PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION -– DATED APRIL 7, 2020MARCH 26, 2021

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. 2)1)

Filed by the Registrantx

Filed by a Party other than the Registrant¨

Check the appropriate box:

FIRST UNITED CORPORATION

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION -– DATED APRIL 7, 2020

MARCH 26, 2021

FIRST UNITED CORPORATION

MESSAGE FROM THE BOARD OF DIRECTORS

Dear Fellow Shareholders –

You are cordially invited to attend the 20202021 Annual Meeting of Shareholders (the “Annual“2021 Annual Meeting”) of First United Corporation, a Maryland corporation (the “Corporation”), which is scheduled to be held on [•], 20202021, at [a.m.[___ a.m./p.m.] local time,, Eastern Time, and any adjournmentsadjournment or postponements thereof, at [●]. Shareholders of recordpostponement thereof. Due to the public health impact of the Corporation atCOVID-19 pandemic and to assist in protecting the closehealth and well-being of business on                    our shareholders, employees and the community, the 2021 Annual Meeting will be held in a virtual-only format.

The Board of Directors has fixed [•], 20202021 as the record date for purposes of determining shareholders who are entitled to notice of, and to vote at, the 2021 Annual Meeting.Meeting, pursuant to the Maryland General Corporation Law. Details of the business to be conducted at the 2021 Annual Meeting are given in the accompanying Notice of Annual Meeting of Shareholders and the Proxy Statement. The Proxy Statement, accompanying BLUE Proxy Card, and 20192020 Annual Report to Shareholders (including the Corporation’s Annual Report on Form 10-K and Form 10-K/A for the fiscal year ended December 31, 2019) was2020) were first sent or given to our shareholders on or about [•], 2020.2021. You should also have received aBLUEproxy card Proxy Card orBLUE voting instruction form Voting Instruction Form and postage-paid return envelope, through which areyour vote is being solicited on behalf of our Board of Directors (the “Board”).

Your vote will be especially important at the 2021 Annual Meeting. As you may know, Driver Management Company LLC, Driver Opportunity Partners I LP and J. Abbott R. Cooper (collectively, “Driver Management”) have notified the Corporation that they intend to nominate three candidates to the Boardone candidate for election as directorsa director and to submit seven proposals (collectively, the “Driver Proposals”) for shareholder approval at the 2021 Annual Meeting.

The Board doesNOTendorse the election of any of the nomineesnominee proposed by Driver Management, Company LLC,does NOT recommend voting in favor of any of the Driver Opportunity Partners I LP and J. Abbott R. Cooper (collectively, “Driver Management”)Proposals, and strongly and unanimously urges you toNOTsign or return any proxy card sent to you by Driver Management. Driver Management is currently being investigated by the Office of the Maryland Commissioner of Financial Regulation (the “Maryland Commissioner”) for acquiring shares of the Corporation’s stock in violation of Section 3-314 of the Financial Institutions Article of the Annotated Code of Maryland (the “Maryland Stock Acquisition Statute”). The Maryland Stock Acquisition Statute requires a person who desires to acquire the stock of a Maryland bank or bank holding company to file an application with the Maryland Commissioner under certain circumstances and, if the Maryland Commissioner determines that such acquisition will constitute a “stock acquisition”, to obtain the Maryland Commissioner’s prior approval thereof. The Maryland Stock Acquisition Statute provides that stock acquired in violation of the statute cannot be voted for five years.  If the Maryland Commissioner finds that Driver Management acquired shares of the Corporation’s common stock, par value $0.01 per share (the “Common Stock”), in violation of the Maryland Stock Acquisition Statute, then, as noted above, the Maryland Stock Acquisition Statute provides that Driver Management will be prohibited from voting those shares for five years, including at the Annual Meeting.  The Corporation’s Amended and Restated Bylaws, as amended to date (the “Bylaws”), permit a person to nominate director candidates only if that person is a shareholder who is entitled to vote for the election of directors. Consequently, if the Maryland Commissioner determines that Driver Management’s acquisition of its shares of Common Stock violated the Maryland Stock Acquisition Statute and Driver Management is therefore unable to vote its Common Stock for five years, then Driver Management would have failed to submit a nomination of director candidates for the election of directors in a manner consistent with the Bylaws, in which case Driver Management would not be entitled to nominate director candidates at the Annual Meeting.

If you have previously submitted a proxy card sent to you by Driver Management, you can revoke that proxy and have your shares voted for ouryour Board’s nominees and in accordance with the Board’s recommendations on the other matters to be voted on at the Annual Meeting by signing, dating and returning the enclosedBLUE Proxy Card or by following the instructions provided on theBLUE Proxy Card to submit a proxy over the Internet or by telephone or by appearing atattending the virtual 2021 Annual Meeting and voting your shares in person.at the virtual 2021 Annual Meeting.

We are confident that our slate of Board candidates has the right mix of professional achievement, skills, experiences and reputations that qualify each of the Corporation’s candidates to serve as shareholder representatives overseeing the management of the Corporation. We are committed to engaging with our shareholders and continuing to respond to shareholder concerns about the Corporation, and we believe we are in the best position to oversee the execution of our long-term strategic plan to grow and realize shareholder value. The Board unanimously recommends that you vote “FOR” the re-electionelection of Messrs. John F. Barr, Brian R. BoalSanu Chadha, Christy DiPietro, Patricia Milon, and John W. McCullough and Ms. Marisa A. Shockley.Carissa L. Rodeheaver to the Board.

After reading the Notice of Annual Meeting of Shareholders and the Proxy Statement, please mark your votes on the accompanyingBLUE Proxy Card or voting instruction form,BLUE Voting Instruction Form, sign it and promptly return it in the accompanying postage-paid envelope. You may also vote by submitting a proxy by Internet or telephone as instructed in the proxy statementProxy Statement or on theBLUE Proxy Card or vote instruction form.BLUE Voting Instruction Form. Please vote by whichever method is most convenient for you to ensure that your shares are represented at the 2021 Annual Meeting.

You may receive proxy solicitation materials from Driver Management, including proxy statements and proxy cards. The Board recommends that you disregard them. We are not responsible for the accuracy of any information provided by or relating to Driver Management, the nominee or the nomineesany proposal contained in any proxy solicitation materials filed or disseminated by, or on behalf of, Driver Management or any other statements that Driver Management or its representatives have made or may otherwise make. The Board, including all of its independent directors, strongly urges you toNOT sign or return any proxy card sent to you by or on behalf of Driver Management. Again, if you have previously submitted a proxy card sent to you by or on behalf of Driver Management, you can revoke that proxy and vote for your Board’s nominees and in accordance with the Board’s recommendations on the other matters to be voted on at the 2021 Annual Meeting by using the enclosedBLUE Proxy Card or voting by Internet or telephone by following the instructions specified on theBLUE Proxy Card.

It is very important that your shares be represented and voted at the 2021 Annual Meeting. Whether or not you plan to attend the virtual 2021 Annual Meeting, we hope you will vote as soon as possible. You may vote over the Internet, as well as by telephone, or by mailing theBLUE Proxy Card or voting instruction form.BLUE Voting Instruction Form. Returning the proxy or voting by Internet or telephone does not deprive you of your right to attend the 2021 Annual Meeting virtually and to vote your shares in person.at the 2021 Annual Meeting.

We look forward to seeing you at the Annual Meeting. Your vote and participation, no matter how many or how few shares you own, are very important to us. Your cooperation is greatly appreciated.

Because of the uncertainties surrounding the impact of the coronavirus (COVID-19), we are planning for the possibility that the Annual Meeting may be held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance of the Annual Meeting, and details on how to participate in the Annual Meeting will be set forth in a press release issued by the Corporation and available at http://investors.mybank.com/News.

By Order of the Board of Directors,

JOHN W. MCCULLOUGH

Independent Lead Director

Oakland, Maryland

[●•], 20202021

The attached Notice of Annual Meeting of Shareholders and Proxy Statement are first being made available to shareholders of record beginning [•], 2020.2021. If you have any questions or require assistance in authorizing a proxy or voting your shares of Common Stock,common stock, please contact the Corporation’s proxy solicitor at the contact listed below:

509 Madison Avenue Suite 1206

New York, NY 10022

Shareholders Call Toll Free: (800) 662-5200
Banks, Brokers, Trustees and Other Nominees Call Collect: (203) 658-9400

Email: FUNC@investor.morrowsodali.comFUNC@investor.MorrowSodali.com

PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION -– DATED APRIL 7, 2020

MARCH 26, 2021

FIRST UNITED CORPORATION

19 South Second Street

Oakland, Maryland 21550-0009

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

[•], 20202021

Dear Shareholders of First United Corporation:

Notice is hereby given that the 20202021 Annual Meeting of the Shareholders (the “Annual“2021 Annual Meeting”) of First United Corporation a Maryland corporation (the “Corporation”) is scheduled towill be held at . The[__ a.m./p.m.], Eastern Time, on [•], 2021, and at any adjournment or postponement thereof. Due to the public health impact of the COVID-19 pandemic and to assist in protecting the health and well-being of our shareholders, employees and the community, the 2021 Annual Meeting is scheduled for:

, 2020, at [a.m./p.m.] local timewill be held in a virtual-only format.

The purposes of the 2021 Annual Meeting are:are to vote on several Management and Shareholder Proposals:

Shareholders may also transact suchIn the event that any other business as may be properly broughtcomes before the 2021 Annual Meeting or at any adjournment or postponement thereof.thereof, shareholders will also be asked to vote on such business.

The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice of Annual Meeting of Shareholders. The Board recommends a vote on the enclosed BLUE Proxy Card “FOR” each of the four director nominees named in the accompanying Proxy Statement, and a vote “FOR” each of Proposals 2, 3, 4, 5 and 6, “EVERY 1 YEAR” on Proposal 27, and 3 on the enclosed“BLUEAGAINST Proxy Card.” each of Proposals 8, 9, 10, 11, 12, 13 and 14.

The Board has fixed [•], 20202021 (the “Record Date”) as the record date for purposes of determining shareholders who are entitled to notice of, and to vote at, the 2021 Annual Meeting.Meeting, pursuant to the Maryland General Corporation Law. The 2021 Annual Meeting may be adjourned or postponed from time to time. At any adjourned or postponed meeting, action with respect to matters specified in this notice may be taken without further notice to shareholders, unless required by law or the Corporation’s Amended and Restated Bylaws, as amended to date (the “Bylaws”).Bylaws.

Whether or not you expect to attend the virtual 2021 Annual Meeting, in person, we encourage you to submit your proxy as soon as possible using one of three convenient methods by (i) accessing the Internet site, described in theBLUEProxy Card or voting instruction form provided to you,available at [__], (ii) calling the toll-free number in theBLUEProxy Card or voting instruction form provided to you,[__], or (iii) signing, dating and returning theBLUEProxy Card or instruction formBLUE Voting Instruction Form provided to you. You are urged to complete and submit the enclosedBLUEProxy Card, even if your shares werehave been sold after such date.the Record Date.

If your shares of Common Stockcommon stock are held in a brokerage account or by a bank, trustee or other nominee (i.e., your shares are held in “street name”), then you will receive voting instructionsa BLUE Voting Instruction Form from that nominee. To ensure that your nominee-held shares are voted in the manner that you desire, youYou must either provide voting instructions by completing the BLUE Voting Instruction Form and returning it to your broker, bank, trustee or other nominee or obtain a “legal proxy” authorizing youfor your shares to vote those shares. If you choose to submit voting instructions, then webe voted. We recommend that you instruct theyour broker, bank, trustee or other nominee holding your shares to vote your shares on the enclosedBLUEProxy Card. Voting Instruction Form. The Proxyproxy is revocable and will not affect your right to vote in person if you attend the 2021 Annual Meeting.

If you wish to attend the virtual 2021 Annual Meeting, provided that you have obtainedmust register in advance. Requests for registration to attend the 2021 Annual Meeting must be received no later than [__ a.m./p.m.], Eastern Time, on [•], 2021. The process to register to attend the 2021 Annual Meeting depends on how your common stock is held. Generally, you may hold common stock in your name as a legal proxy“shareholder of record” or in an account with a broker, bank, trust or other nominee (i.e., in “street name”). You are able to do so.attend and vote at the 2021 Annual Meeting regardless of how your common stock is held.

Anyone acting as proxy agent for a shareholder must present a Proxy Cardproxy card that has been properly executed by the shareholder, that authorizes the agent to so act, and that is in form and substance satisfactory to the judgesInspector of electionElection and consistent with the Bylaws.

Your vote (in person(whether cast by you personally or by proxy) will be especially important at the 2021 Annual Meeting. As you may know, Driver Management Company LLC, Driver Opportunity Partners I LP and J. Abbott R. Cooper (collectively, “Driver Management”) havehas notified the Corporation that they intendit intends to nominate three candidates to the Boardone candidate for election as directorsa director and to submit seven proposals for shareholder approval at the Annual Meeting. Driver Management is currently being investigated by the Office of the Maryland Commissioner of Financial Regulation (the “Maryland Commissioner”) for acquiring shares of the Corporation’s stock in violation of Section 3-314 of the Financial Institutions Article of the Annotated Code of Maryland (the “Maryland Stock Acquisition Statute”). The Maryland Stock Acquisition Statute requires a person who desires to acquire the stock of a Maryland bank or bank holding company to file an application with the Maryland Commissioner under certain circumstances and, if the Maryland Commissioner determines that such acquisition will constitute a “stock acquisition”, to obtain the Maryland Commissioner’s prior approval thereof. The Maryland Stock Acquisition Statute provides that stock acquired in violation of the statute cannot be voted for five years.  If the Maryland Commissioner finds that Driver Management acquired shares of the Corporation’s common stock, par value $0.01 per share (the “Common Stock”), in violation of the Maryland Stock Acquisition Statute, then, as noted above, the Maryland Stock Acquisition Statute provides that Driver Management will be prohibited from voting those shares for five years, including at the Annual Meeting.  The Bylaws permit a person to nominate director candidates only if that person is a shareholder who is entitled to vote for the election of directors. Consequently, if the Maryland Commissioner determines that Driver Management’s acquisition of its shares of Common Stock violated the Maryland Stock Acquisition Statute and Driver Management is therefore unable to vote its Common Stock for five years, then Driver Management would have failed to submit a nomination of director candidates for the election of directors in a manner consistent with the Bylaws, in which case Driver Management would not be entitled to nominate director candidates at the2021 Annual Meeting. You may receive proxy solicitation materials from Driver Management, including proxy statements and proxy cards. The Board recommends that you disregard them. We are not responsible for the accuracy of any information provided by or relating to Driver Management, the nominee or the nomineesany proposal contained in any proxy solicitation materials filed or disseminated by, or on behalf of, Driver Management or any other statements that Driver Management or its representatives have made or may otherwise make. As discussed in the accompanying Proxy Statement, two of the proposals submitted by Driver Management (Proposals 9 and 12) are substantively similar to the Board’s Proposals 3 and 4. The Board urges you to vote for the proposals submitted by the Board, including Proposals 3 and 4, using the BLUE Proxy Card or BLUE Voting Instruction Form.

The Board strongly and unanimously recommends that you vote on theBLUE Proxy Card or BLUE Voting Instruction Form “FOR” the election of Sanu Chadha, Christy M. DiPietro, Patricia Milon and Carissa L. Rodeheaver. The Board does NOT endorse the election of any nominee proposed by Driver Management, does NOT recommend voting instruction form “in favor of any of Driver Management’s proposals (i.e., Proposals 8, 9, 10, 11, 12, 13 and 14), and strongly and unanimously urges you to FOR”NOT the re-election of Messrs. John F. Barr, Brian R. Boal and John W. McCullough and Ms. Marisa A. Shockley.sign or return any proxy card sent to you by Driver Management.

The Corporation’s nominees of the Board for election as directors of the Corporation are listed in the accompanying Proxy Statement andBLUE Proxy Card.IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE 2021 ANNUAL MEETING, REGARDLESS OF WHETHER OR NOT YOU PLAN TO ATTEND.ATTEND THE 2021 ANNUAL MEETING VIRTUALLY. ACCORDINGLY, AFTER READING THE ACCOMPANYING PROXY STATEMENT, PLEASE FOLLOW THE INSTRUCTIONS ON THE ENCLOSED BLUE PROXY CARD AND PROMPTLY SUBMIT YOUR PROXY BY INTERNET, TELEPHONE OR MAIL AS DESCRIBED ON THE BLUE PROXY CARD. PLEASE NOTE THAT EVEN IF YOU PLAN TO ATTEND THE 2021 ANNUAL MEETING VIRTUALLY, WE RECOMMEND THAT YOU VOTE USING THE ENCLOSED BLUE PROXY CARD PRIOR TO THE 2021 ANNUAL MEETING TO ENSURE THAT YOUR SHARES WILL BE REPRESENTED. EVEN IF YOU VOTE YOUR SHARES PRIOR TO THE 2021 ANNUAL MEETING, IF YOU ARE A RECORD HOLDER OF SHARES, OR A BENEFICIAL OWNERHOLDER WHO OBTAINS A “LEGAL”LEGAL PROXY FROM YOUR BROKER, BANK, TRUSTEE, OR OTHER NOMINEE, YOU STILL MAY ATTEND THE VIRTUAL 2021 ANNUAL MEETING AND VOTE YOUR SHARES IN PERSON.AT THE 2021 ANNUAL MEETING.

Regardless of the number of shares of Common Stockcommon stock of the Corporation that you own, your vote will be important. Thank you for your continued support, interest and investment in First United.

Because of the uncertainties surrounding the impact of the coronavirus (COVID-19), we are planning for the possibility that the Annual Meeting may be held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance of the Annual Meeting, and details on how to participate in the Annual Meeting will be set forth in a press release issued by the Corporation and available at http://investors.mybank.com/News.United.

By order of the Board of Directors

TONYA K. STURM

Secretary

Oakland, Maryland

, 2020

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2021 ANNUAL MEETING TO BE HELD ON [•], 2020.2021.

The Proxy Statement, the accompanyingBLUE Proxy Card, and the Corporation’s Annual Report to Shareholders (including its Annual Report on Form 10-K and Form 10-K/A for the year ended December 31, 2019)2020) are available free of charge at http://www.edocumentview.com/www.proxyvoting.com/FUNC. Information on this website, other than this Proxy Statement, is not a part of this Proxy Statement.

Please sign, date and promptly return the enclosedBLUEBLUEProxy Card in the envelope provided, or grant a proxy and give voting instructions by Internet or telephone, so that you may be represented at the 2021 Annual Meeting. Instructions are on yourBLUE Proxy Card or on the voting instruction formBLUE Voting Instruction Form provided by your bank, broker, trust or other nominee.

Brokers cannot vote on any of the proposals without your instructions.

********************

The accompanying Proxy Statement provides a detailed description of the business to be conducted at the 2021 Annual Meeting. We urge you to read the accompanying Proxy Statement, including the appendices, carefully and in their entirety.

If you have any questions concerning the business to be conducted at the 2021 Annual Meeting, would like additional copies of the Proxy Statement or need help submitting a Proxyproxy for your shares, please contact Morrow Sodali LLC, the Corporation’s proxy solicitor:

509 Madison Avenue Suite 1206

New York, NY 10022

Shareholders Call Toll Free: (800) 662-5200
Banks,Brokers, Trustees and Other Nominees Call Collect: (203) 658-9400

Email: FUNC@investor.morrowsodali.comFUNC@investor.MorrowSodali.com

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PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION – DATED APRIL 7, 2020

MARCH 26, 2021

FIRST UNITED CORPORATION

19 South Second Street

Oakland, Maryland 21550-0009

(800) 470-4356

PROXY STATEMENT

This Proxy Statement and the accompanyingBLUE Proxy Card are being furnished in connection with the solicitation by the Board of Directors (the “Board”) of First United Corporation, a Maryland Corporationcorporation (the “Corporation”) of proxies to be voted at the 20202021 Annual Meeting of Shareholders (the “Annual“2021 Annual Meeting”) to be held on             , 2020, at          [a.m.[__ a.m./p.m.] local time, Eastern Time, on [•], 2021, and at              , and any adjournment or postponement thereof. The approximate date on which thisDue to the public health impact of the COVID-19 pandemic and to assist in protecting the health and well-being of our shareholders, employees and the community, the 2021 Annual Meeting will be held in a virtual-only format. This Proxy Statement andBLUE Proxy Card, along with the 20192020 Annual Report to Shareholders (including the Corporation’s Annual Report on Form 10-K and Form 10-K/A for the fiscal year ended December 31, 2019)2020) will be first sent or given to shareholders is on or about [•], 2020.2021.

Because ofYou must register in advance to attend the uncertainties surrounding2021 Annual Meeting. Requests for registration to attend the impact of the coronavirus (COVID-19)2021 Annual Meeting must be received no later than [___ a.m./p.m.], the Corporation is planningEastern Time, on [•], 2021. For further information about how to register for the possibility thatmeeting, see “When and where will the 2021 Annual Meeting may be held solely by means of remote communication. If the Corporation takes this step, it will announce the decision to do so in advance of the Annual Meeting, and details on how to participate in the meeting will be set forth in a press release issued by the Corporation and available at http://investors.mybank.com/News..”

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

QUESTIONS AND ANSWERS ABOUT THE 2021 ANNUAL MEETING

Why I am receiving this Proxy Statement?

The Board is soliciting yourhas fixed [•], 2021 (the “Record Date”) as the record date for purposes of determining shareholders who are entitled to notice of, and to vote at, the 2021 Annual Meeting pursuant to the Maryland General Corporation Law (the “MGCL”). You are receiving this proxy vote to our Annual Meetingstatement because you owned shares of the Corporation’s common stock, par value $0.01 per share (the “Common Stock”), atas of the close of business on , (the “Record Date”) for the Record Date, and the Board is soliciting proxy votes with respect to the following matters that will be presented at the 2021 Annual Meeting, and therefore, are entitled to vote atas well as such other business as may be properly brought before the Annual Meeting on the following proposals:meeting or any adjournment or postponement thereof:

You are receiving this Proxy Statement as a shareholder of the Corporation as of the Record Date for purposes of determining the shareholders entitled to receive notice of and vote at the2021 Annual Meeting. As further described below, we request that you promptly use the enclosedBLUE Proxy Card to vote, by Internet, by telephone or by mail, in the event you desire to express your support of or opposition to the proposals.

THE BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” THE ELECTION OF EACH OF THE BOARD’S NOMINEES ON PROPOSAL 1, “FOR” PROPOSALS 2, 3, 4, 5, AND 6; FOR “EVERY 1 YEAR�� ON PROPOSAL 27, AND “FOR” PROPOSAL 3,

“AGAINST” EACH OF THE PROPOSALS TO BE SUBMITTED BY DRIVER MANAGEMENT, I.E., PROPOSALS 8, 9, 10, 11, 12, 13 AND 14 USING THE ENCLOSED BLUE PROXY CARD.

THE BOARD URGES YOU TO NOT TO SIGN, RETURN OR VOTE ANY PROXY CARD SENT TO YOU BY DRIVER MANAGEMENT, EVEN AS A PROTEST VOTE, AS ONLY YOUR LATEST DATED PROXY CARD WILL BE COUNTED.

Is my vote important?

Your vote will be particularly important at the 2021 Annual Meeting. As you may know, the Corporation has received a notice from Driver Management Company LLC, Driver Opportunity Partners I LP and J. Abbott R. Cooper (collectively, “Driver Management”) regarding its intent to nominate a slate comprised of three candidates to the Boardone candidate for election as directors, (collectively, thea director (the “Driver Nominees”Nominee”), in opposition to the four nomineesre-election of [Carissa L. Rodeheaver], who has been recommended for re-election by the Board.Board, and to submit seven proposals (the “Driver Proposals”) for shareholder approval at the 2021 Annual Meeting. You may receive proxy solicitation materials from Driver Management, is currently being investigatedincluding proxy statements and proxy cards. The Board recommends that you disregard them. We are not responsible for the accuracy of any information provided by or relating to Driver Management, the OfficeDriver Nominee or any proposal contained in any proxy solicitation materials filed or disseminated by, or on behalf of, the Maryland Commissioner of Financial Regulation (the “Maryland Commissioner”) for acquiring shares of the Corporation’s stock in violation of Section 3-314 of the Financial Institutions Article of the Annotated Code of Maryland (the “Maryland Stock Acquisition Statute”). The Maryland Stock Acquisition Statute requires a person who desires to acquire the stock of a Maryland bankDriver Management or bank holding company to file an application with the Maryland Commissioner under certain circumstances and, if the Maryland Commissioner determines that such acquisition will constitute a “stock acquisition”, to obtain the Maryland Commissioner’s prior approval thereof. The Maryland Stock Acquisition Statute provides that stock acquired in violation of the statute cannot be voted for five years.  If the Maryland Commissioner findsany other statements that Driver Management acquired shares of Common Stock,or its representatives have made or may otherwise make. As discussed elsewhere in violationthe Proxy Statement, two of the Maryland Stock Acquisition Statute, then, as noted above, the Maryland Stock Acquisition Statute provides thatproposals submitted by Driver Management will be prohibited from voting those shares for five years, including at(Proposals 9 and 12) are substantively similar to the Annual Meeting.Board’s Proposals 3 and 4. The Corporation’s Amended and Restated Bylaws, as amended to date (the “Bylaws”), permit a person to nominate director candidates only if that person is a shareholder who is entitledBoard urges you to vote for the election of directors. Consequently, ifproposals submitted by the Maryland Commissioner determines that Driver Management’s acquisition of its shares of Common Stock violatedBoard, including Proposals 3 and 4, using the Maryland Stock Acquisition Statute and Driver Management is therefore unable to vote its Common Stock for five years, then Driver Management would have failed to submit a nomination of director candidates for the election of directors in a manner consistent with the Bylaws, in which case Driver Management would not be entitled to nominate director candidates at the Annual Meeting. BLUE Proxy Card or BLUE Voting Instruction Form.

The Board recommends a vote “FOR” the election of each of the four director nominees recommended by the Board and named in this Proxy Statement on the enclosedBLUE Proxy Card, and strongly and unanimously urges you to NOT to sign or return any proxy card(s) or voting instruction form(s) that you may receive from Driver Management.

To vote “FOR” all of the Board’s nominees, you must complete, sign, date and return the enclosedBLUE Proxy Card or follow the instructions provided in theBLUE Proxy Card for submitting a proxy over the Internet or by telephone or vote in person at the virtual 2021 Annual Meeting.

If you have previously signed any Proxy Cardproxy card sent to you by Driver Management in respect of the 2021 Annual Meeting, you can revoke it by signing, dating and returning the enclosedBLUE Proxy Card or by following the instructions provided in theBLUE Proxy Card for submitting a proxy to vote your shares over the Internet or by telephone or voting in person at the virtual 2021 Annual Meeting. Completing, signing, dating and returning any Proxy Cardproxy card that Driver Management may send to you, even with instructions to vote “withhold” with respect to the Driver Nominees,Nominee, will cancel any proxy you may have previously submitted to have your shares voted for the Board’s nominees as only your latest Proxy Cardproxy card or voting instruction form will be counted. Beneficial owners who own their shares in “street name” should follow the voting instructions provided by their bank, broker, trustee or other nominee to ensure that their shares are represented and voted at the 2021 Annual Meeting, or to revoke prior voting instructions. The Board urges you to sign, date and return only the enclosedBLUE Proxy Card.

When and where will the 2021 Annual Meeting be held?

The 2021 Annual Meeting is scheduled to be held on                        , 2020, at [a.m.[__ a.m./p.m.] local time, at                        , Eastern Time, on [•], 2021. Due to the public health impact of the COVID-19 pandemic and to assist in protecting the health and well-being of our shareholders, employees and the community, the 2021 Annual Meeting will be held in a virtual-only format.

You must register in advance to attend the virtual 2021 Annual Meeting. Requests for registration to attend the 2021 Annual Meeting must be received no later than [__ a.m./p.m.], Eastern Time, on [•], 2021. The process to register to attend the 2021 Annual Meeting depends on how your Common Stock is held. Generally, you may hold Common Stock in your name as a “shareholder of record” or in an account with a broker, bank, trust or other nominee (i.e., in “street name”). You are able to attend the 2021 Annual Meeting regardless of how your Common Stock is held.

You must register to attend the virtual 2021 Annual Meeting

no later than [__ a.m./p.m.], Eastern Time, on [__], 2021.

Who is soliciting my vote?

The Board on behalf of the Corporation, is soliciting your proxy to vote your shares of our Common Stock on all matters scheduled to come before the 2021 Annual Meeting, whether or not you attend in person.the virtual 2021 Annual Meeting. By completing, signing, dating and returning theBLUE Proxy Card or voting instruction form,BLUE Voting Instruction Form, or by submitting your proxy and voting instructions over the Internet or by telephone, you are authorizing the persons named as proxies to vote your shares of Common Stock at the 2021 Annual Meeting as you have instructed. Proxies will be solicited on behalf of the Board by the Corporation’s directors, director nominees, and certain executive officers and other employees of the Corporation. Such persons are listed in Appendix A to this Proxy Statement.

Additionally, the Corporation has retained Morrow Sodali LLC (“Morrow Sodali”), a proxy solicitation firm, which may solicit proxies on the Board’s behalf. You may also be solicited by press releases issued by us, postings on our corporate website or other websites or otherwise. Unless expressly indicated otherwise, information contained on our corporate website is not part of this Proxy Statement. In addition, none of the information on the other websites, if any, listed in this Proxy Statement is part of this Proxy Statement. Such website addresses are intended to be inactive textual references only.only.

Will there be a proxy contest at the 2021 Annual Meeting?

Driver Management has nominated a slate of three individualsannounced its intention to nominate the Driver Nominee for election as directorsa director to the Board and to submit the Driver Proposals for shareholder approval at the 2021 Annual Meeting.

The Driver NomineesNominee and the Driver Proposals haveNOT been endorsed by our Board. As noted above, Driver Management is currently being investigated by the Maryland Commissioner for acquiring shares of the Corporation’s stock in violation of the Maryland Stock Acquisition Statute. The Maryland Stock Acquisition Statute requires a person who desires to acquire the stock of a Maryland bank or bank holding company to file an application with the Maryland Commissioner under certain circumstances and, if the Maryland Commissioner determines that such acquisition will constitute a “stock acquisition”, to obtain the Maryland Commissioner’s prior approval thereof. The Maryland Stock Acquisition Statute provides that stock acquired in violation of the statute cannot be voted for five years.  If the Maryland Commissioner finds that Driver Management acquired shares of Common Stock, in violation of the Maryland Stock Acquisition Statute, then, as noted above, the Maryland Stock Acquisition Statute provides that Driver Management will be prohibited from voting those shares for five years, including at the Annual Meeting. The Bylaws permit a person to nominate director candidates only if that person is a shareholder who is entitled to vote for the election of directors. Consequently, if the Maryland Commissioner determines that Driver Management’s acquisition of its shares of Common Stock violated the Maryland Stock Acquisition Statute and Driver Management is therefore unable to vote its Common Stock for five years, then Driver Management would have failed to submit a nomination of director candidates for the election of directors in a manner consistent with the Bylaws, in which case Driver Management would not be entitled to nominate director candidates at the Annual Meeting. You may receive proxy solicitation materials from Driver Management, including Proxy Statementsproxy statements and Proxy Cards.proxy cards. The Board recommends that you disregard them. We are not responsible for the accuracy of any information provided by or relating to Driver Management, the Driver Nominee or the nomineesany proposals contained in any proxy solicitation materials filed or disseminated by, or on behalf of, Driver Management or any other statements that Driver Management or its representatives have made or may otherwise make.

Our Board is pleased to nominate for election as directordirectors the following four persons—Messrs. Barr, BoalMses. Chadha, DiPietro, Milon and McCulloughRodeheaver, all of whom are incumbent directors of the Corporation and Ms. Shockley—are named in this Proxy Statement and on the enclosedBLUE Proxy Card. We believe our four nominees have the breadth of relevant and diverse experiences, integrity and commitment necessary to continue to grow the Corporation for the benefit of all of the Corporation’s shareholders.

What are the Board’s recommendations?

Our Board unanimously recommends that you vote by proxy using theBLUE Proxy Card with respect to the proposals as follows:

Why is the Board making such recommendations?

We describe each proposal and the Board’s reason for its recommendation with respect to each proposalof these proposals on pages 18, 4415, 50, 51, 52, 53, 54, 56, 57, 58, 58, 59, 60, 61, and 45 62, respectively, and elsewhere in this Proxy Statement.

Who is entitled to vote at the 2021 Annual Meeting?

The Board has set                , 2020 as the Record Date for the Annual Meeting. You are entitled to notice and to vote if you were a shareholder of record of our Common Stock asis the only class of capital securities of the close of business on               , 2020. You are entitled to one vote on each proposal for each share of Common Stock you held on the Record Date. Your sharesCorporation that may be voted at the 2021 Annual Meeting only if you are present in person or your shares are represented by a valid Proxy. AtMeeting. As of the close of business on the Record Date, there were[•] shares of our Common Stock were issued outstanding and outstanding. A shareholder of record who holds shares of Common Stock that are entitled to votebe voted at the 2021 Annual Meeting.Meeting may cast one vote for each share held on each matter that is submitted to shareholders. Shares may be voted at the 2021 Annual Meeting only if the shareholder of record holding such shares or the beneficial owner of such shares with a legal proxy is attending the virtual 2021 Annual Meeting or if such shares are represented by a valid proxy.

What is the difference between a shareholder of “record” and a “street name” holder?

If your shares are registered directly in your name, then you are considered the shareholder of record with respect to those shares. The Corporation sent the proxy materials directly to you.

If your shares are held in a stock brokerage account or by a bank, trustee or other nominee, then the broker, bank, trustee or other nominee is considered to be the shareholder of record with respect to those shares. In that case, you are considered to be the beneficial owner of those shares, and your shares are said to be held in “street name,” and the proxy materials will be forwarded to you by that nominee. Street name holders generally cannot submit a proxy or vote their shares directly and must instead instruct the broker, bank, trustee or other nominee how to vote their shares. If you do not provide voting instructions to your broker, then your shares will not be voted at the 2021 Annual Meeting on any proposal with respect to which your broker does not have discretionary authority. If you own your shares in street name, please instruct your bank, broker, trustee or other nominee how to vote your shares using theBLUE voting instruction form Voting Instruction Form provided by your bank, broker, trustee or other nominee so that your vote can be counted. TheBLUE voting instruction form Voting Instruction Form provided by your bank, broker, trustee or other nominee holding your shares may also include information about how to submit your voting instructions over the Internet or by telephone, if such options are available.telephone. TheBLUE Proxy Card accompanying this Proxy Statement will provide information regarding internetInternet and telephone voting.

What constitutes a quorum?

A quorum is required to hold and conduct business at the virtual 2021 Annual Meeting. The presence in person (by attending the meeting virtually) or by proxy of holders of record of a majority of the shares ofall issued and outstanding shares of Common Stock that are entitled to vote at the 2021 Annual Meeting constituteswill constitute a quorum which is required to hold and conduct business at the Annual Meeting. At the close of business on the Record Date, shares of our Common Stock were outstanding and entitled to vote at the Annual Meeting.. Shares are counted as present at the 2021 Annual Meeting if:

If you are a record holder and you submit your proxy, regardless of whether you abstain from voting on one or more matters, your shares will be counted as present at the 2021 Annual Meeting for the purpose of determining a quorum. If your shares are held in “street name,” your shares are counted as present for purposes of determining a quorum if you provide voting instructions to your broker, bank, trust or other nominee and such broker, bank, trust or other nominee submits a proxy covering your shares. In the absence of a quorum, the 2021 Annual Meeting may be adjourned, from time to time, by a majority vote of the shareholders present or represented, without any notice other than by announcement at the meeting, until a quorum shall attend.

Who can attend the 2021 Annual Meeting?

Admission to the virtual 2021 Annual Meeting is limited to shareholders and their duly appointed proxy holders as of the close of business on the Record Date. If you wish to attend the virtual 2021 Annual Meeting, you must register in advance. Requests for registration to attend the 2021 Annual Meeting must be received no later than [__ a.m./p.m.], Eastern Time, on [•], 2021. The process to register to attend the 2021 Annual Meeting depends on how your Common Stock is held. If you are a shareholder of record and you plan to attend the 2021 Annual Meeting, you must register to attend by emailing Proof of Ownership to FUNC@investor.MorrowSodali.com. Proof of ownership may include a copy of your proxy card received either from the Corporation or from Driver Management or a statement showing your ownership as of the Record Date. If your shares are held in “street name” and you plan to attend the 2021 Annual Meeting, you must present proofregister to attend by emailing FUNC@investor.MorrowSodali.com and attach evidence that you beneficially owned shares of your ownership of our Common Stock such as a bank or brokerage account statement, as well as valid government-issued photo identification to be admitted toof the Annual Meeting. Any holderRecord Date, which may consist of a proxy from a shareholder must present the Proxy Card, properly executed, and a copy of proof of ownership as well as valid government-issued photo identification.

Wethe voting instruction form provided by your broker, bank, financial institution or other nominee, an account statement, or a letter or legal proxy from such custodian. After registering, you will be unablereceive a confirmation email prior to admit anyone who does not present identification or refuses to complythe 2021 Annual Meeting with our rules of conducta link and instructions for entering the Annual Meeting. These rules provide, among other things, that no cameras, recording equipment, electronic devices, large bags or packages will be permitted at the Annual Meeting. You are encouraged to submit aBLUE Proxy Card to have your shares voted regardless of whether or not you plan to attend thevirtual 2021 Annual Meeting.

Your vote is very important. Please submit your BLUE Proxy Card even if you plan to attend the virtual 2021 Annual Meeting.

How do I vote my shares?

Shareholders may vote on matters that are properly presented at the 2021 Annual Meeting in four ways:

The process forCorporation is offering registered shareholders the opportunity to vote their shares by telephone or electronically through the Internet, in addition to following the traditional method of completing a paper Proxy Card and returning it by mail. Shareholders may vote by telephone or via the Internet by following the procedures described on the BLUE Proxy Card. To vote via telephone or the Internet, please have the BLUE Proxy Card in hand, and call the number or go to the website listed on the BLUE Proxy Card and follow the instructions. The telephone and Internet voting procedures are designed to authenticate shareholders’ identities, to allow shareholders to give their voting instructions, and to confirm that shareholders’ instructions have been recorded properly.

Please note that if you hold your shares depends on howin a stock brokerage account or if your Common Stock is held. Generally, you may hold Common Stock in your name as a “shareholder of record” or in an account withshares are held by a broker, bank, trust or other nominee (i.e.,(that is, in “street name”). If, your broker, bank, trustee or other nominee will not vote your shares are registeredof Common Stock unless you provide voting instructions to your broker, bank, trustee or other nominee. You should instruct your broker, bank, trustee or other nominee to vote your shares by following the instructions provided by the broker, bank, trustee or other nominee when it sends this Proxy Statement to you. You may not vote shares held in street name by returning a BLUE Voting Instruction Form directly to the Corporation or by voting at the virtual 2021 Annual Meeting unless you provide a “legal proxy”, which you must obtain from your name,bank, broker, trustee or nominee.

The instructions by which you may vote your shares in person at the virtual 2021 Annual Meeting differ based on whether you hold shares in your name as the shareholder of record or in street name. Shares held in your name as the shareholder of record may be voted at the 2021 Annual Meeting if you have registered to attend the 2021 Annual Meeting, by completing the following steps: clicking on the Shareholder Ballot link on the virtual 2021 Annual Meeting site; completing the electronic ballot; and clicking ‘Sign and Submit’ to have it sent directly to the Inspector of Election before the polls are closed at the  2021 Annual Meeting. Shares held beneficially in street name may be voted at the 2021 Annual Meeting only if you first obtain a legal proxy from the broker, bank, trust or other nominee that holds your shares as of the Record Date, indicating that you were a beneficial owner of shares as of the close of business on such date and the number of shares that you beneficially owned at that time. Your legal proxy must be saved as a PDF or image file format in order to upload a copy with your electronic ballot during the virtual 2021 Annual Meeting. The Corporation is not involved in the provision of legal proxies from brokers to beneficial shareholders. If you either do not request a legal proxy prior to the 2021 Annual Meeting or byyour broker fails to provide you a legal proxy, whetherthen you will not be able to change your previously submitted vote at the 2021 Annual Meeting or notvote for the first time at the 2021 Annual Meeting. If you have registered to attend the 2021 Annual Meeting. YouMeeting, you may vote using any ofby completing the following methods:steps: clicking on the Shareholder Ballot link on the virtual Annual Meeting site; completing the electronic ballot; uploading your Legal Proxy or other evidence of authority to vote; and clicking ‘Sign and Submit’ to have it sent directly to the Inspector of Election before the polls are closed at the virtual 2021 Annual Meeting.

Even if you plan to attend the virtual 2021 Annual Meeting, we recommend that you also submit your proxy or voting instructions by Internet, telephone, or mail so that your vote will be counted if you later decide not to attend the 2021 Annual Meeting. The Internet and telephone voting facilities will close at 11:59 [__ a.m./p.m. ET], Eastern Time, on [•], 2021 for shareholders of record and on [•], 2021 for shares held beneficially in street name on , 2020.name. Shareholders who submit a proxyvote by Internet or telephone need not return a Proxy Cardproxy card or the voting instruction form forwardedsent by your broker, bank, trustbrokers, banks, trusts or other holder of record by mail.nominees.

If you have any questions or require assistance in submitting a proxy for your shares, please callcontact Morrow Sodali by phone at (800) 662-5200 (toll free for shareholders) or (203)(203) 658-9400 (call collect for banks, brokers, trustees or other nominees)., or by email at FUNC@investor.MorrowSodali.com.

How can I change my vote or revoke my proxy?

As aA shareholder of record if you submitwho submits a proxy you may revoke that proxy at any time before it is voted at the 2021 Annual Meeting. ShareholdersMeeting or before the authority granted is otherwise exercised. A shareholder of record may revoke a proxy prior to the 2021 Annual Meeting by (i) deliveringexecuting a later dated Proxy Card that we receive no later than [•], 2021; (ii) submitting a proxy at a later time by Internet or telephone with regard to the same shares; (iii) giving written notice of revocation that is dated later than the date of your proxy to the attention of the Secretary at our offices atFirst United Corporation, 19 South Second Street, Oakland, Maryland 21550-0009 (ii) signing and delivering a later-dated proxy over the Internet, by telephone or by mail, that we receive no later than            or (iii)(iv) attending and voting in personvirtually at the 2021 Annual Meeting. Attendance by a shareholder at the 2021 Annual Meeting alone will not by itself, revoke ahave the effect of revoking that shareholder’s validly executed proxy.

If your shares are held in the name of a broker, bank, trust or other nominee, you may change your voting instructions by following the instructions of your broker, bank, trust or other nominee. You may also vote in person at the 2021 Annual Meeting if you obtain a legal proxy from your broker, bank, trust or other nominee that holds your shares in street name.name, as described above.

If you have previously submitted a proxy card sent to you by Driver Management, you may change your vote by completing and returning the enclosedBLUE Proxy Card in the accompanying postage-paid envelope, or by voting over the Internet or by telephone by following the instructions on yourBLUE Proxy Card.Card or by attending and voting at the 2021 Annual Meeting. Submitting a proxy card sent to you by Driver Management will revoke votes that you have previously made via the Corporation’sBLUE Proxy Card.Card, so the Board urges you to vote using only the BLUE Proxy Card or BLUE Voting Instruction Form.

Has the Corporation received notice from one or more shareholders that they are intending to nominate director candidates or bring proposals at the 2021 Annual Meeting?

Yes. Based on its most recently available public filings, Driver Management has indicated that it beneficially owns an aggregate of 360,637360,737 shares of our Common Stock (representing approximately 5.2% of our outstanding Common Stock), and. Driver Management has delivered notice to the Corporation of its intention to nominate three candidates to the Boardone candidate for election as directorsa director in opposition to [Carissa L. Rodeheaver, our Chairman, Chief Executive Officer and President] who has been unanimously nominated by our Board, and to submit the four nominees recommendedDriver Proposals for shareholder approval at the 2021 Annual Meeting. As discussed elsewhere in this Proxy Statement, two of the proposals submitted by Driver Management (Proposals 9 and 12) are substantively similar to the Board’s Proposals 3 and 4. The Board urges you to vote “FOR” the proposals submitted by the Board. Driver Management is currently being investigated byBoard, including Proposals 3 and 4, using the Maryland Commissioner for acquiring shares of the Corporation’s stock in violation of the Maryland Stock Acquisition Statute. The Maryland Stock Acquisition Statute requires a person who desires to acquire the stock of a Maryland bankBLUE Proxy Card or bank holding company to file an application with the Maryland Commissioner under certain circumstances and, if the Maryland Commissioner determines that such acquisition will constitute a “stock acquisition”, to obtain the Maryland Commissioner’s prior approval thereof. The Maryland Stock Acquisition Statute provides that stock acquired in violation of the statute cannot be voted for five years.  If the Maryland Commissioner finds that Driver Management acquired shares of Common Stock, in violation of the Maryland Stock Acquisition Statute, then, as noted above, the Maryland Stock Acquisition Statute provides that Driver Management will be prohibited from voting those shares for five years, including at the Annual Meeting. The Bylaws permit a person to nominate director candidates only if that person is a shareholder who is entitled to vote for the election of directors. Consequently, if the Maryland Commissioner determines that Driver Management’s acquisition of its shares of Common Stock violated the Maryland Stock Acquisition Statute and Driver Management is therefore unable to vote its Common Stock for five years, then Driver Management would have failed to submit a nomination of director candidates for the election of directors in a manner consistent with the Bylaws, in which case Driver Management would not be entitled to nominate director candidates at the Annual Meeting.BLUE Voting Instruction Form.

What does it mean if I receive more than one notice from the Corporation or BLUE Proxy Card?

Because Driver Management has submitted the Driver NomineesNominee for election as a director to the Board in opposition toand the slate proposed by our Board,Driver Proposals for shareholder approval at the 2021 Annual Meeting, we may conduct multiple mailings prior to the 2021 Annual Meeting to ensure shareholders have our latest proxy information and materials to vote. In that event, we will send you a newBLUE Proxy Card or voting instruction formBLUE Voting Instruction Form with each mailing, regardless of whether you have previously voted. You may also receive more than one set of proxy materials, including multipleBLUE Proxy Cards, if you hold shares that are registered in more than one account—please vote theBLUEProxy Card for every account you own. The latest dated proxy you submit will be counted, andcounted. IF YOU WISH TO VOTE AS RECOMMENDED BY THE BOARD, THEN YOU SHOULD ONLY SUBMIT BLUE PROXY CARDS.

What should I do if I receive a proxy card from Driver Management?

Driver Management has nominated a slate of three individualsannounced its intention to nominate the Driver Nominee for election as directorsa director to the Board in opposition to the nominees proposedre-election of [Carissa L. Rodeheaver, our Chairman, Chief Executive Officer and President] who has been unanimously nominated by our Board.Board, and to submit the Driver Proposals for shareholder approval at the 2021 Annual Meeting. We expect that you may receive proxy solicitation materials from Driver Management, including opposition proxy statements and proxy cards. You should know that Driver Management is currently being investigated by the Maryland Commissioner for acquiring shares of the Corporation’s stock in violation of the Maryland Stock Acquisition Statute. The Maryland Stock Acquisition Statute requires a person who desires to acquire the stock of a Maryland bank or bank holding company to file an application with the Maryland Commissioner under certain circumstances and, if the Maryland Commissioner determines that such acquisition will constitute a “stock acquisition”, to obtain the Maryland Commissioner’s prior approval thereof. The Maryland Stock Acquisition Statute provides that stock acquired in violation of the statute cannot be voted for five years.  If the Maryland Commissioner finds that Driver Management acquired shares of Common Stock in violation of the Maryland Stock Acquisition Statute, then, as noted above, the Maryland Stock Acquisition Statute provides that Driver Management will be prohibited from voting those shares for five years, including at the Annual Meeting. The Bylaws permit a person to nominate director candidates only if that person is a shareholder who is entitled to vote for the election of directors. Consequently, if the Maryland Commissioner determines that Driver Management’s acquisition of its shares of Common Stock violated the Maryland Stock Acquisition Statute and Driver Management is therefore unable to vote its Common Stock for five years, then Driver Management would have failed to submit a nomination of director candidates for the election of directors in a manner consistent with the Bylaws, in which case Driver Management would not be entitled to nominate director candidates at the Annual Meeting.

The Board strongly and unanimously urges you to NOT to sign or return any proxy cards or voting instruction forms that you may receive from Driver Management, including to vote “withhold”not even for the purpose of voting “WITHHOLD” with respect to the Driver NomineesNominee. We are not responsible for the accuracy of any information provided by or relating to Driver Management, or the Driver NomineesNominee or any proposal contained in any proxy solicitation materials filed or disseminated by, or on behalf of, Driver Management or any other statements that Driver Management or its representatives have made or may otherwise make. If you have already voted using the proxy card provided by Driver Management, you have every right to change your vote by completing and returning the enclosedBLUE Proxy Card or by voting over the Internet or by telephone by following the instructions provided on the enclosedBLUE Proxy Card or voting instruction form.BLUE Voting Instruction Form. Only the latest proxy you submit will be counted. If you vote “withhold” on the Driver NomineesNominee using the proxy card sent to you by Driver Management, your vote will not be counted as a vote for any of the director nominees recommended by our Board, but will result in the revocation of any previous vote you may have cast on theBLUE Proxy Card.If you wish to vote pursuant to the recommendation of our Board, you should disregard any proxy card that you receive other than the BLUE Proxy Card. If you have any questions or need assistance voting, please callcontact Morrow Sodali by phone at (800) 662-5200 (toll free for shareholders) or (203) 658-9400 (call collect for banks, brokers, trustees and other nominees).

, or by email at FUNC@investor.MorrowSodali.com.

How will my shares be voted?

ShareholdersAll shares of record as of the close of business on               , 2020, the Record Date, are entitled to one vote for each share of our Common Stock held on each matter to be voted upon at the Annual Meeting. All sharesthat are entitled to vote and represented by properly submitted proxies received before the polls are closed at the 2021 Annual Meeting, and not revoked or superseded, will be voted at the 2021 Annual Meeting in accordance with the instructions indicated on those proxies. Where a choice has been specified on theBLUE Proxy Card with respect to the proposals, the shares represented by theBLUE Proxy Card will be voted as you specify. If you return a validly executedBLUEProxy Card without indicating how your shares should be voted on a matter and you do not revoke your proxy, then your proxy will be voted: “FOR” the election of the four Board nominees set forth on theBLUEProxy Card (Proposal 1);Proposal 1; “FOR” the non-binding, advisory resolution approving the compensation of the Corporation’s named executive officers (Proposal 2); andProposal 2; “FOR” Proposal 3; “FOR” Proposal 4; “FOR” Proposal 5; “FOR” Proposal 6; “EVERY 1 YEAR” on Proposal 7; “AGAINST” Proposal 8; “AGAINST” Proposal 9; “AGAINST” Proposal 10; “AGAINST” Proposal 11; “AGAINST” Proposal 12; “AGAINST” Proposal 13; “AGAINST” Proposal 14; and in the ratificationdiscretion of the appointment of Baker Tillypersons named as our independent registered public accounting firm forproxies with respect to any other business that may properly come before the fiscal year ending December 31, 2020 (Proposal 3).2021 Annual Meeting or any adjournment or postponement thereof.

What happens if I do not specify how I want my shares voted? What is discretionary voting? What is a broker non-vote?

As a shareholder as of the close of business on the Record Date, if you properly complete, sign, date and return aBLUE Proxy Card or voting instruction form, then your shares of Common Stock will be voted as you specify. However, ifIf you submit a signedBLUEProxy Card or submit your proxy by telephone or Internet andbut do not specify how you want your shares voted, then the persons named as proxies will vote your shares:shares as follows:

In addition, the persons named as proxies will have discretionary authority to vote your shares with respect to any other matter that properly comes before the 2021 Annual Meeting or any adjournment or postponement thereof.

A “broker non-vote” occurs when the broker holding shares for a beneficial owner has not received voting instructions from the beneficial owner and does not have discretionary authority to vote the shares. If you own your shares in “street name” through a broker and do not provide voting instructions to your broker, then your broker will not have the authority to vote your shares on any proposal presented at the 2021 Annual Meeting unless it has discretionary authority with respect to that proposal. In that case, your shares will be considered to be broker non-votes and will not be voted on that proposal. Whether a broker has discretionary authority depends on your agreement with your broker and the rules of the various regional and national exchanges of which your nominee is a member (the “Broker Rules”). Accordingly, it is very important that you instruct your broker on how to vote shares that you hold in street name.

To the extent that Driver Management provides a proxy card to shareholdersa broker who own theirholds shares in street name,for a beneficial owner, none of the election of directorsmatters to be voted on at the 2021 Annual Meeting is notwill be considered a discretionary matter under the Broker Rules, which means that a broker that is subject to the Broker Rules will not have authority to vote shares held in street name.name without instructions from the beneficial owner. As a result, if you are a beneficial owner, then we encourage you to provide voting instructions to the broker that holds your shares by carefully following the instructions provided to you by that broker.

What is the effect of abstentions and broker non-votes on voting?

Abstentions will be counted as present at the 2021 Annual Meeting for the purpose of determining a quorum. Because each director nominee will require more “FOR” votes than the director nominee(s) who receive the least number of votes in order to be elected, “withhold” votes have no effect on the outcome of Proposal 11. Abstentions with respect to Proposal 2 will have the same effect as votes “against” such proposal and abstentions with respect to Proposals 23, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 and 314 will have no impact on the outcome of those proposals.

A broker non-vote occurs when the broker holding shares for a beneficial owner has not received voting instructions from the beneficial owner and does not have discretionary authority to vote the shares. If you own your shares in “street name” and do not provide voting instructions to your broker, then your shares will not be voted at the 2021 Annual Meeting on any proposal with respect to which your broker does not have discretionary authority. Whether a broker has discretionary authority depends on your agreement with that broker and any Broker Rules to which that broker is subject. The Broker Rules generally prohibit a broker from exercising discretionary voting authority (i.e., they cannot vote) on non-routine matters without specific instructions from their customers. Proposals are determined to be routine or non-routine matters based on the Broker Rules. However, in the case of meetings involving contested director elections, the Broker Rules generally prohibit a broker from exercising discretionary authority with respect to any proposals to be voted on at such meetings, whether routine or not. Because Driver Management has attempted to provideprovided notice to the Corporation that it intends to nominate a competing slate of directorsdirector in opposition to the Board’s highly qualified director nominees,nominee, the 2021 Annual Meeting is expected to constitute a contested election. Accordingly, brokers that are subject to the Broker Rules generally will not be permitted to vote shares held by a beneficial owner at the 2021 Annual Meeting without instructions from that beneficial owner as to how to the shares are to be voted. Any shares held by such a broker who has not received instructions from the beneficial owner as to how such shares are to be voted will have no effect on the outcome of Proposals 1, 23, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 or 3,14 but the shares will be counted for establishing the presence of a quorum. Any shares held by such a broker who has not received instructions from the beneficial owners as to how such shares are to be voted will have an effect on the outcome of Proposal 2, as the vote required to approve Proposal 2 is based on the total number of shares outstanding rather than the votes cast. We therefore encourage you to provide voting instructions on aBLUE Proxy Card or the voting instruction formBLUE Voting Instruction Form provided by the broker that holds your shares, in each case by carefully following the instructions provided.

Could other matters be decided at the 2021 Annual Meeting?

We do not expect that any other items of business will be presented for consideration at the 2021 Annual Meeting other than those described in this Proxy Statement. However, by completing, signing, dating and returning aBLUE Proxy Card or submitting your proxy or voting instructions over the Internet or by telephone, you will give to the persons named as proxies discretionary voting authority with respect to any matter that may properly come before the 2021 Annual Meeting, and of which we did not have notice at least by [__], 20202021 and such persons named as proxies intend to vote on any such other matter in accordance with their best judgment.

Who will count the votes?

All votes will be tabulated as required by Maryland law, the state of our incorporation, by the independent inspector of election appointed for the 2021 Annual Meeting, who will separately tabulate affirmative and negative votes, abstentions and broker non-votes. Shares held by persons attending the 2021 Annual Meeting but not voting and shares represented by proxies that reflect abstentions as to one or more proposals and broker non-votes will be counted as present for purposes of determining a quorum.

When will the voting results be announced?

The final voting results will be reported in a Current Report on Form 8-K, which will be filed with the SECSecurities and Exchange Commission (the “SEC”) within four business days after the 2021 Annual Meeting. If our final voting results are not available within four business days after the 2021 Annual Meeting, we will file a Current Report on Form 8-K reporting the preliminary voting results and subsequently file the final voting results in an amendment to the Current Report on Form 8-K within four business days after the final voting results are known to us.

What vote is required with respect to the proposals?

Proposal 1—Election of Directors. If Assuming that Driver Management is legally entitled to nominatenominates the Driver Nominees,Nominee at the 2021 Annual Meeting, the vote by a plurality of the shares present in person (including by remote communication, if applicable)(virtually) or represented by proxy at the 2021 Annual Meeting and entitled to vote thereon is required for the election of directors under Proposal 1 at the 2021 Annual Meeting. This means that, among the Board’s nominees and the Driver Nominees,Nominee, the four nominees receiving the highest number of “FOR” votes of the shares entitled to be voted in the election of directors will be elected. You may vote “FOR ALL” Board nominees, “WITHHOLD ALL” as to all Board nominees, or “FOR ALL EXCEPT” to vote for Board nominees except the specific nominee from whom you “WITHHOLD” your vote. There is no “against” option.Shares voting “withhold” are counted for purposes of determining a quorum. However, if you withhold authority to vote with respect to the election of any or all of the four nominees, your shares will not be voted with respect to those nominees indicated. Therefore, “withhold” votes will not affect the outcome of the election of directors. Brokers and other nominees are generally prohibited from exercising discretionary authority to vote on the election of directors, and any shares held by such a nominee for which beneficial owners do not provide voting instructions will be considered “broker non-votes”. Broker non-votes and “withhold votes” will have no effect on the outcome of Proposal 1.

If Driver Management does not nominate the Driver Nominee at the 2021 Annual Meeting, then directors will be elected by the affirmative vote of a majority of all shares of Common Stock voted at the 2021 Annual Meeting. In that case, the withholding of a vote for a director nominee will constitute a vote against that nominee, but a broker non-vote with respect to the election of directors will have no impact on the outcome of that vote.

Proxies may not be voted for more than four directors and shareholders cannot cumulate votes. If it is determined that Driver Management is not legally

Proposal 2—Charter Amendment to Declassify the Board. The approval of a Charter amendment to declassify the Board, as described in Proposal 2, requires the affirmative vote of holders of two-thirds (66 2/3%) of the outstanding shares of Common Stock entitled to nominatevote on that proposal at the Driver Nominees, then2021 Annual Meeting. You may vote “FOR,” “AGAINST” or “ABSTAIN.” Broker non-votes and abstentions will have the eligible director candidates willsame effect as votes “AGAINST” this proposal.

Proposal 3—Non-binding Advisory Vote on a Majority Vote Standard. The approval of a non-binding advisory resolution that the Board take the actions necessary to amend the Charter to reduce the votes required to approve certain shareholder actions to a majority of all votes entitled to be elected bycast on the matter, as described in Proposal 3, requires the affirmative vote of a majority of the votes cast inon that proposal at the election. In that case, a broker non-vote2021 Annual Meeting. You may vote “FOR,” “AGAINST” or “ABSTAIN.” Broker non-votes and abstentions will not be treated as votes cast for approval of this proposal, and, therefore, will have no impacteffect on the results of the vote. While the vote buton Proposal 3 is advisory, and will not be binding on the Corporation or our Board, the Board will take into account the outcome of the vote on this Proposal 3 when deciding whether to ask shareholders to approve the amendment to the Charter contemplated by this proposal at a “withheld” vote will be treated as a vote against a director candidate.future meeting of shareholders.

Proposal 4—Non-binding Advisory Vote on Proxy Access. The approval of a non-binding advisory resolution that the Board take the actions necessary to amend the Bylaws to provide for proxy access in the election of directors, as described in Proposal 4, requires the affirmative vote of a majority of the votes cast on that proposal at the 2021 Annual Meeting. You may vote “FOR,” “AGAINST” or “ABSTAIN.” Broker non-votes and abstentions will not be treated as votes cast for approval of this proposal, and, therefore, will have no effect on the results of the vote. While the vote on Proposal 4 is advisory, and will not be binding on the Corporation or our Board, the Board will review the results of the voting on this proposal and take it into consideration in deciding whether to adopt a proxy access bylaw.

Proposal 5—Non-binding Resolution to Approve Compensation for Executive Officers. The approval of a non-binding advisory resolution approving the compensation of the Corporation’s named executive officers, as described in Proposal 5, requires the affirmative vote of thea majority of the votes cast on that proposal at the 2021 Annual Meeting. You may vote “FOR,” “AGAINST” or “ABSTAIN.” Broker non-votes if any, and abstention will not be treated as votes cast for approval of the compensation of the Corporation’s named executive officers,this proposal, and, therefore, will have no effect on the results of the vote, although they will be considered present for the purposes of determining the presence of a quorum.vote. While the vote on Proposal 25 is advisory, and will not be binding on the Corporation or our Board, the Board will review the results of the voting on this proposal and take it into consideration when making future decisions regarding executive compensation as we have done in this and previous years.

Proposal 6—Ratification of Auditors. The ratification of the appointment of Baker TillyCrowe LLP, as described in Proposal 6, requires the affirmative vote of thea majority of the votes cast on that proposal at the 2021 Annual Meeting. You may vote “FOR,” “AGAINST” or “ABSTAIN.” Broker non-votes if any, and abstentions will not be treated as votes cast for approval of this proposal, and, therefore, will have no effect on the appointmentresults of Baker Tilly,the vote.

Proposal 7—Frequency of Say-on-Pay. The recommendation, by non-binding advisory vote, regarding the frequency of future Say-on-Pay Votes, as described in Proposal 7, will be determined based on the option (every one year, every two years or every three years) that receives the highest number of all votes cast on that proposal at the 2021 Annual Meeting. Broker non-votes and abstentions will have no impact on the outcome of the proposal.

Proposals 8, 9, 10, 11, 12, 13 and 14—Driver Proposals. The approval of each of the Driver Proposals (i.e., Proposals 8, 9, 10, 11, 12, 13 and 14) requires the affirmative vote of a majority of the votes cast on each such proposal at the 2021 Annual Meeting. You may vote “FOR,” “AGAINST” or “ABSTAIN” on each of these proposals. Broker non-votes and abstention will not be treated as votes cast for approval of any of these proposals, and, therefore, will have no effect on the results of the vote although theyon such proposals. Although the vote on each of the Driver Proposals is advisory, and will not be considered present forbinding on the purposesCorporation or our Board, the Board will review and take into consideration the results of determining the presence of a quorum.voting on these proposals when making future decisions.

Who will pay for the solicitation of proxies?

The Corporation will bear the entire cost of the Board’s solicitation of proxies, including the preparation, assembly and mailing of this Proxy Statement, theBLUE Proxy Card, the Notice of Annual Meeting of Shareholders and any additional information furnished to shareholders. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries and custodians holding shares of our Common Stock in their names that are beneficially owned by others to forward to those beneficial owners. We may reimburse persons representing beneficial owners for their costs of forwarding the solicitation materials to the beneficial owners. Original solicitation of proxies may be supplemented by telephone, facsimile, electronic mail or personal solicitation by our directors, officers or staff members. Other than the persons described in this Proxy Statement, no general class of employee of the Corporation will be employed to solicit shareholders in connection with this proxy solicitation. However, in the course of their regular duties, employees may be asked to perform clerical or ministerial tasks in furtherance of this solicitation. No additional compensation will be paid to our directors, officers or staff members for such services. We have retained Morrow Sodali to act as a proxy solicitor in conjunction with the 2021 Annual Meeting. We have agreed to pay Morrow Sodali $[●]__], plus reasonable out-of-pocket expenses for proxy solicitation services. Morrow Sodali expects that approximately [●][__] of its employees will assist in the solicitation. The parties'parties’ engagement letter contains confidentiality, indemnification and other provisions that the Corporation believes are customary for this type of engagement.

Our aggregate expenses, including legal fees for attorneys, accountants, public relations and other advisors, printing, advertising, postage, transportation, litigation and other costs incidental to the solicitation, but excluding (i) costs normally expended for a solicitation for an election of directors in the absence of a proxy contest and (ii) costs represented by salaries and wages of Corporation employees and officers, are expected to be approximately $[●]__], of which $[●]__] has been incurred as of the date of this Proxy Statement.

Appendix A sets forth information relating to our directors, director nominees, as well as certain of our officers and employees who are considered “participants” in our solicitation under the rules of the SEC by reason of their position as directors and director nominees of the Corporation or because they may be soliciting proxies on our behalf.

Do I have appraisal or dissenters’ rights?

None of the applicable Maryland law, our Certificate of Incorporation, as amended (the “Certificate of Incorporation”) nor ourthe Charter or the Bylaws, provide for appraisal or other similar rights for dissenting shareholders in connection with any of the proposals set forth in this Proxy Statement. Accordingly, you will have no right to dissent and obtain payment for your shares in connection with such proposals.

Whom should I call if I have questions about the 2021 Annual Meeting?

Morrow Sodali is assisting us with our effort to solicit proxies. If you have any questions concerning the business to be conducted at the 2021 Annual Meeting, would like additional copies of this Proxy Statement or need help submitting a proxy for your shares, please contact Morrow Sodali:

509 Madison Avenue Suite 1206

New York, NY 10022

Shareholders Call Toll Free:Free: (800) 662-5200
Banks, Brokers, Trustees and Other Nominees Call Collect: (203) 658-9400

Email: FUNC@investor.morrowsodali.com FUNC@investor.MorrowSodali.com

THE BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” THE ELECTION OF EACH

OF THE BOARD’S NOMINEES ON PROPOSAL 1, “FOR” PROPOSALS 2, 3, 4, 5 AND 6, “EVERY 1 YEAR” ON PROPOSAL 27, AND “FOR” PROPOSAL 3,“AGAINST” PROPOSALS 8, 9, 10, 11, 12, 13 AND 14, USING THE ENCLOSED BLUE PROXY CARD ORBLUE VOTE INSTRUCTION FORM.

THE BOARD URGES YOU TO NOT TO SIGN, RETURN OR VOTE ANY PROXY CARD OR VOTE INSTRUCTION FORM SENT TO YOU BY DRIVER MANAGEMENT EVEN AS A PROTEST VOTE,

AS ONLY YOUR LATEST DATED PROXY CARD WILL BE COUNTED.

BACKGROUND OF THE SOLICITATION

As early as May 2014, the Corporation first considered potential corporate governance enhancements to proactively refresh the Board, including the addition of Carissa Rodeheaver as Chairman of the Board and President and Chief Executive Officer of the Corporation in 2015, and creation of a Board Succession Plan by the Nominating and Governance Committee in July 2018.

On March 15, 2019, Driver Management sent a letter to Ms. Rodeheaver detailing its belief that the Corporation should immediately retain a qualified investment bank with experience in selling banking organizations and solicit acquisition proposals. The letter also stated Mr. Cooper’s desire to discuss this and other matters with the Board.

On each of March 26, March 28 and April 2, 2019, Driver Management filed notices of exempt solicitation (collectively, the “Notices of Exempt Solicitation”) in connection with the Corporation’s 2019 annual meeting of shareholders (the “2019 Annual Meeting”), urging shareholders to vote against the Corporation’s nominees for director and against approving the Corporation’s compensation to executive officers. The Notices of Exempt Solicitation also urged shareholders to demand the Corporation to immediately hire financial advisors and explore a sale.

On April 5, 2019, Mr. Cooper and Ms. Rodeheaver exchanged emails to schedule an in-person meeting, which took place on April 10, 2019 in New York, New York, between Mr. Cooper, Ms. Rodeheaver and Tonya Sturm, the Corporation’s Senior Vice President and Chief Financial Officer, Secretary and Treasurer. Following their meeting, Mr. Cooper sent Ms. Rodeheaver an email on April 13, 2019, in which he introduced Ms. Rodeheaver to an employment attorney and consultant to discuss the Corporation’s compensation and change of control arrangements.

On May 24, 2019, Mr. Cooper sent Ms. Rodeheaver an email explaining his reaction to the 2019 Annual Meeting, expressing his disagreement with the Corporation’s share repurchase program and urging the Corporation to evaluate strategic options.

On July 24, 2019, Mr. Cooper sent a letter to Ms. Rodeheaver detailing his belief that the Corporation could receive $26–$30 per share in a sale and should immediately run a sale process. The letter also stated Mr. Cooper’s desire to discuss this with the Board.

On August 20, 2019, Mr. Cooper sent Ms. Rodeheaver a copy of a presentation to be shared with the Board outlining Driver Management’s belief that the Corporation could be valued between $26–$33 per share in a sale and should immediately commence a sale process.

On September 2, 2019, after a review of Mr. Cooper’s presentation, Ms. Rodeheaver sent an email to Mr. Cooper explaining the Board’s belief that additional analyses would need to be conducted by the Corporation with respect to Mr. Cooper’s assertions.

On September 4, 2019, Mr. Cooper sent a response letter to Ms. Rodeheaver reiterating his belief that the Corporation’s shares were undervalued and a sale process would deliver uncaptured value to shareholders.

On September 5, 2019, Driver Management filed a Schedule 13D, disclosing a beneficial ownership of approximately 5.08% of the outstanding Common Stock. On that same day, the Corporation issued a public statement in response to Driver Management’s Schedule 13D, explaining that the Corporation’s management had promptly shared Driver Management’s view with the Board for consideration.

On September 6, 2019, Driver Management filed Amendment No. 1 to the Schedule 13D stating, among other things, that Driver Management had no intent to conduct a campaign to solicit proxies.

On September 9, 2019, Driver Management filed Amendment No. 2 to the Schedule 13D to attach an additional letter dated as of September 9, 2019 that Mr. Cooper sent to Ms. Rodeheaver. The letter contains further responses to the Corporation’s public statement issued on September 5, 2019, questioned what costly campaign could the Corporation possibly wish to avoid and reiterated Driver Management’s belief that the Corporation should start a sale process.

On September 13, 2019, Mr. Cooper sent another letter to Ms. Rodeheaver repeating his criticisms of the Corporation’s leadership, which was filed as an exhibit to Amendment No. 3 to the Schedule 13D on September 13, 2019.

On September 16, 2019, the Corporation issued a public statement in response to Driver Management’s Amendment No. 3 to the Schedule 13D, expressing disappointment in Driver Management’s failure to engage constructively with the Corporation and detailing both the Board’s and management team’s continued efforts to engage with Driver Management.

On September 26, 2019, Driver Management filed Amendment No. 4 to the Schedule 13D with an investor presentation and attached a press release, each again demanding the Corporation start a sale process.

On October 2, 2019, Mr. Cooper sent a letter to John McCullough, the Corporation’s independent lead director (the “Lead Director”), requesting that the Board appoint a special committee of independent directors.

On October 3, 2019, Mr. Cooper delivered a demand letter to Ms. Sturm, demanding to inspect, among other things, the Corporation’s shareholder list materials.

On October 10, 2019, Ms. Sturm sent a response letter to Mr. Cooper. The response letter stated that the Corporation would provide Driver Management with the records to which it is legally entitled once it makes a proper demand under Maryland law that applies to all shareholders and governs the demand for shareholder list materials made by Mr. Cooper.

On October 11, 2019, Mr. McCullough sent a response letter to Mr. Cooper regarding the potential nomination of directors and inviting Driver Management to explore a cooperation framework with the Corporation.

On October 16, 2019, the Corporation’s counsel met telephonically with Driver Management’s counsel to introduce the possibility of a cooperation framework. During these discussions, the Corporation’s counsel indicated that the Corporation would cooperate with Driver Management to identify director candidates to enhance the composition, skillset and experience of the Board as part of the Corporation’s ongoing refreshment process. Driver Management’s counsel stated that Driver Management was not willing to entertain a cooperation framework without a commitment by the Board to initiate a formal sale process as part of such framework.

On October 24, 2019, Mr. Cooper sent a letter to Ms. Sturm, and on October 29, 2019, Mr. Cooper sent another letter to Ms. Rodeheaver. Each letter reiterated similar criticisms of the Corporation and were filed as exhibits to Amendment No. 7 to the Schedule 13D on October 29, 2019.

On October 28, 2019, Mr. Cooper sent an email to Mr. McCullough that stated that Mr. Cooper would not consider a discussion with the Corporation regarding a cooperation framework unless the Board first committed to initiating a public sale process.

On October 30, 2019, Driver Management issued a press release and a related presentation regarding Driver Management’s call for the Corporation to explore a sale process. The press release and the presentation were filed as exhibits to Amendment No. 8 to the Schedule 13D on October 31, 2019.

Also on October 30, 2019, Mr. McCullough sent a response letter to Mr. Cooper’s October 28, 2019 email expressing disappointment that Driver Management refused to provide input on the Board absent an announcement of a public sale process, and the Corporation’s continued desire to establish a cooperation framework that would allow the Corporation and Driver Management to work together constructively.

On October 31, 2019, Mr. Cooper provided Mr. McCullough with a list of the individuals that Driver Management intends to nominate for election to the Board at the Annual Meeting, despite the fact that he had previously publicly stated he had no intention to conduct a campaign to solicit votes.

On November 6, 2019, Driver Management sent a letter to Mr. McCullough reiterating Driver Management’s criticism of the Corporation’s corporate governance. On that same day, Mr. McCullough sent a response letter to Mr. Cooper restating the Corporation’s desire to explore a possible cooperation framework to identify potential director candidates, and offering to interview Driver Management’s candidates once its candidates have had an opportunity to review, complete and deliver a D&O questionnaire as required by the Bylaws.

On November 8, 2019, Johnny Guerry, a shareholder of the Corporation, sent a letter to the Board, demanding that the Corporation immediately explore a sale process.

On November 13, 2019, Ms. Rodeheaver sent an email to Mr. Guerry, acknowledging the letter he recently issued as a press release and offering to schedule an introductory phone call with him to discuss his views. Mr. Guerry subsequently agreed to have a call with Mses. Rodeheaver and Sturm on November 26, 2019.

On November 19, 2019, Driver Management announced its intent to nominate directors to the Board at the Annual Meeting via a press release and launched a website related to its campaign. On that same day, the Corporation issued a press release acknowledging that, although a formal notice of nominations satisfying the requirements of the Bylaws had not yet been received, Driver Management had publicly announced its intent to nominate directors at the Annual Meeting.

On November 20, 2019, the Board authorized an increase in the number of shares that may be purchased under the Corporation’s share repurchase program (the “Repurchase Program”) from its initial announcement on April 30, 2019, and extended the term of the Repurchase Program through November 20, 2020.

On November 26, 2019, Mses. Rodeheaver and Sturm called Mr. Guerry for their scheduled introductory call. Mr. Guerry did not answer Mses. Rodeheaver’s and Sturm’s call and never responded to the message they left for him to reschedule the introductory meeting.

On December 3, 2019, Driver Management sent a letter to Mr. McCullough, criticizing, among other things, the Corporation’s decision to increase the Repurchase Program.

Also on December 3, 2019, Driver Management delivered a nomination notice to the Corporation regarding it intent to nominate Messrs. Driscoll and Elzen and Ms. Narrell-Mead to the Board at the Annual Meeting.

On December 4, 2019, Driver Management delivered a letter to its fund investors which provided a link to a podcast interview that Mr. Cooper gave and that was first published on November 27, 2019. The podcast covered Mr. Cooper’s general views on state regulation of soliciting proxies in the banking sector and specifically, his ongoing campaign with the Corporation.

On Friday, December 13, 2019, Driver Management sent a letter to the independent directors of the Board calling for a plurality voting standard in contested elections and a sale of the Corporation, and demanded that the Board respond to these demands by Monday, December 16, 2019. Between December 13, 2019 and December 15, 2019, the Corporation’s counsel and counsel for Driver Management discussed the Board’s proposal to (a) implement without any delay a plurality voting standard policy for the Annual Meeting in the event it was contested; and (b) formally amend the Corporation’s organizational documents to provide for a permanent plurality voting standard carveout for contested director elections as part of the suite of governance enhancements already being considered for implementation in connection with the Annual Meeting. During the course of these discussions, the Corporation’s counsel explained that the Board intended to address the lack of a plurality carveout in the Bylaws after the Board’s Nominating and Corporate Governance Committee had conducted a fulsome, holistic review of the Bylaws, with an eye toward addressing changing shareholder expectations and evolving corporate governance practices. However, while this review was ongoing, the Board would convene no later than December 16, 2019 for the purpose of voting on the approval of a plurality carveout with respect to the majority voting standard in the event there is a contested election at the Annual Meeting. Counsel for Driver Management stated in an email that it would discuss with its client, but that this “seem[ed] like a constructive approach given the timeframe” and on December 16, 2019, the Board adopted a plurality voting standard policy with respect to the Annual Meeting in the event a contested election were to take place at such meeting. The Board determined it would wait until the above-mentioned review was completed to make any formal amendments to the Bylaws.

On December 17, 2019, Driver Management delivered a letter to the independent directors of the Board reiterating criticisms of the Corporation and the Board. The letter was filed as an exhibit to Amendment No. 12 to the Schedule 13D.

On January 9, 2020, Mr. Cooper delivered a demand letter to certain members of the Board, demanding to inspect, among other things, the Corporation’s shareholder list materials that Driver Management previously sought in its demand letter dated October 3, 2019.

On January 15, 2020, Driver Management delivered a letter via email to the Corporation’s shareholders, which reiterated Driver Management’s criticisms of Ms. Rodeheaver.

On January 17, 2020, Ms. Sturm sent a response letter to Mr. Cooper again confirming that the Corporation would provide Driver Management with the Corporation’s shareholder list materials to which it is legally entitled once Driver Management makes a proper demand under the provisions of Maryland law governing Driver Management’s demand that apply equally to all shareholders, as set forth in Ms. Sturm’s letter dated October 10, 2019.

On January 21, 2020, Driver Management published a tweet incorrectly stating that Mr. Cooper had not heard back from the Corporation regarding Driver Management’s January 9, 2020 books and records demand, despite the fact that the Corporation had responded to Mr. Cooper. Subsequently, on January 27, 2020, counsel for the Corporation exchanged emails with counsel for Driver Management about the misleading tweet. The tweet was later removed and a corrective tweet was published on January 28, 2020.

Between January 27, 2020 and February 5, 2020, the Corporation’s counsel and Driver Management’s counsel coordinated an in-person meeting between Mr. McCullough, Ms. Kathryn Burkey, a current member of the Board, Ms. Rodeheaver, Ms. Sturm and Mr. Cooper scheduled for February 6, 2020. To accommodate Mr. Cooper’s preferences, the Corporation agreed to travel to meet at Driver Management’s counsel’s offices with Driver Management’s counsel present, and agreed to set aside time during the meeting for Mr. Cooper to meet with the independent directors without management present.

On January 27, 2020, counsel for Driver Management sent an email to counsel for the Corporation regarding the in-person meeting, stating that “[Ms. Rodeheaver’s] presence is not a non-starter, but rather a suggestion for a more productive assembly.” Once the Corporation’s counsel informed Driver Management’s counsel that Mses. Rodeheaver and Sturm would be present for a portion of the meeting, Driver Management’s counsel provided the Corporation’s counsel one day’s notice that the meeting would no longer take place, simply stating ”[m]y client says the meeting is off.”

On February 5, 2020, Driver Management delivered a letter to the Corporation’s shareholders via email containing criticisms about Ms. Burkey.

Also on February 5, 2020, the Corporation issued a press release in which the Corporation included a copy of Mr. McCullough’s letter to Mr. Cooper. Mr. McCullough described the Corporation’s numerous attempts to engage in a constructive dialogue with Driver Management and expressed disappointment that these attempts were not reciprocated.

On February 7, 2020, Driver Management issued a press release and letter to Mr. McCullough in response to Mr. McCullough’s February 6, 2020 letter. Driver Management reiterated similar criticisms of the Corporation, its management and the Board.

On February 10, 2020, Mr. Cooper sent a response letter to Ms. Sturm’s January 17, 2020 letter requesting the information relating to the shareholders of the Corporation that Driver Management previously sought in its letters dated October 3, 2019 and January 9, 2020.

On February 11, 2020, the Corporation issued a press release in which the Corporation announced that the Board had completed three strategic review processes with two independent financial advisors over the past five months and confirmed the Corporation will continue to execute its current strategy.

Also on February 11, 2020, Driver Management delivered a letter to the Corporation’s shareholders via email criticizing Mr. Robert Kurtz and Mr. Boal, two members of the Board.

Between January 16, 2020 and February 14, 2020, Driver Management published numerous tweets about the Corporation, certain Board members and the rejection of Driver Management’s non-compliant shareholder list demand.

On February 19, 2020, the Corporation’s counsel was interviewed in person by two representatives from the Maryland Commissioner’s enforcement division to discuss whether Driver Management’s acquisitions of Common Stock violated the Maryland Stock Acquisition Statute. The Maryland Stock Acquisition Statute provides that any person who desires to make a “stock acquisition” shall file an application with the Maryland Commissioner at least 60 days prior to such acquisition. A stock acquisition is defined to include, among other things, any acquisition of voting stock of a commercial bank or bank holding company in Maryland if the acquisition will affect the power to direct or to cause the direction of the management or policy of any banking institution or bank holding company. The Maryland Stock Acquisition Statute provides that any doubt as to whether an acquisition of stock of a Maryland bank or bank holding company will affect the power to direct or cause the direction of the management or policy of such banking institution shall be resolved in favor of filing an application with the Maryland Commissioner. Importantly, the Maryland Stock Acquisition Statute provides that stock acquired in violation of the Maryland Stock Acquisition Statute cannot be voted for five years.

Also on February 19, 2020, after preliminary discussions between the Corporation’s and Driver Management’s respective counsel, the Corporation received an initial proposed cooperation framework from Driver Management’s counsel, notwithstanding Driver Management’s previous refusal to consider a cooperation framework unless the Board first committed to initiating a public sale process. Notably, Driver Management’s proposed framework did not include a sale process announcement, which served as the barrier to settlement discussions five months prior. The proposed framework did, however, contain a provision pursuant to which Driver Management sought a covenant from the Corporation that it would not, among other things, take any adverse position with respect to Driver Management in connection with any regulatory proceedings (the “Regulatory Covenant”).

On February 28, 2020, counsel for each of the Corporation and Driver Management met telephonically to further discuss the terms of a possible cooperation framework. During such discussions, counsel for Driver Management communicated expressly that Driver Management was not under investigation or review by any regulatory agency or legal authority. At such time, however, as disclosed for the first time in its preliminary proxy statement on March 26, 2020, Driver Management was already, in fact, subject to an investigation by the Maryland Commissioner.

Also on February 28, 2020, in light of declining global markets, including the market for Common Stock, Driver Management issued a letter to Ms. Rodeheaver, requesting that the Corporation buy back some of its Common Stock under the Repurchase Program, a position contrary to Mr. Cooper’s May 24, 2019 criticisms of the Repurchase Program.

On March 3, 2020, counsel for the Corporation sent a revised term sheet to counsel to Driver Management, which, among other things, contemplated that Driver Management would make a representation to the Corporation that it was not being investigated by any regulatory authority (the “Regulatory Representation”).

On March 6, 2020, counsel for Driver Management sent a revised term sheet to the Corporation’s counsel from which both the Regulatory Covenant and the Regulatory Representation had been deleted.

On March 9, 2020, counsel for each of the Corporation and Driver Management again met telephonically to discuss the terms of a possible cooperation framework. During that meeting, counsel for Driver Management expressed to the Corporation’s counsel that it removed the Regulatory Representation from the draft term sheet because it did not find the Regulatory Representation to be relevant.

On March 10, 2020, counsel for Driver Management sent an email to the Corporation’s counsel, stating that it believed Driver Management could make the Regulatory Representation. The Corporation later realized that this could not have been possible, because Driver Management was already subject to a regulatory investigation. Despite several direct and repeated requests by the Corporation’s counsel about whether Driver Management was under regulatory investigation, at no point in time prior to Driver Management’s filing of its preliminary proxy statement did Driver Management or its counsel inform the Corporation that Driver Management was in fact under investigation.

On March 13, 2020, Mr. McCullough and Ms. Burkey met telephonically with Mr. Cooper to discuss the terms of a possible cooperation agreement, including, but not limited to, Mr. Cooper’s initial request to have $750,000 in proxy solicitation expenses reimbursed by the Corporation. These expenses include those incurred by Driver Management since the Corporation first introduced the idea of a possible cooperation framework in October 2019.

On March 14, 2020, Mr. McCullough and Ms. Burkey met telephonically with Mr. Cooper per his request for a follow-up discussion.

On March 17, 2020, Driver Management issued a letter to Mr. McCullough criticizing the Corporation’s recently-announced changes in executive compensation.

On March 24, 2020, Mr. Cooper confirmed to the Corporation that he would meet telephonically to discuss his concerns, limited to the terms of the Corporation’s final proposal for a cooperation framework sent on March 20, 2020, with Mr. McCullough and Ms. Burkey, and would send an agenda for the call.

On March 25, 2020, Mr. McCullough and Ms. Burkey met telephonically with Mr. Cooper per his request for a follow-up discussion. Despite Mr. Cooper’s confirmation the prior day that he would provide an agenda for the call, no such agenda was sent to the Corporation.

Also on March 25, 2020, Driver Management sent the Corporation a letter, announcing that it decided to suspend discussions of a possible cooperation agreement.

On March 26, 2020, Driver Management filed a preliminary proxy statement with the SEC. Driver Management disclosed in its preliminary proxy statement, for the first time, that Driver Management was being investigated by the Maryland Commissioner for possible violations of the Maryland Stock Acquisition Statute. Driver Management did not disclose this fact, or the possibility that a violation of the Maryland Stock Acquisition Statute would prohibit Driver Management from voting its shares of Common Stock at the Annual Meeting, in any of the soliciting materials that it filed with the SEC on and after January 21, 2020 (the date, according to Driver Management’s preliminary proxy statement, of the Maryland Commissioner’s initial investigatory letter to Driver Management). It likewise has not amended its Schedule 13D, or included such information in any of the previous 15 amendments to its Schedule 13D, to disclose this material and necessary information.

Also on March 26, 2020, the Corporation issued a press release, announcing Driver Management’s suspension of discussions regarding a possible cooperation agreement. Also on March 26, 2020, the Corporation issued an additional press release noting that the Corporation has been honored for its female representation on the Board.

On March 27, 2020, the Corporation made several announcements, including, among other things, that (i) the Board declared a cash dividend of $.13 per share, payable on May 1, 2020 to holders of Common Stock as of April 17, 2020, (ii) Robert Kurtz intends to retire from service on the Board in June 2020 as part of the Board’s ongoing refreshment strategy, and (iii) the Board amended the Bylaws to codify the Board’s mandatory director policy and adopted a Lead Director Policy to clarify the role and responsibilities of the Corporation’s Lead Director.

On March 30, 2020, the Corporation filed a preliminary proxy statement with the SEC.

On April 2, 2020, the Corporation filed an Amendment No. 1 to its preliminary proxy statement with the SEC.

On April 3, 2020, Driver Management filed an Amendment No. 1 to its preliminary proxy statement with the SEC.

On April 7, 2020, the Corporation filed an Amendment No. 2 to its preliminary proxy statement with the SEC.

OUR BOARD STRONGLY AND UNANIMOUSLY URGES YOU NOT TO SIGN OR RETURN ANY PROXY CARD OR VOTING INSTRUCTION FORM THAT YOU MAY RECEIVE FROM DRIVER MANAGEMENT, EVEN TO VOTE “WITHHOLD” WITH RESPECT TO THE ADDITIONAL DRIVER NOMINEES, AS DOING SO WILL CANCEL ANY PROXY YOU MAY HAVE PREVIOUSLY SUBMITTED TO HAVE YOUR SHARES VOTED FOR THE BOARD’S PROPOSED SLATE ON ABLUE PROXY CARD, AS ONLY YOUR LATEST PROXY CARD OR VOTING INSTRUCTION FORM WILL BE COUNTED.

INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

The Corporation’s directors, director nominees and certain of its executive officers, will be deemed to be participants in the solicitation of proxies from the Corporation's shareholders in connection with the Annual Meeting. Information regarding these directors, director nominees and executive officers, including their direct and indirect interests, by securities holdings or otherwise, of the Corporation’s directors, director nominees and executive officers in the Corporation’s securities, is set forth in Appendix A to this Proxy Statement.

OUTSTANDING SHARES; VOTING RIGHTS; QUORUM AND REQUIRED VOTE

Shareholders of record as of the Record Date of issued and outstanding shares of Common Stock are entitled to notice of and to vote at the Annual Meeting. As of the Record Date,          shares of the Common Stock were issued and outstanding, but the Corporation believes that Driver Management is prohibited from voting 365,212 shares of Common Stock at the Annual Meeting. Each share is entitled to one vote on each matter submitted to shareholders.

If you complete, sign and date the enclosedBLUE Proxy Card and return it before the Annual Meeting, the persons named will vote your shares as you specify in the proxy. If you complete, sign, date and return yourBLUE Proxy Card but do not indicate how you wish your shares voted, they will be voted in accordance with the Board’s recommendations. If you do not return a signed proxy, or submit your vote via Internet or by phone, then your shares will not be voted unless you attend the Annual Meeting and vote in person.

The presence in person or by proxy of holders of record of a majority of the shares of issued and outstanding Common Stock entitled to vote at the Annual Meeting constitutes a quorum. Withhold votes (in the case of the election of directors), abstentions and broker non-votes will all be counted for purposes of determining whether a quorum is present.

Except in the case of a contested election, the Bylaws provide that directors are elected by the affirmative vote of a majority of all shares of Common Stock voted at the Annual Meeting In the case of a contested election, the Bylaws provide that directors shall be elected by a plurality vote. A contested election is one in which there are more director nominees than there are directorships up for election. Accordingly, because Driver Management has submitted a nomination notice regarding its intent to nominate three individuals in addition to the four nominees proposed by the Board, and assuming that Driver Management is permitted by Maryland law to vote its shares of Common Stock at the Annual Meeting, the election will be contested and directors will be elected by a plurality of votes cast in the election. If Driver Management is prohibited from voting its shares of Common Stock, then directors will be elected by a majority of the votes cast in the election. In either case, broker non-votes and “withheld” votes will have no effect on the outcome of Proposal 1.

The adoption of the non-binding advisory resolution approving the compensation paid to the Corporation’s named executive officers for 2019, as described in Proposal 2, and the ratification of the appointment of the Corporation’s independent registered public accounting firm, as described in Proposal 3, each require the affirmative vote of a majority of votes cast at the Annual Meeting. Accordingly, an abstention or a broker non-vote with respect to Proposal 2 will have no impact on the outcome. Abstentions and broker non-votes with respect to Proposal 3 will have no impact on the outcome. If other matters should properly come before the Annual Meeting or any adjournment or postponement thereof, persons named in the enclosed proxy or their substitutes will vote with respect to such matters in accordance with their best judgment.

All properly executedBLUE Proxy Cards received pursuant to this solicitation will be voted as directed by the shareholders in theirBLUE Proxy Cards. If no direction is given in theBLUE Proxy Card, then, subject to the procedures governing broker non-votes (see “Methods of Voting” below), your shares will be voted “FOR” each of the nominees named in Proposal 1, “FOR” adoption of the non-binding advisory resolution approving the compensation paid to the Corporation’s named executive officers for 2019 as described in Proposal 2, and “FOR” ratification of the appointment of the Corporation’s independent registered public accounting firm named in Proposal 3.

Proxies may be revoked at any time before a vote is taken or the authority granted is otherwise exercised. Revocation may be accomplished by: (i) the execution of a later dated Proxy Card; (ii) the execution of a later casted Internet or telephone vote with regard to the same shares; (iii) giving written notice to Tonya K. Sturm, Secretary, First United Corporation, 19 South Second Street, Oakland, Maryland 21550-0009; or (iv) giving written notice to the Secretary in person at the Annual Meeting. The Internet and telephone voting facilities will close at 11:59 p.m. ET for shareholders of record and for shares held beneficially in street name on                   , 2020. Any shareholder who attends the Annual Meeting and revokes his/her proxy may vote in person. However, attendance by a shareholder at the Annual Meeting alone will not have the effect of revoking that shareholder’s validly executed proxy.

Methods of Voting

Shareholders may vote on matters that are properly presented at the Annual Meeting in four ways:

The Corporation is offering registered shareholders the opportunity to vote their shares electronically through the Internet or by telephone, in addition to following the traditional method of completing a paperBLUE Proxy Card and returning it by mail. Shareholders may vote by telephone or via the Internet by following the procedures described on theBLUE Proxy Card. To vote via telephone or the Internet, please have theBLUE Proxy Card in hand, and call the number or go to the website listed on theBLUEProxy Card and follow the instructions. The telephone and Internet voting procedures are designed to authenticate shareholders’ identities, to allow shareholders to give their voting instructions, and to confirm that shareholders’ instructions have been recorded properly. Shareholders voting through the Internet should understand that they may bear certain costs associated with Internet access, such as usage charges from their Internet service providers.

Please note that if you hold your shares in a stock brokerage account, your broker may not be able to vote your shares of Common Stock on Proposals 1, 2 or 3 unless you provide voting instructions to your broker. Accordingly, it is very important that you instruct your broker to vote your shares by following the instructions provided by that nominee when it sends this Proxy Statement to you. You may not vote shares held in street name by returning aBLUE Proxy Card directly to the Corporation or by voting in person at the Annual Meeting unless you provide a “legal proxy”, which you must obtain from your bank, broker, trust or other nominee.

BENEFICIAL OWNERSHIP OF COMMON STOCK BY

PRINCIPAL SHAREHOLDERS AND MANAGEMENT

The following table sets forth information as of the March 27, 20209, 2021 relating to the beneficial ownership of the Common Stock by (i) each person or group known by the Corporation to beneficially own more than five percent of the outstanding shares of Common Stock; (ii) each of the Corporation’s directors, director nominees and named executive officers (as defined below under “Remuneration“Compensation of Executive Officers”); and (iii)(ii) all directors, director nominees and executive officers of the Corporation as a group. Generally, a person “beneficially owns” shares if he or she has, or shares with others, the right to vote those shares or to invest (or dispose of) those shares, or if he or she has the right to acquire such voting or investment rights, within 60 days of the Record DateMarch 9, 2021 (such as by exercising stock options or similar rights). The percentages shown for 20202021 were calculated based on 6,966,8986,995,867 issued and outstanding shares of Common Stock, plus, for each named person, any shares that such person may acquire within 60 days of the Record Date.March 9, 2021. Except as otherwise noted, the address of each person named below is the address of the Corporation. So that shareholders can see how beneficial ownership by our directors, director nominees and named executive officers has changed, the table also provides beneficial ownership as of February 28, 2019,March 27, 2020, which was the recordcut-off date for the 2019 Annual Meeting, and was taken frombeneficial ownership disclosures in the proxy statement for that meeting.the 2020 Annual Meeting of Shareholders (the “2020 Annual Meeting”).

Notes:

The following table sets forth information as of March 9, 2021 relating to the beneficial ownership of the Common Stock by each person or group known by the Corporation to beneficially own more than five percent of the outstanding shares of Common Stock.

Notes:

ELECTION OF DIRECTORS (Proposal 1)

The number of directors who shall serve on the Board is currently set at eleven members,12, and directors are divided into three classes, as nearly equal in number as possible, with respect to the time for which the directors may hold office. Each director is elected to hold office for a term of three years, and the terms of one class of directors expire each year. The terms of Class III Directors expire this year, the terms of Class IIIII Directors expire in 2021,2022, and the terms of Class IIII Directors expire in 2022.2023. In all cases, each director serves until his or her successor is duly elected and qualifies. Director Gary R. Ruddell, whose term expires this year, is not standing for re-election at the 2021 Annual Meeting in accordance with the mandatory director retirement provision of the Bylaws. To address the vacancy that would otherwise be created by Mr. Ruddell’s retirement, the Board has reduced to 11 the number of directors who shall serve on the Board, effective as of the conclusion of the 2021 Annual Meeting.

At this year’sthe 2021 Annual Meeting, upon the recommendation of the Nominating and Governance Committee (the “Nominating Committee”), the Board will ask shareholders to vote on the election of John F. Barr, Brian R. Boal, John W. McCulloughMses. Chadha, DiPietro, Milon and Marisa A. ShockleyRodeheaver to serve as Class III Directors until the 20232024 Annual Meeting and until their successors are duly elected and qualify. Each of the foregoingMs. Rodeheaver was elected by shareholders at the 20172018 Annual Meeting of Shareholders and is standing for re-election. Ms. Milon was elected by the Board in July 2020 to fill a vacancy created by the retirement of our former director Robert W. Kurtz and was recommended for election by a non-management director and the CEO. Driver Management was offered the opportunity to interview Mses. Milon and DiPietro prior to the 2020 Annual Meeting, but refused the opportunity to do so. Ms. Chadha was elected by the Board in January 2021 to fill the vacancy created by the retirement of our former director Elaine McDonald, after she had been under consideration by the Board since October 2020, and was recommended for election by a non-management director and the CEO. Ms. DiPietro was elected by the Board in January 2021 in contemplation of Mr. Ruddell’s retirement, after she had been under consideration by the Board since March 2020, and was recommended for election by a non-management director, the CEO and a shareholder. In the event a Board nominee declines or is unable to serve as a director, which is not anticipated, the proxies designated on the BLUE Proxy Card will vote in their discretion with respect to a substitute nominee named by the Board, or the Board will reduce the total size of the Board, in its discretion. Proxies cannot be votedYou may not vote for a greater number of personsnominees than the four nominees named in this Proxy Statement and on theBLUEProxy Card.

Information about the principal occupations, business experience and qualifications of these nominees is provided below under the heading “QUALIFICATIONS OF DIRECTOR NOMINEES AND CURRENT DIRECTORS”.“Qualifications of Director Nominees and Current Directors.”

As each of the Class II directors is standing for election, each has an interest in the outcome of the vote on Proposal 1.

The Board of Directors unanimously recommends that shareholders vote “FOR” each of the director nominees named above.

Nominees for Class III Directors

(Nominated for reelectionelection at the 20202021 Annual Meeting)

Name

Carissa L. Rodeheaver

CONTINUING DIRECTORS

The following tables identify each director of the Corporation whose term does not expire in 2020.2021. Information about the principal occupations, business experience and qualifications of these continuing directors is provided below under the heading “QUALIFICATIONS OF DIRECTOR NOMINEES AND CURRENT DIRECTORS”.“Qualification of Director Nominees and Current Directors.”

Class II Directors

(Terms expire in 2021)

Class III Directors

(Terms expire in 2022)

Name

M. Kathryn Burkey

I. Robert Rudy

H. Andrew Walls, III

Class I Directors

(Terms expire in 2023)

Name

John F. Barr

Brian R. Boal

John W. McCullough
Marisa A. Shockley

QUALIFICATIONS OF DIRECTOR NOMINEES AND CURRENT DIRECTORS

In addition to bringing extensive knowledge of the communities served by the Corporation through their involvement with their communities, as business partners and volunteers, the

The Nominating and Governance Committee (the “Nominating Committee”) believes that all director nominees and continuing directors possess a diverse balance of skills, business experience and expertise necessary to provide leadership to the Corporation. In addition, the Corporation’s nominees bring extensive knowledge of the communities served by the Corporation through their involvement with their communities, both as business partners and volunteers. The following discussion sets forth the specific experience, qualifications, other attributes and skills of each director nominee and continuing director that led the Nominating Committee to determine that such person should serve on the Board in light of the Corporation’s business and structure. Each of the director nominees has consented to (i) serve as a nominee, (ii) serve as a director if elected, and (iii) to being named as a nominee in this Proxy Statement. All current directors also serve on the board of directors of First United Bank & Trust (the “Bank”), the Corporation’s wholly-owned subsidiary.

Director Nominees for Re-ElectionElection

Continuing Directors

Age 56

Director Since: May 2014

Independent

Committees: Nominating Committee and Strategic Planning Committee

Skills and Qualifications: business operations and marketing expertise, human resource management, executive leadership, extensive knowledge of floor plan lending, non-profit expertise, strategic planning and broad knowledge of Frederick County, Maryland market

Conclusion and Recommendation; Vote Required

Assuming that Driver Management is eligible to nominate director candidates at the Annual Meeting, the affirmativevote by a plurality of the shares present in person (including by remote communication, if applicable) or represented by proxy at the Annual Meeting and entitled to vote thereon is requiredtoelect the four Board nominees listed on theBLUE Proxy Card (i.e., Messrs. Barr, Boal and McCullough and Ms. Shockley) to serve on our Board for a three-year term of office expiring at the 2023 Annual Meeting of Shareholders. In that case, because each director nominee will require more “FOR” votes than the director nominee(s) who receive the least number of votes in order to be elected, “withhold” votes will have no effect on the outcome on Proposal 1,although they will be considered present for the purpose of determining the presence of a quorum. Broker non-votes with respect to the election of directors, as described in Proposal 1, will have no impact on the outcome of Proposal 1,although they will be considered present for the purpose of determining the presence of a quorum. If Driver Management is not entitled to vote its shares at the Annual Meeting and, thus, nominate directors at the Annual Meeting, then directors will be elected by a majority of votes cast. In such case, broker non-votes will have no effect on the outcome of Proposal 1, but “withheld” votes will be treated as votes against a director candidate.

The Board recommends that shareholders vote “FOR” the election of the four Board nominees listed on the BLUE Proxy Card (i.e., Messrs. Barr, Boal and McCullough and Ms. Shockley) to serve on our Board for a three-year term of office expiring at the 2023 Annual Meeting of Shareholders.

CORPORATE GOVERNANCE AND OTHER MATTERS

Our Shareholder Engagement Program

Board-driven engagement. The Board oversees and participates in the shareholder engagement process, and regularly reviews and assesses shareholder input.input on a range of topics. Both the Chairman and the Lead Director play a central role in the Board’s shareholder engagement efforts. Theefforts, with support and participation from management and other directors regularly participate in meetings with shareholders.

Year-round engagement and Board reporting. The CEO and CFO, together with other executive management members and directors, conduct regular, year-round outreach to shareholders in-person and by phone to obtain their input on key matters and to inform management and the Board about the issues that shareholders tell us matter most to them. Our shareholder and investor outreach also typically includes investor road shows, analyst meetings, and investor conferences. We also continue to improve our engagement and communications with our retail shareholders, including employee shareholders.

Transparent and informed governance enhancements. The Board routinely reviews and improves the Corporation’s governance practices and policies, including our shareholder engagement practices. Shareholder input is regularly shared with the Board, its committees, and management, facilitating a dialogue that provides shareholders with transparency into our governance practices and considerations, and informs the Corporation’s enhancement of those practices. In addition to shareholder sentiments, the Board considers trends in governance practices and regularly reviews the voting results of our meetings of shareholders, the governance practices of our peers, and current trends in governance.

Committees of the Board

The Board has the following Committees:committees: an Audit Committee,Committee; an Asset and Liability Management Committee, ,Committee; a Strategic Planning Committee,Committee; a Compensation Committee, aCommittee; the Nominating and Governance CommitteeCommittee; and a Risk and Corporate Compliance Committee. These committees are discussed below.

Audit Committee– The Audit Committee is a separately-designated standing committee established pursuant to Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and consists of Brian R. Boal (Chairman), M. Kathryn Burkey, Robert W. Kurtz, John W. McCullough and Elaine L. McDonald.Act. The committeeAudit Committee is responsible for the hiring, setting of compensation and oversight of the Corporation’s independent registered public accounting firm. The Audit Committee also assists the Board in monitoring (i) the integrity of the financial statements, (ii) the performance of the Corporation’s internal audit function and (iii) the Corporation’s compliance with legal and regulatory requirements. In carrying out its duties, the Committee meets with the internal and independent auditors, with and without management present, to discuss the overall scope and plans for their respective audits, the results of their examinations, their evaluations of the Corporation’s internal controls, and the overall quality of the Corporation’s financial reporting. The Board has determined that all audit committee members are financially literate and that Ms. Burkey and Messrs. Boal Kurtz and McCullough each qualify as an “audit committee financial expert” as defined by the SEC in Item 407 of Regulation S-K. This committee met nine times in 2019. The Board has adopted a written charter for the Audit Committee, a copy of which is available on the Corporation’s website at www.mybank.com.https://investors.mybank.com/corporate-overview/documents/default.aspx.

Asset and Liability Management Committee– The Asset and Liability Management Committee consists of John F. Barr, John W. McCullough, Carissa L. Rodeheaver, Gary R. Ruddell, I. Robert Rudy and Marisa A. Shockley. The committee reviews and recommends changes to the Corporation’s Asset and Liability, Investment, Liquidity, and Capital Plans. This Committee met four times in 2019.

Strategic Planning Committee– The Strategic Planning Committee consists of John F. Barr, Brian R. Boal, M. Kathryn Burkey, Robert W. Kurtz, John W. McCullough, Elaine L. McDonald, Carissa L. Rodeheaver, Gary R. Ruddell, I. Robert Rudy, Marisa A. Shockley and H. Andrew Walls, III. The Committee focuses on long-term planning to ensure that management’s decisions take into account the future operating environment, the development of corporate statements of policy, and review of management’s internal and external information through its Enterprise Risk Management framework. This committee met twice in 2019.

Compensation Committee – The Compensation Committee, which met eight times in 2019, consists of  M. Kathryn Burkey (Chairman), Robert W. Kurtz,  John W. McCullough, I. Robert Rudy and H. Andrew Walls, III.  The Committee is responsible for developing a compensation policy for the executive officers and for recommending to the Board a compensation policy for the directors of the Corporation and its subsidiaries, overseeing the Corporation’s various compensation plans and managing changes for executive compensation and recommending changes for director compensation.  The Committee determines executive compensation pursuant to the principles discussed below under the heading “Renumeration of Executive Officers”.Officers.” The Board reviews and, where appropriate, approves or ratifies committee recommendations.  The Compensation Committee may not delegate its authority to any other person or corporate body without the authorization of the Board. The Compensation Committee has adopted a written charter, a copy of which is available on the Corporation’s website at www.mybank.com.https://investors.mybank.com/corporate-overview/documents/default.aspx.

Nominating and Governance Committee– The Nominating Committee consists of John W. McCullough (Chairman), Elaine L. McDonald, Marisa A. Shockley and H. Andrew Walls, III. The Committee is responsible for developing qualification criteria for directors, reviewing director candidates recommended by shareholders (see “Director Recommendations and Nominations” below), actively seeking, interviewing and screening a diverse group of individuals qualified to become directors, recommending to the Board those candidates who should be nominated to serve as directors and developing and recommending to the Board for adoption corporate governance guidelines, codes of ethics and similar policies. This Committee met twice in 2019. The Nominating Committee has a written charter, a copy of which is available on the Corporation’s website atwww.mybank.comhttps://investors.mybank.com/corporate-overview/documents/default.aspx.

Risk and Corporate Compliance Committee.– The Risk and Compliance Committee.  The Directors’ Risk and Compliance Committee consists of M. Kathryn Burkey, Robert W. Kurtz, John W. McCullough, Carissa L. Rodeheaver, Gary R. Ruddell and H. Andrew Walls, III and is responsible for reviewing the Bank’s overall risk profile and the alignment of the Corporation’s risk profile with the Corporation’s strategic plan, goals and objectives. The Committee is also responsible for reviewing outstanding audit issues and compliance recommendations as identified by various internal or external parties, approving operational risk programs such as the Bank Protection Act Program, the Business Continuity Planning Program, Cybersecurity Program, the Information Security Program, Privacy Program, Identification Theft/Red Flag Program and Bank Secrecy Act Program.  The Risk and Compliance Committee is responsible for the annual review of any significant vendor relationships, litigation or consumer complaints as well as the adequacy and effectiveness of the Compliance Program, and the Corporation’s insurance programs and policies in place.  The Committee monitors classified credits and management’s plans for those credits.  This

Current Board Committee met five times during 2019.Membership and Number of Meetings

Board Policies

The Board is committed to setting a tone of the highest ethical standards and performance for our management, officers, and the Corporation as a whole. The Board believes that strong corporate governance practices are a critical element of doing business today.business. As such, the Board has adopted: (i) a Code of Ethics for directors; (ii) Corporate Governance Guidelines for directors; (iii) a Code of Ethics for senior financial officers, which applies to the Corporation’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions; (iv) an Insider Trading Policy; and (v) a Luxury Expenditure Policy. These codes and policies are reviewed on a regular basis to ensure that they reflect the best interests of the Corporation and its shareholders. These codes and policies may be found on the Corporation’s website athttp:https://investors.mybank.com/govdoccorporate-overview/documents/default.aspxs..

Director Independence

Pursuant to Rule 5605(b)(1) of The NASDAQ Stock Marketthe Nasdaq Rules, (the “NASDAQ Rules”), a majority of the Corporation’s directors must be “independent directors” as that term is defined by NASDAQ Rule 5605(a)(2). of the Nasdaq Rules. The Board has determined that each of John F. Barr, Brian R. Boal, M. Kathryn Burkey, Robert W. Kurtz,Sanu Chadha, Christy M. DiPietro, John W. McCullough, Elaine L. McDonald,Patricia Milon, I. Robert Rudy, Gary R. Ruddell, Marisa A. Shockley, and H. Andrew Walls, III is an “independent director”, and these independent directors constitute a majority of the Board. Each of the members of the Audit Committee, Compensation Committee, and of the Nominating Committee is an “independent director”. Each member of the Audit Committee also satisfies the independence requirements of NASDAQ Rule 5605(c)(2)(A). of the Nasdaq Rules. In making these independence determinations, the Board, in addition to the transactions described in the section below under “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS”,entitled “Certain Relationships and Related Transactions,” considered the fact that Mr. Kurtz previously served as an executive officer of the Corporation and the Bank and the fact that Mr. Boal is Mr. Kurtz’s nephew. The amounts paid to Morgantown Printing & Binding (“MP&B”), a corporation owned by Mr. Walls and a trust established for the benefit of his minor children, in 20192020 or any of the past three fiscal years did not exceed 5% of MP&B’s consolidated gross revenues for those years.

Board’s Role in Strategy

The Board’s most important functions are to oversee the development and execution of the Corporation’s long-term strategy and risk management profile. Management and the Board regularly discuss the Corporation’s strategy and progress towards achieving its strategic objectives and reviews the Corporation’s risk factors in light of the current economy, regulatory and political environments. These discussions result in Board input that informs updates to the strategic plan, which are presented to the Board for approval on an annual basis. The Corporation’s strategic planning process also includes periodic reviews of strategic alternatives performed by an independent strategic planning consultant. The resulting assessment of the Corporation’s long-term strategy to create shareholder value is reviewed by the Board and used to inform ongoing strategy development.

Board Leadership and Role in Risk Oversight

The Bylaws provide that the Chairman of the Board shall be the CEO of the Corporation. The Board has employed this leadership structure since the Corporation’s formation in 1984 because it believes that a single experienced leader serving as both Chairman of the Board and CEO is the most appropriate leadership structure for the Corporation. By having one person serve as both Chairman and CEO, the Board believes that the Corporation demonstrates to shareholders, customers, employees, vendors, regulators, and other stakeholders that we have strong leadership, with a single individual setting the tone and having primary responsibility for managing and leading the Corporation. Further, the Board believes that this structure reduces the potential for confusion or duplication of efforts and assures clarity of leadership.

The Board recognizes, however, thatthe importance of independent oversight and support, particularly when the operations of and issues faced by a highly-regulated, publicly-traded corporation such as the Corporation can be complex and that there is a need to rely from time to time on the leadership of a director who is independent of management.complex. Accordingly, to strengthen corporate governance, the Board appoints aan Independent Lead Director, whowhose role is to assist the Chairman of the Board in ensuring strong and effective corporate governance. The Independent Lead Director is responsible for facilitating the resolution of issues relating to the performance of the Chairman of the Board and CEO and other members of management, or any other issue that a director, an officer or an employee believes should be addressed by someone other than the Chairman of the Board and CEO. In furtherance of that objective, the Board has adopted aan Independent Lead Director Policy, which provides that the duties and rights of the Independent Lead Independent Director shall include: (i) presiding at (a) all Board meetings at which the Chairman of the Board is not present, and (b) all executive sessions of independent directors; (ii) serving as a liaison between the Chairman of the Board and the independent directors; (iii) pre-approving Board meeting agendas; (iv) pre-approving Board meeting schedules to assure that there is sufficient time for discussion of all agenda items; (v) the authority to convene meetings of the independent directors; and (vi) if reasonably requested by shareholders, making himself or herself reasonably available for consultation and direct communication with major shareholders. BecauseAnnually, the independent directors appoint one director recommended by the Nominating Committee is charged with overseeing corporate governance matters, the Board believes that it is most appropriate to appoint the Chairman of the Nominating Committeeserve as the Independent Lead Director. JohnMr. McCullough iscurrently serves as the current Chairman of the Nominating Committee and, thus, theIndependent Lead Director.

The Board reviews our leadership structure from time to time in light of the issues that we face and the qualities, experience, skills and education of the directors who comprise the Board. The Board has the power to revise this leadership structure should it deem such a revision necessary or appropriate.

In addition, the Board believes that it is important for the success of our leadership structure to have a strong, competent and independent Board. The Corporation has a well-developed and well-seasoned Board, comprised of the Chairman and CEO and nineeleven additional directors who are “independent directors”, as defined by the NASDAQNasdaq Rules. The Board believes that this high percentage of independence assures an objective and shareholder-based view of the Corporation’s operations.

Of these independent directors, fourthree members qualify as “audit committee financial experts”, as defined by rules adopted by the SEC pursuant to the Sarbanes-Oxley Act of 2002. Although the credentials of each director are noted elsewhere in this Proxy Statement, it is worth illustrating the credentials of these fourthree members that make them eligible for this distinction:

In an effort to hone their skills, and to assure their continued independence, members of the Board undertake regular training. A number of methods are employed to provide in-depth training. On frequent occasions, internal training is provided to familiarize the Board with regulatory requirements imposed on financial institutions by applicable laws such as the Bank Secrecy Act and the Community Reinvestment Act. Periodically, directors attend seminars related to banking issues, which offer them the additional benefit of meeting with directors of other financial institutions. All directors have direct access to the American Bankers Association, which enables them to keep abreast of issues pertinent to the banking industry and to research banking materials. The FDIC also has available a specific board education program which is periodically used for director training.

The strength of the Board, and a valuable counter balance to management, is found in the risk management practices employed by the Board, directly and through its various specialized committees and the Independent Lead Director. The Board, as part of its oversight and governance functions, regularly reviews risks and appropriate modeling of Asset Liability Management, loan concentrations, liquidity, management succession and capital planning. The Directors’ Risk and Compliance Committee is responsible for reviewing the Bank’s overall risk profile and the alignment of the Corporation’s risk profile with the Corporation’s strategic plan, goals and objectives. The Risk and Compliance Committee is also responsible for reviewing outstanding audit issues and compliance recommendations as identified by various internal or external parties, approving operational risk programs such as the Bank Protection Act Program, the Business Continuity Planning Program, Cybersecurity Program, the Information Security Program, Privacy Program, Identification Theft/Red Flag Program and Bank Secrecy Act Program.  The Risk and Compliance Committee is responsible for the annual review of any significant vendor relationships, litigation or consumer complaints as well as the adequacy and effectiveness of the Compliance Program, and the Corporation’s insurance programs and policies in place.  The Risk and Compliance Committee monitors classified credits and management’s plans for those credits. An internal risk management committee, which comprised of the Director of Risk Management and various associates of the Corporation, oversees the Enterprise Risk Management system and reports to the Directors’ Risk and Compliance Committee.

To assist the Board with tracking and reviewing Board and Committee activities, all directors have 24/7 access to all policies and reports, the minutes of every meeting of the Board and its committees over the last five years and numerous other reports and models prepared by or for the Corporation.

To maintain a level of independence from management, the Board conducts regular executive sessions of independent directors. These sessions are led by Mr. McCullough, who serves as the independentIndependent Lead Director and Chairman of the Corporation’s Nominating Committee, John McCullough, who also serves as the Lead Director.

The Board reviews our leadership structure from time to time in light of the issues that we face and the qualities, experience, skills and education of the directors who comprise the Board. The Board has the power to revise this leadership structure should it deem such a revision necessary or appropriate.Committee.

Attendance at Board Meetings

The Board held 1415 meetings in 2019.2020. Directors are expected to attend a combined minimum attendance of 75% of all boardBoard and committee meetings for which they are a member, the strategic planning meeting, and the annual shareholder meeting. Each director who served as such during 20192020 attended at least 75% of the aggregate of (i) the total number of meetings of the Board (held during the period served) and (ii) the total number of meetings held by all committees of the Board on which that person served (held during the period served).

Board, Committee and Director Evaluations

The Board, led by the Nominating Committee, conducts an annual self-evaluation to determine whether it and its committees are functioning effectively. Under each committee’s charter, the committee evaluates and assesses its performance, skills and resources required to meet its obligations under its charter at least annually. Results of the evaluations are then presented to the Board and its committees and used to determine actions designed to enhance the operations of the Board and its committees going forward.

Director Retirement and Board Refreshment

The Bylaws provide that no person may be elected to the Board at any meeting of shareholders if he or she is or will be 72 years of age or older during the calendar year in which such meeting occurs. In 2018, the Nominating Committee began discussions about a formal director refreshment plan in light of upcoming director retirements. This plan was formalized in 2019 and identifies desired skillsets and industry expertise andof future nominees, as well as encourages diversity of members.

We believe that Board refreshment is an integral part of effective governance. While we value the insight of our longer tenured directors and their understanding of the Corporation’s business and the banking industry, we do understand the ongoing need to consider new director candidates who can provide new viewpoints. As a result, we believe that it is important to a board’s oversight role to have an appropriate balance between experienced directors and less tenured directors. Since 2014, we have added six new directors, including three of this year’s director nominees: Mses. Chadha, DiPietro and Milon. In 2019, we reduced the size of our Board with the retirement of a long standing director. Two additional directors retired in 2020, and we anticipate future retirements in 2021 and 2023. We have begun a proactive search process to identify a number of independent board candidates that will enhance our Board’s diversity and provide expertise in key areas such as banking/financial, regulatory, compliance, technology and innovation.

We believe our ongoing Board evolution will result in the strategic refreshment of our independent directors, reduce our Board size, maintain our commitment to diversity and continuously update the skill set of our Board.

Director Onboarding and Education

Overview. Director onboarding and ongoing education programs are important components of fostering Board effectiveness. The Corporate Governance Guidelines provide that directors receive continuing education in areas that will assist them in their duties. The Director Onboarding and Ongoing Education Program engages directors through a mixture of in-house training and outside programs.

Onboarding. The Corporation’s comprehensive program begins with director onboarding activities and includes a thorough orientation process that acclimates new directors to the Corporation, the Board and management. Director onboarding involves a combination of written materials, oral presentations, and meetings with members of the Board and management. Topics covered include: strategic planning, regulatory, financial statements, capital planning, legal and corporate governance matters as well as a Board committee orientation.

Committee Rotation. Directors are rotated through committee assignments every two to three years based on their skillsets to ensure they develop a comprehensive overview of each committee and its role in corporate governance.

Ongoing Education. In an effort to hone their skills, and to assure their continued independence, members of the Board undertake regular training. A number of methods are employed to provide in-depth training. On frequent occasions, internal training is provided to familiarize the Board with regulatory requirements imposed on financial institutions by applicable laws such as the Bank Secrecy Act and the Community Reinvestment Act, and they receive regular training on aspects of information technology and cyber security. Periodically, directors attend seminars and economic updates related to banking issues, which offer them the additional benefit of meeting with directors of other financial institutions. All directors have direct access to the American Bankers Association, which enables them to keep abreast of issues pertinent to the banking industry and to research banking materials. The FDIC also has available a specific board education program which is periodically used for director training.

The Board also receives in-house training sessions conducted by third party consultants. During 2020, these topics included cyber risk and security, economic updates, community banking trends and Environmental, Social and Governance matters.

Director Recommendations and Nominations

The Nominating Committee will from time to time review and considerDirector candidates recommended by shareholders. A shareholder may nominate a director candidate by written notice to the Chairman of the Board or the President, which notice must include: (i) the recommending shareholder’s contact information, including his or her name and address; (ii) the class and number of shares of the Corporation’s capital stock beneficially owned by the recommending shareholder; (iii) the name, address and credentials of the candidate for nomination, including the principal occupation of each proposed nominee; (iv) the number of shares of the Corporation’s capital stock beneficially owned by the candidate; (v) the candidate’s written consent to be considered as a candidate; and (vi) all information relating to such proposed nominee that would be required to be disclosed by Regulation 14A under the Exchange Act promulgated thereunder, assuming such provisions would be applicable to the solicitation of proxies for such proposed nominee. Such recommendation must be delivered or mailed to the Chairman of the Board or the President no less than 150 days nor more than 180 days before the date of the Annual Meeting of Shareholders for which the candidate is being recommended, which, for purposes of this requirement, the date of the meeting shall be deemed to be on the same day and month as the Annual Meeting for the preceding year.

Candidates may come to the attention of the Nominating Committee from current directors, executive officers, shareholders, or other persons. TheDuring 2020, the Nominating Committee does not haveadopted a formal policy under which it considers the diversity of candidates for directorship when making nomination recommendations. This policy ensures that the pool of candidates are ethnically, racially, and gender diverse. The Nominating Committee periodically reviews its list of candidates available to fill Board vacancies and researches the talent, skills, expertise and general background of these candidates. In evaluating candidates for nomination, the Nominating Committee uses a variety of methods and regularly assesses the size of the Board, whether any vacancies are expected due to retirement or otherwise, the need for particular expertise on the Board, and whether the Corporation’s market areas are adequately represented by Board members. In nominating director candidates, the Nominating Committee generally seeks to choose individuals that have skills, education, experience and other attributes that will complement and/or broaden the strengths of the existing directors.

In 2014, the Corporation created an Advisory Council consisting of five separate Advisory Groups, which represent each of our market areas. The Advisory Groups consist of business owners and key individuals within each local market area. The purpose of these Advisory Groups is to foster open discussions that will enable us to enhance our understanding of the difference in each of these markets and the financial needs of the customer base. The meetings are led by local Market Presidents and are also attended by members of the management team and directors. These meetings include topics of discussion such as local market analysis, changes in the market, new products and services, customer engagement, customer experiences, and human talent. These meetings also provide a sounding board for our marketing and advertising plans and provide great opportunities to network with local businesses. From time to time, promising director candidates come to the attention of the Nominating Committee through their service on these Advisory Groups, although such service is not a requirement of being considered for nomination.

The Nominating Committee will from time to time review and consider candidates recommended by shareholders. A shareholder may recommend a director candidate by written notice to the Chairman of the Board or the President, which notice must include: (i) the recommending shareholder’s contact information, including his or her name and address; (ii) the class and number of shares of the Corporation’s capital stock beneficially owned by the recommending shareholder; (iii) the name, address and credentials of the candidate for consideration, including the principal occupation of each proposed nominee; (iv) the number of shares of the Corporation’s capital stock beneficially owned by the candidate; (v) the candidate’s written consent to be considered as a candidate; and (vi) all information relating to such proposed nominee that would be required to be disclosed by Regulation 14A under the Exchange Act promulgated thereunder, assuming such provisions would be applicable to the solicitation of proxies for such proposed nominee. Such recommendation must be delivered or mailed to the Chairman of the Board or the President no less than 150 days nor more than 180 days before the date of the 2021 Annual Meeting of Shareholders for which the candidate is being recommended, which, for purposes of this requirement, the date of the meeting shall be deemed to be on the same day and month as the 2021 Annual Meeting for the preceding year.

Whether recommended by a shareholder or another third party, or recommended independently by the Nominating Committee, a candidate will be selected for nomination based on his or her talents and the needs of the Board. The Nominating Committee’s goal in selecting nominees is to identify persons that possess complementary skills and that can work well together with existing Board members at the highest level of integrity and effectiveness. A candidate, whether recommended by a Corporation shareholder or otherwise, will not be considered for nomination unless he or she maintains strong professional and personal ethics and values, has relevant management experience, and is committed to enhancing financial performance. The Corporation looks for diverse candidates that possess competencies that will support our long-term strategies. These competencies could include expertise in the banking industry, finance, risk management, real estate, marketing, regional geographic markets and economics, strategic planning, executive management, technology or other relevant qualifications. Certain Board positions, such as Audit Committee membership, may require other special skills, expertise or independence from the Corporation.

It should be noted that a director recommendation is not a nomination. AThe Corporation believes that a shareholder who is entitled to vote for the election of directors and who desires to nominate a candidate for election to be voted on at an Annual Meeting may do so only in accordance with Section 4 of Article II of the Bylaws, and must specify (i) the recommendingnominating shareholder’s contact information, including his or her name and address; (ii) the class and number of shares of the Corporation’s capital stock beneficially owned by the recommending shareholder; (iii) the name, address and credentials of the candidate for nomination, including the principal occupation of each proposed nominee; (iv) the number of shares of the Corporation’s capital stock beneficially owned by the candidate; (v) the candidate’s written consent to be considered as a candidate; and (vi) all information relating to such proposed nominee that would be required to be disclosed by Regulation 14A under the Exchange Act promulgated thereunder, assuming such provisions would be applicable to the solicitation of proxies for such proposed nominee. Such recommendationnomination notice must be delivered or mailed to the Chairman of the Board or the President no less than 150 days nor more than 180 days before the date of the Annual Meeting of Shareholders for which the candidate is being recommended,considered, which, for purposes of this requirement, the date of the meeting shall be deemed to be on the same day and month as the Annual Meeting of Shareholders for the preceding year. Accordingly, a shareholder who desiresintends to recommend a person for consideration asnominate a director nominee for the 20212022 Annual Meeting of Shareholders (the “2021“2022 Annual Meeting”) must submit such recommendation as provided above no earlier than [•], 20202021 and no later than [•], 2020.2021.

Shareholder Communications with the Board

Shareholders may communicate with the Board, including the non-employee directors,by sending a letter to First United Corporation Board of Directors, c/o Tonya K. Sturm, Secretary, First United Corporation, 19 South Second Street, Oakland, Maryland, 21550-0009. The Secretary will deliver all shareholder communications directly to the Board for consideration.

Policy Regarding Director Attendance at Annual Meetings

The Corporation believes that the 2021 Annual Meeting is an opportunity for shareholders to communicate directly with directors and, accordingly, expects that all directors will attend each Annual Meeting. If you would like an opportunity to discuss issues directly with our directors, please consider attending this year’s Annual Meeting. The 20192020 Annual Meeting was attended virtually by eightnine persons who served on the Board as of the date of that meeting.

Family Relationships Among Directors, Nominees and Executive Officers

Director Brian R. Boal is the nephew of director Robert W. Kurtz.None.

Policy with Respect to Hedging Transactions

The Corporation has not adopted any practices or policies regarding the ability of employees (including officers) or directors, or any of their designees, to purchase financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds), or otherwise engage in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Corporation’s equity securities (i) granted to the employee or director by the Corporation as part of his or her compensation or (ii) held, directly or indirectly, by the employee or director.

Legal Proceedings

In light of a letter received by the Corporation from counsel for Driver Management on May 18, 2020, the Corporation, on May 20, 2020, instituted a declaratory relief action in the Circuit Court for Garrett County, Maryland, in which Driver Partners, Driver Management Company, Mr. Cooper and each of Michael J. Driscoll, Lisa Narrell-Mead and Ethan Elzen (the individuals being collectively referred to as the “Driver 2020 Nominees”) were named as defendants (the “Declaratory Relief Action”). In the Declaratory Relief Action, the Corporation sought a declaratory judgment that Driver Partners and the Driver 2020 Nominees were prohibited from voting their shares of Common Stock and nominating director candidates for election for five years, including at the 2020 Annual Meeting, by operation of subsection (e) of the Maryland Stock Acquisition Statute (which mandates that shares acquired in violation of the Maryland Stock Acquisition Statute are ineligible to vote for five years), and pursuant to the Bylaws, respectively. Defendants in the Declaratory Relief Action filed motions to dismiss.

With the motions to dismiss pending, Driver Partners, on September 4, 2020, filed a lawsuit against the Corporation, all of its then-incumbent directors, and former directors Robert W. Kurtz and Elaine McDonald (the individuals being collectively referred to as the “Director Defendants”) in the United States District Court for the District of Maryland and styled Driver Opportunity Partners I LP v. First United Corp., et al., No. 1:20-cv-2575 RDB (the “Driver Litigation”). Driver Partners’ complaint purported to assert nine tort causes of action related to the Corporation’s and the Director Defendants’ conduct associated with the Corporation’s 2020 Annual Meeting and Driver Management’s proxy contest.

On September 8, 2020, the Corporation filed (i) papers opposing the defendants’ motions to dismiss the Declaratory Relief Action and (ii) an amended complaint in the Declaratory Relief Action. In large part, the amended complaint dismissed claims against the Driver 2020 Nominees without prejudice, as they had all lost in the shareholder vote and had represented that they were no longer shareholders of the Corporation. Additionally, the amended complaint included updated allegations to reflect the outcome of the Corporation’s 2020 Annual Meeting and other matters.

With the Driver 2020 Nominees no longer being parties, the remaining defendants in the Declaratory Relief Action removed the Declaratory Relief Action to federal district court on September 8, 2020. The Declaratory Relief Action is currently pending in the same court as the Driver Litigation, with the matter styled First United Corp. v. Driver Opportunity Partners I LP, et al., No. 1:20-cv-2592-RDB. The remaining defendants renewed their motion to dismiss as to the Corporation’s amended complaint.

For its complaint, Driver Partners alleged that certain acts and omissions of the Corporation and/or the Director Defendants in connection with the 2020 Annual Meeting and/or in response to Driver Management’s proxy contest constituted a wide range of torts, including breaches of fiduciary duty, abuses of process, malicious prosecution, defamation, tortious interference, unfair competition, and unjust enrichment. Driver Partners sought unspecified compensatory and punitive damages and asked the court to vacate the results of the director election at the 2020 Annual Meeting and order a new meeting of shareholders for the purpose of electing directors. The Corporation and Director Defendants filed motions to dismiss Driver Partners’ complaint. After briefing closed, the court, on January 4, 2021, held a telephonic hearing on the parties’ motions to dismiss. In a ruling on the Declaratory Relief Action issued January 6, 2021, the court certified a question to the Maryland Court of Appeals concerning whether the Corporation could pursue a claim based on the Maryland Stock Acquisition Statute, and otherwise stayed the Declaratory Relief Action pending a decision from the Maryland Court of Appeals.

On the Corporation’s and the Director Defendants’ motions to dismiss the Driver Litigation, the court on January 11, 2021, issued an order dismissing six of Driver Partners’ nine asserted claims:  (i) breach of fiduciary duty; (ii) abuse of process (litigation); (iii) abuse of process (regulatory); (iv) malicious prosecution; (v) unfair competition; and (vi) unjust enrichment. The court denied the motion to dismiss Driver Partners’ two asserted claims for defamation and its claim for intentional interference with prospective business relations. Subsequently, on January 25, 2021, Driver Partners filed motions asking the court to reconsider its dismissal of its breach of duty claim, and a separate motion for leave to amend Driver Partners’ complaint to assert claims for breach of fiduciary duty and for violation of Section 14(a) of the Exchange Act and SEC Rule 14a-9 focused on proxy materials related to the 2020 Annual Meeting.  On February 8, 2021, the Corporation and the Director Defendants filed papers opposing Driver Partners’ motions. Driver Partners’ filed reply papers on the motions on February 22, 2021, and briefing is now closed. The court has not yet decided either motion.

Meanwhile, the Maryland Court of Appeals accepted the federal court’s request to certify a question in the Declaratory Relief Action. The Corporation filed its opening brief on February 23, 2021, and the current schedule contemplates a likelihood of briefing extending into April 2021 and an expectation of argument before the Court of Appeals in May 2021.

DIRECTOR COMPENSATION

The following table provides information about compensation paid to or earned by the Corporation’s directors during 20192020 who are not also “named executive officers” (as defined below under the heading, “Remuneration“Compensation of Executive Officers”). Mses. Chadha and DiPietro did not receive any remuneration from the Corporation or the Bank in 2020. The amounts set forth below include the compensation paid by both the Corporation and the Bank for service on the Board and the board of directors of the Bank, respectively.

Notes:

The Compensation Committee of the Board is responsible for evaluating and recommending director compensation to the Board for approval. In evaluating director compensation, the Compensation Committee considers the legal responsibilities that directors owe to the Corporation and its shareholders in connection with their service on the Board and/or a committee of the Board, and the risks to the directors associated with their service, and reviews the fees and benefits paid to directors of similar institutions in and around the Corporation’s market areas. The Compensation Committee’s current director compensation arrangement contemplates a mix of cash and equity awards, as discussed below.

For 2019,2020, each director who was not an employee of the Corporation or the Bank (a “Non-Employee Director”) received a cash retainer of $10,000, a grant of 1,000 fully-vested shares of Common Stock, having a grant date fair value of $18,300,$14,520, and a cash fee of $1,000 for each meeting of the Board and/or the Bank’s board of directors that he or she attended. The cash fee is reduced to $200 when special meetings are called and the meeting lasts less than two hours or is related to regulatory matters. Directors do not receive more than one cash fee when the Board and the board of directors of the Bank meet together. Directors who served on committees of the Corporation also received a cash fee of $500 for each committee meeting that they attended. The Chairperson of each of the Audit Committee (Mr. Boal), Compensation Committee (Ms. Burkey) and Nominating Committee (Mr. McCullough) received an additional annual cash retainer of $2,500. All directors of the Corporation also served on the board of directors of the Bank and received a cash fee of $500 for attending each meeting of a committee of the Bank’s board of directors of the Bank on which they served.

Non-Employee Directors may elect to receive some or all of their cash retainers in shares of Common Stock. The number of shares paid in lieu of cash retainers is determined by dividing the portion of the cash retainer to be paid in stock by the mean between the high and low sales price of a share of Common Stock on the trading day immediately preceding the payment date, as reported on The NASDAQNasdaq Stock Market.

All directors are permitted to participate in the Corporation’s Amended and Restated Executive and Director Deferred Compensation Plan (the “Deferred Compensation Plan”). The material terms of the Deferred Compensation Plan are discussed below under the heading “Remuneration“Compensation of Executive Officers”. During 2019, Ms. McDonald participated in this plan and whereby all of her director’s fees during 2019 were deferred and placed into her Deferred Compensation account held in the Trust department.Officers.”

AUDIT COMMITTEE REPORT

The Audit Committee has (i) reviewed and discussed the Corporation’s audited consolidated financial statements for the year ended December 31, 20192020 with the Corporation’s management; (ii) discussed with Baker Tilly US, LLP, formerly known as Baker Tilly Virchow Krause, LLP (“Baker Tilly”), the Corporation’s independent auditors for the fiscal year ended December 31, 2020, the matters required to be discussed by the applicable requirements of the as adopted by the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC, and (iii) received the written disclosures and the letter from Baker Tilly required by applicable requirements of the PCAOB regarding Baker Tilly’s communications with the Audit Committee concerning its independence, and discussed with Baker Tilly its independence. Based on these reviews and discussions, the Audit Committee recommended to the Board that the audited consolidated financial statements for the fiscal year ended December 31, 20192020 be included in the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.2020.

By:         AUDIT COMMITTEE

Brian R. Boal

M. Kathryn Burkey

Robert W. Kurtz

John W. McCullough

Elaine L. McDonaldMarisa A. Shockley

EXECUTIVE OFFICERS

Information about the Corporation’s executive officers is set forth below. All officers are elected annually by the Board and hold office at its pleasure.

Carissa L. Rodeheaver, age 54,55, serves as the Chairman of the Board, President and CEO of both the Corporation and the Bank. She has served as President since November 2012 and as Chairman and CEO since January 1, 2016 upon the retirement of William B. Grant from those positions.2016. Prior to these appointments, Ms. Rodeheaver served as the CFO of the Corporation and the Bank starting in January 2006 and as Secretary and Treasurer of the Corporation and the Bank starting in December 2009. Between March 19, 2008 and her appointment as President, Ms. Rodeheaver served as Executive Vice President of the Bank. Prior to this, Ms. Rodeheaver served as Trust Officer of the Bank from 1992 to 2000, as Vice President and Trust Department Sales Manager of the Bank from 2000 to 2004, and as Vice President and Assistant CFO of the Corporation from 2004 to December 31, 2005. She is a Certified Public Accountant.

Tonya K. Sturm, age 52,54, serves as Senior Vice President and CFO of both the Corporation and the Bank. She has served as CFO since May 2015 and as Senior Vice President since June 2016. In May 2016, she was appointed Secretary and Treasurer of the Corporation and the Bank. Prior to the appointment of Senior Vice President, she served as Vice President since September 2008. Prior to her appointment as CFO and Vice President, Ms. Sturm served as Controller of the Corporation and the Bank starting in September 2008, as a Staff Auditor of the Bank from July 1996 to June 1998, as a Credit Analyst of the Bank from June 1998 to March 1999, as Staff Accountant of the Bank from April 1999 to May 2002, as a Senior Staff Accountant of the Bank June 2002 to December 2003, as the Finance Manager of the Bank from January 2004 to May 2006, and as Vice President and Director of Finance of the Bank from June 2006 to August 2008.

Information about the Bank’s executive officers, other than Mses. Rodeheaver and Sturm, is set forth below. All officers are elected annually by the Bank’s board of directors and hold office at its pleasure.

Robert L. Fisher, II, age 51,52, serves as Senior Vice President and Chief LendingRevenue Officer. Mr. Fisher has been employed by the Corporation since September 2013. Mr. Fisher has more than 20 years of experience in the banking industry with the majority of his experience based in commercial banking. Mr. Fisher held the positions of Senior Vice President of Commercial Banking, Managing Director of Commercial Banking, and Regional President at a large regional bank in the Mid-Atlantic region from 2001 to 2013.

Jason B. Rush, age 49,50, serves as a Senior Vice President and Chief Operating Officer. Mr. Rush was appointed Senior Vice President and Chief Operating Officer in January 2017. Prior to this appointment, he served as Senior Vice President and Chief Risk Officer and Director of Operations and Support from 2006 to 2017. Mr. Rush has been employed by the First United organization since October 1993.  Prior to his current position, Mr. Rush served as Vice President, Director of Operations & Support since March 2006, and before that as Vice President and Regional Manager/Community Office Manager from January 2005 to February 2006; Vice President and Community Office Manager/Manager of Cash Management from May 2004 to December 2004; Assistant Vice President and Community Office Manager from April 2001 to April 2004; Community Office Manager from August 1998 to April 2001; Customer Service Officer from March 1997 to July 1998; Assistant Compliance Officer from July 1995 to February 1997; and Management Trainee from October 1993 to July 1995.  Mr. Rush also serves as the Treasurer of Rush Services, Inc., a family-owned business in which he has a fifty percent ownership interest.  He also participates with his brother in farming and land investment.

Keith R. Sanders, age 50,51, serves as Senior Vice President and Senior Trust Officer. Mr. Sanders has been employed by the Corporation since August 2002. He served as Senior Trust Sales Officer from August 2002 until December 2005, and as Senior Trust/Investment Sales Manager from January 2006 until October 2011. He was named First Vice President and Senior Trust Officer on November 1, 2011 and Senior Vice President and Senior Trust Officer on May 22, 2013.

EXECUTIVE COMPENSATION

The Corporation is a “smaller reporting company” as defined in Item 10(f)(1) of the Regulation S-K, and the following discussion of the compensation paid to the Corporation’s named executive officers is intended to comply with the rules relating to the disclosure of executive compensation. Although these rules allow the Corporation to provide less detail about its executive compensation program than companies that are not smaller reporting companies, the Compensation Committee is committed to providing information that is necessary for shareholders to understand its executive compensation-related decisions. Accordingly, this discussion includes supplemental information that describedescribes key decisions on the 20192020 executive compensation program for the named executive officers, as well as key changes for the 2020 program.

Executive Summaryofficers.

The
Executive Summary and Financial Highlights

2020 was an unprecedented year consumed by the pandemic and health care crisis. Despite the economic turmoil caused by the pandemic, the Corporation preserved capital, conservatively increased our allowance for loan losses to protect asset quality and grew total assets by $58.3 million. Grossthe balance sheet through increased loans grew by $44.4 million and deposits grew by $74.5 million. Consolidated net income was $13.1 million fordeposits. Additionally, the year ended December 31, 2019 compared to $10.7 million for 2018. Basic and diluted net income per share for 2019 were both $1.85, compared to basic and diluted net income per common share of $1.51 for 2018, a 23% increase. The net interest margin declined slightly to 3.68% in 2019 from 3.74% in 2018.Board enhanced its corporate governance as follows:

The book value of the our Common Stock was $17.71Earnings per share at December 31, 2019grew 7% as compared to $16.52 per share at December 31, 2018. Capital levels2019 and while the net interest margin was impacted by the interest rate environment and our participation in the PPP, net income remained strong with a total risk-based capital ratiogrowth of 16.29% at year end.5% over prior year. The following represents financial highlights for 2020:

2019 was a year of significant achievement for the Corporation as we:

During 2019,2020, we alsoexperienced volatility in our share price consistent with the banking industry. This impacted short-term returns, but we continued ourto demonstrate a trend of strong performance in generating long-term returns for our shareholders. The exhibit below shows our total shareholder return compared to SNL Financials’ U.S. Banks $1B - $5B index, and the S&P 500 index2020 proxy peer group over the five-year period from December 31, 20142015 to December 31, 2019.2020.

Source: FactSet as of December 31, 2019,2020, and includes price change and reinvested cash dividends

Overview of Compensation Philosophy and Objectives

The Compensation Committee of the Board is responsible for overseeing and administering the Corporation’s employee benefit plans and policies, and for annually reviewing and approving all compensation decisions relating to the executive officers, including the named executive officers. The compensation committee of the Bank’s board of directors has identical responsibilities with respect to executive officers of the Bank. Both the Compensation Committee and the Bank’s compensation committee are made of the same directors. The Compensation Committee submits its decisions regarding compensation to the independent directors of the Board. The Compensation Committee has the authority and resources to obtain, independent of management, advice and assistance from internal and external legal, human resource, accounting or other experts, advisors, or consultants as it deems desirable or appropriate.

The Compensation Committee is composed of at least three directors who are determined to be “independent directors” as that term is defined by NASDAQ Rule 5605(a)(2). of the Nasdaq Rules. The members of the Compensation Committee are appointed each year by the Board, after considering the recommendations and views of the CEO.Nominating Committee. Five members of the Board serve on the Compensation Committee, each of whom is an “independent director”. The Chairman of the Compensation Committee reports to the Board regarding all committee actions.

The Compensation Committee recognizes the importance of balancing the need to attract and retain qualified executive officers with the need to maintain sound principles for the development and administration of compensation and benefit programs. The Compensation Committee has taken steps to enhance the Compensation Committee’s ability to effectively carry out its responsibilities as well as ensure that the Corporation maintains strong links between executive pay and performance. Examples of procedures and actions that the Compensation Committee utilized in 20192020 include:

The Compensation Committee believes that the compensation paid to executive officers should be closely tied to the Corporation’s performance on both a short and long-term basis. Overall, the Compensation Committee believes that a performance-based compensation program can assist the Corporation in attracting, motivating and retaining the quality executives critical to long-term success. Accordingly, when and to the extent permitted by law, the Compensation Committee generally seeks to structure executive compensation programs so that they are focused on enhancing overall financial performance.

In setting the CEO’s compensation, the Compensation Committee meets with the CEO to discuss her performance and compensation package. Decisions regarding her package are based upon the Compensation Committee’s independent deliberations and input from the Compensation Committee’s compensation consultant, if one is engaged for that purpose. In setting compensation for other named executive officers, the Compensation Committee considers the CEO’s recommendations, as well as any requested input and data from the Chief Financial Officer,CFO, Human Resources Department and outside consultants and advisors. The Compensation Committee occasionally requests one or more members of senior management to be present at Compensation Committee meetings where executive compensation and corporate or individual performance are discussed and evaluated. Only Compensation Committee members are allowed to vote on decisions regarding executive compensation, and such decisions occur only during its executive sessions.sessions without executive officers present.

In addition to reviewing competitive market values, the Compensation Committee also examines the total compensation mix, pay-for-performance relationship, and how all elements, in the aggregate, comprise each executive’s total compensation package. The Compensation Committee also examines all incentive compensation plans at least annually to ensure that such plans do not encourage employees to take unnecessary or excessive risks that threaten the Corporation’s value. All incentive plans contain “claw-back” provisions that require, in the event the Corporation is required to prepare an accounting restatement due to its material noncompliance with any financial reporting requirement under applicable securities laws or applicable accounting principles, each participant who received an award to return it to the extent the accounting restatement shows that a smaller award should have been paid. Further, all incentive plans contain ethics provisions that require a participant to repay an award in the event that the Corporation determines that the award was paid in a plan year in which the participant willfully engaged in any activity that was or is injurious to the Corporation and its affiliates. In general, the Board and/or its Compensation Committee may terminate, suspend or amend an incentive plan at any time.

For 2019, executive compensation consisted primarily of base salary, which is targeted to recognize each executive officer’s performance and contributions to success considering salary standards in the marketplace. No incentive awards were granted in 2019.

Role of Compensation Consultants

The Compensation Committee has the authority and resources necessary to engage independent consultants to aid and provide direction with respect to executive compensation and benefits. The Compensation Committee did not use the services of a compensation consultant with respect to any aspect of executive compensation paid or earned in 2019. However, inIn 2019, the Compensation Committee engaged McLagan, which is part of the Rewards Solutions practice at Aon plc, as its independent compensation consultant to provide advice and facilitate the Committee’s deliberations with respect to executive compensation to be paid in and after 2020.

McLagan repotsreported directly and exclusively to the Compensation Committee and did not provide any other services to us, management or our affiliates. McLagan did not make compensation-related decisions for the Compensation Committee, as the Compensation Committee always retains the authority to make all final compensation-related decisions. During 2019,2020, and after taking into consideration the factors listed in Rule 5605(d)(3)(D) of the Nasdaq Manual,Rules, the Compensation Committee concluded that neither it nor the Corporation has any conflicts of interest with McLagan and that McLagan is independent from management.

Key 2020

Compensation Plan Process and ChangesPlans

McLagan reviewedAnnually, the Board approves the Corporation’s financial budget. The budget supports the multi-year financial objectives of the Corporation and establishes annual financial goals and targets to support achievement of these long-term financial objectives. The specific performance targets for the incentive-based plans are derived from both the annual budget and multi-year financial projections. As part of its annual review of executive compensation, the Compensation Committee reviews base salaries and makes adjustments based upon annual performance appraisals for the preceding year, the experience and qualifications of the executive officer, the scope of responsibilities of the position and the executive’s performance relative to established goals and objectives. During 2020, the Compensation Committee determined that an adjustment was necessary to the base salary of the Chief Operating Officer to better align his salary with the peer group, to recognize the scope of responsibilities underlying his position and his growth since assuming the position. They further determined that no merit salary adjustments would be made to base salaries for other named executive officers due to the introduction of the performance based Short Term and Long Term Incentive Plans in 2020.

A critical element of the compensation program designsphilosophy is a review of the Corporation’s performance and paycompensation levels of our executive officersand mix relative to both typical market practices in the banking industry and industry best practice. In their review, McLagan found that the pay levels for our executive officers were below market median compared to a peer group of similarly-sizedpublicly traded commercial banks. Each year, the Committee reviews this peer group and makes adjustments as necessary. Peer group data is supplemented with national compensation survey data. The comparator bank peer group for that analysis is2020 consisted of 19 banks as listed below.

The peer group was recommended by McLagan and consisted of banks traded on NYSEThe New York Stock Exchange or NASDAQThe Nasdaq Stock Market that met the following parameters as of September 30, 2019:

Exceptions to the criteria above were made for Summit Financial Group, Orrstown Financial Services and Citizens Financial Services due to geographic and/or business model relevance. There were no changes to the peer group in 2020.

Based on McLagan’sthe 2019 McLagan analysis, feedback from shareholders and the judgment of the Compensation Committee, the Compensation Committee determined to adopt new programs and policies for 2020. We believe these changes willThese programs were designed to enhance the at-risk nature of pay, increase alignment between corporate performance and executive rewards as well as between executive interests and shareholder interests, areto be consistent with typical market practice and are in the best interests of the Corporation. The key changes to executive compensation that will bewas provided through these new programs are summarized below.

The Compensation Committee retains discretion to increase or decrease all incentive awards based upon the superior performance, shortfalls in performance, subjective factors or extraordinary non-recurring results. For 2020, no adjustments were made to plan goals or results.

Compensation of Named Executive Officers in 2020

All of the Corporation’s executive officers are also executive officers of the Bank. Both the Corporation and the Bank maintain various compensation plans and arrangements for their respective executive officers, but, where appropriate, most of these plans and arrangements are structured to apply to executive officers of the consolidated group.

The following table sets forth, for each of the last two calendar years (which were also the Corporation’s last two fiscal years), the total compensation awarded to, earned by, or paid to (i) each person who served as the Corporation’s principal executive officer at any time during 2020, (ii) the Corporation’s two most highly compensated executive officers other than the principal executive officer who were serving as such as of December 31, 2020 and whose total compensation (excluding above-market and preferential earnings on nonqualified deferred compensation) exceeded $100,000 during 2020, and (iii) up to two additional individuals for whom disclosure would have been provided pursuant to the foregoing item (ii) had they been serving as executive officers of the Corporation as of December 31, 2020 (all such persons are referred to as the “named executive officers”). For this purpose, the term “executive officer” includes any executive officers of the Bank who performs a policy making function for the Corporation. The Corporation has determined that the named executive officers for purposes of this Proxy Statement include Ms. Rodeheaver, and Messrs. Fisher and Rush. In calendar years 2020 and 2019, executive compensation included annual base salary, restricted stock units (“RSUs”) awarded pursuant to a Long-Term Incentive Plan (the “LTIP”), cash compensation paid under a Short-Term Incentive Plan (the “STIP”), and income related to certain employee benefit plans, and the table that follows reflects compensation paid by both the Corporation and the Bank.

Notes:

Short-Term Incentive Plan

In 2020, the Compensation Committee adopted a Short -Term Incentive Plan (“STIP”)the STIP to provide executives with the opportunity to earn cash incentives based on the achievement of pre-defined performance metrics for each calendar year. Although similar plans are common practice within the banking industry, we havethe Corporation has not had a formal cash incentive plan or made significant cash incentive awards since before the 2008 financial crisis.

The STIP consists of four performance categories, each with defined threshold, target and maximum performance and payout levels. Performance and payouts under each performance category are calculated separately, and failure to meet an acceptable performance threshold for a given category will result in no incentive payout for that category. Similarly, payouts for performance above the defined maximum level for a given category are capped, which we believethe Compensation Committee believes limits the incentive to take unnecessary risks to receive ever-increasing incentive awards. In addition, 80% of the overall award potential is contingent on corporate performance, with the remaining 20% contingent on quantitative individual performance objectives.

TheFor 2020, the Compensation Committee approved four goals to reward performance categorieswith the primary objectives of driving revenue, lowering costs and weightings undermaintaining high asset quality. Multiple metrics were utilized to discourage excessive risk-taking by participants consistent with overall compensation philosophy. In addition to the STIP for 2020 are shown below:

Thefour fundamental measures of corporate performance, the STIP also includes a minimum performance hurdle that must be attained before any awards under the plan are paid. If theThe Corporation does not attain an acceptable levelhad to achieve a minimum of 50% of targeted net income in 2020 no awards will be paidin order for any payout to occur in the plan, regardless of performance in other categories.any goal category. The use of this performance hurdle aligns with bank regulatory best practices intended to protect the safety and soundness of the bank,Bank, rather than representing stretchhigher performance aspirations as with the four plan goals in the table above.below.

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 Compensation 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.

The Compensation Committee reviewed the results of financial operations for the established goals as approved by the Audit Committee before exercising its authority to approve the cash incentive payments on March 4, 2021. The Compensation Committee recognized that 2020 was an unprecedented year, both negatively and positively impacted by the pandemic, the economic environment, and the Government stimulus plans. The Compensation Committee regularly reviewed the actual and projected performance of the Corporation relative to the established goals and ultimately determined that, in spite of the unique performance challenges of 2020, no adjustments would be made with respect to the goals as originally established. As part of its approval process, the Compensation Committee first determined that the net income performance hurdle was met, permitting the payment of awards as earned. They then reviewed the actual performance to each of the goals as shown in the chart below. To calculate the payment level, the weight for each goal was multiplied by the level of achievement for that goal. The total payout was calculated as the sum of all payment levels for each executive.

The 2020 net income performance hurdle for the STIP plan was achieved and the performance measures, respective weights and actual performance levels for 2020 were as follows: