For the nine months ended September 30, 2004, the Corporation's returns on average assets and average shareholders' equity were .67% and 9.05%, respectively, compared to 1.04% and 13.06%, respectively, for the same period in 2003.

Loans and leases were $898.6 million at September 30, 2004, compared to $778.6 million at September 30, 2003, an increase of 15.4%. This increase is attributable primarily to growth in commercial and residential mortgage loans. Existing commercial relationships in core markets are responsible for much of the commercial loan growth during the period. Deposits were $829.0 million at September 30, 2004, compared to $775.8 million at September 30, 2003, an increase of 6.9%. The increase in deposits is primarily attributable to an increase in brokered certificates of deposit, of $100,000 or more, which were purchased in order to fund the rapid loan growth during the period. Total assets were $1.2 billion at September 30, 2004, a 9.1% increase from $1.1 billion at September 30, 2003.

Comparing September 30, 2004 to September 30, 2003, shareholders' equity increased 4.0%, from $82.8 million at September 30, 2003 to $86.1 million at September 30, 2004. As a result, book value per share increased from $13.68 to $14.15. At September 30, 2004, there were 6,087,287 issued and outstanding shares of the Corporation's common stock.

On September 30, 2004, the Corporation redeemed all of its 9.375% Junior Subordinated Deferrable Interest Debentures that it issued to First United Capital Trust in 1999. The aggregate redemption price paid by the Corporation was approximately $23.7 million. First United Capital Trust was dissolved on October 12, 2004.

Net-Interest Income

Net interest income, on a fully tax-equivalent basis, increased $.1 million in the third quarter of 2004 when compared to the third quarter of 2003. The increase resulted from a $.5 million increase in interest income during the period, coupled with a $.4 million increase in interest expense. Net interest income, on a fully tax-equivalent basis, for the first nine months of 2004 increased 6.2% to $27.5 million, compared to $25.9 million for the first nine months of 2003. Net interest margin, on a fully tax-equivalent basis, was 3.43% for the nine months ended September 30, 2004, decreasing 18 basis points when compared to 3.61% for the nine months ended September 30, 2003. The margin compression continues to be a reflection of the historically-low interest rate environment.

Non-Interest Income

Comparing the third quarter of 2004 to the third quarter of 2003, non- interest income remained unchanged at $2.8 million. For the first nine months of 2004, non-interest income was $9.2 million, compared to $8.4 million for the same period of 2003, a 9.5% increase.

The increase in non-interest income for the nine-month period ended September 30, 2004 was primarily a result of an increase in service charges on deposit accounts, attributable to a renewed concentration on the Corporation's overdraft protection program, and increases in trust income. These items contributed a combined $.7 million increase in non-interest income for the nine months ended September 30, 2004.

Non-Interest Expense

Non-interest expense for the third quarter of 2004 was $9.1 million, compared to $8.0 million for the third quarter of 2003, a 13.8% increase. For the first nine months of 2004, non-interest expense was $25.7 million, compared to $21.9 million for the same period of 2003, a 17.4% increase.

These increases in non-interest expense for the three- and nine-month periods ended September 30, 2004, were the result of various factors, including the Corporation's continued growth and expansion efforts, which have added personnel and corresponding increases in salaries and benefits. Professional fees incurred in connection with the Corporation's focus on compliance with the Sarbanes-Oxley Act of 2002, particularly its provisions addressing management's assessment of internal controls, also contributed to the increases in non-interest expense for the three- and nine- month periods ended September 30, 2004. In addition, approximately $.9 million write-off of issuance costs due to the redemption on September 30, 2004 of our junior subordinated debentures issued to First United Capital Trust were realized.

Asset Quality

Management believes that the Corporation's asset quality is sound. The ratio of nonperforming and past-due loans to total loans at September 30, 2004 was .79%, compared to .33% at September 30, 2003. The ratio of nonperforming and past-due loans to total assets at September 30, 2004 was .59%, compared to .23% at September 30, 2003. These ratio increases resulted primarily from the addition of two agricultural loans to non-accrual status in the second quarter of 2004. Management believes that the risk of loss associated with these relationships has been appropriately considered in determining the Corporation's adequacy of the allowance for loan losses. The ratio of the allowance for loan losses to gross loans at September 30, 2004 was .73%, compared to .80% at September 30, 2003. For the quarter ended September 30, 2004, the provision for loan losses was $.85 million, compared to $.36 million for the quarter ended September 30, 2003.

ABOUT FIRST UNITED CORPORATION

First United Corporation offers full-service banking products and services through its trust company subsidiary, First United Bank & Trust, and consumer finance products through its consumer finance subsidiaries, OakFirst Loan Center, Inc. and OakFirst Loan Center, LLC. The Corporation also offers a full range of insurance products and services to customers in its market areas through Gonder Insurance Agency, Inc. These entities operate a network of offices throughout Garrett, Allegany, Washington, and Frederick Counties in Maryland, as well as Mineral, Hardy, and Berkeley Counties in West Virginia. The Corporation's website is www.mybankfirstunited.com .

This press release may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements present management's expectations, beliefs, plans and objectives regarding future financial performance, and assumptions or judgments concerning such performance. Any discussions contained in this press release, except to the extent that they contain historical facts, are forward-looking and accordingly involve estimates, assumptions, judgments and uncertainties. There are a number of factors that could cause actual results or outcomes to differ materially from those addressed in the forward-looking statements. Such factors are detailed in the "Risk Factors" filed as Exhibit 99.1 to the Annual Report of First United Corporation on Form 10-K for the year ended December 31, 2003. Except as required by applicable laws, we do not intend to publish updates or revisions of any forward-looking statements it makes to reflect new information, future events or otherwise.