off amounted to $41,000; as of December 31, 2025, it was $200,000. Loans that are in the foreclosure process and secured by 1 to 4 residential properties amounted to $1.3 million as of September 30, 2026, and $500,000 as of December 31, 2025. The increase is mainly related to a residential mortgage loan of approximately $1.1 million. Calculated as a percentage of the loan portfolio, the proportion of loans that are overdue for 30 days or more but still accrue 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 attributed to a large non-residential commercial property loan.
The loan, which was modified according to ASU in February 2022, increased from $1.2 million on December 31, 2025, to $6.9 million on September 30, 2026. The reason for the increase is that a large commercial and industrial loan of $5.9 million completed its extension arrangement in the third quarter of 2026.
About First United Corporation
First United Corporation is a company based in Maryland, established in 1985. It is a financial holding company registered with the Federal Reserve Board under the Bank Holding Companies Act of 1956 and chose to operate as such in 2021. The company's main business is to act as the parent company for a bank, First United Statutory Trust I ("Trust I"), and First United Statutory Trust II ("Trust II"), which together with Trust I are referred to as "trusts." Both trusts are statutory business trusts in Connecticut, established with the purpose of issuing trust preferred securities that meet the requirements of tier one capital. The bank owns two subsidiaries in the consumer finance sector: OakFirst Loan Center and Inc (companies located in West Virginia), as well as OakFirst Loan Center and LLC (limited liability companies in Maryland). Additionally, the bank has a subsidiary, First OREO Trust, which is a statutory trust in Maryland and is used to hold real estate acquired through foreclosure or through deeds in lieu of foreclosure.In addition, the bank also holds 99.9% of the limited partnership interests in Liberty Mews Limited Partnership, a partnership established in Maryland with the purpose of acquiring, developing, and operating low-income housing units located in Garrett County, Maryland; it also holds 99.9% of the non-voting member interests in MCC FUBT Fund and LLC, which are Ohio limited liability companies aimed at acquiring, developing, and operating 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 by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts, but rather representations of management’s beliefs, plans, and objectives for the future, as well as the assumptions and judgments made regarding those beliefs, plans, and objectives. Such statements are typically identified by words such as “expected,” “estimated,” “should,” “anticipated,” “believed,” “intended,” and similar phrases. Although these statements reflect management’s good-faith beliefs and projections, they do not constitute guarantees of future performance and may not materialize. The beliefs, plans, and objectives on which forward-looking statements are based involve risks and uncertainties that could lead to significant differences between actual results and those stated in the statements. For a discussion of these risks and uncertainties, please refer to the section titled “Risk Factors” in the periodic reports submitted to the U.S. Securities and Exchange Commission by First United Corporation. In addition, investors should understand that the company is obligated, in accordance with generally accepted accounting principles, to assess subsequent events and their impact on key accounting assumptions and estimates as of September 30, 2026, before submitting the Form 10-Q consolidated financial statements for the quarter ended September 30, 2026; this may require the company to make adjustments to the amounts presented in this press release.
