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	Record Year for Trust Department

	Speaking of record years! Your Trust Department enjoyed a year of record sales of $42 million. An uncooperative equities market held total footings at the $300 million mark throughout much of the year. That said, most trust accounts had investment results which outpaced market indices.

	The staff of the Finance area continued to hone their skills in strategic management of the Company's balance sheet. Through the implementation of sweep accounts and a Real Estate Investment Trust, the Company was able to increase its net income. This, coupled with better budgeting and forecasting models, will serve the Company well for years to come.

	The equities market favored First United Corporation (FUNC) with outstanding performance as shares rose from $10.38 per share on December 31, 2000, to $16.00 per share at the end of 2001 Even with this performance, the value of the shares is still discounted when compared to peer groups with similar performance.

	As noted earlier, 2001 saw the end of our nation's longest economic expansion. First United is not immune to the impact of the recession. During 2001, there was an upturn in non-performing loans and charge offs. Much of this was propelled by weakness in the automobile portfolio and increased mortgage foreclosures. A contributing factor to this is the ease of bankruptcy and the willingness of too many borrowers to take this route. The result is not only higher charge offs, but higher costs for borrowers. Even so, your Company's asset quality compares favorably with that of peer banks. Reserves for loan and lease losses are less than one percent of gross loans and leases (.95%).

	Value of Call Center Very Evident

	Another success of 2001 was the continued strong performance of the Company's Call Center. As reported previously, a strategic decision was made years ago to staff your Center with associates who were well trained in customer service and sales. The Center answered more than 150,000 calls last year, directly resulting in over $41 million in business activity for your Bank.

	The year 2001 was not without its challenges. Primary among them was careful management of the net interest margin. Like most

			First United Corporation 2001 Annual Report Table of Contents