Message To the Shareholders
                       Of First United Corporation:

industry is required to pay for all the costs associated with compliance.
      The second law is Sarbanes-Oxley. Without question, there have been instances of corporate malfeasance. But it can be argued that this law is an overreaction that has laid a significant burden on many small businesses. On the one hand, I am delighted to report to you that First United came through its Sarbanes-Oxley compliance review with flying colors, and continues to adhere to the tenets of that law. On the other hand, I can tell you that this accomplishment has come at significant cost. Over the last two years, the cost of compliance with this law has been nearly three quarters of a million dollars. And that represents actual direct expense, and does not include the countless hours spent in meetings and sessions to navigate through the dictates of the law. Let me assure you, however, that we are cognizant of our responsibilities under this law, and all laws, and we intend to fully comply with them.
      A final challenge worth noting is our ongoing evaluation of our branch franchise. Mentioned earlier were our efforts to expand into areas of strong growth. The sadder part of that process is the need to identify those existing offices which no longer make sense for the company.

We have a responsibility to invest company assets in a way that will generate strong returns for you, the shareholder. In light of this, the company closed its Romney, West Virginia office in 2004, and intends to close its Barton, Maryland office in 2006. These assets have been and will be utilized to fund growth in stronger areas.
      I am, from time to time, asked to comment on the factors that make First United successful. Certainly one of these would be our focus on building productive and lasting relationships with our customers. We have resisted the temptation to focus on commoditized pricing and on pushing products. Instead, engage in a process with our customers where we listen carefully and learn how we can tailor effective financial solutions for them that will help them accomplish their goals. This is a skill we continue to hone; it represents a significant difference from the way that much of our competition interacts with customers.
      We believe our size offers us another advantage in our market. With $1.3 billion in assets, we are uniquely positioned in the areas we serve. Much of our competition is significantly larger than us. This may cause them to be less flexible and customer-focused than we are. At our size, we can be closer to