FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended September 30, 1998
Commission file number 0-14237
First United Corporation
(Exact name of registrant as specified in its charter)
Maryland 52-1380770
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification no.)
19 South Second Street, Oakland, Maryland 21550-0009
(address of principal executive offices) (zip code)
(301) 334-4715
Registrant's telephone number, including area code
Not applicable
Former name, address and former fiscal year, if changed since
last report.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter periods that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
X Yes No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
Common stock, $.01 Par value--6,174,811 shares outstanding as of
September 30, 1998 Preferred stock, No par value--No shares
outstanding as of September 30, 1998.
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INDEX
FIRST UNITED CORPORATION
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 1998
(Unaudited), December 31, 1997, and September 30, 1997(Unaudited).
Consolidated Statements of Income (Unaudited) - Nine months
ended September 30, 1998 and 1997 and three months ended September 30, 1998 and
1997.
Consolidated Statement of Cash Flows (Unaudited) - Nine
months ended Septemner 30, 1998 and 1997.
Notes to Unaudited Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES
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FIRST UNITED CORPORATION
Consolidated Balance Sheet
(in thousands)
September 30, Dec. 31, September 30,
Assets 1998 1997 1997
(unaudited) (*) (unaudited)
-----------------------------
Cash and due from banks $15,024 $17,586 $15,269
Investment securities:
Available-for-sale:
U.S. Treasury Securities 1,925 10,225 16,507
Obl. of other U S Gov. Agen. 44,561 31,468 34,574
Obl. of St. and Loc. Govt 23,006 6,360 6,361
Other investments 30,942 17,000 21,767
-------------------------
Total available-for-sale 100,434 65,053 79,209
Held-to-maturity:
Obl. of St. and Loc. Govt - 9,203 9,313
Other investments - 20,339 12,389
---------------------------
Total held-to-maturity - 29,542 21,702
---------------------------
Total investment securities 100,434 94,595 100,911
Federal funds sold - - 3,300
Loans 483,764 441,392 429,973
Reserve for poss. credit losses (3,021) (2,654) (2,529)
---------------------------
Net loans 480,743 438,738 427,444
Bank premises and equipment 9,526 9,250 9,182
Acc. int. Rec. and other assets 11,300 8,861 8,932
----------------------------
Total Assets $617,027 $569,030 $565,038
============================
* The balance sheet at December 31, 1997 has been derived from
the audited financial statements at that date.
See notes to unaudited consolidated financial statements.
() Indicates Deduction
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FIRST UNITED CORPORATION
Consolidated Balance Sheet
September 30, Dec. 31, September 30,
1998 1997 1997
(unaudited) (*) (unaudited)
Liabilities ------------------------------
Deposits
Non-int. bearing deposits $ 55,592 $ 51,309 $ 52,248
Interest bearing deposits 452,111 448,751 445,634
---------------------------
Total deposits 507,703 500,060 497,882
Reserve for taxes, int., &
other liabilities 5,074 6,225 5,033
Fed funds purchased & other
borrowed money 45,250 5,094 5,000
Dividends payable 1,947 937 885
----------------------------
Total Liabilities 559,974 512,316 508,800
Shareholders' Equity
Preferred stock -no par value
Authorized and unissued; 2,000 Shares
Capital Stock -par value $.01 per share:
Authorized 25,000 shares; issued and
outstanding 6,175 shares at September 30,
1998, 6,260 outstanding at December
31, 1997, and 6,288 outstanding at
September 30, 1997 62 63 63
Surplus 21,780 23,461 23,977
Retained earnings 34,452 32,913 31,898
Unrealized gain on
available-for-sale securities
net of taxes 759 277 300
---------------------------
Total Shareholders' Equity 57,053 56,714 56,238
----------------------------
Total Liabilities and
Shareholders' Equity $617,027 $569,030 $565,038
============================
* The balance sheet at December 31, 1997 has been derived from
the audited financial statements at that date.
See Notes to unaudited consolidated financial statements.
() Indicates Deduction
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FIRST UNITED CORPORATION
Consolidated Statement Of Income
(in thousands, except per share data) Nine Months
Ended September 30,
1998 1997
-------------------
(unaudited)
Interest income
Interest and fees on loans $ 30,446 $ 27,333
Interest on investment securities:
Taxable 3,715 4,060
Exempt from federal income tax 580 523
--------------------
4,295 4,583
Interest on federal funds sold 117 93
--------------------
Total interest income 34,858 32,009
Interest expense
Interest on deposits:
Savings 630 870
Interest-bearing transaction acct. 2,516 2,118
Time, $100,000 or more 2,536 1,818
Other time 9,360 8,814
Interest on fed funds purchased
& other borrowed money 1,112 212
--------------------
Total interest expense 16,154 13,832
--------------------
Net interest income 18,704 18,177
Provision for possible credit losses 816 623
--------------------
Net interest income after provision
for possible credit losses 17,888 17,554
Other operating income
Trust department income 1,050 1,035
Service charges on deposit accts. 1,872 1,635
Insurance premium income 189 226
Security gains 85 -
Other income 1,521 1,638
--------------------
Total other operating income 4,717 4,534
Other operating expenses
Salaries and employees benefits 7,092 7,551
Occupancy expense of premises 798 732
Equipment expense 1,264 1,248
Data processing expense 450 429
Deposit assess. and related fees 118 124
Other expense 4,730 4,973
--------------------
Total other operating expenses 14,452 15,057
--------------------
Income before income taxes 8,153 7,031
Applicable income taxes (2,842) (2,309)
--------------------
Net income $5,311 $4,722
====================
Earnings per share $0.85 $0.74
====================
See Notes to unaudited consolidated financial statements.
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FIRST UNITED CORPORATION
Consolidated Statement of Income
(in thousands, except per share data) Three Months
Ended September 30,
1998 1997
-------------------
(unaudited)
Interest income
Interest and fees on loans $ 10,501 $ 9,497
Interest on investment securities:
Taxable 1,255 1,327
Exempt from federal income tax 221 161
-------------------
1,476 1,488
Interest on federal funds sold 25 40
-------------------
Total interest income 12,002 11,025
Interest expense
Interest on deposits:
Savings 168 284
Interest-bearing transaction acct. 859 773
Time, $100,000 or more 856 699
Other time 3,168 3,044
Interest on fed funds purchased
& other borrowed money 604 87
-------------------
Total interest expense 5,655 4,887
-------------------
Net interest income 6,347 6,138
Provision for possible credit losses 341 376
-------------------
Net interest income after provision
for possible credit losses 6,006 5,762
Other operating income
Trust department income 350 345
Service charges on deposit accts. 628 731
Insurance premium income 63 80
Security gains 82 -
Other income 525 421
------------------
Total other operating income 1,648 1,577
Other operating expenses
Salaries and employees benefits 2,373 2,226
Occupancy expense of premises 276 240
Equipment expense 437 418
Data processing expense 178 134
Deposit assess. and related fees 34 34
Other expense 1,457 1,800
---------------------
Total other operating expenses 4,755 4,861
---------------------
Income before income taxes 2,899 2,487
Applicable income taxes (1,012) (838)
---------------------
Net income $1,887 $1,649
=====================
Earnings per share $0.30 $0.26
=====================
See Notes to unaudited consolidated financial statements.
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FIRST UNITED CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months
Ended September 30,
1998 1997
--------------------
(unaudited)
Operating activities
Net Income $ 5,311 $ 4,722
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for possible credit losses 816 623
Provision for depreciation 1,147 1,067
Net accretion & amortization of investment
security discounts & premiums 156 (142)
Realized gains on sale
of investment securities (85) -
Increase in acc. Interest receivable
& other assets (2,439) (1,511)
Increase (decrease)in reserve for taxes,
accrued interest, & other liabilities 990 (349)
--------------------
Net cash provided by operating activities 5,896 4,410
Investing activities
Proceeds from maturities of available-for-
sale securities 60,233 50,429
Purchases of available-for-sale securities (62,570) (42,020)
Proceeds form maturities of held-to-maturity
securities 5,530 4,808
Purchases of held-to-maturity securities (8,625) (3,866)
Net increase in loans (42,823) (47,473)
Purchases of premises & equipment (1,423) (918)
-------------------
Net cash used in investing activities ($49,678) ($39,040)
Financing activities
Increase (decrease) in Fed funds purchased
and Other borrowed money $ 39,025 ($3,000)
Net (decrease) increase in demand deposits,
NOW accounts and savings accounts (4,175) 7,540
Net increase in
certificates of deposits 11,818 37,802
Cash dividends paid or declared (3,767) (2,666)
Proceeds from issuance of capital stock - (18)
Acquisition and retirement of Common Stock (1,681) (2,666)
Net cash provided by -------------------
financing activities 41,220 36,992
Cash and cash equivalents at beg. of year 17,586 16,207
(Decrease) increase in cash & cash equiv. (2,562) 2,362
--------------------
Cash & cash equivalents at end of period $ 15,024 $ 18,569
====================
See Notes to unaudited consolidated financial statements.
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FIRST UNITED CORPORATION
Note to Unaudited Consolidated Financial Statements
September 30, 1998
Note A -- Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q. Accordingly, they
do not include all the information and footnotes required for complete financial
statements. In the opinion of management, all adjustments considered necessary
for a fair presentation, consisting of normal recurring items have been
included. Operating results for the nine month period ended September 30, 1998,
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1998. The enclosed consolidated financial statements should
be read in conjunction with the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year ended
December 31, 1997.
Earnings per share are based on the weighted average number of shares
outstanding of 6,222 and 6,367 for the nine months ended September 30, 1998 and
1997, respectively.
Note B - Comprehensive Income
As of January 1, 1998 the Company adopted FASB Statement 130, Reporting
Comprehensive Income. Statement 130 establishes new rules for reporting and
display of comprehensive income and its components; however, the adoption of
this statement had no impact on the Company's net income or shareholders'
equity. Accumulated other comprehensive income represents the unrealized gains
and losses on the company's available-for-sale securities, net of income taxes.
During the first nine months of 1998 and 1997, total comprehensive income, net
income plus the change in unrealized gains on available-for-sale securities,
amounted to $5,792 and $4,809, net of income taxes, respectively.
Note C - New Accounting Pronouncements
In February 1998, Statement of Financial Accounting Standards No. 132,
"Employers' Disclosures about Pensions and Other Postretirement Benefits"
(Statement No. 132), was issued. This statement, effective for financial
statements issued for fiscal years beginning after December 15, 1997, revises
employers' disclosures about pension and other postretirement benefit plans. It
does not change the measurement or recognition of those plans. The adoption of
Statement No. 132 will not have an impact on the Corporation's consolidated
financial statements.
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In June 1998, Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (Statement No.
133), was issued. Statement 133 establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts, and hedging activities. This statement is effective for
financial statements issued for all quarters of all fiscal years beginning after
June 15, 1999. With the exception of the reclassification listed below, the
adoption of Statement No. 133 will not have a material impact on the
Corporation's consolidated financial statements as the Company does not enter
into derivative contracts. The Corporation adopted this Statement on July 1,
1998. In connection with the adoption of this statement, $25,265,806 of the
investment securities previously classified as held-to-maturity were
reclassified to available-for-sale. This change had a one-time increase to
comprehensive income in the amount of $250,378.
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Part I. Financial Information
Item II. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Consolidated net income for the quarter ended September 30, 1998 totaled
$1.886 million, which is $.237 million more than was recorded for the third
quarter of 1997. This translates into $.30 per share for the current period.
For the same quarter of 1997, each share earned $.26. Consolidated net income
for the nine month period ended September 30, 1998 totaled $5.311 million, which
is $.589 million more than was recorded for the same period of 1997. This
translates into $.85 per share for the year. For the same period of 1997, each
share earned $.74. Return on Average Equity (ROAE) increased from 11.70
percent, at December 31, 1997, to 12.38 percent as of September 30, 1998.
The "efficiency ratio" is a key measuring tool for profitability and
operating efficiency. The calculation for the efficiency ratio is noninterest
expense divided by net operating revenue,(net interest income plus other
operating income) excluding nonrecurring items and securities gains and losses.
A lower ratio equals higher profitability and operating efficiencies. The
Corporation's efficiency ratio was 60.46% for the nine month period ended
September 30, 1998. This represents an improvement from year-end 1997 when the
ratio was 62.98%.
Fee income from our Business Manager, PrimeVest, and Trust Services has
increased 10.66% or $.144 million compared to the same period in 1997. Salaries
and employee benefits for the first nine months of 1998 decreased from $ 7.551
million in 1997 to $ 7.092 million in 1998. Other operating income and other
operating expense for the first nine months of 1998 were $4.72 million and
$14.45 million compared to $4.53 million and $15.06 million for the same time
period in 1997. This represents an increase of 4.19% in other operating income
and a decrease of 4.05% in other operating expense.
The growth exhibited by the loan portfolio in the third quarter continued to
be strong. In the third quarter, net loans grew $16.786 million to a total of
$480.743 million. The growth for the same quarter of 1997 was $14.769 million,
bringing the total to $427.444 million. Year to date 1998, net loans have grown
$42.005 million or 9.57%.
As a result of our loan growth, interest income at September 30, 1998 was
$34.858 million compared to $32.009 at September 30, 1997. This total
represents an increase of $2.849 million or 8.90%.
The corporation's interest expense year to date as of September 30, 1998
was $2.322 higher than was recorded for the same period in 1997. Interest
expense increased $.768 million from the same quarter last year. The increase
in expense can be attributed to deposit growth of $9.821 million from September
30, 1997 to September 30, 1998. Deposits, fueled by growth of $14.520 million in
the third quarter, have increased to $507.703 million as of September 30, 1998.
This represents an increase of $7.643 million year to date or 1.53%. Although
deposit growth has lagged behind loan growth, the Corporation was able to meet
its liquidity needs through borrowings from the Federal Home Loan Bank of
Atlanta and various correspondet Banks. As always, it is of utmost importance
that we constantly evaluate the funding sources available to
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the Corporation to choose the one that not only provides the greatest cost
benefit but also allows us the flexibility to be competitive in today's market
place.
Net interest income for the first nine months of 1998 increased 2.90% from
the same period in 1997, to a total of $18.704 million. The result was a
Corporate net interest margin of 4.59 percent in comparison to the net interest
margin of 4.83 percent at the end of year 1997. The decline can be attributed to
the intense competition for traditional deposits, which have forced the
Corporation to use other nontraditional, more expensive sources of funds.
Although the margin is within the expectations of the Corporation, varying
market conditions constantly cause us to reevaluate our acceptable margin on
loans and deposits. Return on Average Assets (ROAA) has increased 2.56% to 1.20
percent at September 30, 1998 compared to 1.17 percent at September 30, 1997.
This is a direct result of our increased earnings for 1998.
Year 2000 Disclosure
Company State of Readiness:
The Corporation began its Year 2000 project over a year ago to prepare the
Bank and its systems for the century date change. This situation arose when
computer systems and programs were originally designed eliminating the first two
digits of the century, thereby saving valuable and costly disk and memory space.
However, as we near the 21st century, the two-digits of '00' in the year could
be misinterpreted as '1900' instead of '2000'.
Following the Federal Financial Institution Examination Council guidelines,
the Corporation's Year 2000 project plan contains these phases: Awareness,
Assessment, Renovation, Validation, and Implementation. A more definitive
description of these phases is detailed below:
Awareness Phase - The definition of the problem as well as its scope is conveyed
to Management, the Board of Directors and all staff members to facilitate the
appropriate resources and cooperation to complete the project. A Year 2000 Task
Force was established with a senior member of management charged with overall
project management. An overall strategy was established which included vendor
management (including service bureaus, vendors, and service providers) and
customer issues. This phase has been completed.
Assessment Phase - This phase was designed to assess the size and complexity of
the issue within Corporation's operating and facility environment. During this
phase, the Corporation conducted an inventory of all Information Technology
issues including hardware, software, third party service providers, vendors, and
those who the Corporation shares information with. Additionally, the
Corporation inventoried all non-Information Technology items such as facility
systems, heating, air conditioning and ventilation systems, security systems,
elevators, and utility companies. These vendors were then contacted for Year
2000 compliance status, rated as to the mission-critical status to the continued
operation of the Corporation's functions, and rated as to their project plan for
Year 2000 compliance.
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To assure compliance going forward, policies were established requiring all
new systems and/or relationships to be evaluated for Year 2000 compliance prior
to implementation. A budget was established for 1998 with the remainder of the
project budget allocated for 1999. The final phase of this project included the
definition of contingency plans. This phase has been completed.
Renovation Phase - This phase is the redesign of code, upgrade of hardware
and/or software, vendor certification, and any additional associated changes.
The Corporation utilizes a service bureau for its core processing (processing
and maintenance of all customer accounts), the renovation phase is mostly one of
vendor monitoring for compliance. Several internal programs were identified as
requiring upgrades and those have been scheduled to be completed through the
first quarter of 1999. As we utilize a personal computer platform, an intensive
review of our computers confirmed the need to accelerate our computer
replacement and upgrade schedule. This phase will be completed by March 1999.
Validation Phase - Testing is the most time consuming and costly of the phases
established. Not only do all systems need to be tested as the function in and
of themselves, but all connections to outside sources and vendors must be tested
as well. Understanding the consequences of testing in a production environment,
the Corporation took the precaution of establishing a test lab, which closely
mirrors our operating environment. Experts were also hired to facilitate our
test scripts and monitor our process. The validation of our service bureau
for compliance is being completed via proxy testing. The Corporation's staff
has the responsibility of reviewing all test scripts, providing feedback, and
monitoring results. This process will be completed by March 1999 with
continuing validation through December 31, 1999.
Implementation Phase - Validated systems will be implemented per our normal
software and hardware implementation procedures. This requires all systems to
be fully backed up prior to loading the validated software onto Year 2000
compliant computer systems. Any modifications to certified systems must be
tested in the test lab prior to implementation in the production environment.
This phase will be completed prior to March 1999 and continue through 2000 for
any modified or new system.
Third Party Issues
As with any business, the Corporation is dependent on third parties for
many of our mission-critical functions. Currently the Corporation has
interfaces with many other entities including, but not limited to, Federal
Reserve Banks, Credit Bureaus, Governmental Agencies, and our service providers.
Additionally, there is a reliance on utility companies for our electric,
heating, and telecommunications. As part of our assessment, we have reviewed
the Year 2000 plans of our third party relationships and have determined that
all are or will by compliant per their disclosures to us prior to December 31,
1999. Their progress is closely monitored and a series of definitive
contingency plans have been created to offset any malfunction not expected after
the century change.
The Costs to Address the Corporation's Year 2000 Issues
Costs involved in the Year 200 issue include; modifying software, hiring
Year 2000 solution providers, testing and validating of all systems, and
assuring customer awareness. The 1998 budget for such costs is $100,000 of which
$80,224 has been expensed as of September 30,1998.
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The Risks of the Corporation's Year 2000 Issues
An uncertainty exists as to the Corrporation's risks surrounding the Year
2000 issues. As of September 30, 1998, there are no known events, trends, or
uncertainties likely to have a material impact on the Corporation's results of
operations, liquidity and financial condition. Ongoing testing outlined in the
Corporation's State of Readiness section will remedy this uncertainty.
Customer Risk Issues
As required by our government regulating entity, the Corporatiion is
required to review our customers and market partners for any Year 2000
consequences. This includes a review of our loan and deposit customer risk and
those we conduct business with in the investment arena. This review is being
completed at this time with scheduled updates during 1999.
Contingency Planning
As with any regulated financial entity, a Disaster Recovery plan (also know
as Business Resumption or Contingency Plans) is required to be maintained. This
plan details specific guidelines on maintaining our business functions during
and after various emergency situations. Year 2000 Contingency Planning is more
detailed and has two levels of review. First, we completed Remediation
Contingency Planning, which set trigger dates for all of our mission critical
systems that are not compliant. Should a system or vendor fail to provide Year
2000 certification or miss significant remediation dates by the trigger date,
alternative methods and vendors would be implemented.
The second phase of Year 2000 Contingency Planning is to solidify and
expand our existing Business Recovery plans to include a myriad of what if
scenarios after the century date change. Meetings were held to review all
mission critical systems and alternative methods described to handle any
disruption or miscalculation after the Year 2000 has arrived. Plans are in
place to review our Business Recovery plans again during 1999 and to simulate
instances where these plans would be implemented.
Information Technology Development
The Corporation recognizes the need to continue Information Technology
development in addition to the Year 2000 project plan. The Corporation will
continue research and develop on other technology initiatives as it pertains to
the overall strategic planning process.
Independent Verification
In order to assure appropriate progress toward achieving Year 2000
compliance and to assure the Year 2000 plan is comprehensive, the services of
an independent third party has been hired to conduct a second review of our Year
2000 efforts. This is being completed during the end of September 1998 with the
results provided in October 1998.
The provision for possible credit losses was $0.816 million for the first
nine months of 1998 compared to $.623 million for the same period in 1997. Net
charge-offs for the first nine months of 1998 were $0.447 million, which equates
to 0.09 percent of our net loan total of $480.743 million. For the same period
of 1997, net charge-offs were $.281 million or 0.07% of the September 30, 1997
net loan total of $427.444 million. The increase in the provision for
-13-
possible credit losses was made to maintain an adequate reserve in light of the
strong loan growth experienced year to date. First United Corporation continues
to place emphasize on maintaining a quality loan portfolio, achieved through
stringent underwriting standards and a consistent loan review process.
Summary of Loan Loss Experience
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
September 30, 1998
----------------
Balance at the Beginning of the period $2,654
Charge-offs:
Domestic:
Commercial, financial and agricultural 143
Real estate - mortgage 191
Installment loans to individuals 231
----------------
565
----------------
Recoveries:
Domestics:
Commercial, financial and agricultural 34
Real estate - mortgage 2
Installment loans to individuals 80
---------------
116
---------------
Net Charge-offs 449
---------------
Additions charged to operations 816
---------------
Balance at end of period $3,021
===============
Ratio of net charge-offs during the period to average
Loans outstanding during the period .09%
===============
Risk Elements of Loan Portfolio
The following table provides a comparison of the Risk Elements of the Loan
Portfolio in the format prescribed by Item III-C of Industry Guide 3. The Bank
has no foreign loans or loans defined as troubled debt restructurings. Further,
the Bank has no potential problem loans other than those in the table below.
First United's non-accrual loans increased $.093 million in the first nine
months of 1998 from the year end total of $.562 million.
September 30 Dec. 31
1998 1997
-----------------------
Non-accrual loans $655 $562
Accruing loans past due 90 days or more 428 563
Information with respect to non-accrual loans at September 30, 1998 is as
follows:
-14-
Non-accrual Loans $655 $562
Interest income that would have been recorded
under original terms 29 40
Interest income recorded during the period 14 20
A strength of First United has always been its capital position.
Shareholders' equity is $57.053 million, a 1.14 percent increase from the third
quarter of 1997, which was $56.238 million. Risk based capital, which is an
expression of the Corporation's stability and security was 13.10 percent, which
is excess of the regulatory minimum of 8.00 percent.
On July 31, 1996, the Board of Directors ratified a stock buy back program.
The Corporation's management has authority to repurchase up to 5% of the
outstanding shares of First United Corporation at a price management deems
appropriate. On April 29, 1998 the Board of Directors ratified an amendment to
the Plan which would enable the Corporation's management to repurchase an
additional 5% or 309,048 shares. As of September 30, 1998, the Corporation has
repurchased 330,220 shares at a price of $5.831 million. This represents 5.08%
of the approved 10%.
The Corporation paid cash dividends of $.15 on February 1, 1998, May 1, 1998
and August 1, 1998. On September 16, 1998, the Corporation declared another
dividend of equal amount, to be paid November 1, 1998, to shareholders of record
at October 20, 1998.
Forward-Looking Statements
The Corporation has made certain "forward-looking" statements with respect
to this report. Such statements should not be construed as guarantees of future
performance. Actual results may differ from "forward-looking" information as a
result of any number of unforeseeable factors, which include, but are not
limited to, the effect of prevailing economic conditions, the overall direction
of government policies, unforeseeable changes in the general interest rate
environment, competitive factors in the marketplace, and business risk
associated with credit extensions and trust activities. These and other factors
could lead to actual results which differ materially from management's
statements regarding future performance.
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Part II. OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
None.
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST UNITED CORPORATION
Date 10/27/98 /s/ William B. Grant
---------- --------------------------------------------
William B. Grant, Chairman of the Board
and Chief Executive Officer
Date 10/27/98 /s/ Robert W. Kurtz
---------- --------------------------------------------
Robert W. Kurtz, President and Chief
Financial Officer
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST UNITED CORPORATION
Date 10/27/98
---------- --------------------------------------------
William B. Grant, Chairman of the Board
and Chief Executive Officer
Date 10/27/98
---------- --------------------------------------------
Robert W. Kurtz, President and Chief
Financial Officer
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<PAGE>
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<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> YEAR
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