First United Corporation reported financial results for the three months ended June 30, 2026, with adjusted earnings per share of $1.13 beating the analyst consensus estimate of $1.05 by 7.62%. The company reported quarterly sales of $23.905 million, which exceeded the analyst consensus estimate of $23.550 million by 1.51%. Sales increased by 10.43% compared to $21.647 million in the same period last year. Consolidated net income on a GAAP basis was $5.7 million, or $0.87 per diluted share, compared to $6.0 million, or $0.92 per diluted share, for the second quarter of 2025. Results were materially affected by a one-time, non-GAAP consulting expense of approximately $2.2 million related to core processor contract negotiations.

Second Quarter Financial Highlights

The following table summarizes key income metrics for the second quarter of 2026 compared to prior periods:

Additional second quarter highlights include:

• Net interest margin on a non-GAAP, fully tax equivalent (FTE) basis was 3.98% for the second quarter of 2026, reflecting increased loan yields and reduced funding costs.
• Strong loan production with $66.0 million in commercial loan originations and $33.9 million in residential mortgage originations.
• Provision expense was $0.8 million in the second quarter, reflecting continued economic and political uncertainty and modest loan growth, slightly offset by improved qualitative factors.
• Operating expenses increased by $2.1 million compared to the linked quarter, driven by the one-time, non-GAAP $1.7 million, net of tax, consulting fee related to core contract negotiations.
• A cash dividend of $0.26 per share was declared in the second quarter.

Net Interest Income and Margin

Net interest income on a non-GAAP, FTE basis increased by $1.9 million for the second quarter of 2026 compared to the second quarter of 2025. Interest income on loans increased by $1.5 million due to an increase of 15 basis points in overall yield on the loan portfolio, as new loans were booked at higher rates and adjustable-rate loans continued to reprice upward. Interest expense decreased by $0.6 million year-over-year, primarily due to the repayment of $25.0 million in brokered certificates of deposit in January 2026 and $65.0 million in Federal Home Loan Bank (FHLB) borrowings in March 2026. Comparing the second quarter of 2026 to the first quarter of 2026, net interest income on a non-GAAP, FTE basis increased by $0.5 million, driven by an increase in average loan balances of $66.1 million. The net interest margin for the six months ended June 30, 2026 was 3.89% compared to 3.61% for the six months ended June 30, 2025.

Non-Interest Income and Expense

Other operating income increased by $0.4 million in the second quarter of 2026 compared to the second quarter of 2025, driven by an increase in trust and brokerage income of $0.3 million as a result of increased production of new accounts and favorable market values in assets under management. For the six months ended June 30, 2026, other operating income inclusive of net gains increased by $0.7 million compared to the same period of 2025, driven by an increase in trust and brokerage income of $0.5 million and an increase in bank owned life insurance (BOLI) income of $0.2 million. Other operating expenses increased by $2.8 million in the second quarter of 2026 compared to the second quarter of 2025, driven by the one-time consulting fee and a $0.8 million increase in salaries and benefits. For the six months ended June 30, 2026, other operating expenses increased by $3.9 million compared to the same period of 2025, driven by the consulting fee, a $1.7 million increase in salaries and benefits, and a $0.3 million increase in data processing expenses. The effective income tax rates for the six-month periods ended June 30, 2026 and 2025 were 24.1% and 24.7%, respectively.

Balance Sheet and Loan Portfolio

Total assets at June 30, 2026 were $2.1 billion, representing a $5.4 million decrease since December 31, 2025. Outstanding loans of $1.6 billion at June 30, 2026 reflected a $50.4 million increase since December 31, 2025. The following table details loan portfolio changes by type:

Total deposits of $1.7 billion at June 30, 2026 remained flat compared to December 31, 2025. The following table summarizes deposit changes:

The book value of the Corporation's common stock was $32.91 per share at June 30, 2026, compared to $31.33 per share at December 31, 2025. At June 30, 2026, there were 6,453,836 basic outstanding shares and 6,462,604 diluted outstanding shares of common stock.

Asset Quality and Capital Ratios

Asset quality remained strong during the first six months of 2026. The allowance for credit losses (ACL) was $20.6 million at June 30, 2026, compared to $19.0 million at June 30, 2025 and $19.5 million at December 31, 2025. The ratio of the ACL to loans outstanding was 1.31% at June 30, 2026, compared to 1.28% at December 31, 2025 and 1.27% at June 30, 2025. Net charge-offs of $0.1 million were recorded for the quarter ended June 30, 2026. Non-accrual loans totaled $4.5 million at June 30, 2026 compared to $4.2 million at December 31, 2025. The following table presents key capital ratios:

Annualized Return on Average Assets and Return on Average Equity for the six-month period ended June 30, 2026 were 1.20% and 11.92%, respectively. On a non-GAAP adjusted basis, Return on Average Assets was 1.36% and Return on Average Equity was 13.49% for the same period.

Raymond James analyst Steve Moss has maintained an Outperform rating for First United (NASDAQ: FUNC) and raised the price target to $50. The previous target was $44. The adjustment reflects a revised outlook on the stock's performance potential.

Rating and Price Action

The brokerage firm continues to view First United favorably, as evidenced by the Outperform rating. The increase in the price target to $50 suggests an expected upside from the prior $44 level.