10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

        For quarterly period ended June 30, 2022

◻    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

        For the transition period from _______________ to ________________

Commission file number 0-14237

First United Corporation

(Exact name of registrant as specified in its charter)

Maryland	52-1380770
(State or other jurisdiction of incorporation or organization)	(I. R. S. Employer Identification No.)
19 South Second Street, Oakland, Maryland	21550-0009
(Address of principal executive offices)	(Zip Code)

(800) 470-4356

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbols	Name of each exchange on which registered
Common Stock	FUNC	Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑  No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑   No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated filer ◻	Accelerated Filer ◻
Non-Accelerated filer ☑	Smaller Reporting Company ☑
Emerging Growth Company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standard provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ◻   No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 6,656,395 shares of common stock, par value $.01 per share, as of July 31, 2022.

INDEX TO QUARTERLY REPORT

FIRST UNITED CORPORATION

		Page
PART I. FINANCIAL INFORMATION		3
Item 1.	Financial Statements (unaudited)	3
	Consolidated Statements of Financial Condition – June 30, 2022 and December 31, 2021	3
	Consolidated Statements of Operations – for the six and three months ended June 30, 2022 and 2021	4
	Consolidated Statements of Comprehensive (Loss)/Income – for the six and three months ended June 30, 2022 and 2021	8
	Consolidated Statements of Changes in Shareholders’ Equity – for three months ended June 30, 2022 and 2021	10
	Consolidated Statements of Cash Flows – for the six months ended June 30, 2022 and 2021	11
	Notes to Consolidated Financial Statements	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	46
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	66
Item 4.	Controls and Procedures	67
PART II. OTHER INFORMATION		68
Item 1.	Legal Proceedings	68
Item 1A.	Risk Factors	68
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 3.	Defaults upon Senior Securities	68
Item 4.	Mine Safety Disclosures	68
Item 5.	Other Information	68
Item 6.	Exhibits	69
SIGNATURES		70

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

First United Corporation and Subsidiaries

Consolidated Statements of Financial Condition

(In thousands, except share data - Unaudited)

	June 30, 2022		December 31, 2021
Assets
Cash and due from banks	$	20,108	$	109,823
Interest bearing deposits in banks		1,543		5,897
Cash and cash equivalents		21,651		115,720
Investment securities – available for sale (at fair value)		132,867		286,771
Investment securities – held to maturity (fair value $220,301 at June 30, 2022 and $65,369 at December 31, 2021)		240,588		56,259
Restricted investment in bank stock, at cost		1,026		1,029
Loans held for sale		—		67
Loans		1,233,613		1,153,687
Unearned fees		(104)		(292)
Allowance for loan losses		(15,737)		(15,955)
Net loans		1,217,772		1,137,440
Premises and equipment, net		35,305		34,697
Goodwill and other intangibles		11,947		12,052
Bank owned life insurance		45,739		45,150
Deferred tax assets		13,653		6,857
Other real estate owned, net		4,517		4,477
Right of use assets		2,075		2,247
Pension asset		—		4,765
Accrued interest receivable		5,055		4,821
Other assets		20,260		17,486
Total Assets	$	1,752,455		1,729,838
Liabilities and Shareholders’ Equity
Liabilities:
Non-interest bearing deposits	$	527,761	$	501,627
Interest bearing deposits		956,593		967,747
Total deposits		1,484,354		1,469,374
Short-term borrowings		69,914		57,699
Long-term borrowings		30,929		30,929
Operating lease liability		2,570		2,761
SERP deferred compensation		10,452		10,395
Pension Liability		4,669		—
Accrued interest payable and other liabilities		15,676		15,787
Dividends payable		999		993
Total Liabilities		1,619,563		1,587,938
Shareholders’ Equity:
Common Stock – par value $0.01 per share; Authorized 25,000,000 shares; issued and outstanding 6,656,395 shares at June 30, 2022 and 6,620,955 at December 31, 2021		67		66
Surplus		24,105		23,661
Retained earnings		154,636		145,487
Accumulated other comprehensive loss		(45,916)		(27,314)
Total Shareholders’ Equity		132,892		141,900
Total Liabilities and Shareholders’ Equity	$	1,752,455	$	1,729,838

See accompanying notes to the consolidated financial statements

3

First United Corporation and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)

	Six Months Ended
	June 30,
	2022		2021
	(Unaudited)
Interest income
Interest and fees on loans	$	25,293	$	25,829
Interest on investment securities
Taxable		2,946		1,984
Exempt from federal income tax		561		543
Total investment income		3,507		2,527
Other		78		142
Total interest income		28,878		28,498
Interest expense
Interest on deposits:
Savings		36		46
Interest-bearing transaction accounts		319		636
Time deposits		521		1,463
Total interest on Deposits		876		2,145
Interest on short-term borrowings		39		50
Interest on long-term borrowings		651		1,304
Total Interest Expense		1,566		3,499
Net Interest income		27,312		24,999
Provision for loan losses		205		665
Net interest income after provision for loan losses		27,107		24,334
Other operating income
Net gains on investments, available for sale		3		154
Net gains on sale of residential mortgage loans		28		860
Net gains on disposal of fixed assets		34		16
Net gains		65		1,030
Other Income
Service charges on deposit accounts		928		817
Other service charges		445		432
Trust department		4,233		4,275
Debit card income		1,869		1,723
Bank owned life insurance		589		579
Brokerage commissions		533		625
Other		198		612
Total other income		8,795		9,063
Total other operating income		8,860		10,093
Other operating expenses
Salaries and employee benefits		11,761		10,495
FDIC premiums		329		366
Equipment expense		2,073		1,805
Occupancy expense of premises		1,438		1,418
Data processing expense		1,626		1,601
Marketing expense		257		279
Professional services		1,084		2,661
Contract labor		323		333
Telephone		253		483
Losses/(gains) on sales and write downs of other real estate owned, net		247		(610)
Investor relations		219		430
Settlement expense		—		3,300
Contributions		63		50
Other		1,542		1,348
Total other operating expenses		21,215		23,959
Income before income tax expense		14,752		10,468

4

Provision for income tax expense		3,609		2,635
Net Income	$	11,143	$	7,833
Basic net income per share	$	1.68	$	1.15
Diluted net income per share	$	1.68	$	1.15
Weighted average number of basic shares outstanding		6,639		6,803
Weighted average number of diluted shares outstanding		6,649		6,808
Dividends declared per common share	$	0.30	$	0.30

See accompanying notes to the consolidated financial statements

5

First United Corporation and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)

	Three Months Ended
	June 30,
	2022		2021
	(Unaudited)
Interest income
Interest and fees on loans	$	12,861	$	13,097
Interest on investment securities
Taxable		1,540		994
Exempt from federal income tax		279		268
Total investment income		1,819		1,262
Other		51		77
Total interest income		14,731		14,436
Interest expense
Interest on deposits:
Savings		18		21
Interest-bearing transaction accounts		167		293
Time deposits		216		685
Total interest on Deposits		401		999
Interest on short-term borrowings		21		26
Interest on long-term borrowings		338		648
Total Interest Expense		760		1,673
Net Interest income		13,971		12,763
Provision for loan losses		624		555
Net interest income after provision for loan losses		13,347		12,208
Other operating income
Net gains on investments, available for sale		—		154
Gains on sale of residential mortgage loans		7		272
Gains on disposal of fixed assets		6		16
Net gains		13		442
Other Income
Service charges on deposit accounts		463		412
Other service charges		232		221
Trust department		2,044		2,034
Debit card income		983		913
Bank owned life insurance		297		293
Brokerage commissions		313		357
Other		81		91
Total other income		4,413		4,321
Total other operating income		4,426		4,763
Other operating expenses
Salaries and employee benefits		5,793		5,507
FDIC premiums		155		183
Equipment		1,029		954
Occupancy		711		693
Data processing		805		875
Marketing		151		133
Professional services		564		1,491
Contract labor		158		185
Line rentals		139		268
Losses/(gains) on sales and write downs of other real estate owned, net		152		(198)
Investor relations		123		306
Contributions		42		27
Other		815		608
Total other operating expenses		10,637		11,032
Income before income tax expense		7,136		5,939
Provision for income tax expense		1,708		1,536

6

Net Income	$	5,428	$	4,403
Basic net income per common share	$	0.82	$	0.66
Diluted net income per common share	$	0.82	$	0.66
Weighted average number of basic shares outstanding		6,650		6,609
Weighted average number of diluted shares outstanding		6,661		6,615
Dividends declared per common share	$	0.15	$	0.15

See accompanying notes to the consolidated financial statements

7

First United Corporation and Subsidiaries

Consolidated Statements of Comprehensive (Loss)/Income

(In thousands)

	Six Months Ended
	June 30,
	2022		2021
Comprehensive (Loss)/Income	(Unaudited)
Net Income	$	11,143	$	7,833
Other comprehensive (loss)/income, net of tax and reclassification adjustments:
Available for sale securities:
Unrealized holding (losses)/gains on investments with OTTI	$	(654)	$	2,523
Reclassification adjustment for accretable yield realized in income		101		101
Other comprehensive (loss)/income on investments with OTTI		(755)		2,422
Unrealized holding losses on all other AFS investments	$	(16,203)	$	(4,327)
Unrealized holding losses on securities transferred from available for sale to held to maturity		8,328		—
Reclassification adjustment for gains realized in income		3		154
Other comprehensive losses on all other AFS investments		(7,878)		(4,481)
Held to Maturity Securities
Unrealized holding losses on securities transferred to held to maturity	$	(8,328)	$	—
Reclassification adjustment for amortization realized in income		(324)		(108)
Other comprehensive (losses)/income on HTM investments		(8,004)		108
Cash flow hedges:
Unrealized holding gains on cash flow hedges	$	1,088	$	507
Reclassification adjustment for gains realized in income		—		—
Other comprehensive income on cash flow hedges		1,088		507
Pension plan liability:
Unrealized holding (losses)/gains on pension plan liability	$	(10,542)	$	1,090
Reclassification adjustment for amortization of unrecognized loss realized in income		(558)		(744)
Other comprehensive (loss)/income on pension plan liability		(9,984)		1,834
SERP liability:
Unrealized holding losses on SERP liability	$	—	$	—
Reclassification adjustment for amortization of unrealized loss realized in income		(135)		(150)
Other comprehensive income on SERP liability		135		150
Other comprehensive (losses)/gains before income tax		(25,398)		540
Income tax benefit/(expense) related to other comprehensive income		6,796		(145)
Other comprehensive (loss)/income, net of tax		(18,602)		395
Comprehensive (loss)/income	$	(7,459)	$	8,228

See accompanying notes to the consolidated financial statements

8

First United Corporation and Subsidiaries

Consolidated Statements of Comprehensive (Loss)/Income

(In thousands)

	Three Months Ended
	June 30,
	2022		2021
Comprehensive (Loss)/Income (in thousands)	(Unaudited)
Net Income	$	5,428	$	4,403
Other comprehensive (loss)/income, net of tax and reclassification adjustments:
Available for sale securities:
Unrealized holding (losses)/gains on investments with OTTI	$	(795)	$	2,160
Reclassification adjustment for accretable yield realized in income		51		51
Other comprehensive(loss)/income on investments with OTTI		(846)		2,109
Unrealized holding (losses)/gains on all other AFS investments	$	(5,359)	$	2,778
Reclassification adjustment for gains realized in income		—		154
Other comprehensive (losses)/gains on all other AFS investments		(5,359)		2,624
Held to Maturity Securities
Unrealized holding losses on securities transferred to held to maturity	$	—	$	—
Unrealized holding losses on HTM investments		—		—
Reclassification adjustment for amortization realized in income		(230)		(46)
Other comprehensive income on HTM investments		230		46
Cash flow hedges:
Unrealized holding gains/(loss) on cash flow hedges	$	249	$	(47)
Reclassification adjustment for gains realized in income		—		—
Other comprehensive income/(loss) on cash flow hedges		249		(47)
Pension plan liability:
Unrealized holding (losses)/gains on pension plan liability	$	(6,922)	$	1,280
Reclassification adjustment for amortization of unrecognized loss realized in income		(279)		(372)
Other comprehensive (losses)/income on pension plan liability		(6,643)		1,652
SERP liability:
Unrealized holding losses on SERP liability	$	—	$	—
Reclassification adjustment for amortization of unrealized loss realized in income		(67)		(73)
Other comprehensive income on SERP liability		67		73
Other comprehensive (losses)/income before income tax		(12,302)		6,457
Income tax benefit/(expense) related to other comprehensive income		3,293		(1,727)
Other comprehensive (loss)/income, net of tax		(9,009)		4,730
Comprehensive (loss)/income	$	(3,581)	$	9,133

See accompanying notes to the consolidated financial statements

9

First United Corporation and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity

(In thousands, except per share data)

	Common Stock		Surplus		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders' Equity
Balance at January 1, 2022	$	66	$	23,661	$	145,487	$	(27,314)	$	141,900
Net income						5,715				5,715
Other comprehensive loss								(9,593)		(9,593)
Stock based compensation				(4)						(4)
Common stock issued - 15,456 shares				55						55
Common stock dividend declared - $0.15 per share						(995)				(995)
Balance at March 31, 2022	$	66	$	23,712	$	150,207	$	(36,907)	$	137,078
Net income						5,428				5,428
Other comprehensive loss								(9,009)		(9,009)
Stock based compensation		1		339						340
Common stock issued - 18,416 shares				54						54
Common stock dividend declared - $0.15 per share						(999)				(999)
Balance at June 30, 2022	$	67	$	24,105	$	154,636	$	(45,916)	$	132,892

	Common Stock		Surplus		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders' Equity
Balance at January 1, 2021	$	70	$	30,149	$	129,691	$	(28,863)	$	131,047
Net income						3,430				3,430
Other comprehensive loss								(4,335)		(4,335)
Stock based compensation				50						50
Common stock issued - 2,956 shares				46						46
Common stock dividend declared - $0.15 per share						(1,049)				(1,049)
Balance at March 31, 2021	$	70	$	30,245	$	132,072	$	(33,198)	$	129,189
Net income						4,403				4,403
Other comprehensive income								4,730		4,730
Stock based compensation				296						296
Common stock issued - 3,261 shares				56						56
Common stock repurchase - 400,000 shares		(4)		(7,175)						(7,179)
Common stock dividend declared - $0.15 per share						(939)				(939)
Balance at June 30, 2021	$	66	$	23,422	$	135,536	$	(28,468)	$	130,556

See accompanying notes to the consolidated financial statements

10

First United Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

	Six Months Ended
	June 30,
	2022		2021
	(Unaudited)
Operating activities
Net income	$	11,143	$	7,833
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		205		665
Depreciation		1,645		1,632
Stock based compensation		336		402
Gains on sales of other real estate owned		—		(596)
Write-downs of other real estate owned		—		(160)
Originations of loans held for sale		(1,043)		(20,744)
Proceeds from sale of loans held for sale		1,138		23,707
Gains from sale of loans held for sale		(28)		(860)
Gains on disposal of fixed assets		(34)		(16)
Net amortization of investment securities discounts and premiums- AFS		100		516
Net (accretion)/amortization of investment securities discounts and premiums- HTM		(405)		168
Amortization of intangible assets		105		—
Gains on sales/calls of investment securities – AFS		(3)		(154)
Earnings on bank owned life insurance		(589)		(579)
Amortization of deferred loan fees		(123)		(1,979)
Amortization of operating lease right of use asset		172		(6)
Increase in accrued interest receivable and other assets		1,300		(502)
Deferred tax benefit		(6,796)		(22)
Operating lease liability		(191)		(13)
Increase/(decrease) in accrued interest payable and other liabilities		3,527		(2,670)
Net cash provided by operating activities		10,459		6,622
Investing activities
Proceeds from maturities/calls of investment securities - AFS		9,583		27,285
Proceeds from maturities/calls of investment securities - HTM		7,571		8,744
Proceeds from sales of investment securities - AFS		1,023		13,687
Purchases of investment securities - AFS		(12,892)		(58,516)
Purchases of investment securities - HTM		(52,459)		(6,332)
Proceeds from sales of other real estate owned		—		3,386
Proceeds from disposal of fixed assets		37		—
Net decrease in restricted stock		3		810
Net (increase)/decrease in loans		(80,454)		45,193
Purchases of loans		—		(20,100)
Purchases of premises and equipment		(2,256)		(741)
Net cash (used in)/provided by investing activities		(129,844)		13,416
Financing activities
Net increase in deposits		14,980		33,745
Issuance of common stock		109		46
Cash dividends paid on common stock		(1,988)		(1,906)
Net increase in short-term borrowings		12,215		246
Stock repurchase		—		(7,179)
Net cash provided by financing activities		25,316		24,952
(Decrease)/increase in cash and cash equivalents		(94,069)		44,990
Cash and cash equivalents at beginning of the year		115,720		149,432
Cash and cash equivalents at end of period	$	21,651	$	194,422
Supplemental information
Interest paid	$	1,667	$	3,561
Taxes paid	$	3,758	$	3,487
Non-cash investing activities:
Transfers from loans to other real estate owned	$	40	$	—
Transfers from securities available for sale to held to maturity	$	139,036	$	—

See accompanying notes to the consolidated financial statements

11

FIRST UNITED CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 – Basis of Presentation

The financial information is presented in accordance with generally accepted accounting principles and general practice for financial institutions in the United States of America (“U.S. GAAP”).  In preparing financial statements, management is required to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities as of the date of financial statements.  In addition, these estimates and assumptions affect revenues and expenses in the financial statements and as such, actual results could differ from those estimates.  

Principles of Consolidation

The consolidated financial statements include the accounts of First United Corporation, the Bank, First United Statutory Trust I, First United Statutory Trust II, OakFirst Loan Center, LLC, Oakfirst Loan Center, Inc., First OREO Trust and FUBT OREO I, LLC. All significant inter-company accounts and transactions have been eliminated.

Certain prior period balances have been reclassified to conform to the current period presentation. Operating results for the six and three month periods ended June 30, 2022 are not necessarily indicative of the results that may be expected for the full year or for any future interim period. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in First United Corporation’s Annual Report on Form 10-K for the year ended December 31, 2021.

As used in these notes, the terms “the Corporation” “we”, “us”, and “our” refer to First United Corporation and, unless the context clearly requires otherwise, its consolidated subsidiaries.

The Corporation has evaluated events and transactions occurring subsequent to the statement of financial condition date of June 30, 2022 and through the date these consolidated financial statements were issued, for items of potential recognition or disclosure.

Note 2 – Earnings Per Common Share

Basic earnings per common share is derived by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period and does not include the effect of any potentially dilutive common stock equivalents. Diluted earnings per share is derived by dividing net income available to common shareholders by the weighted-average number of shares outstanding, adjusted for the dilutive effect of outstanding common stock equivalents, such as restricted stock units (“RSUs”). There were no anti-dilutive shares outstanding at June 30, 2022 or 2021.

12

The following table sets forth the calculation of basic and diluted earnings per common share for the six and three month periods ended June 30, 2022 and 2021:

	Six months ended June 30,
	2022					2021
			Average	Per Share				Average	Per Share
(in thousands, except for per share amount)	Income		Shares	Amount		Income		Shares	Amount
Basic Earnings Per Share:
Net income	$	11,143	6,639	$	1.68	$	7,833	6,803	$	1.15
Diluted Earnings Per Share:
Restricted stock units			10					5
Net income	$	11,143	6,649	$	1.68	$	7,833	6,808	$	1.15

	Three months ended June 30,
	2022					2021
			Average	Per Share				Average	Per Share
(in thousands, except for per share amount)	Income		Shares	Amount		Income		Shares	Amount
Basic Earnings Per Share:
Net income	$	5,428	6,650	$	0.82	$	4,403	6,609	$	0.66
Diluted Earnings Per Share:
Restricted stock units			11					6
Net income	$	5,428	6,661	$	0.82	$	4,403	6,615	$	0.66

13

Note 3 – Investments

The following table shows a comparison of amortized cost and fair values of investment securities at June 30, 2022 and December 31, 2021:

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		OTTI in AOCL
June 30, 2022
Available for Sale:
U.S. government agencies	$	11,060	$	—	$	1,145	$	9,915	$	—
Residential mortgage-backed agencies		47,086		—		5,840		41,246		—
Commercial mortgage-backed agencies		36,498		—		4,502		31,996		—
Collateralized mortgage obligations		27,095		—		2,945		24,150		—
Obligations of states and political subdivisions		8,341		43		61		8,323		—
Corporate bonds		1,000		—		21		979		—
Collateralized debt obligations		18,640		—		2,382		16,258		(1,415)
Total available for sale	$	149,720	$	43	$	16,896	$	132,867	$	(1,415)
(in thousands)	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value		OTTI in AOCL
June 30, 2022
Held to Maturity:
U.S. treasuries	$	37,076	$	—	$	1,226	$	35,850	$	—
U.S. government agencies		67,596		—		8,749		58,847		—
Residential mortgage-backed agencies		27,996		3		2,282		25,717		—
Commercial mortgage-backed agencies		25,440		1		2,996		22,445		—
Collateralized mortgage obligations		59,951		—		5,658		54,293		—
Obligations of states and political subdivisions		22,529		1,107		487		23,149		—
Total held to maturity	$	240,588	$	1,111	$	21,398	$	220,301	$	—

14

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		OTTI in AOCL
December 31, 2021
Available for Sale:
U.S. government agencies	$	69,602	$	66	$	2,499	$	67,169	$	—
Residential mortgage-backed agencies		49,630		—		969		48,661		—
Commercial mortgage-backed agencies		51,694		175		1,001		50,868		—
Collateralized mortgage obligations		93,018		84		3,025		90,077		—
Obligations of states and political subdivisions		12,439		371		6		12,804		—
Collateralized debt obligations		18,609		112		1,529		17,192		(660)
Total available for sale	$	294,992	$	808	$	9,029	$	286,771	$	(660)
(in thousands)	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value		OTTI in AOCL
December 31, 2021
Held to Maturity:
Residential mortgage-backed agencies	$	30,634	$	649	$	436	$	30,847	$	—
Commercial mortgage-backed agencies		5,456		145		—		5,601		—
Obligations of states and political subdivisions		20,169		8,752		—		28,921		—
Total held to maturity	$	56,259	$	9,546	$	436	$	65,369	$	—

The Corporation reassessed classification of certain investments and, effective February 1, 2022, the Corporation transferred $139.0 million of callable agencies, obligations of state and political subdivisions, and collateralized mortgage obligations from available for sale to held to maturity securities.  The transfer occurred at fair value.  The related unrealized loss of $8.4 million included in other comprehensive loss remained in other comprehensive loss, to be amortized out of other comprehensive loss with an offsetting entry to interest income as a yield adjustment over the remaining term of the securities.  No gain or loss was recorded at the time of transfer.

15

The following table shows the Corporation’s investment securities with gross unrealized and unrecognized losses and fair values at June 30, 2022 and December 31, 2021, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position:

	Less than 12 months					12 months or more
(in thousands)	Fair Value		Unrealized Losses		Number of Investments	Fair Value		Unrealized Losses		Number of Investments
June 30, 2022
Available for Sale:
U.S. government agencies	$	8,481		580	2		1,435		565	1
Residential mortgage-backed agencies		25,523		2,957	3		15,723		2,883	2
Commercial mortgage-backed agencies		18,648		2,527	6		13,348		1,975	3
Collateralized mortgage obligations		15,997		1,827	9		8,152		1,118	1
Obligations of states and political subdivisions		5,598		61	6		—		—	—
Collateralized debt obligations		6,492		128	4		9,766		2,254	5
Corporate Bonds		979		21	1		—		—	—
Total available for sale	$	81,718	$	8,101	31	$	48,424	$	8,795	12
	Less than 12 months					12 months or more
(in thousands)	Fair Value		Unrecognized Losses		Number of Investments	Fair Value		Unrecognized Losses		Number of Investments
June 30, 2022
Held to Maturity:
U.S. treasuries	$	35,850		1,226	4	$	—	$	—	—
U.S. government agencies		58,847	$	8,749	9		—		—	—
Residential mortgage-backed agencies		18,356		829	31		7,264		1,453	3
Commercial mortgage-backed agencies		20,443		2,996	3		—		—	—
Collateralized mortgage obligations		54,293		5,658	8		—		—	—
Obligations of states and political subdivisions		2,379		487	1		—		—	—
Total held to maturity	$	190,168	$	19,945	56	$	7,264	$	1,453	3

16

	Less than 12 months					12 months or more
(in thousands)	Fair Value		Unrealized Losses		Number of Investments	Fair Value		Unrealized Losses		Number of Investments
December 31, 2021
Available for Sale:
U.S. government agencies	$	23,577	$	122	3	$	33,972	$	2,377	6
Residential mortgage-backed agencies		29,507		257	3		19,154		712	2
Commercial mortgage-backed agencies		32,177		787	4		5,211		214	1
Collateralized mortgage obligations		24,322		649	5		43,076		2,376	5
Obligations of states and political subdivisions		3,046		6	1		—		—	—
Collateralized debt obligations		—		—	—		10,468		1,529	5
Total available for sale	$	112,629	$	1,821	16	$	111,881	$	7,208	19
	Less than 12 months					12 months or more
(in thousands)	Fair Value		Unrecognized Losses		Number of Investments	Fair Value		Unrecognized Losses		Number of Investments
December 31, 2021
Held to Maturity:
Residential mortgage-backed agencies	$	7,395	$	291	6	$	2,782	$	145	1
Total held to maturity	$	7,395	$	291	6	$	2,782	$	145	1

Management systematically evaluates securities for impairment on a quarterly basis. Based upon application of Accounting Standards Codification (“ASC”) Topic 320 (Section 320-10-35), management must assess whether (a) the Corporation has the intent to sell the security and (b) it is more likely than not that the Corporation will be required to sell the security prior to its anticipated recovery. If neither applies, then declines in the fair value of securities below their cost that are considered other-than-temporary declines are split into two components. The first is the loss attributable to declining credit quality. Credit losses are recognized in earnings as realized losses in the period in which the impairment determination is made. The second component consists of all other losses. The other losses are recognized in other comprehensive income. In estimating other than temporary impairment (“OTTI”) charges, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) adverse conditions specifically related to the security, an industry, or a geographic area, (3) the historic and implied volatility of the security, (4) changes in the rating of a security by a rating agency, (5) recoveries or additional declines in fair value subsequent to the balance sheet date, (6) failure of the issuer of the security to make scheduled interest payments, and (7) the payment structure of the debt security and the likelihood of the issuer being able to make payments that increase in the future. Due to the duration and the significant market value decline in the pooled trust preferred securities held in our portfolio, we performed more extensive testing on these securities for purposes of evaluating whether or not an OTTI has occurred.

17

The following table presents a cumulative roll-forward of the amount of non-cash OTTI charges related to credit losses that have been recognized in earnings for the trust preferred securities held in the CDO portfolio during the six and three month periods ended June 30, 2022 and 2021 that the Corporation does not intend to sell:

	Six Months Ended
	June 30,
(in thousands)	2022		2021
Balance of credit-related OTTI at January 1	$	2,043	$	2,244
Reduction for increases in cash flows expected to be collected		(101)		(101)
Balance of credit-related OTTI at June 30	$	1,942	$	2,143

	Three Months Ended
	June 30,
(in thousands)	2022		2021
Balance of credit-related OTTI at April 1	$	1,993	$	2,194
Reduction for increases in cash flows expected to be collected		(51)		(51)
Balance of credit-related OTTI at June 30	$	1,942	$	2,143

The amortized cost and estimated fair value of securities by contractual maturity at June 30, 2022 are shown in the following table. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties.

	June 30, 2022
(in thousands)	Amortized Cost		Fair Value
Available for Sale:
Due after one year through five years	$	8,365	$	8,099
Due after five years through ten years		5,556		5,195
Due after ten years		25,120		22,181
		39,041		35,475
Residential mortgage-backed agencies		47,086		41,246
Commercial mortgage-backed agencies		36,498		31,996
Collateralized mortgage obligations		27,095		24,150
Total available for sale	$	149,720	$	132,867
Held to Maturity:
Due after one year through five years	$	49,576	$	47,528
Due after five years through ten years		23,748		20,999
Due after ten years	$	53,877	$	49,319
		127,201		117,846
Residential mortgage-backed agencies		27,996		25,717
Commercial mortgage-backed agencies		25,440		22,445
Collateralized mortgage obligations		59,951		54,293
Total held to maturity	$	240,588	$	220,301

18

Note 4 – Loans and Related Allowance for Loan Losses

The following table summarizes the primary segments of the loan portfolio at June 30, 2022 and December 31, 2021:

(in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Total
June 30, 2022
Individually evaluated for impairment	$	2,267	$	599	$	—	$	2,384	$	33	$	5,283
Collectively evaluated for impairment		419,675		115,516		225,640		403,909		63,590		1,228,330
Total loans	$	421,942	$	116,115	$	225,640	$	406,293	$	63,623	$	1,233,613
December 31, 2021
Individually evaluated for impairment	$	2,365	$	629	$	90	$	2,644	$	—	$	5,728
Collectively evaluated for impairment		371,926		127,448		180,886		402,042		65,657		1,147,959
Total loans	$	374,291	$	128,077	$	180,976	$	404,686	$	65,657	$	1,153,687

The commercial and industrial portfolio in the table above includes $0.8 million and $7.7 million of Paycheck Protection Program (“PPP”) loans at June 30, 2022 and December 31, 2021, respectively, which are 100% guaranteed by the SBA, and no allowance for loan loss (“ALL”) has been assigned to them.

The following table presents the classes of the loan portfolio summarized by the aggregate pass and the criticized categories of special mention and substandard within the internal risk rating system at June 30, 2022 and December 31, 2021:

(in thousands)	Pass		Special Mention		Substandard		Total
June 30, 2022
Commercial real estate
Non owner-occupied	$	212,939	$	6,438	$	12,308	$	231,685
All other CRE		183,562		2,304		4,391		190,257
Acquisition and development
1-4 family residential construction		24,247		—		—		24,247
All other A&D		91,493		—		375		91,868
Commercial and industrial		206,035		4,940		14,665		225,640
Residential mortgage
Residential mortgage - term		340,549		—		5,853		346,402
Residential mortgage - home equity		59,219		—		672		59,891
Consumer		63,411		—		212		63,623
Total	$	1,181,455	$	13,682	$	38,476	$	1,233,613
December 31, 2021
Commercial real estate
Non owner-occupied	$	173,299	$	12,987	$	6,077	$	192,363
All other CRE		174,395		2,357		5,176		181,928
Acquisition and development
1-4 family residential construction		19,924		—		—		19,924
All other A&D		107,532		218		403		108,153
Commercial and industrial		161,429		5,071		14,476		180,976
Residential mortgage
Residential mortgage - term		338,832		—		5,624		344,456
Residential mortgage - home equity		59,533		—		697		60,230
Consumer		65,557		—		100		65,657
Total	$	1,100,501	$	20,633	$	32,553	$	1,153,687

19

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due.

The increase of $6.3 million in the substandard category was related to one large relationship in the nursing care sector that was downgraded from special mention in the first quarter of 2022.  This relationship continues to perform according to its contractual terms and is not considered impaired.

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and non-accrual loans at June 30, 2022 and December 31, 2021:

(in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days+ Past Due		Total Past Due and Accruing		Non- Accrual		Total Loans
June 30, 2022
Commercial real estate
Non owner-occupied	$	231,596	$	—	$	89	$	—	$	89	$	—	$	231,685
All other CRE		190,191		—		—		—		—		66		190,257
Acquisition and development
1-4 family residential construction		24,247		—		—		—		—		—		24,247
All other A&D		91,493		—		—		—		—		375		91,868
Commercial and industrial		224,113		39		1,488		—		1,527		—		225,640
Residential mortgage
Residential mortgage - term		342,616		73		2,119		254		2,446		1,340		346,402
Residential mortgage - home equity		59,321		178		53		4		235		335		59,891
Consumer		63,295		153		75		67		295		33		63,623
Total	$	1,226,872	$	443	$	3,824	$	325	$	4,592	$	2,149	$	1,233,613
December 31, 2021
Commercial real estate
Non owner-occupied	$	192,363	$	—	$	—	$	—	$	—	$	—	$	192,363
All other CRE		181,847		—		—		—		—		81		181,928
Acquisition and development
1-4 family residential construction		19,924		—		—		—		—		—		19,924
All other A&D		107,763		—		—		—		—		390		108,153
Commercial and industrial		180,676		132		78		—		210		90		180,976
Residential mortgage
Residential mortgage - term		340,429		159		2,222		148		2,529		1,498		344,456
Residential mortgage - home equity		59,485		238		104		—		342		403		60,230
Consumer		65,208		268		29		152		449		—		65,657
Total	$	1,147,695	$	797	$	2,433	$	300	$	3,530	$	2,462	$	1,153,687

Non-accrual loans that have been subject to partial charge-offs totaled $1.3 million at June 30, 2022 and $0.5 million at December 31, 2021.  Loans secured by 1-4 family residential real estate properties in the process of foreclosure totaled $0.1 million at June 30, 2022 and $0.2 million at December 31, 2021.   As a percentage of the loan portfolio, accruing loans past due 30 days or more increased to 0.37% compared to 0.19% at March 31, 2022 and 0.31% as of December 31, 2021.   

20

The following table summarizes the primary segments of the ALL at June 30, 2022 and December 31, 2021, segregated by the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment:

(in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Unallocated		Total
June 30, 2022
Individually evaluated for impairment	$	—	$	—	$	—	$	29	$	33	$	—	$	62
Collectively evaluated for impairment	$	6,220	$	2,172	$	2,830	$	3,083	$	940	$	430	$	15,675
Total ALL	$	6,220	$	2,172	$	2,830	$	3,112	$	973	$	430	$	15,737
December 31, 2021
Individually evaluated for impairment	$	—	$	—	$	28	$	36	$	—	$	—	$	64
Collectively evaluated for impairment	$	6,032	$	2,615	$	2,432	$	3,448	$	934	$	430	$	15,891
Total ALL	$	6,032	$	2,615	$	2,460	$	3,484	$	934	$	430	$	15,955

The evaluation of the need and amount of a specific allocation of the ALL and whether a loan can be removed from impairment status is made on a quarterly basis.

21

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not required at June 30, 2022 and December 31, 2021:

	Impaired Loans with Specific Allowance				Impaired Loans with No Specific Allowance		Total Impaired Loans
(in thousands)	Recorded Investment		Related Allowances		Recorded Investment		Recorded Investment (1)		Unpaid Principal Balance
June 30, 2022
Commercial real estate
Non owner-occupied	$	—	$	—	$	103	$	103	$	103
All other CRE		—		—		2,164		2,164		2,164
Acquisition and development
1-4 family residential construction		—		—		224		224		224
All other A&D		—		—		375		375		1,584
Commercial and industrial		—		—		—		—		—
Residential mortgage
Residential mortgage – term		270		29		1,779		2,049		2,108
Residential mortgage – home equity		—		—		335		335		335
Consumer		33		33				33		33
Total impaired loans	$	303	$	62	$	4,980	$	5,283	$	6,551
December 31, 2021
Commercial real estate
Non owner-occupied	$	—	$	—	$	106	$	106	$	106
All other CRE		—		—		2,259		2,259		2,259
Acquisition and development
1-4 family residential construction		—		—		239		239		239
All other A&D		—		—		390		390		1,599
Commercial and industrial		90		28		—		90		2,304
Residential mortgage
Residential mortgage – term		344		31		1,897		2,241		2,302
Residential mortgage – home equity		46		5		357		403		422
Consumer		—		—		—		—		—
Total impaired loans	$	480	$	64	$	5,248	$	5,728	$	9,231

(1) Recorded investment consists of unpaid principal balance, net of charge-offs, interest payments received applied to principal and unamortized deferred loan origination fees and cost.

Loans that are collectively evaluated for impairment are analyzed with general allowances being made as appropriate. For general allowances, historical loss trends are used in the estimation of losses in the current portfolio. These historical loss amounts are modified by other qualitative factors.

The classes described above, which are based on the Federal call code assigned to each loan, provide the starting point for the ALL analysis. Management tracks the historical net charge-off activity (full and partial charge-offs, net of full and partial recoveries) at the call code level. A historical charge-off factor is calculated utilizing a defined number of consecutive historical quarters. Consumer pools currently utilize a rolling twelve quarters, while Commercial pools currently utilize a rolling eight quarters.

Management supplements the historical charge-off factor with a number of additional qualitative factors that are likely to cause estimated credit losses associated with the existing loan pools to differ from historical loss experience. The additional factors, which are evaluated quarterly and updated using information obtained from internal, regulatory, and governmental sources, are:  (a) national and local economic trends and conditions; (b) levels of and trends in delinquency rates and non-accrual loans; (c) trends in volumes and terms of loans; (d) effects of changes in lending policies; (e) experience, ability, and depth of lending staff; (f) value of underlying collateral; and (g) concentrations of credit from a loan type, industry and/or geographic standpoint.

22

Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process to make appropriate and timely adjustments to the ALL. When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALL. Residential mortgage and consumer loans are charged off after they are 120 days contractually past due. All other loans are charged off based on an evaluation of the facts and circumstances of each individual loan. When the Bank believes that its ability to collect is solely dependent on the liquidation of the collateral, a full or partial charge-off is recorded promptly to bring the recorded investment to an amount that the Bank believes is supported by an ability to collect on the collateral. The circumstances that may impact the Bank’s decision to charge-off all or a portion of a loan include default or non-payment by the borrower, scheduled foreclosure actions, and/or prioritization of the Bank’s claim in bankruptcy. There may be circumstances where due to pending events, the Bank will place a specific allocation of the ALL on a loan for which a partial charge-off has been previously recognized. This specific allocation may be either charged-off or removed depending upon the outcome of the pending event. Full or partial charge-offs are not recovered until full principal and interest on the loan have been collected, even if a subsequent appraisal supports a higher value. In most cases, loans with partial charge-offs remain in non-accrual status. Both full and partial charge-offs reduce the recorded investment of the loan and the ALL and are considered to be charge-offs for purposes of all credit loss metrics and trends, including the historical rolling charge-off rates used in the determination of the ALL.

The following tables present the activity in the ALL for the six and three month periods ended June 30, 2022 and 2021:

(in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Unallocated		Total
ALL balance at January 1, 2022	$	6,032	$	2,615	$	2,460	$	3,484	$	934	$	430	$	15,955
Charge-offs		—		—		(52)		(33)		(545)		—		(630)
Recoveries		1		20		9		101		76		—		207
Provision		187		(463)		413		(440)		508		—		205
ALL balance at June 30, 2022	$	6,220	$	2,172	$	2,830	$	3,112	$	973	$	430	$	15,737
ALL balance at January 1, 2021	$	5,543	$	2,339	$	2,584	$	5,150	$	370	$	500	$	16,486
Charge-offs		—		(81)		—		(82)		(175)		—		(338)
Recoveries		—		110		38		29		78		—		255
Provision		132		132		322		(238)		317		—		665
ALL balance at June 30, 2021	$	5,675	$	2,500	$	2,944	$	4,859	$	590	$	500	$	17,068

(in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Unallocated		Total
ALL balance at April 1, 2022	$	5,922	$	2,542	$	2,513	$	2,945	$	940	$	430	$	15,292
Charge-offs		—		—		(4)		(24)		(299)		—		(327)
Recoveries		—		2		6		86		54		—		148
Provision		298		(372)		315		105		278		—		624
ALL balance at June 30, 2022	$	6,220	$	2,172	$	2,830	$	3,112	$	973	$	430	$	15,737
ALL balance at April 1, 2021	$	5,404	$	2,423	$	2,831	$	5,028	$	368	$	500	$	16,554
Charge-offs		—		—		—		—		(95)		—		(95)
Recoveries		—		9		2		12		31		—		54
Provision		271		68		111		(181)		286		—		555
ALL balance at June 30, 2021	$	5,675	$	2,500	$	2,944	$	4,859	$	590	$	500	$	17,068

The ALL is based on estimates, and actual losses may vary from current estimates.  Management believes that the granularity of the homogeneous pools and the related historical loss ratios and other qualitative factors, as well as the consistency in the application of assumptions, result in an ALL that is representative of the risk found in the components of the portfolio at any given date.

23

The following table presents the average recorded investment in impaired loans by class and related interest income recognized for the periods indicated:

	Six months ended						Six months ended
	June 30, 2022						June 30, 2021
(in thousands)	Average investment		Interest income recognized on an accrual basis		Interest income recognized on a cash basis		Average investment		Interest income recognized on an accrual basis		Interest income recognized on a cash basis
Commercial real estate
Non owner-occupied	$	105	$	6	$	—	$	3,165	$	6	$	—
All other CRE		2,211		45		—		3,058		69		—
Acquisition and development
1-4 family residential construction		231		7		—		259		6		—
All other A&D		382		—		—		599		6		—
Commercial and industrial		45		—		—		—		—		—
Residential mortgage
Residential mortgage – term		2,166		24		5		2,672		39		5
Residential mortgage – home equity		376		—		—		454		—		—
Consumer		11		—		—		17		—		—
Total	$	5,527	$	82	$	5	$	10,224	$	126	$	5

	Three months ended						Three months ended
	June 30, 2022						June 30, 2021
(in thousands)	Average investment		Interest income recognized on an accrual basis		Interest income recognized on a cash basis		Average investment		Interest income recognized on an accrual basis		Interest income recognized on a cash basis
Commercial real estate
Non owner-occupied	$	105	$	3	$	—	$	4,689	$	3	$	—
All other CRE		2,188		22		—		2,982		34		—
Acquisition and development
1-4 family residential construction		228		3		—		255		3		—
All other A&D		378		—		—		611		3		—
Commercial and industrial		—		—		—		—		—		—
Residential mortgage
Residential mortgage – term		2,130		12		—		2,585		19		—
Residential mortgage – home equity		363		—		—		474		—		—
Consumer		17		—		—		11		—		—
Total	$	5,409	$	40	$	—	$	11,607	$	62	$	—

In the normal course of business, the Bank modifies loan terms for various reasons. These reasons may include as a retention strategy to compete in the current interest rate environment, and to re-amortize or extend a loan term to better match the loan’s payment stream with the borrower’s cash flows. A modified loan is considered to be a troubled debt restructuring (a “TDR”) when the Bank has determined that the borrower is troubled (i.e. experiencing financial difficulties) and a concession has been granted. The Bank evaluates the probability that the borrower will be in payment default on any of its debt in the foreseeable future without modification. To make this determination, the Bank performs a global financial review of the borrower and loan guarantors to assess their current ability to meet their financial obligations.

When the Bank restructures a loan to a troubled borrower, the loan terms (i.e. interest rate, payment, amortization period and/or maturity date) are modified in such a way to enable the borrower to cover the modified debt service payments based on current financials and cash flow adequacy. If a borrower’s hardship is thought to be temporary, then modified terms are only offered for that

24

time period. Where possible, the Bank obtains additional collateral and/or secondary payment sources at the time of the restructure in order to put the Bank in the best possible position if the borrower is not able to meet the modified terms. To date, the Bank has not forgiven any principal as a restructuring concession. The Bank will not offer modified terms if it believes that modifying the loan terms will only delay an inevitable permanent default.

All loans designated as TDRs are considered impaired loans and may be in either accruing or non-accruing status. If the loan was accruing at the time of the modification, then it continues to be in accruing status subsequent to the modification. Non-accrual TDRs may return to accruing status when there has been sufficient payment performance for a period of at least six months. TDRs are considered to be in payment default if, subsequent to modification, the loans are transferred to non-accrual status or to foreclosure. A loan may be removed from being reported as a TDR in the calendar year following the modification if the interest rate at the time of modification was consistent with the interest rate for a loan with comparable credit risk and the loan has performed according to its modified terms for at least six months. Further, a loan that has been removed from TDR reporting status and has been subsequently re-modified at standard market terms, may be removed from impaired status as well.

The volume, type and performance of TDR activity is considered in the assessment of the local economic trend qualitative factor used in the determination of the ALL for loans that are evaluated collectively for impairment.

There were 12 loans totaling $3.2 million and $3.3 million that were classified as TDRs at June 30, 2022 and December 31, 2021, respectively.  The following table presents the volume and recorded investment in TDRs at the times they were modified, by class and type of modification that occurred during the periods indicated.

During the six month period ended June 30, 2022, there were no new TDRs and no existing TDRs that were re-modified. The Bank had no significant commitments to lend additional funds to TDRs.  During the six month period ended June 30, 2021, there were no new TDRs and one existing TDR that had reached its modification maturity date was re-modified.  These modifications did not impact the ALL.  During the six month periods ended June 30, 2022 and 2021, there were no payment defaults.

	Temporary Rate Modification			Extension of Maturity			Modification of Payment and Other Terms
(in thousands)	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
Six months ended June 30, 2021
Commercial real estate
Non owner-occupied	—	$	—	1	$	109	—	$	—
All other CRE	—		—	—		—	—		—
Acquisition and development
1-4 family residential construction	—		—	—		—	—		—
All other A&D	—		—	—		—	—		—
Commercial and industrial	—		—	—		—	—		—
Residential mortgage
Residential mortgage – term	—		—	—		—	—		—
Residential mortgage – home equity	—		—	—		—	—		—
Consumer	—		—	—		—	—		—
Total	—	$	—	1	$	109	—	$	—

25

The following table presents the volume and recorded investment in TDRs at the times they were modified, by class and type of modification that occurred during the periods indicated.

During the three month period ended June 30, 2022, there were no new TDRs and no existing TDRs that were re-modified. The Bank had no significant commitments to lend additional funds to TDR borrowers.  During the three month period ended June 30, 2021, there were no new TDRs and one existing TDR that had reached its modification maturity date was re-modified.  These re-modifications did not impact the ALL.  During the three months ended June 30, 2022 and 2021, there were no payment defaults under TDRs.

	Temporary Rate Modification			Extension of Maturity			Modification of Payment and Other Terms
(in thousands)	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
Three months ended June 30, 2021
Commercial real estate
Non owner-occupied	—	$	—	1	$	109	—	$	—
All other CRE	—		—	—		—	—		—
Acquisition and development
1-4 family residential construction	—		—	—		—	—		—
All other A&D	—		—	—		—	—		—
Commercial and industrial	—		—	—		—	—		—
Residential mortgage
Residential mortgage – term	—		—	—		—	—		—
Residential mortgage – home equity	—		—	—		—	—		—
Consumer	—		—	—		—	—		—
Total	—	$	—	1	$	109	—	$	—

Note 5 - Other Real Estate Owned, net

The following table presents the components of other real estate owned (“OREO”) at June 30, 2022 and December 31, 2021:

(in thousands)	June 30, 2022		December 31, 2021
Acquisition and development	$	4,477	$	4,477
Residential mortgage		40		—
Total OREO, net	$	4,517	$	4,477

The following table presents the activity in the OREO valuation allowance for the six and three month periods ended June 30, 2022 and 2021:

	Six Months Ended				Three Months Ended
	June 30,				June 30,
(in thousands)	2022		2021		2022		2021
Balance beginning of period	$	453	$	1,010	$	453	$	1,004
Fair value adjustment		—		(160)		—		(164)
Sales of OREO		—		(307)		—		(297)
Balance at end of period	$	453	$	543	$	453	$	543

26

The following table presents the components of OREO (income)/expenses, net, for the six and three month periods ended June 30, 2022 and 2021:

	Six Months Ended				Three Months Ended
	June 30,				June 30,
(in thousands)	2022		2021		2022		2021
Gains on sale of real estate, net	$	—	$	(596)	$	—	$	(105)
Fair value adjustment, net		—		(160)		—		(164)
Expenses, net		249		195		153		72
Rental and other income		(2)		(49)		(1)		(1)
Total OREO expenses/(income), net	$	247	$	(610)	$	152	$	(198)

Note 6 – Fair Value of Financial Instruments

The Corporation complies with the guidance of ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements required under other accounting pronouncements. The Corporation also follows the guidance on matters relating to all financial instruments found in ASC Subtopic 825-10, Financial Instruments – Overall.

Fair value is defined as the price to sell an asset or to transfer a liability in an orderly transaction between willing market participants as of the measurement date. Fair value is best determined by values quoted through active trading markets. Active trading markets are characterized by numerous transactions of similar financial instruments between willing buyers and willing sellers. Because no active trading market exists for various types of financial instruments, many of the fair values disclosed were derived using present value discounted cash flows or other valuation techniques described below. As a result, the Corporation’s ability to actually realize these derived values cannot be assumed.

The Corporation measures fair values based on the fair value hierarchy established in ASC Paragraph 820-10-35-37. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of inputs that may be used to measure fair value under the hierarchy are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities. This level is the most reliable source of valuation.

Level 2: Quoted prices that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability. Level 2 inputs include inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield curves at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates). It also includes inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs). Several sources are utilized for valuing these assets, including a contracted valuation service, Standard & Poor’s (“S&P”) evaluations and pricing services, and other valuation matrices.

Level 3: Prices or valuation techniques that require inputs that are both significant to the valuation assumptions and not readily observable in the market (i.e. supported with little or no market activity). Level 3 instruments are valued based on the best available data, some of which is internally developed, and consider risk premiums that a market participant would require.

The level established within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Transfers in and out of Level 1, 2 or 3 are recorded at fair value at the beginning of the reporting period.

Investments – The investment portfolio is classified and accounted for based on the guidance of ASC Topic 320, Investments – Debt and Equity Securities.

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The fair value of investments available-for-sale is determined using a market approach. At June 30, 2022 and December 31, 2021, the U.S. Government agencies and treasuries, residential and commercial mortgage-backed securities, and municipal bonds segments are classified as Level 2 within the valuation hierarchy. Their fair values were determined based upon market-corroborated inputs and valuation matrices, which were obtained through third party data service providers or securities brokers through which we have historically transacted both purchases and sales of investment securities.

Derivative financial instruments (Cash flow hedge) – The Corporation’s open derivative positions are interest rate swap agreements. Those classified as Level 2 open derivative positions are valued using externally developed pricing models based on observable market inputs provided by a third party and validated by management.  The Corporation has considered counterparty credit risk in the valuation of its interest rate swap assets.

Impaired loans – Loans included in the table below are those that are considered impaired with a specific allocation or with partial charge-offs, based upon the guidance of the loan impairment subsection of the Receivables Topic, ASC Section 310-10-35, under which the Corporation has measured impairment generally based on the fair value of the loan’s collateral. Fair value consists of the loan balance less its valuation allowance and is generally determined based on independent third-party appraisals of the collateral or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values based upon the lowest level of input that is significant to the fair value measurements.

Equity Investment- Equity investments included in the table below are considered impaired with losses recognized on the income statement in net gains.  Fair value of the equity investment was based on an independent third-party valuation report where the value was determined based on the revenue multiples of like kind information technology businesses.  These assets are included as Level 3 fair values based upon the lowest level of input that is significant to the fair value measurements.

Other real estate owned – OREO included in the table below are considered impaired with specific write-downs. Fair value of other real estate owned was based on independent third-party appraisals of the properties. These values were determined based on the sales prices of similar properties in the approximate geographic area. These assets are included as Level 3 fair values based upon the lowest level of input that is significant to the fair value measurements.

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For assets measured at fair value on a recurring and non-recurring basis, the fair value measurements by level within the fair value hierarchy used at June 30, 2022 and December 31, 2021 were as follows:

			Fair Value Measurements at June 30, 2022 Using
			Quoted
			Prices in	Significant
	Assets/(liabilities)		Active Markets	Other		Significant
	Measured at		for Identical	Observable		Unobservable
	Fair Value		Assets	Inputs		Inputs
(in thousands)	06/30/22		(Level 1)	(Level 2)		(Level 3)
Recurring:
Investment securities available-for-sale:
U.S. government agencies	$	9,915		$	9,915
Residential mortgage-backed agencies	$	41,246		$	41,246
Commercial mortgage-backed agencies	$	31,996		$	31,996
Collateralized mortgage obligations	$	24,150		$	24,150
Obligations of states and political subdivisions	$	8,323		$	8,323
Corporate bonds	$	979		$	979
Collateralized debt obligations	$	16,258				$	16,258
Financial derivatives	$	635		$	635
Non-recurring:
Impaired loans, net	$	337				$	337
Equity Investment	$	590				$	590
Other real estate owned	$	—				$	—

			Fair Value Measurements at December 31, 2021 Using
			Quoted
			Prices in	Significant
	Assets/(liabilities)		Active Markets	Other		Significant
	Measured at		for Identical	Observable		Unobservable
	Fair Value		Assets	Inputs		Inputs
(in thousands)	12/31/21		(Level 1)	(Level 2)		(Level 3)
Recurring:
Investment securities available-for-sale:
U.S. government agencies	$	67,169		$	67,169
Residential mortgage-backed agencies	$	48,661		$	48,661
Commercial mortgage-backed agencies	$	50,868		$	50,868
Collateralized mortgage obligations	$	90,077		$	90,077
Obligations of states and political subdivisions	$	12,804		$	12,804
Collateralized debt obligations	$	17,192				$	17,192
Financial derivatives	$	(453)		$	(453)
Non-recurring:
Impaired loans, net	$	408				$	408
Equity investment	$	590				$	590
Other real estate owned	$	349				$	349

At June 30, 2022, the fair value of impaired loans with a valuation allowance or partial charge-off was $0.8 million, net of valuation allowances of $61,811 and partial charge-offs of $1.3 million.  During the six months ended June 30, 2022, changes to the valuation allowance or additional charge off activity was recorded on loans with a net balance of approximately $0.3 million.  At December 31, 2021, the fair value of impaired loans with a valuation allowance or charge-off was $1.0 million, net of valuation allowances of $64,700 and charge-offs of $1.3 million. During the year ended December 31, 2021, changes to the valuation allowance or additional charge off activity was recorded on loans with a net balance of approximately $0.4 million.

29

There were no transfers of assets between any of the fair value hierarchy for the six month periods ended June 30, 2022 or 2021.

For Level 3 assets and liabilities measured at fair value on a recurring and non-recurring basis as of June 30, 2022 and December 31, 2021, the significant unobservable inputs used in the fair value measurements were as follows:

(in thousands)	Fair Value at June 30, 2022		Valuation Technique	Significant Unobservable Inputs	Significant Unobservable Input Value
Recurring:
Investment Securities – available for sale -CDO	$	16,258	Discounted Cash Flow	Discount Margin	Range of low to mid 300 and mid 400
Non-recurring:
Impaired Loans, net	$	337	Market Comparable Properties	Marketability Discount	10.0% - 15.0% (1) (weighted avg 14.2%)
Equity Investment	$	590	Market Method	Revenue Multiples	2.8x

(in thousands)	Fair Value at December 31, 2021		Valuation Technique	Significant Unobservable Inputs	Significant Unobservable Input Value
Recurring:
Investment Securities – available for sale -CDO	$	17,192	Discounted Cash Flow	Discount Rate	Libor + 3.25%
Non-recurring:
Impaired Loans, net	$	408	Market Comparable Properties	Marketability Discount	10.0% - 15.0% (1) (weighted avg 13.2%)
Equity Investment	$	590	Market Method	Revenue Multiples	2.8x
Other Real Estate Owned	$	349	Market Comparable Properties	Marketability Discount	15.0%

(1) Range would include discounts taken since appraisal and estimated values

30

The following tables show a reconciliation of the beginning and ending balances for fair valued assets measured on a recurring basis using Level 3 significant unobservable inputs for the six and three month periods ended June 30, 2022 and 2021:

	Fair Value Measurements
	Using Significant Unobservable Inputs
	(Level 3)
	Investment Securities
(in thousands)	Available for Sale
Beginning balance January 1, 2022	$	17,192
Total losses realized/unrealized:
Included in other comprehensive loss		(934)
Ending balance June 30, 2022	$	16,258

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
(in thousands)	Investment Securities Available for Sale
Beginning balance April 1, 2022	$	17,319
Total gains realized/unrealized:
Included in other comprehensive income		(1,061)
Ending balance June 30, 2022	$	16,258

	Fair Value Measurements
	Using Significant Unobservable Inputs
	(Level 3)
	Investment Securities
(in thousands)	Available for Sale
Beginning balance January 1, 2021	$	13,260
Total losses realized/unrealized:
Included in other comprehensive loss		2,970
Ending balance June 30, 2021	$	16,230

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
(in thousands)	Investment Securities Available for Sale
Beginning balance April 1, 2021	$	13,649
Total losses realized/unrealized:
Included in other comprehensive income		2,581
Ending balance June 30, 2021	$	16,230

There were no gains or losses included in earnings attributable to the change in realized/unrealized gains or losses related to the assets for the six and three month periods ended June 30, 2022 or 2021.

The disclosed fair values may vary significantly between institutions based on the estimates and assumptions used in the various valuation methodologies. The derived fair values are subjective in nature and involve uncertainties and significant judgment. Therefore, they cannot be determined with precision. Changes in the assumptions could significantly impact the derived estimates of fair value. Disclosure of non-financial assets such as buildings, as well as certain financial instruments such as leases is not required. Accordingly, the aggregate fair values presented do not represent the underlying value of the Corporation.

31

The following tables present fair value information about financial instruments, whether or not recognized in the Consolidated Statement of Financial Condition, for which it is practicable to estimate that value. The actual carrying amounts and estimated fair values of the Corporation’s financial instruments that are included in the Consolidated Statement of Financial Condition are as follows:

	June 30, 2022				Fair Value Measurements
					Quoted
					Prices in		Significant
					Active Markets		Other		Significant
					for Identical		Observable		Unobservable
	Carrying		Fair		Assets		Inputs		Inputs
(in thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets:
Cash and due from banks	$	20,108	$	20,108	$	20,108
Interest bearing deposits in banks		1,543		1,543		1,543
Investment securities - AFS		132,867		132,867			$	116,609	$	16,258
Investment securities - HTM		240,588		220,301				195,613		24,688
Restricted bank stock		1,026		N/A
Loans, net		1,217,772		1,159,687						1,159,687
Financial derivatives		635		635				635
Accrued interest receivable		5,055		5,055				945		4,110
Financial Liabilities:
Deposits - non-maturity		1,349,440		1,349,440				1,349,440
Deposits - time deposits		134,914		135,048				135,048
Short-term borrowed funds		69,914		69,914				69,914
Long-term borrowed funds		30,929		30,967				30,967
Accrued interest payable		92		92				92
Off balance sheet financial instruments		—		—		—

	December 31, 2021				Fair Value Measurements
					Quoted
					Prices in		Significant
					Active Markets		Other		Significant
					for Identical		Observable		Unobservable
	Carrying		Fair		Assets		Inputs		Inputs
(in thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets:
Cash and due from banks	$	109,823	$	109,823	$	109,823
Interest bearing deposits in banks		5,897		5,897		5,897
Investment securities - AFS		286,771		286,771			$	269,579	$	17,192
Investment securities - HTM		56,259		65,369				36,448		28,921
Restricted bank stock		1,029		1,029				1,029
Loan held for sale		67		67						67
Loans, net		1,137,440		1,122,671						1,122,671
Accrued interest receivable		4,821		4,821				4,821
Financial Liabilities:
Deposits - non-maturity		1,306,145		1,306,145				1,306,145
Deposits - time deposits		163,229		163,961				163,961
Financial derivatives		453		453				453
Short-term borrowed funds		57,699		57,699				57,699
Long-term borrowed funds		30,929		31,085				31,085
Accrued interest payable		137		137				137

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Note 7 – Accumulated Other Comprehensive Loss

The following table presents the changes in each component of accumulated other comprehensive loss for the 12 months ended December 31, 2021, and the three months ended March 31, 2022 and June 30, 2022:

	Investment		Investment
	securities-		securities-		Investment
	with OTTI		all other		securities-		Cash Flow		Pension
(in thousands)	AFS		AFS		HTM		Hedge		Plan		SERP		Total
Accumulated OCL, net:
Balance - January 1, 2021	$	(3,277)	$	(25)	$	(315)	$	(954)	$	(22,630)	$	(1,662)	$	(28,863)
Other comprehensive income/(loss) before reclassifications		2,475		(5,611)		—		635		3,431		(521)		409
Amounts reclassified from accumulated other comprehensive loss		(147)		(113)		181		—		1,091		128		1,140
Balance - December 31, 2021	$	(949)	$	(5,749)	$	(134)	$	(319)	$	(18,108)	$	(2,055)	$	(27,314)
Other comprehensive income/(loss) before reclassifications		103		(1,843)		(6,100)		614		(2,651)		—		(9,877)
Amounts reclassified from accumulated other comprehensive loss		(37)		(2)		69		—		204		50		284
Balance - March 31, 2022	$	(883)	$	(7,594)	$	(6,165)	$	295	$	(20,555)	$	(2,005)	$	(36,907)
Other comprehensive income/(loss) before reclassifications		(582)		(3,924)		—		182		(5,069)		—		(9,393)
Amounts reclassified from accumulated other comprehensive loss		(37)		—		168		—		204		49		384
Balance - June 30, 2022	$	(1,502)	$	(11,518)	$	(5,997)	$	477	$	(25,420)	$	(1,956)	$	(45,916)

33

The following tables present the components of other comprehensive income/(loss) for the six and three month periods ended June 30, 2022 and 2021:

	Before		Tax
Components of Other Comprehensive Loss	Tax		(Expense)
(in thousands)	Amount		Benefit		Net
For the six months ended June 30, 2022
Available for sale (AFS) securities with OTTI:
Unrealized holding losses	$	(654)	$	175	$	(479)
Less: accretable yield recognized in income		101		(27)		74
Net unrealized losses on investments with OTTI		(755)		202		(553)
Available for sale securities – all other:
Unrealized holding losses		(16,203)		4,336		(11,867)
Unrealized holding losses on securities transferred from available for sale to held to maturity		8,328		(2,228)		6,100
Less: gains recognized in income		3		(1)		2
Net unrealized losses on all other AFS securities		(7,878)		2,109		(5,769)
Held to maturity securities:
Unrealized holding losses on securities transferred to held to maturity		(8,328)		2,228		(6,100)
Less: amortization recognized in income		(324)		87		(237)
Net unrealized losses on HTM securities		(8,004)		2,141		(5,863)
Cash flow hedges:
Unrealized holding gains		1,088		(292)		796
Pension Plan:
Unrealized net actuarial loss		(10,542)		2,822		(7,720)
Less: amortization of unrecognized loss		(558)		150		(408)
Net pension plan liability adjustment		(9,984)		2,672		(7,312)
SERP:
Unrealized net actuarial loss		—		—		—
Less: amortization of unrecognized loss		(135)		36		(99)
Net SERP liability adjustment		135		(36)		99
Other comprehensive loss	$	(25,398)	$	6,796	$	(18,602)

34

	Before		Tax
Components of Other Comprehensive Income	Tax		(Expense)
(in thousands)	Amount		Benefit		Net
For the six months ended June 30, 2021
Available for sale (AFS) securities with OTTI:
Unrealized holding gains	$	2,523	$	(676)	$	1,847
Less: gains recognized in income		—		—		—
Less: accretable yield recognized in income		101		(27)		74
Net unrealized gains on investments with OTTI		2,422		(649)		1,773
Available for sale securities – all other:
Unrealized holding losses		(4,327)		1,159		(3,168)
Less: gains recognized in income		154		(41)		113
Net unrealized losses on all other AFS securities		(4,481)		1,200		(3,281)
Held to maturity securities:
Unrealized holding gains		—		—		—
Less: amortization recognized in income		(108)		29		(79)
Net unrealized gains on HTM securities		108		(29)		79
Cash flow hedges:
Unrealized holding gains		507		(136)		371
Pension Plan:
Unrealized net actuarial gain		1,090		(291)		799
Less: amortization of unrecognized loss		(744)		200		(544)
Less: amortization of prior service costs		—		—		—
Net pension plan liability adjustment		1,834		(491)		1,343
SERP:
Unrealized net actuarial loss		—		—		—
Less: amortization of unrecognized loss		(150)		40		(110)
Net SERP liability adjustment		150		(40)		110
Other comprehensive income	$	540	$	(145)	$	395

35

Components of Other Comprehensive Loss (in thousands)	Before Tax Amount		Tax (Expense) Benefit		Net
For the three months ended June 30, 2022
Available for sale (AFS) securities with OTTI:
Unrealized holding losses	$	(795)	$	213	$	(582)
Less: accretable yield recognized in income		51		(14)		37
Net unrealized losses on investments with OTTI		(846)		227		(619)
Available for sale securities – all other:
Unrealized holding losses		(5,359)		1,435		(3,924)
Unrealized holding losses on securities transferred from available for sale to held to maturity		—		—		—
Less: gains recognized in income		—		—		—
Net unrealized losses on all other AFS securities		(5,359)		1,435		(3,924)
Held to maturity securities:
Unrealized holding gains		—		—		—
Less: amortization recognized in income		(230)		62		(168)
Net unrealized gains on HTM securities		230		(62)		168
Cash flow hedges:
Unrealized holding gains		249		(67)		182
Pension Plan:
Unrealized net actuarial loss		(6,922)		1,853		(5,069)
Less: amortization of unrecognized loss		(279)		75		(204)
Net pension plan liability adjustment		(6,643)		1,778		(4,865)
SERP:
Unrealized net actuarial loss		—		—		—
Less: amortization of unrecognized loss		(67)		18		(49)
Net SERP liability adjustment		67		(18)		49
Other comprehensive loss	$	(12,302)	$	3,293	$	(9,009)

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Components of Other Comprehensive Income (in thousands)	Before Tax Amount		Tax (Expense) Benefit		Net
For the three months ended June 30, 2021
Available for sale (AFS) securities with OTTI:
Unrealized holding gains	$	2,160	$	(579)	$	1,581
Less: accretable yield recognized in income		51		(14)		37
Net unrealized gains on investments with OTTI		2,109		(565)		1,544
Available for sale securities – all other:
Unrealized holding gains		2,778		(744)		2,034
Less: gains recognized in income		154		(41)		113
Net unrealized gains on all other AFS securities		2,624		(703)		1,921
Held to maturity securities:
Less: amortization recognized in income		(46)		12		(34)
Net unrealized gains on HTM securities		46		(12)		34
Cash flow hedges:
Unrealized holding losses		(47)		13		(34)
Pension Plan:
Unrealized net actuarial gain		1,280		(342)		938
Less: amortization of unrecognized loss		(372)		100		(272)
Less: amortization of prior service costs		—		—		—
Net pension plan liability adjustment		1,652		(442)		1,210
SERP:
Unrealized net actuarial loss		—		—		—
Less: amortization of unrecognized loss		(73)		18		(55)
Net SERP liability adjustment		73		(18)		55
Other comprehensive income	$	6,457	$	(1,727)	$	4,730

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The following table presents the details of amounts reclassified from accumulated other comprehensive loss for the six and three month periods ended June 30, 2022 and 2021:

Amounts Reclassified from	Six Months Ended
Accumulated Other Comprehensive Loss	June 30,				Affected Line Item in the Statement
(in thousands)	2022		2021		Where Net Income is Presented
Net unrealized gains on available for sale investment securities with OTTI:
Accretable yield	$	101	$	101	Interest income on taxable investment securities
Taxes		(27)		(27)	Provision for income tax expense
	$	74	$	74	Net of tax
Net unrealized gains on available for sale investment securities - all others:
Gains recognized	$	3	$	154	Net gains
Taxes		(1)		(41)	Provision for income tax expense
	$	2	$	113	Net of tax
Net unrealized losses on held to maturity securities:
Amortization	$	(324)	$	(108)	Interest income on taxable investment securities
Taxes		87		29	Provision for income tax expense
	$	(237)	$	(79)	Net of tax
Net pension plan liability adjustment:
Amortization of unrecognized loss	$	(558)	$	(744)	Other Expense
Taxes		150		200	Provision for income tax expense
	$	(408)	$	(544)	Net of tax
Net SERP liability adjustment:
Amortization of unrecognized loss	$	(135)	$	(150)	Other Expense
Taxes		36		40	Provision for income tax expense
	$	(99)	$	(110)	Net of tax
Total reclassifications for the period	$	(668)	$	(546)	Net of tax

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Amounts Reclassified from	Three Months Ended
Accumulated Other Comprehensive Loss	June 30,				Affected Line Item in the Statement
(in thousands)	2022		2021		Where Net Income is Presented
Net unrealized gains on available for sale investment securities with OTTI:
Accretable Yield	$	51	$	51	Interest income on taxable investment securities
Taxes		(14)		(14)	Provision for income tax expense
	$	37	$	37	Net of tax
Net unrealized gains on available for sale investment securities - all others:
Gains recognized	$	—	$	154	Net gains
Taxes		—		(41)	Provision for income tax expense
	$	—	$	113	Net of tax
Net unrealized losses on held to maturity securities:
Amortization	$	(230)	$	(46)	Interest income on taxable investment securities
Taxes		62		12	Provision for income tax expense
	$	(168)	$	(34)	Net of tax
Net pension plan liability adjustment:
Amortization of unrecognized loss	$	(279)	$	(372)	Other expense
Taxes		75		100	Provision for income tax expense
	$	(204)	$	(272)	Net of tax
Net SERP liability adjustment:
Amortization of unrecognized loss	$	(67)	$	(73)	Other expense
Taxes		18		18	Provision for income tax expense
	$	(49)	$	(55)	Net of tax
Total reclassifications for the period	$	(384)	$	(211)	Net of tax

Note 8 – Employee Benefit Plans

The following tables present the components of the net periodic pension plan cost for First United Corporation’s noncontributory Defined Benefit Pension Plan (the “Pension Plan”) and the Bank’s Defined Benefit Supplemental Executive Retirement Plan (“Defined Benefit SERP”) for the periods indicated:

	Six Months Ended				Three Months Ended
Pension Plan	June 30,				June 30,
(in thousands)	2022		2021		2022		2021
Service cost	$	28	$	78	$	14	$	39
Interest cost		768		711		384		355
Expected return on assets		(1,905)		(1,785)		(953)		(892)
Amortization of net actuarial loss		558		744		279		372
Net pension credit included in employee benefits and other expense	$	(551)	$	(252)	$	(276)	$	(126)

At June 30, 2022, the market value of the pension plan decreased $9.4 million since December 31, 2021. This decrease is related to the increasing rate environment and market volatility resulting in a pension plan liability of $4.6 million at June 30, 2022 compared to a pension plan asset of $4.8 million at December 31, 2021.

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	Six Months Ended				Three Months Ended
Defined Benefit SERP	June 30,				June 30,
(in thousands)	2022		2021		2022		2021
Service cost	$	83	$	69	$	42	$	34
Interest cost		143		119		71		59
Amortization of recognized loss		135		151		67		76
Amortization of prior service cost		—		(1)		—		—
Net Defined Benefit SERP expense included in employee benefits and other expense	$	361	$	338	$	180	$	169

The service cost component of net periodic benefit cost is included in salaries and benefits and all other components of net periodic benefit cost are included in other expense in the Consolidated Statement of Operations for the Pension Plan and the Defined Benefit SERP.

The Pension Plan is a noncontributory defined benefit pension plan that covers our employees who were hired prior to the freeze and others who were grandfathered into the plan. The benefits are based on years of service and the employees’ compensation during the last five years of employment.  

Effective April 30, 2010, the Pension Plan was amended, resulting in a “soft freeze”, the effect of which prohibits new entrants into the plan and ceases crediting of additional years of service after that date. Effective January 1, 2013, the Pension Plan was amended to unfreeze it for those employees for whom the sum of their (a) ages, at their closest birthday plus (b) years of service for vesting purposes equals 80 or greater. The “soft freeze” continues to apply to all other plan participants. Pension benefits for these participants are managed through discretionary contributions to the First United Corporation 401(k) Profit Sharing Plan (the “401(k) Plan”).

The Bank established the Defined Benefit SERP in 2001 as an unfunded supplemental executive retirement plan. The Defined Benefit SERP is available only to a select group of management or highly compensated employees to provide supplemental retirement benefits in excess of limits imposed on qualified plans by federal tax law. Concurrent with the establishment of the Defined Benefit SERP, the Bank acquired Bank Owned Life Insurance (“BOLI”) policies on the senior management personnel and officers of the Bank. The benefits resulting from the favorable tax treatment accorded the earnings on the BOLI policies are intended to provide a source of funds for the future payment of the Defined Benefit SERP benefits as well as other employee benefit costs.

The benefit obligation activity for both the Pension Plan and the Defined Benefit SERP was calculated using an actuarial measurement date of January 1. Plan assets and the benefit obligations were calculated using an actuarial measurement date of December 31.

The Corporation will assess the need for future annual contributions to the pension plan based upon its funded status and an evaluation of the future benefits to be provided thereunder. No contributions were made to the Pension Plan during the first six months of 2022 or 2021. The Corporation expects to fund the annual projected benefit payments for the Defined Benefit SERP from operations.

On January 9, 2015, First United Corporation and members of management who do not participate in the Defined Benefit SERP entered into participation agreements under the Deferred Compensation Plan, each styled as a Defined Contribution SERP Agreement (the “Contribution Agreement”). Pursuant to each Contribution Agreement, First United Corporation agreed, for each Plan Year (as defined in the Deferred Compensation Plan) in which it determines that it has been Profitable (as defined in the Contribution Agreement), to make a discretionary contribution to the participant’s Employer Account in an amount equal to 15% of the participant’s base salary level for such Plan Year, with the first Plan Year being the year ending December 31, 2015. The Contribution Agreement provides that the participant will become 100% vested in the amount maintained in his or her Employer Account upon the earliest to occur of the following events: (a) Normal Retirement (as defined in the Contribution Agreement); (b)  Separation from Service (as defined in the Contribution Agreement) following a Change of Control (as defined in the Deferred Compensation Plan) and subsequent Triggering Event (as defined in the Contribution Agreement); (c) Separation from Service due to a Disability (as defined in the Contribution Agreement); (d) with respect to a particular award of Employer Contribution Credits, the participant’s completion of 2 consecutive Years of Service (as defined in the Contribution Agreement) immediately following the Plan Year for which such award was made; or (e) death. Notwithstanding the foregoing, however, a participant will

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lose entitlement to the amount maintained in his or her Employer Account in the event employment is terminated for Cause (as defined in the Contribution Agreement). In addition, the Contribution Agreement conditions entitlement to the amounts held in the Employer Account on the participant (1) refraining from engaging in Competitive Employment (as defined in the Contribution Agreement) for three years following his or her Separation from Service, (2) refraining from injurious disclosure of confidential information concerning the Corporation, and (3) remaining available, at the First United Corporation’s reasonable request, to provide at least six hours of transition services per month for 12 months following his or her Separation from Service (except in the case of death or Disability), except that only item (2) will apply in the event of a Separation from Service following a Change of Control and subsequent Triggering Event.

In January 2021, the Board of Directors approved discretionary contributions to three participants totaling $101,257. The Corporation recorded $25,314 of related compensation expense for the first six months of 2022 and 2021 related to these contributions. The Corporation recorded $12,657 of related compensation expense for the second quarter of 2022 and 2021 related to these contributions. In January 2022, the Board of Directors approved discretionary contributions to three participants totaling $103,689. The Corporation recorded $25,922 of related compensation expense for the first six months of 2022 related to these contributions. The Corporation recorded $12,961 of related compensation expense for the second quarter of 2022 related to these contributions. Each discretionary contribution has a two year vesting period.

Note 9 - Equity Compensation Plan Information

At the 2018 Annual Meeting of Shareholders, First United Corporation’s shareholders approved the First United Corporation 2018 Equity Compensation Plan (the “Equity Plan”) which authorizes the issuance of up to 325,000 shares of common stock to employees, directors and qualifying consultants pursuant to stock options, stock appreciation rights, stock awards, dividend equivalents, and other stock-based awards.

The Corporation complies with the provisions of ASC Topic 718, Compensation-Stock Compensation, in measuring and disclosing stock compensation cost.  The measurement objective in ASC Paragraph 718-10-30-6 requires public companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. The cost is recognized in expense over the period in which an employee is required to provide service in exchange for the award (the vesting period).

Pursuant to First United Corporation’s director compensation policy, each director receives an annual retainer of 1,000 shares of First United Corporation common stock, plus $10,000 to be paid, at the director’s election, in cash or additional shares of common stock. In January 2021, a total of 1,202 fully vested shares were issued to two new directors, which had a grant date fair market value of $16.66 per share.  In May 2021, a total of 12,726 fully vested shares of common stock were issued to directors, which had a grant date fair value of $18.50 per share.  In May 2022, a total of 14,940 fully vested shares of common stock were issued to directors, which had a grant date fair value of $18.92 per share.  Director stock compensation expense was $125,588 for the six months ended June 30, 2022 and $132,860 for the six months ended June 30, 2021.  Director stock compensation expense was $66,730 for the second quarter of 2022 and $62,644 for the second quarter of 2021.

Restricted Stock Units

On March 26, 2020, pursuant to the Corporation’s Long Term Incentive Plan (the "LTIP"), which is a sub-plan of the Equity Plan, the Compensation Committee of First United Corporation’s Board of Directors (the "Committee") granted RSUs to the Corporation’s principal executive officer, its principal financial officer, and certain of its other executive officers. An RSU contemplates the issuance of shares of common stock of First United Corporation if and when the RSU vests.

The RSUs granted to each of the foregoing officers consist of (a) a performance vesting award for a three year performance period and (b) a time-vesting award that will vest ratably over a three year period. Target performance levels were set based on the annual budget which supports the Corporation’s long-term objective of achieving high performance as compared to peers. Threshold performance is the minimum level of acceptable performance as defined by the Committee and maximum performance represented a level potentially achievable under ideal circumstances. Achievement of the threshold performance level would result in each executive participant earning a payout at 50% of his or her respective target award opportunity. Achievement of the target performance level would result in the executive participant earning the target award and achievement at or above the maximum performance level would result in the executive participant earning 150% of the target opportunity. Actual results for any goal that

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falls between performance levels would be interpolated to calculate a proportionate award. For the performance period ending December 31, 2021, the RSUs’ performance goal is based on earnings per share for the year ending December 31, 2021. For the performance period ending December 31, 2022, the RSUs performance goals are based on earnings per share for the year ending December 31, 2022 and growth in tangible book value per share during the performance period. For the performance period ending December 31, 2023, the RSUs performance goals are based on earnings per share for the year ending December 31, 2023 and growth in tangible book value per share during the performance period.  

To receive any shares under an RSU, a grantee must be employed by the Corporation or one of its subsidiaries on the applicable vesting date, except that a grantee whose employment terminates prior to such vesting date due to death, disability or retirement will be entitled to a pro-rated portion of the shares subject to the RSUs, assuming that, in the case of performance-vesting RSUs, the performance goals had been met at their "target" levels.

In the first quarter of 2020, RSUs were granted relating to 9,791 performance vesting shares (target level) for 2019 LTIP plan for the performance period ending December 31, 2021 and 10,143 performance vesting shares and 5,070 time vesting shares (target level) for 2020 LTIP plan for the performance period ending December 31, 2022, which had a grant date fair market value of $12.54 per share of common stock underlying each RSU.  The 2020 plan has a performance period for the performance-vesting RSUs of three years ending December 31, 2022 and the time-vesting RSUs will vest ratably over a three year period that began on March 26, 2021.  On March 26, 2021, 1,690 of the 5,070 time vesting shares were issued to participants.  On March 26, 2022, 1,688  shares of the 3,380 remaining time vesting shares were issued to participants.  Stock compensation expense was $42,024 and $52,254 for the six month periods ended June 30, 2022 and 2021.  Stock compensation expense was $15,896 and $26,127 for the second quarter of 2022 and 2021, respectively.  Unrecognized compensation expense at June 30, 2022 related to unvested RSUs was $47,687.

In May 2021, RSUs relating to 7,389 performance vesting shares and 3,693 time vesting shares (target level) for plan year 2021 were granted, which had a grant date fair market value of $17.93 per share of common stock underlying each RSU.  The performance period for the performance-vesting RSUs is the three year period ending December 31, 2023.  The time-vesting RSUs will vest ratably over a three year period that began on May 5, 2022. On May 5, 2022, 1,230 shares of the 3,693 time-vesting RSUs were issued to participants.  Stock compensation expense was $33,142 and $11,048 for the first six months of 2022 and 2021, respectively.  Stock compensation expense was $16,571 and $11,048 for the second quarter of 2022 and 2021, respectively.  Unrecognized compensation expense as of June 30, 2022 related to unvested units was $121,522.

In March 2022, RSUs relating to 8,096 performance vesting shares and 6,238 time vesting shares (target level) for plan year 2022 were granted, which had a grant date fair market value of $21.88 per share of common stock underlying each RSU.  The performance period for the performance-vesting RSUs is the three year period ending December 31, 2024.  The time-vesting RSUs will vest ratably over a three year period beginning on March 9, 2023. Stock compensation expense was $26,145 for the six and three month periods ended June 30, 2022.  Unrecognized compensation expense as of June 30, 2022 related to unvested units was $287,598.

Note 10 – Derivative Financial Instruments

As a part of managing interest rate risk, the Corporation entered into interest rate swap agreements to modify the re-pricing characteristics of certain interest-bearing liabilities. The Corporation has designated its interest rate swap agreements as cash flow hedges under the guidance of ASC Subtopic 815-30, Derivatives and Hedging – Cash Flow Hedges. Cash flow hedges have the effective portion of changes in the fair value of the derivative, net of taxes, recorded in net accumulated other comprehensive income.

In March 2016, the Corporation entered into four interest rate swap contracts totaling $30.0 million notional amount, hedging future cash flows associated with floating rate trust preferred debt. As of June 30, 2022, $20.0 million notional amount remains.

The fair value of the interest rate swap contracts was $0.6 million and $(0.5) million at June 30, 2022 and December 31, 2021, respectively.

For the six months ended June 30, 2022, the Corporation recorded an increase in the value of the derivatives of $1.1 million and the related deferred tax of $0.3 million in net accumulated other comprehensive loss to reflect the effective portion of cash flow

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hedges. For the three months ended June 30, 2022, the Corporation recorded an increase in the value of the derivatives of $0.2 million and the related deferred tax of $0.1 million in net accumulated other comprehensive loss to reflect the effective portion of cash flow hedges. ASC Subtopic 815-30 requires the net accumulated other comprehensive loss to be reclassified to earnings if the hedge becomes ineffective or is terminated. There was no hedge ineffectiveness recorded for the six or three months ended June 30, 2022. The Corporation does not expect any material losses relating to these hedges to be reclassified into earnings within the next 12 months.

Interest rate swap agreements are entered into with counterparties that meet established credit standards and the Corporation believes that the credit risk inherent in these contracts is not significant as of June 30, 2022.

The table below discloses the impact of derivative financial instruments on the Corporation’s Consolidated Financial Statements for the six and three month periods ended June 30, 2022 and 2021.

Derivative in Cash Flow Hedging Relationships
					Amount of gain or
					(loss) recognized in
			Amount of gain or		income or derivative
	Amount of gain or		(loss) reclassified from		(ineffective portion
	(loss) recognized in		accumulated OCI into		and amount excluded
	OCI on derivative		income (effective		from effectiveness
(in thousands)	(effective portion)		portion) (a)		testing) (b)
Interest rate contracts:
Six months ended:
June 30, 2022	$	796	$	—	$	—
June 30, 2021		371		—		—
Three months ended:
June 30, 2022	$	182	$	—	$	—
June 30, 2021		(34)		—		—

Notes:

(a) Reported as interest expense

(b) Reported as other income

Note 11 – Revenue Recognition

ASC Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities. ASC Topic 606 is applicable to noninterest revenue streams such as wealth management, including trust and brokerage services, service charges on deposit accounts, interchange fee income – debit card income and gains/losses on OREO sales. Noninterest revenue streams in-scope of ASC Topic 606 are discussed below.

Wealth Management – Trust and Brokerage

Trust and asset management income is primarily comprised of fees earned from the management and administration of trusts and other customer assets. The Corporation’s performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the month-end market value of the assets under management and the applicable fee rate. Payment is generally received a few days after month end through a direct charge to customers’ accounts. Optional services such as real estate sales and tax return preparation services are also available to existing trust and asset management customers. The Corporation’s performance obligation for these transactional-based services is generally satisfied, and related revenue recognized, at a point in time (i.e., as incurred). Payment is received shortly after services are rendered.

Service Charges on Deposit Accounts

Service charges on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, check orders, and other deposit account related fees. The Corporation’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the

43

period in which the service is provided. Check orders and other deposit account related fees are largely transactional based, and therefore, the Corporation’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts.

Other Service Charges

Fees, exchange, and other service charges are primarily comprised of ATM fees, loan servicing fees and other service charges. ATM fees are primarily generated when a Bank cardholder uses a non-Bank ATM or a non-Bank cardholder uses a Bank ATM.  Loan servicing fees are comprised of fees earned on servicing of loan portfolios sold to the secondary market.  Other service charges include revenue from processing wire transfers, bill pay service, cashier’s checks, and other services.   The Corporation’s performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized, when the services are rendered or upon completion.

Interchange Fees – Debit and Credit Card Income

Debit and credit card income is primarily comprised of interchange fees earned whenever the Corporation’s debit cards are processed through card payment networks such as Visa. Merchant services income mainly represents fees charged to merchants to process their debit and credit card transactions, in addition to account management fees. Payment is typically received immediately or in the following month.

The following presents noninterest income, segregated by revenue streams that are within and outside the scope of ASC Topic 606, for the six and three month periods ended June 30, 2022 and June 30, 2021:

	Six Months Ended				Three Months Ended
	June 30,				June 30,
(in thousands)	2022		2021		2022		2021
Noninterest income
In-scope of Topic 606:
Service charges on deposit accounts	$	928	$	817	$	463	$	412
Other service charges		445		432		232		221
Trust department		4,233		4,275		2,044		2,034
Debit card income		1,869		1,723		983		913
Brokerage commissions		533		625		313		357
Noninterest income (in-scope of Topic 606)		8,008		7,872		4,035		3,937
Noninterest income (out-of-scope of Topic 606)		787		1,191		378		384
Total Noninterest Income	$	8,795	$	9,063	$	4,413	$	4,321

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Note 12 – Regulatory Capital Requirements

The following table presents our capital ratios as of June 30, 2022 and December 31, 2021.

	June 30, 2022		December 31, 2021		Required for Capital Adequacy Purposes		Required to be Well Capitalized
Total Capital (to risk-weighted assets)
First United Bank & Trust	14.64	%	14.97	%	8.00	%	10.00	%
Tier 1 Capital (to risk-weighted assets)
First United Bank & Trust	13.46	%	13.72	%	6.00	%	8.00	%
Common Equity Tier 1 Capital (to risk-weighted assets)
First United Bank & Trust	13.46	%	13.72	%	4.50	%	6.50	%
Tier 1 Capital (to average assets)
First United Bank & Trust	10.40	%	10.00	%	4.00	%	5.00	%

As of June 30, 2022 and December 31, 2021, the Bank was considered “well capitalized” under the regulatory framework for prompt corrective action.

Note 13 – Borrowed Funds

The following is a summary of short-term borrowings with original maturities of less than one year:

(Dollars in thousands)	Six Months Ended June 30, 2022		Year Ended December 31, 2021
Overnight borrowings, weighted average interest rate of 1.75% at June 30, 2022	$	18,900	$	—
Securities sold under agreements to repurchase:
Outstanding at end of period	$	51,014	$	57,699
Weighted average interest rate at end of period		0.14%		0.15%
Maximum amount outstanding as of any month end	$	62,023	$	72,396
Average amount outstanding	$	59,710	$	57,697
Approximate weighted average rate during the period		0.12%		0.15%

Short-term borrowings increased $12.2 million since December 31, 2021, driven by $18.9 million in overnight borrowings, which were offset by a decrease in other short-term borrowings of $6.7 million during the six months related to our Treasury Management customers utilizing their funds.

At June 30, 2022, the repurchase agreements were secured by $69.5 million in investment securities issued by government related agencies.  A minimum of 102% of fair value is pledged against account balances.

Note 14 – Recent Accounting Pronouncements

Recently issued but not yet effective Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchases financial assets with credit deterioration since their origination. The new model referred to as current expected credit losses (“CECL”) model, will

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apply to: (a) financial assets subject to credit losses and measured at amortized cost; and (b) certain off-balance sheet credit exposures. This includes loans, held to maturity debt securities, loan commitments, financial guarantees and net investments in leases as well as reinsurance and trade receivables. The estimate of expected credit losses should consider historical information, current information, and supportable forecasts, including estimates of prepayments. ASU 2016-13 was originally effective for SEC filers for annual periods beginning after December 15, 2019, and interim periods within those annual periods. In November 2019, the FASB approved a delay of the required implementation date of ASU No. 2016-13 for smaller reporting companies, as defined by the Securities and Exchange Commission, including the Corporation, resulting in a required implementation date for the Corporation of January 1, 2023.

Management has formed a focus group consisting of multiple members from areas, including credit, finance, loan servicing, reporting, and information systems. The Corporation is completing its data and model validation analyses, with parallel processing of our existing allowance for loan losses model with the CECL model to follow. The Corporation is currently evaluating the provisions of ASU No. 2016-13 to determine the potential impact the new standard will have on the financial condition or results of operations.

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848).”  The ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendment only applies to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of the reference rate reform. The ASU is effective as of March 12, 2020 and through December 31, 2022. The Corporation is in the process of evaluating the impact of this standard on the loan portfolio, investment portfolio, long term debt and interest rate swaps, but believes that its adoption will not have a material impact on the Corporation’s financial condition or results of operations.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.  ASU 2022-02 made certain targeted amendments specific to troubled debt restructurings (TDRs) by creditors and vintage disclosure related to gross write-offs. Upon adoption, the Corporation will be required to apply the loan and refinancing and restructuring guidance to determine whether a modification results in a new loan or a continuation of an existing loan, rather than applying the recognition and measurement guidance for TDRs.  The ASU also requires companies to disclose current-period gross write-offs by year of origination for financing receivables and net investment in leases within scope of Subtopic 326-20.  ASU 2022-02 is effective March 31, 2023, for entities that have adopted ASU 2016-13, otherwise effective date is the same as ASU 2016-13. The Corporation’s current plan is to adopt ASU 2016-13 effective January 1, 2023 at which time it will also implement ASU 2022-02.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

INTRODUCTION

The following discussion and analysis is intended as a review of material changes in and significant factors affecting the financial condition and results of operations of First United Corporation and its consolidated subsidiaries for the periods indicated. This discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and the notes thereto contained in Item 1 of Part I of this report, as well as the audited consolidated financial statements and related notes included in First United Corporation’s Annual Report on Form 10-K for the year ended December 31, 2021.

Unless the context clearly suggests otherwise, references in this report to “us”, “we”, “our”, and “the Corporation” are to First United Corporation and its consolidated subsidiaries.

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements do not represent historical facts, but are statements about management’s beliefs, plans and objectives about the future, as well as its assumptions and judgments concerning such beliefs, plans and objectives. These statements are evidenced by terms such as "anticipate," "estimate," "should," "expect," "believe," "intend," and similar expressions. Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not

46

prove true. The beliefs, plans and objectives on which forward-looking statements are based involve risks and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. For a discussion of these risks and uncertainties, see the section of the periodic reports that First United Corporation files with the Securities and Exchange Commission entitled "Risk Factors".

FIRST UNITED CORPORATION

First United Corporation is a Maryland corporation chartered in 1985 and a financial holding company registered with the Board of Governors of the Federal Reserve System (the “FRB”) under the Bank Holding Company Act of 1956, as amended.  The Corporation’s primary business is serving as the parent company of First United Bank & Trust, a Maryland trust company (the “Bank”), First United Statutory Trust I (“Trust I”) and First United Statutory Trust II (“Trust II” and together with Trust I, the “Trusts”), both Connecticut statutory business trusts. The Trusts were formed for the purpose of selling trust preferred securities that qualified as Tier 1 capital. The Bank has two consumer finance company subsidiaries - OakFirst Loan Center, Inc., a West Virginia corporation, and OakFirst Loan Center, LLC, a Maryland limited liability company - and two subsidiaries that it uses to hold real estate acquired through foreclosure or by deed in lieu of foreclosure - First OREO Trust, a Maryland statutory trust, and FUBT OREO I, LLC, a Maryland limited liability company. In addition, the Bank owns 99.9% of the limited partnership interests in Liberty Mews Limited Partnership, a Maryland limited partnership formed for the purpose of acquiring, developing and operating low-income housing units in Garrett County, Maryland, and a 99.9% non-voting membership interest in MCC FUBT Fund, LC, an Ohio limited liability company formed for the purpose of acquiring, developing and operating low-income housing units in Allegany County, Maryland.

At June 30, 2022, the Corporation’s total assets were $1.8 billion, net loans were $1.2 billion, and deposits were $1.5 billion. Shareholders’ equity at June 30, 2022 was $132.9 million.

The Corporation maintains an Internet site at www.mybank.com on which it makes available, free of charge, its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to the foregoing as soon as reasonably practicable after these reports are electronically filed with, or furnished to, the SEC.

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SELECTED FINANCIAL DATA

The following table sets forth certain selected financial data for the six month periods ended June 30, 2022 and 2021 and is qualified in its entirety by the detailed information and unaudited financial statements, including the notes thereto, included elsewhere in this quarterly report.

	As of the six months ended
	June 30,
	2022			2021
Per Share Data
Basic net income per common share (1) - as reported	$	1.68		$	1.15
Basic net income per common share (1) - non-GAAP	$	1.68		$	1.52
Diluted net income per common share (1) - as reported	$	1.68		$	1.15
Diluted net income per common share (1) - non-GAAP	$	1.68		$	1.52
Basic book value per common share - as reported	$	20.22		$	19.74
Diluted book value per common share - as reported	$	20.19		$	19.72
Significant Ratios:
Return on Average Assets (a) (1) - as reported		1.26	%		0.88	%
Settlement expenses, net of income tax		—			0.30	%
Adjusted Return on Average Assets (a) (1) (non-GAAP)		1.26	%		1.18	%
Return on Average Equity (a) (1) - as reported		16.32	%		12.21	%
Settlement expenses, net of income tax		—			2.64	%
Income tax effect of adjustment		—			1.13	%
Adjusted Return on Average Equity (a) (1) (non-GAAP)		16.32	%		15.98	%
Average Equity to Average Assets		7.75	%		7.29	%
Capital Ratios:
Consolidated Total Capital (to risk weighted assets)		15.56	%		15.80	%
Consolidated Tier 1 Capital (to risk weighted assets)		14.41	%		14.55	%
Consolidated Common Equity Tier 1 Capital (to risk weighted assets)		12.35	%		12.37	%
Consolidated Tier 1 Capital (to average assets)		11.23	%		9.94	%
(1) See reconciliation of this non-GAAP financial measure provided elsewhere herein associated with settlement expenses incurred during the first quarter of 2021.

Note: ^(a) Annualized

RESULTS OF OPERATIONS

Overview

Consolidated net income was $11.1 million for the first six months of 2022 compared to $7.8 million for the first six months of 2021.  Basic and diluted net income per share for the first six months of 2022 were both $1.68, compared to basic and diluted net income per share of $1.15 for the first six months of 2021. The year over year increase was primarily driven by a $2.3 million increase in net interest income; of which, $1.9 million resulted from the decrease in interest expense as costs of funds decreased by approximately 55%.  Additionally, comparative year-to-date income increased due to the $3.3 million in litigation settlement expense recognized in 2021.

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Consolidated net income was $5.4 million for the second quarter of 2022, or $0.82 per diluted share, compared to $4.4 million, or $0.66 per diluted share, for the second quarter of 2021.  The increase in net income year over year was driven by an increase in net interest income of $1.2 million and reduced operating expenses of $0.4 million, offset by an increase in provision expense of $0.1 million, reduced other operating income, and a decrease of $0.3 million in gains from sales of mortgages.  Additionally, we experienced a decrease in gains from sales of available for sale investments and recognized an expense of $0.2 million in expense related to Other Real Estate Owned (“OREO”) in the second quarter 2022 compared to a gain on sale of OREO of $0.2 million in the second quarter of 2021.  The OREO expenses were attributable to one development project as we continue to work with the participation group to market and sell the commercial parcels.

Comparing the six months ended June 30, 2022 to the six months ended June 30, 2021, net interest income, on a non-GAAP, fully taxable equivalent (“FTE”) basis, increased by $2.3 million.  Interest income increased by $0.4 million and interest expense decreased by $1.9 million.  Interest income during the first six months of 2021 included $2.0 million in fees related to Paycheck Protection Program (“PPP”) loan forgiveness that were recognized during that period compared to $0.1 million for the six months ended June 30, 2022.  The yield on earning assets increased 10 basis points to 3.66% during the six months of 2022 compared to 3.56% during the same period of 2021, which correlated to the rising interest rate environment and new loans booked at higher rates.  Interest expense on deposits decreased $1.3 million while the average balances decreased $10.2 million and interest on long-term borrowings decreased $0.7 million relating to the prepayment of $70.0 million of Federal Home Loan Bank (“FHLB”) advances in the third quarter of 2021.  The decreased interest expense resulted in an overall decrease of 32 basis points on interest bearing liabilities.  To date, we have not experienced significant pressure on deposit pricing, but we expect to experience increasing rates the remainder of this year given the recent moves by the Federal Reserve.  The net interest margin for the six months ended June 30, 2022 was 3.46% compared to 3.13% for the six months ended June 30, 2021.  

Net interest income, on a non-GAAP, FTE basis, increased by $1.2 million for the second quarter 2022 when compared to the second quarter of 2021.  This increase was driven by an increase of $0.3 million in interest income related to an overall increase of 15 basis points on interest earning assets despite a decline in average balances of $33.8 million. Interest income on loans decreased $0.2 million due primarily to a reduction of fees related to PPP loan forgiveness recognized during 2021.  Investment income increased $0.6 million due to an increase in average balances related to the deployment of excess cash balances to purchase investment securities late in the fourth quarter of 2021 and early in the first quarter of 2022.  The reduction of $1.1 million in interest expense resulted from the lowering of deposit rates throughout 2021, the decline of $73.3 million of average balances in the higher cost CD portfolio and the prepayment of $70.0 million of FHLB advances in 2021. The net interest margin for the second quarter of 2022 was 3.52%, compared to 3.15% for the second quarter of 2021.  

Non-interest income for the six months ended June 30, 2022 decreased by approximately $0.8 million when compared to the same period of 2021.  This decrease was primarily due to the decrease in net gains on sales of residential mortgage loans of $0.8 million as refinance activity has slowed considerably in correlation with rising mortgage interest rates and due to management’s strategic decision to book new mortgage loans at higher rates to our in-house portfolio.  

Other operating income, including gains, for the second quarter of 2022 decreased by approximately $0.3 million when compared with the same period of 2021.  Gains on sales of mortgage loans decreased by approximately $0.3 million related to the diminished refinance activity due to the rising interest rate environment and management’s strategic decision to book new mortgage loans at higher rates to our in-house portfolio. Net gains on sales of investments decreased by approximately $0.2 million, which was partially offset by the increase of service charges on deposit accounts by approximately $0.1 million.

For the six months ended June 30, 2022, non-interest expenses decreased by $2.3 million in 2022 when compared to the six months ended June 30, 2021.   This decrease was attributable to the one-time litigation settlement expense of $3.3 million, and $1.2 million in legal expenses that were recognized in 2021 along with a $0.2 million reduction in telephone expense and a $0.2 million decline in investor relations costs. These decreases were partially offset by year-over-year increases in salaries and employee benefits of $1.2 million, which was partially related to the reduction of employee wages associated with deferred loan costs and increases of $0.3 million in equipment expenses, $0.9 million in OREO expenses and $0.2 million in miscellaneous other expenses.  

Other operating expenses decreased by $0.4 million when comparing the second quarter of 2022 to the second quarter of 2021.  This decrease was driven by a decrease in legal and professional fees of approximately $0.9 million and investor relations expense of approximately $0.2 million, which were partially offset by an increase in salaries and employee benefits of approximately $0.3 million and net OREO expenses of approximately $0.4 million.  The increase in OREO expenses was driven by expenses

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attributable to one development project as we continue to work with the participation group to market and sell the commercial parcels and gains on sales of properties in 2021 that resulted in a net credit.

The provision for loan losses was $0.6 million for both the second quarter of 2022 and the second quarter of 2021.  The provision expense recorded in the second quarter of 2022 was attributable primarily to loan portfolio growth during the quarter and changes in the qualitative factors, particularly related to the current economic outlook.  Net charge-offs of $179,000 were recorded for the quarter ended June 30, 2022, compared to net charge offs of $67,000 for 2021. The ratio of the ALL to loans outstanding was 1.28% at June 30, 2022, compared to 1.29% at March 31, 2022 and 1.38% at December 31, 2021.  

The effective income tax rates as a percentage of income for the six months ended June 30, 2022 and June 30, 2021 were 24.5% and 25.2%, respectively.  The reduced tax rate for the six months ended June 30, 2022 when compared to the six months ended June 30, 2021 was related to an increased benefit at the holding company related to the fair value costs associated with the executive long term incentive plan payouts, and state tax treatment of the litigation settlement expenses. The new low-income housing tax credit investment in 2021 is expected to begin generating tax credits in 2022 and should provide increased tax credits beginning in 2023 and beyond for the term of the tax credit.

Non-GAAP Financial Measures

The Corporation believes that certain non-GAAP financial measures are meaningful because they reflect adjustments commonly made by management, investors, regulators and analysts to evaluate performance trends and the adequacy of common equity. This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for performance and financial condition measures determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

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The following table presents a reconciliation of net income and basic and diluted earnings per share (as reported) to adjusted net income and adjusted basic and diluted earnings per share:

	Six months ended June 30,				Three months ended June 30,
	2022		2021		2022		2021
(in thousands, except for per share amount)
Net income - as reported	$	11,143	$	7,833	$	5,428	$	4,403
Adjustments:
Settlement expense		—		3,300		—		—
Income tax effect of adjustment		—		(735)		—		—
Adjusted net income (non-GAAP)	$	11,143	$	10,398	$	5,428	$	4,403
Basic and Diluted earnings per share - as reported	$	1.68	$	1.15	$	0.82	$	0.66
Adjustments:
Settlement expense		—		0.47		—		—
Income tax effect of adjustment		—		(0.10)		—		—
Adjusted basic and diluted earnings per share (non-GAAP)	$	1.68	$	1.52	$	0.82	$	0.66
Significant Ratios:
Return on Average Assets (1) - as reported		1.26%		0.88%
Settlement expenses, net of income tax effect		—		0.30%
Adjusted Return on Average Assets (1) (non-GAAP)		1.26%		1.18%
Return on Average Equity (1) - as reported		16.32%		12.21%
Settlement expenses, net of income tax effect		—		3.77%
Adjusted Return on Average Equity (1) (non-GAAP)		16.32%		15.98%

Net Interest Income

Net interest income is our largest source of operating revenue. Net interest income is the difference between the interest that we earn on our interest-earning assets and the interest expense we incur on our interest-bearing liabilities. For analytical and discussion purposes, net interest income is adjusted to a FTE basis to facilitate performance comparisons between taxable and tax-exempt assets by increasing tax-exempt income by an amount equal to the federal income taxes that would have been paid if this income were taxable at the statutorily applicable rate. This is a non-GAAP disclosure and management believes it is not materially different than the corresponding GAAP disclosure.

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The tables below summarizes net interest income for the six and three month periods ended June 30, 2022 and 2021.

	GAAP						Non-GAAP - FTE
	Six Months Ended						Six Months Ended
	June 30,						June 30,
(dollars in thousands)	2022			2021			2022			2021
Interest income	$	28,878		$	28,498		$	29,355		$	28,971
Interest expense		1,566			3,499			1,566			3,499
Net interest income	$	27,312		$	24,999		$	27,789		$	25,472
Net interest margin %		3.40	%		3.07	%		3.46	%		3.13	%
	Three Months Ended							Three Months Ended
	June 30,						June 30,
(dollars in thousands)		2022			2021			2022			2021
Interest income	$	14,731		$	14,436		$	14,967		$	14,670
Interest expense		760			1,673			760			1,673
Net interest income	$	13,971		$	12,763		$	14,207		$	12,997
Net interest margin %		3.46	%		3.10	%		3.52	%		3.15	%

The following tables set forth the average balances, net interest income and expense, and average yields and rates of our interest-earning assets and interest-bearing liabilities for the six and three month periods ended June 30, 2022 and 2021:

	Six Months Ended
	June 30,
	2022						2021
	Average				Average		Average				Average
(dollars in thousands)	Balance		Interest		Yield/Rate		Balance		Interest		Yield/Rate
Assets
Loans	$	1,184,804	$	25,326	4.31	%	$	1,187,760	$	25,873	4.39	%
Investment Securities:
Taxable		356,878		2,946	1.66	%		264,525		1,984	1.51	%
Non taxable		27,447		1,005	7.38	%		25,698		972	7.63	%
Total		384,325		3,951	2.07	%		290,223		2,956	2.05	%
Federal funds sold		44,689		57	0.26	%		155,009		63	0.08	%
Interest-bearing deposits with other banks		4,487		5	0.21	%		2,980		1	0.07	%
Other interest earning assets		1,028		16	3.14	%		4,054		78	3.88	%
Total earning assets		1,619,333		29,355	3.66	%		1,640,026		28,971	3.56	%
Allowance for loan losses		(15,558)						(16,582)
Non-earning assets		172,839						152,853
Total Assets	$	1,776,614					$	1,776,297
Liabilities and Shareholders’ Equity
Interest-bearing demand deposits	$	291,220	$	182	0.13	%	$	208,930	$	347	0.33	%
Interest-bearing money markets		289,377		137	0.10	%		344,100		288	0.17	%
Savings deposits		247,573		36	0.03	%		212,342		46	0.04	%
Time deposits		148,377		521	0.71	%		221,414		1,464	1.33	%
Short-term borrowings		60,144		39	0.13	%		50,670		50	0.20	%
Long-term borrowings		30,929		651	4.24	%		100,929		1,304	2.61	%
Total interest-bearing liabilities		1,067,620		1,566	0.30	%		1,138,385		3,499	0.62	%
Non-interest-bearing deposits		541,992						481,803
Other liabilities		29,337						26,704
Shareholders’ Equity		137,665						129,405
Total Liabilities and Shareholders’ Equity	$	1,776,614					$	1,776,297
Net interest income and spread			$	27,789	3.36	%			$	25,472	2.94	%
Net interest margin					3.46	%					3.13	%

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(1) The above table reflects the average rates earned or paid stated on an FTE basis assuming a 21% tax rate for 2022 and 2021. Non-GAAP interest income on a fully taxable equivalent was $477 and $473, respectively.

(2) Net interest margin is calculated as net interest income divided by average earning assets.

(3) The average yields on investments are based on amortized cost.

Comparing the six months ended June 30, 2022 to the six months ended June 30, 2021, net interest income, on a non-GAAP, FTE basis, increased by $2.3 million.  Interest income increased by $0.4 million and interest expense decreased by $1.9 million.  Interest income for the first six months of 2021 included $2.0 million in fees related to PPP loan forgiveness that were recognized during that period compared to $0.1 million for the six months ended June 30, 2022.  The yield on earning assets increased 10 basis points to 3.66% in 2022 compared to 3.56% in 2021 in correlation with the rising interest rate environment and new loans booked at higher rates.  Interest expense on deposits decreased $1.3 million while the average balances decreased $10.2 million and interest on long-term borrowings decreased $0.7 million relating to the prepayment of $70.0 million of FHLB advances in the third quarter of 2021.  The decreased interest expense resulted in an overall decrease of 32 basis points on interest bearing liabilities.  To date, we have not experienced significant pressure on deposit pricing, but we expect to experience increasing rates the remainder of this year given the recent moves by the Federal Reserve.  The net interest margin for the six months ended June 30, 2022 was 3.46% compared to 3.13% for the six months ended June 30, 2021.  

	Three Months Ended
	June 30,
	2022						2021
(dollars in thousands)	Average Balance		Interest		Average Yield/Rate		Average Balance		Interest		Average Yield/Rate
Assets
Loans	$	1,200,651	$	12,876	4.30	%	$	1,173,007	$	13,119	4.49	%
Investment Securities:
Taxable		350,602		1,540	1.76	%		273,196		994	1.46	%
Non taxable		26,879		500	7.46	%		25,325		480	7.60	%
Total		377,481		2,040	2.17	%		298,521		1,474	1.98	%
Federal funds sold		36,151		39	0.43	%		174,346		39	0.09	%
Interest-bearing deposits with other banks		3,728		4	0.43	%		3,288		—	—	%
Other interest earning assets		1,026		8	3.13	%		3,654		38	4.17	%
Total earning assets		1,619,037		14,967	3.71	%		1,652,816		14,670	3.56	%
Allowance for loan losses		(15,221)						(16,758)
Non-earning assets		166,785						147,763
Total Assets	$	1,770,601					$	1,783,821
Liabilities and Shareholders’ Equity
Interest-bearing demand deposits	$	298,571	$	93	0.12	%	$	214,310	$	175	0.33	%
Interest-bearing money markets		282,083		74	0.11	%		328,100		118	0.14	%
Savings deposits		251,187		18	0.03	%		221,614		21	0.04	%
Time deposits		142,013		216	0.61			215,349		685	1.28	%
Short-term borrowings		60,727		21	0.14	%		51,035		26	0.20	%
Long-term borrowings		30,929		338	4.38	%		100,929		648	2.57	%
Total interest-bearing liabilities		1,065,510		760	0.29	%		1,131,337		1,673	0.59	%
Non-interest-bearing deposits		539,488						498,130
Other liabilities		30,564						27,085
Shareholders’ Equity		136,039						127,269
Total Liabilities and Shareholders’ Equity	$	1,771,601					$	1,783,821
Net interest income and spread			$	14,207	3.42	%			$	12,997	2.97	%
Net interest margin					3.52	%					3.15	%

(1) The above table reflects the average rates earned or paid stated on an FTE basis assuming a 21% tax rate for 2022 and 2021. Non-GAAP interest income on a fully taxable equivalent was $236 and $234, respectively.

(2) Net interest margin is calculated as net interest income divided by average earning assets.

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(3) The average yields on investments are based on amortized cost.

Net interest income, on a non-GAAP, FTE basis, increased by $1.2 million for the second quarter 2022 when compared to the second quarter of 2021.  This increase was driven by an increase of $0.3 million in interest income related to an overall increase of 15 basis points on interest earning assets despite a decline in average balances of $33.8 million. Interest income on loans decreased $0.2 million due primarily to a reduction of fees related to PPP loan forgiveness recognized during 2021.  Investment income increased $0.6 million due to an increase in average balances related to the deployment of excess cash balances to purchase investment securities late in the fourth quarter of 2021 and early in the first quarter of 2022.  The reduction of $1.1 million in interest expense resulted from the lowering of deposit rates throughout 2021, the decline of $73.3 million of average balances in the higher cost CD portfolio and the prepayment of $70.0 million of FHLB advances in 2021. The net interest margin for the second quarter of 2022 was 3.52%, compared to 3.15% for the second quarter of 2021.  

The following table sets forth an analysis of volume and rate changes in interest income and interest expense for our average interest-earning assets and average interest-bearing liabilities for the six and three month periods ended June 30, 2022 and 2021:

	For the Six months ended June 30, 2022
	compared to the Six months ended June 30, 2021
(in thousands and tax equivalent basis)	Volume		Rate		Net
Interest Income:
Loans	$	(65)	$	(482)	$	(547)
Taxable Investments		697		265		962
Non-taxable Investments		67		(34)		33
Federal funds sold		(44)		38		(6)
Interest-bearing deposits		1		3		4
Other interest earning assets		(59)		(3)		(62)
Total interest income		597		(213)		384
Interest Expense:
Interest-bearing demand deposits		136		(301)		(165)
Interest-bearing money markets		(47)		(104)		(151)
Savings deposits		7		(17)		(10)
Time deposits		(486)		(457)		(943)
Short-term borrowings		9		(20)		(11)
Long-term borrowings		(914)		261		(653)
Total interest expense		(1,295)		(638)		(1,933)
Net interest income	$	1,892	$	425	$	2,317

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	For the Three months ended June 30, 2022 compared to the Three months ended June 30, 2021
(in thousands and tax equivalent basis)	Volume		Rate		Net
Interest Income:
Loans	$	310	$	(553)	$	(243)
Taxable Investments		283		263		546
Non-taxable Investments		30		(10)		20
Federal funds sold		(31)		31		0
Interest-bearing deposits		0		4		4
Other interest earning assets		(27)		(3)		(30)
Total interest income		565		(268)		297
Interest Expense:
Interest-bearing demand deposits		70		(152)		(82)
Interest-bearing money markets		(16)		(28)		(44)
Savings deposits		3		(6)		(3)
Time deposits		(235)		(234)		(469)
Short-term borrowings		5		(10)		(5)
Long-term borrowings		(450)		140		(310)
Total interest expense		(623)		(290)		(913)
Net interest income	$	1,188	$	22	$	1,210

(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.

Provision for Loan Losses

Specific allocations have been made for impaired loans where management has determined that the collateral supporting the loans is not adequate to cover the loan balance, and the qualitative factors affecting the ALL have been adjusted based on the current economic environment and the characteristics of the loan portfolio.

Other Income

The composition of other operating income for the six and three month periods ended June 30, 2022 and 2021 is illustrated in the following table:

	Income as % of						Income as % of
	Total Other Income						Total Other Income
	Six Months Ended						Three Months Ended
	June 30,						June 30,
(in thousands)	2022			2021			2022			2021
Service charges on deposit accounts	$	928	11%	$	817	9%	$	463	11%	$	412	10%
Other service charges		445	5%		432	5%		232	5%		221	5%
Trust department		4,233	48%		4,275	47%		2,044	46%		2,034	47%
Debit card income		1,869	21%		1,723	19%		983	22%		913	21%
Bank owned life insurance		589	7%		579	6%		297	7%		293	7%
Brokerage commissions		533	6%		625	7%		313	7%		357	8%
Other income		198	2%		612	7%		81	2%		91	2%
	$	8,795	100%	$	9,063	100%	$	4,413	100%	$	4,321	100%

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Other Operating Expenses

The composition of other operating expenses for the six and three month periods ended June 30, 2022 and 2021 is illustrated in the following table:

	Expense as % of						Expense as % of
	Total Other Operating Expenses						Total Other Operating Expenses
	Six Months Ended						Three Months Ended
	June 30,						June 30,
(in thousands)	2022			2021			2022			2021
Salaries and employee benefits	$	11,761	55%	$	10,495	44%	$	5,793	54%	$	5,507	50%
FDIC premiums		329	2%		366	1%		155	2%		183	1%
Equipment		2,073	10%		1,805	8%		1,029	10%		954	9%
Occupancy expense of premises		1,438	7%		1,418	6%		711	7%		693	6%
Data processing expense		1,626	8%		1,601	7%		805	8%		875	8%
Marketing expense		257	1%		279	1%		151	1%		133	1%
Professional services		1,084	5%		2,661	11%		564	5%		1,491	14%
Contract labor		323	2%		333	1%		158	2%		185	2%
Telephone		253	1%		483	2%		139	1%		268	2%
Other real estate owned		247	1%		(610)	(3)%		152	1%		(198)	(2)%
Investor relations		219	1%		430	2%		123	1%		306	3%
Settlement expense		—	0%		3,300	14%		—	0%		—	0%
Contributions		63	0%		50	0%		42	0%		27	0%
Other		1,542	7%		1,348	6%		815	8%		608	6%
	$	21,215	100%	$	23,959	100%	$	10,637	100%	$	11,032	100%

Provision for Income Taxes

In reporting interim financial information, income tax provisions should be determined under the procedures set forth in Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) Topic 740, Income Taxes (Section 740-270-30). This guidance provides that at the end of each interim period, an entity should make its best estimate of the effective tax rate expected to be applicable for the full fiscal year. The rate so determined should be used in providing for income taxes on a current year-to-date basis. The effective tax rate should reflect anticipated investment tax credits, capital gains rates, and other available tax planning alternatives. In arriving at this effective tax rate, however, no effect should be included for the tax related to significant, unusual or extraordinary items that will be separately reported or reported net of their related tax effect in reports for the interim period or for the fiscal year.

FINANCIAL CONDITION

Balance Sheet Overview

Total assets at June 30, 2022 were $1.8 billion, representing a $7.9 million decrease since March 31, 2022 and a $22.6 million increase since December 31, 2021.  During the second quarter of 2022, cash and interest-bearing deposits in other banks decreased by $54.5 million, the investment portfolio decreased by $11.8 million and gross loans increased by $52.2 million.  Other assets including deferred taxes, premises and equipment and accrued interest receivable also increased collectively by $6.6 million.  

Total liabilities at June 30, 2022 were $1.6 billion, representing a $3.7 million decrease since March 31, 2022 and a $31.6 million increase since December 31, 2021.  The increase in total liabilities was also attributable to the change in the market value of the pension plan assets of $9.4 million since December 31, 2021.  This decrease is related to the increasing rate environment and market volatility resulting in a pension plan liability of $4.6 million at June 30, 2022 compared to a pension plan asset of $4.8 million at December 31, 2021. Total deposits decreased by $23.2 million since March 31, 2022 and increased by $15.0 million since December 31, 2021.  The decline in deposits during the second quarter is primarily attributable to reduced money market balances associated with one local municipality.  Short term borrowings increased $12.2 million since December 31, 2021, driven by $18.9 million in overnight borrowings, which were offset by a decrease in other short-term borrowings of $7.9 million during the quarter.  

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The increase in overnight borrowings at June 30, 2022 was primarily driven by the strong loan growth coupled with the decline in deposit balances during the second quarter and the timing difference associated with an expected loan pay-off.  Management plans to bring approximately $50.0 million in trust department money market accounts which had been placed off-balance sheet in 2021, back on-balance sheet in the third quarter.

Loan Portfolio

The following table presents the composition of our loan portfolio at the dates indicated:

(dollars in thousands)	June 30, 2022			December 31, 2021
Commercial real estate	$	421,942	34%	$	374,291	32%
Acquisition and development		116,115	10%		128,077	11%
Commercial and industrial *		225,640	18%		180,976	16%
Residential mortgage		406,293	33%		404,686	35%
Consumer		63,623	5%		65,657	6%
Total Loans	$	1,233,613	100%	$	1,153,687	100%

*Includes $0.8 million of PPP loans at June 30, 2022 and $7.7 million at December 31, 2021

Outstanding gross loans of $1.2 billion at June 30, 2022 reflected growth of $79.9 million for the first six months of 2022 and growth of $52.2 million for the second quarter of 2022.  Since December 31, 2021, commercial real estate (“CRE”) loans increased by $47.7 million, acquisition and development (“A&D”) loans decreased by $12.0 million and commercial and industrial loans increased by $44.6 million.  The growth in the commercial real estate and commercial and industrial portfolios is a result of expansion of relationships with existing clients as well as new commercial clients.   Residential mortgage loans increased $1.6 million related to the diminished refinance activity due to the rising interest rate environment and management’s strategic decision to book new mortgage loans at higher rates to our in-house portfolio. The consumer loan portfolio decreased by $2.0 million due to amortization of the existing portfolio offsetting new production.

New commercial loan production for the three months ended June 30, 2022 was approximately $103.4 million.  At June 30, 2022, unfunded, committed commercial construction loans totaled approximately $34.9 million. Commercial amortization and payoffs were approximately $47.7 million through June 30, 2022.

New consumer mortgage loan production for the second quarter of 2022 was approximately $15.1 million with most of this production being comprised of in-house mortgages.  The pipeline in-house, portfolio loans as of June 30, 2022 consisted of $13.5 million. Production levels have slowed for residential mortgages as compared to the second quarter of 2021 because of the increasing interest rates for the first six months of 2022.

Non-accrual loans totaled $2.1 million at June 30, 2022 compared to $2.5 million at December 31, 2021.  The  decrease in non-accrual balances at June 30, 2022 was primarily related to $0.2 million of principal pay-downs of residential mortgage and home equity loans.  

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Risk Elements of Loan Portfolio

The following table presents the risk elements of our loan portfolio at the dates indicated. Management is not aware of any potential problem loans other than those listed in this table or discussed below.

(dollars in thousands)	June 30, 2022		% of Applicable Portfolio	December 31, 2021		% of Applicable Portfolio
Non-accrual loans:
Commercial real estate	$	66	0.02%	$	81	0.02%
Acquisition and development		375	0.32%		390	0.30%
Commercial and industrial		—	0.00%		90	0.05%
Residential mortgage		1,675	0.41%		1,901	0.47%
Consumer		33	0.05%		—	0.00%
Total non-accrual loans	$	2,149	0.17%	$	2,462	0.21%
Accruing Loans Past Due 90 days or more:
Residential mortgage	$	258		$	148
Consumer		67			152
Total loans past due 90 days or more	$	325		$	300
Total non-accrual and accruing loans past due 90 days or more	$	2,474		$	2,762
Restructured Loans (TDRs):
Performing	$	3,134		$	2,997
Non-accrual (included above)		289			300
Total TDRs	$	3,423		$	3,297
Other real estate owned	$	4,517		$	4,477
Total Non-performing assets	$	6,991		$	7,239
Impaired loans without a valuation allowance		4,980			5,248
Impaired loans with a valuation allowance		303			480
Total impaired loans	$	5,283		$	5,728
Valuation allowance related to impaired loans	$	62		$	64
Non-accrual loans to total loans (as %)		0.17%			0.21%
Non-performing loans to total loans (as %)		0.20%			0.24%
Non-performing assets to total assets (as %)		0.40%			0.42%
Allowance for loan losses to non-accrual loans (as %)		732.29%			648.05%
Allowance for loan losses to non-performing assets (as %)		225.10%			220.40%

Performing loans considered to be impaired (including performing troubled debt restructurings, or TDRs), as defined and identified by management, amounted to $3.1 million at June 30, 2022 and $3.0 million at December 31, 2021. Loans are identified as impaired when, based on current information and events, management determines that we will be unable to collect all amounts due according to contractual terms. These loans consist primarily of A&D loans and CRE loans. The fair values are generally determined based upon independent third-party appraisals of the collateral or discounted cash flows based upon the expected proceeds. Specific allocations have been made where management believes there is insufficient collateral to repay the loan balance if liquidated and there is no secondary source of repayment available.

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The following table presents the details of impaired loans that are TDRs by class at June 30, 2022 and December 31, 2021:

	June 30, 2022			December 31, 2021
	Number of	Recorded		Number of	Recorded
(dollars in thousands)	Contracts	Investment		Contracts	Investment
Performing
Commercial real estate
Non owner-occupied	1		103	1	$	106
All other CRE	2		2,098	2		2,178
Acquisition and development
1-4 family residential construction	1		224	1		239
All other A&D	—		—	—		—
Commercial and industrial	—		—	—		—
Residential mortgage
Residential mortgage – term	11		709	6		474
Residential mortgage – home equity	—		—	—		—
Consumer	—		—	—		—
Total performing	15	$	3,134	10	$	2,997
Non-accrual
Commercial real estate
Non owner-occupied	—	$	—	—	$	—
All other CRE	—		—	—		—
Acquisition and development
1-4 family residential construction	—		—	—		—
All other A&D	—		—	—		—
Commercial and industrial	—		—	—		—
Residential mortgage
Residential mortgage – term	2		289	2		300
Residential mortgage – home equity	—			—		—
Consumer	—		—	—		—
Total non-accrual	2		289	2		300
Total TDRs	17	$	3,423	12	$	3,297

The level of TDRs was $3.2 million at June 30, 2022 compared to $3.4 million at December 31, 2021, with a slight reduction due to payments made during the first six months of 2022. There were no new TDRs during the first six months of 2022.

Allowance and Provision for Loan Losses

The ALL is maintained to absorb probable incurred credit losses from the loan portfolio. The ALL is based on management’s continuing evaluation of the quality of the loan portfolio, assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated loss experience, and the amount of non-performing loans.

The ALL is also based on estimates, and actual losses will vary from current estimates. These estimates are reviewed quarterly, and as adjustments, either positive or negative, become necessary, a corresponding increase or decrease is made in the ALL. The methodology used to determine the adequacy of the ALL is consistent with prior years. An estimate for probable losses related to unfunded lending commitments, such as letters of credit and binding but unfunded loan commitments is also prepared. This estimate is computed in a manner similar to the methodology described above, adjusted for the probability of actually funding the commitment.  The ALL decreased to $15.7 million at June 30, 2022 compared to $16.0 million at December 31, 2021.

The ratio of year-to-date net charge offs to average loans for the six months ending June 30, 2022 was an annualized 0.07%, compared to net charge offs to average loans of 0.01% for 2021.  Our special assets team continues to aggressively collect on charged-off loans.

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The ALL at June 30, 2022 is adequate to provide for probable credit losses inherent in our loan portfolio. Amounts that will be recorded for the provision for loan losses in future periods will depend upon trends in the loan balances, including the composition of the loan portfolio, changes in loan quality and loss experience trends, potential recoveries on previously charged-off loans and changes in other qualitative factors. Management also applies interest rate risk, collateral value and debt service sensitivity analyses to the Commercial real estate loan portfolio and obtains new appraisals on specific loans under defined parameters to assist in the determination of the periodic provision for loan losses.

The following table presents a summary of the activity in the ALL for the six months ended June 30:

(dollars in thousands)	2022			2021
Balance, January 1	$	15,955		$	16,486
Charge-offs:
Commercial real estate		—			(81)
Acquisition and development		—			—
Commercial and industrial		(52)			(82)
Residential mortgage		(33)			(175)
Consumer		(545)			—
Total charge-offs		(630)			(257)
Recoveries:
Commercial real estate		1			110
Acquisition and development		20			38
Commercial and industrial		9			29
Residential mortgage		101			78
Consumer		76			—
Total recoveries		207			255
Net losses		(423)			(2)
Provision for loan losses		205			665
Balance at end of period	$	15,737		$	17,149
Allowance for loan losses to gross loans outstanding (as %)		1.28	%		1.49	%

Net (Charge-offs)/Recoveries as a % of Average Applicable Portfolio
	2022		2021
Commercial real estate		0.00%		(0.02)%
Acquisition and development		(0.07)%		0.97%
Commercial and industrial		(0.23)%		0.04%
Residential mortgage		0.02%		0.03%
Consumer		0.45%		0.48%

Investment Securities

At June 30, 2022, the total amortized cost basis of the available-for-sale investment portfolio was $149.7 million, compared to a fair value of $132.9 million. Unrealized gains and losses on securities available-for-sale are reflected in accumulated other comprehensive loss, a component of shareholders’ equity. The amortized cost basis of the held to maturity portfolio was $240.6 million, compared to a fair value of $220.3 million.

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The following table presents the composition of our securities portfolio at amortized cost and fair values at the dates indicated:

	June 30, 2022					December 31, 2021
	Amortized		Fair Value		FV as %	Amortized		Fair Value		FV as %
(dollars in thousands)	Cost		(FV)		of Total	Cost		(FV)		of Total
Securities Available for Sale:
U.S. government agencies	$	11,060	$	9,915	8%	$	69,602	$	67,169	23%
Residential mortgage-backed agencies		47,086		41,246	31%		49,630		48,661	17%
Commercial mortgage-backed agencies		36,498		31,996	24%		51,694		50,868	19%
Collateralized mortgage obligations		27,095		24,150	18%		93,018		90,077	31%
Obligations of state and political subdivisions		8,341		8,323	6%		12,439		12,804	4%
Corporate bonds		1,000		979	1%		—		—	—
Collateralized debt obligations		18,640		16,258	12%		18,609		17,192	6%
Total available for sale	$	149,720	$	132,867	100%	$	294,992	$	286,771	100%
Securities Held to Maturity:
U.S. treasuries	$	37,076	$	35,850	16%	$	—	$	—	—
U.S. government agencies		67,596		58,847	27%		—		—	—
Residential mortgage-backed agencies		27,996		25,717	12%		30,634		30,847	47%
Commercial mortgage-backed agencies		25,440		22,445	10%		5,456		5,601	9%
Collateralized mortgage obligations		59,951		54,293	25%		—		—	—
Obligations of state and political subdivisions		22,529		23,149	10%		20,169		28,921	44%
Total held to maturity	$	240,588	$	220,301	100%	$	56,259	$	65,369	100%

Total fair value of investment securities available for sale decreased by $153.9 million since December 31, 2021 due to the transfer of investments from available-for-sale to held to maturity in the first quarter 2022.  At June 30, 2022, the securities classified as available-for-sale included a net unrealized loss of $16.9 million, which represents the difference between the fair value and amortized cost of securities in the portfolio.

The Corporation reassessed classification of certain investments and effective February 1, 2022, the Corporation transferred $139.0 million of callable agencies, obligation of state and political subdivisions, and collateralized mortgage obligations from available for sale to held to maturity securities.  The transfer occurred at fair value.  The related unrealized loss of $8.4 million included in other comprehensive loss remained in other comprehensive loss, to be amortized out of other comprehensive loss with an offsetting entry to interest income as a yield adjustment over the remaining term of the securities.  No gain or loss was recorded at the time of transfer.  The transfer of these securities was completed in an effort to mitigate further decline in fair market value in a rising rate environment.  Management’s assessment of the portfolio included lower yielding bonds and the risk of extension in an up 300 basis point shock.

As discussed in Note 6 to the consolidated financial statements presented elsewhere in this report, the Corporation measures fair market values based on the fair value hierarchy established in ASC Topic 820, Fair Value Measurements and Disclosures. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Level 3 prices or valuation techniques require inputs that are both significant to the valuation assumptions and are not readily observable in the market (i.e. supported with little or no market activity). These Level 3 instruments are valued based on both observable and unobservable inputs derived from the best available data, some of which is internally developed, and considers risk premiums that a market participant would require.

Approximately $116.6 million of the available-for-sale portfolio was valued using Level 2 pricing and had net unrealized losses of $14.5 million at June 30, 2022. The remaining $16.3 million of the securities available-for-sale represents the entire collateralized debt obligation (“CDO”) portfolio, which was valued using significant unobservable inputs (Level 3 assets). The $2.4 million in net unrealized losses associated with this portfolio relates to nine pooled trust preferred securities that comprise the CDO portfolio. Net unrealized losses of $1.4 million represent non-credit related OTTI charges on seven of the securities, while $1.0 million of unrealized losses relates to two securities which have had no credit related OTTI.

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Deposits

The following table presents the composition of our deposits at the dates indicated:

(dollars in thousands)	June 30, 2022			December 31, 2021
Non-interest-bearing demand deposits	$	527,761	36%	$	501,627	34%
Interest-bearing deposits:
Demand		299,532	20%		228,175	16%
Money Market		269,994	18%		339,748	23%
Savings deposits		252,153	17%		236,595	16%
Time deposits		134,914	9%		163,229	11%
Total Deposits	$	1,484,354	100%	$	1,469,374	100%

Total deposits at June 30, 2022 increased $15.0 million when compared to deposits at December 31, 2021.  Non-interest-bearing deposits increased $26.1 million primarily related to the new commercial business gained during 2022.  Interest bearing demand deposits increased $71.4 million.  Traditional savings accounts increased $15.6 million.  Money market balances decreased $69.8 million driven by one local municipality opting to move their funds to a state-sponsored deposit account that offers a higher yield as well as a movement of balances to the trust department for higher rates, while maintaining the customer relationship.  Time deposits decreased $28.3 million related to maturing time deposits moving into other deposit products.

Borrowed Funds

The following table presents the composition of our borrowings at the dates indicated:

(in thousands)	June 30, 2022		December 31, 2021
Fed Funds Purchased, weighted average interest rate of 1.75% at June 30, 2022	$	18,900	$	—
Securities sold under agreements to repurchase	$	51,014	$	57,699
Total short-term borrowings		69,914		57,699
Junior subordinated debt		30,929		30,929
Total long-term borrowings	$	30,929	$	30,929

Short-term borrowings increased $12.2 million since December 31, 2021, driven by $18.9 million in overnight borrowings, which were offset by a decrease in other short-term borrowings of $6.7 million during the six months related to our Treasury Management customers utilizing their funds.

Liquidity Management

Liquidity is a financial institution’s capability to meet customer demands for deposit withdrawals while funding all credit-worthy loans. The factors that determine the institution’s liquidity are:

● Reliability and stability of core deposits;

● Cash flow structure and pledging status of investments; and

● Potential for unexpected loan demand.

We actively manage our liquidity position through regular meetings of a sub-committee of executive management, known as the Treasury Team, which looks forward 12 months at 30-day intervals. The measurement is based upon the projection of funds sold or purchased position, along with ratios and trends developed to measure dependence on purchased funds and core growth. Monthly reviews by management and quarterly reviews by the Asset and Liability Committee under prescribed policies and procedures are designed to ensure that we will maintain adequate levels of available funds.

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It is our policy to manage our affairs so that liquidity needs are fully satisfied through normal Bank operations. That is, the Bank will manage its liquidity to minimize the need to make unplanned sales of assets or to borrow funds under emergency conditions. The Bank will use funding sources where the interest cost is relatively insensitive to market changes in the short run (periods of one year or less) to satisfy operating cash needs. The remaining normal funding will come from interest-sensitive liabilities, either deposits or borrowed funds. When the marginal cost of needed wholesale funding is lower than the cost of raising this funding in the retail markets, the Corporation may supplement retail funding with external funding sources such as:

1. Unsecured Fed Funds lines of credit with upstream correspondent banks (M&T Bank, Pacific Coast Banker’s Bank, PNC Financial Services, Atlantic Community Bankers Bank, Community Bankers Bank and Zions National Bank).

2. Secured advances with the FHLB, which are collateralized by eligible one to four family residential mortgage loans, home equity lines of credit, commercial real estate loans, various securities and pledged cash.

3. Secured line of credit with the Fed Discount Window for use in borrowing funds up to 90 days, using municipal securities as collateral.

4. Brokered deposits, including CDs and money market funds, provide a method to generate deposits quickly. These deposits are strictly rate driven but often provide the most cost-effective means of funding growth.

5. One Way Buy CDARS/ICS funding – a form of brokered deposits that has become a viable supplement to brokered deposits obtained directly.

Management believes that we have adequate liquidity available to respond to current and anticipated liquidity demands and is not aware of any trends or demands, commitments, events or uncertainties that are likely to materially affect our ability to maintain liquidity at satisfactory levels.

Market Risk and Interest Sensitivity

Our primary market risk is interest rate fluctuation. Interest rate risk results primarily from the traditional banking activities that we engage in, such as gathering deposits and extending loans. Many factors, including economic and financial conditions, movements in interest rates and consumer preferences affect the difference between the interest earned on our assets and the interest paid on our liabilities. Interest rate sensitivity refers to the degree that earnings will be impacted by changes in the prevailing level of interest rates. Interest rate risk arises from mismatches in the repricing or maturity characteristics between interest-bearing assets and liabilities. Management seeks to minimize fluctuating net interest margins, and to enhance consistent growth of net interest income through periods of changing interest rates. Management uses interest sensitivity gap analysis and simulation models to measure and manage these risks. The interest rate sensitivity gap analysis assigns each interest-earning asset and interest-bearing liability to a time frame reflecting its next repricing or maturity date. The differences between total interest-sensitive assets and liabilities at each time interval represent the interest sensitivity gap for that interval. A positive gap generally indicates that rising interest rates during a given interval will increase net interest income, as more assets than liabilities will reprice. A negative gap position would benefit us during a period of declining interest rates.

At June 30, 2022, we were asset sensitive.

Our interest rate risk management goals are:

● Ensure that the Board of Directors and senior management will provide effective oversight and ensure that risks are adequately identified, measured, monitored and controlled;

● Enable dynamic measurement and management of interest rate risk;

● Select strategies that optimize our ability to meet our long-range financial goals while maintaining interest rate risk within policy limits established by the Board of Directors;

● Use both income and market value oriented techniques to select strategies that optimize the relationship between risk and return; and

● Establish interest rate risk exposure limits for fluctuation in net interest income (“NII”), net income and economic value of equity.

To manage interest sensitivity risk, management formulates guidelines regarding asset generation and pricing, funding sources and pricing, and off-balance sheet commitments. These guidelines are based on management’s outlook regarding future

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interest rate movements, the state of the regional and national economy, and other financial and business risk factors. Management uses computer simulations to measure the effect on net interest income of various interest rate scenarios. Key assumptions used in the computer simulations include cash flows and maturities of interest rate sensitive assets and liabilities, changes in asset volumes and pricing, and management’s capital plans. This modeling reflects interest rate changes and the related impact on net interest income over specified periods.

We evaluate the effect of a change in interest rates of +/-100 basis points to +/-400 basis points on both NII and Net Portfolio Value (“NPV”) / Economic Value of Equity (“EVE”). We concentrate on NII rather than net income as long as NII remains the significant contributor to net income.

NII modeling allows management to view how changes in interest rates will affect the spread between the yield paid on assets and the cost of deposits and borrowed funds. Unlike traditional Gap modeling, NII modeling takes into account the different degree to which installments in the same repricing period will adjust to a change in interest rates. It also allows the use of different assumptions in a falling versus a rising rate environment. The period considered by the NII modeling is the next eight quarters.

NPV / EVE modeling focuses on the change in the market value of equity. NPV / EVE is defined as the market value of assets less the market value of liabilities plus/minus the market value of any off-balance sheet positions. By effectively looking at the present value of all future cash flows on or off the balance sheet, NPV / EVE modeling takes a longer-term view of interest rate risk. This complements the shorter-term view of the NII modeling.

Measures of NII at risk produced by simulation analysis are indicators of an institution’s short-term performance in alternative rate environments. These measures are typically based upon a relatively brief period, usually one year. They do not necessarily indicate the long-term prospects or economic value of the institution.

Based on the simulation analysis performed at June 30, 2022 and December 31, 2021, management estimated the following changes in net interest income, assuming the indicated rate changes:

(Dollars in thousands)	June 30, 2022		December 31, 2021
+400 basis points	$	963	$	4,072
+300 basis points	$	825	$	3,233
+200 basis points	$	677	$	2,315
+100 basis points	$	492	$	1,160
-100 basis points	$	(3,060)	$	(3,110)

This estimate is based on assumptions that may be affected by unforeseeable changes in the general interest rate environment and any number of unforeseeable factors. Rates on different assets and liabilities within a single maturity category adjust to changes in interest rates to varying degrees and over varying periods of time. The relationships between lending rates and rates paid on purchased funds are not constant over time. Management can respond to current or anticipated market conditions by lengthening or shortening the Bank’s sensitivity through loan repricings or changing its funding mix. The rate of growth in interest-free sources of funds will influence the level of interest-sensitive funding sources. In addition, the absolute level of interest rates will affect the volume of earning assets and funding sources. As a result of these limitations, the interest-sensitive gap is only one factor to be considered in estimating the net interest margin.

Management believes that no material changes in our market risks, our procedures used to evaluate and mitigate those risks, or our actual or simulated sensitivity positions have occurred since December 31, 2021. Our NII simulation analysis as of December 31, 2021 is included in Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2021 under the heading “Market Risk and Interest Sensitivity.

Impact of Inflation – Our assets and liabilities are primarily monetary in nature, and as such, future changes in prices do not affect the obligations to pay or receive fixed and determinable amounts of money. During inflationary periods, monetary assets lose value in terms of purchasing power and monetary liabilities have corresponding purchasing power gains. The concept of purchasing power is not an adequate indicator of the impact of inflation on financial institutions because it does not incorporate changes in our earnings.

64

Capital Resources

We require capital to fund loans, satisfy our obligations under the Bank’s letters of credit, meet the deposit withdrawal demands of the Bank’s customers, and satisfy our other monetary obligations. To the extent that deposits are not adequate to fund our capital requirements, we can rely on the funding sources identified above under the heading “Liquidity Management”. At June 30, 2022, the Bank had $111.1 million available through unsecured lines of credit with correspondent banks, and approximately $189.8 million available through the FHLB. Management is not aware of any demands, commitments, events or uncertainties that are likely to materially affect our ability to meet our future capital requirements.

In addition to operational requirements, the Bank is subject to risk-based capital regulations, which were adopted and are monitored by federal banking regulators. These regulations are used to evaluate capital adequacy and require an analysis of an institution’s asset risk profile and off-balance sheet exposures, such as unused loan commitments and stand-by letters of credit.  Based on capital ratios at June 30, 2022, the Bank was considered to be well-capitalized.

65

The following table presents the Bank’s capital ratios as of the dates indicated:

	June 30, 2022		December 31, 2021		Required for Capital Adequacy Purposes		Required to be Well Capitalized
Total Capital (to risk-weighted assets)
First United Bank & Trust	14.64	%	14.97	%	8.00	%	10.00	%
Tier 1 Capital (to risk-weighted assets)
First United Bank & Trust	13.46	%	13.72	%	6.00	%	8.00	%
Common Equity Tier 1 Capital (to risk-weighted assets)
First United Bank & Trust	13.46	%	13.72	%	4.50	%	6.50	%
Tier 1 Capital (to average assets)
First United Bank & Trust	10.40	%	10.00	%	4.00	%	5.00	%

Contractual Obligations, Commitments and Off-Balance Sheet Arrangements

Contractual Obligations

The Corporation enters into contractual obligations in the normal course of business. Among these obligations are FHLB advances and junior subordinated debentures, operating lease agreements for banking and subsidiaries’ offices and for data processing and telecommunications equipment.  Comparing June 30, 2022 to December 31, 2021, short-term borrowings increased $12.2 million, driven by $18.9 million in overnight borrowings, which were offset by a decrease in other short-term borrowings of $6.7 million during the period  related to our Treasury Management customers utilizing their funds.

Commitments

Loan commitments are made to accommodate the financial needs of our customers. Letters of credit commit us to make payments on behalf of customers when certain specified future events occur. The credit risks inherent in loan commitments and letters of credit are essentially the same as those involved in extending loans to customers, and these arrangements are subject to our normal credit policies. We are not a party to any other off-balance sheet arrangements.

Commitments to extend credit in the form of consumer, commercial and business at the dates indicated were as follows:

(in thousands)	June 30, 2022		December 31, 2021
Residential Mortgage - home equity	$	68,811	$	66,874
Residential Mortgage - construction		22,552		18,657
Commercial		140,935		136,897
Consumer - personal credit lines		4,509		4,551
Standby letters of credit		15,922		15,711
Total	$	252,729	$	242,690

The increase of $10.0 million in commitments at June 30, 2022 when compared to December 31, 2021 was due to new business in construction commitments in the residential mortgage and commercial portfolios.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The information required by this item is included in Item 2 of Part I of this report under the caption “Market Risk and Interest Sensitivity” and in Item 7 of Part II of First United Corporation’s Annual Report on Form 10-K for the year ended December 31, 2021 under the heading “Market Risk and Interest Sensitivity” both of which are incorporated in this Item 3 by reference.

66

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 with the SEC, such as this Quarterly Report, is recorded, processed, summarized and reported within the periods specified in those rules and forms, and that such information is accumulated and communicated to our management, including First United Corporation’s principal executive officer (“PEO”) and its principal financial officer (“PFO”), as appropriate, to allow for timely decisions regarding required disclosure. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

An evaluation of the effectiveness of these disclosure controls as of June 30, 2022 was carried out under the supervision and with the participation of management, including the PEO and the PFO. Based on that evaluation, management, including the PEO and the PFO, has concluded that our disclosure controls and procedures are, in fact, effective at the reasonable assurance level.

During the six months ended June 30, 2022, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

67

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

The risks and uncertainties to which our financial condition and operations are subject are discussed in detail in Item 1A of Part I of First United Corporation’s Annual Report on Form 10-K for the year ended December 31, 2021. Management does not believe that any material changes in our risk factors have occurred since they were last disclosed except as follows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

68

Item 6. Exhibits

The exhibits filed or furnished with this quarterly report are listed in the following Exhibit Index.

Exhibit	Description
31.1	Certifications of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act (filed herewith)
31.2	Certifications of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act (filed herewith)
32	Certification of the Principal Executive Officer and the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act (furnished herewith)
101.INS	Inline XBRL Instance Document (filed herewith)
101.SCH	Inline XBRL Taxonomy Extension Schema (filed herewith)
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase (filed herewith)
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase (filed herewith)
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase (filed herewith)
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase (filed herewith)
104	The cover page of First United Corporation’s Quarterly Report on Form 10Q for the quarter ended March 31, 2022 formatted in Inline XBRL, included within the Exhibit 101 attachments (filed herewith).

* Portions of the exhibit have been omitted pursuant to Item 601(b)(10)(vi) of Regulation S-K.

69

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FIRST UNITED CORPORATION
Date: August 11, 2022	/s/ Carissa L. Rodeheaver
	Carissa L. Rodeheaver, CPA
	Chairman of the Board, President and Chief Executive Officer
	(Principal Executive Officer)
Date: August 11, 2022	/s/ Tonya K. Sturm
	Tonya K. Sturm, Senior Vice President,
	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

70

EX-31.1

Exhibit 31.1

Certifications of the Principal Executive Officer

Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14

As adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Carissa L. Rodeheaver, certify that:

1. I have reviewed this quarterly report on Form 10-Q of First United Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2022	/s/ Carissa L. Rodeheaver
	Carissa L. Rodeheaver, CPA
	Chairman of the Board, President and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certifications of the Principal Financial Officer

Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14

As adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Tonya K. Sturm, certify that:

1. I have reviewed this quarterly report on Form 10-Q of First United Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2022	/s/ Tonya K. Sturm
	Tonya K. Sturm, Senior Vice President,
	Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

Exhibit 32

Certification of Periodic Report

Pursuant to 18 U.S.C. § Section 1350

As adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to, and for purposes only of, 18 U.S.C. § 1350, each of the undersigned hereby certifies that (i) the Quarterly Report of First United Corporation on Form 10-Q for the quarter ended June 30, 2022 filed with the  Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of First United Corporation.

Date: August 11, 2022	/s/ Carissa L. Rodeheaver
	Carissa L. Rodeheaver, CPA
	Chairman of the Board, President and Chief Executive Officer
	(Principal Executive Officer)
Date: August 11, 2022	/s/ Tonya K. Sturm
	Tonya K. Sturm, Senior Vice President,
	Chief Financial Officer
	(Principal Financial Officer)

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2022	Jul. 31, 2022
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
Document Transition Report	false
Current Fiscal Year End Date	--12-31
Entity File Number	0-14237
Entity Registrant Name	First United Corporation
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	52-1380770
Entity Address, Address Line One	19 South Second Street
Entity Address, City or Town	Oakland
Entity Address, State or Province	MD
Entity Address, Postal Zip Code	21550-0009
City Area Code	800
Local Phone Number	470-4356
Title of 12(b) Security	Common Stock
Trading Symbol	FUNC
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		6,656,395
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2022
Entity Central Index Key	0000763907
Amendment Flag	false

XML

Consolidated Statement of Financial Condition - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Assets
Cash and due from banks	$ 20,108	$ 109,823
Interest bearing deposits in banks	1,543	5,897
Cash and cash equivalents	21,651	115,720
Investment securities - available for sale (at fair value)	132,867	286,771
Investment securities - held to maturity (fair value $220,301 at June 30, 2022 and $65,369 at December 31, 2021)	240,588	56,259
Restricted investment in bank stock, at cost	1,026	1,029
Loans held for sale		67
Loans	1,233,613	1,153,687
Unearned fees	(104)	(292)
Allowance for loan losses	(15,737)	(15,955)
Net loans	1,217,772	1,137,440
Premises and equipment, net	35,305	34,697
Goodwill and other intangibles	11,947	12,052
Bank owned life insurance	45,739	45,150
Deferred tax assets	13,653	6,857
Other real estate owned, net	4,517	4,477
Right of use asset	2,075	2,247
Pension asset		4,765
Accrued interest receivable	5,055	4,821
Other Assets	20,260	17,486
Total Assets	1,752,455	1,729,838
Liabilities:
Non-interest bearing deposits	527,761	501,627
Interest bearing deposits	956,593	967,747
Total deposits	1,484,354	1,469,374
Short-term borrowings	69,914	57,699
Long-term borrowings	30,929	30,929
Operating lease liability	2,570	2,761
SERP deferred compensation	10,452	10,395
Pension Liability	4,669
Accrued interest payable and other liabilities	15,676	15,787
Dividends payable	999	993
Total Liabilities	1,619,563	1,587,938
Shareholders' Equity:
Common Stock - par value $0.01 per share; Authorized 25,000,000 shares; issued and outstanding 6,656,395 shares at June 30, 2022 and 6,620,955 at December 31, 2021	67	66
Surplus	24,105	23,661
Retained earnings	154,636	145,487
Accumulated other comprehensive loss	(45,916)	(27,314)
Total Shareholders' Equity	132,892	141,900
Total Liabilities and Shareholders' Equity	$ 1,752,455	$ 1,729,838

XML

Consolidated Statement of Financial Condition (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Consolidated Statement of Financial Condition [Abstract]
Held-to-maturity securities, fair value	$ 220,301	$ 65,369
Common stock, Par value	$ 0.01	$ 0.01
Common Stock, Shares Authorized	25,000,000	25,000,000
Common Stock, Shares, Issued	6,656,395	6,620,955
Common Stock, Shares, Outstanding	6,656,395	6,620,955

XML

Consolidated Statement of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Interest income
Interest and fees on loans	$ 12,861	$ 13,097	$ 25,293	$ 25,829
Interest on investment securities: Taxable	1,540	994	2,946	1,984
Interest on investment securities: Exempt from federal income tax	279	268	561	543
Total investment income	1,819	1,262	3,507	2,527
Other	51	77	78	142
Total interest income	14,731	14,436	28,878	28,498
Interest expense
Savings	18	21	36	46
Interest-bearing transaction accounts	167	293	319	636
Time deposits	216	685	521	1,463
Total interest on Deposits	401	999	876	2,145
Interest on short-term borrowings	21	26	39	50
Interest on long-term borrowings	338	648	651	1,304
Total interest expense	760	1,673	1,566	3,499
Net interest income	13,971	12,763	27,312	24,999
Provision for loan losses	624	555	205	665
Net interest income after provision for loan losses	13,347	12,208	27,107	24,334
Other operating income
Net gains on investments, available for sale		154	3	154
Net gains on sale of residential mortgage loans	7	272	28	860
Net gains on disposal of fixed assets	6	16	34	16
Net gains	13	442	65	1,030
Total other income	4,413	4,321	8,795	9,063
Total other operating income	4,426	4,763	8,860	10,093
Other operating expenses
Salaries and employee benefits	5,793	5,507	11,761	10,495
FDIC premiums	155	183	329	366
Equipment expense	1,029	954	2,073	1,805
Occupancy expense of premises	711	693	1,438	1,418
Data processing expense	805	875	1,626	1,601
Marketing expense	151	133	257	279
Professional services	564	1,491	1,084	2,661
Contract labor	158	185	323	333
Telephone	139	268	253	483
Losses/(gains) on sales and write downs of other real estate owned, net	152	(198)	247	(610)
Investor relations	123	306	219	430
Settlement expense				3,300
Contributions	42	27	63	50
Other	815	608	1,542	1,348
Total other operating expenses	10,637	11,032	21,215	23,959
Income before income tax expense	7,136	5,939	14,752	10,468
Provision for income tax expense	1,708	1,536	3,609	2,635
Net Income	$ 5,428	$ 4,403	$ 11,143	$ 7,833
Basic net income per share	$ 0.82	$ 0.66	$ 1.68	$ 1.15
Diluted net income per share	$ 0.82	$ 0.66	$ 1.68	$ 1.15
Weighted average number of basic shares outstanding	6,650	6,609	6,639	6,803
Weighted average number of diluted shares outstanding	6,661	6,615	6,649	6,808
Dividends declared per common share	$ 0.15	$ 0.15	$ 0.30	$ 0.30
Service Charges on Deposit Accounts [Member]
Other operating income
Total other income	$ 463	$ 412	$ 928	$ 817
Other Service Charges [Member]
Other operating income
Total other income	232	221	445	432
Trust Department [Member]
Other operating income
Total other income	2,044	2,034	4,233	4,275
Debit Card Income [Member]
Other operating income
Total other income	983	913	1,869	1,723
Bank Owned Life Insurance [Member]
Other operating income
Total other income	297	293	589	579
Brokerage Commissions [Member]
Other operating income
Total other income	313	357	533	625
Other [Member]
Other operating income
Total other income	$ 81	$ 91	$ 198	$ 612

XML

Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Net Income	$ 5,428	$ 4,403	$ 11,143	$ 7,833
Other comprehensive (loss)/income, net of tax and reclassification adjustments:
Other Comprehensive Income (Loss), before Tax	(12,302)	6,457	(25,398)	540
Net unrealized tax (expense) benefit	3,293	(1,727)	6,796	(145)
Other comprehensive loss, net of tax	(9,009)	4,730	(18,602)	395
Comprehensive (Loss)/Income	(3,581)	9,133	(7,459)	8,228
Investment securities- with OTTI [Member]
Other comprehensive (loss)/income, net of tax and reclassification adjustments:
Unrealized holding (losses)/gains on investments	(795)	2,160	(654)	2,523
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax	51	51	101	101
Other Comprehensive Income (Loss), before Tax	(846)	2,109	(755)	2,422
Net unrealized tax (expense) benefit	227	(565)	202	(649)
Other comprehensive loss, net of tax	(619)	1,544	(553)	1,773
Investment securities- all other [Member]
Other comprehensive (loss)/income, net of tax and reclassification adjustments:
Unrealized holdings losses on securities transferred to held to maturity			8,328
Unrealized holding (losses)/gains on investments	(5,359)	2,778	(16,203)	(4,327)
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax		154	3	154
Other Comprehensive Income (Loss), before Tax	(5,359)	2,624	(7,878)	(4,481)
Net unrealized tax (expense) benefit	1,435	(703)	2,109	1,200
Other comprehensive loss, net of tax	(3,924)	1,921	(5,769)	(3,281)
Investment Securities HTM [Member]
Other comprehensive (loss)/income, net of tax and reclassification adjustments:
Unrealized holdings losses on securities transferred to held to maturity			(8,328)
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax	(230)	(46)	(324)	(108)
Other Comprehensive Income (Loss), before Tax	230	46	(8,004)	108
Net unrealized tax (expense) benefit	(62)	(12)	2,141	(29)
Other comprehensive loss, net of tax	168	34	(5,863)	79
Investment Securities Transferred From AFS to HTM [Member]
Other comprehensive (loss)/income, net of tax and reclassification adjustments:
Unrealized holding (losses)/gains on investments			8,328
Investment Securities Transferred to HTM [Member]
Other comprehensive (loss)/income, net of tax and reclassification adjustments:
Unrealized holding (losses)/gains on investments			(8,328)
Cash Flow Hedge (OCI) [Member]
Other comprehensive (loss)/income, net of tax and reclassification adjustments:
Unrealized holding (losses)/gains on investments	249	(47)	1,088	507
Other Comprehensive Income (Loss), before Tax	249	(47)	1,088	507
Adjustment [Member]
Other comprehensive (loss)/income, net of tax and reclassification adjustments:
Unrealized holding (losses)/gains on investments	(6,922)	1,280	(10,542)	1,090
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax	(279)	(372)	(558)	(744)
Other Comprehensive Income (Loss), before Tax	(6,643)	1,652	(9,984)	1,834
Accumulated SERP [Member]
Other comprehensive (loss)/income, net of tax and reclassification adjustments:
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax	(67)	(73)	(135)	(150)
Other Comprehensive Income (Loss), before Tax	$ 67	$ 73	$ 135	$ 150

XML

Consolidated Statement of Changes in Shareholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Surplus [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Total
Balance at Dec. 31, 2020	$ 70	$ 30,149	$ 129,691	$ (28,863)	$ 131,047
Net income			3,430		3,430
Other comprehensive loss				(4,335)	(4,335)
Common stock issued		46			46
Stock based compensation		50			50
Common stock dividend declared			(1,049)		(1,049)
Balance at Mar. 31, 2021	70	30,245	132,072	(33,198)	129,189
Balance at Dec. 31, 2020	70	30,149	129,691	(28,863)	131,047
Net income					7,833
Other comprehensive loss					395
Balance at Jun. 30, 2021	66	23,422	135,536	(28,468)	130,556
Balance at Mar. 31, 2021	70	30,245	132,072	(33,198)	129,189
Net income			4,403		4,403
Other comprehensive loss				4,730	4,730
Common stock issued		56			56
Stock based compensation		296			296
Stock repurchase	(4)	(7,175)			(7,179)
Common stock dividend declared			(939)		(939)
Balance at Jun. 30, 2021	66	23,422	135,536	(28,468)	130,556
Balance at Dec. 31, 2021	66	23,661	145,487	(27,314)	141,900
Net income			5,715		5,715
Other comprehensive loss				(9,593)	(9,593)
Common stock issued		55			55
Stock based compensation		(4)			(4)
Common stock dividend declared			(995)		(995)
Balance at Mar. 31, 2022	66	23,712	150,207	(36,907)	137,078
Balance at Dec. 31, 2021	66	23,661	145,487	(27,314)	141,900
Net income					11,143
Other comprehensive loss					(18,602)
Balance at Jun. 30, 2022	67	24,105	154,636	(45,916)	132,892
Balance at Mar. 31, 2022	66	23,712	150,207	(36,907)	137,078
Net income			5,428		5,428
Other comprehensive loss				(9,009)	(9,009)
Common stock issued		54			54
Stock based compensation	1	339			340
Common stock dividend declared			(999)		(999)
Balance at Jun. 30, 2022	$ 67	$ 24,105	$ 154,636	$ (45,916)	$ 132,892

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Consolidated Statement of Changes in Shareholders' Equity (Parenthetical) - $ / shares	3 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Mar. 31, 2021
Consolidated Statement of Changes in Shareholders' Equity [Abstract]
Common stock issued, shares	18,416	15,456	3,261	2,956
Stock repurchase, shares			400,000
Common stock dividend declared per share	$ 0.15	$ 0.15	$ 0.15	$ 0.15

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Consolidated Statement of Cash Flows - USD ($) $ in Thousands	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Operating activities
Net income	$ 5,428	$ 5,715	$ 4,403	$ 3,430	$ 11,143	$ 7,833
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	624		555		205	665
Depreciation					1,645	1,632
Stock based compensation					336	402
Gains on sales of other real estate owned			(105)			(596)
Write-downs of other real estate owned			(164)			(160)
Originations of loans held for sale					(1,043)	(20,744)
Proceeds from sale of loans held for sale					1,138	23,707
Gains from sale of loans held for sale					(28)	(860)
Gains on disposal of fixed assets	(6)		(16)		(34)	(16)
Net amortization of investment securities discounts and premiums- AFS					100	516
Net (accretion)/amortization of investment securities discounts and premiums- HTM					(405)	168
Amortization of intangible assets					105
Gains on sales/calls of investment securities - AFS			(154)		(3)	(154)
Earnings on Bank owned life insurance					(589)	(579)
Amortization of deferred loan fees					(123)	(1,979)
Amortization of operating lease right of use asset					172	(6)
Increase in accrued interest receivable and other assets					1,300	(502)
Deferred tax benefit					(6,796)	(22)
Operating lease liability					(191)	(13)
Increase/(decrease) in accrued interest payable and other liabilities					3,527	(2,670)
Net cash provided by operating activities					10,459	6,622
Investing activities
Proceeds from maturities/calls of investment securities - AFS					9,583	27,285
Proceeds from maturities/calls of investment securities - HTM					7,571	8,744
Proceeds from sales of investment securities - AFS					1,023	13,687
Purchases of investment securities - AFS					(12,892)	(58,516)
Purchases of investment securities - HTM					(52,459)	(6,332)
Proceeds from sales of other real estate owned						3,386
Proceeds from disposal of fixed assets					37
Net decrease in restricted stock					3	810
Net (increase)/decrease in loans					(80,454)	45,193
Purchases of loans						(20,100)
Purchases of premises and equipment					(2,256)	(741)
Net cash (used in)/provided by investing activities					(129,844)	13,416
Financing activities
Net increase in deposits					14,980	33,745
Issuance of common stock					109	46
Cash dividends on common stock					(1,988)	(1,906)
Net increase in short-term borrowings					12,215	246
Stock repurchase						(7,179)
Net cash provided by financing activities					25,316	24,952
(Decrease)/increase in cash and cash equivalents					(94,069)	44,990
Cash and cash equivalents at beginning of the year		$ 115,720		$ 149,432	115,720	149,432	$ 149,432
Cash and cash equivalents at end of period	$ 21,651		$ 194,422		21,651	194,422	$ 115,720
Supplemental information
Interest paid					1,667	3,561
Taxes paid					3,758	$ 3,487
Non-cash investing activities:
Transfers from loans to other real estate owned					40
Transfers from securities available for sale to held to maturity					$ 139,036

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Basis of Presentation

6 Months Ended

Jun. 30, 2022

Basis of Presentation [Abstract]

Basis of Presentation

Note 1 – Basis of Presentation

The financial information is presented in accordance with generally accepted accounting principles and general practice for financial institutions in the United States of America (“U.S. GAAP”).  In preparing financial statements, management is required to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities as of the date of financial statements.  In addition, these estimates and assumptions affect revenues and expenses in the financial statements and as such, actual results could differ from those estimates.  

Principles of Consolidation

The consolidated financial statements include the accounts of First United Corporation, the Bank, First United Statutory Trust I, First United Statutory Trust II, OakFirst Loan Center, LLC, Oakfirst Loan Center, Inc., First OREO Trust and FUBT OREO I, LLC. All significant inter-company accounts and transactions have been eliminated.

Certain prior period balances have been reclassified to conform to the current period presentation. Operating results for the six and three month periods ended June 30, 2022 are not necessarily indicative of the results that may be expected for the full year or for any future interim period. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in First United Corporation’s Annual Report on Form 10-K for the year ended December 31, 2021.

As used in these notes, the terms “the Corporation” “we”, “us”, and “our” refer to First United Corporation and, unless the context clearly requires otherwise, its consolidated subsidiaries.

The Corporation has evaluated events and transactions occurring subsequent to the statement of financial condition date of June 30, 2022 and through the date these consolidated financial statements were issued, for items of potential recognition or disclosure.

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Earnings Per Common Share

6 Months Ended

Jun. 30, 2022

Earnings Per Common Share [Abstract]

Earnings Per Common Share

Note 2 – Earnings Per Common Share

Basic earnings per common share is derived by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period and does not include the effect of any potentially dilutive common stock equivalents. Diluted earnings per share is derived by dividing net income available to common shareholders by the weighted-average number of shares outstanding, adjusted for the dilutive effect of outstanding common stock equivalents, such as restricted stock units (“RSUs”). There were no anti-dilutive shares outstanding at June 30, 2022 or 2021.

The following table sets forth the calculation of basic and diluted earnings per common share for the six and three month periods ended June 30, 2022 and 2021:

	Six months ended June 30,
	2022					2021
			Average	Per Share				Average	Per Share
(in thousands, except for per share amount)	Income		Shares	Amount		Income		Shares	Amount
Basic Earnings Per Share:
Net income	$	11,143	6,639	$	1.68	$	7,833	6,803	$	1.15
Diluted Earnings Per Share:
Restricted stock units			10					5
Net income	$	11,143	6,649	$	1.68	$	7,833	6,808	$	1.15

	Three months ended June 30,
	2022					2021
			Average	Per Share				Average	Per Share
(in thousands, except for per share amount)	Income		Shares	Amount		Income		Shares	Amount
Basic Earnings Per Share:
Net income	$	5,428	6,650	$	0.82	$	4,403	6,609	$	0.66
Diluted Earnings Per Share:
Restricted stock units			11					6
Net income	$	5,428	6,661	$	0.82	$	4,403	6,615	$	0.66

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Investments

6 Months Ended

Jun. 30, 2022

Investments [Abstract]

Investments

Note 3 – Investments

The following table shows a comparison of amortized cost and fair values of investment securities at June 30, 2022 and December 31, 2021:

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		OTTI in AOCL
June 30, 2022
Available for Sale:
U.S. government agencies	$	11,060	$	—	$	1,145	$	9,915	$	—
Residential mortgage-backed agencies		47,086		—		5,840		41,246		—
Commercial mortgage-backed agencies		36,498		—		4,502		31,996		—
Collateralized mortgage obligations		27,095		—		2,945		24,150		—
Obligations of states and political subdivisions		8,341		43		61		8,323		—
Corporate bonds		1,000		—		21		979		—
Collateralized debt obligations		18,640		—		2,382		16,258		(1,415)
Total available for sale	$	149,720	$	43	$	16,896	$	132,867	$	(1,415)
(in thousands)	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value		OTTI in AOCL
June 30, 2022
Held to Maturity:
U.S. treasuries	$	37,076	$	—	$	1,226	$	35,850	$	—
U.S. government agencies		67,596		—		8,749		58,847		—
Residential mortgage-backed agencies		27,996		3		2,282		25,717		—
Commercial mortgage-backed agencies		25,440		1		2,996		22,445		—
Collateralized mortgage obligations		59,951		—		5,658		54,293		—
Obligations of states and political subdivisions		22,529		1,107		487		23,149		—
Total held to maturity	$	240,588	$	1,111	$	21,398	$	220,301	$	—

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		OTTI in AOCL
December 31, 2021
Available for Sale:
U.S. government agencies	$	69,602	$	66	$	2,499	$	67,169	$	—
Residential mortgage-backed agencies		49,630		—		969		48,661		—
Commercial mortgage-backed agencies		51,694		175		1,001		50,868		—
Collateralized mortgage obligations		93,018		84		3,025		90,077		—
Obligations of states and political subdivisions		12,439		371		6		12,804		—
Collateralized debt obligations		18,609		112		1,529		17,192		(660)
Total available for sale	$	294,992	$	808	$	9,029	$	286,771	$	(660)
(in thousands)	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value		OTTI in AOCL
December 31, 2021
Held to Maturity:
Residential mortgage-backed agencies	$	30,634	$	649	$	436	$	30,847	$	—
Commercial mortgage-backed agencies		5,456		145		—		5,601		—
Obligations of states and political subdivisions		20,169		8,752		—		28,921		—
Total held to maturity	$	56,259	$	9,546	$	436	$	65,369	$	—

The Corporation reassessed classification of certain investments and, effective February 1, 2022, the Corporation transferred $139.0 million of callable agencies, obligations of state and political subdivisions, and collateralized mortgage obligations from available for sale to held to maturity securities.  The transfer occurred at fair value.  The related unrealized loss of $8.4 million included in other comprehensive loss remained in other comprehensive loss, to be amortized out of other comprehensive loss with an offsetting entry to interest income as a yield adjustment over the remaining term of the securities.  No gain or loss was recorded at the time of transfer.

The following table shows the Corporation’s investment securities with gross unrealized and unrecognized losses and fair values at June 30, 2022 and December 31, 2021, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position:

	Less than 12 months					12 months or more
(in thousands)	Fair Value		Unrealized Losses		Number of Investments	Fair Value		Unrealized Losses		Number of Investments
June 30, 2022
Available for Sale:
U.S. government agencies	$	8,481		580	2		1,435		565	1
Residential mortgage-backed agencies		25,523		2,957	3		15,723		2,883	2
Commercial mortgage-backed agencies		18,648		2,527	6		13,348		1,975	3
Collateralized mortgage obligations		15,997		1,827	9		8,152		1,118	1
Obligations of states and political subdivisions		5,598		61	6		—		—	—
Collateralized debt obligations		6,492		128	4		9,766		2,254	5
Corporate Bonds		979		21	1		—		—	—
Total available for sale	$	81,718	$	8,101	31	$	48,424	$	8,795	12
	Less than 12 months					12 months or more
(in thousands)	Fair Value		Unrecognized Losses		Number of Investments	Fair Value		Unrecognized Losses		Number of Investments
June 30, 2022
Held to Maturity:
U.S. treasuries	$	35,850		1,226	4	$	—	$	—	—
U.S. government agencies		58,847	$	8,749	9		—		—	—
Residential mortgage-backed agencies		18,356		829	31		7,264		1,453	3
Commercial mortgage-backed agencies		20,443		2,996	3		—		—	—
Collateralized mortgage obligations		54,293		5,658	8		—		—	—
Obligations of states and political subdivisions		2,379		487	1		—		—	—
Total held to maturity	$	190,168	$	19,945	56	$	7,264	$	1,453	3

	Less than 12 months					12 months or more
(in thousands)	Fair Value		Unrealized Losses		Number of Investments	Fair Value		Unrealized Losses		Number of Investments
December 31, 2021
Available for Sale:
U.S. government agencies	$	23,577	$	122	3	$	33,972	$	2,377	6
Residential mortgage-backed agencies		29,507		257	3		19,154		712	2
Commercial mortgage-backed agencies		32,177		787	4		5,211		214	1
Collateralized mortgage obligations		24,322		649	5		43,076		2,376	5
Obligations of states and political subdivisions		3,046		6	1		—		—	—
Collateralized debt obligations		—		—	—		10,468		1,529	5
Total available for sale	$	112,629	$	1,821	16	$	111,881	$	7,208	19
	Less than 12 months					12 months or more
(in thousands)	Fair Value		Unrecognized Losses		Number of Investments	Fair Value		Unrecognized Losses		Number of Investments
December 31, 2021
Held to Maturity:
Residential mortgage-backed agencies	$	7,395	$	291	6	$	2,782	$	145	1
Total held to maturity	$	7,395	$	291	6	$	2,782	$	145	1

Management systematically evaluates securities for impairment on a quarterly basis. Based upon application of Accounting Standards Codification (“ASC”) Topic 320 (Section 320-10-35), management must assess whether (a) the Corporation has the intent to sell the security and (b) it is more likely than not that the Corporation will be required to sell the security prior to its anticipated recovery. If neither applies, then declines in the fair value of securities below their cost that are considered other-than-temporary declines are split into two components. The first is the loss attributable to declining credit quality. Credit losses are recognized in earnings as realized losses in the period in which the impairment determination is made. The second component consists of all other losses. The other losses are recognized in other comprehensive income. In estimating other than temporary impairment (“OTTI”) charges, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) adverse conditions specifically related to the security, an industry, or a geographic area, (3) the historic and implied volatility of the security, (4) changes in the rating of a security by a rating agency, (5) recoveries or additional declines in fair value subsequent to the balance sheet date, (6) failure of the issuer of the security to make scheduled interest payments, and (7) the payment structure of the debt security and the likelihood of the issuer being able to make payments that increase in the future. Due to the duration and the significant market value decline in the pooled trust preferred securities held in our portfolio, we performed more extensive testing on these securities for purposes of evaluating whether or not an OTTI has occurred.

The following table presents a cumulative roll-forward of the amount of non-cash OTTI charges related to credit losses that have been recognized in earnings for the trust preferred securities held in the CDO portfolio during the six and three month periods ended June 30, 2022 and 2021 that the Corporation does not intend to sell:

	Six Months Ended
	June 30,
(in thousands)	2022		2021
Balance of credit-related OTTI at January 1	$	2,043	$	2,244
Reduction for increases in cash flows expected to be collected		(101)		(101)
Balance of credit-related OTTI at June 30	$	1,942	$	2,143

	Three Months Ended
	June 30,
(in thousands)	2022		2021
Balance of credit-related OTTI at April 1	$	1,993	$	2,194
Reduction for increases in cash flows expected to be collected		(51)		(51)
Balance of credit-related OTTI at June 30	$	1,942	$	2,143

The amortized cost and estimated fair value of securities by contractual maturity at June 30, 2022 are shown in the following table. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties.

	June 30, 2022
(in thousands)	Amortized Cost		Fair Value
Available for Sale:
Due after one year through five years	$	8,365	$	8,099
Due after five years through ten years		5,556		5,195
Due after ten years		25,120		22,181
		39,041		35,475
Residential mortgage-backed agencies		47,086		41,246
Commercial mortgage-backed agencies		36,498		31,996
Collateralized mortgage obligations		27,095		24,150
Total available for sale	$	149,720	$	132,867
Held to Maturity:
Due after one year through five years	$	49,576	$	47,528
Due after five years through ten years		23,748		20,999
Due after ten years	$	53,877	$	49,319
		127,201		117,846
Residential mortgage-backed agencies		27,996		25,717
Commercial mortgage-backed agencies		25,440		22,445
Collateralized mortgage obligations		59,951		54,293
Total held to maturity	$	240,588	$	220,301

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Loans and Related Allowance for Loan Losses

6 Months Ended

Jun. 30, 2022

Loans and Related Allowance for Loan Losses [Abstract]

Loans and Related Allowance for Loan Losses

Note 4 – Loans and Related Allowance for Loan Losses

The following table summarizes the primary segments of the loan portfolio at June 30, 2022 and December 31, 2021:

(in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Total
June 30, 2022
Individually evaluated for impairment	$	2,267	$	599	$	—	$	2,384	$	33	$	5,283
Collectively evaluated for impairment		419,675		115,516		225,640		403,909		63,590		1,228,330
Total loans	$	421,942	$	116,115	$	225,640	$	406,293	$	63,623	$	1,233,613
December 31, 2021
Individually evaluated for impairment	$	2,365	$	629	$	90	$	2,644	$	—	$	5,728
Collectively evaluated for impairment		371,926		127,448		180,886		402,042		65,657		1,147,959
Total loans	$	374,291	$	128,077	$	180,976	$	404,686	$	65,657	$	1,153,687

The commercial and industrial portfolio in the table above includes $0.8 million and $7.7 million of Paycheck Protection Program (“PPP”) loans at June 30, 2022 and December 31, 2021, respectively, which are 100% guaranteed by the SBA, and no allowance for loan loss (“ALL”) has been assigned to them.

The following table presents the classes of the loan portfolio summarized by the aggregate pass and the criticized categories of special mention and substandard within the internal risk rating system at June 30, 2022 and December 31, 2021:

(in thousands)	Pass		Special Mention		Substandard		Total
June 30, 2022
Commercial real estate
Non owner-occupied	$	212,939	$	6,438	$	12,308	$	231,685
All other CRE		183,562		2,304		4,391		190,257
Acquisition and development
1-4 family residential construction		24,247		—		—		24,247
All other A&D		91,493		—		375		91,868
Commercial and industrial		206,035		4,940		14,665		225,640
Residential mortgage
Residential mortgage - term		340,549		—		5,853		346,402
Residential mortgage - home equity		59,219		—		672		59,891
Consumer		63,411		—		212		63,623
Total	$	1,181,455	$	13,682	$	38,476	$	1,233,613
December 31, 2021
Commercial real estate
Non owner-occupied	$	173,299	$	12,987	$	6,077	$	192,363
All other CRE		174,395		2,357		5,176		181,928
Acquisition and development
1-4 family residential construction		19,924		—		—		19,924
All other A&D		107,532		218		403		108,153
Commercial and industrial		161,429		5,071		14,476		180,976
Residential mortgage
Residential mortgage - term		338,832		—		5,624		344,456
Residential mortgage - home equity		59,533		—		697		60,230
Consumer		65,557		—		100		65,657
Total	$	1,100,501	$	20,633	$	32,553	$	1,153,687

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due.

The increase of $6.3 million in the substandard category was related to one large relationship in the nursing care sector that was downgraded from special mention in the first quarter of 2022.  This relationship continues to perform according to its contractual terms and is not considered impaired.

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and non-accrual loans at June 30, 2022 and December 31, 2021:

(in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days+ Past Due		Total Past Due and Accruing		Non- Accrual		Total Loans
June 30, 2022
Commercial real estate
Non owner-occupied	$	231,596	$	—	$	89	$	—	$	89	$	—	$	231,685
All other CRE		190,191		—		—		—		—		66		190,257
Acquisition and development
1-4 family residential construction		24,247		—		—		—		—		—		24,247
All other A&D		91,493		—		—		—		—		375		91,868
Commercial and industrial		224,113		39		1,488		—		1,527		—		225,640
Residential mortgage
Residential mortgage - term		342,616		73		2,119		254		2,446		1,340		346,402
Residential mortgage - home equity		59,321		178		53		4		235		335		59,891
Consumer		63,295		153		75		67		295		33		63,623
Total	$	1,226,872	$	443	$	3,824	$	325	$	4,592	$	2,149	$	1,233,613
December 31, 2021
Commercial real estate
Non owner-occupied	$	192,363	$	—	$	—	$	—	$	—	$	—	$	192,363
All other CRE		181,847		—		—		—		—		81		181,928
Acquisition and development
1-4 family residential construction		19,924		—		—		—		—		—		19,924
All other A&D		107,763		—		—		—		—		390		108,153
Commercial and industrial		180,676		132		78		—		210		90		180,976
Residential mortgage
Residential mortgage - term		340,429		159		2,222		148		2,529		1,498		344,456
Residential mortgage - home equity		59,485		238		104		—		342		403		60,230
Consumer		65,208		268		29		152		449		—		65,657
Total	$	1,147,695	$	797	$	2,433	$	300	$	3,530	$	2,462	$	1,153,687

Non-accrual loans that have been subject to partial charge-offs totaled $1.3 million at June 30, 2022 and $0.5 million at December 31, 2021.  Loans secured by 1-4 family residential real estate properties in the process of foreclosure totaled $0.1 million at June 30, 2022 and $0.2 million at December 31, 2021.   As a percentage of the loan portfolio, accruing loans past due 30 days or more increased to 0.37% compared to 0.19% at March 31, 2022 and 0.31% as of December 31, 2021.   

The following table summarizes the primary segments of the ALL at June 30, 2022 and December 31, 2021, segregated by the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment:

(in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Unallocated		Total
June 30, 2022
Individually evaluated for impairment	$	—	$	—	$	—	$	29	$	33	$	—	$	62
Collectively evaluated for impairment	$	6,220	$	2,172	$	2,830	$	3,083	$	940	$	430	$	15,675
Total ALL	$	6,220	$	2,172	$	2,830	$	3,112	$	973	$	430	$	15,737
December 31, 2021
Individually evaluated for impairment	$	—	$	—	$	28	$	36	$	—	$	—	$	64
Collectively evaluated for impairment	$	6,032	$	2,615	$	2,432	$	3,448	$	934	$	430	$	15,891
Total ALL	$	6,032	$	2,615	$	2,460	$	3,484	$	934	$	430	$	15,955

The evaluation of the need and amount of a specific allocation of the ALL and whether a loan can be removed from impairment status is made on a quarterly basis.

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not required at June 30, 2022 and December 31, 2021:

	Impaired Loans with Specific Allowance				Impaired Loans with No Specific Allowance		Total Impaired Loans
(in thousands)	Recorded Investment		Related Allowances		Recorded Investment		Recorded Investment (1)		Unpaid Principal Balance
June 30, 2022
Commercial real estate
Non owner-occupied	$	—	$	—	$	103	$	103	$	103
All other CRE		—		—		2,164		2,164		2,164
Acquisition and development
1-4 family residential construction		—		—		224		224		224
All other A&D		—		—		375		375		1,584
Commercial and industrial		—		—		—		—		—
Residential mortgage
Residential mortgage – term		270		29		1,779		2,049		2,108
Residential mortgage – home equity		—		—		335		335		335
Consumer		33		33				33		33
Total impaired loans	$	303	$	62	$	4,980	$	5,283	$	6,551
December 31, 2021
Commercial real estate
Non owner-occupied	$	—	$	—	$	106	$	106	$	106
All other CRE		—		—		2,259		2,259		2,259
Acquisition and development
1-4 family residential construction		—		—		239		239		239
All other A&D		—		—		390		390		1,599
Commercial and industrial		90		28		—		90		2,304
Residential mortgage
Residential mortgage – term		344		31		1,897		2,241		2,302
Residential mortgage – home equity		46		5		357		403		422
Consumer		—		—		—		—		—
Total impaired loans	$	480	$	64	$	5,248	$	5,728	$	9,231

(1) Recorded investment consists of unpaid principal balance, net of charge-offs, interest payments received applied to principal and unamortized deferred loan origination fees and cost.

Loans that are collectively evaluated for impairment are analyzed with general allowances being made as appropriate. For general allowances, historical loss trends are used in the estimation of losses in the current portfolio. These historical loss amounts are modified by other qualitative factors.

The classes described above, which are based on the Federal call code assigned to each loan, provide the starting point for the ALL analysis. Management tracks the historical net charge-off activity (full and partial charge-offs, net of full and partial recoveries) at the call code level. A historical charge-off factor is calculated utilizing a defined number of consecutive historical quarters. Consumer pools currently utilize a rolling twelve quarters, while Commercial pools currently utilize a rolling eight quarters.

Management supplements the historical charge-off factor with a number of additional qualitative factors that are likely to cause estimated credit losses associated with the existing loan pools to differ from historical loss experience. The additional factors, which are evaluated quarterly and updated using information obtained from internal, regulatory, and governmental sources, are:  (a) national and local economic trends and conditions; (b) levels of and trends in delinquency rates and non-accrual loans; (c) trends in volumes and terms of loans; (d) effects of changes in lending policies; (e) experience, ability, and depth of lending staff; (f) value of underlying collateral; and (g) concentrations of credit from a loan type, industry and/or geographic standpoint.

Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process to make appropriate and timely adjustments to the ALL. When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALL. Residential mortgage and consumer loans are charged off after they are 120 days contractually past due. All other loans are charged off based on an evaluation of the facts and circumstances of each individual loan. When the Bank believes that its ability to collect is solely dependent on the liquidation of the collateral, a full or partial charge-off is recorded promptly to bring the recorded investment to an amount that the Bank believes is supported by an ability to collect on the collateral. The circumstances that may impact the Bank’s decision to charge-off all or a portion of a loan include default or non-payment by the borrower, scheduled foreclosure actions, and/or prioritization of the Bank’s claim in bankruptcy. There may be circumstances where due to pending events, the Bank will place a specific allocation of the ALL on a loan for which a partial charge-off has been previously recognized. This specific allocation may be either charged-off or removed depending upon the outcome of the pending event. Full or partial charge-offs are not recovered until full principal and interest on the loan have been collected, even if a subsequent appraisal supports a higher value. In most cases, loans with partial charge-offs remain in non-accrual status. Both full and partial charge-offs reduce the recorded investment of the loan and the ALL and are considered to be charge-offs for purposes of all credit loss metrics and trends, including the historical rolling charge-off rates used in the determination of the ALL.

The following tables present the activity in the ALL for the six and three month periods ended June 30, 2022 and 2021:

(in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Unallocated		Total
ALL balance at January 1, 2022	$	6,032	$	2,615	$	2,460	$	3,484	$	934	$	430	$	15,955
Charge-offs		—		—		(52)		(33)		(545)		—		(630)
Recoveries		1		20		9		101		76		—		207
Provision		187		(463)		413		(440)		508		—		205
ALL balance at June 30, 2022	$	6,220	$	2,172	$	2,830	$	3,112	$	973	$	430	$	15,737
ALL balance at January 1, 2021	$	5,543	$	2,339	$	2,584	$	5,150	$	370	$	500	$	16,486
Charge-offs		—		(81)		—		(82)		(175)		—		(338)
Recoveries		—		110		38		29		78		—		255
Provision		132		132		322		(238)		317		—		665
ALL balance at June 30, 2021	$	5,675	$	2,500	$	2,944	$	4,859	$	590	$	500	$	17,068

(in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Unallocated		Total
ALL balance at April 1, 2022	$	5,922	$	2,542	$	2,513	$	2,945	$	940	$	430	$	15,292
Charge-offs		—		—		(4)		(24)		(299)		—		(327)
Recoveries		—		2		6		86		54		—		148
Provision		298		(372)		315		105		278		—		624
ALL balance at June 30, 2022	$	6,220	$	2,172	$	2,830	$	3,112	$	973	$	430	$	15,737
ALL balance at April 1, 2021	$	5,404	$	2,423	$	2,831	$	5,028	$	368	$	500	$	16,554
Charge-offs		—		—		—		—		(95)		—		(95)
Recoveries		—		9		2		12		31		—		54
Provision		271		68		111		(181)		286		—		555
ALL balance at June 30, 2021	$	5,675	$	2,500	$	2,944	$	4,859	$	590	$	500	$	17,068

The ALL is based on estimates, and actual losses may vary from current estimates.  Management believes that the granularity of the homogeneous pools and the related historical loss ratios and other qualitative factors, as well as the consistency in the application of assumptions, result in an ALL that is representative of the risk found in the components of the portfolio at any given date.

The following table presents the average recorded investment in impaired loans by class and related interest income recognized for the periods indicated:

	Six months ended						Six months ended
	June 30, 2022						June 30, 2021
(in thousands)	Average investment		Interest income recognized on an accrual basis		Interest income recognized on a cash basis		Average investment		Interest income recognized on an accrual basis		Interest income recognized on a cash basis
Commercial real estate
Non owner-occupied	$	105	$	6	$	—	$	3,165	$	6	$	—
All other CRE		2,211		45		—		3,058		69		—
Acquisition and development
1-4 family residential construction		231		7		—		259		6		—
All other A&D		382		—		—		599		6		—
Commercial and industrial		45		—		—		—		—		—
Residential mortgage
Residential mortgage – term		2,166		24		5		2,672		39		5
Residential mortgage – home equity		376		—		—		454		—		—
Consumer		11		—		—		17		—		—
Total	$	5,527	$	82	$	5	$	10,224	$	126	$	5

	Three months ended						Three months ended
	June 30, 2022						June 30, 2021
(in thousands)	Average investment		Interest income recognized on an accrual basis		Interest income recognized on a cash basis		Average investment		Interest income recognized on an accrual basis		Interest income recognized on a cash basis
Commercial real estate
Non owner-occupied	$	105	$	3	$	—	$	4,689	$	3	$	—
All other CRE		2,188		22		—		2,982		34		—
Acquisition and development
1-4 family residential construction		228		3		—		255		3		—
All other A&D		378		—		—		611		3		—
Commercial and industrial		—		—		—		—		—		—
Residential mortgage
Residential mortgage – term		2,130		12		—		2,585		19		—
Residential mortgage – home equity		363		—		—		474		—		—
Consumer		17		—		—		11		—		—
Total	$	5,409	$	40	$	—	$	11,607	$	62	$	—

In the normal course of business, the Bank modifies loan terms for various reasons. These reasons may include as a retention strategy to compete in the current interest rate environment, and to re-amortize or extend a loan term to better match the loan’s payment stream with the borrower’s cash flows. A modified loan is considered to be a troubled debt restructuring (a “TDR”) when the Bank has determined that the borrower is troubled (i.e. experiencing financial difficulties) and a concession has been granted. The Bank evaluates the probability that the borrower will be in payment default on any of its debt in the foreseeable future without modification. To make this determination, the Bank performs a global financial review of the borrower and loan guarantors to assess their current ability to meet their financial obligations.

When the Bank restructures a loan to a troubled borrower, the loan terms (i.e. interest rate, payment, amortization period and/or maturity date) are modified in such a way to enable the borrower to cover the modified debt service payments based on current financials and cash flow adequacy. If a borrower’s hardship is thought to be temporary, then modified terms are only offered for that

time period. Where possible, the Bank obtains additional collateral and/or secondary payment sources at the time of the restructure in order to put the Bank in the best possible position if the borrower is not able to meet the modified terms. To date, the Bank has not forgiven any principal as a restructuring concession. The Bank will not offer modified terms if it believes that modifying the loan terms will only delay an inevitable permanent default.

All loans designated as TDRs are considered impaired loans and may be in either accruing or non-accruing status. If the loan was accruing at the time of the modification, then it continues to be in accruing status subsequent to the modification. Non-accrual TDRs may return to accruing status when there has been sufficient payment performance for a period of at least six months. TDRs are considered to be in payment default if, subsequent to modification, the loans are transferred to non-accrual status or to foreclosure. A loan may be removed from being reported as a TDR in the calendar year following the modification if the interest rate at the time of modification was consistent with the interest rate for a loan with comparable credit risk and the loan has performed according to its modified terms for at least six months. Further, a loan that has been removed from TDR reporting status and has been subsequently re-modified at standard market terms, may be removed from impaired status as well.

The volume, type and performance of TDR activity is considered in the assessment of the local economic trend qualitative factor used in the determination of the ALL for loans that are evaluated collectively for impairment.

There were 12 loans totaling $3.2 million and $3.3 million that were classified as TDRs at June 30, 2022 and December 31, 2021, respectively.  The following table presents the volume and recorded investment in TDRs at the times they were modified, by class and type of modification that occurred during the periods indicated.

During the six month period ended June 30, 2022, there were no new TDRs and no existing TDRs that were re-modified. The Bank had no significant commitments to lend additional funds to TDRs.  During the six month period ended June 30, 2021, there were no new TDRs and one existing TDR that had reached its modification maturity date was re-modified.  These modifications did not impact the ALL.  During the six month periods ended June 30, 2022 and 2021, there were no payment defaults.

	Temporary Rate Modification			Extension of Maturity			Modification of Payment and Other Terms
(in thousands)	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
Six months ended June 30, 2021
Commercial real estate
Non owner-occupied	—	$	—	1	$	109	—	$	—
All other CRE	—		—	—		—	—		—
Acquisition and development
1-4 family residential construction	—		—	—		—	—		—
All other A&D	—		—	—		—	—		—
Commercial and industrial	—		—	—		—	—		—
Residential mortgage
Residential mortgage – term	—		—	—		—	—		—
Residential mortgage – home equity	—		—	—		—	—		—
Consumer	—		—	—		—	—		—
Total	—	$	—	1	$	109	—	$	—

The following table presents the volume and recorded investment in TDRs at the times they were modified, by class and type of modification that occurred during the periods indicated.

During the three month period ended June 30, 2022, there were no new TDRs and no existing TDRs that were re-modified. The Bank had no significant commitments to lend additional funds to TDR borrowers.  During the three month period ended June 30, 2021, there were no new TDRs and one existing TDR that had reached its modification maturity date was re-modified.  These re-modifications did not impact the ALL.  During the three months ended June 30, 2022 and 2021, there were no payment defaults under TDRs.

	Temporary Rate Modification			Extension of Maturity			Modification of Payment and Other Terms
(in thousands)	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
Three months ended June 30, 2021
Commercial real estate
Non owner-occupied	—	$	—	1	$	109	—	$	—
All other CRE	—		—	—		—	—		—
Acquisition and development
1-4 family residential construction	—		—	—		—	—		—
All other A&D	—		—	—		—	—		—
Commercial and industrial	—		—	—		—	—		—
Residential mortgage
Residential mortgage – term	—		—	—		—	—		—
Residential mortgage – home equity	—		—	—		—	—		—
Consumer	—		—	—		—	—		—
Total	—	$	—	1	$	109	—	$	—

XML

Other Real Estate Owned, Net

6 Months Ended

Jun. 30, 2022

Other Real Estate Owned, Net [Abstract]

Other Real Estate Owned, Net

Note 5 - Other Real Estate Owned, net

The following table presents the components of other real estate owned (“OREO”) at June 30, 2022 and December 31, 2021:

(in thousands)	June 30, 2022		December 31, 2021
Acquisition and development	$	4,477	$	4,477
Residential mortgage		40		—
Total OREO, net	$	4,517	$	4,477

The following table presents the activity in the OREO valuation allowance for the six and three month periods ended June 30, 2022 and 2021:

	Six Months Ended				Three Months Ended
	June 30,				June 30,
(in thousands)	2022		2021		2022		2021
Balance beginning of period	$	453	$	1,010	$	453	$	1,004
Fair value adjustment		—		(160)		—		(164)
Sales of OREO		—		(307)		—		(297)
Balance at end of period	$	453	$	543	$	453	$	543

The following table presents the components of OREO (income)/expenses, net, for the six and three month periods ended June 30, 2022 and 2021:

	Six Months Ended				Three Months Ended
	June 30,				June 30,
(in thousands)	2022		2021		2022		2021
Gains on sale of real estate, net	$	—	$	(596)	$	—	$	(105)
Fair value adjustment, net		—		(160)		—		(164)
Expenses, net		249		195		153		72
Rental and other income		(2)		(49)		(1)		(1)
Total OREO expenses/(income), net	$	247	$	(610)	$	152	$	(198)

XML

Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2022

Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments

Note 6 – Fair Value of Financial Instruments

The Corporation complies with the guidance of ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements required under other accounting pronouncements. The Corporation also follows the guidance on matters relating to all financial instruments found in ASC Subtopic 825-10, Financial Instruments – Overall.

Fair value is defined as the price to sell an asset or to transfer a liability in an orderly transaction between willing market participants as of the measurement date. Fair value is best determined by values quoted through active trading markets. Active trading markets are characterized by numerous transactions of similar financial instruments between willing buyers and willing sellers. Because no active trading market exists for various types of financial instruments, many of the fair values disclosed were derived using present value discounted cash flows or other valuation techniques described below. As a result, the Corporation’s ability to actually realize these derived values cannot be assumed.

The Corporation measures fair values based on the fair value hierarchy established in ASC Paragraph 820-10-35-37. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of inputs that may be used to measure fair value under the hierarchy are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities. This level is the most reliable source of valuation.

Level 2: Quoted prices that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability. Level 2 inputs include inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield curves at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates). It also includes inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs). Several sources are utilized for valuing these assets, including a contracted valuation service, Standard & Poor’s (“S&P”) evaluations and pricing services, and other valuation matrices.

Level 3: Prices or valuation techniques that require inputs that are both significant to the valuation assumptions and not readily observable in the market (i.e. supported with little or no market activity). Level 3 instruments are valued based on the best available data, some of which is internally developed, and consider risk premiums that a market participant would require.

The level established within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Transfers in and out of Level 1, 2 or 3 are recorded at fair value at the beginning of the reporting period.

Investments – The investment portfolio is classified and accounted for based on the guidance of ASC Topic 320, Investments – Debt and Equity Securities.

The fair value of investments available-for-sale is determined using a market approach. At June 30, 2022 and December 31, 2021, the U.S. Government agencies and treasuries, residential and commercial mortgage-backed securities, and municipal bonds segments are classified as Level 2 within the valuation hierarchy. Their fair values were determined based upon market-corroborated inputs and valuation matrices, which were obtained through third party data service providers or securities brokers through which we have historically transacted both purchases and sales of investment securities.

Derivative financial instruments (Cash flow hedge) – The Corporation’s open derivative positions are interest rate swap agreements. Those classified as Level 2 open derivative positions are valued using externally developed pricing models based on observable market inputs provided by a third party and validated by management.  The Corporation has considered counterparty credit risk in the valuation of its interest rate swap assets.

Impaired loans – Loans included in the table below are those that are considered impaired with a specific allocation or with partial charge-offs, based upon the guidance of the loan impairment subsection of the Receivables Topic, ASC Section 310-10-35, under which the Corporation has measured impairment generally based on the fair value of the loan’s collateral. Fair value consists of the loan balance less its valuation allowance and is generally determined based on independent third-party appraisals of the collateral or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values based upon the lowest level of input that is significant to the fair value measurements.

Equity Investment- Equity investments included in the table below are considered impaired with losses recognized on the income statement in net gains.  Fair value of the equity investment was based on an independent third-party valuation report where the value was determined based on the revenue multiples of like kind information technology businesses.  These assets are included as Level 3 fair values based upon the lowest level of input that is significant to the fair value measurements.

Other real estate owned – OREO included in the table below are considered impaired with specific write-downs. Fair value of other real estate owned was based on independent third-party appraisals of the properties. These values were determined based on the sales prices of similar properties in the approximate geographic area. These assets are included as Level 3 fair values based upon the lowest level of input that is significant to the fair value measurements.

For assets measured at fair value on a recurring and non-recurring basis, the fair value measurements by level within the fair value hierarchy used at June 30, 2022 and December 31, 2021 were as follows:

			Fair Value Measurements at June 30, 2022 Using
			Quoted
			Prices in	Significant
	Assets/(liabilities)		Active Markets	Other		Significant
	Measured at		for Identical	Observable		Unobservable
	Fair Value		Assets	Inputs		Inputs
(in thousands)	06/30/22		(Level 1)	(Level 2)		(Level 3)
Recurring:
Investment securities available-for-sale:
U.S. government agencies	$	9,915		$	9,915
Residential mortgage-backed agencies	$	41,246		$	41,246
Commercial mortgage-backed agencies	$	31,996		$	31,996
Collateralized mortgage obligations	$	24,150		$	24,150
Obligations of states and political subdivisions	$	8,323		$	8,323
Corporate bonds	$	979		$	979
Collateralized debt obligations	$	16,258				$	16,258
Financial derivatives	$	635		$	635
Non-recurring:
Impaired loans, net	$	337				$	337
Equity Investment	$	590				$	590
Other real estate owned	$	—				$	—

			Fair Value Measurements at December 31, 2021 Using
			Quoted
			Prices in	Significant
	Assets/(liabilities)		Active Markets	Other		Significant
	Measured at		for Identical	Observable		Unobservable
	Fair Value		Assets	Inputs		Inputs
(in thousands)	12/31/21		(Level 1)	(Level 2)		(Level 3)
Recurring:
Investment securities available-for-sale:
U.S. government agencies	$	67,169		$	67,169
Residential mortgage-backed agencies	$	48,661		$	48,661
Commercial mortgage-backed agencies	$	50,868		$	50,868
Collateralized mortgage obligations	$	90,077		$	90,077
Obligations of states and political subdivisions	$	12,804		$	12,804
Collateralized debt obligations	$	17,192				$	17,192
Financial derivatives	$	(453)		$	(453)
Non-recurring:
Impaired loans, net	$	408				$	408
Equity investment	$	590				$	590
Other real estate owned	$	349				$	349

At June 30, 2022, the fair value of impaired loans with a valuation allowance or partial charge-off was $0.8 million, net of valuation allowances of $61,811 and partial charge-offs of $1.3 million.  During the six months ended June 30, 2022, changes to the valuation allowance or additional charge off activity was recorded on loans with a net balance of approximately $0.3 million.  At December 31, 2021, the fair value of impaired loans with a valuation allowance or charge-off was $1.0 million, net of valuation allowances of $64,700 and charge-offs of $1.3 million. During the year ended December 31, 2021, changes to the valuation allowance or additional charge off activity was recorded on loans with a net balance of approximately $0.4 million.

There were no transfers of assets between any of the fair value hierarchy for the six month periods ended June 30, 2022 or 2021.

For Level 3 assets and liabilities measured at fair value on a recurring and non-recurring basis as of June 30, 2022 and December 31, 2021, the significant unobservable inputs used in the fair value measurements were as follows:

(in thousands)	Fair Value at June 30, 2022		Valuation Technique	Significant Unobservable Inputs	Significant Unobservable Input Value
Recurring:
Investment Securities – available for sale -CDO	$	16,258	Discounted Cash Flow	Discount Margin	Range of low to mid 300 and mid 400
Non-recurring:
Impaired Loans, net	$	337	Market Comparable Properties	Marketability Discount	10.0% - 15.0% (1) (weighted avg 14.2%)
Equity Investment	$	590	Market Method	Revenue Multiples	2.8x

(in thousands)	Fair Value at December 31, 2021		Valuation Technique	Significant Unobservable Inputs	Significant Unobservable Input Value
Recurring:
Investment Securities – available for sale -CDO	$	17,192	Discounted Cash Flow	Discount Rate	Libor + 3.25%
Non-recurring:
Impaired Loans, net	$	408	Market Comparable Properties	Marketability Discount	10.0% - 15.0% (1) (weighted avg 13.2%)
Equity Investment	$	590	Market Method	Revenue Multiples	2.8x
Other Real Estate Owned	$	349	Market Comparable Properties	Marketability Discount	15.0%

(1) Range would include discounts taken since appraisal and estimated values

The following tables show a reconciliation of the beginning and ending balances for fair valued assets measured on a recurring basis using Level 3 significant unobservable inputs for the six and three month periods ended June 30, 2022 and 2021:

	Fair Value Measurements
	Using Significant Unobservable Inputs
	(Level 3)
	Investment Securities
(in thousands)	Available for Sale
Beginning balance January 1, 2022	$	17,192
Total losses realized/unrealized:
Included in other comprehensive loss		(934)
Ending balance June 30, 2022	$	16,258

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
(in thousands)	Investment Securities Available for Sale
Beginning balance April 1, 2022	$	17,319
Total gains realized/unrealized:
Included in other comprehensive income		(1,061)
Ending balance June 30, 2022	$	16,258

	Fair Value Measurements
	Using Significant Unobservable Inputs
	(Level 3)
	Investment Securities
(in thousands)	Available for Sale
Beginning balance January 1, 2021	$	13,260
Total losses realized/unrealized:
Included in other comprehensive loss		2,970
Ending balance June 30, 2021	$	16,230

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
(in thousands)	Investment Securities Available for Sale
Beginning balance April 1, 2021	$	13,649
Total losses realized/unrealized:
Included in other comprehensive income		2,581
Ending balance June 30, 2021	$	16,230

There were no gains or losses included in earnings attributable to the change in realized/unrealized gains or losses related to the assets for the six and three month periods ended June 30, 2022 or 2021.

The disclosed fair values may vary significantly between institutions based on the estimates and assumptions used in the various valuation methodologies. The derived fair values are subjective in nature and involve uncertainties and significant judgment. Therefore, they cannot be determined with precision. Changes in the assumptions could significantly impact the derived estimates of fair value. Disclosure of non-financial assets such as buildings, as well as certain financial instruments such as leases is not required. Accordingly, the aggregate fair values presented do not represent the underlying value of the Corporation.

The following tables present fair value information about financial instruments, whether or not recognized in the Consolidated Statement of Financial Condition, for which it is practicable to estimate that value. The actual carrying amounts and estimated fair values of the Corporation’s financial instruments that are included in the Consolidated Statement of Financial Condition are as follows:

	June 30, 2022				Fair Value Measurements
					Quoted
					Prices in		Significant
					Active Markets		Other		Significant
					for Identical		Observable		Unobservable
	Carrying		Fair		Assets		Inputs		Inputs
(in thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets:
Cash and due from banks	$	20,108	$	20,108	$	20,108
Interest bearing deposits in banks		1,543		1,543		1,543
Investment securities - AFS		132,867		132,867			$	116,609	$	16,258
Investment securities - HTM		240,588		220,301				195,613		24,688
Restricted bank stock		1,026		N/A
Loans, net		1,217,772		1,159,687						1,159,687
Financial derivatives		635		635				635
Accrued interest receivable		5,055		5,055				945		4,110
Financial Liabilities:
Deposits - non-maturity		1,349,440		1,349,440				1,349,440
Deposits - time deposits		134,914		135,048				135,048
Short-term borrowed funds		69,914		69,914				69,914
Long-term borrowed funds		30,929		30,967				30,967
Accrued interest payable		92		92				92
Off balance sheet financial instruments		—		—		—

	December 31, 2021				Fair Value Measurements
					Quoted
					Prices in		Significant
					Active Markets		Other		Significant
					for Identical		Observable		Unobservable
	Carrying		Fair		Assets		Inputs		Inputs
(in thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets:
Cash and due from banks	$	109,823	$	109,823	$	109,823
Interest bearing deposits in banks		5,897		5,897		5,897
Investment securities - AFS		286,771		286,771			$	269,579	$	17,192
Investment securities - HTM		56,259		65,369				36,448		28,921
Restricted bank stock		1,029		1,029				1,029
Loan held for sale		67		67						67
Loans, net		1,137,440		1,122,671						1,122,671
Accrued interest receivable		4,821		4,821				4,821
Financial Liabilities:
Deposits - non-maturity		1,306,145		1,306,145				1,306,145
Deposits - time deposits		163,229		163,961				163,961
Financial derivatives		453		453				453
Short-term borrowed funds		57,699		57,699				57,699
Long-term borrowed funds		30,929		31,085				31,085
Accrued interest payable		137		137				137

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Accumulated Other Comprehensive Loss

6 Months Ended

Jun. 30, 2022

Accumulated Other Comprehensive Loss [Abstract]

Accumulated Other Comprehensive Loss

Note 7 – Accumulated Other Comprehensive Loss

The following table presents the changes in each component of accumulated other comprehensive loss for the 12 months ended December 31, 2021, and the three months ended March 31, 2022 and June 30, 2022:

	Investment		Investment
	securities-		securities-		Investment
	with OTTI		all other		securities-		Cash Flow		Pension
(in thousands)	AFS		AFS		HTM		Hedge		Plan		SERP		Total
Accumulated OCL, net:
Balance - January 1, 2021	$	(3,277)	$	(25)	$	(315)	$	(954)	$	(22,630)	$	(1,662)	$	(28,863)
Other comprehensive income/(loss) before reclassifications		2,475		(5,611)		—		635		3,431		(521)		409
Amounts reclassified from accumulated other comprehensive loss		(147)		(113)		181		—		1,091		128		1,140
Balance - December 31, 2021	$	(949)	$	(5,749)	$	(134)	$	(319)	$	(18,108)	$	(2,055)	$	(27,314)
Other comprehensive income/(loss) before reclassifications		103		(1,843)		(6,100)		614		(2,651)		—		(9,877)
Amounts reclassified from accumulated other comprehensive loss		(37)		(2)		69		—		204		50		284
Balance - March 31, 2022	$	(883)	$	(7,594)	$	(6,165)	$	295	$	(20,555)	$	(2,005)	$	(36,907)
Other comprehensive income/(loss) before reclassifications		(582)		(3,924)		—		182		(5,069)		—		(9,393)
Amounts reclassified from accumulated other comprehensive loss		(37)		—		168		—		204		49		384
Balance - June 30, 2022	$	(1,502)	$	(11,518)	$	(5,997)	$	477	$	(25,420)	$	(1,956)	$	(45,916)

The following tables present the components of other comprehensive income/(loss) for the six and three month periods ended June 30, 2022 and 2021:

	Before		Tax
Components of Other Comprehensive Loss	Tax		(Expense)
(in thousands)	Amount		Benefit		Net
For the six months ended June 30, 2022
Available for sale (AFS) securities with OTTI:
Unrealized holding losses	$	(654)	$	175	$	(479)
Less: accretable yield recognized in income		101		(27)		74
Net unrealized losses on investments with OTTI		(755)		202		(553)
Available for sale securities – all other:
Unrealized holding losses		(16,203)		4,336		(11,867)
Unrealized holding losses on securities transferred from available for sale to held to maturity		8,328		(2,228)		6,100
Less: gains recognized in income		3		(1)		2
Net unrealized losses on all other AFS securities		(7,878)		2,109		(5,769)
Held to maturity securities:
Unrealized holding losses on securities transferred to held to maturity		(8,328)		2,228		(6,100)
Less: amortization recognized in income		(324)		87		(237)
Net unrealized losses on HTM securities		(8,004)		2,141		(5,863)
Cash flow hedges:
Unrealized holding gains		1,088		(292)		796
Pension Plan:
Unrealized net actuarial loss		(10,542)		2,822		(7,720)
Less: amortization of unrecognized loss		(558)		150		(408)
Net pension plan liability adjustment		(9,984)		2,672		(7,312)
SERP:
Unrealized net actuarial loss		—		—		—
Less: amortization of unrecognized loss		(135)		36		(99)
Net SERP liability adjustment		135		(36)		99
Other comprehensive loss	$	(25,398)	$	6,796	$	(18,602)

	Before		Tax
Components of Other Comprehensive Income	Tax		(Expense)
(in thousands)	Amount		Benefit		Net
For the six months ended June 30, 2021
Available for sale (AFS) securities with OTTI:
Unrealized holding gains	$	2,523	$	(676)	$	1,847
Less: gains recognized in income		—		—		—
Less: accretable yield recognized in income		101		(27)		74
Net unrealized gains on investments with OTTI		2,422		(649)		1,773
Available for sale securities – all other:
Unrealized holding losses		(4,327)		1,159		(3,168)
Less: gains recognized in income		154		(41)		113
Net unrealized losses on all other AFS securities		(4,481)		1,200		(3,281)
Held to maturity securities:
Unrealized holding gains		—		—		—
Less: amortization recognized in income		(108)		29		(79)
Net unrealized gains on HTM securities		108		(29)		79
Cash flow hedges:
Unrealized holding gains		507		(136)		371
Pension Plan:
Unrealized net actuarial gain		1,090		(291)		799
Less: amortization of unrecognized loss		(744)		200		(544)
Less: amortization of prior service costs		—		—		—
Net pension plan liability adjustment		1,834		(491)		1,343
SERP:
Unrealized net actuarial loss		—		—		—
Less: amortization of unrecognized loss		(150)		40		(110)
Net SERP liability adjustment		150		(40)		110
Other comprehensive income	$	540	$	(145)	$	395

Components of Other Comprehensive Loss (in thousands)	Before Tax Amount		Tax (Expense) Benefit		Net
For the three months ended June 30, 2022
Available for sale (AFS) securities with OTTI:
Unrealized holding losses	$	(795)	$	213	$	(582)
Less: accretable yield recognized in income		51		(14)		37
Net unrealized losses on investments with OTTI		(846)		227		(619)
Available for sale securities – all other:
Unrealized holding losses		(5,359)		1,435		(3,924)
Unrealized holding losses on securities transferred from available for sale to held to maturity		—		—		—
Less: gains recognized in income		—		—		—
Net unrealized losses on all other AFS securities		(5,359)		1,435		(3,924)
Held to maturity securities:
Unrealized holding gains		—		—		—
Less: amortization recognized in income		(230)		62		(168)
Net unrealized gains on HTM securities		230		(62)		168
Cash flow hedges:
Unrealized holding gains		249		(67)		182
Pension Plan:
Unrealized net actuarial loss		(6,922)		1,853		(5,069)
Less: amortization of unrecognized loss		(279)		75		(204)
Net pension plan liability adjustment		(6,643)		1,778		(4,865)
SERP:
Unrealized net actuarial loss		—		—		—
Less: amortization of unrecognized loss		(67)		18		(49)
Net SERP liability adjustment		67		(18)		49
Other comprehensive loss	$	(12,302)	$	3,293	$	(9,009)

Components of Other Comprehensive Income (in thousands)	Before Tax Amount		Tax (Expense) Benefit		Net
For the three months ended June 30, 2021
Available for sale (AFS) securities with OTTI:
Unrealized holding gains	$	2,160	$	(579)	$	1,581
Less: accretable yield recognized in income		51		(14)		37
Net unrealized gains on investments with OTTI		2,109		(565)		1,544
Available for sale securities – all other:
Unrealized holding gains		2,778		(744)		2,034
Less: gains recognized in income		154		(41)		113
Net unrealized gains on all other AFS securities		2,624		(703)		1,921
Held to maturity securities:
Less: amortization recognized in income		(46)		12		(34)
Net unrealized gains on HTM securities		46		(12)		34
Cash flow hedges:
Unrealized holding losses		(47)		13		(34)
Pension Plan:
Unrealized net actuarial gain		1,280		(342)		938
Less: amortization of unrecognized loss		(372)		100		(272)
Less: amortization of prior service costs		—		—		—
Net pension plan liability adjustment		1,652		(442)		1,210
SERP:
Unrealized net actuarial loss		—		—		—
Less: amortization of unrecognized loss		(73)		18		(55)
Net SERP liability adjustment		73		(18)		55
Other comprehensive income	$	6,457	$	(1,727)	$	4,730

The following table presents the details of amounts reclassified from accumulated other comprehensive loss for the six and three month periods ended June 30, 2022 and 2021:

Amounts Reclassified from	Six Months Ended
Accumulated Other Comprehensive Loss	June 30,				Affected Line Item in the Statement
(in thousands)	2022		2021		Where Net Income is Presented
Net unrealized gains on available for sale investment securities with OTTI:
Accretable yield	$	101	$	101	Interest income on taxable investment securities
Taxes		(27)		(27)	Provision for income tax expense
	$	74	$	74	Net of tax
Net unrealized gains on available for sale investment securities - all others:
Gains recognized	$	3	$	154	Net gains
Taxes		(1)		(41)	Provision for income tax expense
	$	2	$	113	Net of tax
Net unrealized losses on held to maturity securities:
Amortization	$	(324)	$	(108)	Interest income on taxable investment securities
Taxes		87		29	Provision for income tax expense
	$	(237)	$	(79)	Net of tax
Net pension plan liability adjustment:
Amortization of unrecognized loss	$	(558)	$	(744)	Other Expense
Taxes		150		200	Provision for income tax expense
	$	(408)	$	(544)	Net of tax
Net SERP liability adjustment:
Amortization of unrecognized loss	$	(135)	$	(150)	Other Expense
Taxes		36		40	Provision for income tax expense
	$	(99)	$	(110)	Net of tax
Total reclassifications for the period	$	(668)	$	(546)	Net of tax

Amounts Reclassified from	Three Months Ended
Accumulated Other Comprehensive Loss	June 30,				Affected Line Item in the Statement
(in thousands)	2022		2021		Where Net Income is Presented
Net unrealized gains on available for sale investment securities with OTTI:
Accretable Yield	$	51	$	51	Interest income on taxable investment securities
Taxes		(14)		(14)	Provision for income tax expense
	$	37	$	37	Net of tax
Net unrealized gains on available for sale investment securities - all others:
Gains recognized	$	—	$	154	Net gains
Taxes		—		(41)	Provision for income tax expense
	$	—	$	113	Net of tax
Net unrealized losses on held to maturity securities:
Amortization	$	(230)	$	(46)	Interest income on taxable investment securities
Taxes		62		12	Provision for income tax expense
	$	(168)	$	(34)	Net of tax
Net pension plan liability adjustment:
Amortization of unrecognized loss	$	(279)	$	(372)	Other expense
Taxes		75		100	Provision for income tax expense
	$	(204)	$	(272)	Net of tax
Net SERP liability adjustment:
Amortization of unrecognized loss	$	(67)	$	(73)	Other expense
Taxes		18		18	Provision for income tax expense
	$	(49)	$	(55)	Net of tax
Total reclassifications for the period	$	(384)	$	(211)	Net of tax

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Employee Benefit Plans

6 Months Ended

Jun. 30, 2022

Employee Benefit Plans [Abstract]

Employee Benefit Plans

Note 8 – Employee Benefit Plans

The following tables present the components of the net periodic pension plan cost for First United Corporation’s noncontributory Defined Benefit Pension Plan (the “Pension Plan”) and the Bank’s Defined Benefit Supplemental Executive Retirement Plan (“Defined Benefit SERP”) for the periods indicated:

	Six Months Ended				Three Months Ended
Pension Plan	June 30,				June 30,
(in thousands)	2022		2021		2022		2021
Service cost	$	28	$	78	$	14	$	39
Interest cost		768		711		384		355
Expected return on assets		(1,905)		(1,785)		(953)		(892)
Amortization of net actuarial loss		558		744		279		372
Net pension credit included in employee benefits and other expense	$	(551)	$	(252)	$	(276)	$	(126)

At June 30, 2022, the market value of the pension plan decreased $9.4 million since December 31, 2021. This decrease is related to the increasing rate environment and market volatility resulting in a pension plan liability of $4.6 million at June 30, 2022 compared to a pension plan asset of $4.8 million at December 31, 2021.

	Six Months Ended				Three Months Ended
Defined Benefit SERP	June 30,				June 30,
(in thousands)	2022		2021		2022		2021
Service cost	$	83	$	69	$	42	$	34
Interest cost		143		119		71		59
Amortization of recognized loss		135		151		67		76
Amortization of prior service cost		—		(1)		—		—
Net Defined Benefit SERP expense included in employee benefits and other expense	$	361	$	338	$	180	$	169

The service cost component of net periodic benefit cost is included in salaries and benefits and all other components of net periodic benefit cost are included in other expense in the Consolidated Statement of Operations for the Pension Plan and the Defined Benefit SERP.

The Pension Plan is a noncontributory defined benefit pension plan that covers our employees who were hired prior to the freeze and others who were grandfathered into the plan. The benefits are based on years of service and the employees’ compensation during the last five years of employment.  

Effective April 30, 2010, the Pension Plan was amended, resulting in a “soft freeze”, the effect of which prohibits new entrants into the plan and ceases crediting of additional years of service after that date. Effective January 1, 2013, the Pension Plan was amended to unfreeze it for those employees for whom the sum of their (a) ages, at their closest birthday plus (b) years of service for vesting purposes equals 80 or greater. The “soft freeze” continues to apply to all other plan participants. Pension benefits for these participants are managed through discretionary contributions to the First United Corporation 401(k) Profit Sharing Plan (the “401(k) Plan”).

The Bank established the Defined Benefit SERP in 2001 as an unfunded supplemental executive retirement plan. The Defined Benefit SERP is available only to a select group of management or highly compensated employees to provide supplemental retirement benefits in excess of limits imposed on qualified plans by federal tax law. Concurrent with the establishment of the Defined Benefit SERP, the Bank acquired Bank Owned Life Insurance (“BOLI”) policies on the senior management personnel and officers of the Bank. The benefits resulting from the favorable tax treatment accorded the earnings on the BOLI policies are intended to provide a source of funds for the future payment of the Defined Benefit SERP benefits as well as other employee benefit costs.

The benefit obligation activity for both the Pension Plan and the Defined Benefit SERP was calculated using an actuarial measurement date of January 1. Plan assets and the benefit obligations were calculated using an actuarial measurement date of December 31.

The Corporation will assess the need for future annual contributions to the pension plan based upon its funded status and an evaluation of the future benefits to be provided thereunder. No contributions were made to the Pension Plan during the first six months of 2022 or 2021. The Corporation expects to fund the annual projected benefit payments for the Defined Benefit SERP from operations.

On January 9, 2015, First United Corporation and members of management who do not participate in the Defined Benefit SERP entered into participation agreements under the Deferred Compensation Plan, each styled as a Defined Contribution SERP Agreement (the “Contribution Agreement”). Pursuant to each Contribution Agreement, First United Corporation agreed, for each Plan Year (as defined in the Deferred Compensation Plan) in which it determines that it has been Profitable (as defined in the Contribution Agreement), to make a discretionary contribution to the participant’s Employer Account in an amount equal to 15% of the participant’s base salary level for such Plan Year, with the first Plan Year being the year ending December 31, 2015. The Contribution Agreement provides that the participant will become 100% vested in the amount maintained in his or her Employer Account upon the earliest to occur of the following events: (a) Normal Retirement (as defined in the Contribution Agreement); (b)  Separation from Service (as defined in the Contribution Agreement) following a Change of Control (as defined in the Deferred Compensation Plan) and subsequent Triggering Event (as defined in the Contribution Agreement); (c) Separation from Service due to a Disability (as defined in the Contribution Agreement); (d) with respect to a particular award of Employer Contribution Credits, the participant’s completion of 2 consecutive Years of Service (as defined in the Contribution Agreement) immediately following the Plan Year for which such award was made; or (e) death. Notwithstanding the foregoing, however, a participant will

lose entitlement to the amount maintained in his or her Employer Account in the event employment is terminated for Cause (as defined in the Contribution Agreement). In addition, the Contribution Agreement conditions entitlement to the amounts held in the Employer Account on the participant (1) refraining from engaging in Competitive Employment (as defined in the Contribution Agreement) for three years following his or her Separation from Service, (2) refraining from injurious disclosure of confidential information concerning the Corporation, and (3) remaining available, at the First United Corporation’s reasonable request, to provide at least six hours of transition services per month for 12 months following his or her Separation from Service (except in the case of death or Disability), except that only item (2) will apply in the event of a Separation from Service following a Change of Control and subsequent Triggering Event.

In January 2021, the Board of Directors approved discretionary contributions to three participants totaling $101,257. The Corporation recorded $25,314 of related compensation expense for the first six months of 2022 and 2021 related to these contributions. The Corporation recorded $12,657 of related compensation expense for the second quarter of 2022 and 2021 related to these contributions. In January 2022, the Board of Directors approved discretionary contributions to three participants totaling $103,689. The Corporation recorded $25,922 of related compensation expense for the first six months of 2022 related to these contributions. The Corporation recorded $12,961 of related compensation expense for the second quarter of 2022 related to these contributions. Each discretionary contribution has a two year vesting period.

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Equity Compensation Plan Information

6 Months Ended

Jun. 30, 2022

Equity Compensation Plan Information [Abstract]

Equity Compensation Plan Information

Note 9 - Equity Compensation Plan Information

At the 2018 Annual Meeting of Shareholders, First United Corporation’s shareholders approved the First United Corporation 2018 Equity Compensation Plan (the “Equity Plan”) which authorizes the issuance of up to 325,000 shares of common stock to employees, directors and qualifying consultants pursuant to stock options, stock appreciation rights, stock awards, dividend equivalents, and other stock-based awards.

The Corporation complies with the provisions of ASC Topic 718, Compensation-Stock Compensation, in measuring and disclosing stock compensation cost.  The measurement objective in ASC Paragraph 718-10-30-6 requires public companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. The cost is recognized in expense over the period in which an employee is required to provide service in exchange for the award (the vesting period).

Pursuant to First United Corporation’s director compensation policy, each director receives an annual retainer of 1,000 shares of First United Corporation common stock, plus $10,000 to be paid, at the director’s election, in cash or additional shares of common stock. In January 2021, a total of 1,202 fully vested shares were issued to two new directors, which had a grant date fair market value of $16.66 per share.  In May 2021, a total of 12,726 fully vested shares of common stock were issued to directors, which had a grant date fair value of $18.50 per share.  In May 2022, a total of 14,940 fully vested shares of common stock were issued to directors, which had a grant date fair value of $18.92 per share.  Director stock compensation expense was $125,588 for the six months ended June 30, 2022 and $132,860 for the six months ended June 30, 2021.  Director stock compensation expense was $66,730 for the second quarter of 2022 and $62,644 for the second quarter of 2021.

Restricted Stock Units

On March 26, 2020, pursuant to the Corporation’s Long Term Incentive Plan (the "LTIP"), which is a sub-plan of the Equity Plan, the Compensation Committee of First United Corporation’s Board of Directors (the "Committee") granted RSUs to the Corporation’s principal executive officer, its principal financial officer, and certain of its other executive officers. An RSU contemplates the issuance of shares of common stock of First United Corporation if and when the RSU vests.

The RSUs granted to each of the foregoing officers consist of (a) a performance vesting award for a three year performance period and (b) a time-vesting award that will vest ratably over a three year period. Target performance levels were set based on the annual budget which supports the Corporation’s long-term objective of achieving high performance as compared to peers. Threshold performance is the minimum level of acceptable performance as defined by the Committee and maximum performance represented a level potentially achievable under ideal circumstances. Achievement of the threshold performance level would result in each executive participant earning a payout at 50% of his or her respective target award opportunity. Achievement of the target performance level would result in the executive participant earning the target award and achievement at or above the maximum performance level would result in the executive participant earning 150% of the target opportunity. Actual results for any goal that

falls between performance levels would be interpolated to calculate a proportionate award. For the performance period ending December 31, 2021, the RSUs’ performance goal is based on earnings per share for the year ending December 31, 2021. For the performance period ending December 31, 2022, the RSUs performance goals are based on earnings per share for the year ending December 31, 2022 and growth in tangible book value per share during the performance period. For the performance period ending December 31, 2023, the RSUs performance goals are based on earnings per share for the year ending December 31, 2023 and growth in tangible book value per share during the performance period.  

To receive any shares under an RSU, a grantee must be employed by the Corporation or one of its subsidiaries on the applicable vesting date, except that a grantee whose employment terminates prior to such vesting date due to death, disability or retirement will be entitled to a pro-rated portion of the shares subject to the RSUs, assuming that, in the case of performance-vesting RSUs, the performance goals had been met at their "target" levels.

In the first quarter of 2020, RSUs were granted relating to 9,791 performance vesting shares (target level) for 2019 LTIP plan for the performance period ending December 31, 2021 and 10,143 performance vesting shares and 5,070 time vesting shares (target level) for 2020 LTIP plan for the performance period ending December 31, 2022, which had a grant date fair market value of $12.54 per share of common stock underlying each RSU.  The 2020 plan has a performance period for the performance-vesting RSUs of three years ending December 31, 2022 and the time-vesting RSUs will vest ratably over a three year period that began on March 26, 2021.  On March 26, 2021, 1,690 of the 5,070 time vesting shares were issued to participants.  On March 26, 2022, 1,688  shares of the 3,380 remaining time vesting shares were issued to participants.  Stock compensation expense was $42,024 and $52,254 for the six month periods ended June 30, 2022 and 2021.  Stock compensation expense was $15,896 and $26,127 for the second quarter of 2022 and 2021, respectively.  Unrecognized compensation expense at June 30, 2022 related to unvested RSUs was $47,687.

In May 2021, RSUs relating to 7,389 performance vesting shares and 3,693 time vesting shares (target level) for plan year 2021 were granted, which had a grant date fair market value of $17.93 per share of common stock underlying each RSU.  The performance period for the performance-vesting RSUs is the three year period ending December 31, 2023.  The time-vesting RSUs will vest ratably over a three year period that began on May 5, 2022. On May 5, 2022, 1,230 shares of the 3,693 time-vesting RSUs were issued to participants.  Stock compensation expense was $33,142 and $11,048 for the first six months of 2022 and 2021, respectively.  Stock compensation expense was $16,571 and $11,048 for the second quarter of 2022 and 2021, respectively.  Unrecognized compensation expense as of June 30, 2022 related to unvested units was $121,522.

In March 2022, RSUs relating to 8,096 performance vesting shares and 6,238 time vesting shares (target level) for plan year 2022 were granted, which had a grant date fair market value of $21.88 per share of common stock underlying each RSU.  The performance period for the performance-vesting RSUs is the three year period ending December 31, 2024.  The time-vesting RSUs will vest ratably over a three year period beginning on March 9, 2023. Stock compensation expense was $26,145 for the six and three month periods ended June 30, 2022.  Unrecognized compensation expense as of June 30, 2022 related to unvested units was $287,598.

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2022

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

Note 10 – Derivative Financial Instruments

As a part of managing interest rate risk, the Corporation entered into interest rate swap agreements to modify the re-pricing characteristics of certain interest-bearing liabilities. The Corporation has designated its interest rate swap agreements as cash flow hedges under the guidance of ASC Subtopic 815-30, Derivatives and Hedging – Cash Flow Hedges. Cash flow hedges have the effective portion of changes in the fair value of the derivative, net of taxes, recorded in net accumulated other comprehensive income.

In March 2016, the Corporation entered into four interest rate swap contracts totaling $30.0 million notional amount, hedging future cash flows associated with floating rate trust preferred debt. As of June 30, 2022, $20.0 million notional amount remains.

The fair value of the interest rate swap contracts was $0.6 million and $(0.5) million at June 30, 2022 and December 31, 2021, respectively.

For the six months ended June 30, 2022, the Corporation recorded an increase in the value of the derivatives of $1.1 million and the related deferred tax of $0.3 million in net accumulated other comprehensive loss to reflect the effective portion of cash flow

hedges. For the three months ended June 30, 2022, the Corporation recorded an increase in the value of the derivatives of $0.2 million and the related deferred tax of $0.1 million in net accumulated other comprehensive loss to reflect the effective portion of cash flow hedges. ASC Subtopic 815-30 requires the net accumulated other comprehensive loss to be reclassified to earnings if the hedge becomes ineffective or is terminated. There was no hedge ineffectiveness recorded for the six or three months ended June 30, 2022. The Corporation does not expect any material losses relating to these hedges to be reclassified into earnings within the next 12 months.

Interest rate swap agreements are entered into with counterparties that meet established credit standards and the Corporation believes that the credit risk inherent in these contracts is not significant as of June 30, 2022.

The table below discloses the impact of derivative financial instruments on the Corporation’s Consolidated Financial Statements for the six and three month periods ended June 30, 2022 and 2021.

Derivative in Cash Flow Hedging Relationships
					Amount of gain or
					(loss) recognized in
			Amount of gain or		income or derivative
	Amount of gain or		(loss) reclassified from		(ineffective portion
	(loss) recognized in		accumulated OCI into		and amount excluded
	OCI on derivative		income (effective		from effectiveness
(in thousands)	(effective portion)		portion) (a)		testing) (b)
Interest rate contracts:
Six months ended:
June 30, 2022	$	796	$	—	$	—
June 30, 2021		371		—		—
Three months ended:
June 30, 2022	$	182	$	—	$	—
June 30, 2021		(34)		—		—

Notes:

(a) Reported as interest expense

(b) Reported as other income

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Revenue Recognition

6 Months Ended

Jun. 30, 2022

Revenue Recognition [Abstract]

Revenue Recognition

Note 11 – Revenue Recognition

ASC Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities. ASC Topic 606 is applicable to noninterest revenue streams such as wealth management, including trust and brokerage services, service charges on deposit accounts, interchange fee income – debit card income and gains/losses on OREO sales. Noninterest revenue streams in-scope of ASC Topic 606 are discussed below.

Wealth Management – Trust and Brokerage

Trust and asset management income is primarily comprised of fees earned from the management and administration of trusts and other customer assets. The Corporation’s performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the month-end market value of the assets under management and the applicable fee rate. Payment is generally received a few days after month end through a direct charge to customers’ accounts. Optional services such as real estate sales and tax return preparation services are also available to existing trust and asset management customers. The Corporation’s performance obligation for these transactional-based services is generally satisfied, and related revenue recognized, at a point in time (i.e., as incurred). Payment is received shortly after services are rendered.

Service Charges on Deposit Accounts

Service charges on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, check orders, and other deposit account related fees. The Corporation’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the

period in which the service is provided. Check orders and other deposit account related fees are largely transactional based, and therefore, the Corporation’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts.

Other Service Charges

Fees, exchange, and other service charges are primarily comprised of ATM fees, loan servicing fees and other service charges. ATM fees are primarily generated when a Bank cardholder uses a non-Bank ATM or a non-Bank cardholder uses a Bank ATM.  Loan servicing fees are comprised of fees earned on servicing of loan portfolios sold to the secondary market.  Other service charges include revenue from processing wire transfers, bill pay service, cashier’s checks, and other services.   The Corporation’s performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized, when the services are rendered or upon completion.

Interchange Fees – Debit and Credit Card Income

Debit and credit card income is primarily comprised of interchange fees earned whenever the Corporation’s debit cards are processed through card payment networks such as Visa. Merchant services income mainly represents fees charged to merchants to process their debit and credit card transactions, in addition to account management fees. Payment is typically received immediately or in the following month.

The following presents noninterest income, segregated by revenue streams that are within and outside the scope of ASC Topic 606, for the six and three month periods ended June 30, 2022 and June 30, 2021:

	Six Months Ended				Three Months Ended
	June 30,				June 30,
(in thousands)	2022		2021		2022		2021
Noninterest income
In-scope of Topic 606:
Service charges on deposit accounts	$	928	$	817	$	463	$	412
Other service charges		445		432		232		221
Trust department		4,233		4,275		2,044		2,034
Debit card income		1,869		1,723		983		913
Brokerage commissions		533		625		313		357
Noninterest income (in-scope of Topic 606)		8,008		7,872		4,035		3,937
Noninterest income (out-of-scope of Topic 606)		787		1,191		378		384
Total Noninterest Income	$	8,795	$	9,063	$	4,413	$	4,321

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Regulatory Capital Requirements

6 Months Ended

Jun. 30, 2022

Regulatory Capital Requirements [Abstract]

Regulatory Capital Requirements

Note 12 – Regulatory Capital Requirements

The following table presents our capital ratios as of June 30, 2022 and December 31, 2021.

	June 30, 2022		December 31, 2021		Required for Capital Adequacy Purposes		Required to be Well Capitalized
Total Capital (to risk-weighted assets)
First United Bank & Trust	14.64	%	14.97	%	8.00	%	10.00	%
Tier 1 Capital (to risk-weighted assets)
First United Bank & Trust	13.46	%	13.72	%	6.00	%	8.00	%
Common Equity Tier 1 Capital (to risk-weighted assets)
First United Bank & Trust	13.46	%	13.72	%	4.50	%	6.50	%
Tier 1 Capital (to average assets)
First United Bank & Trust	10.40	%	10.00	%	4.00	%	5.00	%

As of June 30, 2022 and December 31, 2021, the Bank was considered “well capitalized” under the regulatory framework for prompt corrective action.

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Borrowed Funds

6 Months Ended

Jun. 30, 2022

Borrowed Funds [Abstract]

Borrowed Funds

Note 13 – Borrowed Funds

The following is a summary of short-term borrowings with original maturities of less than one year:

(Dollars in thousands)	Six Months Ended June 30, 2022		Year Ended December 31, 2021
Overnight borrowings, weighted average interest rate of 1.75% at June 30, 2022	$	18,900	$	—
Securities sold under agreements to repurchase:
Outstanding at end of period	$	51,014	$	57,699
Weighted average interest rate at end of period		0.14%		0.15%
Maximum amount outstanding as of any month end	$	62,023	$	72,396
Average amount outstanding	$	59,710	$	57,697
Approximate weighted average rate during the period		0.12%		0.15%

Short-term borrowings increased $12.2 million since December 31, 2021, driven by $18.9 million in overnight borrowings, which were offset by a decrease in other short-term borrowings of $6.7 million during the six months related to our Treasury Management customers utilizing their funds.

At June 30, 2022, the repurchase agreements were secured by $69.5 million in investment securities issued by government related agencies.  A minimum of 102% of fair value is pledged against account balances.

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Adoption of New Accounting Standards and Effects of New Accounting Pronouncements

6 Months Ended

Jun. 30, 2022

Adoption of New Accounting Standards and Effects of New Accounting Pronouncements [Abstract]

Adoption of New Accounting Standards and Effects of New Accounting Pronouncements

Note 14 – Recent Accounting Pronouncements

Recently issued but not yet effective Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchases financial assets with credit deterioration since their origination. The new model referred to as current expected credit losses (“CECL”) model, will

apply to: (a) financial assets subject to credit losses and measured at amortized cost; and (b) certain off-balance sheet credit exposures. This includes loans, held to maturity debt securities, loan commitments, financial guarantees and net investments in leases as well as reinsurance and trade receivables. The estimate of expected credit losses should consider historical information, current information, and supportable forecasts, including estimates of prepayments. ASU 2016-13 was originally effective for SEC filers for annual periods beginning after December 15, 2019, and interim periods within those annual periods. In November 2019, the FASB approved a delay of the required implementation date of ASU No. 2016-13 for smaller reporting companies, as defined by the Securities and Exchange Commission, including the Corporation, resulting in a required implementation date for the Corporation of January 1, 2023.

Management has formed a focus group consisting of multiple members from areas, including credit, finance, loan servicing, reporting, and information systems. The Corporation is completing its data and model validation analyses, with parallel processing of our existing allowance for loan losses model with the CECL model to follow. The Corporation is currently evaluating the provisions of ASU No. 2016-13 to determine the potential impact the new standard will have on the financial condition or results of operations.

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848).”  The ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendment only applies to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of the reference rate reform. The ASU is effective as of March 12, 2020 and through December 31, 2022. The Corporation is in the process of evaluating the impact of this standard on the loan portfolio, investment portfolio, long term debt and interest rate swaps, but believes that its adoption will not have a material impact on the Corporation’s financial condition or results of operations.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.  ASU 2022-02 made certain targeted amendments specific to troubled debt restructurings (TDRs) by creditors and vintage disclosure related to gross write-offs. Upon adoption, the Corporation will be required to apply the loan and refinancing and restructuring guidance to determine whether a modification results in a new loan or a continuation of an existing loan, rather than applying the recognition and measurement guidance for TDRs.  The ASU also requires companies to disclose current-period gross write-offs by year of origination for financing receivables and net investment in leases within scope of Subtopic 326-20.  ASU 2022-02 is effective March 31, 2023, for entities that have adopted ASU 2016-13, otherwise effective date is the same as ASU 2016-13. The Corporation’s current plan is to adopt ASU 2016-13 effective January 1, 2023 at which time it will also implement ASU 2022-02.

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Earnings Per Common Share (Policy)

6 Months Ended

Jun. 30, 2022

Earnings Per Common Share [Abstract]

Earnings Per Common Share

Basic earnings per common share is derived by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period and does not include the effect of any potentially dilutive common stock equivalents. Diluted earnings per share is derived by dividing net income available to common shareholders by the weighted-average number of shares outstanding, adjusted for the dilutive effect of outstanding common stock equivalents, such as restricted stock units (“RSUs”). There were no anti-dilutive shares outstanding at June 30, 2022 or 2021.

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Earnings Per Common Share (Tables)

6 Months Ended

Jun. 30, 2022

Earnings Per Common Share [Abstract]

Basic and Diluted Earnings Per Share

	Six months ended June 30,
	2022					2021
			Average	Per Share				Average	Per Share
(in thousands, except for per share amount)	Income		Shares	Amount		Income		Shares	Amount
Basic Earnings Per Share:
Net income	$	11,143	6,639	$	1.68	$	7,833	6,803	$	1.15
Diluted Earnings Per Share:
Restricted stock units			10					5
Net income	$	11,143	6,649	$	1.68	$	7,833	6,808	$	1.15

	Three months ended June 30,
	2022					2021
			Average	Per Share				Average	Per Share
(in thousands, except for per share amount)	Income		Shares	Amount		Income		Shares	Amount
Basic Earnings Per Share:
Net income	$	5,428	6,650	$	0.82	$	4,403	6,609	$	0.66
Diluted Earnings Per Share:
Restricted stock units			11					6
Net income	$	5,428	6,661	$	0.82	$	4,403	6,615	$	0.66

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Investments (Tables)

6 Months Ended

Jun. 30, 2022

Investments [Abstract]

Unrealized Gain (Loss) on Investments

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		OTTI in AOCL
June 30, 2022
Available for Sale:
U.S. government agencies	$	11,060	$	—	$	1,145	$	9,915	$	—
Residential mortgage-backed agencies		47,086		—		5,840		41,246		—
Commercial mortgage-backed agencies		36,498		—		4,502		31,996		—
Collateralized mortgage obligations		27,095		—		2,945		24,150		—
Obligations of states and political subdivisions		8,341		43		61		8,323		—
Corporate bonds		1,000		—		21		979		—
Collateralized debt obligations		18,640		—		2,382		16,258		(1,415)
Total available for sale	$	149,720	$	43	$	16,896	$	132,867	$	(1,415)
(in thousands)	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value		OTTI in AOCL
June 30, 2022
Held to Maturity:
U.S. treasuries	$	37,076	$	—	$	1,226	$	35,850	$	—
U.S. government agencies		67,596		—		8,749		58,847		—
Residential mortgage-backed agencies		27,996		3		2,282		25,717		—
Commercial mortgage-backed agencies		25,440		1		2,996		22,445		—
Collateralized mortgage obligations		59,951		—		5,658		54,293		—
Obligations of states and political subdivisions		22,529		1,107		487		23,149		—
Total held to maturity	$	240,588	$	1,111	$	21,398	$	220,301	$	—

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		OTTI in AOCL
December 31, 2021
Available for Sale:
U.S. government agencies	$	69,602	$	66	$	2,499	$	67,169	$	—
Residential mortgage-backed agencies		49,630		—		969		48,661		—
Commercial mortgage-backed agencies		51,694		175		1,001		50,868		—
Collateralized mortgage obligations		93,018		84		3,025		90,077		—
Obligations of states and political subdivisions		12,439		371		6		12,804		—
Collateralized debt obligations		18,609		112		1,529		17,192		(660)
Total available for sale	$	294,992	$	808	$	9,029	$	286,771	$	(660)
(in thousands)	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value		OTTI in AOCL
December 31, 2021
Held to Maturity:
Residential mortgage-backed agencies	$	30,634	$	649	$	436	$	30,847	$	—
Commercial mortgage-backed agencies		5,456		145		—		5,601		—
Obligations of states and political subdivisions		20,169		8,752		—		28,921		—
Total held to maturity	$	56,259	$	9,546	$	436	$	65,369	$	—

Gross Unrealized Losses and Fair Values of Securities

	Less than 12 months					12 months or more
(in thousands)	Fair Value		Unrealized Losses		Number of Investments	Fair Value		Unrealized Losses		Number of Investments
June 30, 2022
Available for Sale:
U.S. government agencies	$	8,481		580	2		1,435		565	1
Residential mortgage-backed agencies		25,523		2,957	3		15,723		2,883	2
Commercial mortgage-backed agencies		18,648		2,527	6		13,348		1,975	3
Collateralized mortgage obligations		15,997		1,827	9		8,152		1,118	1
Obligations of states and political subdivisions		5,598		61	6		—		—	—
Collateralized debt obligations		6,492		128	4		9,766		2,254	5
Corporate Bonds		979		21	1		—		—	—
Total available for sale	$	81,718	$	8,101	31	$	48,424	$	8,795	12
	Less than 12 months					12 months or more
(in thousands)	Fair Value		Unrecognized Losses		Number of Investments	Fair Value		Unrecognized Losses		Number of Investments
June 30, 2022
Held to Maturity:
U.S. treasuries	$	35,850		1,226	4	$	—	$	—	—
U.S. government agencies		58,847	$	8,749	9		—		—	—
Residential mortgage-backed agencies		18,356		829	31		7,264		1,453	3
Commercial mortgage-backed agencies		20,443		2,996	3		—		—	—
Collateralized mortgage obligations		54,293		5,658	8		—		—	—
Obligations of states and political subdivisions		2,379		487	1		—		—	—
Total held to maturity	$	190,168	$	19,945	56	$	7,264	$	1,453	3

	Less than 12 months					12 months or more
(in thousands)	Fair Value		Unrealized Losses		Number of Investments	Fair Value		Unrealized Losses		Number of Investments
December 31, 2021
Available for Sale:
U.S. government agencies	$	23,577	$	122	3	$	33,972	$	2,377	6
Residential mortgage-backed agencies		29,507		257	3		19,154		712	2
Commercial mortgage-backed agencies		32,177		787	4		5,211		214	1
Collateralized mortgage obligations		24,322		649	5		43,076		2,376	5
Obligations of states and political subdivisions		3,046		6	1		—		—	—
Collateralized debt obligations		—		—	—		10,468		1,529	5
Total available for sale	$	112,629	$	1,821	16	$	111,881	$	7,208	19
	Less than 12 months					12 months or more
(in thousands)	Fair Value		Unrecognized Losses		Number of Investments	Fair Value		Unrecognized Losses		Number of Investments
December 31, 2021
Held to Maturity:
Residential mortgage-backed agencies	$	7,395	$	291	6	$	2,782	$	145	1
Total held to maturity	$	7,395	$	291	6	$	2,782	$	145	1

Non-Cash OTTI Credit Losses Recognized in Earnings

	Six Months Ended
	June 30,
(in thousands)	2022		2021
Balance of credit-related OTTI at January 1	$	2,043	$	2,244
Reduction for increases in cash flows expected to be collected		(101)		(101)
Balance of credit-related OTTI at June 30	$	1,942	$	2,143

	Three Months Ended
	June 30,
(in thousands)	2022		2021
Balance of credit-related OTTI at April 1	$	1,993	$	2,194
Reduction for increases in cash flows expected to be collected		(51)		(51)
Balance of credit-related OTTI at June 30	$	1,942	$	2,143

Amortized Cost and Fair Values Classified by Contractual Maturity Date

	June 30, 2022
(in thousands)	Amortized Cost		Fair Value
Available for Sale:
Due after one year through five years	$	8,365	$	8,099
Due after five years through ten years		5,556		5,195
Due after ten years		25,120		22,181
		39,041		35,475
Residential mortgage-backed agencies		47,086		41,246
Commercial mortgage-backed agencies		36,498		31,996
Collateralized mortgage obligations		27,095		24,150
Total available for sale	$	149,720	$	132,867
Held to Maturity:
Due after one year through five years	$	49,576	$	47,528
Due after five years through ten years		23,748		20,999
Due after ten years	$	53,877	$	49,319
		127,201		117,846
Residential mortgage-backed agencies		27,996		25,717
Commercial mortgage-backed agencies		25,440		22,445
Collateralized mortgage obligations		59,951		54,293
Total held to maturity	$	240,588	$	220,301

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Loans And Related Allowances For Loan Losses (Tables)

6 Months Ended

Jun. 30, 2022

Loans And Related Allowances For Loan Losses [Abstract]

Loan Portfolio Segments

(in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Total
June 30, 2022
Individually evaluated for impairment	$	2,267	$	599	$	—	$	2,384	$	33	$	5,283
Collectively evaluated for impairment		419,675		115,516		225,640		403,909		63,590		1,228,330
Total loans	$	421,942	$	116,115	$	225,640	$	406,293	$	63,623	$	1,233,613
December 31, 2021
Individually evaluated for impairment	$	2,365	$	629	$	90	$	2,644	$	—	$	5,728
Collectively evaluated for impairment		371,926		127,448		180,886		402,042		65,657		1,147,959
Total loans	$	374,291	$	128,077	$	180,976	$	404,686	$	65,657	$	1,153,687

Classes of the Loan Portfolio Summarized by the Aggregate Risk Rating

(in thousands)	Pass		Special Mention		Substandard		Total
June 30, 2022
Commercial real estate
Non owner-occupied	$	212,939	$	6,438	$	12,308	$	231,685
All other CRE		183,562		2,304		4,391		190,257
Acquisition and development
1-4 family residential construction		24,247		—		—		24,247
All other A&D		91,493		—		375		91,868
Commercial and industrial		206,035		4,940		14,665		225,640
Residential mortgage
Residential mortgage - term		340,549		—		5,853		346,402
Residential mortgage - home equity		59,219		—		672		59,891
Consumer		63,411		—		212		63,623
Total	$	1,181,455	$	13,682	$	38,476	$	1,233,613
December 31, 2021
Commercial real estate
Non owner-occupied	$	173,299	$	12,987	$	6,077	$	192,363
All other CRE		174,395		2,357		5,176		181,928
Acquisition and development
1-4 family residential construction		19,924		—		—		19,924
All other A&D		107,532		218		403		108,153
Commercial and industrial		161,429		5,071		14,476		180,976
Residential mortgage
Residential mortgage - term		338,832		—		5,624		344,456
Residential mortgage - home equity		59,533		—		697		60,230
Consumer		65,557		—		100		65,657
Total	$	1,100,501	$	20,633	$	32,553	$	1,153,687

Loan Portfolio Summarized by the Past Due Status

(in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days+ Past Due		Total Past Due and Accruing		Non- Accrual		Total Loans
June 30, 2022
Commercial real estate
Non owner-occupied	$	231,596	$	—	$	89	$	—	$	89	$	—	$	231,685
All other CRE		190,191		—		—		—		—		66		190,257
Acquisition and development
1-4 family residential construction		24,247		—		—		—		—		—		24,247
All other A&D		91,493		—		—		—		—		375		91,868
Commercial and industrial		224,113		39		1,488		—		1,527		—		225,640
Residential mortgage
Residential mortgage - term		342,616		73		2,119		254		2,446		1,340		346,402
Residential mortgage - home equity		59,321		178		53		4		235		335		59,891
Consumer		63,295		153		75		67		295		33		63,623
Total	$	1,226,872	$	443	$	3,824	$	325	$	4,592	$	2,149	$	1,233,613
December 31, 2021
Commercial real estate
Non owner-occupied	$	192,363	$	—	$	—	$	—	$	—	$	—	$	192,363
All other CRE		181,847		—		—		—		—		81		181,928
Acquisition and development
1-4 family residential construction		19,924		—		—		—		—		—		19,924
All other A&D		107,763		—		—		—		—		390		108,153
Commercial and industrial		180,676		132		78		—		210		90		180,976
Residential mortgage
Residential mortgage - term		340,429		159		2,222		148		2,529		1,498		344,456
Residential mortgage - home equity		59,485		238		104		—		342		403		60,230
Consumer		65,208		268		29		152		449		—		65,657
Total	$	1,147,695	$	797	$	2,433	$	300	$	3,530	$	2,462	$	1,153,687

Primary Segments of the Allowance for Loan Loss

(in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Unallocated		Total
June 30, 2022
Individually evaluated for impairment	$	—	$	—	$	—	$	29	$	33	$	—	$	62
Collectively evaluated for impairment	$	6,220	$	2,172	$	2,830	$	3,083	$	940	$	430	$	15,675
Total ALL	$	6,220	$	2,172	$	2,830	$	3,112	$	973	$	430	$	15,737
December 31, 2021
Individually evaluated for impairment	$	—	$	—	$	28	$	36	$	—	$	—	$	64
Collectively evaluated for impairment	$	6,032	$	2,615	$	2,432	$	3,448	$	934	$	430	$	15,891
Total ALL	$	6,032	$	2,615	$	2,460	$	3,484	$	934	$	430	$	15,955

Impaired Loans and Related Interest Income by Loan Portfolio Class

	Impaired Loans with Specific Allowance				Impaired Loans with No Specific Allowance		Total Impaired Loans
(in thousands)	Recorded Investment		Related Allowances		Recorded Investment		Recorded Investment (1)		Unpaid Principal Balance
June 30, 2022
Commercial real estate
Non owner-occupied	$	—	$	—	$	103	$	103	$	103
All other CRE		—		—		2,164		2,164		2,164
Acquisition and development
1-4 family residential construction		—		—		224		224		224
All other A&D		—		—		375		375		1,584
Commercial and industrial		—		—		—		—		—
Residential mortgage
Residential mortgage – term		270		29		1,779		2,049		2,108
Residential mortgage – home equity		—		—		335		335		335
Consumer		33		33				33		33
Total impaired loans	$	303	$	62	$	4,980	$	5,283	$	6,551
December 31, 2021
Commercial real estate
Non owner-occupied	$	—	$	—	$	106	$	106	$	106
All other CRE		—		—		2,259		2,259		2,259
Acquisition and development
1-4 family residential construction		—		—		239		239		239
All other A&D		—		—		390		390		1,599
Commercial and industrial		90		28		—		90		2,304
Residential mortgage
Residential mortgage – term		344		31		1,897		2,241		2,302
Residential mortgage – home equity		46		5		357		403		422
Consumer		—		—		—		—		—
Total impaired loans	$	480	$	64	$	5,248	$	5,728	$	9,231

(1) Recorded investment consists of unpaid principal balance, net of charge-offs, interest payments received applied to principal and unamortized deferred loan origination fees and cost.

Allowance for Loan Losses Summarized by Loan Portfolio Segments

The following tables present the activity in the ALL for the six and three month periods ended June 30, 2022 and 2021:

(in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Unallocated		Total
ALL balance at January 1, 2022	$	6,032	$	2,615	$	2,460	$	3,484	$	934	$	430	$	15,955
Charge-offs		—		—		(52)		(33)		(545)		—		(630)
Recoveries		1		20		9		101		76		—		207
Provision		187		(463)		413		(440)		508		—		205
ALL balance at June 30, 2022	$	6,220	$	2,172	$	2,830	$	3,112	$	973	$	430	$	15,737
ALL balance at January 1, 2021	$	5,543	$	2,339	$	2,584	$	5,150	$	370	$	500	$	16,486
Charge-offs		—		(81)		—		(82)		(175)		—		(338)
Recoveries		—		110		38		29		78		—		255
Provision		132		132		322		(238)		317		—		665
ALL balance at June 30, 2021	$	5,675	$	2,500	$	2,944	$	4,859	$	590	$	500	$	17,068

(in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Unallocated		Total
ALL balance at April 1, 2022	$	5,922	$	2,542	$	2,513	$	2,945	$	940	$	430	$	15,292
Charge-offs		—		—		(4)		(24)		(299)		—		(327)
Recoveries		—		2		6		86		54		—		148
Provision		298		(372)		315		105		278		—		624
ALL balance at June 30, 2022	$	6,220	$	2,172	$	2,830	$	3,112	$	973	$	430	$	15,737
ALL balance at April 1, 2021	$	5,404	$	2,423	$	2,831	$	5,028	$	368	$	500	$	16,554
Charge-offs		—		—		—		—		(95)		—		(95)
Recoveries		—		9		2		12		31		—		54
Provision		271		68		111		(181)		286		—		555
ALL balance at June 30, 2021	$	5,675	$	2,500	$	2,944	$	4,859	$	590	$	500	$	17,068

Average of Impaired Loans and Related Interest Income by Loan Portfolio Class

	Six months ended						Six months ended
	June 30, 2022						June 30, 2021
(in thousands)	Average investment		Interest income recognized on an accrual basis		Interest income recognized on a cash basis		Average investment		Interest income recognized on an accrual basis		Interest income recognized on a cash basis
Commercial real estate
Non owner-occupied	$	105	$	6	$	—	$	3,165	$	6	$	—
All other CRE		2,211		45		—		3,058		69		—
Acquisition and development
1-4 family residential construction		231		7		—		259		6		—
All other A&D		382		—		—		599		6		—
Commercial and industrial		45		—		—		—		—		—
Residential mortgage
Residential mortgage – term		2,166		24		5		2,672		39		5
Residential mortgage – home equity		376		—		—		454		—		—
Consumer		11		—		—		17		—		—
Total	$	5,527	$	82	$	5	$	10,224	$	126	$	5

	Three months ended						Three months ended
	June 30, 2022						June 30, 2021
(in thousands)	Average investment		Interest income recognized on an accrual basis		Interest income recognized on a cash basis		Average investment		Interest income recognized on an accrual basis		Interest income recognized on a cash basis
Commercial real estate
Non owner-occupied	$	105	$	3	$	—	$	4,689	$	3	$	—
All other CRE		2,188		22		—		2,982		34		—
Acquisition and development
1-4 family residential construction		228		3		—		255		3		—
All other A&D		378		—		—		611		3		—
Commercial and industrial		—		—		—		—		—		—
Residential mortgage
Residential mortgage – term		2,130		12		—		2,585		19		—
Residential mortgage – home equity		363		—		—		474		—		—
Consumer		17		—		—		11		—		—
Total	$	5,409	$	40	$	—	$	11,607	$	62	$	—

Troubled Debt Restructuring

	Temporary Rate Modification			Extension of Maturity			Modification of Payment and Other Terms
(in thousands)	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
Six months ended June 30, 2021
Commercial real estate
Non owner-occupied	—	$	—	1	$	109	—	$	—
All other CRE	—		—	—		—	—		—
Acquisition and development
1-4 family residential construction	—		—	—		—	—		—
All other A&D	—		—	—		—	—		—
Commercial and industrial	—		—	—		—	—		—
Residential mortgage
Residential mortgage – term	—		—	—		—	—		—
Residential mortgage – home equity	—		—	—		—	—		—
Consumer	—		—	—		—	—		—
Total	—	$	—	1	$	109	—	$	—

	Temporary Rate Modification			Extension of Maturity			Modification of Payment and Other Terms
(in thousands)	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
Three months ended June 30, 2021
Commercial real estate
Non owner-occupied	—	$	—	1	$	109	—	$	—
All other CRE	—		—	—		—	—		—
Acquisition and development
1-4 family residential construction	—		—	—		—	—		—
All other A&D	—		—	—		—	—		—
Commercial and industrial	—		—	—		—	—		—
Residential mortgage
Residential mortgage – term	—		—	—		—	—		—
Residential mortgage – home equity	—		—	—		—	—		—
Consumer	—		—	—		—	—		—
Total	—	$	—	1	$	109	—	$	—

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Other Real Estate Owned, Net (Tables)

6 Months Ended

Jun. 30, 2022

Other Real Estate Owned, Net [Abstract]

Components of OREO, Net of Related Valuation Allowance

(in thousands)	June 30, 2022		December 31, 2021
Acquisition and development	$	4,477	$	4,477
Residential mortgage		40		—
Total OREO, net	$	4,517	$	4,477

Schedule of Activity in OREO Valuation Allowance

	Six Months Ended				Three Months Ended
	June 30,				June 30,
(in thousands)	2022		2021		2022		2021
Balance beginning of period	$	453	$	1,010	$	453	$	1,004
Fair value adjustment		—		(160)		—		(164)
Sales of OREO		—		(307)		—		(297)
Balance at end of period	$	453	$	543	$	453	$	543

Schedule of Components of OREO Expenses, Net

	Six Months Ended				Three Months Ended
	June 30,				June 30,
(in thousands)	2022		2021		2022		2021
Gains on sale of real estate, net	$	—	$	(596)	$	—	$	(105)
Fair value adjustment, net		—		(160)		—		(164)
Expenses, net		249		195		153		72
Rental and other income		(2)		(49)		(1)		(1)
Total OREO expenses/(income), net	$	247	$	(610)	$	152	$	(198)

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2022

Fair Value of Financial Instruments [Abstract]

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques

(in thousands)	Fair Value at June 30, 2022		Valuation Technique	Significant Unobservable Inputs	Significant Unobservable Input Value
Recurring:
Investment Securities – available for sale -CDO	$	16,258	Discounted Cash Flow	Discount Margin	Range of low to mid 300 and mid 400
Non-recurring:
Impaired Loans, net	$	337	Market Comparable Properties	Marketability Discount	10.0% - 15.0% (1) (weighted avg 14.2%)
Equity Investment	$	590	Market Method	Revenue Multiples	2.8x

(in thousands)	Fair Value at December 31, 2021		Valuation Technique	Significant Unobservable Inputs	Significant Unobservable Input Value
Recurring:
Investment Securities – available for sale -CDO	$	17,192	Discounted Cash Flow	Discount Rate	Libor + 3.25%
Non-recurring:
Impaired Loans, net	$	408	Market Comparable Properties	Marketability Discount	10.0% - 15.0% (1) (weighted avg 13.2%)
Equity Investment	$	590	Market Method	Revenue Multiples	2.8x
Other Real Estate Owned	$	349	Market Comparable Properties	Marketability Discount	15.0%

(1) Range would include discounts taken since appraisal and estimated values

Assets and Liabilities Measured at Fair Value on a Recurring and Nonrecurring Basis

			Fair Value Measurements at June 30, 2022 Using
			Quoted
			Prices in	Significant
	Assets/(liabilities)		Active Markets	Other		Significant
	Measured at		for Identical	Observable		Unobservable
	Fair Value		Assets	Inputs		Inputs
(in thousands)	06/30/22		(Level 1)	(Level 2)		(Level 3)
Recurring:
Investment securities available-for-sale:
U.S. government agencies	$	9,915		$	9,915
Residential mortgage-backed agencies	$	41,246		$	41,246
Commercial mortgage-backed agencies	$	31,996		$	31,996
Collateralized mortgage obligations	$	24,150		$	24,150
Obligations of states and political subdivisions	$	8,323		$	8,323
Corporate bonds	$	979		$	979
Collateralized debt obligations	$	16,258				$	16,258
Financial derivatives	$	635		$	635
Non-recurring:
Impaired loans, net	$	337				$	337
Equity Investment	$	590				$	590
Other real estate owned	$	—				$	—

			Fair Value Measurements at December 31, 2021 Using
			Quoted
			Prices in	Significant
	Assets/(liabilities)		Active Markets	Other		Significant
	Measured at		for Identical	Observable		Unobservable
	Fair Value		Assets	Inputs		Inputs
(in thousands)	12/31/21		(Level 1)	(Level 2)		(Level 3)
Recurring:
Investment securities available-for-sale:
U.S. government agencies	$	67,169		$	67,169
Residential mortgage-backed agencies	$	48,661		$	48,661
Commercial mortgage-backed agencies	$	50,868		$	50,868
Collateralized mortgage obligations	$	90,077		$	90,077
Obligations of states and political subdivisions	$	12,804		$	12,804
Collateralized debt obligations	$	17,192				$	17,192
Financial derivatives	$	(453)		$	(453)
Non-recurring:
Impaired loans, net	$	408				$	408
Equity investment	$	590				$	590
Other real estate owned	$	349				$	349

Reconciliation of Fair Valued Assets Measured on a Recurring Basis

	Fair Value Measurements
	Using Significant Unobservable Inputs
	(Level 3)
	Investment Securities
(in thousands)	Available for Sale
Beginning balance January 1, 2022	$	17,192
Total losses realized/unrealized:
Included in other comprehensive loss		(934)
Ending balance June 30, 2022	$	16,258

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
(in thousands)	Investment Securities Available for Sale
Beginning balance April 1, 2022	$	17,319
Total gains realized/unrealized:
Included in other comprehensive income		(1,061)
Ending balance June 30, 2022	$	16,258

	Fair Value Measurements
	Using Significant Unobservable Inputs
	(Level 3)
	Investment Securities
(in thousands)	Available for Sale
Beginning balance January 1, 2021	$	13,260
Total losses realized/unrealized:
Included in other comprehensive loss		2,970
Ending balance June 30, 2021	$	16,230

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
(in thousands)	Investment Securities Available for Sale
Beginning balance April 1, 2021	$	13,649
Total losses realized/unrealized:
Included in other comprehensive income		2,581
Ending balance June 30, 2021	$	16,230

Fair Value by Balance Sheet Grouping

	June 30, 2022				Fair Value Measurements
					Quoted
					Prices in		Significant
					Active Markets		Other		Significant
					for Identical		Observable		Unobservable
	Carrying		Fair		Assets		Inputs		Inputs
(in thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets:
Cash and due from banks	$	20,108	$	20,108	$	20,108
Interest bearing deposits in banks		1,543		1,543		1,543
Investment securities - AFS		132,867		132,867			$	116,609	$	16,258
Investment securities - HTM		240,588		220,301				195,613		24,688
Restricted bank stock		1,026		N/A
Loans, net		1,217,772		1,159,687						1,159,687
Financial derivatives		635		635				635
Accrued interest receivable		5,055		5,055				945		4,110
Financial Liabilities:
Deposits - non-maturity		1,349,440		1,349,440				1,349,440
Deposits - time deposits		134,914		135,048				135,048
Short-term borrowed funds		69,914		69,914				69,914
Long-term borrowed funds		30,929		30,967				30,967
Accrued interest payable		92		92				92
Off balance sheet financial instruments		—		—		—

	December 31, 2021				Fair Value Measurements
					Quoted
					Prices in		Significant
					Active Markets		Other		Significant
					for Identical		Observable		Unobservable
	Carrying		Fair		Assets		Inputs		Inputs
(in thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets:
Cash and due from banks	$	109,823	$	109,823	$	109,823
Interest bearing deposits in banks		5,897		5,897		5,897
Investment securities - AFS		286,771		286,771			$	269,579	$	17,192
Investment securities - HTM		56,259		65,369				36,448		28,921
Restricted bank stock		1,029		1,029				1,029
Loan held for sale		67		67						67
Loans, net		1,137,440		1,122,671						1,122,671
Accrued interest receivable		4,821		4,821				4,821
Financial Liabilities:
Deposits - non-maturity		1,306,145		1,306,145				1,306,145
Deposits - time deposits		163,229		163,961				163,961
Financial derivatives		453		453				453
Short-term borrowed funds		57,699		57,699				57,699
Long-term borrowed funds		30,929		31,085				31,085
Accrued interest payable		137		137				137

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Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Jun. 30, 2022

Accumulated Other Comprehensive Loss [Abstract]

Schedule of Accumulated Other Comprehensive Loss

	Investment		Investment
	securities-		securities-		Investment
	with OTTI		all other		securities-		Cash Flow		Pension
(in thousands)	AFS		AFS		HTM		Hedge		Plan		SERP		Total
Accumulated OCL, net:
Balance - January 1, 2021	$	(3,277)	$	(25)	$	(315)	$	(954)	$	(22,630)	$	(1,662)	$	(28,863)
Other comprehensive income/(loss) before reclassifications		2,475		(5,611)		—		635		3,431		(521)		409
Amounts reclassified from accumulated other comprehensive loss		(147)		(113)		181		—		1,091		128		1,140
Balance - December 31, 2021	$	(949)	$	(5,749)	$	(134)	$	(319)	$	(18,108)	$	(2,055)	$	(27,314)
Other comprehensive income/(loss) before reclassifications		103		(1,843)		(6,100)		614		(2,651)		—		(9,877)
Amounts reclassified from accumulated other comprehensive loss		(37)		(2)		69		—		204		50		284
Balance - March 31, 2022	$	(883)	$	(7,594)	$	(6,165)	$	295	$	(20,555)	$	(2,005)	$	(36,907)
Other comprehensive income/(loss) before reclassifications		(582)		(3,924)		—		182		(5,069)		—		(9,393)
Amounts reclassified from accumulated other comprehensive loss		(37)		—		168		—		204		49		384
Balance - June 30, 2022	$	(1,502)	$	(11,518)	$	(5,997)	$	477	$	(25,420)	$	(1,956)	$	(45,916)

Components of Comprehensive Income

	Before		Tax
Components of Other Comprehensive Loss	Tax		(Expense)
(in thousands)	Amount		Benefit		Net
For the six months ended June 30, 2022
Available for sale (AFS) securities with OTTI:
Unrealized holding losses	$	(654)	$	175	$	(479)
Less: accretable yield recognized in income		101		(27)		74
Net unrealized losses on investments with OTTI		(755)		202		(553)
Available for sale securities – all other:
Unrealized holding losses		(16,203)		4,336		(11,867)
Unrealized holding losses on securities transferred from available for sale to held to maturity		8,328		(2,228)		6,100
Less: gains recognized in income		3		(1)		2
Net unrealized losses on all other AFS securities		(7,878)		2,109		(5,769)
Held to maturity securities:
Unrealized holding losses on securities transferred to held to maturity		(8,328)		2,228		(6,100)
Less: amortization recognized in income		(324)		87		(237)
Net unrealized losses on HTM securities		(8,004)		2,141		(5,863)
Cash flow hedges:
Unrealized holding gains		1,088		(292)		796
Pension Plan:
Unrealized net actuarial loss		(10,542)		2,822		(7,720)
Less: amortization of unrecognized loss		(558)		150		(408)
Net pension plan liability adjustment		(9,984)		2,672		(7,312)
SERP:
Unrealized net actuarial loss		—		—		—
Less: amortization of unrecognized loss		(135)		36		(99)
Net SERP liability adjustment		135		(36)		99
Other comprehensive loss	$	(25,398)	$	6,796	$	(18,602)

	Before		Tax
Components of Other Comprehensive Income	Tax		(Expense)
(in thousands)	Amount		Benefit		Net
For the six months ended June 30, 2021
Available for sale (AFS) securities with OTTI:
Unrealized holding gains	$	2,523	$	(676)	$	1,847
Less: gains recognized in income		—		—		—
Less: accretable yield recognized in income		101		(27)		74
Net unrealized gains on investments with OTTI		2,422		(649)		1,773
Available for sale securities – all other:
Unrealized holding losses		(4,327)		1,159		(3,168)
Less: gains recognized in income		154		(41)		113
Net unrealized losses on all other AFS securities		(4,481)		1,200		(3,281)
Held to maturity securities:
Unrealized holding gains		—		—		—
Less: amortization recognized in income		(108)		29		(79)
Net unrealized gains on HTM securities		108		(29)		79
Cash flow hedges:
Unrealized holding gains		507		(136)		371
Pension Plan:
Unrealized net actuarial gain		1,090		(291)		799
Less: amortization of unrecognized loss		(744)		200		(544)
Less: amortization of prior service costs		—		—		—
Net pension plan liability adjustment		1,834		(491)		1,343
SERP:
Unrealized net actuarial loss		—		—		—
Less: amortization of unrecognized loss		(150)		40		(110)
Net SERP liability adjustment		150		(40)		110
Other comprehensive income	$	540	$	(145)	$	395

Components of Other Comprehensive Loss (in thousands)	Before Tax Amount		Tax (Expense) Benefit		Net
For the three months ended June 30, 2022
Available for sale (AFS) securities with OTTI:
Unrealized holding losses	$	(795)	$	213	$	(582)
Less: accretable yield recognized in income		51		(14)		37
Net unrealized losses on investments with OTTI		(846)		227		(619)
Available for sale securities – all other:
Unrealized holding losses		(5,359)		1,435		(3,924)
Unrealized holding losses on securities transferred from available for sale to held to maturity		—		—		—
Less: gains recognized in income		—		—		—
Net unrealized losses on all other AFS securities		(5,359)		1,435		(3,924)
Held to maturity securities:
Unrealized holding gains		—		—		—
Less: amortization recognized in income		(230)		62		(168)
Net unrealized gains on HTM securities		230		(62)		168
Cash flow hedges:
Unrealized holding gains		249		(67)		182
Pension Plan:
Unrealized net actuarial loss		(6,922)		1,853		(5,069)
Less: amortization of unrecognized loss		(279)		75		(204)
Net pension plan liability adjustment		(6,643)		1,778		(4,865)
SERP:
Unrealized net actuarial loss		—		—		—
Less: amortization of unrecognized loss		(67)		18		(49)
Net SERP liability adjustment		67		(18)		49
Other comprehensive loss	$	(12,302)	$	3,293	$	(9,009)

Components of Other Comprehensive Income (in thousands)	Before Tax Amount		Tax (Expense) Benefit		Net
For the three months ended June 30, 2021
Available for sale (AFS) securities with OTTI:
Unrealized holding gains	$	2,160	$	(579)	$	1,581
Less: accretable yield recognized in income		51		(14)		37
Net unrealized gains on investments with OTTI		2,109		(565)		1,544
Available for sale securities – all other:
Unrealized holding gains		2,778		(744)		2,034
Less: gains recognized in income		154		(41)		113
Net unrealized gains on all other AFS securities		2,624		(703)		1,921
Held to maturity securities:
Less: amortization recognized in income		(46)		12		(34)
Net unrealized gains on HTM securities		46		(12)		34
Cash flow hedges:
Unrealized holding losses		(47)		13		(34)
Pension Plan:
Unrealized net actuarial gain		1,280		(342)		938
Less: amortization of unrecognized loss		(372)		100		(272)
Less: amortization of prior service costs		—		—		—
Net pension plan liability adjustment		1,652		(442)		1,210
SERP:
Unrealized net actuarial loss		—		—		—
Less: amortization of unrecognized loss		(73)		18		(55)
Net SERP liability adjustment		73		(18)		55
Other comprehensive income	$	6,457	$	(1,727)	$	4,730

Reclassification out of Accumulated Other Comprehensive Income

The following table presents the details of amounts reclassified from accumulated other comprehensive loss for the six and three month periods ended June 30, 2022 and 2021:

Amounts Reclassified from	Six Months Ended
Accumulated Other Comprehensive Loss	June 30,				Affected Line Item in the Statement
(in thousands)	2022		2021		Where Net Income is Presented
Net unrealized gains on available for sale investment securities with OTTI:
Accretable yield	$	101	$	101	Interest income on taxable investment securities
Taxes		(27)		(27)	Provision for income tax expense
	$	74	$	74	Net of tax
Net unrealized gains on available for sale investment securities - all others:
Gains recognized	$	3	$	154	Net gains
Taxes		(1)		(41)	Provision for income tax expense
	$	2	$	113	Net of tax
Net unrealized losses on held to maturity securities:
Amortization	$	(324)	$	(108)	Interest income on taxable investment securities
Taxes		87		29	Provision for income tax expense
	$	(237)	$	(79)	Net of tax
Net pension plan liability adjustment:
Amortization of unrecognized loss	$	(558)	$	(744)	Other Expense
Taxes		150		200	Provision for income tax expense
	$	(408)	$	(544)	Net of tax
Net SERP liability adjustment:
Amortization of unrecognized loss	$	(135)	$	(150)	Other Expense
Taxes		36		40	Provision for income tax expense
	$	(99)	$	(110)	Net of tax
Total reclassifications for the period	$	(668)	$	(546)	Net of tax

Amounts Reclassified from	Three Months Ended
Accumulated Other Comprehensive Loss	June 30,				Affected Line Item in the Statement
(in thousands)	2022		2021		Where Net Income is Presented
Net unrealized gains on available for sale investment securities with OTTI:
Accretable Yield	$	51	$	51	Interest income on taxable investment securities
Taxes		(14)		(14)	Provision for income tax expense
	$	37	$	37	Net of tax
Net unrealized gains on available for sale investment securities - all others:
Gains recognized	$	—	$	154	Net gains
Taxes		—		(41)	Provision for income tax expense
	$	—	$	113	Net of tax
Net unrealized losses on held to maturity securities:
Amortization	$	(230)	$	(46)	Interest income on taxable investment securities
Taxes		62		12	Provision for income tax expense
	$	(168)	$	(34)	Net of tax
Net pension plan liability adjustment:
Amortization of unrecognized loss	$	(279)	$	(372)	Other expense
Taxes		75		100	Provision for income tax expense
	$	(204)	$	(272)	Net of tax
Net SERP liability adjustment:
Amortization of unrecognized loss	$	(67)	$	(73)	Other expense
Taxes		18		18	Provision for income tax expense
	$	(49)	$	(55)	Net of tax
Total reclassifications for the period	$	(384)	$	(211)	Net of tax

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Employee Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2022

Pension [Member]

Components of Net Periodic Pension Plan Cost

	Six Months Ended				Three Months Ended
Pension Plan	June 30,				June 30,
(in thousands)	2022		2021		2022		2021
Service cost	$	28	$	78	$	14	$	39
Interest cost		768		711		384		355
Expected return on assets		(1,905)		(1,785)		(953)		(892)
Amortization of net actuarial loss		558		744		279		372
Net pension credit included in employee benefits and other expense	$	(551)	$	(252)	$	(276)	$	(126)

SERP [Member]

Components of Net Periodic Pension Plan Cost

	Six Months Ended				Three Months Ended
Defined Benefit SERP	June 30,				June 30,
(in thousands)	2022		2021		2022		2021
Service cost	$	83	$	69	$	42	$	34
Interest cost		143		119		71		59
Amortization of recognized loss		135		151		67		76
Amortization of prior service cost		—		(1)		—		—
Net Defined Benefit SERP expense included in employee benefits and other expense	$	361	$	338	$	180	$	169

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Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2022

Derivative Financial Instruments [Abstract]

Impact Of Derivative Financial Instruments

Derivative in Cash Flow Hedging Relationships
					Amount of gain or
					(loss) recognized in
			Amount of gain or		income or derivative
	Amount of gain or		(loss) reclassified from		(ineffective portion
	(loss) recognized in		accumulated OCI into		and amount excluded
	OCI on derivative		income (effective		from effectiveness
(in thousands)	(effective portion)		portion) (a)		testing) (b)
Interest rate contracts:
Six months ended:
June 30, 2022	$	796	$	—	$	—
June 30, 2021		371		—		—
Three months ended:
June 30, 2022	$	182	$	—	$	—
June 30, 2021		(34)		—		—

Notes:

(a) Reported as interest expense

(b) Reported as other income

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Revenue Recognition (Tables)

6 Months Ended

Jun. 30, 2022

Revenue Recognition [Abstract]

Schedule of Noninterest Income Segregated by Revenue Streams In-Scope and Out-of-Scope of Topic 606

	Six Months Ended				Three Months Ended
	June 30,				June 30,
(in thousands)	2022		2021		2022		2021
Noninterest income
In-scope of Topic 606:
Service charges on deposit accounts	$	928	$	817	$	463	$	412
Other service charges		445		432		232		221
Trust department		4,233		4,275		2,044		2,034
Debit card income		1,869		1,723		983		913
Brokerage commissions		533		625		313		357
Noninterest income (in-scope of Topic 606)		8,008		7,872		4,035		3,937
Noninterest income (out-of-scope of Topic 606)		787		1,191		378		384
Total Noninterest Income	$	8,795	$	9,063	$	4,413	$	4,321

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Regulatory Capital Requirements (Tables)

6 Months Ended

Jun. 30, 2022

Regulatory Capital Requirements [Abstract]

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations

	June 30, 2022		December 31, 2021		Required for Capital Adequacy Purposes		Required to be Well Capitalized
Total Capital (to risk-weighted assets)
First United Bank & Trust	14.64	%	14.97	%	8.00	%	10.00	%
Tier 1 Capital (to risk-weighted assets)
First United Bank & Trust	13.46	%	13.72	%	6.00	%	8.00	%
Common Equity Tier 1 Capital (to risk-weighted assets)
First United Bank & Trust	13.46	%	13.72	%	4.50	%	6.50	%
Tier 1 Capital (to average assets)
First United Bank & Trust	10.40	%	10.00	%	4.00	%	5.00	%

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Borrowed Funds (Tables)

6 Months Ended

Jun. 30, 2022

Borrowed Funds [Abstract]

Summary of Short-term Borrowings

The following is a summary of short-term borrowings with original maturities of less than one year:

(Dollars in thousands)	Six Months Ended June 30, 2022		Year Ended December 31, 2021
Overnight borrowings, weighted average interest rate of 1.75% at June 30, 2022	$	18,900	$	—
Securities sold under agreements to repurchase:
Outstanding at end of period	$	51,014	$	57,699
Weighted average interest rate at end of period		0.14%		0.15%
Maximum amount outstanding as of any month end	$	62,023	$	72,396
Average amount outstanding	$	59,710	$	57,697
Approximate weighted average rate during the period		0.12%		0.15%

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Earnings Per Common Share (Narrative) (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Shares of common stock outstanding	6,661,000	6,615,000	6,649,000	6,808,000
Restricted Stock Units (RSUs) [Member]
Antidilutive shares excluded from computation of earnings per share			0	0

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Earnings Per Common Share (Basic and Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021
Earnings Per Common Share [Abstract]
Net Income	$ 5,428	$ 5,715	$ 4,403	$ 3,430	$ 11,143	$ 7,833
Basic Earnings Per Share: Average Shares	6,650		6,609		6,639	6,803
Diluted Earnings Per Share: Average Shares, adjustment	11		6		10	5
Weighted Average Number of Shares Outstanding, Diluted, Total	6,661		6,615		6,649	6,808
Basic Earnings Per Share Amount	$ 0.82		$ 0.66		$ 1.68	$ 1.15
Diluted Earnings Per Share Amount	$ 0.82		$ 0.66		$ 1.68	$ 1.15

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Investments (Unrealized Gain (Loss) on Investments) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Schedule of Investments [Line Items]
Amortized Cost	$ 149,720	$ 294,992
Gross Unrealized Gains	43	808
Gross Unrealized Losses	16,896	9,029
Fair Value	132,867	286,771
OTTI in AOCL	(1,415)	(660)
Held-to-maturity Amortized cost	240,588	56,259
Held-to-maturity Gross Unrealized Gains	1,111	9,546
Held-to-maturity Gross Unrealized Losses	21,398	436
Fair Value	220,301	65,369
US Treasury Securities [Member]
Schedule of Investments [Line Items]
Held-to-maturity Amortized cost	37,076
Held-to-maturity Gross Unrealized Losses	1,226
Fair Value	35,850
U.S. government agencies [Member]
Schedule of Investments [Line Items]
Amortized Cost	11,060	69,602
Gross Unrealized Gains		66
Gross Unrealized Losses	1,145	2,499
Fair Value	9,915	67,169
Held-to-maturity Amortized cost	67,596
Held-to-maturity Gross Unrealized Losses	8,749
Fair Value	58,847
Residential mortgage-backed agencies [Member]
Schedule of Investments [Line Items]
Amortized Cost	47,086	49,630
Gross Unrealized Losses	5,840	969
Fair Value	41,246	48,661
Held-to-maturity Amortized cost	27,996	30,634
Held-to-maturity Gross Unrealized Gains	3	649
Held-to-maturity Gross Unrealized Losses	2,282	436
Fair Value	25,717	30,847
Commercial mortgage-backed agencies [Member]
Schedule of Investments [Line Items]
Amortized Cost	36,498	51,694
Gross Unrealized Gains		175
Gross Unrealized Losses	4,502	1,001
Fair Value	31,996	50,868
Held-to-maturity Amortized cost	25,440	5,456
Held-to-maturity Gross Unrealized Gains	1	145
Held-to-maturity Gross Unrealized Losses	2,996
Fair Value	22,445	5,601
Collateralized mortgage obligations [Member]
Schedule of Investments [Line Items]
Amortized Cost	27,095	93,018
Gross Unrealized Gains		84
Gross Unrealized Losses	2,945	3,025
Fair Value	24,150	90,077
Held-to-maturity Amortized cost	59,951
Held-to-maturity Gross Unrealized Losses	5,658
Fair Value	54,293
Obligations of states and political subdivisions [Member]
Schedule of Investments [Line Items]
Amortized Cost	8,341	12,439
Gross Unrealized Gains	43	371
Gross Unrealized Losses	61	6
Fair Value	8,323	12,804
Held-to-maturity Amortized cost	22,529	20,169
Held-to-maturity Gross Unrealized Gains	1,107	8,752
Held-to-maturity Gross Unrealized Losses	487
Fair Value	23,149	28,921
Corporate Debt Securities [Member]
Schedule of Investments [Line Items]
Amortized Cost	1,000
Gross Unrealized Losses	21
Fair Value	979
Collateralized debt obligations [Member]
Schedule of Investments [Line Items]
Amortized Cost	18,640	18,609
Gross Unrealized Gains		112
Gross Unrealized Losses	2,382	1,529
Fair Value	16,258	17,192
OTTI in AOCL	$ (1,415)	$ (660)

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Investments (Gross Unrealized Losses and Fair Values of Securities) (Details) $ in Thousands	Jun. 30, 2022 USD ($) security	Dec. 31, 2021 USD ($) security
Schedule of Investments [Line Items]
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 81,718	$ 112,629
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	$ 8,101	$ 1,821
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Number of Investments | security	31	16
Available-for-Sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	$ 48,424	$ 111,881
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	$ 8,795	$ 7,208
Available-for-Sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Number of Investments | security	12	19
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 190,168	$ 7,395
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	$ 19,945	$ 291
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Number Of Investments | security	56	6
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 7,264	$ 2,782
Held-to-Maturity Securities, Continuous Unrealized Loss Position, More than 12 Months, Unrealized Losses	$ 1,453	$ 145
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Number Of Investments | security	3	1
US Treasury Securities [Member]
Schedule of Investments [Line Items]
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 35,850
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	$ 1,226
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Number Of Investments | security	4
U.S. government agencies [Member]
Schedule of Investments [Line Items]
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 8,481	$ 23,577
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	$ 580	$ 122
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Number of Investments | security	2	3
Available-for-Sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	$ 1,435	$ 33,972
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	$ 565	$ 2,377
Available-for-Sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Number of Investments | security	1	6
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 58,847
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	$ 8,749
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Number Of Investments | security	9
Residential mortgage-backed agencies [Member]
Schedule of Investments [Line Items]
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 25,523	$ 29,507
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	$ 2,957	$ 257
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Number of Investments | security	3	3
Available-for-Sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	$ 15,723	$ 19,154
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	$ 2,883	$ 712
Available-for-Sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Number of Investments | security	2	2
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 18,356	$ 7,395
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	$ 829	$ 291
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Number Of Investments | security	31	6
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 7,264	$ 2,782
Held-to-Maturity Securities, Continuous Unrealized Loss Position, More than 12 Months, Unrealized Losses	$ 1,453	$ 145
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Number Of Investments | security	3	1
Commercial mortgage-backed agencies [Member]
Schedule of Investments [Line Items]
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 18,648	$ 32,177
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	$ 2,527	$ 787
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Number of Investments | security	6	4
Available-for-Sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	$ 13,348	$ 5,211
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	$ 1,975	$ 214
Available-for-Sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Number of Investments | security	3	1
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 20,443
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	$ 2,996
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Number Of Investments | security	3
Collateralized mortgage obligations [Member]
Schedule of Investments [Line Items]
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 15,997	$ 24,322
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	$ 1,827	$ 649
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Number of Investments | security	9	5
Available-for-Sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	$ 8,152	$ 43,076
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	$ 1,118	$ 2,376
Available-for-Sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Number of Investments | security	1	5
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 54,293
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	$ 5,658
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Number Of Investments | security	8
Obligations of states and political subdivisions [Member]
Schedule of Investments [Line Items]
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 5,598	$ 3,046
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	$ 61	$ 6
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Number of Investments | security	6	1
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 2,379
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	$ 487
Held-to-Maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Number Of Investments | security	1
Corporate Debt Securities [Member]
Schedule of Investments [Line Items]
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 979
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	$ 21
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Number of Investments | security	1
Collateralized debt obligations [Member]
Schedule of Investments [Line Items]
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 6,492
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	$ 128
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Number of Investments | security	4
Available-for-Sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	$ 9,766	$ 10,468
Available-for-Sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	$ 2,254	$ 1,529
Available-for-Sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Number of Investments | security	5	5

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Investments (Non-Cash OTTI Credit Losses Recognized in Earnings) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Investments [Abstract]
Balance of credit-related OTTI, Beginning	$ 1,993	$ 2,194	$ 2,043	$ 2,244
Reduction for increases in cash flows expected to be collected	(51)	(51)	(101)	(101)
Balance of credit-related OTTI, Ending	$ 1,942	$ 2,143	$ 1,942	$ 2,143

XML

Investments (Amortized Cost and Fair Values Classified by Contractual Maturity Date) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Schedule of Investments [Line Items]
Amortized Cost: Due after one year through five years	$ 8,365
Amortized Cost: Due after five years through ten years	5,556
Fair Value: Due after one year through five years	8,099
Fair Value: Due after five years through ten years	5,195
Available-for-sale Securities, Amortized Cost Basis	149,720	$ 294,992
Available-for-sale Securities	132,867	286,771
Amortized Cost: Due after one year through five years, Held to maturity	49,576
Amortized Cost: Due after five years through ten years, Held to maturity	23,748
Amortized Cost: Due after ten years, Held to maturity	53,877
Amortized Cost: Held to maturity	127,201
Fair Value: Due after one year through five years, Held to maturity	47,528
Fair Value: Due after five years through ten years, Held to maturity	20,999
Fair Value: Due after ten years, Held to maturity	49,319
Fair value: Held to maturity	117,846
Held-to-maturity Securities	240,588	56,259
Held-to-maturity securities, fair value	220,301	65,369
Residential mortgage-backed agencies [Member]
Schedule of Investments [Line Items]
Amortized Cost: Due after ten years	25,120
Fair Value: Due after ten years	22,181
Available-for-sale Securities, Amortized Cost Basis	47,086	49,630
Available-for-sale Securities	41,246	48,661
Held-to-maturity Securities	27,996	30,634
Held-to-maturity securities, fair value	25,717	30,847
Commercial mortgage-backed agencies [Member]
Schedule of Investments [Line Items]
Available For Sale Debt Maturities Amortized Cost Sub Total	39,041
Available for sale debt maturities fair value sub total	35,475
Available-for-sale Securities, Amortized Cost Basis	36,498	51,694
Available-for-sale Securities	31,996	50,868
Held-to-maturity Securities	25,440	5,456
Held-to-maturity securities, fair value	22,445	5,601
Collateralized mortgage obligations [Member]
Schedule of Investments [Line Items]
Available-for-sale Securities, Amortized Cost Basis	27,095	93,018
Available-for-sale Securities	24,150	$ 90,077
Held-to-maturity Securities	59,951
Held-to-maturity securities, fair value	$ 54,293

XML

Investments (Narrative) (Details) - USD ($) $ in Millions	Feb. 01, 2022	Jun. 30, 2022
Investments [Abstract]
Transfer to Held-to-maturity	$ 139.0
Net unrealized (losses)/gains on all other AFS securities	8.4
Gain (loss) on transfer to Held-to-maturity	$ 0.0
Available-for-sale securities pledged as collateral		$ 69.5

XML

Loans And Related Allowances For Loan Losses (Narrative) (Details)	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2022 USD ($)	Mar. 31, 2022 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) contract	Jun. 30, 2021 USD ($)	Dec. 31, 2021 USD ($) contract	Mar. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Financing Receivable, Modifications [Line Items]
Allowance for loan losses	$ 15,737,000	$ 15,292,000	$ 17,068,000	$ 15,737,000	$ 17,068,000	$ 15,955,000	$ 16,554,000	$ 16,486,000
Nonaccrual loans	2,149,000			2,149,000		2,462,000
Financing receivable, modifications, subsequent default, recorded investment	0		0	0	0
Substandard [Member]
Financing Receivable, Modifications [Line Items]
Increase (decrease) in loans and leases receivable net of deferred income		$ 6,300,000
Partial Charge Off [Member]
Financing Receivable, Modifications [Line Items]
Nonaccrual loans	1,300,000			1,300,000		500,000
Troubled Debt Restructuring [Member]
Financing Receivable, Modifications [Line Items]
Allowance for loan losses	300,000			$ 300,000		$ 400,000
Financing receivable, modifications, number of contracts | contract				12		12
Financing receivable, modifications, recorded investment	3,200,000			$ 3,200,000		$ 3,300,000
Commercial real estate- all other CRE [Member]
Financing Receivable, Modifications [Line Items]
Nonaccrual loans	66,000			66,000		81,000
Acquisition and development- 1-4 family residential construction [Member]
Financing Receivable, Modifications [Line Items]
Loans in process of foreclosure	$ 100,000			100,000		$ 200,000
Percentage of loan portfolio accruing loans excluding PPP loans past due 30 days or more	0.37%
Percentage Of Loan Portfolio Accruing Loan Past Due Thirty Days Or More		0.19%				0.31%
Acquisition and development- All other A&D [Member]
Financing Receivable, Modifications [Line Items]
Nonaccrual loans	$ 375,000			375,000		$ 390,000
Commercial and industrial [Member]
Financing Receivable, Modifications [Line Items]
Allowance for loan losses	2,830,000	$ 2,513,000	2,944,000	2,830,000	2,944,000	2,460,000	2,831,000	2,584,000
Nonaccrual loans						90,000
Commercial and industrial [Member] | CARES Act [Member]
Financing Receivable, Modifications [Line Items]
PPP loans	800,000			$ 800,000		$ 7,700,000
PPP loans SBA guarantee percent				100.00%		100.00%
Allowance for loan losses	0			$ 0		$ 0
Residential mortgage- term [Member]
Financing Receivable, Modifications [Line Items]
Nonaccrual loans	1,340,000			1,340,000		1,498,000
Residential mortgage- home equity [Member]
Financing Receivable, Modifications [Line Items]
Nonaccrual loans	335,000			335,000		403,000
Consumer [Member]
Financing Receivable, Modifications [Line Items]
Allowance for loan losses	973,000	$ 940,000	$ 590,000	973,000	$ 590,000	$ 934,000	$ 368,000	$ 370,000
Nonaccrual loans	$ 33,000			$ 33,000

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Loans And Related Allowances For Loan Losses (Loan Portfolio Segments) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	$ 5,283	$ 5,728
Collectively evaluated for impairment	1,228,330	1,147,959
Total Loans	1,233,613	1,153,687
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	2,267	2,365
Collectively evaluated for impairment	419,675	371,926
Total Loans	421,942	374,291
Acquisition and Development [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	599	629
Collectively evaluated for impairment	115,516	127,448
Total Loans	116,115	128,077
Commercial and industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment		90
Collectively evaluated for impairment	225,640	180,886
Total Loans	225,640	180,976
Residential Mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	2,384	2,644
Collectively evaluated for impairment	403,909	402,042
Total Loans	406,293	404,686
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	33
Collectively evaluated for impairment	63,590	65,657
Total Loans	$ 63,623	$ 65,657

XML

Loans And Related Allowances For Loan Losses (Classes of the Loan Portfolio Summarized by the Aggregate Risk Rating) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 1,233,613	$ 1,153,687
Commercial real estate- non owner-occupied [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	231,685	192,363
Commercial real estate- all other CRE [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	190,257	181,928
Acquisition and development- 1-4 family residential construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	24,247	19,924
Acquisition and development- All other A&D [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	91,868	108,153
Commercial and industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	225,640	180,976
Residential mortgage- term [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	346,402	344,456
Residential mortgage- home equity [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	59,891	60,230
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	63,623	65,657
Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,181,455	1,100,501
Pass [Member] | Commercial real estate- non owner-occupied [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	212,939	173,299
Pass [Member] | Commercial real estate- all other CRE [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	183,562	174,395
Pass [Member] | Acquisition and development- 1-4 family residential construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	24,247	19,924
Pass [Member] | Acquisition and development- All other A&D [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	91,493	107,532
Pass [Member] | Commercial and industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	206,035	161,429
Pass [Member] | Residential mortgage- term [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	340,549	338,832
Pass [Member] | Residential mortgage- home equity [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	59,219	59,533
Pass [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	63,411	65,557
Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	13,682	20,633
Special Mention [Member] | Commercial real estate- non owner-occupied [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	6,438	12,987
Special Mention [Member] | Commercial real estate- all other CRE [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	2,304	2,357
Special Mention [Member] | Acquisition and development- All other A&D [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		218
Special Mention [Member] | Commercial and industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	4,940	5,071
Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	38,476	32,553
Substandard [Member] | Commercial real estate- non owner-occupied [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	12,308	6,077
Substandard [Member] | Commercial real estate- all other CRE [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	4,391	5,176
Substandard [Member] | Acquisition and development- All other A&D [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	375	403
Substandard [Member] | Commercial and industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	14,665	14,476
Substandard [Member] | Residential mortgage- term [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	5,853	5,624
Substandard [Member] | Residential mortgage- home equity [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	672	697
Substandard [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 212	$ 100

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Loans And Related Allowances For Loan Losses (Loan Portfolio Summarized by the Past Due Status) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	$ 4,592	$ 3,530
Non-Accrual	2,149	2,462
Loans	1,233,613	1,153,687
Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	443	797
Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	3,824	2,433
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	325	300
Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	1,226,872	1,147,695
Commercial real estate- non owner-occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	89
Loans	231,685	192,363
Commercial real estate- non owner-occupied [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	89
Commercial real estate- non owner-occupied [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	231,596	192,363
Commercial real estate- all other CRE [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual	66	81
Loans	190,257	181,928
Commercial real estate- all other CRE [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	190,191	181,847
Acquisition and development- 1-4 family residential construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	24,247	19,924
Acquisition and development- 1-4 family residential construction [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	24,247	19,924
Acquisition and development- All other A&D [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual	375	390
Loans	91,868	108,153
Acquisition and development- All other A&D [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	91,493	107,763
Commercial and industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	1,527	210
Non-Accrual		90
Loans	225,640	180,976
Commercial and industrial [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	39	132
Commercial and industrial [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	1,488	78
Commercial and industrial [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	224,113	180,676
Residential mortgage- term [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	2,446	2,529
Non-Accrual	1,340	1,498
Loans	346,402	344,456
Residential mortgage- term [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	73	159
Residential mortgage- term [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	2,119	2,222
Residential mortgage- term [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	254	148
Residential mortgage- term [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	342,616	340,429
Residential mortgage- home equity [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	235	342
Non-Accrual	335	403
Loans	59,891	60,230
Residential mortgage- home equity [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	178	238
Residential mortgage- home equity [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	53	104
Residential mortgage- home equity [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	4
Residential mortgage- home equity [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	59,321	59,485
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	295	449
Non-Accrual	33
Loans	63,623	65,657
Consumer [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	153	268
Consumer [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	75	29
Consumer [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	67	152
Consumer [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 63,295	$ 65,208

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Loans And Related Allowances For Loan Losses (Primary Segments of the Allowance for Loan Loss) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	$ 62		$ 64
Collectively evaluated for impairment	15,675		15,891
Total Allowance For Loan Losses	15,737	$ 15,292	15,955	$ 17,068	$ 16,554	$ 16,486
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Collectively evaluated for impairment	6,220		6,032
Total Allowance For Loan Losses	6,220	5,922	6,032	5,675	5,404	5,543
Acquisition and Development [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Collectively evaluated for impairment	2,172		2,615
Total Allowance For Loan Losses	2,172	2,542	2,615	2,500	2,423	2,339
Commercial and industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment			28
Collectively evaluated for impairment	2,830		2,432
Total Allowance For Loan Losses	2,830	2,513	2,460	2,944	2,831	2,584
Residential Mortgage [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	29		36
Collectively evaluated for impairment	3,083		3,448
Total Allowance For Loan Losses	3,112	2,945	3,484	4,859	5,028	5,150
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	33
Collectively evaluated for impairment	940		934
Total Allowance For Loan Losses	973	940	934	590	368	370
Unallocated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Collectively evaluated for impairment	430		430
Total Allowance For Loan Losses	$ 430	$ 430	$ 430	$ 500	$ 500	$ 500

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Loans And Related Allowances For Loan Losses (Impaired Loans and Related Interest Income by Loan Portfolio Class) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Financing Receivable, Impaired [Line Items]
Impaired Loans with Specific Allowance: Recorded Investment	$ 303	$ 480
Impaired Loans with Specific Allowance: Related Allowance	62	64
Impaired Loans with No Specific Allowance: Recorded Investment	4,980	5,248
Total Impaired Loans: Recorded Investment	5,283	5,728
Unpaid Principal Balance	6,551	9,231
Commercial real estate- non owner-occupied [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Specific Allowance: Recorded Investment	103	106
Total Impaired Loans: Recorded Investment	103	106
Unpaid Principal Balance	103	106
Commercial real estate- all other CRE [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Specific Allowance: Recorded Investment	2,164	2,259
Total Impaired Loans: Recorded Investment	2,164	2,259
Unpaid Principal Balance	2,164	2,259
Acquisition and development- 1-4 family residential construction [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Specific Allowance: Recorded Investment	224	239
Total Impaired Loans: Recorded Investment	224	239
Unpaid Principal Balance	224	239
Acquisition and development- All other A&D [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Specific Allowance: Recorded Investment	375	390
Total Impaired Loans: Recorded Investment	375	390
Unpaid Principal Balance	1,584	1,599
Commercial and industrial [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with Specific Allowance: Recorded Investment		90
Impaired Loans with Specific Allowance: Related Allowance		28
Total Impaired Loans: Recorded Investment		90
Unpaid Principal Balance		2,304
Residential mortgage- term [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with Specific Allowance: Recorded Investment	270	344
Impaired Loans with Specific Allowance: Related Allowance	29	31
Impaired Loans with No Specific Allowance: Recorded Investment	1,779	1,897
Total Impaired Loans: Recorded Investment	2,049	2,241
Unpaid Principal Balance	2,108	2,302
Residential mortgage- home equity [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with Specific Allowance: Recorded Investment		46
Impaired Loans with Specific Allowance: Related Allowance		5
Impaired Loans with No Specific Allowance: Recorded Investment	335	357
Total Impaired Loans: Recorded Investment	335	403
Unpaid Principal Balance	335	$ 422
Consumer [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with Specific Allowance: Recorded Investment	33
Impaired Loans with Specific Allowance: Related Allowance	33
Total Impaired Loans: Recorded Investment	33
Unpaid Principal Balance	$ 33

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Loans And Related Allowances For Loan Losses (Allowance for Loan Losses Summarized by Loan Portfolio Segments) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Financing Receivable, Allowance for Credit Losses [Line Items]
ALL Beginning Balance	$ 15,292	$ 16,554	$ 15,955	$ 16,486	$ 16,486
Charge-offs	(327)	(95)	(630)	(338)
Recoveries	148	54	207	255
Provision for loan losses	624	555	205	665
ALL Ending Balance	15,737	17,068	15,737	17,068	15,955
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
ALL Beginning Balance	5,922	5,404	6,032	5,543	5,543
Recoveries			1
Provision for loan losses	298	271	187	132
ALL Ending Balance	6,220	5,675	6,220	5,675	6,032
Acquisition and Development [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
ALL Beginning Balance	2,542	2,423	2,615	2,339	2,339
Charge-offs				(81)
Recoveries	2	9	20	110
Provision for loan losses	(372)	68	(463)	132
ALL Ending Balance	2,172	2,500	2,172	2,500	2,615
Commercial and industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
ALL Beginning Balance	2,513	2,831	2,460	2,584	2,584
Charge-offs	(4)		(52)
Recoveries	6	2	9	38
Provision for loan losses	315	111	413	322
ALL Ending Balance	2,830	2,944	2,830	2,944	2,460
Residential Mortgage [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
ALL Beginning Balance	2,945	5,028	3,484	5,150	5,150
Charge-offs	(24)		(33)	(82)
Recoveries	86	12	101	29
Provision for loan losses	105	(181)	(440)	(238)
ALL Ending Balance	3,112	4,859	3,112	4,859	3,484
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
ALL Beginning Balance	940	368	934	370	370
Charge-offs	(299)	(95)	(545)	(175)
Recoveries	54	31	76	78
Provision for loan losses	278	286	508	317
ALL Ending Balance	973	590	973	590	934
Unallocated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
ALL Beginning Balance	430	500	430	500	500
ALL Ending Balance	$ 430	$ 500	$ 430	$ 500	$ 430

XML

Loans And Related Allowances For Loan Losses (Average of Impaired Loans and Related Interest Income by Loan Portfolio Class) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Financing Receivable, Impaired [Line Items]
Average Investment	$ 5,409	$ 11,607	$ 5,527	$ 10,224
Interest income recognized on an accrual basis	40	62	82	126
Interest income recognized on a cash basis			5	5
Commercial real estate- non owner-occupied [Member]
Financing Receivable, Impaired [Line Items]
Average Investment	105	4,689	105	3,165
Interest income recognized on an accrual basis	3	3	6	6
Commercial real estate- all other CRE [Member]
Financing Receivable, Impaired [Line Items]
Average Investment	2,188	2,982	2,211	3,058
Interest income recognized on an accrual basis	22	34	45	69
Acquisition and development- 1-4 family residential construction [Member]
Financing Receivable, Impaired [Line Items]
Average Investment	228	255	231	259
Interest income recognized on an accrual basis	3	3	7	6
Acquisition and development- All other A&D [Member]
Financing Receivable, Impaired [Line Items]
Average Investment	378	611	382	599
Interest income recognized on an accrual basis		3		6
Commercial and industrial [Member]
Financing Receivable, Impaired [Line Items]
Average Investment			45
Residential mortgage- term [Member]
Financing Receivable, Impaired [Line Items]
Average Investment	2,130	2,585	2,166	2,672
Interest income recognized on an accrual basis	12	19	24	39
Interest income recognized on a cash basis			5	5
Residential mortgage- home equity [Member]
Financing Receivable, Impaired [Line Items]
Average Investment	363	474	376	454
Consumer [Member]
Financing Receivable, Impaired [Line Items]
Average Investment	$ 17	$ 11	$ 11	$ 17

XML

Loans And Related Allowances For Loan Losses (TDRs) (Details) $ in Thousands	3 Months Ended	6 Months Ended		12 Months Ended
	Jun. 30, 2021 USD ($) contract	Jun. 30, 2022 contract	Jun. 30, 2021 USD ($) contract	Dec. 31, 2021 contract
Troubled Debt Restructuring [Member]
Financing Receivable, Impaired [Line Items]
Number of contracts		12		12
Extension Of Maturity [Member]
Financing Receivable, Impaired [Line Items]
Number of contracts	1		1
Recorded Investment | $	$ 109		$ 109
Commercial real estate- non owner-occupied [Member] | Extension Of Maturity [Member]
Financing Receivable, Impaired [Line Items]
Number of contracts	1		1
Recorded Investment | $	$ 109		$ 109

XML

Other Real Estate Owned, Net (Components of OREO, Net of Related Valuation Allowance) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Total OREO, net	$ 4,517	$ 4,477
Acquisition and Development [Member]
Total OREO, net	4,477	$ 4,477
Residential Mortgage [Member]
Total OREO, net	$ 40

XML

Other Real Estate Owned, Net (Schedule of Activity in OREO Valuation Allowance) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Other Real Estate Owned, Net [Abstract]
Balance beginning of period	$ 453	$ 1,004	$ 453	$ 1,010
Fair value write-down		(164)		(160)
Sales of OREO		(297)		(307)
Balance at end of period	$ 453	$ 543	$ 453	$ 543

XML

Other Real Estate Owned, Net (Schedule of Components of OREO Expenses, Net) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Other Real Estate Owned, Net [Abstract]
Gains on sale of real estate, net		$ (105)		$ (596)
Fair value write-down		(164)		(160)
Expenses, net	153	72	249	195
Rental and other income	(1)	(1)	(2)	(49)
Total OREO expenses, net	$ 152	$ (198)	$ 247	$ (610)

XML

Fair Value of Financial Instruments (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2020
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Gains or losses included in earnings attributable to the change in realized/unrealized gains or losses related to the assets	$ 0	$ 0	$ 0	$ 0
Fair value, assets, level 1 to level 2 transfers, amount	0	0	0	0
Fair value, assets, level 2 to level 1 transfer, amount	0	0	0	0
Provision for loan losses	624,000	555,000	205,000	665,000
Nonaccrual loans	2,149,000		2,149,000		$ 2,462,000
Allowance for loan losses	(15,737,000)	$ (17,068,000)	(15,737,000)	$ (17,068,000)	(15,955,000)	$ (15,292,000)	$ (16,554,000)	$ (16,486,000)
Loans	1,233,613,000		1,233,613,000		1,153,687,000
Impaired Loans with Specific Allowance: Recorded Investment	303,000		303,000		480,000
Impaired Loans with Specific Allowance: Related Allowance	62,000		62,000		64,000
Impaired Loans with No Specific Allowance: Recorded Investment	4,980,000		4,980,000		5,248,000
Partial Charge Off [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Nonaccrual loans	1,300,000		1,300,000		500,000
Troubled Debt Restructuring [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Provision for loan losses			1,300,000		1,300,000
Allowance for loan losses	(300,000)		(300,000)		(400,000)
Impaired Loans with Specific Allowance: Recorded Investment	800,000		800,000		1,000,000.0
Impaired Loans with Specific Allowance: Related Allowance	$ 61,811		$ 61,811		$ 64,700

XML

Fair Value of Financial Instruments (Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques) (Details) - Fair Value, Inputs, Level 3 [Member] - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Fair Value, Measurements, Recurring [Member] | Discounted Cash Flow [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value measurements discount rate		3.25%
Fair Value, Measurements, Recurring [Member] | Investment Securities - Available for Sale [Member] | Discounted Cash Flow [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of securities	$ 16,258	$ 17,192
Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of securities	590
Fair Value, Measurements, Nonrecurring [Member] | Market Comparable Properties [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value measurements discount rate		15.00%
Fair Value, Measurements, Nonrecurring [Member] | Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of securities	$ 337
Fair Value, Measurements, Nonrecurring [Member] | Impaired Loans [Member] | Market Comparable Properties [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of securities		$ 408
Fair Value, Measurements, Nonrecurring [Member] | Impaired Loans [Member] | Measurement Input, Revenue Multiple [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value measurements discount rate	2.80%
Fair Value, Measurements, Nonrecurring [Member] | Equity Method Investment [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of securities		$ 590
Fair Value, Measurements, Nonrecurring [Member] | Equity Method Investment [Member] | Measurement Input, Revenue Multiple [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value measurements discount rate		2.80%
Fair Value, Measurements, Nonrecurring [Member] | Other Real Estate Owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of securities		$ 349
Minimum [Member] | Fair Value, Measurements, Recurring [Member] | Investment Securities - Available for Sale [Member] | Discounted Cash Flow [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value measurements discount rate	300.00%
Minimum [Member] | Fair Value, Measurements, Nonrecurring [Member] | Impaired Loans [Member] | Market Comparable Properties [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value input, unobservable input value, description	10.0%	10.0%
Maximum [Member] | Fair Value, Measurements, Recurring [Member] | Investment Securities - Available for Sale [Member] | Discounted Cash Flow [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value measurements discount rate	400.00%
Maximum [Member] | Fair Value, Measurements, Nonrecurring [Member] | Impaired Loans [Member] | Market Comparable Properties [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value input, unobservable input value, description	15.0%	15.0%
Weighted Average [Member] | Fair Value, Measurements, Nonrecurring [Member] | Impaired Loans [Member] | Market Comparable Properties [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, weighted average rate	14.20%	13.20%

XML

Fair Value of Financial Instruments (Assets And Liabilities Measured At Fair Value On A Recurring And Nonrecurring Basis) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	$ 132,867	$ 286,771
Impaired Loans	5,283	5,728
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Derivative, asset	635	453
Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Loans	337	408
Equity Investment	590	590
Other real estate owned		349
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Derivative, liability		(453)
Financial Derivative, asset	635
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Derivative, asset	635	453
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Loans	337	408
Equity Investment	590	590
Other real estate owned		349
U.S. government agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	9,915	67,169
U.S. government agencies [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	9,915	67,169
U.S. government agencies [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	9,915	67,169
Residential mortgage-backed agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	41,246	48,661
Residential mortgage-backed agencies [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	41,246	48,661
Residential mortgage-backed agencies [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	41,246	48,661
Commercial mortgage-backed agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	31,996	50,868
Commercial mortgage-backed agencies [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	31,996	50,868
Commercial mortgage-backed agencies [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	31,996	50,868
Collateralized mortgage obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	24,150	90,077
Collateralized mortgage obligations [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	24,150	90,077
Collateralized mortgage obligations [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	24,150	90,077
Obligations of states and political subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	8,323	12,804
Obligations of states and political subdivisions [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	8,323	12,804
Obligations of states and political subdivisions [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	8,323	12,804
Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	979
Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	979
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	979
Collateralized debt obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	16,258	17,192
Collateralized debt obligations [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	16,258	17,192
Collateralized debt obligations [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	$ 16,258	$ 17,192

XML

Fair Value of Financial Instruments (Reconciliation Of Fair Valued Assets Measured On A Recurring Basis) (Details) - Fair Value, Inputs, Level 3 [Member] - Fair Value, Measurements, Recurring [Member] - Collateralized debt obligations [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance	$ 17,319	$ 13,649	$ 17,192	$ 13,260
Total losses realized/unrealized: Included in other comprehensive income loss	(1,061)	2,581	(934)	2,970
Ending balance	$ 16,258	$ 16,230	$ 16,258	$ 16,230

XML

Fair Value of Financial Instruments (Fair Value By Balance Sheet Grouping) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and due from banks, Carrying Amount	$ 20,108	$ 109,823
Interest bearing deposits in banks, Carrying Amount	1,543	5,897
Investment securities - AFS, Carrying Amount	132,867	286,771
Restricted Bank stock, Carrying Amount	1,026	1,029
Loans, net, Carrying Amount	1,217,772	1,137,440
Short-term borrowed funds, carrying amount	69,914	57,699
Long-term borrowed funds, carrying amount	30,929	30,929
Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and due from banks	20,108	109,823
Interest bearing deposits in banks	1,543	5,897
Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities - AFS	116,609	269,579
Investment securities - HTM	195,613	36,448
Restricted Bank Stock		1,029
Accrued interest receivable	945	4,821
Deposits - non-maturity	1,349,440	1,306,145
Deposits - time deposits	135,048	163,961
Financial derivatives	635
Financial derivative		453
Short-term borrowed funds	69,914	57,699
Long-term borrowed funds	30,967	31,085
Accrued interest payable	92	137
Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities - AFS	16,258	17,192
Investment securities - HTM	24,688	28,921
Loan held for sale		67
Loans, net	1,159,687	1,122,671
Accrued interest receivable	4,110
Reported Value Measurement [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and due from banks	20,108	109,823
Interest bearing deposits in banks	1,543	5,897
Investment securities - AFS	132,867	286,771
Investment securities - HTM	240,588	56,259
Restricted Bank Stock	1,026	1,029
Loan held for sale		67
Loans, net	1,217,772	1,137,440
Accrued interest receivable	5,055	4,821
Deposits - non-maturity	1,349,440	1,306,145
Deposits - time deposits	134,914	163,229
Financial derivatives	635
Financial derivative		453
Short-term borrowed funds	69,914	57,699
Long-term borrowed funds	30,929	30,929
Accrued interest payable	92	137
Estimate of Fair Value Measurement [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and due from banks	20,108	109,823
Interest bearing deposits in banks	1,543	5,897
Investment securities - AFS	132,867	286,771
Investment securities - HTM	220,301	65,369
Restricted Bank Stock		1,029
Loan held for sale		67
Loans, net	1,159,687	1,122,671
Accrued interest receivable	5,055	4,821
Deposits - non-maturity	1,349,440	1,306,145
Deposits - time deposits	135,048	163,961
Financial derivatives	635
Financial derivative		453
Short-term borrowed funds	69,914	57,699
Long-term borrowed funds	30,967	31,085
Accrued interest payable	$ 92	$ 137

XML

Accumulated Other Comprehensive Loss (Schedule of Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Balance	$ 137,078	$ 141,900	$ 129,189	$ 141,900	$ 131,047	$ 131,047
Balance	132,892	137,078	130,556	132,892	130,556	141,900
Pension [Member]
Other comprehensive income/(loss) before reclassifications	(5,069)		938
Accumulated Other Comprehensive Loss [Member]
Balance	(36,907)	(27,314)	(33,198)	(27,314)	(28,863)	(28,863)
Other comprehensive income/(loss) before reclassifications	(9,393)	(9,877)				409
Amounts reclassified from accumulated other comprehensive loss	384	284				1,140
Balance	(45,916)	(36,907)	(28,468)	(45,916)	(28,468)	(27,314)
Investment securities- with OTTI [Member]
Balance	(883)	(949)		(949)	(3,277)	(3,277)
Other comprehensive income/(loss) before reclassifications	(582)	103	1,581	(479)	1,847	2,475
Amounts reclassified from accumulated other comprehensive loss	(37)	(37)				(147)
Balance	(1,502)	(883)		(1,502)		(949)
Investment securities- all other [Member]
Other comprehensive income/(loss) before reclassifications	(3,924)		2,034	(11,867)	(3,168)
Investment securities- all other - excluding transfers [Member]
Balance	(7,594)	(5,749)		(5,749)	(25)	(25)
Other comprehensive income/(loss) before reclassifications	(3,924)	(1,843)				(5,611)
Amounts reclassified from accumulated other comprehensive loss		(2)				(113)
Balance	(11,518)	(7,594)		(11,518)		(5,749)
Investment Securities HTM [Member]
Balance	(6,165)	(134)		(134)	(315)	(315)
Other comprehensive income/(loss) before reclassifications		(6,100)
Amounts reclassified from accumulated other comprehensive loss	168	69				181
Balance	(5,997)	(6,165)		(5,997)		(134)
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent [Member]
Balance	295	(319)		(319)	(954)	(954)
Other comprehensive income/(loss) before reclassifications	182	614	$ (34)			635
Balance	477	295		477		(319)
Adjustment [Member] | Pension [Member]
Balance	(20,555)	(18,108)		(18,108)	(22,630)	(22,630)
Other comprehensive income/(loss) before reclassifications	(5,069)	(2,651)		(7,720)	799	3,431
Amounts reclassified from accumulated other comprehensive loss	204	204				1,091
Balance	(25,420)	(20,555)		(25,420)		(18,108)
Adjustment [Member] | SERP [Member]
Balance	(2,005)	(2,055)		(2,055)	(1,662)	(1,662)
Other comprehensive income/(loss) before reclassifications						(521)
Amounts reclassified from accumulated other comprehensive loss	49	50				128
Balance	$ (1,956)	$ (2,005)		$ (1,956)		$ (2,055)

XML

Accumulated Other Comprehensive Loss (Components of Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Net unrealized gains (losses), before tax	$ (12,302)		$ 6,457		$ (25,398)	$ 540
Net unrealized tax (expense) benefit	3,293		(1,727)		6,796	(145)
Other comprehensive loss, net of tax	(9,009)	$ (9,593)	4,730	$ (4,335)	(18,602)	395
Pension [Member]
Unrealized holding (losses)/gains on investments	(6,922)		1,280
Net unrealized gains (losses), before tax	(6,643)		1,652
Unrealized tax (expense) benefit	1,853		(342)
Net unrealized tax (expense) benefit	1,778		(442)
Unrealized net gains (losses), net of tax	(5,069)		938
Other comprehensive loss, net of tax	(4,865)		1,210
SERP [Member]
Net unrealized gains (losses), before tax	67
Net unrealized tax (expense) benefit	(18)
Other comprehensive loss, net of tax	49
Reclassification out of Accumulated Other Comprehensive Loss [Member] | Amortization of Unrecognized Loss [Member] | Pension [Member]
Recognized gains (losses), before tax	(279)		(372)
Recognized tax (expense) benefit	75		100
Recognized gains (losses), net of tax	(204)		(272)
Reclassification out of Accumulated Other Comprehensive Loss [Member] | Amortization of Unrecognized Loss [Member] | SERP [Member]
Recognized gains (losses), before tax	(67)		(73)
Recognized tax (expense) benefit	18		18
Recognized gains (losses), net of tax	(49)		(55)
Accumulated Other Comprehensive Loss [Member]
Unrealized net gains (losses), net of tax	(9,393)	(9,877)					$ 409
Recognized gains (losses), net of tax	(384)	(284)					(1,140)
Other comprehensive loss, net of tax	(9,009)	(9,593)	4,730	$ (4,335)
Investment securities- with OTTI [Member]
Unrealized holding (losses)/gains on investments	(795)		2,160		(654)	2,523
Recognized gains (losses), before tax	51		51		101	101
Net unrealized gains (losses), before tax	(846)		2,109		(755)	2,422
Unrealized tax (expense) benefit	213		(579)		175	(676)
Net unrealized tax (expense) benefit	227		(565)		202	(649)
Unrealized net gains (losses), net of tax	(582)	103	1,581		(479)	1,847	2,475
Recognized gains (losses), net of tax	37	37					147
Other comprehensive loss, net of tax	(619)		1,544		(553)	1,773
Investment securities- with OTTI [Member] | Accretable Yield in Income [Member]
Recognized gains (losses), before tax					101	101
Recognized tax (expense) benefit					(27)	(27)
Recognized gains (losses), net of tax					74	74
Investment securities- with OTTI [Member] | Reclassification out of Accumulated Other Comprehensive Loss [Member] | Accretable Yield in Income [Member]
Recognized gains (losses), before tax	51		51
Recognized tax (expense) benefit	(14)		(14)
Recognized gains (losses), net of tax	37		37
Investment securities- all other [Member]
Unrealized holding (losses)/gains on investments	(5,359)		2,778		(16,203)	(4,327)
Recognized gains (losses), before tax			154		3	154
Net unrealized gains (losses), before tax	(5,359)		2,624		(7,878)	(4,481)
Unrealized tax (expense) benefit	1,435		(744)		4,336	1,159
Net unrealized tax (expense) benefit	1,435		(703)		2,109	1,200
Unrealized net gains (losses), net of tax	(3,924)		2,034		(11,867)	(3,168)
Other comprehensive loss, net of tax	(3,924)		1,921		(5,769)	(3,281)
Investment securities- all other [Member] | Recognition of Gains (Losses) In Income [Member]
Recognized gains (losses), before tax					3	154
Recognized tax (expense) benefit					(1)	(41)
Recognized gains (losses), net of tax					2	113
Investment securities- all other [Member] | Reclassification out of Accumulated Other Comprehensive Loss [Member] | Recognition of Gains (Losses) In Income [Member]
Recognized gains (losses), before tax			154
Recognized tax (expense) benefit			(41)
Recognized gains (losses), net of tax			113
Investment Securities HTM [Member]
Recognized gains (losses), before tax	(230)		(46)		(324)	(108)
Net unrealized gains (losses), before tax	230		46		(8,004)	108
Net unrealized tax (expense) benefit	(62)		(12)		2,141	(29)
Unrealized net gains (losses), net of tax		(6,100)
Recognized gains (losses), net of tax	(168)	(69)					(181)
Other comprehensive loss, net of tax	168		34		(5,863)	79
Investment Securities HTM [Member] | Amortization of Recognized Income [Member]
Recognized gains (losses), before tax					(324)	(108)
Recognized tax (expense) benefit					87	29
Recognized gains (losses), net of tax					(237)	(79)
Investment Securities HTM [Member] | Reclassification out of Accumulated Other Comprehensive Loss [Member] | Amortization of Recognized Income [Member]
Recognized gains (losses), before tax	(230)		(46)
Recognized tax (expense) benefit	62		12
Recognized gains (losses), net of tax	(168)		(34)
Investment Securities Transferred From AFS to HTM [Member]
Unrealized holding (losses)/gains on investments					8,328
Unrealized tax (expense) benefit					(2,228)
Unrealized net gains (losses), net of tax					6,100
Investment Securities Transferred to HTM [Member]
Unrealized holding (losses)/gains on investments					(8,328)
Unrealized tax (expense) benefit					2,228
Unrealized net gains (losses), net of tax					(6,100)
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent [Member]
Unrealized holding (losses)/gains on investments	249		(47)		1,088
Net unrealized gains (losses), before tax						507
Unrealized tax (expense) benefit	(67)		13		(292)
Net unrealized tax (expense) benefit						(136)
Unrealized net gains (losses), net of tax	182	614	(34)				635
Other comprehensive loss, net of tax					796	371
Adjustment [Member]
Unrealized holding (losses)/gains on investments	(6,922)		1,280		(10,542)	1,090
Recognized gains (losses), before tax	(279)		(372)		(558)	(744)
Net unrealized gains (losses), before tax	(6,643)		1,652		(9,984)	1,834
Adjustment [Member] | Pension [Member]
Unrealized holding (losses)/gains on investments					(10,542)	1,090
Net unrealized gains (losses), before tax					(9,984)	1,834
Unrealized tax (expense) benefit					2,822	(291)
Net unrealized tax (expense) benefit					2,672	(491)
Unrealized net gains (losses), net of tax	(5,069)	(2,651)			(7,720)	799	3,431
Recognized gains (losses), net of tax	(204)	(204)					(1,091)
Other comprehensive loss, net of tax					(7,312)	1,343
Adjustment [Member] | SERP [Member]
Unrealized holding (losses)/gains on investments
Net unrealized gains (losses), before tax			73		135	150
Unrealized tax (expense) benefit
Net unrealized tax (expense) benefit			(18)		(36)	(40)
Unrealized net gains (losses), net of tax							(521)
Recognized gains (losses), net of tax	$ (49)	$ (50)					$ (128)
Other comprehensive loss, net of tax			$ 55		99	110
Adjustment [Member] | Amortization of Unrecognized Loss [Member] | Pension [Member]
Recognized gains (losses), before tax					(558)	(744)
Recognized tax (expense) benefit					150	200
Recognized gains (losses), net of tax					(408)	(544)
Adjustment [Member] | Amortization of Unrecognized Loss [Member] | SERP [Member]
Recognized gains (losses), before tax					(135)	(150)
Recognized tax (expense) benefit					36	40
Recognized gains (losses), net of tax					$ (99)	$ (110)

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Accumulated Other Comprehensive Loss (Reclassification out of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Interest income on taxable investment securities	$ 1,540		$ 994		$ 2,946	$ 1,984
Provision for income tax expense	(1,708)		(1,536)		(3,609)	(2,635)
Net income	5,428	$ 5,715	4,403	$ 3,430	11,143	7,833
Reclassification out of Accumulated Other Comprehensive Loss [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net income	(384)		(211)		(668)	(546)
Reclassification out of Accumulated Other Comprehensive Loss [Member] | Pension [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Provision for income tax expense	75		100
Net income	(204)		(272)
Reclassification out of Accumulated Other Comprehensive Loss [Member] | SERP [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Provision for income tax expense	18		18
Net income	(49)		(55)
Reclassification out of Accumulated Other Comprehensive Loss [Member] | Amortization of Unrecognized Loss [Member] | Pension [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Other expense	(279)		(372)
Reclassification out of Accumulated Other Comprehensive Loss [Member] | Amortization of Unrecognized Loss [Member] | SERP [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Other expense	(67)		(73)
Investment securities- with OTTI [Member] | Reclassification out of Accumulated Other Comprehensive Loss [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Provision for income tax expense	(14)		(14)		(27)	(27)
Net income	37		37		74	74
Investment securities- with OTTI [Member] | Reclassification out of Accumulated Other Comprehensive Loss [Member] | Accretable Yield in Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Interest income on taxable investment securities	51		51		101	101
Investment securities- all other [Member] | Reclassification out of Accumulated Other Comprehensive Loss [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Provision for income tax expense			(41)		(1)	(41)
Net income			113		2	113
Investment securities- all other [Member] | Reclassification out of Accumulated Other Comprehensive Loss [Member] | Recognition of Gains (Losses) In Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net gains			154		3	154
Investment Securities HTM [Member] | Reclassification out of Accumulated Other Comprehensive Loss [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Provision for income tax expense	62		12		87	29
Net income	(168)		(34)		(237)	(79)
Investment Securities HTM [Member] | Reclassification out of Accumulated Other Comprehensive Loss [Member] | Amortization of Unrecognized Loss [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Interest income on taxable investment securities	$ (230)		$ (46)		(324)	(108)
Adjustment [Member] | Reclassification out of Accumulated Other Comprehensive Loss [Member] | Pension [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Provision for income tax expense					150	200
Net income					(408)	(544)
Adjustment [Member] | Reclassification out of Accumulated Other Comprehensive Loss [Member] | SERP [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Provision for income tax expense					36	40
Net income					(99)	(110)
Adjustment [Member] | Reclassification out of Accumulated Other Comprehensive Loss [Member] | Amortization of Unrecognized Loss [Member] | Pension [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Other expense					(558)	(744)
Adjustment [Member] | Reclassification out of Accumulated Other Comprehensive Loss [Member] | Amortization of Unrecognized Loss [Member] | SERP [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Other expense					$ (135)	$ (150)

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Employee Benefit Plans (Narrative) (Details)	1 Months Ended		3 Months Ended		6 Months Ended
	Jan. 31, 2022 USD ($) employee	Jan. 31, 2021 USD ($) employee	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Discretionary contribution as percentage of employee's base pay					15.00%
Defined contribution plan consecutive years of service to be completed by participant					2 years
Period to refrain from engaging in competitive employment following separation from service					3 years
Assets for Plan Benefits, Defined Benefit Plan							$ 4,765,000
Market value amount of increase (decrease) in plan assets of defined benefit plan			$ 9,400,000		$ 9,400,000
Year 2022 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan participants compensation expense					$ 25,922
Pension [Member]
Defined Benefit Plan Disclosure [Line Items]
Period of employment used to determine benefits					5 years
Plan modification description					Effective April 30, 2010, the Pension Plan was amended, resulting in a “soft freeze”, the effect of which prohibits new entrants into the plan and ceases crediting of additional years of service after that date. Effective January 1, 2013, the Pension Plan was amended to unfreeze it for those employees for whom the sum of their (a) ages, at their closest birthday plus (b) years of service for vesting purposes equals 80 or greater. The “soft freeze” continues to apply to all other plan participants. Pension benefits for these participants are managed through discretionary contributions to the First United Corporation 401(k) Profit Sharing Plan (the “401(k) Plan”).
Employer discretionary contribution					$ 0	$ 0
SERP [Member]
Defined Benefit Plan Disclosure [Line Items]
Employer discretionary contribution	$ 103,689	$ 101,257
Defined contribution plan, number of employees | employee	3	3
Vesting period of employer discretionary contribution					2 years
Assets for Plan Benefits, Defined Benefit Plan							$ 4,800,000
Liability, Defined Benefit Plan, Noncurrent			4,600,000		$ 4,600,000
SERP [Member] | Year 2021 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan participants compensation expense			12,657	$ 12,657	$ 25,314	$ 25,314
SERP [Member] | Year 2022 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan participants compensation expense			$ 12,961

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Employee Benefit Plans (Components of Net Periodic Pension Plan Cost) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Pension [Member]
Defined Benefit Plan Disclosure [Line Items]
Service Cost	$ 14	$ 39	$ 28	$ 78
Interest Cost	384	355	768	711
Expected return on assets	(953)	(892)	(1,905)	(1,785)
Amortization of net actuarial loss/recognized loss	279	372	558	744
Net pension credit included in employee benefits and other expense	(276)	(126)	(551)	(252)
SERP [Member]
Defined Benefit Plan Disclosure [Line Items]
Service Cost	42	34	83	69
Interest Cost	71	59	143	119
Amortization of net actuarial loss/recognized loss	67	76	135	151
Amortization of prior service cost				(1)
Net pension credit included in employee benefits and other expense	$ 180	$ 169	$ 361	$ 338

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Equity Compensation Plan Information (Narrative) (Details)					1 Months Ended				3 Months Ended		6 Months Ended		12 Months Ended
	May 05, 2022 shares	Mar. 26, 2022 shares	Mar. 26, 2021 shares	Mar. 26, 2020	May 31, 2022 $ / shares shares	Mar. 31, 2022 $ / shares shares	May 31, 2021 $ / shares shares	Jan. 31, 2021 director $ / shares shares	Jun. 30, 2022 USD ($) shares	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) shares	Jun. 30, 2021 USD ($)	Dec. 31, 2021 $ / shares shares	Dec. 31, 2020 shares
Number of New Directors | director								2
Director [Member]
Amount payable to non-employee directors									$ 10,000		$ 10,000
Fully-vested shares of common stock issued | shares											1,000
2018 Equity Plan [Member] | Maximum [Member]
Maximum issuance of common stock options | shares									325,000		325,000
2018 Equity Plan [Member] | Director [Member]
Fully-vested shares of common stock issued | shares					14,940		12,726	1,202
Fully vested shares of common stock issued, per share value | $ / shares					$ 18.92		$ 18.50	$ 16.66
Stock compensation expense									$ 66,730	$ 62,644	$ 125,588	$ 132,860,000
Long-Term Incentive Plan [Member]
Stock compensation expense									15,896	26,127	$ 42,024	52,254
Restricted Stock Units (RSUs) [Member] | Officers [Member] | Share-based Payment Arrangement, Tranche One [Member]
Share-based compensation performance based award, percent											50.00%
Restricted Stock Units (RSUs) [Member] | Officers [Member] | Share-based Payment Arrangement, Tranche Two [Member]
Share-based compensation performance based award, percent											150.00%
Restricted Stock Units (RSUs) [Member] | Long-Term Incentive Plan [Member]
Shares of common stock grant date fair market value | $ / shares						$ 21.88	$ 17.93						$ 12.54
Restricted Stock Units (RSUs) [Member] | Long-Term Incentive Plan [Member] | Year 2021 [Member]
Stock compensation expense									16,571	$ 11,048	$ 33,142	$ 11,048
Unrecognized compensation expense related to unvested units									121,522		$ 121,522
Restricted Stock Units (RSUs) [Member] | Long-Term Incentive Plan [Member] | Share-based Payment Arrangement, Tranche One [Member]
Share-based compensation award vesting period				3 years
Restricted Stock Units (RSUs) [Member] | Long-Term Incentive Plan [Member] | Share-based Payment Arrangement, Tranche Two [Member]
Share-based compensation award vesting period											3 years
Unvested Restricted Stock Units [Member] | Long-Term Incentive Plan [Member] | Year 2022 [Member]
Unrecognized compensation expense related to unvested units									287,598		$ 287,598
Unvested Restricted Stock Units [Member] | Long-Term Incentive Plan [Member] | Year 2020 [Member]
Unrecognized compensation expense related to unvested units									47,687		47,687
Performance Vested Shares [Member] | Long-Term Incentive Plan [Member]
Share-based compensation shares of common stock granted | shares						8,096	7,389						9,791	10,143
Stock compensation expense									$ 26,145		$ 26,145
Time-vested Shares [Member] | Long-Term Incentive Plan [Member]
Share-based compensation shares of common stock granted | shares	1,230	3,380	5,070			6,238	3,693							5,070
Shares-based compensation shares of common stock issued | shares		1,688	1,690

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Derivative Financial Instruments (Narrative) (Details) $ in Thousands	1 Months Ended	3 Months Ended	6 Months Ended
	Mar. 31, 2016 USD ($) contract	Jun. 30, 2022 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)
Derivative [Line Items]
Cash flow hedge ineffectiveness		$ 100	$ 300
Interest Rate Swap Agreements [Member]
Derivative [Line Items]
Interest rate swap notional amount	$ 30,000	20,000	20,000
Number of interest rate swap contracts | contract	4
Fair value of interest rate swap contracts		600	600	$ (500)
Increase in fair value of derivatives		$ 200	$ 1,100

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Derivative Financial Instruments (Impact Of Derivative Financial Instruments) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Interest Rate Contract [Member] | Cash Flow Hedging [Member]
Derivative [Line Items]
Amount of gain (loss) recognized in OCI on derivative (effective portion)	$ 182	$ (34)	$ 796	$ 371

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Revenue Recognition (Schedule of Noninterest Income Segregated by Revenue Streams In-Scope and Out-of-Scope of Topic 606) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Noninterest income (in-scope of Topic 660)	$ 4,035	$ 3,937	$ 8,008	$ 7,872
Noninterest income (out-of-scope of Topic 660)	378	384	787	1,191
Total Noninterest Income	4,413	4,321	8,795	9,063
Service Charges on Deposit Accounts [Member]
Noninterest income (in-scope of Topic 660)	463	412	928	817
Total Noninterest Income	463	412	928	817
Other Service Charges [Member]
Noninterest income (in-scope of Topic 660)	232	221	445	432
Total Noninterest Income	232	221	445	432
Trust Department [Member]
Noninterest income (in-scope of Topic 660)	2,044	2,034	4,233	4,275
Total Noninterest Income	2,044	2,034	4,233	4,275
Debit Card Income [Member]
Noninterest income (in-scope of Topic 660)	983	913	1,869	1,723
Total Noninterest Income	983	913	1,869	1,723
Brokerage Commissions [Member]
Noninterest income (in-scope of Topic 660)	313	357	533	625
Total Noninterest Income	$ 313	$ 357	$ 533	$ 625

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Regulatory Capital Requirements (Narrative) (Details) - $ / shares	3 Months Ended
	Jun. 30, 2021	Jun. 30, 2022	Dec. 31, 2021
Regulatory Capital Requirements [Abstract]
Stock repurchase, shares	400,000
Common stock, Par value		$ 0.01	$ 0.01

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Regulatory Capital Requirements (Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations) (Details) - First United Bank & Trust [Member]	Jun. 30, 2022	Dec. 31, 2021
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Capital to Risk Weighted Assets	14.64	14.97
Capital Required for Capital Adequacy to Risk Weighted Assets	8.00
Capital Required to be Well Capitalized to Risk Weighted Assets	10.00
Tier 1 Risk Based Capital to Risk Weighted Assets	13.46	13.72
Tier 1 Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	6.00
Tier 1 Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets	8.00
Common equity, Ratio	13.46	13.72
Common equity, Required For Capital Adequacy Purposes, Ratio	4.50
Common equity, Required To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	6.50
Tier 1 Leverage Capital to Average Assets	10.40	10.00
Tier 1 Leverage Capital Required for Capital Adequacy to Average Assets	4.00
Tier 1 Leverage Capital Required to be Well Capitalized to Average Assets	5.00

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Borrowed Funds (Narrative) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Repurchase agreements secured by available for sale securities	$ 69,500
Aggregated liquidation amount	67	$ 66
Short-term borrowings	69,914	$ 57,699
Amount of increase in short-term debt	12,200
Amount of decrease in other short-term debt	$ 6,700
Borrowing capacity to account balances, percentage	102.00%
Maturity Overnight [Member]
Debt Instrument [Line Items]
Short-term borrowings	$ 18,900

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Borrowed Funds (Summary of Short-term Borrowings) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Short-term Debt [Line Items]
Short-term borrowings	$ 69,914	$ 57,699
Securities Sold under Agreements to Repurchase [Member]
Short-term Debt [Line Items]
Short-term Debt, Weighted Average Interest Rate	0.14%	0.15%
Outstanding at end of year	$ 51,014	$ 57,699
Weighted average interest rate at end of period	0.14%	0.15%
Maximum amount outstanding as of any month end	$ 62,023	$ 72,396
Average amount outstanding	$ 59,710	$ 57,697
Approximate weighted average rate during the year	0.12%	0.15%
Maturity Overnight [Member]
Short-term Debt [Line Items]
Short-term borrowings	$ 18,900
Short-term Debt, Weighted Average Interest Rate	1.75%
Weighted average interest rate at end of period	1.75%