have the distinct opportunity of writing to you this year just after the announcement of First United's expansion effort in Martinsburg and the grand opening of the new Hagerstown Financial Center. Both represent significant steps for your Company and underscore the commitment of building growth and shareholder value.

          On February 13, 2003, First United signed an agreement to purchase four banking offices in Martinsburg. This transaction is pending regulatory approval. These offices, which represent $140 million in deposits, will allow your Company to assume a number two market position in the dynamic Berkeley County area. At the same time, we are opening a new financial services office in Hagerstown. This will bring together our traditional retail office and our trust, brokerage, mortgage specialists and commercial lenders. Like Berkeley County, West Virginia, Washington County, Maryland is posed for significant growth in the coming years. Participation in these areas provides your Company with an abundance of opportunities.

          As we review our performance in 2002, we are pleased to report yet another year of record earnings. Our core earnings for the year were $9.87 million, or $1.63 per share, representing a 7.63% increase over 2001. We did take a special charge against earnings of $.04 per share. This charge pertains to an adjustment to market value in one of the equity securities held in the Company's investment portfolio. While the credit quality of the security is not in question, its market value has declined as a result of the dramatic drop in interest rates. As interest rates increase, the market value of the security will rebound as well. For more discussion on this issue, please see footnote 3 on page 39 of the 10K. Even with this special charge, net income for 2002 was $9.66 million, or $1.59 per share, representing an increase of 5.29% over 2001.

          Commercial Services once again was a leader in asset growth, booking over $53.81 million in general ledger growth. While remaining steadfast to the Bank's quality underwriting standards, the group was successful in meeting the needs of small businesses throughout our diverse markets and providing solutions to meet a variety of needs.

          Speaking of solutions, the mortgage division of the Bank was kept very busy last year, as the home-buying environment was driven by record