Restrictions on Dividend Payments

12 Months Ended

Dec. 31, 2015

Restrictions on Dividend Payments [Abstract]

Restrictions on Dividend Payments

22.Restrictions on Dividend Payments

First United Corporation is subject to an informal agreement with the Federal Reserve Bank of Richmond (the “Reserve Bank”), which requires it to seek the prior approval of the Reserve Bank before making any dividend payment or other distribution on its capital securities or other securities that qualify as Tier 1 capital.  On November 15, 2010, First United Corporation, at the request of the Reserve Bank, deferred regular quarterly cash dividend payments on its Series A Preferred Stock.  Pursuant to the terms of the Series A Preferred Stock, the deferral prohibits First United Corporation from paying dividends or other distributions on its common stock.  On December 15, 2010, First United Corporation, at the request of the Reserve Bank, elected to defer regular quarterly interest payments on its TPS Debentures, beginning with the payments that are due in March 2011.  This deferral likewise prohibited First United Corporation from paying any dividends or distributions on its capital securities during the deferral period. 

In February 2014, First United Corporation received approval from the Reserve Bank to terminate this deferral by making the quarterly interest payments due to the Trusts in March 2014 and paying all deferred interest for prior quarters.  In April 2014, First United Corporation received approval from the Reserve Bank to terminate this deferral by making the quarterly dividend payment due to the holders of the outstanding shares of Series A Preferred Stock in May 2014 and paying all unpaid dividends that accrued during the suspension period. See Note 13 for additional information about the current state of the deferral.