Message To the Shareholders
                       Of First United Corporation:

Dear Fellow Shareholder:
      We are back.
      When I wrote to you last year, I reported on several changes we had made to better position your company for long-term success. These changes had a significant impact on our 2004 earnings. I am delighted that I can now share with you much better results for 2005. Our net income per share jumped to $1.99 from $1.25 a year earlier, a 59% gain. This put us back on track to resume the consistent expansion in earnings that you have come to expect from First United. During our watch over the last nine years, earnings per share have, on average, expanded by 7% per year.
      In 2005 we also experienced strong growth on the balance sheet. Assets grew 6% to $1.31 billion from $1.23 billion in 2004. The growth was well balanced between the loan portfolio and the securities portfolio. Deposits surged by 12%, rising to $955.9 from $850.7 million. Over the last nine years, loan growth has averaged 12% annually, while deposit growth has averaged 9% per year.
      The growth in the balance sheet can be partly attributed to the mix of markets in which First United competes. While we have a very strong market

presence in several slower-growth markets, we have been steadily expanding our reach into some of the most dynamic markets in the Mid-Atlantic region. Our presence in the Hagerstown and Frederick areas of Maryland and in the Martinsburg area of West Virginia allows us to take advantage of these markets' explosive economic growth, which is being driven by population expansion, robust job growth and the convergence of major interstate routes. To the west, First United is becoming a player in the exciting Morgantown, West Virginia market. West Virginia University, one of the most progressive schools in the country, is located there and provides a catalyst for strong growth and expansion. The university's recent athletic prowess is a nice added benefit on top of the significant opportunities we have found in serving customers in this wonderful city.
      We intend to continue our expansion efforts in these growth markets. To that end, we will be building our second office in both Morgantown and Hagerstown this year. The addition of these offices will be another step towards building the critical mass we need to compete effectively in these markets. The construction and staffing of new community offices, together with their ongoing support, is an expensive proposition. While such