x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the fiscal year ended December
31, 2006
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the transition period from _____________ to
_____________
|
Maryland
|
52-1380770
|
|
(State
or other jurisdiction of incorporation or
organization)
|
(I.R.S.
Employer Identification Number)
|
|
19
South Second Street, Oakland, Maryland
|
21550-0009
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Title
of Each Class:
|
Name
of Each Exchange on Which Registered:
|
|
Common
Stock, par value $.01 per share
|
Nasdaq
Stock Market
|
ITEM
1.
|
Business
|
3
|
ITEM
1A.
|
Risk
Factors
|
10
|
ITEM
1B.
|
Unresolved
Staff Comments
|
14
|
ITEM
2.
|
Properties
|
14
|
ITEM
3.
|
Legal
Proceedings
|
15
|
ITEM
4.
|
Submission
of Matters to a Vote of Security Holders
|
15
|
PART
II
|
||
ITEM
5.
|
Market
for the Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
16
|
ITEM
6.
|
Selected
Financial Data
|
17
|
ITEM
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
18
|
ITEM
7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
38
|
ITEM
8.
|
Financial
Statements and Supplementary Data
|
39
|
ITEM
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
67
|
ITEM
9A.
|
Controls
and Procedures
|
67
|
ITEM
9B.
|
Other
Information
|
70
|
PART
III
|
||
ITEM
10.
|
Directors,
Executive Officers and Corporate Governance
|
70
|
ITEM
11.
|
Executive
Compensation
|
70
|
ITEM
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
70
|
ITEM
13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
70
|
ITEM
14.
|
Principal
Accountant Fees and Services
|
70
|
PART
IV
|
||
ITEM
15.
|
Exhibits
and Financial Statement Schedules
|
70
|
SIGNATURES
|
||
EXHIBITS
|
Offices
(in
Market)
|
Deposits
(in thousands)
|
Market
Share
|
||||||||
Allegany
County, Maryland:
|
||||||||||
Susquehanna
Bank
|
6
|
$
|
222,029
|
35.45
|
%
|
|||||
Manufacturers
& Traders Trust Company
|
7
|
192,726
|
30.77
|
%
|
||||||
First
United Bank & Trust
|
5
|
121,513
|
19.40
|
%
|
||||||
Farmers
& Mechanics Bank
|
3
|
59,648
|
9.52
|
%
|
||||||
Standard
Bank
|
2
|
30,459
|
4.86
|
%
|
Frederick
County, Maryland:
|
||||||||||
Farmers
& Mechanics Bank
|
19
|
1,114,657
|
35.61
|
%
|
||||||
Branch
Banking & Trust Co.
|
12
|
601,109
|
19.20
|
%
|
||||||
Bank
of America NA
|
6
|
272,390
|
8.70
|
%
|
||||||
Frederick
County Bank
|
2
|
208,974
|
6.68
|
%
|
||||||
Manufacturers
& Traders Trust Company
|
6
|
201,845
|
6.45
|
%
|
||||||
Woodsboro
Bank
|
7
|
147,839
|
4.72
|
%
|
||||||
Chevy
Chase Bank FSB
|
5
|
133,307
|
4.26
|
%
|
||||||
SunTrust
Bank
|
3
|
130,576
|
4.17
|
%
|
||||||
Middletown
Valley Bank
|
4
|
115,093
|
3.68
|
%
|
||||||
First
United Bank & Trust
|
3
|
92,477
|
2.95
|
%
|
||||||
Sandy
Spring Bank
|
4
|
54,046
|
1.73
|
%
|
||||||
Provident
Bank of Maryland
|
2
|
32,394
|
1.03
|
%
|
||||||
Damascus
Community Bank
|
2
|
15,584
|
0.50
|
%
|
||||||
Sovereign
Bank
|
2
|
8,476
|
0.27
|
%
|
||||||
Columbia
Bank
|
1
|
1,577
|
0.05
|
%
|
Garrett
County, Maryland:
|
||||||||||
First
United Bank & Trust
|
5
|
454,671
|
69.90
|
%
|
||||||
Manufacturers
& Traders Trust Co.
|
5
|
112,330
|
17.27
|
%
|
||||||
Susquehanna
Bank
|
2
|
59,749
|
9.19
|
%
|
||||||
Clear
Mountain Bank
|
1
|
19,600
|
3.01
|
%
|
||||||
Miners
& Merchants Bank
|
1
|
4,069
|
0.63
|
%
|
Washington
County, Maryland:
|
||||||||||
Susquehanna
Bank
|
10
|
508,014
|
27.99
|
%
|
||||||
Hagerstown
Trust Co.
|
11
|
397,816
|
21.92
|
%
|
||||||
Manufacturers
& Traders Trust Company
|
12
|
397,183
|
21.89
|
%
|
||||||
Farmers
& Mechanics Bank
|
6
|
177,852
|
9.80
|
%
|
||||||
Sovereign
Bank
|
4
|
172,991
|
9.53
|
%
|
||||||
First
United Bank & Trust
|
2
|
56,927
|
3.14
|
%
|
||||||
First
National Bank of McConnellsburg
|
1
|
29,852
|
1.65
|
%
|
||||||
Chevy
Chase Bank FSB
|
1
|
26,652
|
1.47
|
%
|
||||||
Citizens
National Bank of Berkeley Springs
|
1
|
21,399
|
1.18
|
%
|
||||||
First
National Bank of Greencastle
|
2
|
16,700
|
0.92
|
%
|
||||||
Orrstown
Bank
|
1
|
9,292
|
0.51
|
%
|
Berkeley
County, West Virginia:
|
||||||||||
Branch
Banking & Trust Co.
|
5
|
325,183
|
32.85
|
%
|
||||||
Centra
Bank Inc.
|
3
|
166,957
|
16.87
|
%
|
||||||
First
United Bank & Trust
|
5
|
123,377
|
12.46
|
%
|
||||||
Susquehanna
Bank
|
4
|
112,714
|
11.39
|
%
|
||||||
City
National Bank of West Virginia
|
4
|
107,829
|
10.89
|
%
|
||||||
Jefferson
Security Bank
|
2
|
61,155
|
6.18
|
%
|
||||||
Citizens
National Bank of Berkeley Springs
|
3
|
55,615
|
5.62
|
%
|
||||||
Bank
of Charles Town
|
2
|
33,204
|
3.35
|
%
|
||||||
Shenandoah
Valley National Bank
|
1
|
3,780
|
0.38
|
%
|
Hardy
County, West Virginia:
|
||||||||||
Summit
Community Bank, Inc.
|
2
|
212,963
|
60.44
|
%
|
||||||
Capon
Valley Bank
|
3
|
99,037
|
28.11
|
%
|
||||||
Pendleton
Community Bank, Inc.
|
1
|
18,317
|
5.20
|
%
|
||||||
First
United Bank & Trust
|
1
|
14,277
|
4.05
|
%
|
||||||
Grant
County Bank
|
1
|
7,776
|
2.21
|
%
|
Mineral
County, West Virginia:
|
||||||||||
Branch
Banking & Trust Co.
|
2
|
75,612
|
32.06
|
%
|
||||||
First
United Bank & Trust
|
2
|
74,392
|
31.54
|
%
|
||||||
Manufacturers
& Traders Trust Co.
|
2
|
56,523
|
23.96
|
%
|
||||||
Grant
County Bank
|
1
|
29,344
|
12.44
|
%
|
Monongalia
County, West Virginia:
|
||||||||||
Centra
Bank, Inc.
|
4
|
369,432
|
25.92
|
%
|
||||||
Huntington
National Bank
|
6
|
361,466
|
25.36
|
%
|
||||||
Branch
Banking & Trust Co.
|
5
|
321,455
|
22.55
|
%
|
||||||
United
Bank
|
4
|
169,220
|
11.87
|
%
|
||||||
Wesbanco
Bank, Inc.
|
5
|
94,026
|
6.60
|
%
|
||||||
Clear
Mountain Bank
|
4
|
58,690
|
4.12
|
%
|
||||||
Citizens
Bank of Morgantown, Inc.
|
1
|
21,747
|
1.53
|
%
|
||||||
First
Exchange Bank
|
2
|
15,429
|
1.08
|
%
|
||||||
First
United Bank & Trust
|
2
|
13,824
|
0.97
|
%
|
ITEM
1A.
|
RISK
FACTORS
|
ITEM
1B.
|
UNRESOLVED
STAFF COMMENTS
|
ITEM
2.
|
PROPERTIES
|
ITEM
3.
|
LEGAL
PROCEEDINGS
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|
MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
|
2006
|
High
|
Low
|
Dividends
Declared
|
|||||||
1st
Quarter
|
$
|
22.83
|
$
|
20.29
|
$
|
.190
|
||||
2nd
Quarter
|
23.35
|
20.29
|
.190
|
|||||||
3rd
Quarter
|
22.00
|
20.31
|
.190
|
|||||||
4th
Quarter
|
22.79
|
21.05
|
.195
|
2005
|
High
|
Low
|
Dividends
Declared
|
|||||||
1st
Quarter
|
$
|
21.70
|
$
|
19.81
|
$
|
.185
|
||||
2nd
Quarter
|
20.30
|
18.94
|
.185
|
|||||||
3rd
Quarter
|
20.85
|
19.25
|
.185
|
|||||||
4th
Quarter
|
21.66
|
19.14
|
.190
|
FERRIS
BAKER WATTS
|
SCOTT
AND STRINGFELLOW, INC.
|
|
12
North Liberty St.
|
909
East Main Street
|
|
Cumberland,
MD 21502
|
Richmond,
VA 23219
|
|
(301)724-7161
|
(804)643-1811
|
|
(800)776-0629
|
(800)552-7757
|
|
113
S. Potomac St.
|
||
Hagerstown,
MD 21740
|
||
(301)733-7111
|
||
(800)344-4413
|
|
Period
Ending
|
|||||
Index
|
12/31/01
|
12/31/02
|
12/31/03
|
12/31/04
|
12/31/05
|
12/31/06
|
First
United Corporation
|
100.00
|
106.92
|
164.12
|
143.24
|
153.25
|
163.71
|
NASDAQ
Composite
|
100.00
|
68.76
|
103.67
|
113.16
|
115.57
|
127.58
|
SNL
$1B-$5B Bank Index
|
100.00
|
115.44
|
156.98
|
193.74
|
190.43
|
220.36
|
ITEM
6.
|
SELECTED
FINANCIAL DATA
|
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||
Balance
Sheet Data
|
||||||||||||||||
Total
Assets
|
$
|
1,349,317
|
$
|
1,310,991
|
$
|
1,233,901
|
$
|
1,108,241
|
$
|
954,388
|
||||||
Net
Loans
|
957,126
|
954,545
|
904,635
|
786,051
|
659,758
|
|||||||||||
Investment
Securities
|
263,272
|
230,095
|
210,661
|
223,615
|
215,236
|
|||||||||||
Deposits
|
971,381
|
955,854
|
850,661
|
750,161
|
610,460
|
|||||||||||
Long-term
Borrowings
|
166,330
|
128,373
|
175,415
|
191,735
|
198,772
|
|||||||||||
Shareholders’
Equity
|
96,856
|
92,039
|
86,356
|
84,191
|
79,283
|
|||||||||||
Operating
Data
|
||||||||||||||||
Interest
Income
|
$
|
80,269
|
$
|
69,756
|
$
|
60,682
|
$
|
57,703
|
$
|
57,589
|
||||||
Interest
Expense
|
39,335
|
29,413
|
24,016
|
23,601
|
25,702
|
|||||||||||
Net
Interest Income
|
40,934
|
40,343
|
36,666
|
34,102
|
31,887
|
|||||||||||
Provision
for Loan Losses
|
1,165
|
1,078
|
2,534
|
833
|
1,506
|
|||||||||||
Other
Operating Income
|
14,041
|
14,088
|
12,971
|
11,867
|
9,007
|
|||||||||||
Other
Operating Expense
|
35,490
|
34,654
|
35,969
|
29,821
|
26,038
|
|||||||||||
Income
Before Tax
|
18,320
|
18,699
|
11,134
|
15,315
|
13,350
|
|||||||||||
Income
Tax
|
5,743
|
6,548
|
3,507
|
4,566
|
3,695
|
|||||||||||
Net
Income
|
$
|
12,577
|
$
|
12,151
|
$
|
7,627
|
$
|
10,749
|
$
|
9,655
|
||||||
Per
Share Data
|
||||||||||||||||
Net
Income
|
$
|
2.05
|
$
|
1.99
|
$
|
1.25
|
$
|
1.77
|
$
|
1.59
|
||||||
Dividends
Paid
|
.76
|
.74
|
.72
|
.70
|
.68
|
|||||||||||
Book
Value
|
15.77
|
15.04
|
14.17
|
13.83
|
13.04
|
|||||||||||
Significant
Ratios
|
||||||||||||||||
Return
on Average Assets
|
.96
|
%
|
.95
|
%
|
.65
|
%
|
1.03
|
%
|
1.13
|
%
|
||||||
Return
on Average Equity
|
13.07
|
%
|
13.61
|
%
|
8.91
|
%
|
13.10
|
%
|
12.75
|
%
|
||||||
Dividend
Payout Ratio
|
37.07
|
%
|
37.44
|
%
|
58.00
|
%
|
39.65
|
%
|
42.76
|
%
|
||||||
Average
Equity to Average Assets
|
7.35
|
%
|
7.00
|
%
|
7.28
|
%
|
7.88
|
%
|
8.84
|
%
|
||||||
Total
Risk-based Capital Ratio
|
12.95
|
%
|
12.66
|
%
|
12.24
|
%
|
11.77
|
%
|
14.31
|
%
|
||||||
Tier
I Capital to Risk Weighted Assets
|
11.81
|
%
|
11.45
|
%
|
10.81
|
%
|
11.04
|
%
|
13.76
|
%
|
||||||
Tier
I Capital to Average Assets
|
9.08
|
%
|
8.64
|
%
|
8.44
|
%
|
8.72
|
%
|
11.72
|
%
|
ITEM
7.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
2006
|
2005
|
2004
|
||||||||
Interest
income
|
$
|
81,838
|
$
|
70,533
|
$
|
61,380
|
||||
Interest
expense
|
39,335
|
29,413
|
24,016
|
|||||||
Net
interest income
|
42,503
|
41,120
|
37,364
|
|||||||
Net
interest margin %
|
3.52
|
%
|
3.49
|
%
|
3.43
|
%
|
%
of Total Interest Income
|
|||
2006
|
2005
|
2004
|
|
Interest
and fees on loans
|
85%
|
88%
|
88%
|
Interest
on investment securities
|
15%
|
12%
|
12%
|
For
the Years Ended December 31
|
||||||||||||||||||||||||||||
2006
|
2005
|
2004
|
||||||||||||||||||||||||||
AVERAGE
BALANCE
|
INTEREST
|
AVERAGE
YIELD/RATE
|
AVERAGE
BALANCE
|
INTEREST
|
AVERAGE
YIELD/RATE
|
AVERAGE
BALANCE
|
INTEREST
|
AVERAGE
YIELD/RATE
|
||||||||||||||||||||
Assets
|
||||||||||||||||||||||||||||
Loans
|
$
|
957,709
|
$
|
69,049
|
7.21
|
%
|
$
|
954,784
|
$
|
61,601
|
6.45
|
%
|
$
|
861,255
|
$
|
53,313
|
6.19
|
%
|
||||||||||
Investment
Securities:
|
||||||||||||||||||||||||||||
Taxable
|
171,720
|
7,699
|
4.48
|
179,018
|
6,231
|
3.48
|
191,135
|
5,819
|
3.04
|
|||||||||||||||||||
Non taxable
|
65,902
|
4,399
|
6.67
|
30,041
|
2,129
|
7.09
|
23,311
|
1,854
|
7.95
|
|||||||||||||||||||
Total
|
237,622
|
12,098
|
5.09
|
209,059
|
8,360
|
4.00
|
214,446
|
7,673
|
3.58
|
|||||||||||||||||||
Federal
funds sold
|
463
|
1
|
.21
|
1,876
|
55
|
2.93
|
2,043
|
35
|
1.71
|
|||||||||||||||||||
Interest-bearing
deposits with other banks
|
2,811
|
165
|
5.88
|
5,327
|
162
|
3.04
|
3,583
|
56
|
1.57
|
|||||||||||||||||||
Other
interest earning assets
|
9,231
|
525
|
5.68
|
8,680
|
355
|
4.09
|
8,439
|
303
|
3.59
|
|||||||||||||||||||
Total
earning assets
|
1,207,836
|
81,838
|
6.78
|
%
|
1,179,726
|
70,533
|
5.98
|
%
|
1,089,766
|
61,380
|
5.63
|
%
|
||||||||||||||||
Allowance
for loan losses
|
(6,245
|
)
|
(6,975
|
)
|
(6,150
|
)
|
||||||||||||||||||||||
Non-earning
assets
|
110,098
|
102,500
|
94,730
|
|||||||||||||||||||||||||
Total
Assets
|
$
|
1,311,689
|
$
|
1,275,251
|
$
|
1,178,346
|
||||||||||||||||||||||
Liabilities
and Shareholders’ Equity
|
||||||||||||||||||||||||||||
Interest-bearing
demand deposits
|
$
|
285,250
|
$
|
6,405
|
2.25
|
%
|
$
|
293,129
|
$
|
4,896
|
1.67
|
%
|
$
|
279,217
|
$
|
2,699
|
.97
|
%
|
||||||||||
Savings
deposits
|
47,779
|
462
|
.97
|
58,964
|
242
|
.41
|
63,471
|
237
|
.37
|
|||||||||||||||||||
Time
deposits:
|
||||||||||||||||||||||||||||
Less
than $100
|
229,829
|
8,439
|
3.67
|
264,503
|
6,023
|
2.28
|
209,708
|
4,950
|
2.36
|
|||||||||||||||||||
$100
or more
|
273,305
|
12,043
|
4.41
|
187,412
|
7,943
|
4.24
|
149,113
|
4,222
|
2.83
|
|||||||||||||||||||
Short-term
borrowings
|
107,430
|
4,429
|
4.12
|
100,601
|
2,749
|
2.73
|
82,747
|
1,153
|
1.39
|
|||||||||||||||||||
Long-term
borrowings
|
153,089
|
7,557
|
4.94
|
159,748
|
7,560
|
4.73
|
205,193
|
10,755
|
5.23
|
|||||||||||||||||||
Total
interest-bearing liabilities
|
1,096,682
|
39,335
|
3.59
|
%
|
1,064,357
|
29,413
|
2.76
|
%
|
989,449
|
24,016
|
2.43
|
%
|
||||||||||||||||
Non-interest-bearing
Deposits
|
107,595
|
112,860
|
94,871
|
|||||||||||||||||||||||||
Other
liabilities
|
11,189
|
8,734
|
8,266
|
|||||||||||||||||||||||||
Shareholders’
Equity
|
96,223
|
89,300
|
85,760
|
|||||||||||||||||||||||||
Total
Liabilities and Shareholders’ Equity
|
$
|
1,311,689
|
$
|
1,275,251
|
$
|
1,178,346
|
||||||||||||||||||||||
Net
interest income and Spread
|
$
|
42,503
|
3.19
|
%
|
$
|
41,120
|
3.22
|
%
|
$
|
37,364
|
3.20
|
%
|
||||||||||||||||
Net
interest margin
|
3.52
|
%
|
3.49
|
%
|
3.43
|
%
|
2006
Compared to 2005
|
2005
Compared to 2004
|
||||||||||||||||||
Volume
|
Rate
|
Net
|
Volume
|
Rate
|
Net
|
||||||||||||||
INTEREST
INCOME:
|
|||||||||||||||||||
Loans
|
$
|
211
|
$
|
7,237
|
$
|
7,448
|
$
|
6,034
|
$
|
2,253
|
$
|
8,287
|
|||||||
Taxable
Investments
|
(327
|
)
|
1,795
|
1,468
|
(422
|
)
|
833
|
411
|
|||||||||||
Non-taxable
Investments
|
2,394
|
(124
|
)
|
2,270
|
477
|
(202
|
)
|
275
|
|||||||||||
Federal
funds sold
|
(4
|
)
|
(50
|
)
|
(54
|
)
|
(5
|
)
|
25
|
20
|
|||||||||
Other
interest earning assets
|
(227
|
)
|
400
|
173
|
142
|
16
|
158
|
||||||||||||
Total
interest income
|
2,047
|
9,258
|
11,305
|
6,226
|
2,925
|
9,151
|
|||||||||||||
INTEREST
EXPENSE:
|
|||||||||||||||||||
Interest-bearing
demand deposits
|
(177
|
)
|
1,686
|
1,509
|
232
|
1,964
|
2,196
|
||||||||||||
Savings
deposits
|
(108
|
)
|
328
|
220
|
(18
|
)
|
23
|
5
|
|||||||||||
Time
deposits less than $100
|
(1,273
|
)
|
3,689
|
2,416
|
1,248
|
(175
|
)
|
1,073
|
|||||||||||
Time
deposits $100 or more
|
3,785
|
315
|
4,100
|
1,623
|
2,098
|
3,721
|
|||||||||||||
Short-term
borrowings
|
282
|
1,398
|
1,680
|
488
|
1,108
|
1,596
|
|||||||||||||
Long-term
borrowings
|
(329
|
)
|
326
|
(3
|
)
|
(2,151
|
)
|
(1,044
|
)
|
(3,195
|
)
|
||||||||
Total
interest expense
|
2,180
|
7,742
|
9,922
|
1,422
|
3,974
|
5,396
|
|||||||||||||
Net
interest income
|
$
|
(133
|
)
|
$
|
1,516
|
$
|
1,383
|
$
|
4,804
|
$
|
(1,049
|
)
|
$
|
3,755
|
(1)
|
The
change in interest income/expense due to both volume and rate has
been
allocated to volume and rate changes in proportion to the relationship
of
the absolute dollar amounts of the change in
each.
|
2006
VS. 2005
|
2005
VS. 2004
|
|||||||||||||||
2006
|
2005
|
2004
|
%
CHANGE
|
%
CHANGE
|
||||||||||||
Service
charges on deposit accounts
|
$
|
4,630
|
$
|
4,260
|
$
|
3,824
|
8.7
|
%
|
11.4
|
%
|
||||||
Other
service charge income
|
1,637
|
1,203
|
925
|
36.1
|
%
|
30.1
|
%
|
|||||||||
Trust
department income
|
3,671
|
3,260
|
3,153
|
12.6
|
%
|
3.4
|
%
|
|||||||||
Brokerage
commission
|
501
|
613
|
720
|
(18.3
|
%)
|
(14.9
|
%)
|
|||||||||
Insurance
commissions
|
1,573
|
1,599
|
1,448
|
(1.6
|
%)
|
10.4
|
%
|
|||||||||
Security
gains (losses)
|
4
|
(125
|
)
|
703
|
*
|
*
|
||||||||||
Bank
owned life insurance (BOLI)
|
848
|
819
|
626
|
3.5
|
%
|
30.8
|
%
|
|||||||||
Gain
on prepayment of long term borrowings
|
--
|
868
|
--
|
|||||||||||||
Other
income
|
1,177
|
1,591
|
1,572
|
(26.0
|
%)
|
1.2
|
%
|
|||||||||
Total
other operating income
|
$
|
14,041
|
$
|
14,088
|
$
|
12,971
|
(.33
|
%)
|
8.6
|
%
|
2006
VS. 2005
|
2005
VS. 2004
|
|||||||||||||||
2006
|
2005
|
2004
|
%
CHANGE
|
%
CHANGE
|
||||||||||||
Salaries
and employee benefits
|
$
|
19,084
|
$
|
18,428
|
$
|
16,907
|
3.6
|
%
|
9.0
|
%
|
||||||
Other
expenses
|
9,900
|
9,676
|
10,360
|
2.3
|
%
|
(6.6
|
%)
|
|||||||||
Equipment
|
3,011
|
3,067
|
2,952
|
(1.8
|
%)
|
3.9
|
%
|
|||||||||
Expenses
related to prepayment of long-term borrowings
|
--
|
437
|
2,728
|
--
|
(84.0
|
%)
|
||||||||||
Occupancy
|
2,043
|
1,642
|
1,642
|
24.4
|
%
|
--
|
||||||||||
Data
processing
|
1,452
|
1,404
|
1,380
|
3.4
|
%
|
1.7
|
%
|
|||||||||
Total
other operating expense
|
$
|
35,490
|
$
|
34,654
|
$
|
35,969
|
2.4
|
%
|
(3.7
|
%)
|
Year
End Percentage of Total Assets
|
|||
2006
|
2005
|
2004
|
|
Net
loans
|
71%
|
73%
|
73%
|
Investments
|
20%
|
18%
|
17%
|
Year
End Percentage of Total Liabilities
|
|||
2006
|
2005
|
2004
|
|
Total
deposits
|
78%
|
78%
|
74%
|
Total
borrowings
|
21%
|
21%
|
25%
|
Loans
Outstanding as of December 31
|
||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||
Commercial
|
$
|
408,361
|
$
|
404,681
|
$
|
373,893
|
$
|
307,523
|
$
|
242,470
|
||||||
Real
Estate - Mortgage
|
359,601
|
337,559
|
319,033
|
264,730
|
233,887
|
|||||||||||
Consumer
Installment
|
181,574
|
193,275
|
199,862
|
201,419
|
173,578
|
|||||||||||
Real
Estate - Construction
|
14,120
|
25,446
|
18,196
|
16,093
|
11,072
|
|||||||||||
Lease
Financing
|
--
|
--
|
466
|
2,260
|
4,819
|
|||||||||||
Total
Loans
|
$
|
963,656
|
$
|
960,961
|
$
|
911,450
|
$
|
792,025
|
$
|
665,826
|
Maturing
Within
One
Year
|
After
One
But
Within
Five
Years
|
Maturing
After
Five
Years
|
Total
|
||||||||||
Commercial
|
$
|
229,467
|
$
|
161,633
|
$
|
17,261
|
$
|
408,361
|
|||||
Real
Estate - Mortgage
|
80,183
|
136,425
|
142,993
|
359,601
|
|||||||||
Installment
|
10,244
|
16,937
|
154,393
|
181,574
|
|||||||||
Real
Estate - Construction
|
--
|
14,120
|
--
|
14,120
|
|||||||||
Total
Loans
|
$
|
319,894
|
$
|
329,115
|
$
|
314,647
|
$
|
963,656
|
|||||
Classified
by Sensitivity to Change in Interest Rates
|
|||||||||||||
Fixed-Interest
Rate Loans
|
$
|
45,375
|
$
|
92,123
|
$
|
291,246
|
$
|
428,744
|
|||||
Adjustable-Interest
Rate Loans
|
274,519
|
236,992
|
23,401
|
534,912
|
|||||||||
Total
Loans
|
$
|
319,894
|
$
|
329,115
|
$
|
314,647
|
$
|
963,656
|
At
December 31
|
||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||
Non-Accrual
Loans
|
$
|
3,190
|
$
|
2,393
|
$
|
3,439
|
$
|
2,774
|
$
|
1,847
|
||||||
Accruing
Loans Past Due 90 Days or More
|
619
|
989
|
1,105
|
1,236
|
1,458
|
|||||||||||
Restructured
Loans
|
522
|
532
|
544
|
554
|
565
|
For
the Years Ended December 31
|
||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||
Balance
at Beginning of Period
|
$
|
6,416
|
$
|
6,814
|
$
|
5,974
|
$
|
6,068
|
$
|
5,752
|
||||||
Loans
Charged Off:
|
||||||||||||||||
Commercial
|
359
|
557
|
808
|
17
|
197
|
|||||||||||
Real Estate - Mortgage
|
89
|
162
|
153
|
147
|
97
|
|||||||||||
Installment
|
1,127
|
1,171
|
1,244
|
1,556
|
1,535
|
|||||||||||
|
|
|
|
|
||||||||||||
Total
Charged Off
|
1,575
|
1,890
|
2,205
|
1,720
|
1,829
|
|||||||||||
Recoveries
of Loans:
|
||||||||||||||||
Commercial
|
110
|
8
|
22
|
50
|
229
|
|||||||||||
Real Estate - Mortgage
|
11
|
59
|
67
|
17
|
9
|
|||||||||||
Installment
|
403
|
347
|
422
|
425
|
401
|
|||||||||||
|
|
|
|
|
||||||||||||
Total Recoveries
|
524
|
414
|
511
|
492
|
639
|
|||||||||||
|
|
|
|
|
||||||||||||
Net
Loans Charged Off
|
1,051
|
1,476
|
1,694
|
1,228
|
1,190
|
|||||||||||
Provision
for Loan Losses
|
1,165
|
1,078
|
2,534
|
833
|
1,506
|
|||||||||||
Huntington
Branch Acquisition
|
||||||||||||||||
Loan Loss Reserve
|
--
|
--
|
--
|
301
|
--
|
|||||||||||
Balance
at the End of Period
|
$
|
6,530
|
$
|
6,416
|
$
|
6,814
|
$
|
5,974
|
$
|
6,068
|
||||||
Loans
at End of Period
|
$
|
963,656
|
$
|
960,961
|
$
|
911,450
|
$
|
792,025
|
$
|
665,826
|
||||||
Daily Average Balance of Loans
|
$
|
957,709
|
$
|
954,784
|
$
|
861,255
|
$
|
727,532
|
$
|
620,049
|
||||||
Allowance for Loan Losses to Loans Outstanding
|
.68
|
%
|
.67
|
%
|
.75
|
%
|
.75
|
%
|
.91
|
%
|
||||||
Net Charge Offs to Average Loans Outstanding
|
.11
|
%
|
.15
|
%
|
.20
|
%
|
.17
|
%
|
.19
|
%
|
2006
|
%
of Total Loans
|
2005
|
%
of Total Loans
|
2004
|
%
of Total Loans
|
2003
|
%
of Total Loans
|
2002
|
%
of Total Loans
|
||||||||||||||||||||||
Commercial
|
$
|
2,983
|
42
|
%
|
$
|
2,777
|
42
|
%
|
$
|
3,050
|
41
|
%
|
$
|
2,166
|
39
|
%
|
$
|
2,149
|
36
|
%
|
|||||||||||
Real
Estate-Mortgage
|
1,512
|
39
|
%
|
1,504
|
38
|
%
|
1,454
|
37
|
%
|
1,247
|
35
|
%
|
1,032
|
37
|
%
|
||||||||||||||||
Consumer
Installment
|
1,934
|
19
|
%
|
2,060
|
20
|
%
|
2,246
|
22
|
%
|
2,462
|
26
|
%
|
2,675
|
26
|
%
|
||||||||||||||||
Lease
Financing
|
--
|
--
|
--
|
--
|
15
|
--
|
52
|
--
|
105
|
1
|
%
|
||||||||||||||||||||
Commitments
|
101
|
--
|
75
|
--
|
49
|
--
|
47
|
--
|
33
|
--
|
|||||||||||||||||||||
Unallocated
|
--
|
--
|
--
|
--
|
--
|
--
|
74
|
--
|
|||||||||||||||||||||||
Total
|
$
|
6,530
|
100
|
%
|
$
|
6,416
|
100
|
%
|
$
|
6,814
|
100
|
%
|
$
|
5,974
|
100
|
%
|
$
|
6,068
|
100
|
%
|
December
31
(fair
value)
|
|||||||||||||||||||
2006
|
As
% of Total
|
2005
|
As
% of Total
|
2004
|
As
% of Total
|
||||||||||||||
Securities
Available-for-Sale:
|
|||||||||||||||||||
U.S.
government and agencies
|
$
|
97,490
|
37
|
%
|
$
|
107,019
|
47
|
%
|
$
|
102,294
|
48
|
%
|
|||||||
Mortgage-backed
securities
|
50,829
|
19
|
%
|
63,938
|
28
|
%
|
74,386
|
35
|
%
|
||||||||||
Obligation
of states and political subdivisions
|
68,432
|
26
|
%
|
57,661
|
25
|
%
|
22,461
|
11
|
%
|
||||||||||
Corporate
and other debt
|
46,521
|
18
|
%
|
1,077
|
--
|
11,520
|
6
|
%
|
|||||||||||
Other
securities
|
--
|
--
|
400
|
--
|
--
|
--
|
|||||||||||||
Total
|
$
|
263,272
|
100
|
%
|
$
|
230,095
|
100
|
%
|
$
|
210,661
|
100
|
%
|
Within
1
Year
|
1
Year
Thru
5
Years
|
5
Years
Thru
10 Years
|
Over
10
Years
|
Total
Fair
Value
|
||||||||||||
Securities
Available-for-Sale:
|
||||||||||||||||
U.S.
government and agencies
|
$
|
31,551
|
$
|
39,563
|
$
|
16,424
|
$
|
9,952
|
$
|
97,490
|
||||||
Mortgage-backed
securities
|
272
|
45,421
|
5,136
|
--
|
50,829
|
|||||||||||
Obligations
of states and political subdivisions
|
2,909
|
5,439
|
2,830
|
57,254
|
68,432
|
|||||||||||
Corporate
and other debt
|
--
|
--
|
--
|
46,521
|
46,521
|
|||||||||||
Total
|
$
|
34,732
|
$
|
90,423
|
$
|
24,390
|
$
|
113,727
|
$
|
263,272
|
||||||
Percentage
of total
|
13.19
|
%
|
34.35
|
%
|
9.26
|
%
|
43.20
|
%
|
100.00
|
%
|
||||||
Weighted
average yield*
|
4.11
|
%
|
5.10
|
%
|
5.53
|
%
|
6.38
|
%
|
5.34
|
%
|
*
Refer to notes on Table 1
|
2006
|
2005
|
2004
|
|||||||||||||||||
Average
Balance
|
Avg.
Yield
|
Average
Balance
|
Avg.
Yield
|
Average
Balance
|
Avg.
Yield
|
||||||||||||||
Non-interest-bearing
demand deposits
|
$
|
107,595
|
--
|
$
|
112,860
|
--
|
$
|
94,871
|
--
|
||||||||||
Interest-bearing
demand deposits
|
285,250
|
2.25
|
%
|
293,129
|
1.67
|
%
|
279,217
|
.97
|
%
|
||||||||||
Savings
deposits
|
47,779
|
.97
|
%
|
58,964
|
.41
|
%
|
63,471
|
.37
|
%
|
||||||||||
Time
deposits less than $100
|
229,829
|
3.67
|
%
|
264,503
|
2.28
|
%
|
209,708
|
2.36
|
%
|
||||||||||
Time
deposits $100 or more
|
273,305
|
4.41
|
%
|
187,412
|
4.24
|
%
|
149,113
|
2.83
|
%
|
||||||||||
Total
|
$
|
943,758
|
$
|
916,868
|
$
|
796,380
|
|
December
31, 2006
|
|||
Maturities
|
||||
3
Months or Less
|
$
|
209,325
|
||
3-6
Months
|
87,536
|
|||
6-12
Months
|
96,148
|
|||
Over
1 Year
|
86,608
|
|||
Total
|
$
|
479,617
|
2006
|
2005
|
2004
|
||||||||
Securities
sold under agreements to repurchase
|
$
|
74,879
|
$
|
90,939
|
$
|
86,914
|
||||
Short-term
FHLB advances
|
24,500
|
31,000
|
23,319
|
|||||||
Total
short-term borrowings
|
99,379
|
121,939
|
110,233
|
|||||||
Long-term
FHLB advances
|
130,401
|
92,444
|
139,486
|
|||||||
Junior
subordinated debentures
|
35,929
|
35,929
|
35,929
|
|||||||
Total
long-term borrowings
|
166,330
|
128,373
|
175,415
|
|||||||
Total
borrowings
|
$
|
265,709
|
$
|
250,312
|
$
|
285,648
|
||||
Average
balance (from Table 1)
|
$
|
260,519
|
$
|
260,349
|
$
|
287,940
|
(Dollars
in thousands)
|
|||||||
2006
|
2005
|
||||||
+200
basis point increase
|
$
|
(3,658
|
)
|
$
|
322
|
||
+100
basis point increase
|
$
|
(1,612
|
)
|
$
|
286
|
||
-100
basis point decrease
|
$
|
663
|
$
|
(1,228
|
)
|
Payments
Due by Period
|
|||||||||||||||||||
Contractual
Obligations
(in
millions)
|
Note
Reference
|
Total
|
Less
than
1
Year
|
1-3
Years
|
3-5
Years
|
More
than
5
Years
|
|||||||||||||
Long
term debt
|
8
|
||||||||||||||||||
FHLB
Advances
|
$
|
130.4
|
$
|
19.8
|
$
|
26.5
|
$
|
82.00
|
$
|
2.10
|
|||||||||
Junior
subordinated debt
|
35.9
|
--
|
--
|
--
|
35.9
|
||||||||||||||
Operating
leases
|
5
|
1.9
|
.4
|
.8
|
.7
|
--
|
|||||||||||||
Data
processing and telecommunications services
|
5
|
3.3
|
1.4
|
1.9
|
--
|
--
|
|||||||||||||
Time
Deposits
|
7
|
533.2
|
453.7
|
66.2
|
12.6
|
.7
|
|||||||||||||
Pension/SERP
|
11
|
10,984.0
|
532.0
|
1,198.0
|
1,597.0
|
7,657.0
|
Commitment
Expiration by Period
|
|||||||||||||||||||
Commitments
(in
millions)
|
Note
Reference
|
Total
|
Less
than
1
Year
|
1-3
Years
|
3-5
Years
|
More
than
5
Years
|
|||||||||||||
Loan
commitments
|
4
|
$
|
119.8
|
$
|
9.0
|
$
|
19.1
|
$
|
3.4
|
$
|
88.3
|
||||||||
Letters
of credit
|
4
|
7.2
|
7.2
|
--
|
--
|
--
|
ITEM
7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
Item
8.
|
Financial
Statements and Supplementary
Data
|
December
31
|
|||||||
2006
|
2005
|
||||||
Assets
|
|||||||
Cash
and due from banks
|
$
|
23,325
|
$
|
24,610
|
|||
Interest-bearing
deposits in banks
|
2,463
|
5,001
|
|||||
Investment
securities available-for-sale (at fair value)
|
263,272
|
230,095
|
|||||
Federal
Home Loan Bank stock, at cost
|
9,620
|
8,050
|
|||||
Loans
|
963,656
|
960,961
|
|||||
Allowance
for loan losses
|
(6,530
|
)
|
(6,416
|
)
|
|||
Net
loans
|
957,126
|
954,545
|
|||||
Premises
and equipment, net
|
29,852
|
27,049
|
|||||
Goodwill
and other intangible assets, net
|
14,033
|
14,591
|
|||||
Bank
owned life insurance
|
27,926
|
24,239
|
|||||
Accrued
interest receivable and other assets
|
21,700
|
22,811
|
|||||
Total
Assets
|
$
|
1,349,317
|
$
|
1,310,991
|
|||
Liabilities
and Shareholders’ Equity
|
|||||||
Liabilities:
|
|||||||
Non-interest-bearing deposits
|
$
|
120,758
|
$
|
114,523
|
|||
Interest-bearing deposits
|
850,623
|
841,331
|
|||||
Total
deposits
|
971,381
|
955,854
|
|||||
Short-term borrowings
|
99,379
|
121,939
|
|||||
Long-term borrowings
|
166,330
|
128,373
|
|||||
Accrued interest payable and other liabilities
|
14,202
|
11,623
|
|||||
Dividends payable
|
1,169
|
1,163
|
|||||
Total
Liabilities
|
1,252,461
|
1,218,952
|
|||||
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
6,141
in 2006 and 6,118 in 2005
|
61
|
61
|
|||||
Surplus
|
21,448
|
20,946
|
|||||
Retained earnings
|
80,927
|
73,012
|
|||||
Accumulated other comprehensive loss
|
(5,580
|
)
|
(1,980
|
)
|
|||
Total
Shareholders’ Equity
|
96,856
|
92,039
|
|||||
Total
Liabilities and Shareholders’ Equity
|
$
|
1,349,317
|
$
|
1,310,991
|
|||
See
notes to consolidated financial statements.
|
Year
ended December 31
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Interest
income
|
||||||||||
Interest
and fees on loans
|
$
|
69,019
|
$
|
61,570
|
$
|
53,264
|
||||
Interest
on investment securities:
|
||||||||||
Taxable
|
7,699
|
6,231
|
5,819
|
|||||||
Exempt from federal income taxes
|
2,860
|
1,383
|
1,205
|
|||||||
10,559
|
7,614
|
7,024
|
||||||||
Other
|
690
|
517
|
359
|
|||||||
Interest
on federal funds sold
|
1
|
55
|
35
|
|||||||
Total
interest income
|
80,269
|
69,756
|
60,682
|
|||||||
Interest
expense
|
||||||||||
Interest
on deposits
|
27,349
|
19,104
|
12,108
|
|||||||
Interest
on short-term borrowings
|
4,429
|
2,749
|
1,153
|
|||||||
Interest
on long-term borrowings
|
7,557
|
7,560
|
10,755
|
|||||||
Total
interest expense
|
39,335
|
29,413
|
24,016
|
|||||||
Net
interest income
|
40,934
|
40,343
|
36,666
|
|||||||
Provision
for loan losses
|
1,165
|
1,078
|
2,534
|
|||||||
Net
interest income after provision for loan losses
|
39,769
|
39,265
|
34,132
|
|||||||
Other
operating income
|
||||||||||
Service
charges
|
6,267
|
5,463
|
4,749
|
|||||||
Trust
department
|
3,671
|
3,260
|
3,153
|
|||||||
Insurance
commissions
|
1,573
|
1,599
|
1,448
|
|||||||
Gain
related to prepayment of long term borrowings
|
0
|
868
|
0
|
|||||||
Net
securities gains (losses)
|
4
|
(125
|
)
|
703
|
||||||
Bank
owned life insurance
|
848
|
819
|
626
|
|||||||
Other
income
|
1,678
|
2,204
|
2,292
|
|||||||
Total
other operating income
|
14,041
|
14,088
|
12,971
|
|||||||
Other
operating expense
|
||||||||||
Salaries
and employee benefits
|
19,084
|
18,428
|
16,907
|
|||||||
Equipment
|
3,011
|
3,067
|
2,952
|
|||||||
Expenses
related to prepayment of long-term borrowings
|
0
|
437
|
2,728
|
|||||||
Occupancy
|
2,043
|
1,642
|
1,642
|
|||||||
Data
processing
|
1,452
|
1,404
|
1,380
|
|||||||
Other
expenses
|
9,900
|
9,676
|
10,360
|
|||||||
Total
other operating expenses
|
35,490
|
34,654
|
35,969
|
|||||||
Income
before income taxes
|
18,320
|
18,699
|
11,134
|
|||||||
Applicable
income taxes
|
5,743
|
6,548
|
3,507
|
|||||||
Net
Income
|
$
|
12,577
|
$
|
12,151
|
$
|
7,627
|
||||
Earnings
per share
|
$
|
2.05
|
$
|
1.99
|
$
|
1.25
|
||||
Weighted
average common shares outstanding
|
6,129,612
|
6,105,699
|
6,088,367
|
|||||||
See
notes to consolidated financial statements.
|
Capital
Stock
|
Surplus
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income/(Loss)
|
Total
Shareholders’
Equity
|
||||||||||||
Balance
at January 1, 2004
|
$
|
61
|
$
|
20,324
|
$
|
62,201
|
$
|
1,605
|
$
|
84,191
|
||||||
Comprehensive
income:
|
||||||||||||||||
Net income for the year
|
7,627
|
7,627
|
||||||||||||||
Unrealized
loss on securities available-for
sale,
net of income tax benefit of $629
|
(1,168
|
)
|
(1,168
|
)
|
||||||||||||
Comprehensive
income
|
437
|
6,459
|
||||||||||||||
Issuance
of 7,000 shares of common
stock
under dividend reinvestment plan
|
129
|
129
|
||||||||||||||
Cash
dividends-$.725 per share
|
|
|
(4,423
|
)
|
|
(4,423
|
)
|
|||||||||
Balance
at December 31, 2004
|
61
|
20,453
|
65,405
|
437
|
86,356
|
|||||||||||
Comprehensive
income:
|
||||||||||||||||
Net income for the year
|
12,151
|
12,151
|
||||||||||||||
Unrealized loss on securities available-for
sale, net of income tax benefit of $1,301
|
(2,417
|
)
|
(2,417
|
)
|
||||||||||||
Comprehensive income
|
(1,980
|
)
|
9,734
|
|||||||||||||
Issuance
of 24,758 shares of common
stock
under dividend reinvestment plan
|
493
|
493
|
||||||||||||||
Cash
dividends-$.745 per share
|
|
|
(4,544
|
)
|
|
(4,544
|
)
|
|||||||||
Balance
at December 31, 2005
|
61
|
20,946
|
73,012
|
(1,980
|
)
|
92,039
|
||||||||||
Comprehensive
income:
|
||||||||||||||||
Net income for the year
|
12,577
|
12,577
|
||||||||||||||
Unrealized gain on securities available-for
sale, net of income taxes of $682
|
1,265
|
1,265
|
||||||||||||||
Comprehensive income
|
(715
|
)
|
13,842
|
|||||||||||||
Adjustment
to initially adopt SFAS No. 158
net of income taxes of $2,619
|
(4,865
|
)
|
(4,865
|
)
|
||||||||||||
Issuance
of 23,241 shares of common
stock
under dividend reinvestment plan
|
502
|
502
|
||||||||||||||
Cash
dividends-$.76 per share
|
|
|
(4,662
|
)
|
|
(4,662
|
)
|
|||||||||
Balance
at December 31, 2006
|
$
|
61
|
$
|
21,448
|
$
|
80,927
|
$
|
(5,580
|
)
|
$
|
96,856
|
|||||
See
notes to consolidated financial statements.
|
Year
ended December 31
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Operating
activities
|
||||||||||
Net
Income
|
$
|
12,577
|
$
|
12,151
|
$
|
7,627
|
||||
Adjustments
to reconcile net income to net cash
provided by operating activities:
|
||||||||||
Provision
for loan losses
|
1,165
|
1,078
|
2,534
|
|||||||
Depreciation
and amortization
|
2,990
|
3,074
|
2,921
|
|||||||
Net
accretion and amortization of investment
security discounts and premiums
|
175
|
483
|
1,106
|
|||||||
(Gain)
loss on sale of investment securities
|
(4
|
)
|
125
|
(703
|
)
|
|||||
Increase
in accrued interest
receivable and other assets
|
(2,517
|
)
|
(1,838
|
)
|
(5,604
|
)
|
||||
(Decrease)
increase in accrued interest payable and
other liabilities
|
(443
|
)
|
1,513
|
920
|
||||||
Proceeds
from sale of mortgage loans
|
--
|
30,941
|
--
|
|||||||
Earnings
on bank owned life insurance
|
(848
|
)
|
(819
|
)
|
(625
|
)
|
||||
Net
cash provided by operating activities
|
13,095
|
46,708
|
8,176
|
|||||||
Investing
activities
|
||||||||||
Net
decrease (increase) in interest-bearing deposits
in banks
|
2,538
|
(3,146
|
)
|
(381
|
)
|
|||||
Proceeds
from maturities of investment securities
available-for-sale
|
56,196
|
87,035
|
127,250
|
|||||||
Proceeds
from sales of investment securities
available-for-sale
|
548
|
27,684
|
14,008
|
|||||||
Purchases
of investment securities
available-for-sale
|
(88,004
|
)
|
(139,118
|
)
|
(129,912
|
)
|
||||
Net
increase in loans
|
(2,726
|
)
|
(80,452
|
)
|
(121,118
|
)
|
||||
Net
(increase) decrease in FHLB stock
|
(1,570
|
)
|
1,475
|
(865
|
)
|
|||||
Purchase
of premises and equipment
|
(5,287
|
)
|
(5,542
|
)
|
(9,288
|
)
|
||||
Purchase
of additional bank owned life insurance
|
(2,839
|
)
|
--
|
(2,300
|
)
|
|||||
Net
cash used in investing activities
|
(41,144
|
)
|
(112,064
|
)
|
(122,606
|
)
|
||||
Financing
activities
|
||||||||||
Net
increase in deposits
|
15,527
|
105,193
|
100,500
|
|||||||
Net
(decrease) increase in short-term borrowings
|
(22,560
|
)
|
11,707
|
38,392
|
||||||
Proceeds
from long-term borrowings
|
55,000
|
--
|
35,929
|
|||||||
Payments
on long-term borrowings
|
(17,043
|
)
|
(47,042
|
)
|
(52,249
|
)
|
||||
Cash
dividends paid
|
(4,662
|
)
|
(4,544
|
)
|
(4,384
|
)
|
||||
Proceeds
from issuance of common stock
|
502
|
493
|
129
|
|||||||
Net
cash provided by financing activities
|
26,764
|
65,807
|
118,317
|
|||||||
(Decrease)
increase in cash and
cash equivalents
|
(1,285
|
)
|
451
|
3,887
|
||||||
Cash
and cash equivalents at beginning of year
|
24,610
|
24,159
|
20,272
|
|||||||
Cash
and cash equivalents at end of year
|
$
|
23,325
|
$
|
24,610
|
$
|
24,159
|
||||
Supplemental
information
|
||||||||||
Interest
paid
|
$
|
38,363
|
$
|
28,557
|
$
|
23,605
|
||||
Income
taxes paid
|
7,860
|
6,750
|
6,262
|
See
notes to consolidated financial statements
|
Actual
|
For
Capital
Adequacy
Purposes
|
To
Be Well
Capitalized
Under
Prompt
Corrective
Action
Provisions
|
|||||||||||||||||
(Dollars
in thousands)
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||
December
31, 2006
|
|||||||||||||||||||
Total
Capital (to Risk Weighted Assets)
|
|||||||||||||||||||
Consolidated
|
$
|
130,863
|
12.95
|
%
|
$
|
80,737
|
8.00
|
%
|
N/A
|
N/A
|
|||||||||
First
United Bank
|
113,770
|
11.40
|
%
|
79,827
|
8.00
|
%
|
99,785
|
10.00
|
%
|
||||||||||
Tier
1 Capital (to Risk Weighted Assets)
|
|||||||||||||||||||
Consolidated
|
119,332
|
11.81
|
%
|
40,368
|
4.00
|
%
|
N/A
|
N/A
|
|||||||||||
First
United Bank
|
107,503
|
10.77
|
%
|
39,914
|
4.00
|
%
|
59,871
|
6.00
|
%
|
||||||||||
Tier
1 Capital (to Average Assets)
|
|||||||||||||||||||
Consolidated
|
119,332
|
9.08
|
%
|
52,563
|
4.00
|
%
|
N/A
|
N/A
|
|||||||||||
First
United Bank
|
107,503
|
8.25
|
%
|
52,116
|
4.00
|
%
|
65,145
|
5.00
|
%
|
Actual
|
For
Capital
Adequacy
Purposes
|
To
Be Well
Capitalized
Under
Prompt
Corrective
Action
Provisions
|
|||||||||||||||||
(Dollars
in thousands)
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||
December
31, 2005
|
|||||||||||||||||||
Total
Capital (to Risk Weighted Assets)
|
|||||||||||||||||||
Consolidated
|
$
|
121,773
|
12.66
|
%
|
$
|
76,958
|
8.00
|
%
|
N/A
|
N/A
|
|||||||||
First
United Bank
|
105,029
|
11.04
|
%
|
76,116
|
8.00
|
%
|
95,148
|
10.00
|
%
|
||||||||||
Tier
1 Capital (to Risk Weighted Assets)
|
|||||||||||||||||||
Consolidated
|
110,357
|
11.45
|
%
|
38,479
|
4.00
|
%
|
N/A
|
N/A
|
|||||||||||
First
United Bank
|
98,820
|
10.39
|
%
|
38,059
|
4.00
|
%
|
57,089
|
6.00
|
%
|
||||||||||
Tier
1 Capital (to Average Assets)
|
|||||||||||||||||||
Consolidated
|
110,357
|
8.64
|
%
|
51,120
|
4.00
|
%
|
N/A
|
N/A
|
|||||||||||
First
United Bank
|
98,820
|
7.80
|
%
|
50,694
|
4.00
|
%
|
63,368
|
5.00
|
%
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
||||||||||
December
31, 2006
|
|||||||||||||
U.S.
government and agencies
|
$
|
98,007
|
$
|
125
|
$
|
642
|
$
|
97,490
|
|||||
Mortgage-backed
securities
|
51,955
|
26
|
1,152
|
50,829
|
|||||||||
Obligations
of states and political subdivisions
|
67,892
|
705
|
165
|
68,432
|
|||||||||
Corporate
and other debt securities
|
46,602
|
103
|
184
|
46,521
|
|||||||||
Totals
|
$
|
264,456
|
$
|
959
|
$
|
2,143
|
$
|
263,272
|
|||||
December
31, 2005
|
|||||||||||||
U.S.
government and agencies
|
$
|
108,301
|
$
|
6
|
$
|
1,288
|
$
|
107,019
|
|||||
Mortgage-backed
securities
|
65,647
|
33
|
1,742
|
63,938
|
|||||||||
Obligations
of states and political subdivisions
|
58,041
|
784
|
1,164
|
57,661
|
|||||||||
Corporate
and other debt securities
|
1,381
|
96
|
--
|
1,477
|
|||||||||
Totals
|
$
|
233,370
|
$
|
919
|
$
|
4,194
|
$
|
230,095
|
2006
|
2005
|
2004
|
||||||||
Proceeds
|
$
|
548
|
$
|
27,684
|
$
|
14,008
|
||||
Realized
gains
|
4
|
93
|
712
|
|||||||
Realized
losses
|
--
|
(218
|
)
|
(9
|
)
|
|||||
December
31, 2006
|
|||||||||||||
Less
than 12 months
|
12
months or more
|
||||||||||||
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
||||||||||
U.S.
government agencies
|
$
|
25,878
|
$
|
(127
|
)
|
$
|
56,609
|
$
|
(515
|
)
|
|||
Mortgage-backed
securities
|
3,212
|
(7
|
)
|
45,470
|
(1,145
|
)
|
|||||||
Obligations
of states and political subdivisions
|
9,844
|
(35
|
)
|
15,234
|
(130
|
)
|
|||||||
Corporate
securities
|
33,680
|
(184
|
)
|
--
|
--
|
||||||||
$
|
72,614
|
$
|
(353
|
)
|
$
|
117,313
|
$
|
(1,790
|
)
|
December
31, 2005
|
|||||||||||||
Less
than 12 months
|
12
months or more
|
||||||||||||
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
||||||||||
U.S.
government agencies
|
$
|
61,312
|
$
|
(718
|
)
|
$
|
42,005
|
$
|
(570
|
)
|
|||
Mortgage-backed
securities
|
42,321
|
(1,163
|
)
|
17,812
|
(579
|
)
|
|||||||
Obligations
of states and political subdivisions
|
36,596
|
(1,164
|
)
|
--
|
--
|
||||||||
$
|
140,229
|
$
|
(3,045
|
)
|
$
|
59,817
|
$
|
(1,149
|
)
|
(in
thousands)
|
|||||||
Contractual
Maturity
|
Amortized
Cost
|
Fair
Value
|
|||||
Due
in one year or less
|
$
|
34,622
|
$
|
34,460
|
|||
Due
after one year through five years
|
45,037
|
45,002
|
|||||
Due
after five years through ten years
|
19,209
|
19,254
|
|||||
Due
after ten years
|
113,633
|
113,727
|
|||||
212,501
|
212,443
|
||||||
Mortgage-backed
securities
|
51,955
|
50,829
|
|||||
$
|
264,456
|
$
|
263,272
|
December
31, 2006
|
December
31, 2005
|
||||||||||||
Loans
|
Loan
Commitments
|
Loans
|
Loan
Commitments
|
||||||||||
Commercial
|
$
|
408,361
|
$
|
72,861
|
$
|
404,681
|
$
|
110,000
|
|||||
Real
Estate - Mortgage
|
359,601
|
40,557
|
337,559
|
39,350
|
|||||||||
Consumer
Installment
|
181,574
|
66
|
193,275
|
42
|
|||||||||
Real
Estate - Construction
|
14,120
|
6,312
|
25,446
|
11,701
|
|||||||||
Commercial
letters of credit
|
--
|
7,200
|
--
|
5,086
|
|||||||||
Total
|
$
|
963,656
|
$
|
126,996
|
$
|
960,961
|
$
|
166,179
|
2006
|
||||
Balance
at January 1
|
$
|
17,685
|
||
Loans
or advances
|
13,169
|
|||
Repayments
|
(5,532
|
)
|
||
Balance
at December 31
|
$
|
25,322
|
2006
|
2005
|
2004
|
||||||||
Balance
at January 1
|
$
|
6,416
|
$
|
6,814
|
$
|
5,974
|
||||
Gross
credit losses
|
(1,575
|
)
|
(1,890
|
)
|
(2,205
|
)
|
||||
Recoveries
|
524
|
414
|
511
|
|||||||
Net
credit losses
|
(1,051
|
)
|
(1,476
|
)
|
(1,694
|
)
|
||||
Provision
for loan losses
|
1,165
|
1,078
|
2,534
|
|||||||
Balance
at December 31
|
$
|
6,530
|
$
|
6,416
|
$
|
6,814
|
2006
|
2005
|
||||||
Land
|
$
|
8,910
|
$
|
9,232
|
|||
Land
Improvements
|
190
|
135
|
|||||
Premises
|
20,700
|
16,987
|
|||||
Furniture
and Equipment
|
27,610
|
26,533
|
|||||
57,410
|
52,887
|
||||||
Less
accumulated depreciation
|
(27,558
|
)
|
(25,838
|
)
|
|||
Total
|
$
|
29,852
|
$
|
27,049
|
2006
|
2005
|
||||||||||||||||||||||||
Gross
Carrying Amount
|
Accumulated
Amortization
|
Net
Carrying Amount
|
Weighted
Average Remaining Life
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
Net
Carrying Amount
|
Weighted
Average Remaining Life
|
||||||||||||||||||
Goodwill
|
$
|
11,900
|
$
|
--
|
$
|
11,900
|
$
|
11,900
|
$
|
--
|
$
|
11,900
|
|||||||||||||
Core
deposit intangible assets
|
4,040
|
(1,907
|
)
|
2,133
|
3.8
|
4,040
|
(1,349
|
)
|
2,691
|
4.8
|
|||||||||||||||
Total
|
$
|
15,940
|
$
|
(1,907
|
)
|
$
|
14,033
|
$
|
15,940
|
$
|
(1,349
|
)
|
$
|
14,591
|
2007
|
$
|
558
|
||
2008
|
558
|
|||
2009
|
558
|
|||
2010
|
459
|
|||
2007
|
$
|
453,690
|
||
2008
|
49,085
|
|||
2009
|
17,478
|
|||
2010
|
9,655
|
|||
2011
|
2,620
|
|||
Thereafter
|
696
|
2006
|
2005
|
2004
|
||||||||
Short-term
FHLB advance,
Daily borrowings, interest rate of 5.50% (at December 31,
2006)
|
$
|
4,500
|
$
|
31,000
|
$
|
--
|
||||
Short-term
FHLB advance,
Interest rate of 5.44% (at December 31, 2006) maturing in May 2007
|
20,000
|
--
|
23,319
|
|||||||
2006
|
2005
|
2004
|
||||||||
Securities
sold under agreements to repurchase:
|
||||||||||
Outstanding
at end of year
|
$
|
74,879
|
$
|
90,939
|
$
|
86,914
|
||||
Weighted average interest rate at year end
|
3.96
|
%
|
2.56
|
%
|
2.14
|
%
|
||||
Maximum amount outstanding as of
any
month end
|
84,380
|
93,632
|
91,209
|
|||||||
Average amount outstanding
|
78,032
|
85,846
|
78,352
|
|||||||
Approximate weighted average rate
during
the year
|
3.80
|
%
|
2.68
|
%
|
1.44
|
%
|
||||
2006
|
2005
|
||||||
FHLB
advances, bearing interest at rates ranging
from 3.15% to 5.40% at December 31
|
$
|
130,401
|
$
|
92,444
|
|||
Junior
subordinated debt, bearing interest at rates
ranging from 6.02% to 8.14% at December 31
|
35,929
|
35,929
|
|||||
$
|
166,330
|
$
|
128,373
|
December
31
|
|||||||||||||
2006
|
2005
|
||||||||||||
Fixed
Rate
|
Floating
Rate
|
Total
|
Total
|
||||||||||
(in
thousands)
|
|||||||||||||
Due
in 2006
|
$
|
--
|
$
|
--
|
$
|
--
|
$
|
7,044
|
|||||
Due
in 2007
|
14,800
|
5,000
|
19,800
|
19,800
|
|||||||||
Due
in 2008
|
1,000
|
--
|
1,000
|
1,000
|
|||||||||
Due
in 2009
|
25,500
|
--
|
25,500
|
12,500
|
|||||||||
Due
in 2010
|
1,000
|
--
|
1,000
|
--
|
|||||||||
Due
in 2011
|
51,000
|
30,000
|
81,000
|
--
|
|||||||||
Thereafter
|
27,720
|
10,310
|
38,030
|
88,029
|
|||||||||
Total
long-term debt
|
$
|
121,020
|
$
|
45,310
|
$
|
166,330
|
$
|
128,373
|
1-4
family mortgage loans
|
$
|
140,019
|
||
Commercial
loans
|
7,513
|
|||
Multifamily
loans
|
2,865
|
|||
Investment
securities
|
30,050
|
|||
$
|
180,447
|
For
the Year Ending December 31
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Accumulated
unrealized (losses)/gains on securities available for
sale at January 1, net of tax
|
$
|
(1,980
|
)
|
$
|
437
|
$
|
1,605
|
|||
Net
unrealized gains/(losses) for the period, net of tax expense (benefit)
of
$683 in 2006, ($1,345) in 2005, and ($382) in 2004
|
1,268
|
(2,498
|
)
|
(710
|
)
|
|||||
Reclassification
of (gains)/losses occurring during the period, net of tax (expense)
benefit of $1 in 2006, ($44) in 2005, and $245 in 2004
|
(3
|
)
|
81
|
(458
|
)
|
|||||
Effect
on other comprehensive income for the period
|
1,265
|
(2,417
|
)
|
(1,168
|
)
|
|||||
Accumulated
unrealized gains/(losses) on securities available for sale at December
31,
net of tax
|
$
|
(715
|
)
|
$
|
(1,980
|
)
|
$
|
437
|
||
Accumulated
unrealized losses for pension obligation at January 1, net of
tax
|
$
|
0
|
$
|
0
|
$
|
0
|
||||
Prior
service costs, net of tax of $46
|
(85
|
)
|
0
|
0
|
||||||
Net
transition asset, net of tax benefit of $116
|
216
|
0
|
0
|
|||||||
Net
actuarial loss, net of tax of $1,632
|
(3,032
|
)
|
0
|
0
|
||||||
Cumulative
effect of change in accounting for pension obligation
|
(2,901
|
)
|
0
|
0
|
||||||
Accumulated
unrealized losses for SERP obligation at January 1, net of
tax
|
0
|
0
|
0
|
|||||||
Prior
service costs, net of tax of $252
|
(467
|
)
|
0
|
0
|
||||||
Net
actuarial loss, net of tax of $800
|
(1,497
|
)
|
0
|
0
|
||||||
Accumulated
unrealized losses for SERP obligation at December 31, net of
tax
|
$
|
(1,964
|
)
|
$
|
0
|
$
|
0
|
|||
TOTAL
ACCUMULATED OTHER COMPREHENSIVE
INCOME
(LOSS) AT DECEMBER 31, NET OF TAX
|
$
|
(5,580
|
)
|
$
|
(1,980
|
)
|
$
|
437
|
2006
|
2005
|
2004
|
||||||||
Current
Tax Provision:
|
||||||||||
Federal
|
$
|
5,179
|
$
|
4,321
|
$
|
4,486
|
||||
State
|
1,094
|
978
|
838
|
|||||||
$
|
6,273
|
$
|
5,299
|
$
|
5,324
|
|||||
Deferred
taxes (benefit) :
|
||||||||||
Federal
|
$
|
(469
|
)
|
$
|
1,105
|
$
|
(1,798
|
)
|
||
State
|
(61
|
)
|
144
|
(19
|
)
|
|||||
$
|
(530
|
)
|
$
|
1,249
|
$
|
(1,817
|
)
|
|||
Income
tax expense for the year
|
$
|
5,743
|
$
|
6,548
|
$
|
3,507
|
2006
|
2005
|
2004
|
||||||||
Federal
statutory rate
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
||||
Tax-exempt
income on securities and loans
|
(5.6
|
)
|
(2.7
|
)
|
(4.1
|
)
|
||||
Tax-exempt
BOLI income
|
(1.6
|
)
|
(1.5
|
)
|
(2.0
|
)
|
||||
State
income tax, net of federal tax benefit
|
3.5
|
3.9
|
4.4
|
|||||||
Other
|
--
|
.3
|
(1.8
|
)
|
||||||
31.3
|
%
|
35.0
|
%
|
31.5
|
%
|
2006
|
2005
|
||||||
Deferred
tax assets:
|
|||||||
Allowance for loan losses
|
$
|
2,583
|
$
|
2,538
|
|||
Deferred loan fees
|
225
|
173
|
|||||
Deferred compensation
|
513
|
558
|
|||||
State tax loss carry forwards
|
722
|
658
|
|||||
Unrealized loss on investment securities
available-for-sale
|
468
|
1,295
|
|||||
Pension/SERP
|
608
|
--
|
|||||
Other
|
81
|
88
|
|||||
Total
deferred tax assets
|
5,200
|
5,310
|
|||||
Valuation allowance
|
(722
|
)
|
(658
|
)
|
|||
Total
deferred tax assets less valuation allowance
|
4,478
|
4,652
|
|||||
Deferred
tax liabilities:
|
|||||||
Amortization of goodwill and core deposit intangible
|
(524
|
)
|
(363
|
)
|
|||
Depreciation
|
(943
|
)
|
(1,176
|
)
|
|||
Pension
|
--
|
(2,459
|
)
|
||||
Other
|
(406
|
)
|
(371
|
)
|
|||
Total
deferred tax liabilities
|
(1,873
|
)
|
(4,369
|
)
|
|||
Net deferred tax assets
|
$
|
2,605
|
$
|
283
|
Pension
|
SERP
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Change
in Benefit Obligation
|
|||||||||||||
Obligation
at the beginning of the year
|
$
|
18,423
|
$
|
16,718
|
$
|
3,662
|
$
|
2,442
|
|||||
Service
cost
|
809
|
799
|
138
|
90
|
|||||||||
Interest
cost
|
1,048
|
1,035
|
200
|
134
|
|||||||||
Change
in assumptions
|
(591
|
)
|
--
|
--
|
--
|
||||||||
Actuarial
losses
|
1
|
318
|
722
|
912
|
|||||||||
Benefits
paid
|
(509
|
)
|
(447
|
)
|
(26
|
)
|
(26
|
)
|
|||||
Plan
amendments
|
--
|
--
|
--
|
110
|
|||||||||
Obligation
at the end of the year
|
19,181
|
18,423
|
4,696
|
3,662
|
|||||||||
Change
in Plan Assets
|
|||||||||||||
Fair
value at the beginning of the year
|
19,276
|
14,434
|
--
|
--
|
|||||||||
Actual
return on plan assets
|
1,707
|
507
|
--
|
--
|
|||||||||
Employer
contribution
|
1,000
|
4,782
|
26
|
26
|
|||||||||
Benefits
paid
|
(509
|
)
|
(447
|
)
|
(26
|
)
|
(26
|
)
|
|||||
Fair
value at the end of the year
|
21,474
|
19,276
|
--
|
-
|
|||||||||
Funded
Status
|
$
|
2,293
|
$
|
853
|
$
|
4,696
|
$
|
3,662
|
|||||
Reconciliation
of funded status to the amounts reported in the statement of financial
condition:
|
2006
|
2005
|
2006
|
2005
|
||||||||||
Funded
Status
|
$
|
2,293
|
$
|
853
|
$
|
(4,696
|
)
|
$
|
(3,662
|
)
|
|||
Unrecognized
net actuarial loss
|
-
|
5,595
|
--
|
1,695
|
|||||||||
Unrecognized
prior service cost
|
-
|
142
|
--
|
832
|
|||||||||
Unrecognized
net transition asset
|
-
|
(371
|
)
|
--
|
--
|
||||||||
Amount
included in other assets, related to pension
plan
at year end
|
$
|
2,293
|
$
|
6,219
|
$
|
(4,696
|
)
|
$
|
(1,135
|
)
|
Pension
|
SERP
|
||||||||||||||||||
2006
|
2005
|
2004
|
2006
|
2005
|
2004
|
||||||||||||||
Components
of Net Pension Cost
|
|||||||||||||||||||
Service
cost
|
$
|
809
|
$
|
799
|
$
|
718
|
$
|
138
|
$
|
90
|
$
|
179
|
|||||||
Interest
cost
|
1,048
|
1,035
|
938
|
200
|
134
|
100
|
|||||||||||||
Expected
return on assets
|
(1,586
|
)
|
(1,406
|
)
|
(1,183
|
)
|
--
|
--
|
--
|
||||||||||
Amortization
of transition asset
|
(39
|
)
|
(39
|
)
|
(39
|
)
|
--
|
--
|
--
|
||||||||||
Amortization
of recognized loss
|
220
|
189
|
151
|
121
|
53
|
--
|
|||||||||||||
Amortization
of prior service cost
|
10
|
10
|
10
|
113
|
103
|
103
|
|||||||||||||
Net
pension expense included in employee benefits
|
$
|
462
|
$
|
588
|
$
|
595
|
$
|
572
|
$
|
380
|
$
|
382
|
|||||||
Weighted
Average Assumptions used to
determine
benefit obligations:
|
|||||||||||||||||||
Discount
rate for benefit obligations
|
6.00
|
%
|
6.15
|
%
|
6.15
|
%
|
5.50
|
%
|
5.50
|
%
|
5.50
|
%
|
|||||||
Discount
rate for net pension cost
|
6.15
|
%
|
6.15
|
%
|
6.25
|
%
|
--
|
--
|
--
|
||||||||||
Expected
long-term return on assets
|
8.00
|
%
|
8.25
|
%
|
8.25
|
%
|
--
|
--
|
--
|
||||||||||
Rate
of compensation increase
|
3.00
|
%
|
4.00
|
%
|
4.00
|
%
|
4.00
|
%
|
4.00
|
%
|
4.00
|
%
|
Percentage
of
Plan
Assets
|
|||||||
2006
|
2005
|
||||||
ASSET
CATEGORY
|
|||||||
Equity securities
|
63
|
%
|
62
|
%
|
|||
Debt securities
|
32
|
32
|
|||||
Cash and cash equivalents
|
5
|
6
|
|||||
Total
|
100
|
%
|
100
|
%
|
2006
|
2005
|
||||||
Number
of shares held
|
3,000
|
3,839
|
|||||
Number
of shares purchased
|
0
|
33
|
|||||
Number
of shares sold
|
839
|
11,099
|
|||||
Fair
value
|
$
|
66
|
$
|
82
|
|||
Dividends
paid
|
$
|
2
|
$
|
6
|
|||
Percentage
of total plan assets
|
.31
|
%
|
.42
|
%
|
Pension
Plan
|
SERP
|
||||||
2007
|
$
|
456
|
$
|
76
|
|||
2008
|
476
|
70
|
|||||
2009
|
586
|
66
|
|||||
2010
|
654
|
66
|
|||||
2011
|
811
|
66
|
|||||
2012-2016
|
6,391
|
1,266
|
|||||
$
|
9,374
|
$
|
1,610
|
Pension
|
SERP
|
||||||
Unrecognized
net actuarial loss
|
$
|
3,032
|
$
|
1,497
|
|||
Unrecognized
prior service costs
|
85
|
467
|
|||||
Net
transition asset
|
(216
|
)
|
--
|
||||
$
|
2,901
|
$
|
1,964
|
Pension
|
SERP
|
||||||
Prior
service cost
|
$
|
10
|
$
|
113
|
|||
Net
transition asset
|
(39
|
)
|
--
|
||||
Net
actuarial loss
|
283
|
203
|
|||||
$
|
254
|
$
|
316
|
Before
application of Statement No. 158
|
Reclassification
|
After
application of Statement No. 158
|
||||||||
Accrued
Interest Receivable and other assets
|
$
|
23,544
|
$
|
(1,844
|
)
|
$
|
21,700
|
|||
Total
Assets
|
1,351,161
|
(1,844
|
)
|
1,349,317
|
||||||
Accrued
Interest Payable and other liabilities
|
11,181
|
3,021
|
14,202
|
|||||||
Total
Liabilities
|
1,249,440
|
3,021
|
1,252,461
|
|||||||
Accumulated
Other Comprehensive Income/(Loss)
|
(715
|
)
|
(4,865
|
)
|
(5,580
|
)
|
||||
Shareholders’
Equity
|
101,721
|
(4,865
|
)
|
96,856
|
2006
|
2005
|
||||||||||||
Carrying
Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
||||||||||
Financial
Assets:
|
|||||||||||||
Cash and cash equivalents
|
$
|
23,325
|
$
|
23,325
|
$
|
24,610
|
$
|
24,610
|
|||||
Interest-bearing deposits in banks
|
2,463
|
2,463
|
5,001
|
5,001
|
|||||||||
Investment securities
|
263,272
|
263,272
|
230,095
|
230,095
|
|||||||||
Federal Home Loan Bank stock
|
9,620
|
9,620
|
8,050
|
8,050
|
|||||||||
Loans, net
|
957,126
|
943,173
|
954,545
|
949,622
|
|||||||||
Accrued interest receivable
|
6,249
|
6,249
|
6,114
|
6,114
|
|||||||||
Financial
Liabilities:
|
|||||||||||||
Deposits
|
971,381
|
967,849
|
955,854
|
952,350
|
|||||||||
Borrowed funds
|
265,709
|
265,400
|
250,312
|
253,744
|
|||||||||
Accrued interest payable
|
5,110
|
5,110
|
4,129
|
4,129
|
|||||||||
Off Balance Sheet Financial Instruments
|
--
|
--
|
--
|
--
|
December
31
|
|||||||
2006
|
2005
|
||||||
Assets
|
|||||||
Cash
|
$
|
1,593
|
$
|
2,067
|
|||
Investment
securities
|
1,221
|
1,230
|
|||||
Investment
in bank subsidiary
|
115,914
|
111,384
|
|||||
Other
assets
|
7,043
|
5,711
|
|||||
Investment
in non-bank subsidiaries
|
9,653
|
9,962
|
|||||
Total
Assets
|
$
|
135,424
|
$
|
130,354
|
|||
Liabilities
and Shareholder’s Equity
|
|||||||
Accrued
interest and other liabilities
|
$
|
1,470
|
$
|
1,223
|
|||
Dividends
payable
|
1,169
|
1,163
|
|||||
Junior
subordinated debt
|
35,929
|
35,929
|
|||||
Shareholders’
equity
|
96,856
|
92,039
|
|||||
Total
Liabilities and Shareholder’s Equity
|
$
|
135,424
|
$
|
130,354
|
Year
Ended December 31
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Income:
|
||||||||||
Dividend
income from bank subsidiary
|
$
|
5,819
|
$
|
8,009
|
$
|
8,718
|
||||
Other
Income
|
284
|
253
|
422
|
|||||||
Total
Income
|
6,103
|
8,262
|
9,140
|
|||||||
Expenses:
|
||||||||||
Interest
expense
|
2,355
|
2,179
|
2,927
|
|||||||
Other
expenses
|
142
|
127
|
942
|
|||||||
Total
Expenses
|
2,497
|
2,306
|
3,869
|
|||||||
Income
before income taxes and equity in undistributed
net income of subsidiaries
|
3,606
|
5,956
|
5,271
|
|||||||
Income
tax benefit
|
--
|
--
|
1,205
|
|||||||
Equity
in undistributed net income of subsidiaries:
|
||||||||||
Bank
|
8,124
|
5,518
|
1,080
|
|||||||
Non-bank
|
847
|
677
|
71
|
|||||||
Net
Income
|
$
|
12,577
|
$
|
12,151
|
$
|
7,627
|
Year
Ended December 31
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Operating
Activities
|
||||||||||
Net
Income
|
$
|
12,577
|
$
|
12,151
|
$
|
7,627
|
||||
Adjustments
to reconcile net income to net cash
provided by operating activities:
|
||||||||||
Equity
in undistributed net income
of subsidiaries
|
(8,971
|
)
|
(6,195
|
)
|
(1,151
|
)
|
||||
Decrease
(increase) in other assets
|
1,208
|
(237
|
)
|
(830
|
)
|
|||||
Increase
in accrued interest payable and other
liabilities
|
138
|
250
|
232
|
|||||||
Increase
in dividends payable
|
6
|
36
|
34
|
|||||||
Net
cash provided by operating activities
|
4,958
|
6,005
|
5,912
|
|||||||
Investing
Activities
|
||||||||||
Proceeds
from investment maturities
|
9
|
38
|
269
|
|||||||
Net
investment in subsidiaries
|
(1,281
|
)
|
(1,331
|
)
|
(1,704
|
)
|
||||
Capital
transfer to Bank
|
--
|
--
|
(12,000
|
)
|
||||||
Net
cash used in investing activities
|
(1,272
|
)
|
(1,293
|
)
|
(13,435
|
)
|
||||
Financing
Activities
|
||||||||||
Cash
dividends
|
(4,662
|
)
|
(4,544
|
)
|
(4,384
|
)
|
||||
Proceeds
from issuance of common stock
|
502
|
493
|
129
|
|||||||
Proceeds
from issuance of long term debt
|
--
|
--
|
12,218
|
|||||||
Net
cash provided by (used in)
financing activities
|
(4,160
|
)
|
(4,051
|
)
|
7,963
|
|||||
(Decrease)
increase in cash and cash equivalents
|
(474
|
)
|
661
|
440
|
||||||
Cash
and cash equivalents at beginning of year
|
2,067
|
1,406
|
966
|
|||||||
Cash
and cash equivalents at end of year
|
$
|
1,593
|
$
|
2,067
|
$
|
1,406
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
||||||||||
2006
|
|||||||||||||
Interest
income
|
$
|
18,977
|
$
|
19,539
|
$
|
20,560
|
$
|
21,193
|
|||||
Interest
expense
|
8,840
|
9,225
|
10,380
|
10,890
|
|||||||||
Net
interest income
|
10,137
|
10,314
|
10,180
|
10,303
|
|||||||||
Provision
for loan losses
|
(77
|
)
|
157
|
499
|
586
|
||||||||
Other
income
|
3,512
|
3,304
|
3,510
|
3,711
|
|||||||||
Gains
(losses) on securities
|
4
|
0
|
0
|
0
|
|||||||||
Other
expenses
|
9,518
|
8,936
|
8,538
|
8,498
|
|||||||||
Income
before income taxes
|
4,212
|
4,525
|
4,653
|
4,930
|
|||||||||
Applicable
income taxes
|
1,407
|
1,481
|
1,388
|
1,467
|
|||||||||
Net
income
|
$
|
2,805
|
$
|
3,044
|
$
|
3,265
|
$
|
3,463
|
|||||
Earnings
per share
|
$
|
.46
|
$
|
.50
|
$
|
.53
|
$
|
.56
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
||||||||||
2005
|
|||||||||||||
Interest
income
|
$
|
16,150
|
$
|
16,826
|
$
|
18,099
|
$
|
18,681
|
|||||
Interest
expense
|
6,560
|
6,833
|
7,710
|
8,310
|
|||||||||
Net
interest income
|
9,590
|
9,993
|
10,389
|
10,371
|
|||||||||
Provision
for loan losses
|
(91
|
)
|
1,007
|
356
|
(194
|
)
|
|||||||
Other
income
|
3,053
|
3,097
|
3,430
|
4,633
|
|||||||||
Gains
(losses) on securities
|
28
|
(218
|
)
|
59
|
6
|
||||||||
Other
expenses
|
8,479
|
8,509
|
8,787
|
8,879
|
|||||||||
Income
before income taxes
|
4,283
|
3,356
|
4,735
|
6,325
|
|||||||||
Applicable
income taxes
|
1,529
|
1,219
|
1,691
|
2,109
|
|||||||||
Net
income
|
$
|
2,754
|
$
|
2,137
|
$
|
3,044
|
$
|
4,216
|
|||||
Earnings
per share
|
$
|
.45
|
$
|
.35
|
$
|
.50
|
$
|
.69
|
ITEM
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
CONTROLS
AND PROCEDURES
|
/s/
William B. Grant
|
/s/
Carissa L. Rodeheaver
|
|
William
B. Grant, Esq., CFP
|
Carissa
L. Rodeheaver, CPA, CFP
|
|
Chairman
of the Board and
|
Senior
Vice President and
|
|
Chief
Executive Officer
|
Chief
Financial Officer
|
ITEM
9B.
|
OTHER
INFORMATION
|
DIRECTORS,
EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE
|
ITEM
11.
|
EXECUTIVE
COMPENSATION
|
ITEM
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED
STOCKHOLDER MATTERS
|
ITEM
13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
|
ITEM
14.
|
PRINCIPAL
ACCOUNTANT FEES AND
SERVICES
|
EXHIBITS
AND FINANCIAL STATEMENT
SCHEDULES
|
First
United Corporation
|
||
Dated:
March 9, 2007
|
By:
|
/s/
William B. Grant
|
William
B. Grant, Esq., CFP
|
||
Chairman
of the Board and Chief Executive
Officer
|
/s/
William B. Grant
|
/s/
David J. Beachy
|
|
(William
B. Grant) Director, Chief Executive Officer
|
(David
J. Beachy) Director--March 9, 2007
|
|
March
9, 2007
|
||
/s/
M. Kathryn Burkey
|
/s/
Faye E. Cannon
|
|
(M.
Kathryn Burkey) Director--March 9, 2007
|
(Faye
E. Cannon) Director--March 9, 2007
|
|
/s/
Paul Cox, Jr.
|
/s/
Raymond F. Hinkle
|
|
(Paul
Cox, Jr.) Director--March 9, 2007
|
(Raymond
F. Hinkle) Director--March 9, 2007
|
|
/s/
Robert W. Kurtz
|
/s/
John W. McCullough
|
|
(Robert
W. Kurtz) Director, President and Chief
|
(John
W. McCullough) Director--March 9, 2007
|
|
Risk
Officer--March 9, 2007
|
||
/s/
Elaine L. McDonald
|
/s/
Donald E. Moran
|
|
(Elaine
L. McDonald) Director--March 9, 2007
|
(Donald
E. Moran) Director--March 9, 2007
|
/s/
Karen F. Myers
|
/s/
Carissa L. Rodeheaver
|
|
(Karen
F. Myers) Director--March 9, 2007
|
(Carissa
L. Rodeheaver) SVP & Chief Financial Officer-
|
|
March
9, 2007
|
||
/s/
Gary R. Ruddell
|
/s/
I. Robert Rudy
|
|
(Gary
R. Ruddell) Director--March 9, 2007
|
(I.
Robert Rudy) Director--March 9, 2007
|
|
/s/
Robert G. Stuck
|
||
(Richard
G. Stanton) Director - March 9, 2007
|
(Robert
G. Stuck) Director--March 9, 2007
|
|
/s/
H. Andrew Walls, III
|
||
(H.
Andrew Walls, III) Director--March 9, 2007
|
Exhibit |
Description
|
3.1
|
Amended
and Restated Articles of Incorporation (incorporated by reference
to
Exhibit 3.1 of the Corporation's Quarterly Report on Form 10-Q for
the
period ended September 30, 1998)
|
3.2
|
Amended
and Restated By-Laws (incorporated by reference to Exhibit 3(ii)
of the
Corporation's Annual Report on Form 10-K for the year ended December
31,
1997)
|
10.1
|
First
United Bank & Trust Amended and Restated Supplemental Executive
Retirement Plan (“SERP”) (incorporated by reference to Exhibit 10.4 of the
Corporation’s Current Report on Form 8-K filed on February 21,
2007)
|
10.2
|
Amended
and Restated SERP Agreement with William B. Grant (incorporated by
reference to Exhibit 10.5 of the Corporation’s Current Report on Form 8-K
filed on February 21, 2007)
|
10.3
|
Form
of Amended and Restated SERP Agreement with executive officers other
than
William B. Grant (incorporated by reference to Exhibit 10.6 of the
Corporation’s Current Report on Form 8-K filed on February 21,
2007)
|
10.4
|
Form
of Endorsement Split Dollar Agreement between the Bank and each of
William
B. Grant, Robert W. Kurtz, Jeannette R. Fitzwater, Phillip D. Frantz,
Eugene D. Helbig, Jr., Steven M. Lantz, Robin M. Murray, Carissa
L.
Rodeheaver, and Frederick A. Thayer, IV (incorporated by reference
to
Exhibit 10.3 of the Corporation’s Quarterly Report on Form 10-Q for the
period ended September 30, 2003)
|
10.5
|
First
United Corporation Executive and Director Deferred Compensation Plan
(incorporated by reference to Exhibit 10.10 of the Corporation’s Quarterly
Report on Form 10-Q for the period ended September 30,
2003)
|
10.6
|
First
United Corporation Change in Control Plan (incorporated by reference
to
Exhibit 10.1 of the Corporation’s Current Report on Form 8-K filed on
February 21, 2007)
|
10.7
|
Change
in Control Severance Plan Agreement with William B. Grant (incorporated
by
reference to Exhibit 10.2 the Corporation’s Current Report on Form 8-K
filed on February 21, 2007)
|
10.8
|
Form
of Change in Control Severance Plan Agreement with executive officers
other than William B. Grant (incorporated by reference to Exhibit
10.3 the
Corporation’s Current Report on Form 8-K filed on February 21,
2007)
|
21
|
Subsidiaries
of the Corporation, incorporated by reference to page 3 of this Annual
Report on Form 10-K.
|
23.1
|
Consent
of Beard Miller Company LLP (filed
herewith)
|
23.2
|
Consent
of Ernst & Young LLP (filed
herewith)
|
31.1
|
Certifications
of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act (filed
herewith)
|
31.2
|
Certifications
of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act (filed
herewith)
|
32.1
|
Certification
of the CEO pursuant to Section 906 of the Sarbanes-Oxley Act (furnished
herewith)
|
32.2
|
Certification
of the CFO pursuant to Section 906 of the Sarbanes-Oxley Act (furnished
herewith)
|