Regulatory Capital Requirements

12 Months Ended

Dec. 31, 2011

4.	Regulatory Capital Requirements

First United Corporation and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, First United Corporation and the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require First United Corporation and the Bank to maintain certain minimum amounts of capital and ratios of total and Tier I capital to risk-weighted assets, and of Tier I capital to average assets (leverage). Management believes, as of December 31, 2011, that First United Corporation and the Bank meet all capital adequacy requirements to which they are subject.

As of December 31, 2011, the most recent notification from regulatory agencies categorized First United Corporation and the Bank as "well capitalized" under the regulatory framework for prompt corrective action. For a financial institution to be categorized as well capitalized, total risk-based, Tier I risk-based, and Tier I leverage ratios must not fall below the percentages shown in the following table. Management is not aware of any condition or event which has caused the well capitalized position to change.

											To Be Well Capitalized
											Under Prompt
						For Capital					Corrective Action
	Actual					Adequacy Purposes					Provisions
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
December 31, 2011
Total Capital (to Risk Weighted Assets)
Consolidated	$	152,280		13.05	%	$	93,342		8.00	%	$	116,677		10.00	%
First United Bank & Trust		155,651		13.38	%		93,035		8.00	%		116,294		10.00	%
Tier 1 Capital (to Risk Weighted Assets)
Consolidated		131,884		11.30	%		46,671		4.00	%		70,006		6.00	%
First United Bank & Trust		140,818		12.11	%		46,517		4.00	%		69,776		6.00	%
Tier 1 Capital (to Average Assets)
Consolidated		131,884		9.10	%		57,953		4.00	%		72,441		5.00	%
First United Bank & Trust		140,818		9.75	%		57,782		4.00	%		72,228		5.00	%

											To Be Well Capitalized
											Under Prompt
						For Capital					Corrective Action
	Actual					Adequacy Purposes					Provisions
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
December 31, 2010
Total Capital (to Risk Weighted Assets)
Consolidated	$	151,147		11.57	%	$	104,534		8.00	%	$	130,667		10.00	%
First United Bank & Trust		150,349		11.53	%		104,281		8.00	%		130,351		10.00	%
Tier 1 Capital (to Risk Weighted Assets)
Consolidated		127,317		9.74	%		52,267		4.00	%		78,407		6.00	%
First United Bank & Trust		133,802		10.26	%		52,140		4.00	%		78,210		6.00	%
Tier 1 Capital (to Average Assets)
Consolidated		127,317		7.34	%		69,349		4.00	%		86,687		5.00	%
First United Bank & Trust		133,802		7.73	%		69,203		4.00	%		86,504		5.00	%

- Definition

The entire disclosure for banks, savings institutions, and credit unions, for regulatory capital requirements imposed by the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS) or for any state imposed capital requirements, as applicable. The disclosure may include (1) a description of regulatory capital requirements (a) for capital adequacy purposes and (b) established by the prompt corrective action provisions of Section 38 of the Federal Depository Insurance Act; (2) the actual or possible material effects of noncompliance with such requirements; (3) whether the entity is in compliance with the regulatory capital requirements including (a) required and actual ratios and amounts of Tier 1 leverage, Tier 1 risk-based, and total risk-based capital, tangible capital (for savings institutions), and Tier 3 capital for market risk (for certain banks and bank holding companies), (b) factors that may significantly affect capital adequacy; (4) the prompt corrective action category in which the entity was classified as of its most recent notification; (5) whether management believes any conditions or events since notification have changed the entity's category. Also may include additional information that might be disclosed in situations where substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time.

+ References

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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+ Details