As filed with the Office of the Securities and Exchange Commission on April 2, 2012November 18, 2016

Registration No. 333-_______333-214477

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________

PRE-EFFECTIVE AMENDMENT NO. 1

to

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

___________________________

FIRST UNITED CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

19 South Second Street, Oakland, Maryland 21550

(Address of Principal Executive Offices)

William B. Grant, EsquireCarissa L. Rodeheaver

Chairman, President and Chief Executive Officer and President

First United Corporation

19 South Second Street, Oakland, Maryland 21550

(888) 692-2654

(Name, Address and Telephone Number of Agent for Service)

Copies to:

Andrew D. Bulgin, Esquire

Gordon Feinblatt LLC

The Garrett Building

233 East Redwood Street

Baltimore, Maryland 21202

(410) 576-4280

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Post-Effective Amendment.registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box:Rþ

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.£¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.£¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.£¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b2 of the Exchange Act.

CALCULATION OF REGISTRATION FEE

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.

The information contained in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to completion, dated April 2, 2012November 18, 2016

Prospectus

Dividend Reinvestment and Stock Purchase Plan

800,000 Shares of Common Stock, Par Value $.01 Per Share, Underlying Subscription Rights

to Purchase up to 783,626 Shares of Common Stock

This prospectus relatesWe are distributing, at no charge and on a pro-rata basis, an aggregate of 6,269,004 non-transferable subscription rights, each of which we sometimes refer to as a “right”, to purchase up to an aggregate of 783,626 shares of our common stock at a subscription price of $[•]per share. The subscription price represents a 10% discount to the sale by First United Corporationvolume weighted average closing sales price of our common stock for the 20 trading days immediately preceding[•], 20[•],which was the date on which the registration statement of which this prospectus forms a part was declared effective. Rights are being distributed to each person who held shares of our common stock par value $.01 per share, to First United Corporation shareholders under its Dividend Reinvestment and Stock Purchase Plan, as amended,of 5:00 p.m., Eastern Standard Time, on November 28, 2016, which we refer to as the “Plan”“record date”.

Each right will entitle the holder to a basic subscription privilege and an oversubscription privilege. Under the Plan, youbasic subscription privilege, subject to the fact that we will not issue fractional shares, each right entitles its holder to purchase 0.125 new shares for each share of our common stock held as of the record date, which is the same as one new share for each eight (8) shares held as of the record date. Under the oversubscription privilege, each holder who fully exercises its basic subscription privilege may subscribe, at the subscription price, for additional whole shares for allocation in the event that not all available shares are purchased pursuant to all shareholders’ basic subscription privilege. However, the oversubscription privilege will be offered only for an aggregate number of shares that, when combined with the number of shares purchased pursuant to all shareholders’ basic subscription privilege, does not exceed 783,626 shares. We reserve the right to accept or reject oversubscriptions for any reason. We do not intend to accept any oversubscriptions that we believe may have an unfavorable effect on our ability to preserve our net operating loss deferred tax asset. Purchases of shares pursuant to the opportunityoffering are also subject to reinvest the cash dividends paid on some or all of yourcertain other limitations described in this prospectus. As noted above, we will not issue fractional shares of common stock in additionalthe offering and holders will be entitled to purchase only a whole number of shares of common stock. You also havestock, rounded down to the opportunity to use optional cash payments, of not less than$50 per payment nor more than$100,000 per calendar quarter, to purchase additionalnearest whole number. Thus, a shareholder must own at least eight shares of common stock. Certain transactionsstock as of the record date to purchase one new share under the Plan are subject to fees and commission charges for whichbasic subscription privilege.

If you fully exercise your basic subscription privilege, then you will not experience any dilution in the percentage of our outstanding shares of common stock that you own immediately after the completion of the offering. If we accept your subscription pursuant to your oversubscription privilege, then in all circumstances the percentage of our outstanding shares that you own immediately after the offering will be responsible. Please seehigher than it was before the discussionoffering.

Subscription rights will expire if they are not exercised by 5:00 p.m., Eastern Standard Time, on[•], 20[•], which we refer to as the “expiration date”, unless we extend the offering period for up to 30 days until[•], 20[•]. You should carefully consider whether to exercise your subscription rights before the expiration of “Costs”the offering. All exercises of subscription rights are irrevocable. Our Board of Directors is making no recommendation regarding your exercise of the subscription rights.

We reserve the right to amend the terms of or cancel the offering at any time. Computershare Inc., our subscription agent for the offering, will hold all funds it receives in an escrow account until completion of the offering. If we decide to extend, amend or modify the terms of the offering for any reason, subscriptions received prior to such extension, amendment or modification will remain irrevocable. If we cancel the offering, all subscription funds will be returned promptly, without interest or penalty.

To facilitate the offering, we have entered into Standby Purchase Agreements, which we refer to as “Standby Purchase Agreements”, with certain accredited investors, whom we refer to as the “standby investors”. Subject to certain limits and other conditions set forth in the Standby Purchase Agreements, the standby investors have agreed to purchase from us, at the subscription price, a portion of the shares of our common stock that are not purchased by shareholders in the offering. See the section of this prospectus entitled “DESCRIPTION OF THE PLAN”“THE STANDBY PURCHASE AGREEMENTS” for further details regarding these fees and commission charges.details.

We have authorized the sale of a total of 1,020,141The shares of common stock under the Plan since its inception. Of this number, 220,141 shares have been soldare being offered directly by us pursuantwithout the services of an underwriter or selling agent. We will receive all of the net proceeds from shares sold in the offering. The purpose of the offering is to a previously-filed prospectus containedraise equity capital in a Registration Statement on Form S-3 (File No. 33-26248). Pursuantcost-effective manner that allows current shareholders to Rule 429participate. See the section of the Securities Act of 1933, as amended, which we refer to as the “Securities Act”, this prospectus is a combined prospectus and relates to the 800,000 shares that remain available for sale and issuance under the Plan.

Shares of common stock purchased by you may, at our option, be newly issued shares, shares purchased in the open market, or shares purchased in negotiated transactions. If the Plan’s administrator, which we refer to as the “Administrator”, purchases newly issued shares for you, then the price for each share will be the “fair market value” of a share, which the Plan defines as the average of the high and low sales prices of common stock as quoted on The NASDAQ Stock Market for the 20 trading days immediately preceding the date of purchase. If the Administrator purchases shares from others, then the price to you will be the weighted average price at which those shares are actually purchased (excluding trading expenses, which we will pay)entitled “USE OF PROCEEDS”.

Our common stock is listed on The NASDAQ Global Select Market under the symbol “FUNC”. AsOn November 4, 2016, the last trading day prior to the announcement of March 30, 2012,this rights offering, the 20-day average of the high and lowclosing sales prices of the common stock was $5.26 per share. On March 30, 2012, the closing price of our common stock was $6.00$11.60 per share. The last reported sale of our common stock occurred on[•], 20[•], and the closing sales price of our common stock on that date was $[•]per share. The volume weighted average closing sales price of our common stock for the 20-trading day period preceding the effective date of the registration statement of which this prospectus forms a part was $[•] per share.

We will receive allThe exercise of your rights for shares of our common stock involves risks. You should carefully consider the net proceeds from salesrisk factors beginning on page 16 of newly issued shares to you. We will not receive any proceeds from sales of shares that the Administrator buys from persons other than us.this prospectus before exercising your rights.

Investing in ourNeither the Securities and Exchange Commission nor any state securities involves certain risks. See “RISK FACTORS” starting on page 5commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE SECURITIES OFFERED HEREBY ARE NOT DEPOSIT OR SAVINGS ACCOUNTS OR OTHER OBLIGATIONS OF ANY BANK OR NON-BANK SUBSIDIARY OF FIRST UNITED CORPORATION, AND THEY ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY OR INSTRUMENTALITY.These securities are not savings accounts, deposits, or other obligations of a bank and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

Our principal executive offices are located at 19 South Second Street, Oakland, Maryland 21550 and our telephone number is (888) 692-2654.

The date of this Prospectusprospectus is __________, 2012[•], 20[•]

TABLE OF CONTENTS

ABOUT THIS PROSPECTUS

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statementYou should rely only on Form S-1 that we filed with the Securities and Exchange Commission, which we refer to as the “SEC”, relating to the shares of our common stock offered under the Plan. This prospectus does not include all of the information contained or incorporated by reference in the registration statement. The registration statement containing this prospectus, including exhibits to the registration statement, provides additional information about First United Corporation, the Plan, and the shares of common stock offered under the Plan. You should carefully read this prospectus, especially the section entitled “RISK FACTORS” starting on page 5, before making a decision to invest in the shares offered. You should also carefully read the additional information described under the headings “WHERE YOU CAN FIND MORE INFORMATION” on page 19 and “INCORPORATION OF CERTAIN INFORMATION BY REFERENCE” on page 19 before making a decision to invest in shares of common stock.

prospectus. We have not authorized anyone to provide you with any other or different information. No dealer, salespersonIf anyone provides you with information that is different from, or other person is authorized to give anyinconsistent with, the information or to represent anything not contained or incorporated by reference in this prospectus. You mustprospectus, you should not rely on any unauthorized information or representation. This prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so.it. You should not assume that the information contained in this prospectus is accurate only as of any date other than the date on the front cover of this prospectus, or that the document and that any information we have incorporated by reference herein is accurate only as of any date other than the date of the relevant report or other document in which such information is contained. Our business, financial condition, results of operations and prospects may have changed since such dates.

Neither we nor any of our officers, directors, agents, or representatives make any representation to you about the legality of an investment in our common stock. You should not consider any information in this prospectus or in the documents incorporated by reference regardlessherein to be investment, legal, or tax advice. You should consult your own counsel, accountant, and other advisors for legal, tax, business, financial, and related advice regarding the purchase of the time of deliveryour securities.

The distribution of this prospectus, or anythe offering and the sale of a security.

Unless otherwise mentioned or unless the context requires otherwise, all references in this prospectus to “First United”, “the Corporation”, “we”, “us”, “our” and similar terms refer to First United Corporation.

FIRST UNITED CORPORATION

First United Corporation is a Maryland corporation chartered in 1985 and a financial holding company registered under the federal Bank Holding Company Act of 1956, as amended. Its primary business is serving as the parent company of First United Bank & Trust, a Maryland-chartered commercial bank with trust powers, which we refer to as the “Bank”. The Bank operates 28 banking offices, one call center and 31 Automated Teller Machines in Allegany County, Frederick County, Garrett County, and Washington County in Maryland, and in Berkeley County, Mineral County, Hardy County, and Monongalia County in West Virginia. The Bank is an independent community bank providing a complete range of retail and commercial banking services to businesses and individuals in its market areas. The Bank’s deposits are insured by the Federal Deposit Insurance Corporation. In addition to its two consumer finance company subsidiaries and two trust subsidiaries used to hold other real estate owned, the Bank owns a 99% limited partnership interest in Liberty Mews Limited Partnership, a Maryland limited partnership formed for the purpose of acquiring, developing and operating low-income housing units in Garrett County, Maryland. A detailed discussion of our business is contained in Item 1 of Part I of our Annual Report on Form 10-K for the year ended December 31, 2011, which is incorporated by reference in this prospectus. See “WHERE YOU CAN FIND MORE INFORMATION” on page 19 for information on how to obtain a copy of our annual report.

We and the Bank are extensively regulated under federal and state laws. The regulation of financial holding companies and banks is intended primarily for the protection of depositors and the deposit insurance fund and not for the benefit of security holders. For a discussion of the material elements of the extensive regulatory framework applicable to us and the Bank, please refer to Item 1 of Part I of our Annual Report on Form 10-K for the year ended December 31, 2011 under the heading “SUPERVISION AND REGULATION”.

At December 31, 2011, we had total assets of approximately $1.4 billion, net loans of approximately $919.2 million, and deposits of approximately $1.0 billion. Shareholders’ equity at December 31, 2011 was approximately $96.7 million.

Our principal executive offices are located at 19 South Second Street, Oakland, Maryland 21550 and our telephone number is (888) 692-2654. We maintain an Internet site athttp://www.mybank4.com on which we make available free of charge our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to the foregoing as soon as reasonably practicable after these reports are electronically filed with, or furnished to, the SEC.

PLAN OVERVIEW

The Plan provides existing shareholders with a convenient and economical way to (1) reinvest cash dividends paid on your shares of our common stock in additional shares, which we refercertain jurisdictions may be restricted by law. This prospectus does not constitute an offer of, or a solicitation of an offer to as the “Dividend Reinvestment feature”, (2) purchase additional shares of our common stock, which we refer to as the “Stock Purchase feature”, and (3) sell the shares held in your Plan account. The Plan has various other features from which to choose to meet your investment needs, and you should carefully read this entire prospectus.

The shares of our common stock purchased under the Plan will be either newly issued shares or shares purchased from others in the open market or in privately negotiated transactions. If the Administrator purchases newly issued shares from us, then the price to participants will be 100% of “fair market value”, which, for purposes of the Plan, means the average of the high and low sales prices of common stock as quoted on The NASDAQ Global Select Market for the 20 trading days immediately preceding the date of purchase. If the Administrator purchases from others, then the discount will not apply and the cost of the shares to participants will be the weighted average price at which those shares are actually purchased (excluding trading expenses, which we will pay).

The Plan is designed for long-term investors who wish to invest and build their share ownership over time. Unlike an individual stock brokerage account, the timing of purchases and sales is subject to the provisions of the Plan.

If you are a shareholder of record and wish to purchase additionalbuy, any shares of common stock pursuant to the Stock Purchase feature of the Plan, you may mail optional cash payments of at least $50 to the Administrator with the tear-off portion of your account statement. You may invest up to $100,000 per calendar quarter under the Stock Purchase feature of the Plan. in any jurisdiction in which such offer or solicitation is not permitted.

The optional cash paymentsindustry and market data and other statistical information contained in this prospectus and the Enrollment Application, when completed, shoulddocuments incorporated herein are based on management’s own estimates, independent publications, government publications, reports by market research firms or other published independent sources and, in each case, are believed by management to be mailedreasonable estimates. Although we believe these resources toBroadridge Corporate Issuer Solutions, Inc., which is be reliable, we have not independently verified the Administrator, in the envelope provided for your convenience.information.

As used in this prospectus, the terms “the Company”, “we”, “us” and “our” refer to First United Corporation and, unless the context clearly requires otherwise, its consolidated subsidiaries, and the term “the Bank” refers to First United Corporation’s wholly-owned bank subsidiary, First United Bank & Trust.

A WARNING ABOUT FORWARD-LOOKING STATEMENTS

Some of the statements contained, or incorporated by reference, in this prospectus may include projections, predictions, expectations or statements as to beliefs or future events or results or refer to other matters that are not historical facts. Such statements constitute forward-looking statements and are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from those contemplated by the statements. The forward-looking statements are based on various factors and were derived using numerous assumptions. In some cases, you can identify these forward-looking statements by words like “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “intend”, “believe”, “estimate”, “predict”, “potential”, or “continue” or the negative of those words and other comparable words. You should be aware that those statements reflect only our predictions. If known or unknown risks or uncertainties should materialize, or if underlying assumptions should prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected. You should bear this in mind when reading this prospectus and not place undue reliance on these forward-looking statements. Factors that might cause such differences include, but are not limited to:

You should also consider carefully the statements under the heading “RISK FACTORS” starting on page 5,16, including the statements incorporated by reference into that section, and in the other sections of this prospectus, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements and could materially and adversely affect our business, operating results and financial condition. Also note that we provide cautionary discussion of risks, uncertainties and possibly inaccurate assumptions relevant to our businesses in our periodic and current reports filed with the SECCommission and incorporated by reference in this prospectus and in prospectus supplements and other offering materials. The risks discussed in this prospectus and in the other documents referenced above are factors that, individually or in the aggregate, management believes could cause our actual results to differ materially from expected and historical results. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider such disclosures to be a complete discussion of all potential risks or uncertainties.

The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

RISK FACTORSQUESTIONS AND ANSWERS RELATING TO THE OFFERING

An investment in sharesThe following are examples of ourwhat we anticipate will be common stock involves certain risks.questions about the offering. The significant risksanswers are based on selected information from this prospectus and uncertainties related to our common stock of which we are aware are discussed below. The significant risks and uncertainties related to us and our business of which we are aware are discussed below in Item 1A of Part I (“Risk Factors”) of our Annual Report on Form 10-K for the year ended December 31, 2011, which discussion isdocuments incorporated by reference in this prospectus. You should carefully consider theseThe following questions and answers do not contain all of the information that may be important to you and may not address all of the questions that you may have about the offering. This prospectus and the documents incorporated by reference contain more detailed descriptions of the terms and conditions of the offering and provide additional information about us and our business, including potential risks and uncertainties before you deciderelated to buy shares ofthe offering, our common stock. Any of these factors could materiallystock, and adversely affect our business, financial condition, operating resultsbusiness.

Exercising your subscription rights and prospects and could negatively impact the market price ofinvesting in our common stock. If anystock involves a high degree of these risks materialize,risk. We urge you could loseto carefully read the section entitled “RISK FACTORS” beginning on page 16 of this prospectus, and all or part of your investment. Additional risks and uncertainties that we do not yet know of, or that we currently think are immaterial, may also impair our business operations. You should also consider the other information contained in andincluded or incorporated by reference in this prospectus includingin its entirety before you decide whether to exercise your rights.

What is the offering?

We are distributing to holders of our financial statementscommon stock as of 5:00 p.m., Eastern Standard Time, on November 28, 2016 subscription rights, on a pro rata basis and the related notes, before decidingat no cost, to purchase an aggregate of 783,626 shares of our common stock. This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statementsstock at a subscription price of $[•] per share. If you are a holder of our common stock as a result of certain factors, including the risks discussed above.

As of the record date, of this prospectus, First United Corporation is prohibited from declaring or paying cash dividends onthen, under your basic subscription right, you will receive the outstandingright to subscribe for 0.125 shares of its common stock. Accordingly, purchases under the Plan will be limited to the Stock Purchase feature until such time as the dividend restrictions are lifted and First United Corporation resumes the payment of cash dividends.

As discussed in the next three risk factors, First United Corporation has deferred the payment of cash dividends and interest under its other securities and is, therefore, currently prohibited from declaring or paying any cash dividends on the outstanding shares of its common stock. Accordingly, participants in the Plan will not be able to acquire additional shares of First United Corporation common stock underat the Dividend Reinvestment featuresubscription price for every one share of our common stock that you owned as of the Plan until such time as First United Corporation pays all deferred dividends and interest and resumes the payment of cash dividends on the outstanding shares of its common stock. Until that time, a participant who desiresrecord date. If you fully exercise your basic subscription privilege, then you will also be entitled to request to purchase additional shares of common stock through the Plan will be limited to optional cash investments pursuant to the Stock Purchase feature of the Plan.your oversubscription privilege, as described below. The subscription rights are evidenced by rights certificates.

First United Corporation andWhy are we conducting the Bank have entered into informal agreements with their regulators that limit their abilities to pay dividends and make other distributions on outstanding securities, and First United Corporation has deferred the payment of certain dividends and distributions pursuant to these agreements.offering?

First United Corporation has entered into an informal agreement withWe are conducting the Federal Reserve Bankoffering to raise capital that can be used to offset the impact of Richmond, or the “Reserve Bank”, pursuant to which it agreed not to pay dividends on outstanding sharesour planned redemption of its common stock or on outstanding shares$10 million of itsour Fixed Rate Cumulative Perpetual Preferred Stock, Series A, which we refer to as the “Series A Preferred Stock”, or make interest payments under theand our planned repayment of $10.8 million of our junior subordinated debentures, which we refer to as the “TPS Debentures”, underlyingissued to our Delaware statutory business trust subsidiary, First United Statutory Trust III, which we refer to as “Trust III”. We intend to consummate the redemption and repayment as soon as is practicable following the closing of the offering. Our Board of Directors has chosen to raise capital through a rights offering to give our shareholders the opportunity to prevent ownership dilution by acquiring additional shares of common stock in the offering. Our Board of Directors also considered several alternative capital-raising methods prior to concluding that the offering was the best option under the current circumstances. We believe that raising capital at this time, in this manner and for the foregoing purposes is prudent in light of current market conditions and the anticipated impact of the offering and use of proceeds on our financial condition, but our Board of Directors is making no recommendation regarding your exercise of the subscription rights. We cannot assure you that we will not need to seek additional financing or engage in additional capital raising transactions in the future.

What is the basic subscription privilege and oversubscription privilege?

Subject to the fact that we will not issue fractional shares in the offering, the basic subscription privilege entitles a holder of a right to purchase 0.125 shares of our common stock at the subscription price. For example, if you owned 80 shares of our common stock on the record date, then you would be granted 80 rights and you would have the right to purchase 10 shares of our common stock for an aggregate subscription price of $[•]. If, however, you owned less than eight shares on the record date, then you would not be able to purchase shares in the offering. You may exercise all or any number of your rights, or you may choose to not exercise any of your rights. If you exercise less than your full basic subscription privilege, then you will not be entitled to purchase shares under your oversubscription privilege. Please note that, as noted above, we will not issue fractional shares of common stock in the offering and holders will be entitled only to purchase a whole number of shares of common stock, rounded down to the nearest whole number that a holder would otherwise be entitled to purchase, with the total subscription payment being adjusted accordingly.

If you are a record holder, your rights certificate accompanies this prospectus. If you hold your shares in street name through a broker, dealer, custodian bank, or other nominee who uses the services of The Depository Trust & Clearing Corporation (“DTC”), then you will not receive a rights certificate. Instead, DTC will issue one subscription right to your nominee for every share of our common stock you owned as of the record date. Each subscription right entitles you to purchase 0.125 shares of our common stock at the subscription price. For more information, see “What should I do if I want to participate in the offering, but my shares are held in the name of my broker, dealer, custodian bank, or other nominee?” in this section.

If you exercise your basic subscription privilege in full by purchasing one new share for every eight shares that you hold as of the record date, (i.e., 0.125 shares of common stock for each share that you own), then you will not experience any dilution in the percentage of our outstanding shares of common stock that you own immediately after the completion of the offering.

Under the oversubscription privilege, each holder who fully exercises its basic subscription privilege may also subscribe to purchase, at the subscription price, additional shares to the extent they are available after the exercise of all holders’ basic subscription privileges. If we receive oversubscription requests for more shares of our common stock than we have available for oversubscriptions, then each requesting holder will receive its pro rata portion of the available shares based on the number of shares requested by each holder under the oversubscription privilege. We reserve the right to accept or reject oversubscriptions for any reason. In addition, purchases pursuant to the oversubscription privilege will be limited as described under “Are there limits on the number of shares of common stock I may purchase in the offering?” in this section. We can provide no assurances that you will actually be able to purchase any shares of common stock upon the exercise of your oversubscription privilege.

To properly exercise your oversubscription privilege, you must deliver the subscription payment related to your oversubscription privilege prior to the expiration of the offering. Because we will not know the total number of unsubscribed shares prior to the expiration of the offering, if you wish to maximize the number of shares you purchase pursuant to your oversubscription privilege, you will need to deliver payment in an amount equal to the aggregate subscription price for the maximum number of shares of our common stock that may be available to you (i.e., assuming you fully exercise your basic subscription right and are allotted the full amount of your oversubscription as elected by you).

If oversubscription requests exceed the number of shares of common stock available for sale after purchases by all shareholders exercising their basic subscription privilege, then we will have discretion to allocate the available shares of common stock among shareholders who oversubscribed as we deem appropriate. When determining how to allocate such remaining shares, we may give priority to those oversubscription purchasers that we believe will develop future business relationships with us, refer business to us or purchase additional shares of our common stock on the open market after the closing of the offering.

To the extent the aggregate subscription price of the maximum number of unsubscribed shares allocated to you pursuant to exercise of the oversubscription privilege is less than the amount you actually paid in connection with the exercise of the oversubscription privilege, you will be allocated only the number of unsubscribed shares available to you, and any excess subscription payments received by the subscription agent will be returned to you, without interest or penalty, as soon as practicable. To the extent the amount you actually paid in connection with the exercise of the oversubscription privilege is less than the aggregate subscription price of the maximum number of unsubscribed shares allocated to you pursuant to the oversubscription privilege, you will be allocated the number of unsubscribed shares for which you actually paid in connection with the oversubscription privilege.

How will the standby investors participate in the offering?

To facilitate the offering, we have entered into Standby Purchase Agreements with (i) Castle Creek Special Situations Advisors LLC, Castle Creek SSF-D Investors LP, Arch Investment Holdings I Ltd., May Clinic, Mayo Clinic Master Retirement Trust, which we refer to collectively as the “Castle Creek Funds”, and (ii) Second Curve Vision Fund, L.P., Second Curve Vision Fund International, Ltd., Second Curve Opportunity Fund, L.P., Second Curve Partners, L.P., Second Curve Partners II, L.P., and Second Curve Partners International Ltd., which we refer to collectively as the “Second Curve Funds”.

The Castle Creek Funds have agreed, subject to there being sufficient shares available after purchases by shareholders in the offering, to purchase from us, at the subscription price, the lesser of (a) up to an aggregate of $5.0 million in shares of our common stock that are not purchased by shareholders in the offering and (b) the maximum number of shares that they may purchase without causing an “ownership change” under Section 382(g) of the Internal Revenue Code of 1986, as amended, which we refer to as the “Code”.

The Second Curve Funds, which own an aggregate of 131,614shares of our common stock as of the record date, have committed to purchase up to $2.0 million in shares of our common stock through a combination of the exercise of their basic subscription privilege in the offering and, subject to there being sufficient shares available after purchases by shareholders in the offering, pursuant to their Standby Purchase Agreements, provided that they will not purchase shares to the extent it would cause an “ownership change” under Section 382(g) of the Code. If the Second Curve Funds were to exercise their basic subscription privilege in full, then they would purchase an aggregate of 16,451 shares of our common stock in the offering for an aggregate subscription price of $[•], and, subject to there being sufficient shares available after purchases by shareholders in the offering and to the Section 382(g) limitation, an aggregate of[•]shares of our common stock under their Standby Purchase Agreements for an aggregate purchase price of $[•].

If for any reason we do not complete the offering, then we will have no obligation to sell shares to the standby investors pursuant to the Standby Purchase Agreements.

Are there limits on the number of shares of common stock I may purchase in the offering?

Yes. Other than any person or entity that owns, as of the date of this prospectus, more than 5% of our common stock, a person or entity, together with related persons or entities, may not exercise subscription rights (including the oversubscription privilege) to purchase shares of our common stock that, when aggregated with their existing ownership, would result in such person or entity, together with any related persons or entities, owning 5% or more of our issued and outstanding shares of common stock following the offering, or that would otherwise require regulatory approval. In addition, any person or entity, together with related persons or entities, that exercises subscription rights (including the oversubscription privilege) to purchase shares of our common stock that, when aggregated with their existing ownership, results in such person or entity, together with any related persons or entities, becoming the beneficial owner of 4% or more of our issued and outstanding shares of common stock following the offering will be required to enter into an agreement prohibiting such person or entity from purchasing additional shares that would result in such person or entity owning more than 5% of our common stock. For more information, see the section of this prospectus entitled “THE OFFERING”under the heading “Limitations on Amount You May Purchase”.

In addition, notwithstanding any other information presented in this prospectus, we do not intend to accept any subscriptions or oversubscriptions in this offering that we believe may have an unfavorable effect on our ability to preserve our net operating loss deferred tax asset. For more information, see the section of this prospectus entitled “OUR NET OPERATING LOSS DEFERRED TAX ASSETS”.

How do I exercise my subscription rights?

If you wish to participate in the offering, you must deliver your payment along with your properly completed and signed rights certificate, and any other subscription materials, to the subscription agent. To properly exercise your oversubscription privilege, you must indicate the number of shares you wish to purchase in addition to the shares subscribed for under your basic subscription privilege on your rights certificate. You must exercise your basic rights in full in order to exercise your oversubscription right. See section of this prospectus entitled “THE OFFERING”under the headings “The Subscription Rights”, “Basic Subscription Privilege”, and “Oversubscription Privilege”

Payments must be made in full in U.S. dollars for the full number of shares for which you are subscribing by:

Please note that funds paid by personal check may take seven or more business days to clear. Accordingly, if you wish to pay by means of a personal check, we urge you to make payment sufficiently in advance of the expiration date to ensure that the subscription agent receives cleared funds before that time. We also urge you to consider payment by means of a certified check drawn upon First United Bank & Trust in order to expedite the receipt of your payment.

Please follow the payment and delivery instructions accompanying the rights certificate.DO NOT DELIVER DOCUMENTS TO THE COMPANY OR THE BANK. As described in this prospectus and in the instructions accompanying the rights certificate, in certain cases additional documentation or medallion guarantees may be required. For more information, see the section of this prospectus entitled “THE OFFERING” under the heading “Method of Exercising Subscription Rights”. You are solely responsible for completing delivery to the subscription agent of your rights certificate, any other subscription materials, and payment. We urge you to allow sufficient time for delivery of your subscription materials to the subscription agent so that the subscription agent receives them by 5:00 p.m., Eastern Standard Time, on[•], 20[•]. We are not responsible for subscription materials sent directly to our offices.

If you send a payment that is insufficient to purchase the number of shares you requested, or if the number of shares you requested is not specified in the forms, the payment received will be applied to exercise your subscription rights to the fullest extent possible based on the amount of the payment received, subject to the availability of shares under the oversubscription privilege and purchase limitations. Any excess subscription payments received by the subscription agent will be returned promptly, without interest or penalty, following the expiration of the offering. We reserve the right to reject any attempted subscription that does not include proper documentation or matching payment.

What should I do if I want to participate in the offering, but my shares are held in the name of my broker, dealer, custodian bank, or other nominee?

If you hold your shares of common stock in the name of a broker, dealer, custodian bank, or other nominee, then your broker, dealer, custodian bank, or other nominee is the record holder of the shares you own. You will not receive a rights certificate. The record holder must exercise the subscription rights on your behalf for the shares of common stock you wish to purchase in the offering.

If you wish to purchase shares of our common stock through the offering, please promptly contact your broker, dealer, custodian bank, or other nominee as record holder of your shares. We will ask your record holder to notify you of the offering. However, if your broker, dealer, custodian bank, or other nominee does not contact you, then you should promptly initiate contact with it. Your broker, dealer, custodian bank, or other nominee may establish a deadline prior to 5:00 p.m., Eastern Standard Time, on[•], 20[•], which we established as the expiration date of the offering, by which you must provide it with your instructions to exercise your subscription rights and pay for your shares.

Am I required to exercise all of the rights I receive in the offering?

No. You may exercise any number of your subscription rights, or you may choose not to exercise any subscription rights. However, if you choose not to exercise your basic subscription privilege in full, the relative percentage of our shares of common stock that you own will decrease as a result of the offering, and your voting and other rights will be diluted. In addition, if you do not exercise your basic subscription privilege in full, you will not be entitled to participate in the oversubscription privilege. For more information, see “How many shares of common stock will be outstanding after the offering?” in this section.

Will our officers and directors be exercising their subscription rights?

Certain of our directors and officers have indicated that they intend to participate in the offering, although they are not required to do so. Collectively, we expect our directors and officers, together with their affiliates, to purchase up to approximately 31,413 shares in the offering. As of the record date, our directors and officers, together with their affiliates, beneficially own approximately 251,379 shares of common stock and are entitled to purchase approximately 31,413 shares in the offering by exercising their respective basic subscription privileges on the same terms and conditions applicable to all shareholders. Following the offering, after exercising their respective basic subscription privileges in full, we expect our directors and officers, together with their affiliates, to own an aggregate of approximately 282,792 shares of common stock, or approximately 4.0% of our total outstanding shares of common stock, if we sell all 783,626 shares offered in the offering.

Has our Board of Directors made a recommendation to our shareholders regarding the exercise of rights under the offering?

No. Our Board of Directors is not making any recommendation to you about whether you should exercise any subscription rights. Shareholders who exercise their subscription rights risk a loss on their investment. We cannot assure you that the market price of our common stock will be above the subscription price or that anyone purchasing shares at the subscription price will be able to sell those shares in the future at the same price or a higher price. You are urged to make your decision based on your own assessment of our business and the offering. Please review the section of this prospectus entitled “RISK FACTORS” for a discussion of some of the risks involved in investing in our common stock.

What other agreements do we have in place with the standby investors and will the standby investors receive any compensation for their commitments?

We have agreed with each of the standby investors to file a registration statement with the Commission to register, at our expense, the resale of all shares that the standby investors purchase and to use commercially reasonable efforts to cause that registration statement to be declared effective by the Commission.

How many shares will the standby investors own after the offering?

Purchasers in the offering will not know the number or percentage of our outstanding shares of common stock that the standby investors will own after the completion of the offering until the expiration of the offering period. The Standby Purchase Agreements with the Castle Creek Funds contemplate that they will be permitted to purchase up to an aggregate of[•] shares, to the extent not purchased by rights holders in the offering. The Second Curve Funds, which own an aggregate of 131,614 shares of our common as of the record date, have committed to purchase up to $2.0 million in shares of our common stock through a combination of the exercise of their basic subscription privilege in the offering and, subject to there being sufficient shares available after purchases by shareholders in the offering, pursuant to the offer and sale contemplated by their Standby Purchase Agreements. The actual number of shares and percentage ownership will depend on the number of shares purchased by shareholders who exercise their basic subscription privilege and oversubscription privilege. The chart below presents the aggregate ownership of the standby investors if rights holders purchase 0%, 25%, 50% and 100% of the shares offered in the offering.

How was the subscription price be determined?

In determining the subscription price, our Board of Directors considered a number of factors, including the need to offer the shares at a price that would be attractive to investors relative to the then current trading price of our common stock, the tangible book value of a share of our common stock, historical and current trading prices of our common stock, general conditions in the financial services industry, the need for capital and alternatives available to us for raising capital, potential market conditions, and the desire to provide an opportunity to our shareholders to participate in the offering on a pro rata basis. Because our common stock is not heavily traded and to account for the possibility of wide price fluctuations over a short period of time, our Board of Directors concluded that it would be prudent to base the subscription price on the volume weighted average price at which our common stock trades over a period of several trading days. In conjunction with its review of these factors, our Board of Directors also reviewed our history and prospects, including our past and present earnings, our prospects for future earnings, and the outlook for our industry, our current financial condition and regulatory status, and a range of discounts to market value represented by the subscription prices in various other rights offerings. Finally, our Board considered our desire to have a successful offering, which required negotiations with the standby investors with respect to the minimum and maximum sales prices that would be acceptable to them.

Based on the foregoing, our Board decided to set the subscription price at an amount per share equal to 90% of the volume weighted average closing sales price of our common stock for the 20 trading days immediately preceding the date on which the registration statement of which this prospectus forms a part was declared effective, subject to a minimum subscription price of $9.00 per share and a maximum subscription price of $11.93 per share. The registration statement was declared effective on[•], 20[•], and the volume weighted average closing sales price of our common stock for the 20 trading days immediately preceding that date was $[•] per share.

The last reported sale of our common stock occurred on[•], 20[•], and the closing sales price of our common stock on that date was $[•] per share. The volume weighted average closing sales price of the common stock for the 20 trading day period that included[•], 20[•]was$[•] per share.

How soon must I act to exercise my rights?

If you received a rights certificate and elect to exercise some or all of your subscription rights, the subscription agent must receive your completed and signed rights certificate and complete payment prior to the expiration of the offering, which is[•], 20[•], at 5:00 p.m., Eastern Standard Time. If you hold your shares in the name of a broker, dealer, custodian bank, or other nominee, your broker, dealer, custodian bank, or other nominee may establish a deadline prior to 5:00 p.m. Eastern Standard Time, on[•], 20[•] by which you must provide it with your instructions to exercise your subscription rights and pay for your shares.

Although we will make reasonable attempts to provide this prospectus to holders of subscription rights, the offering and all subscription rights will expire at 5:00 p.m., Eastern Standard Time, on[•], 20[•] (unless extended for up to 30 days until[•], 20[•]), whether or not we have been able to locate each person entitled to subscription rights.

May I transfer my subscription rights?

No. You may not transfer your subscription rights.

Are we requiring a minimum subscription to complete the offering?

No. There is no minimum subscription requirement in the offering. However, our Board of Directors reserves the right to cancel the offering for any reason, including if our Board of Directors believes that there is insufficient participation by our shareholders.

Can the Board of Directors extend, cancel, or amend the offering?

Yes. We have the option to extend the period for exercising your subscription rights for up to 30 days until[•], 20[•]. Our Board of Directors may cancel the offering at any time for any reason. If the offering is cancelled, all subscription payments received by the subscription agent will be returned promptly, without interest or penalty. Our Board of Directors reserves the right to amend or modify the terms of the offering at any time, for any reason. Such amendments or modifications could include, for example, a reduction in the subscription price. If we reduce the subscription price, your subscription will remain irrevocable but all excess subscription payments received by the subscription agent will be returned promptly, without interest or penalty.

What will happen if I choose not to exercise my subscription rights?

If you do not exercise any subscription rights, then the number of shares of our common stock that you own will not change. Because shares may be purchased by other shareholders or the standby investor, however, your percentage ownership will be diluted after the completion of the offering unless you exercise your basic subscription privilege in full. For more information, see “How many shares of common stock will be outstanding after the offering?” in this section.

After I send in my payment and rights certificate, may I change or cancel my exercise of rights?

No. All exercises of subscription rights are irrevocable, even if you later learn information that you consider to be unfavorable to the exercise of your subscription rights. If we decide to extend, amend or modify the terms of the offering for any reason, subscriptions received prior to such extension, amendment or modification will remain irrevocable. You should not exercise your subscription rights unless you are certain that you wish to purchase shares of our common stock at the subscription price.

When will I receive my new shares?

All shares of our common stock that you purchase in the offering will be issued electronically in book-entry (uncertificated) form. If you are a shareholder of record as of the record date and purchase shares in the offering by submitting a rights certificate and payment, we will issue your new shares as soon as practicable after the completion of the offering, and you will receive confirmation from the subscription agent by mail that your shares were electronically issued. If, as of the record date, your shares were held by a broker, dealer, custodian bank, or other nominee, and you participate in the offering, your broker, dealer, custodian bank, or other nominee will be credited with the shares of common stock you purchase in the offering as soon as practicable after the completion of the offering, and your nominee will credit your account with such shares. Until your shares have been issued in book-entry form or your account is credited with such shares, you may not be able to sell your shares.

How many shares of common stock will be outstanding after the offering?

As of[•], 20[•], 6,269,004 shares of our common stock were issued and outstanding. Assuming that there are no other transactions by us involving shares of our common stock and the full 783,626 shares of our common stock are subscribed for in the offering and/or purchased by the standby investors, we expect 7,052,630 shares of common stock to be outstanding immediately after completion of the offering and, if it occurs, the closing of the sales to the standby investors. As a result of the offering, the ownership interests and voting interests of the existing shareholders that do not fully exercise their basic subscription privilege will be diluted.

Are there risks in exercising my subscription rights?

Yes. The exercise of your subscription rights involves risks. Exercising your subscription rights involves the purchase of additional shares of common stock and should be considered as carefully as you would consider any other equity investment. Among other things, you should carefully consider the risks described in the section of this prospectus entitled “RISK FACTORS” and the documents incorporated by reference in this prospectus.

If the offering is not completed, will my subscription payment be refunded to me?

Yes. The subscription agent will hold all funds it receives in an escrow account until completion of the offering. If the offering is not completed, all subscription payments received by the subscription agent will be returned promptly, without interest or penalty. If you hold shares through a broker, dealer, custodian bank, or other nominee, it may take longer for you to receive payment because the subscription agent will return payments through the record holder of your shares.

What fees or charges apply if I purchase the shares in the offering?

We are not charging any fee or sales commission to issue subscription rights to you or to issue shares to you if you exercise your subscription rights. If you exercise your subscription rights through your broker, dealer, custodian bank, or other nominee, you will be responsible for paying any fees your nominee may charge you.

What are the material U.S. federal income tax consequences of exercising my subscription rights?

For U.S. federal income tax purposes, you should not recognize income or loss upon receipt or exercise of subscription rights. You should consult your tax advisor as to your particular tax consequences resulting from the offering. For a more detailed discussion, see the section of this prospectus entitled “MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES”.”

Are there other key dates relating to the rights offering?

Yes. Below is a list of the key dates for the offering of which you should be aware. With the exception of the record date and the rights distribution date, such dates are subject to change in the event we determine to extend the rights offering (as discussed herein).For more information regarding these dates, we encourage you to review the section of this prospectus entitled “THE OFFERING”, as that section of the prospectus describes other timing considerations of which you should be aware regarding the rights offering (for example, dates by which different forms of payment upon the exercise of rights are deemed received).

Are there any conditions to the rights distribution?

The completion of the rights distribution is subject to the satisfaction (in our sole discretion) of the following conditions:

What if I have other questions?

If you have questions regarding the completion of your rights certificate or submitting payment, please contact our information agent, Georgeson LLC, at (800) 561-2871. If you have other questions about the offering or the Company, please contact Tonya K. Sturm, our Senior Vice President and Chief Financial Officer, at 301-533-2390. You should consult your tax adviser as to the particular consequences to you of the offering.

SUMMARY

This summary contains basic information about us and this offering. Because it is a summary, it does not contain all of the information that you should consider before investing. You should read this entire prospectus carefully, including the section entitled “RISK FACTORS”, our financial statements and the notes thereto incorporated by reference to our annual report and quarterly reports, and the other documents we refer to and incorporate by reference in this prospectus for a more complete understanding of us and this offering before making an investment decision. In particular, we incorporate important business and financial information in this prospectus by reference.

About First United Corporation

First United Corporation is a Maryland corporation chartered in 1985 and a bank holding company registered with the Board of Governors of the Federal Reserve System, or the “Federal Reserve”, under the Bank Holding Company Act of 1956, as amended. The Company’s primary business is serving as the parent company of First United Bank & Trust, a Maryland trust preferred securities issued by its trust subsidiaries,company, First United Statutory Trust I, (“Trustor “Trust I”), and First United Statutory Trust II, (“Trustor “Trust II”) and First United Statutory Trust III (“Trust III” and, together with Trust I, both Connecticut statutory business trusts, and Trust II, the “Trusts”), or take any other action that reduces regulatory capital without the prior approval of the Reserve Bank. III.

The Bank has entered intois an independent community bank providing a similar agreement withcomplete range of retail and commercial banking services to businesses and individuals serviced by a network of 23 branches, one call center, and 25 automated teller machines as of September 30, 2016 in Allegany County, Frederick County, Garrett County, and Washington County in Maryland, and in Mineral County, Berkeley County and Monongalia County in West Virginia. The Bank’s deposits are insured by the Federal Deposit Insurance Corporation, orwhich we refer to as the “FDIC”,. In addition to its two consumer finance company subsidiaries and a statutory trust subsidiary and a limited liability company subsidiary, both used to hold other real estate owned, the Bank owns a 99% limited partnership interest in Liberty Mews Limited Partnership, a Maryland Commissionerlimited partnership formed for the purpose of Financial Regulation. These agreements giveacquiring, developing and operating low-income housing units in Garrett County, Maryland. A detailed discussion of our regulatorsbusiness is contained in Item 1 of Part I of our Annual Reports on Form 10-K that we file with the ability to prohibit a proposed dividend payment, or any other distribution with respect to outstanding securities,Commission, including the repurchaseAnnual Report on Form 10-K for the year ended December 31, 2015. See the section of stock, atthis prospectus entitled “WHERE YOU CAN FIND MORE INFORMATION” for information on how to obtain a time or times when applicable bankingcopy of our annual and corporate laws would otherwise permit such a dividend or distribution. On November 15, 2010, First United Corporation elected, at the request of the Reserve Bank pursuant to its agreement, to defer cash dividend payments on its common stock and to defer regularly scheduled quarterly cash dividend payments under the Series A Preferred Stock, startingother reports that we file with the dividend payment due November 15, 2010. On December 15, 2010, atCommission.

Trust I, Trust II and Trust III are collectively referred to as the request“Trusts”. The Trusts were formed for the purpose of the Reserve Bank pursuant to its agreement, First United Corporation elected to defer regularly scheduled quarterly interest payments with respect to an aggregate of $41.73 million of the TPS Debentures, starting with the interestselling “trust preferred securities” that qualify as Tier 1 capital. Dividend and other payments due in March 2011, and this deferral requires the Trusts to defer regular quarterly dividend payments on their trust preferred securities. Both the deferral of dividends on the Series A Preferred Stock and the deferral of interest on the TPS Debentures are permitted under the terms of those securities and do not constitute events of default. During the deferral periods, dividends on the Series A Preferred Stock and interest under the TPS Debentures, and dividends on the relatedthese trust preferred securities continueare funded by our payments under an equal amount of TPS Debentures that we issued to accrue and must be paid at the time First United Corporation recommences regular payments. Although First United Corporation intends to periodically reevaluate the deferral of, and, in consultation with its regulators, consider reinstating, these payments when appropriate, no assurances can be given as to when, or if, these payments will recommence.

Even if First United Corporation were to conclude at a later date that its financial condition and results of operations warrant the recommencement of these payments, there can be no guarantee that our regulators will agree with our conclusion. Moreover, there is no requirement that our regulators take consistent approaches when exercising their powers under these agreements. For example, even though the Reserve Bank might approve the payment of a particular dividend, that dividend could be effectively prohibitedTrusts by the FDIC and/or the Maryland Commissioner of Financial Regulation if First United Corporation intended to fund that dividend through a dividend by the Bank and the FDIC and/or the Maryland Commissioner were to deny the Bank’s dividend request. Similarly, even though the FDIC and the Maryland Commissioner of Financial Regulation might approve a dividend by the Bank to First United Corporation, the Reserve Bank could prevent the Corporation from using that dividend to make a distribution to the holders of its outstanding common stock, Series A Preferred Stock, or outstanding TPS Debentures.

These agreements increase the likelihood that we will realize the other risks discussed below related to our ability to pay dividends and make other distributions.

The terms of the Series A Preferred Stock limit First United Corporation’s ability to pay dividends and make other distributions on its capital securities, and First United Corporation’s deferral of dividend payments under the Series A Preferred Stock has triggered additional dividend restrictions.

In January 2009, First United Corporation issued and sold 30,000 shares of its Series A Preferred Stock to the U.S. Department of the Treasury (the “Treasury”) pursuant to the Treasury’s Troubled Asset Relief Program Capital Purchase Program. Under the terms of the transaction documents relating to this sale, First United Corporation’s ability to declare or pay dividends on shares of its capital securities is limited.  Specifically, First United Corporation is unable to declare dividends on common stock, other stock ranking junior to the Series A Preferred Stock, or preferred stock ranking on a parity with the Series A Preferred Stock, and First United Corporation is also prohibited from repurchasing shares of such common stock, junior stock or parity stock, if First United Corporation is in arrears on the quarterly cash dividends due on the outstanding shares of the Series A Preferred Stock. As noted above, First United Corporation has elected to defer cash dividends on the Series A Preferred Stock, so no cash dividends or other distributions on, or repurchases of, the common stock are currently permitted.  First United Corporation cannot predict when, or if, it will be able to pay accrued and future dividends on the Series A Preferred Stock. Moreover, because First United Corporation’s ability to pay cash dividends on the outstanding shares of its common stock depends in part on its ability to pay the dividends due under the Series A Preferred Stock, First United Corporation cannot predict when, or if, it will resume the payment of cash dividends on the shares of common stock owned by Plan participants.

First United Corporation’s ability to pay dividends on its capital securities is also subject to the terms of the outstanding TPS Debentures, and First United Corporation’s deferral of interest payments under the TPS Debentures has also triggered dividend restrictions.

Company. In March 2004, First United Corporationthe Company issued approximately $30.9 million of TPS Debentures to Trust I and Trust II in connection with thetheir sales by those Trusts of $30.0 in mandatorily redeemable preferred capital securities to third party investors.investors and $0.9 million in common securities to the Company. Between December 2009 and January 2010, First United Corporationthe Company issued approximately $10.8 million of TPS Debentures to Trust III in connection with theits sale by Trust III of approximately $10.5 million in mandatorily redeemable preferred capital securities to third party investors.investors and $0.3 million in common securities to the Company.

We and the Bank are extensively regulated under federal and state laws. The regulation of bank holding companies and banks is intended primarily for the protection of depositors and the deposit insurance fund and not for the benefit of security holders. For a discussion of the material elements of the extensive regulatory framework applicable to us, please refer to Item 1 of Part I of our Annual Reports on Form 10-K that we file with the Commission, including the Annual Report on Form 10-K for the year ended December 31, 2015.

At September 30, 2016, we had total assets of $1.3 billion, net loans of $890.0 million, and deposits of $1.0 billion. Shareholders’ equity at September 30, 2016 was $114.8 million.

Our principal executive offices are located at 19 South Second Street, Oakland, Maryland 21550 and our telephone number is (888) 692-2654. We maintain an Internet site athttp://www.mybank.com on which we make available free of charge our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to the foregoing as soon as reasonably practicable after these reports are electronically filed with, or furnished to, the Commission.

Our common stock is listed on the NASDAQ Global Select Market under the ticker symbol “FUNC.” Effective October 31, 2016, our common stock became subject to The NASDAQ Stock Market’s “Tick Size Pilot Program”, as part of “Test Group 3”. The program, which will last for two years, was implemented pursuant to a Commission order issued on June 24, 2014 and imposes wider minimum quoting and/or trading increments, or “tick sizes”, for certain securities with small market capitalization. The purpose of the program is to allow the Commission, self-regulatory organizations (like The NASDAQ Stock Market), and the public to evaluate and assess the impact of increment conventions on the liquidity and trading of securities of small capitalization companies. The program includes a specified subset of the exchange-listed stocks of companies that have $3 billion or less in market capitalization, an average daily trading volume of one million shares or less and a volume-weighted average price of at least $2.00 for every trading day. The control group in the program includes approximately 1,400 randomly-selected securities and three test groups, each with approximately 400 securities selected by a stratified sampling. Under the program, securities in Test Group 3, like our common stock, are to be both quoted in and traded at $0.05 minimum increments, subject to a midpoint exception, a retail investor exception, and a negotiated trade exception. In addition, securities in Test Group 3 are subject to a “trade-at” requirement that prevents price matching by a trading center that is not displaying a protected bid or protected offer, subject to certain exceptions.

The Offering

The following summary describes the principal terms of the TPS Debentures require First United Corporationoffering, but is not intended to make quarterly payments be complete. See the information in the section entitled “THE OFFERING” beginning on page 22of interestthis prospectus for a more detailed description of the terms and conditions of the offering.

RISK FACTORS

An investment in our common stock, including the common stock issued through the rights offering, involves risk. You should consider carefully the risks described below, along with the information discussed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the Commission on March 9, 2016, which is incorporated by reference into this prospectus, and in subsequent periodic filings in which we may update disclosures of such risk factors or add new risk factors, together with all the other information included in this prospectus and in the documents we have incorporated by reference. The occurrence of any of the events described as possible risks could have a material adverse effect on the value of our common stock, including the common stock issued through the rights offering. These risks are not the only ones facing our company. Additional risks not currently known to us or that we currently deem immaterial also may impair our business. See “WHERE TO FIND MORE INFORMATION”.

Risks Related to the Offering

The standby investors’ purchase of shares pursuant to the Standby Purchase Agreements is subject to conditions to closing that could result in such transaction being delayed or not consummated, which could negatively impact our stock price and future business operations.

The purchase of shares by the standby investors is subject to conditions to closing as set forth in the Standby Purchase Agreements, including that we and the standby investors have obtained all required regulatory approval. If any of such conditions to closing are not satisfied or, where permissible, not waived, the standby investors will not participate in the offering. In addition, any of the standby investors may choose to terminate its Standby Purchase Agreement under certain circumstances, including if there is a material adverse change in our financial condition or operations or if the closing of the sales to the standby investors does not occur on or before May 15, 2017. Failure to sell shares to the standby investors could negatively impact our stock price, future business and operations, and financial condition. Any delay in the consummation of such sale, or any uncertainty about the participation of the standby investors, may also adversely affect our stock price, future business, growth, revenue, and results of operations.

The subscription price determined for the offering may not be indicative of the value of our common stock.

Our Board of Directors determined the subscription price after considering a variety of factors and negotiating with the standby investors. You should not consider the subscription price as an indication of value of the Company or our common stock. You should not assume or expect that, after the offering, our shares of common stock will trade at or above the subscription price in any given time period. The market price of our common stock may decline during or after the offering, and you may not be able to sell the underlying shares of our common stock purchased during the offering at a price equal to or greater than the subscription price. The value of our common stock may also be subject to significant fluctuations in response to our future operating results and other factors.

Our Board of Directors is not making any recommendation to you about whether you should exercise any subscription rights. Shareholders who participate in the offering risk the loss of their entire investment.

The offering may cause the trading price of our common stock to decrease immediately, and this decrease may continue.

The subscription price at which we are selling shares in the offering is less than the recent trading prices of our common stock as reported by the NASDAQ Global Select Market. Additionally, the number of shares we expect to issue if we complete the offering may result in an immediate decrease in the market value of our common stock. If the holders of the TPS Debentures, although it has the rightshares purchased in this offering choose to defer payments of interest for up to 20 consecutive quarterly periods. As noted above, First United Corporation elected to defer interest payments undersell some or all of its TPS Debenturesthose shares, the resulting sales could further depress the market price of our common stock. The last reported sale of our common stock occurred on December 15, 2010. Accordingly, First United Corporation is[•], 20[•], and the closing sales price of our common stock on that date was $[•] per share.

Your ownership interest may be significantly diluted if you do not currently permittedexercise your subscription rights in the offering.

To the extent that you do not exercise your basic subscription privilege and shares are purchased by other shareholders in the offering and/or by the standby investors, your proportionate voting interest will be reduced, and the percentage that your original shares represent of our outstanding common stock after the offering may be significantly diluted.

If you do not act promptly and follow the subscription instructions, your exercise of rights will be rejected.

If you desire to pay dividendspurchase shares of our common stock in the offering, you must act promptly to ensure that the subscription agent receives all required forms and payments before the expiration of the offering at 5:00 p.m., Eastern Standard Time, on[•], 20[•]. If you own your shares in street name, you must act promptly to ensure that your broker, dealer, custodian bank, or make distributions on, or repurchase, redeemother nominee acts for you and that the subscription agent receives all required forms and payments before the offering expires. We are not responsible if your nominee fails to ensure that the subscription agent receives all required forms and payments before the offering expires. If you fail to complete and sign the rights certificate and other required subscription forms, send an incorrect payment amount, or otherwise acquire,fail to follow the subscription procedures that apply to the exercise of your rights before the offering expires, the subscription agent will reject your subscription or accept it only to the extent of the payment received before the offering expires. Neither we nor the subscription agent undertake any responsibility or action to contact you concerning an incomplete or incorrect subscription form or payment, nor are we or they under any obligation to correct such forms or payment. We have the sole discretion to determine whether a subscription exercise properly complies with the subscription procedures.

You will not be able to sell the shares of common stock for which you subscribe in the offering until such shares are issued to you.

If you subscribe for shares in the offering by submitting a completed and signed rights certificate with other required subscription forms and payment, we will issue your shares as soon as practicable following the expiration of the offering. If your shares are held by a broker, dealer, custodian bank, or other nominee and you subscribe for shares in the offering, your nominee will be credited with the shares you purchase and your account will be credited by your nominee at such time. Until the shares of common stock for which you subscribe are issued to you, you will not be able to sell your shares. The stock price may decline between the time you decide to sell your shares and the time you are actually able to sell your shares.

Because you cannot revoke the exercise of your subscription rights and the market price of our common stock may decline after you elect to exercise your subscription rights, you could be committed to buying shares above the market price of our common stock.

Your exercise of subscription rights is irrevocable, even if you learn information about us that you consider unfavorable during the offering period subsequent to your exercise and even if the terms of the offering are amended or modified. The market price of our common stock may decline after you elect to exercise your subscription rights. If you exercise your subscription rights and, afterwards, the public trading market price of our common stock decreases below the subscription price, you will have committed to buying shares of our common stock at a price above the prevailing market price and could have an immediate unrealized loss. Our common stock is listed on the NASDAQ Global Select Market under the symbol “FUNC”. The last reported sale of our common stock occurred on[•], 20[•], and the closing sales price of our common stock on that date, as reported by the NASDAQ Global Select Market, was $[•] per share. The volume weighted average closing sales price of our common stock for the 20 trading day period that included[•], 20[•]was$[•] per share. Following the exercise of your subscription rights you may not be able to sell your common stock at a price equal to or greater than the subscription price. We will not pay you interest on any funds delivered to the subscription agent pursuant to the exercise of subscription rights.

Significant sales of our common stock, or the Series A Preferred Stock. First United Corporation cannot predict when, or if, it will resume making interest payments under the TPS Debentures. Plan participants should not expect to receive cash dividends on their shares of First United Common Stock for the foreseeable future.

Applicable banking and Maryland laws impose additional restrictions on the ability of First United Corporation and the Bank to pay dividends and make other distributions on their capital securities, and, in any event, the payment of dividends is at the discretion of the boards of directors of First United Corporation and the Bank.

In the past, First United Corporation’s ability to pay dividends to shareholders has been largely dependent upon the receipt of dividends from the Bank. Since December 2009, First United Corporation has used its cash to pay dividends. In December 2010, however, First United Corporation contributed substantially all of its excess cash to the Bank to strengthen the Bank’s capital levels. Accordingly, in the eventperception that First United Corporation desires to pay cash dividends on the common stock and/or the Series A Preferred Stocksignificant sales may occur in the future, and assuming such dividends are then permitted undercould adversely affect the termsmarket price for our common stock.

The sale of substantial amounts of our common stock could adversely affect the price of the shares. The availability of shares for future sale, including up to 783,626 shares of our common stock to be issued in the offering, could adversely affect the prevailing market price of our common stock and could cause the market price of our common stock to remain low for a substantial amount of time. In addition, we may grant equity awards under our equity compensation plan, including fully-vested shares of common stock. It is possible that if a significant percentage of such available shares were attempted to be sold within a short period of time, the market for our shares would be adversely affected. It is unclear whether or not the market for our common stock could absorb a large number of attempted sales in a short period of time, regardless of the price at which they might be offered. Even if a substantial number of sales do not occur within a short period of time, the mere existence of this “market overhang” could have a negative impact on the market for our common stock and our ability to raise additional capital.

There is no minimum number of shares that we must sell to complete the offering.

There is no condition in the offering to sell any minimum number or dollar amount of shares. To the extent that shareholders do not purchase significant shares through the exercise of basic subscription privileges or oversubscription privilege, or the Standby Purchase Agreements are terminated, you may be one of only a small number of investors who elect to purchase shares of our common stock.

We may not use the proceeds of the offering for all of the purposes stated in the Use of Proceeds section of this prospectus, and you not agree with how we ultimately choose to use the proceeds.

We will have broad discretion over the use of the net proceeds of this offering. We currently intend to use the proceeds of the offering, after paying our offering expenses, to offset the effects on our capital position of our planned redemption of $10 million of Series A Preferred Stock and our planned repayment of $10.8 million of TPS Debentures. We intend to consummate the TPS Debentures, First United Corporation will likely needredemption and repayment as soon as is practicable following the offering, but our ability to rely on dividendsdo so is subject to the approval of the Federal Reserve and our receipt of a cash dividend from the Bank in the amount of approximately $13.0 million. The Federal Reserve has approved the planned redemption and repayment, subject to the condition that we sell at least $7.0 million in common stock in this offering and/or to the standby investors. Because of the other risks attendant to the offering and to the transactions contemplated by the Standby Purchase Agreements, we cannot assure you that we will satisfy the Federal Reserve’s condition. Further, because the Bank’s ability to pay suchcash dividends is subject to limitations imposed under banking and therecorporate law, no assurance can be no guaranteegiven that the Bank will be able to pay such dividends. Both federala cash dividend in the amount that we need for these transactions. Accordingly, there can be no assurance that we will consummate, in whole or in part, our planned redemption and state laws impose restrictionsrepayment following the closing of the offering or the sales to the standby investors. In the event that we do not consummate those transactions, in whole or in part, our management may allocate the proceeds as it deems appropriate, which means that you will be relying on the abilityjudgment of our management with regard to the use of the Bankproceeds of the offering. You will not have the opportunity, as part of your investment decision, to pay dividends. Under Maryland law, a state-chartered commercial bankinfluence how the proceeds are to be used.

We may pay dividends only out of undivided profits or,cancel the offering at any time, neither we nor the subscription agent will have any obligation to you except to return your subscription payments.

We may, in our sole discretion, decide not to continue with the prior approval ofoffering or cancel the Maryland Commissioner, from surplus in excess of 100% of required capital stock.offering at any time. If however, the surplus of a Maryland bankoffering is less than 100% of its required capital stock, cash dividendscancelled, all subscription payments received by the subscription agent will be returned promptly, without interest or penalty.

We may not be paidable to realize the benefit of our net operating loss deferred tax asset.

As of December 31, 2015 and September 30, 2016, we had a total deferred tax asset of $25.4 million and $24.7, respectively, an offsetting valuation allowance of $1.8 million for both periods, and a deferred tax liability of $3.8 million and $4.4 million, respectively, for a net deferred tax asset of $19.8 million and $18.5 million, respectively.

Included in excessthe total deferred tax asset is $2.7 million associated with a federal net operating loss carryforward which we expect to be substantially utilized in the current year. Also included in total deferred tax asset at December 31, 2015 and September 30, 2016 is $1.8 million of 90%state net operating loss carryforwards associated with separate company tax filings of the Corporation. The Company does not expect these net earnings. In additionoperating loss carryforwards to these specific restrictions, bank regulatory agencies havebe utilized and therefore has established a $1.8 million valuation allowance. A deferred tax asset is reduced by a valuation allowance if, based on the weight of the evidence available, it is more likely than not that some portion or all of the total deferred tax asset will not be realized.

Our ability to prohibit proposed dividendsutilize our net operating loss carryforwards to offset future taxable income may be significantly limited if we experience an “ownership change,” as determined under Section 382 of the Code. If an ownership change were to occur, the limitations imposed by Section 382 of the Code could result in a financial institutionportion of our net operating loss carryforwards expiring unused, thereby impairing their value. While the complexity of Section 382’s provisions and the limited knowledge any public company has about the ownership of its publicly traded stock make it difficult to determine whether an ownership change has occurred, we currently believe that an ownership change will not occur as a result of the offering.

We have attempted to structure the offering so as to avoid an “ownership change” under Section 382 of the Code. We will not accept a subscription pursuant to the oversubscription privilege if we believe that doing so will have an unfavorable effect on our ability to avoid an “ownership change” or preserve our net operating loss deferred tax asset. We do not believe that the exercise of basic subscription privileges will have any unfavorable effect on our ability to avoid an “ownership change” or preserve our net operating loss deferred tax asset. Notwithstanding this measure, an ownership change may occur, which would limit the amount of the net operating loss carryforwards that we might otherwise be permitted under applicable regulations if the regulatory body determines that such distribution would constitute an unsafe or unsound practice. Banks that are considered “troubled institution” are prohibited by federal law from paying dividends altogether. Notwithstanding the foregoing, shareholders must understand that the declaration and payment of dividends and the amounts thereof are at the discretion of First United Corporation’s Board of Directors. Thus, even at times when First United Corporation is not prohibited from paying cash dividends on its capital securities, neither the payment of such dividends nor the amounts thereof can be guaranteed.able to utilize.

Risks Relating to Ownership of Our Common Stock

The shares of First United Corporation’s common stock are not insured.

The shares of First United Corporation’sour common stock are not deposits and are not insured against loss by the FDIC or any other governmental or private agency.

The shares of First United Corporation’sOur common stock areis not heavily traded.traded, and the stock price may fluctuate significantly and may be below the subscription price in the rights offering.

TheOur common stock is listed on the NASDAQ Global Select Market, but shares of the common stock are not heavily traded. Securities that are not heavily traded can be more volatile than stock trading in an active public market. Factors such as our financial results, the introduction of new products and services by us or our competitors, publicity regarding the banking industry, and various other factors affecting the banking industry generally may have a significant impact on the market price of the shares the common stock. Management cannot predict the extent to which an active public market for our common stock will develop or be sustained in the future. Accordingly, Plan participantsyou may not be able to sell theiryour shares of our common stock at the volumes, prices, or times that theyyou desire.

Because First United CorporationThe occurrence of any of the risks described in this “RISK FACTORS” section, including any substantial sales of our common stock or perception that such sales might occur, could also have a significant and adverse impact on the market price of our common stock and could cause the price to be below the subscription price.

Our common stock’s inclusion in The NASDAQ Stock Market’s “Tick Size Pilot Program” may limit your ability to sell your shares at the volumes, prices or times that you desire.

Effective October 31, 2016, our common stock was randomly selected by The NASDAQ Stock Market for inclusion in “Test Group 3” of its “Tick Size Pilot Program”. The program will last for two years and imposes wider minimum quoting and/or trading increments, or “tick sizes”, for certain securities with small market capitalization. Specifically, subject to certain exceptions, the minimum quotation price and minimum trading price for securities in Test Group 3, like our common stock, have been widened to $0.05 per share, which means that our common stock must now be quoted in $0.05 minimum increments and must now trade at $0.05 minimum increments. In addition, securities in Test Group 3 are subject to a “trade-at” requirement that prevents price matching by a trading center that is not displaying a protected bid or protected offer, subject to certain exceptions. As a result, brokerage firms are now required to ensure that your orders with respect to shares of our common stock are priced in nickel increments. This means that the “limit” or “stop” prices that you may place on your order can no longer be in pennies and instead must be in increments of $0.05. We cannot predict the impact, if any, of our common stock’s inclusion in this Tick Size Pilot Program. This program could adversely affect the market for our common stock and could limit your ability to sell your shares at the prices, times and/or volumes that you desire.

The Company has failedentered into an informal agreement with its federal banking regulator that limits its ability to pay dividends and make other distributions on outstanding securities.

The Company has entered into an informal agreement with the Federal Reserve Bank of Richmond (the “Reserve Bank”) that prohibits the Company, without the Reserve Bank’s prior consent, from paying dividends on outstanding shares of its common stock or shares of its Series A Preferred Stock, making interest payments under its TPS Debentures, or taking any other action that would reduce regulatory capital. As a result, the Company may be prohibited from making a dividend payment or any other distribution with respect to outstanding securities, including the repurchase of stock, at a time or times when applicable banking and corporate laws would otherwise permit such a dividend or distribution. This agreement increases the likelihood that we will realize the other risks discussed below relating to our ability to pay dividends and make other distributions.

The terms of the Series A Preferred Stock may, under certain circumstances, prohibit the Company from paying dividends on and/or repurchasing shares of the Company’s common stock.

As of the date of this prospectus, 20,000 shares of the Series A Preferred Stock were issued and outstanding. The terms of the Series A Preferred Stock prohibit the Company from declaring or paying any dividends or making other distributions on the outstanding shares of its common stock, and from repurchasing, redeeming or otherwise acquiring shares of its common stock, if the Company is in arrears on any quarterly cash dividend due on the Series A Preferred Stock. In 2010, at the request of the Reserve Bank, the Company elected to defer regularly scheduled quarterly dividends on the Series A Preferred Stock. The Company terminated that deferral, with the Reserve Bank’s approval, in May 2014, and it thereafter received approvals to pay all subsequent quarterly dividends through August 2016. Unless and until the Company is advised otherwise by the Reserve Bank, the Company’s ability to make each future quarterly dividend payment due under the Series A Preferred Stock will depend on its receipt of an approval from the Reserve Bank. In addition, it should be noted that the Company’s ability to make future quarterly dividend payments will depend in large part on its receipt of cash dividends from the Bank, and the Bank’s ability to pay dividends is subject to various statutory and regulatory limitations. As a result of these limitations, no assurance can be given that the Company will pay dividends on any of its outstanding securities.

The Company’s ability to pay dividends on its capital securities is also subject to the terms of the outstanding TPS Debentures, which prohibit the Company from paying dividends during an interest deferral period.

The terms of the TPS Debentures require the Company to make quarterly payments of interest to the Trusts, as the holders of the TPS Debentures, although the Company has the right to defer payments of interest for up to 20 consecutive quarterly periods. An election to defer interest payments does not constitute an event of default under the terms of the TPS Debentures. The terms of the TPS Debentures prohibit the Company from declaring or paying any dividends or making other distributions on, or from repurchasing, redeeming or otherwise acquiring, any shares of its common stock or shares of its Series A Preferred Stock if the Company elects to defer quarterly interest payments under the TPS Debentures. In addition, a deferral election will require the Trusts to likewise defer the payment of quarterly dividends on their related trust preferred securities.

In 2010, at the request of the Reserve Bank, the Company elected to defer regularly scheduled quarterly interest payments under the TPS Debentures, and this deferral required the Trusts to defer regular quarterly dividend payments on their trust preferred securities. The Company terminated that deferral, with the Reserve Bank’s approval, in March 2014, and it thereafter received approvals to pay all subsequent quarterly interest payments through September 2016. Unless and until the Company is advised otherwise by the Reserve Bank, the Company’s ability to make each future quarterly interest payment due under the TPS Debentures will depend on its receipt of an approval from the Reserve Bank. As a result, and in light of the fact that the Company relies primarily on cash dividends from the Bank to make interest payments, no assurance can be given that the Company will make regularly-scheduled quarterly interest payments under its TPS Debentures. If the Company were to defer interest payments, then it would be prohibited from paying dividends on its outstanding equity securities until the termination of such termination.

If the Company fails to make six quarterly dividend payments on the Series A Preferred Stock, then the holders thereof would have the right to elect up to two additional directors to First United Corporation’sthe Company’s Board of Directors.

Subject to the declaration thereof by First United Corporation’s Board of Directors, theThe terms of the Series A Preferred Stock provide forpermit the Company to defer the payment of quarterly cash dividends, on February 15th, May 15th, August 15thbut, in that case, undeclared dividends will continue to accrue and November 15th of each year. Dividends will accrue regardless of whethermust be paid in full at the board declares atime the Company terminates the dividend on any such date.deferral. The terms provide further provide that whenever, at any time or times, dividends payable on the outstanding shares of the Series A Preferred Stock have not been paid for an aggregate of six quarterly dividend periods or more, whether or not consecutive, the authorized number of directors then constituting First United Corporation’sthe Company’s Board of Directors will automatically be increased by two, from 13 directors to 15 directors (based on the current board structure).two. Thereafter, holders of the Series A Preferred Stock, together with holders of any outstanding stock having voting rights similar to the Series A Preferred Stock, voting as a single class, will be entitled to fill the vacancies created by the automatic increase by electing up to two additional directors (the “Preferred Stock Directors”) at the next annual meeting (or at a special meeting called for the purpose of electing the Preferred Stock Directors prior to the next annual meeting) and at each subsequent annual meeting until all accrued and unpaid dividends for all past dividend periods have been paid in full. First United Corporation currentlyCurrently, the Company does not have any outstanding capital stock with voting rights that are on par with the Series A Preferred Stock. As discussed above, First United Corporation has deferred

Applicable banking and Maryland laws impose additional restrictions on the ability of the Company and the Bank to pay dividends and make other distributions on their capital securities, and, in any event, the payment of dividends is at the discretion of the boards of directors of the Company and the Bank.

In the past, the Company has funded dividends on its capital securities using cash received from the Bank, and this will likely be the case for the foreseeable future. No assurance can be given that the Bank will be able to pay dividends to the Corporation for these purposes at times and/or in amounts requested by the Company. Both federal and state laws impose restrictions on the ability of the Bank to pay dividends. Under Maryland law, a state-chartered commercial bank may pay dividends only out of undivided profits or, with the prior approval of the Office of the Maryland Commissioner of Financial Regulation, which we refer to as the “Maryland Commissioner”, from surplus in excess of 100% of required capital stock. If, however, the surplus of a Maryland bank is less than 100% of its required capital stock, cash dividends may not be paid in excess of 90% of net earnings. In addition to these specific restrictions, bank regulatory agencies have the ability to prohibit proposed dividends by a financial institution which would otherwise be permitted under applicable regulations if the regulatory body determines that such distribution would constitute an unsafe or unsound practice. Banks that are considered to be a “troubled institution” are prohibited by federal law from paying dividends altogether. Notwithstanding the foregoing, shareholders must understand that the declaration and payment of dividends and the amounts thereof are at the discretion of the Company’s Board of Directors. Thus, even at times when the Company is not prohibited from paying cash dividends on its capital securities, neither the Series A Preferred Stock for six quarterly dividend periods, since November 15, 2010. Ifpayment of such dividends nor the Treasury were to inform First United Corporation that it intends to elect Preferred Stock Directors, then the holders of the common stock would notamounts thereof can be entitled to vote on the election of those Preferred Stock Directors.guaranteed.

First United Corporation’sThe Company’s Articles of Incorporation and Bylaws and Maryland law may discourage a corporate takeover.

First United Corporation’sThe Company’s Amended and Restated Articles of Incorporation, which we refer to as the “Charter”, and its Amended and Restated Bylaws, as amended, which we refer to as the “Bylaws”, contain certain provisions designed to enhance the ability of First United Corporation’sthe Company’s Board of Directors to deal with attempts to acquire control of First United Corporation.the Company. First, the Board of Directors is classified into three classes. Directors of each class serve for staggered three-year periods, and no director may be removed except for cause, and then only by the affirmative vote of either a majority of the entire Board of Directors or a majority of the outstanding voting stock. Second, the board has the authority to classify and reclassify unissued shares of stock of any class or series of stock by setting, fixing, eliminating, or altering in any one or more respects the preferences, rights, voting powers, restrictions and qualifications of, dividends on, and redemption, conversion, exchange, and other rights of, such securities. The board could use this authority, along with its authority to authorize the issuance of securities of any class or series, to issue shares having terms favorable to management to a person or persons affiliated with or otherwise friendly to management. In addition, the Bylaws require any shareholder who desires to nominate a director to abide by strict notice requirements.

Maryland law also contains anti-takeover provisions that apply to First United Corporation.the Company. The Maryland Business Combination Act generally prohibits, subject to certain limited exceptions, corporations from being involved in any “business combination” (defined as a variety of transactions, including a merger, consolidation, share exchange, asset transfer or issuance or reclassification of equity securities) with any “interested shareholder” for a period of five years following the most recent date on which the interested shareholder became an interested shareholder. An interested shareholder is defined generally as a person who is the beneficial owner of 10% or more of the voting power of the outstanding voting stock of thea corporation after the date on which thethat corporation had 100 or more beneficial owners of its stock or who is an affiliate or associate of thethat corporation and was the beneficial owner, directly or indirectly, of 10% percent or more of the voting power of the then outstanding stock of thethat corporation at any time within the two-year period immediately prior to the date in question and after the date on which thethat corporation had 100 or more beneficial owners of its stock. The Maryland Control Share Acquisition Act applies to acquisitions of “control shares”, which, subject to certain exceptions, are shares the acquisition of which entitle the holder, directly or indirectly, to exercise or direct the exercise of the voting power of shares of stock of thea corporation in the election of directors within any of the following ranges of voting power: one-tenth or more, but less than one-third of all voting power; one-third or more, but less than a majority of all voting power or a majority or more of all voting power. Control shares have limited voting rights.

Although these provisions do not preclude a takeover, they may have the effect of discouraging, delaying or deferring a tender offer or takeover attempt that a shareholder might consider in his or her best interest, including those attempts that might result in a premium over the market price for the common stock. Such provisions will also render the removal of the Company’s Board of Directors and of management more difficult and, therefore, may serve to perpetuate current management. These provisions could potentially adversely affect the market prices of First United Corporation’sthe Company’s securities.

DESCRIPTION OF THE PLANOFFERING

The following is a question and answer statement of the provisions of the Plan. The Plan was authorized by our Board of Directors and has been in effect since January 9, 1989. The Plan will continue until the earlier of the date that all shares registered under the Plan have been sold or the date we terminate the Plan.Subscription Rights

Purpose

1. What isWe are distributing, at no charge and on a pro-rata basis, to the purpose of the Plan?

The purpose of the Plan is to providerecord holders of our common stock with a convenient method of investing some or all of their cash dividends in shares of common stock and of making optional cash investments in additional shares of common stock. The Plan permits us, at our election, to use shares purchased in the open market or in negotiated transactions or to use our authorized but unissued shares to satisfy the Plan’s requirements. The Plan originally reserved 250,000 shares of common stock to be made available for purchase, but our Board of Directors amended the Plan on March 28, 2012 to make available an additional 770,141 shares. To date, 220,141 shares have been sold under the Plan. Accordingly, as of the dateNovember 28, 2016, non-transferable subscription rights to purchase up to an aggregate of this prospectus, 800,000 shares remain available for purchase under the Plan.

Advantages

2. What are the advantages of the Plan?

Under the Dividend Reinvestment feature of the Plan, participants may have some or all of the cash dividends paid on their shares of common stock automatically reinvested in additional shares of common stock. The Stock Purchase feature provides participants with the ability to make optional cash investments at any time (in a minimum amount of$50per investment and a maximum of$100,000 per calendar quarter), whether or not they elect to reinvest dividends. Full investment of funds is possible under the Plan, whether or not there is a sufficient amount to buy a whole share, because the Plan permits fractions of shares, as well as full shares, to be credited to participants’ accounts. In addition, dividends in respect of such fractions, as well as full shares, will be credited to participants’ accounts. Participants avoid safekeeping requirements and record keeping costs for shares credited to their accounts through the free custodial service and reporting provisions of the Plan. Statements of account will be furnished to participants on a quarterly basis to provide simplified record keeping.

Administration

3. Who administers the Plan?

Broadridge Corporate Issuer Solutions, Inc. is the Administrator of the Plan. The Administrator’s address is 1717 Arch Street, Suite 1300, Philadelphia, Pennsylvania 19103. The Administrator keeps records, sends statements of account to Participants and performs other duties relating to the Plan.

In administering the Plan, the Administrator will not be liable for any act done or any omission to act in good faith, including, without limitation, any claims of liability: (a) arising out of a failure to terminate a participant’s account upon the participant’s death prior to receipt of notice in writing of such death; (b) with respect to the prices at which783,626 shares of our common stock are purchased or sold, regardingat the times when or the manner in which such purchases or sales are made, the decision whethersubscription price of $[•] per share. Each eligible holder of record of shares of our common stock will receive one subscription right to purchase 0.125 shares of common stock for each share of common stock owned by such holder as of 5:00 p.m., Eastern Standard Time, on the record date. Each subscription right will entitle the holder to a basic subscription privilege and an oversubscription privilege.

We intend to keep the offering open until[•], 20[•], unless our Board of Directors, in its sole discretion, extends the offering period for up to 30 days until[•], 20[•].

The Subscription Privilege

The basic subscription privilege of each subscription right entitles you to purchase 0.125 shares of our common stock, upon delivery of the required documents and payment of the subscription price, prior to the expiration of the offering, provided that we will not issue fractional shares in the offering. You will receive one subscription right for each share of our common stock you own as of 5:00 p.m., Eastern Standard Time, on the record date. Accordingly, you must own at least eight shares of common stock on the open market, in negotiated transactions, or from us, or fluctuationsrecord date to participate and purchase one new share in the market valueoffering. You may exercise all or a portion of the common stock; or (c) regarding any matters relatingyour basic subscription privilege; however, if you exercise less than your full basic subscription privilege, you will not be entitled to the operation or management of the Plan. The Administrator may not create a lien on any funds, securities or other property heldpurchase shares under the Plan.your oversubscription privilege.

NeitherAs noted above, we norwill not issue fractional shares of common stock in the Administrator can assureoffering, which means that holders will be entitled to purchase only a whole number of shares of common stock, rounded down to the nearest whole number that a Participantholder would otherwise be entitled to purchase, with the total subscription payment being adjusted accordingly. Any excess subscription payments received by the subscription agent will realizebe returned promptly, without interest or penalty.

Oversubscription Privilege

If you purchase all of the shares of our common stock available to you pursuant to your basic subscription privilege, then you may also subscribe to purchase additional shares should they be available after purchases by all shareholders exercising their basic subscription privilege. However, the oversubscription privilege will only be offered for an aggregate number of shares that, when combined with the number of shares purchased pursuant to the shareholders’ basic subscription privilege, does not exceed 783,626 shares. We can provide no assurances that you will actually be able to purchase any profitshares of common stock upon the exercise of your oversubscription privilege.

To properly exercise your oversubscription privilege, you must deliver the subscription payment related to your oversubscription privilege prior to the expiration of the offering. Because we will not know the total number of unsubscribed shares prior to the expiration of the offering, if you wish to maximize the number of shares you purchase pursuant to your oversubscription privilege, you will need to deliver payment in connectionan amount equal to the aggregate subscription price for the maximum number of shares of our common stock that may be available to you (i.e., assuming you fully exercise your basic subscription privilege and are allotted the full amount of your oversubscription as elected by you).

If oversubscription requests exceed the number of shares of common stock available for sale after purchases by all shareholders exercising their basic subscription privilege, then we will allocate the available shares of common stock among shareholders who oversubscribed as we deem appropriate. When determining how to allocate such remaining shares, we may give priority to those oversubscription purchasers that we believe will develop future business relationships with us, refer business to us or purchase additional shares of our common stock on the open market after the closing of the offering.

We will credit the account of each rights holder with shares of our common stock purchased pursuant to the Plan or protect a participant against a lossexercise of the oversubscription privilege as soon as practicable after the offering has expired.

To the extent the aggregate subscription price of the maximum number of unsubscribed shares available to you pursuant to the oversubscription privilege is less than the amount you actually paid in connection with the exercise of the oversubscription privilege, you will be allocated only the number of unsubscribed shares purchased foravailable to you, and any excess subscription payments received by the participant undersubscription agent will be returned to you, without interest or penalty, as soon as practicable. To the Planextent the amount you actually paid in accordanceconnection with the participant’s instructions as indicated onexercise of the Authorization Form. Itoversubscription privilege is upless than the aggregate subscription price of the maximum number of unsubscribed shares available to each participant to make a decision regarding the sale of any shares owned by the participant, including shares creditedyou pursuant to the participant’s Plan account.oversubscription privilege, you will be allocated the number of unsubscribed shares for which you actually paid in connection with the oversubscription privilege.

Participation – Dividend Reinvestment FeatureDetermination of Subscription Price

4. Who is eligible to participate inIn determining the Plan?

All holders of record of shares of common stock are eligible to participate in the Plan. To be eligible to participate in the Plan, beneficial owners of shares of common stock whose shares are registered in names other than their own (for instance, in the name of a broker) must become shareholders of record by having such shares transferred into their own names or make arrangements with their broker, bank or other nominee to participate on their behalf.

A shareholder will not be eligible to participate in the Plan if he or she resides in a jurisdiction in which it is unlawful for us to permit participation. A shareholder’s right to participate in the Plan is not transferable apart from a transfer of his or her shares of common stock to another person.

5.How does a shareholder participate?

A shareholder may join the Plan at any time by completing the Authorization Form for Dividend Reinvestment and delivering it to the Administrator. A shareholder who does not wish to participate in the Plan will continue to receive dividends, as declared, by check or automatic clearing house (ACH) without any further action on the part of the participant.

6. When will participation begin?

Cash dividends, when declared, are generally paid on the first business day of February, May, August, and November (each, a “Dividend Payment Date”) to shareholders of record on the record date for each dividend. If the Administrator receives an Authorization Form from a shareholder entitled to a dividend by the record date for that dividend, then the Plan will go into effect for that shareholder with that dividend payment (and will apply to subsequent dividends). If the Authorization Form is received after that record date, then any dividend payable with respect to that record date will be paid in cash and the shareholder’s participation in the Plan will begin with the next Dividend Payment Date. See Question Nos. 8 through 11 for information concerning the making of optional cash investments and the timing of optional cash investments.

The Plan does not represent a change in our dividend policy, nor does it represent a guarantee of future dividends, which are subject to the discretion ofsubscription price, our Board of Directors. The declaration of future dividends will depend uponDirectors considered a number of factors, including our future earnings, our capital requirements, regulatory constraints, and our financial condition as well asthe need to offer the shares at a price that would be attractive to investors relative to the then current trading price of First United Bank & Trust and our other subsidiaries.

7. What does the Authorization Form provide?

The Authorization Form allows each shareholder to decide the extent to which he or she will participate in the Plan. In addition, the shareholder, by checking the appropriate box on the Authorization Form, may make optional cash investments.

The Administrator will use cash dividends, plus any optional cash investments received from a participant, to purchase additional shares of common stock. Cash dividends on shares of common stock, credited to a participant’s account under the Plan are always automatically reinvested regardless of which investment option is selected.

Optional Cash Investments – Stock Purchase Feature

8. Who is eligible to make optional cash investments?

Participants who have enrolled in the Plan are eligible to make optional cash investments regardless of whether they have authorized the reinvestment of dividends.

9. How does a participant make optional cash investments?

A Plan participant may make an optional cash investment by completing the Optional Cash Investment Form and delivering it to the Administrator, along with a check in the amount of the investment, prior to the next Dividend Payment Date (See Question No. 6 and Question No. 11). A participant may also use the cash investment form that will be attached to each statement of account sent to participants by the Administrator. If we do not declare a dividend in a particular quarter, then the term “Dividend Payment Date” as used in this prospectus, for purposes of determining the timely receipt of optional cash investment instructions, will be deemed to be the first business day of February, May, August or November, as the case may. Checks should be made payable to StockTrans, Inc. The Administrator will apply any optional cash investments received from a participant to the purchase of shares of common stock for the account of that participant.

If a participant chooses to participate only in the Stock Purchase feature of the Plan, we will pay cash dividends, if declared, on shares registered in the participant’s name in the usual manner and the Administrator will apply any optional cash investments received from the participant to the purchase of additional shares of common stock for the participant’s account under the Plan. Shares of common stock purchased with optional cash investments and credited to the account of the participant will automatically be enrolled in the Dividend Reinvestment feature of the Plan. Accordingly, cash dividends paid on such shares will be reinvested in additional shares of common stock.

10. What are the limitations on making optional cash investments?

The option to make cash investments is available to each participant at any time; however, optional cash investments by a participant may not be less than$50 per investment nor more than$100,000 in the aggregate per calendar quarter. The same amount need not be sent each quarter and there is no obligation to make an optional cash investment in every quarter.

11. When will the Administrator invest optional cash investments?

Optional cash investments received on or before a Dividend Payment Date will be held by the Administrator and combined with funds received from that dividend, if any, for the purchase of common stock under the Plan. Any optional cash investment received after the Dividend Payment Date will be returned to the participant. Participants are urged to mail forms and checks at least five (5) days prior to a Dividend Payment Date to ensure timely receipt, but in no event should forms and checks be mailed more than 30 days prior to the Dividend Payment Date. Neither we nor the Administrator can control the delivery of mail, and, therefore, neither we nor the Administrator will be responsible if an optional cash investment is not made due to a delay in the delivery of a participant’s check. Any optional cash investments received more than 30 days prior to a Dividend Payment Date will be returned to the participant.

No interest will be paid by the Administrator on optional cash investments held by the Administrator.

Purchases

12. How many shares of common stock will be purchased by participants?

The number of shares that will be purchased by each participant depends on the aggregate amount of the participant’s dividends to be reinvested, taking into account dividends on shares credited to the participant’s account under the Plan, the amount of the participant’s optional cash investments, and the applicable purchase price of the shares of common stock (see Question No. 13). A participant’s account will be credited with that number of shares, including fractional shares computed to four decimal places, equal to the total amount to be invested divided by the applicable purchase price.

We reserve the right to limit the maximum number of shares that we sell to participants with respect to any Dividend Payment Date (under both the Dividend Reinvestment feature and the Stock Purchase feature) to the number of shares that would have been sold if all dividends paid on that date were reinvested under the Plan. If, with respect to any Dividend Payment Date, we exercise such right and as a result there are insufficient shares available after investment of participants’ dividends to permit investment of all optional cash investments received, shares available for optional cash investments will be allocated among all participants making optional cash investments in proportion to the amounts of their optional cash investments. The Administrator will refund any payments by participants that are not invested due to this limitation.

13. When and at what price will shares of common stock be purchased under the Plan?

Shares of common stock will be purchased with reinvested dividends and optional cash investments under the Plan at such times as the Administrator may determine, as promptly as reasonably practicable after a dividend is paid, and in no event later than 21 days after such Dividend Payment Date. No interest will be paid on funds held by the Administrator under the Plan. If the Administrator buys any shares in the open market or in privately negotiated transactions, it will not allocate any shares to participants’ accounts until it has acquired sufficient shares from us and/or others to cover the quarterly purchases for all participants.

We, in our sole discretion, will decide whether shares will be purchased in the open market, in privately negotiated transactions, or directly from us. As of the date of this prospectus, we anticipate funding participants’ purchases primarily with newly issued shares, although there can be no assurance that this will actually be the case.

The price at which newly issued shares will be purchased under the Plan will be 100% of “fair market value”. For purposes of the Plan, the “fair market value”tangible book value of a share of our common stock, willhistorical and current trading prices of our common stock, general conditions in the financial services industry, the need for capital and alternatives available to us for raising capital, potential market conditions, and the desire to provide an opportunity to our shareholders to participate in the offering on a pro rata basis. Because our common stock is not heavily traded and to account for the possibility of wide price fluctuations over a short period of time, our Board of Directors concluded that it would be prudent to base the subscription price on the volume weighted average price at which our common stock trades over a period of several trading days. In conjunction with its review of these factors, our Board of Directors also reviewed our history and prospects, including our past and present earnings, our prospects for future earnings, and the outlook for our industry, our current financial condition and regulatory status, and a range of discounts to market value represented by the subscription prices in various other rights offerings. Finally, our Board considered our desire to have a successful offering, which required discussions with the standby investors and a consideration of the high and lowprices that would be acceptable to them.

Based on the foregoing, our Board decided to set the subscription price at an amount per share equal to 90% of the volume weighted average closing sales pricesprice of our common stock as quoted on The NASDAQ Stock Market for the 20 trading days immediately preceding the date of purchase. In no event, however, will the fair market value of a share be less than its par value at the time of sale. Currently, the par value of our common stock is $.01 per share. Notwithstanding the foregoing, we reserve the right to reduce the price at which shares will be purchased, and to change the manner in which such price is calculated, at any time. If we change the purchase price, we will file an amendment or prospectus supplement to this prospectus which will describe the new purchase price.

If the Administrator buys shares in the open market or in negotiated transactions to fund the Plan, then the purchase price recognized by participants will be the weighted average price at which the shares are actually purchased over a period of up to 21 calendar days following an investment date, without regard to dealer mark-ups, brokerage commissions and/or other brokerage expenses. We will pay all applicable dealer mark-ups, brokerage commissions and/or other expenses charged by the brokers or dealers through whom the shares are purchased.

The Administrator may in its discretion commingle the funds represented by dividends to be reinvested and participants’ optional cash investments for the purpose of forwarding purchase orders and may offset purchase and sale orders for the same investment date.

The Administrator will hold the shares purchased under the Plan in each participant’s name, or, if a broker or other nominee is participating on behalf of a beneficial owner, in the broker’s name or other nominee’s name, but the Administrator will have no responsibility for the value of such shares after their purchase.

Our common stock is not-heavily-traded. Thus, depending on the number of shares involved, purchases in the open market to satisfy the requirements of the Plan may have a significant effect on prevailing market prices, which could result in the payment of higher prices for shares than would be the case if the Plan was not in effect. Additionally, because the prices at which shares are purchased under the Plan are determined as of specified dates or as of dates otherwise beyond the control of participants, participants may lose any advantage otherwise available from being able to select the timing of their investments. For example, because the price charged to participants for shares purchased in the open market or in negotiated transactions is the weighted average price at which the shares are actually purchased over a 21-day period following an investment date, participants may pay a higher price for shares purchased under the Plan than for shares purchased on the investment date outside of the Plan.

Our common stock is currently listed on the Global Select Market tier of The NASDAQ Stock Market under the symbol “FUNC”.

14. May a participant purchase shares through the Plan but have dividends on those shares sent directly to him or her?

No. The purpose of the Plan is to provide participants with a convenient method of purchasing shares of common stock and having the dividends on those shares reinvested. Accordingly, dividends paid on shares held in the Plan will be automatically reinvested in additional shares of common stock.

Costs

15. Are any fees or expenses charged to participants in connection with participation in the Plan?

Participants will not pay any service charges in connection with the Plan, as we will pay the expenses of administering the Plan and any dealer mark-ups, brokerage commissions and other expenses charged in connection with the purchase of shares of common stock with reinvested dividends or optional cash investments. However, participants who sell their shares through the Plan will pay standard dealer mark-ups, brokerage commissions and other expenses charged in connection with such sales (see Question No. 27).

Reports to Participants

16. How will participants be advised of the purchase of shares of common stock?

As soon as practicable after each quarterly purchase of shares, each participant will receive a statement of account.These statements are the participant’s continuing record of the cost of purchases and should be retained for tax purposes.Participants also will receive copies of the same communications sent to all other shareholders, including the quarterly reports, annual report, notice of annual meeting and proxy statement, and income tax information for reporting dividends paid.

Dividends

17. Will Participants be credited with dividends on shares held in their account under the Plan?

Yes. We pay dividends, as declared, to the record holders of all shares of our common stock. As the record holder of shares purchased under the Plan for participants, the Administrator will receive dividends for all Plan shares held on the record date. The Administrator will credit such dividends to participants’ accounts in the Plan on the basis of full and fractional shares held in their respective accounts and will reinvest such dividends in additional shares.

Certificates for Shares

18. Will stock certificates be issued for shares of common stock purchased?

Generally, certificates for shares of common stock purchased under the Plan will not be issued to participants. The number of shares credited to an account under the Plan will be shown on the participant’s statement of account. This additional service protects against loss, theft or destruction of stock certificates.

At the request of a participant, subject to any provision of our Bylaws (as amended and/or restated from time to time) that permits us to institute a system of issuing uncertificated shares, certificates for any number of shares, up to the total number of full shares credited to an account under the Plan, will be issued to the participant. Please see Question No. 35 for information on contacting the Administrator. Any remaining full shares and all fractional shares will continue to be held in the participant’s account.

Shares held in or credited to the account of a participant under the Plan may not be pledged unless and until the participant requests that a certificate for such shares be issued in his or her name.

Certificates for fractional shares will not be issued.

19. In whose name will accounts be maintained and certificates registered when issued?

An account will be maintained in each participant’s name as shown on our shareholder records at the time the participant joins the Plan. When issued, certificates for full shares will be registered in the name of the person or entity who holds the account.

Upon written request, certificates also can be registered and issued in names other than the account name, subject to compliance with any applicable laws and the payment by the Participant of any applicable taxes, provided that the request bears the signatures of the participant and the signature is guaranteed by a financial institution, broker or dealer that is a member of the Securities Transfer Agent Medallion Program.

Changing Method of Participation and Withdrawal

20. How does a participant change his or her method of participation?

A participant may change his or her method of participation at any time by completing a new Authorization Form and mailing it to the Administrator (see Question 35 for information on contacting the Administrator). The change will apply as of the next Dividend Payment Date after the Administrator receives the new Authorization Form.

21. May a participant withdraw from the Plan?

Yes. The Plan is entirely voluntary and a participant may withdraw at any time.

If the request to withdraw is received by the Administrator prior to record date for a dividend, the amount of the dividend, and any optional cash investment that would otherwise have been invested, will be paid as soon as practicable to the withdrawing participant. Thereafter, all dividends will be paid in cash. A shareholder may re-enroll in the Plan at any time.

22. How does a participant withdraw from the Plan?

To withdraw from the Plan, a participant must notify the Administrator that he or she wishes to withdraw. Please see Question No. 35 for information on contacting the Administrator. Upon a participant’s withdrawal from the Plan or the termination of the Plan by us, a certificate for full shares credited to the participant’s account under the Plan will be issued and a cash payment will be made for any fractional shares.

23. What happens to fractional shares registered in the participant’s Plan account when he or she withdraws from the Plan?

When a participant withdraws from the Plan, a cash adjustment representing any fractional shares will be mailed directly to the participant. The cash adjustment will be based on the closing sales price of the common stock as quoted on The NASDAQ Global Select Market (or such other exchange as the common stock is then listed) for the trading day immediately preceding the date on which the withdrawal request is received by the Administrator.

Federal Income Tax Consequences

24. What are the federal income tax consequences of participation in the Plan?

A participant will be treated for Federal income tax purposes as having received on each Dividend Payment Date the full amount of the cash dividend, if any, payable on that date with respect to shares of common stock owned by the participant, including shares registered in the participant’s name and shares held for the participant’s Plan account, even though that amount is not actually received by the participant in cash but is instead applied to the purchase of new shares for the participant’s account.

As stated in Question No. 15, we will pay all trading expenses when shares are purchased from others in the open market or in privately-negotiated transactions (whether pursuant to the Dividend Reinvestment Feature or the Stock Purchase Feature). All trading expenses paid on a participant’s behalf will be deemed to be a distribution by us to that participant and will be taxable as a dividend.

A participant will not recognize any taxable income when certificates are issued to the participant for shares credited to the participant’s Plan account, regardless of whether the certificates are issued upon the participant’s request or withdrawal from the Plan, or upon termination of the Plan.

Information returns will be sent to each participant and to the Internal Revenue Service during each year. These returns will show the amount of dividends paid to a participant’s Plan account (i.e., Form 1099-DIV), as well as any proceeds that a participant receives from sales of shares from his or her Plan account (i.e., Form 1099-B).

25. When and how will gains and losses on shares be determined?

A participant will realize a gain or loss whenever he or she sells shares purchased under the Plan. The amount of gain or loss will be the difference between the amount the participant receives for his or her shares in that sale and his or her cost basis for those shares. The cost basis of a share acquired directly from us will equal its “fair market value”, as defined for Federal income tax purposes, on the date we pay the dividend or the date the Administrator buys shares with optional cash payments, as applicable. The cost basis of a share purchased in the open market or in a privately negotiated transaction will equal its purchase price plus any trading expenses that we pay on behalf of the participant.

In the case of foreign shareholders whose dividends are subject to United States income tax withholding, or domestic shareholders whose dividends are subject to United States backup withholding, the Administrator will, to the extent permitted by law, invest in shares of common stock an amount equal to the dividends less the amount of tax required to be withheld in each case. The regular statements of account confirming purchases made for such participants will indicate the amount of tax withheld.

26. When does the holding period begin for purposes of determining gain or loss?

When the Administrator buys shares of common stock only from us, then the holding period for the shares will begin on the day after the Dividend Payment Date for shares purchased with reinvested dividends, and on the day after the Administrator buys shares with optional cash investments.

When the Administrator buys any shares from others, either in the open market or in privately negotiated transactions, then the holding period for those shares will begin on the day after the Administrator allocates shares to the participants’ Plan accounts.

THE ANSWERS TO QUESTIONS NOS. 24 THROUGH 26 ARE ONLY SUMMARIES AND ARE BASED ON OUR UNDERSTANDING OF CURRENT FEDERAL INCOME TAX LAWS. THESE SUMMARIES DO NOT PURPORT TO ADDRESS THE PARTICULAR CIRCUMSTANCES OF INDIVIDUAL PARTICIPANTS. MOREOVER, THEY DO NOT INCLUDE A DISCUSSION OF STATE OR LOCAL INCOME TAX LAW CONSEQUENCES OF PARTICIPATING IN THE PLAN.PARTICIPANTS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE FEDERAL, STATE, LOCAL AND/OR FOREIGN TAX CONSEQUENCES APPLICABLE TO THEM.

Other Information

27. Can Plan shares be sold through the Plan?

Yes. Participants may sell some or all of the shares of common stock credited to their Plan accounts at any time by contacting the Administrator and requesting that certain shares be sold (see Question No. 35 for information on contacting the Administrator). The Administrator will record sales orders on the date of receipt. The Administrator will contact a registered securities broker-dealer and request that the broker-dealer execute a sales order on behalf of the participant in the open market, in negotiated transactions, or by selling the shares to us, as soon as reasonably practicable after receipt of the participant’s request. The proceeds received by the participant will be based on the weighted average sales price per share (including trading fees and other applicable taxes) of the aggregate number of shares sold for the Plan. After settlement of the sale, the Administrator will mail a check to the participant for the proceeds of the sale, less a brokerage commission payable to the broker-dealer effecting the sale and any applicable transfer taxes. The amount of the brokerage commission will depend on the number of shares sold and may differ from broker-dealer to broker-dealer. Participants may obtain information about the brokerage commission for a particular transaction by contacting the Administrator. Please note that the Administrator cannot and does not guarantee the actual sale date or price, nor can it stop or cancel any outstanding sales or issuance requests. All sale requests are final.

Alternatively, a participant may sell his or her shares through a broker of the participant’s choice, in which case the participant must first request a certificate for those shares from the Administrator (see Question No. 18 for instructions on how to obtain a certificate).

28. What if a participant sells or otherwise disposes of all of his or her shares not held in the Plan?

The disposition by a participant of all shares of common stock registered in his or her name that are not credited to the participant’s account under the Plan will have no effect on the shares credited to the participant’s Plan account, and, unless otherwise instructed by the participant, the Administrator will continue to reinvest the dividends on the shares credited to that account.

29. If additional shares of common stock are sold through a rights offering, how will the rights of the Plan be handled?

If we engage in a rights offering, then a participant will receive rights based upon shares held of record in his or her name and upon whole shares credited to his or her account under the Plan. Rights issued in respect of shares credited to an account will be issued to the participant in his or her name.

30. What happens if a stock dividend is issued or a stock split is declared on shares of common stock?

Any shares issued by us as a stock dividend or in a stock split on shares of common stock credited to the account of a participant under the Plan will be added to the participant’s account. Any shares issued by us as a stock dividend or in a stock split on shares of common stock held directly by a participant will be mailed to the participant in the same manner as to shareholders who are not participating in the Plan.

31. How will a participant’s shares credited to the Plan be voted at meetings of shareholders?

Prior to a meeting of shareholders, each participant will be provided with an instruction form that can be used by the participant to direct the vote of shares of common stock held in the participant’s Plan account. If the form is completed and returned as provided in the form, all shares held in that participant’s Plan account will be voted in accordance with the participant’s instructions. If the participant desires to vote in person at the meeting, a proxy for shares credited to the participant’s Plan account may be obtained upon written request received by the Administrator at least 15 days before the meeting.

If no instructions are received on a properly executed returned proxy card or returned instruction form with respect to any item thereon, all of a participant’s shares (both those registered in the participant’s name, if any, and those credited to the participant’s Plan account) will be voted (in the same manner as for non-participating shareholders who return proxies and do not provide instructions) in accordance with management’s recommendations. If the proxy card or instruction form is not returned, or if it is returned unsigned, none of the participant’s shares will be voted unless the Participant votes in person.

32. May the Plan be changed or discontinued?

We reserve the right to make modifications to the Plan, including to change the price at which newly issued shares will be purchased from us under the Plan, and to suspend or terminate the Plan at any time. Any such modification, suspension or termination will be announced to participants and to nonparticipating shareholders.

33. Who interprets and regulates the Plan?

We have the right to interpret and regulate the Plan as we deem necessary or desirable in connection with the operation of the Plan.

34. Can First United Corporation temporarily curtail or suspend purchases or sales of common stock under the Plan?

Yes. We may temporary curtail or suspend purchases or sales of common stock at any time if such purchases or sales would in the Administrator’s judgment contravene, or be restricted by, applicable regulations, interpretations or orders of the SEC, any other governmental commission, agency or instrumentality, any court, securities exchange or other self-regulatory organization. The Administrator shall not be accountable, or otherwise liable, for failure to make purchases of sales at such times and under such circumstances.

35. How can I contact the Administrator regarding questions and other matters?

Questions regarding enrollment, purchase or sale of shares of common stock, and other transactions or services offered pursuant to the Plan should be directed to the Administrator:

- Through the Internet

You can obtain information and take certain other actions regarding your account by visiting www.shareholder.broadridge.com and clicking “Shareholder Logon”. To gain access, you will need your account number and a password, which you must obtain from the Administrator by telephone (see below).

- By Telephone

You may direct your questions and sale requests to shareowner customer service at its toll-free number (within the United States and Canada) at 800-733-1121.

Customer Service Representatives are available from 8:30 a.m. to 5:30 p.m., Eastern Standard Time, Monday through Friday (except holidays).

- In Writing

You may also send questions and sale requests to the Administrator at the following address:

Broadridge Corporate Issuer Solutions, Inc.

1717 Arch Street, Suite 1300

Philadelphia, Pennsylvania 19103.

Be sure to include your name, address, daytime phone number, social security or taxpayer identification number and a reference to First United Corporation on all correspondence.

DESCRIPTION OF THE COMMON STOCK

The following is a summary of the general terms of our common stock based upon our Charter and the Certificate of Designations relating to the Series A Preferred Stock, our Bylaws, and applicable provisions of Maryland law, including the Maryland General Corporation Law, which we refer to as the “MGCL”. Our Charter and Bylaws are incorporated by reference into the registration statement of which this prospectus forms a part was declared effective, subject to a minimum subscription price of $9.00 per share and a maximum subscription price of $11.93 per share. The registration statement was declared effective on[•], 20[•], and the volume weighted average closing sales price of our common stock for the 20 trading days immediately preceding that date was $[•] per share.

You should not consider the subscription price as Exhibit 3.1(i)an indication of value of the Company or our common stock. You should not assume or expect that, after the offering, our shares of common stock will trade at or above the subscription price in any given time period. The market price of our common stock may decline during or after the offering, and you may not be able to sell the shares of our common stock purchased during the offering at a price equal to or greater than the subscription price. You should obtain a current quote for our common stock before exercising your subscription rights and make your own assessment of our business and financial condition, our prospects for the future, and the terms of the offering. The last reported sale of our common stock occurred on[•], 20[•], and the closing sales price of our common stock on that date was $[•] per share. The volume weighted average closing sales price of the common stock for the 20 trading day period that included[•], 20[•]was$[•] per share.

Limitations on Amount You May Purchase

Except for a person or entity that owns, as of the date of this prospectus, more than 5% of our common stock, no person or entity may exercise subscription rights (including the oversubscription privilege) to purchase shares of our common stock that, when aggregated with their existing ownership, would result in such person or entity, together with any of the following persons or entities, owning 5% or more of our issued and outstanding shares of common stock following the offering, or that would require regulatory approval:

The term “associate” is used above to indicate any of the following relationships with a person:

A person or entity that acts in concert with another person, entity, or other party shall also be deemed to be acting in concert with any person or entity who is also acting in concert with that other party, except that any tax-qualified employee plan will not be deemed to be acting in concert with its trustee or a person who serves in a similar capacity solely for the purpose of determining whether stock held by the trustee and stock held by the plan will be aggregated.

Any person or entity, together with related persons or entities, that exercises subscription rights (including the oversubscription privilege) to purchase shares of our common stock that, when aggregated with their existing ownership, results in such person or entity, together with any related persons or entities, owning 4% or more of our issued and outstanding shares of common stock following the offering will be required to enter into an agreement prohibiting such person or entity from purchasing additional shares that would result in such person or entity owning more than 5% of our common stock.

In addition, we will not issue shares of common stock pursuant to the exercise of the basic subscription privilege or the oversubscription privilege to any shareholder who, in our sole opinion, could be required to obtain prior clearance or approval from or submit a notice to any state or federal bank regulatory authority to acquire, own, or control such shares, or if other regulatory approvals may be required. If we elect not to issue shares in such case, such shares will become available to satisfy any oversubscription by other shareholders pursuant to their oversubscription privilege.

Notwithstanding any other information presented in this prospectus, we do not intend to accept any oversubscriptions that we believe may have an unfavorable effect on our ability to preserve our gross net operating loss deferred tax asset. For more information, see the section of this prospectus entitled “OUR NET OPERATING LOSS DEFERRED TAX ASSET” on page 37.

Uncertified Delivery of Shares of Common Stock Acquired in the Offering

All shares of our common stock that you purchase in the offering will be issued electronically in book-entry (uncertificated) form. If you are a shareholder of record as of the record date and purchase shares in the offering by submitting a rights certificate, other subscription materials, and payment, we will issue the new shares as soon as practicable after the completion of the offering, and you will receive confirmation from the subscription agent by mail that your shares were electronically issued. If, as of the record date, your shares were held by a custodian bank, broker, dealer, or other nominee, and you participate in the offering, your custodian bank, broker, dealer, or other nominee will be credited with the shares of common stock you purchase in the offering as soon as practicable after the completion of the offering, and your nominee will credit your account with such shares. Until your shares have been issued in book-entry form or your account is credited with such shares, you may not be able to sell your shares.

Reasons for the Offering

We are conducting the offering to offset the anticipated effects on our capital of our planned redemption of $10 million in Series A Preferred Stock and our planned repayment of $10.8 million in TPS Debentures, which we intend to consummate as soon as is practicable following the offering. See the risk factor entitled “We may not use the proceeds of the offering for all of the purposes stated in the Use of Proceeds section of this prospectus” in the “RISK FACTORS” section of this prospectus for information about our ability to consummate the redemption and repayment transactions. Regardless of whether we effect our planned redemption of Series A Preferred Stock and/or repay the TPS Debentures issued to Trust III, we may in the future, if we seek and obtain regulatory approval to do so, use proceeds of the offering to redeem additional outstanding shares of Series A Preferred Stock and/or repay other TPS Debentures issued by one or more of the Trusts.

Our Board of Directors has chosen to raise capital through Exhibit 4.4. a rights offering to give our shareholders the opportunity to prevent ownership dilution by acquiring additional shares of common stock in the offering. Our Board of Directors also considered several alternative capital-raising methods prior to concluding that the offering was the best option under the current circumstances. However, our Board of Directors is making no recommendation regarding your exercise of the subscription rights. We cannot assure you that we will not need to seek additional financing or engage in additional capital offerings in the future.

Effect of Offering on Existing Shareholders

The ownership interests and voting interests of the existing shareholders that do not fully exercise their basic subscription privilege may be significantly diluted. For more information, see the discussion below under the heading “Outstanding Shares of Common Stock After the Offering”.

Insider Participation

Certain of our directors and officers have indicated that they intend to participate in the offering, although they are not required to do so. Collectively, we expect our directors and officers, together with their affiliates, to purchase up to approximately 31,413 shares in the offering for an aggregate investment of approximately $[•]. As of the record date, our directors and officers, together with their affiliates, beneficially own approximately 251,379 shares of common stock and are entitled to purchase approximately 31,413 shares in the offering by exercising their respective basic subscription privileges on the same terms and conditions applicable to all shareholders. Following the offering, after exercising their respective basic subscription privileges in full, we expect our directors and officers, together with their affiliates, to own an aggregate of approximately 282,792 shares of common stock, or approximately 4.0% of our total outstanding shares of common stock, if we sell all 783,626 shares offered in the offering.

Although directors and officers will be investing their own money in the offering, our Board of Directors makes no recommendation regarding your exercise of the subscription rights. You are urged to make your decision based on your own assessment of our common stock, our business, and the offering.

Method of Exercising Subscription rights

The exercise of subscription rights is irrevocable and may not be cancelled or modified. You may exercise your subscription rights as follows:

Subscription by Record Holders

If you are a record holder of our common stock, the number of rights you may exercise pursuant to the basic subscription privilege will be indicated on the rights certificate delivered to you. You may exercise your subscription rights by (i) properly completing and executing the rights certificate and forwarding it to the subscription agent at the address set forth below in this section under the heading “Subscription Agent”, and (ii) delivering your full subscription payment to the subscription agent through the method described below in this section under the heading “Payment Method” and in the subscription materials, each prior to the expiration of the offering.

Subscription by Beneficial Owners

If your shares of common stock are held in the name of a broker, dealer, custodian bank, or other nominee, you are a beneficial owner of our shares of common stock and will not receive a rights certificate. Instead, one subscription right will be issued to the nominee record holder for each share of our common stock that you own as of the record date, and you will receive an instruction form to exercise your subscription rights through the nominee record holder. Each subscription right entitles you to purchase 0.125 shares of our common stock at the subscription price. We will ask your nominee record holder to notify you of the offering. If you are not contacted by your broker, dealer, custodian bank, or other nominee but believe you are entitled to subscription rights, you should promptly contact your broker, dealer, custodian bank, or other nominee in order to subscribe for shares of our common stock in the offering.

If you hold your shares of our common stock in the name of a broker, dealer, custodian bank, or other nominee, your nominee must exercise the subscription rights on your behalf in accordance with your instructions. Your nominee may establish a deadline that may be before the 5:00 p.m., Eastern Standard Time,[•], 20[•] expiration date we have established for the offering, by which you must provide it with your instructions to exercise your subscription rights and pay for your shares. We are not responsible if you do not receive notice from your broker, dealer, custodian bank, or other nominee or if you do not receive notice in time to respond to your nominee by the deadline established by the nominee.

If you have any questions regarding completing a rights certificate or submitting payment in the offering, please contact our information agent, Georgeson LLC at (800) 561-2871. If you have any general questions regarding the offering, the Company, or the Bank, please contact Tonya K. Sturm, our Senior Vice President & Chief Financial Officer, at (301) 533-2390.

If you wish to participate in the offering, you must deliver your payment along with your properly completed and signed rights certificate, and any other subscription materials, to the subscription agent. Payments must be made in full in U.S. dollars for the full number of shares for which you are subscribing by:

Payments made by check, as described above, should be delivered to Computershare Trust Company, N.A., the subscription agent, as follows:

If by registered, certified, express mail, or overnight courier, to:

Computershare Trust Company, N.A..

c/o Voluntary Corporate Actions

250 Royall Street, Suite V

Canton, MA 02021

If by First Class mail, to:

Computershare Trust Company, N.A.

c/o Voluntary Corporate Actions

PO Box 43011

Providence, RI 02940-3011

Payment received after the expiration of the offering will not be honored, and the subscription agent will return your payment to you, without interest or penalty, as soon as practicable. The subscription agent will be deemed to receive payment upon:

Please note that funds paid by personal check may take seven or more business days to clear. Accordingly, if you wish to pay by means of a personal check, we urge you to make payment sufficiently in advance of the expiration date to ensure that the subscription agent receives cleared funds before that time. We also urge you to consider payment by means of a certified check drawn upon First United Bank & Trust in order to expedite the receipt of your payment.

You should read the instruction letter accompanying the rights certificate carefully and strictly follow it. DO NOT SEND RIGHTS CERTIFICATES OR PAYMENTS TO THE COMPANY OR THE BANK. We are not responsible for subscription materials sent directly to our offices. We will not consider your subscription received until the subscription agent has received delivery of a properly completed and duly executed rights certificate and payment of the full subscription amount. The method of delivery of rights certificates and payment of the subscription amount to the subscription agent will be at the risk of the holders of subscription rights. If sent by mail, we recommend that you send certificates and payments by overnight courier or by registered mail, properly insured, with return receipt requested, and that a sufficient number of days be allowed to ensure delivery to the subscription agent and clearance of payment prior to the expiration of the offering.

Medallion Guarantee May Be Required

Your signature on each rights certificate must be guaranteed by an “eligible guarantor institution,” as such term is defined in Rule 17Ad-15 of the Exchange Act, subject to any standards and procedures adopted by the subscription agent, unless:

You can obtain a signature guarantee from a financial institution, such as a commercial bank, savings and loan association, brokerage firm, or credit union that participates in one of the Medallion signature guarantee programs. The three Medallion signature guarantee programs are the following:

If a financial institution is not a member of a recognized Medallion signature guarantee program, it would not be able to provide signature guarantees. Also, if you are not a customer of a participating financial institution, it is likely the financial institution will not guarantee your signature. Therefore, the best source of a Medallion Guarantee would be a bank, savings and loan association, brokerage firm, or credit union with which you do business. The participating financial institution will use a Medallion imprint or stamp to guarantee the signature, indicating that the financial institution is a member of a Medallion signature guarantee program and is an acceptable signature guarantor.

Subscription Agent

The subscription agent for this offering is Computershare Inc.. Subscription documents and rights certificates should be delivered to Computershare Trust Company, N.A. as follows:

If by registered, certified, express mail, or overnight courier, to:

Computershare Trust Company, N.A. .

c/o Voluntary Corporate Actions

250 Royall Street, Suite V

Canton, MA 02021

If by First Class mail, to:

Computershare Trust Company, N.A .

c/o Voluntary Corporate Actions

PO Box 43011

Providence, RI 02940-3011

You are solely responsible for completing delivery to the subscription agent of your subscription materials. The subscription materials are to be received by the subscription agent on or prior to 5:00 p.m., Eastern Standard Time, on[•], 20[•]. We urge you to allow sufficient time for delivery of your subscription materials to the subscription agent. If you deliver subscription materials in a manner different from those described in this prospectus, we may not honor the exercise of your subscription rights.

Missing or Incomplete Subscription Information

If you do not indicate the number of subscription rights being exercised, or the subscription agent does not receive the full subscription payment for the number of subscription rights that you indicate are being exercised, then you will be deemed to have exercised the maximum number of subscription rights that may be exercised with the aggregate subscription payment you delivered to the subscription agent. If the subscription agent does not apply your full subscription payment to your purchase of our shares of common stock, any excess subscription payment received by the subscription agent will be returned promptly, without interest or penalty.

Expiration Date, Extensions

The period during which you may exercise your subscription rights expires at 5:00 p.m., Eastern Standard Time, on[•], 20[•], which is the expiration of the offering period. If you do not exercise your subscription rights prior to that time, your subscription rights will expire and will no longer be exercisable. We will not be required to issue shares of common stock to you if the subscription agent receives your rights certificate and subscription payment after that time, regardless of when the rights certificate and subscription payment were sent by you. We have the option to extend the offering period for up to 30 days until[•], 20[•], although we do not presently intend to do so. We may extend the offering period by giving oral or written notice to the subscription agent prior to the expiration of the offering period. If we elect to extend the offering period, we will issue a press release announcing such extension no later than 9:00 a.m., Eastern Standard Time, on the next business day after the most recently announced expiration date of the offering.

Amendment or Cancellation

We reserve the right to amend or cancel the offering at any time and for any reason. An amendment or modification could include, for example, a reduction in the subscription price. If we decide to amend or modify the terms of the offering for any reason, subscriptions received prior to such amendment or modification will remain irrevocable. If an amendment includes a reduction in the subscription price, however, all excess subscription payments received from you by the subscription agent will be returned promptly, without interest or penalty. We may cancel the offering, in whole or in part, if at any time before completion of the offering there is any judgment, order, decree, injunction, statute, law, or regulation entered, enacted, amended, or held to be applicable to the offering that in the sole judgment of our Board of Directors would or might make the offering or its completion, whether in whole or in part, illegal or otherwise restrict or prohibit completion of the offering. We may waive any of these conditions and choose to proceed with the offering even if one or more of these events occur. If we cancel the offering, we will issue a press release notifying shareholders of the cancellation and all subscription payments received by the subscription agent will be returned promptly, without interest or penalty.

Foreign Shareholders

We will not mail rights certificates to shareholders on the record date whose addresses are outside the United States. Instead, we will have the subscription agent hold the rights certificates for those holders’ accounts.To exercise their rights, foreign holders must notify the subscription agent before 11:00 a.m., Eastern Standard Time, on the fifth (5^th) business day prior to the expiration date, and must establish to the satisfaction of the Company and the subscription agent that such exercise is permitted under applicable law.If a foreign holder does not notify and provide acceptable instructions to the subscription agent by such time (and if no contrary instructions have been received), such foreign holder will be deemed to have forfeited its right to participate in the offering. The subscription agent contact information for this purpose is: Computershare Trust Company, N.A Attn: Corporate Actions; First United Corporation, 250 Royall Street, Suite V, Canton, MA 02021.

Regulatory Limitation

We will not be required to issue shares of our common stock to you pursuant to the rights offering if, in our opinion, you would be required to obtain prior clearance or approval from any state or federal regulatory authorities, including gaming regulators, to own or control such shares and if, at the expiration time, you have not obtained such clearance or approval.

Compliance with State Regulations Pertaining to the Rights Offering

We are not making the rights offering in any state or other jurisdiction in which it is unlawful to do so. We will not sell or accept an offer to purchase shares of our common stock from you if you are a resident of any state or other jurisdiction in which the sale or offer of the rights would be unlawful. We may delay the commencement of the rights offering in certain states or other jurisdictions in order to comply with the laws of those states or other jurisdictions. However, we may decide, in our sole discretion, not to modify the terms of the rights offering as may be requested by certain states or other jurisdictions. If that happens and you are a resident of the state or jurisdiction that requests the modification, you will not be eligible to participate in the rights offering. We do not expect that there will be any changes in the terms of the rights offering.

Fees and Expenses

We will pay all fees charged by and expenses of the subscription agent and the information agent. If you exercise your subscription rights through your broker, dealer, custodian bank, or other nominee, then you will be responsible for paying any fees that your nominee may charge you.

Notice to Nominees

If you are a broker, dealer, custodian bank, or other nominee that holds shares of our common stock for the account of others on the record date, you should notify the beneficial owners of the shares for whom you are the nominee of the offering as soon as possible to learn their intentions with respect to exercising their subscription rights. You should obtain instructions from the beneficial owner, as set forth in the instructions we have provided to you for your distribution to beneficial owners. If the beneficial owner so instructs, you should submit subscription information and payment for shares. If you hold shares of our common stock for the account(s) of more than one beneficial owner, you may exercise the number of subscription rights to which all beneficial owners in the aggregate otherwise would have been entitled had they been direct holders of our common stock on the record date, provided that you, as a nominee record holder, make a proper showing to the subscription agent by submitting the form entitled “Nominee Holder Certification” which is provided with your offering materials.

Procedures for The Depository Trust & Clearing Corporation Participants

We expect that subscription rights may be exercised through the facilities of DTC. If your subscription rights are held of record through DTC, you may exercise your subscription rights for each beneficial holder by instructing DTC, or having your broker instruct DTC, to transfer your subscription rights from your account to the account of the subscription agent, together with certification as to the aggregate number of subscription rights you are exercising and the exercise price.

No Transfer of Subscription Rights

You may not sell, or otherwise transfer, your subscription rights. We are not applying for listing or quotation of the subscription rights on any exchange or dealer quotation system.

Validity of Subscriptions

We will resolve all questions regarding the validity and form of the exercise of your subscription rights, including time of receipt and eligibility to participate in the offering. Our determination will be final and binding. Once made, subscriptions and directions are irrevocable, and we will not accept any alternative, conditional, or contingent subscriptions or directions. We reserve the absolute right to reject any subscriptions or directions not properly submitted or the acceptance of which would be unlawful. You must resolve any irregularities in connection with your subscription before the subscription period expires, unless waived by us in our sole discretion. Neither we nor the subscription agent shall be under any duty to notify you or your representative of defects in your subscription. A subscription will be considered accepted, subject to our right to cancel the offering, only when a properly completed and duly executed rights certificate and any other required documents and the full subscription payment have been received by the subscription agent. Our interpretations of the terms and conditions of the offering will be final and binding.

Return of Funds

The subscription agent will hold funds received in payment for shares of our common stock in a segregated account pending completion of the offering. Such funds will be held in escrow until the offering is completed or is cancelled. If the offering is cancelled for any reason, all subscription payments received by the subscription agent will be returned promptly, without interest or penalty.

Shareholder Rights

You will have no rights as a holder of our shares of common stock that you purchase in the offering until such shares of common stock are issued to you or until your account at your record holder is credited with shares of common stock purchased in the offering.

No Revocation or Change

Once you submit the form of rights certificate to exercise any subscription rights, you are not allowed to revoke or change the exercise or request a refund of monies paid. All exercises of subscription rights are irrevocable, even if you later learn information about us that you consider to be unfavorable. If we decide to extend, amend or modify the terms of the offering for any reason, subscriptions received prior to such extension, amendment or modification will remain irrevocable. You should not exercise your subscription rights unless you are certain that you wish to purchase shares of common stock at the subscription price of $[•] per share.

Material U.S. Federal Income Tax Consequences

For U.S. federal income tax purposes, you should not recognize income or loss upon receipt or exercise of subscription rights. For a more detailed discussion, see the section titled “Material U.S. Federal Income Tax Consequences” in this prospectus.

No Recommendation to Rights Holders

Our Board of Directors is not making a recommendation regarding your exercise of the subscription rights. Shareholders who exercise subscription rights risk investment loss on money invested. The market price of our common stock may decline to a price that is less than the subscription price and, if you purchase shares at the subscription price, you may not be able to sell the shares in the future at the same price or a higher price. You should make your decision based on your assessment of our business and financial condition, our prospects for the future, and the terms of the offering. Please see the section entitled “RISK FACTORS” in this prospectus for a discussion of some of the risks involved in investing in our common stock.

Trading Symbol

Our common stock is listed on the NASDAQ Global Select Market under the symbol “FUNC”. We urge you to obtain a current market price for the shares of our common stock before making any determination with respect to the exercise of your rights.

Outstanding Shares of Common Stock After the Offering

As of[•], 20[•], 6,269,004 shares of our common stock were issued and outstanding. Assuming that there are no other transactions by us involving shares of our common stock and all 783,626 shares of our common stock are subscribed for in the offering, we expect 7,052,630 shares of common stock to be outstanding immediately after completion of the offering. As a result of the offering, the ownership interests and voting interests of the existing shareholders that do not fully exercise their basic subscription privilege will be diluted.

Questions

If you have any questions regarding completing a rights certificate or submitting payment in the offering, please contact our information agent, Georgeson LLC, at (800) 561-2871. If you have any general questions regarding the offering, the Company, or the Bank, please contact Tonya K. Sturm, our Senior Vice President & Chief Financial Officer, at (301) 533-2390.

THE STANDBY PURCHASE AGREEMENTS

To facilitate the offering, we have entered into Standby Purchase Agreements with the Castle Creek Funds and the Second Curve Funds, each of which has represented to us that it is an “accredited investor” as defined in the Commission’s Regulation D.

Background of the Standby Purchase Agreements

After considering the effects on shareholder value, our plans, the Bank’s long-term viability, regulatory burdens and restrictions, our desire to raise capital in an efficient manner, and alternative transactions with other potential investors, we decided that pursuing a transaction with the standby investors that would support this offering was in the best interests of the Company and its shareholders. Thereafter, the standby investors and their agents were given the opportunity to conduct a detailed due diligence review of the Company. We and the standby investors then negotiated the Standby Purchase Agreements, including the formula to be used to set the subscription price. We entered into the Standby Purchase Agreements on November 7, 2016.

Terms of the Standby Purchase Agreements

The terms of the Standby Purchase Agreements apply only to the standby investors and the Company. Rights holders who participate in the offering are not parties to the Standby Purchase Agreements, and they do not receive any rights pursuant to those agreements.

The Castle Creek Funds have agreed, subject to there being sufficient shares available after purchases by shareholders in the offering, to purchase from us, at the subscription price, the lesser of (a) up to an aggregate of $5.0 million in shares of our common stock that are not purchased by shareholders in the offering and (b) the maximum number of shares that they may purchase without causing an “ownership change” under Section 382(g) of the Internal Revenue Code of 1986, as amended, which we refer to as the “Code”.

The Second Curve Funds, which own an aggregate of 131,614 shares of our common stock as of the record date, have committed to purchase up to $2.0 million in shares of our common stock through a combination of the exercise of their basic subscription privilege in the offering and, subject to there being sufficient shares available after purchases by shareholders in the offering, pursuant to the offer and sale contemplated by their Standby Purchase Agreements, provided that they will not purchase shares to the extent it would cause an “ownership change” under Section 382(g) of the Code. If the Second Curve Funds were to exercise their basic subscription privilege in full, then they would purchase an aggregate of 16,451 shares of our common stock in the offering for an aggregate subscription price of $[•], and, subject to there being sufficient shares available after purchases by shareholders in the offering and to the Section 382(g) limitation, an aggregate of[•]shares of our common stock under their Standby Purchase Agreements for an aggregate purchase price of $[•].

We will not know the aggregate amount of common stock to be sold to the standby investors until the completion of the offering. The consummation of the sale of our common stock to the standby investors is conditioned on the completion of the offering and upon the number of unsubscribed shares available. The chart below presents different scenarios that may occur depending on the number of rights (including the associated oversubscription privilege) that are exercised by shareholders and the number of shares purchased by the standby investors under the Standby Purchase Agreements. The chart below presents the standby investors’ ownership if the basic subscription privilege is exercised with respect to 0%, 25%, 50% and 100% of the subscription rights held by shareholders.

Conditions to Closing

The obligations of the Company and the standby investors to consummate the transactions contemplated by the Standby Purchase Agreements are subject to fulfillment of the following conditions:

The obligations of the Company to consummate the transactions contemplated by the Standby Purchase Agreements are further subject to the conditions that the representations and warranties of the standby investors set forth in their Standby Purchase Agreements are true and correct in all material respects and that the standby investors must have performed all of their respective obligations under the Standby Purchase Agreements.

The obligations of the standby investors to consummate the transactions contemplated by the Standby Purchase Agreements are further subject to the conditions that our representations and warranties set forth in the Standby Purchase Agreements are true and correct in all material respects and that we must have performed all of our obligations under the Standby Purchase Agreements.

Termination Provisions

A Standby Purchase Agreement may be terminated under the following circumstances:

Expenses

Each of the Standby Purchase Agreements provides that we and the standby investor will pay our own expenses associated with the transactions contemplated by the Standby Purchase Agreement, except that we will be obligated to pay the reasonable actual out-of-pocket expenses of each standby investor, up to $25,000 per standby investor, if we terminate the Standby Purchase Agreements because we decide to terminate the offering.

Resale Registration

In the Standby Purchase Agreements, we agreed to file, within 90 days of the closing of the standby offering, a registration statement under the Securities Act to register the resale of the shares purchased by the standby investors, to use commercially reasonable efforts to cause that resale registration statement to be declared effective by the Commission as soon as is practicable, and to maintain a current prospectus with respect to those shares until the earlier of the date on which (i) the standby investors sell or otherwise dispose of their shares, (ii) the shares may be sold by the standby investors pursuant to Rule 144 under the Securities Act and (iii) the shares are no longer issued and outstanding. We have agreed to pay the expenses associated with the resale registration statement. We agreed to enter into a customary registration rights agreement with the standby investors if we fail to comply with the foregoing registration requirements.

Indemnification

The Standby Purchase Agreements require us, subject to certain customary exceptions , to indemnify and hold harmless each standby investor and its affiliated persons against all “Losses” (as defined in the Standby Purchase Agreement) to which they may become subject under the Securities Act or otherwise insofar as such Losses arise out of or are based upon, arising out of, or resulting from the Standby Purchase Agreement and its subject matter. Each standby investor agreed, subject to certain customary exceptions, to indemnify and hold harmless the Company and its affiliated persons against any Losses to which they may become subject as a result of any untrue statement or a material fact or any omission of any material fact required to be stated in this prospectus or the resale registration statement, its related prospectus and/or any related marketing material, or necessary to make the statements therein not misleading to the extent, but only to the extent, that such untrue statement or omission is contained in any information furnished in writing to the Company by such standby investor specifically for inclusion in those documents or materials.

USE OF PROCEEDS

The proceeds to us from the offering will depend on the number of subscription rights that are exercised by shareholders and the number of shares purchased by the standby investors pursuant to the Standby Purchase Agreement. We estimate that the gross proceeds of the offering to us, before expenses, will be $[•], assuming that the offering is fully-subscribed. The following table sets forth the calculation of our net proceeds from the offering. Because we have not conditioned the offering on the sale of a minimum number of shares, we are presenting this information assuming the basic subscription privilege is exercised with respect to 0%, 25%, 50% and 100% of the subscription rights held by shareholders.

We intend to use the proceeds of the offering, after paying our offering expenses, to offset the effects of our planned redemption of $10 million of Series A Preferred Stock and our planned repayment of $10.8 million of TPS Debentures. We intend to consummate the redemption and repayment as soon as is practicable following the offering, but our ability to do so is subject to the approval of the Federal Reserve and our receipt of a cash dividend from the Bank in the amount of approximately $13.0 million. The Federal Reserve has approved the planned redemption and repayment, subject to the condition that we sell at least $7.0 million in common stock in this offering and/or to the standby investors. As noted elsewhere in this prospectus, the Bank’s ability to pay cash dividends is subject to limitations imposed by banking and corporate law. Accordingly, there can be no assurance that we will consummate our planned redemption and repayment. In the event that we do not do so, in whole or in part, we intend to use the proceeds of the offering, after paying our offering expenses, to bolster the capital positions of the Company and the Bank and for general working capital purposes. Regardless of whether we effect our planned redemption of Series A Preferred Stock and/or repay the TPS Debentures issued to Trust III, we may in the future, if we seek and obtain regulatory approval to do so, use proceeds from this offering to redeem additional outstanding shares of Series A Preferred Stock and/or repay other TPS Debentures issued by one or more of the Trusts.

The holders of the Series A Preferred Stock are entitled to receive, if and when declared by the Board of Directors, out of assets legally available for payment, cumulative cash dividends at a rate per annum of 9% per share of Series A Preferred Stock on a liquidation amount of $1,000 per share with respect to each dividend period. The terms of the Series A Preferred Stock call for the payment, if declared by the Company’s Board of Directors, of cash dividends on February 15^th, May 15^th, August 15^th and November 15^th of each year.

The TPS Debentures issued to Trust III mature in 2040, but are redeemable five years after issue and bear interest at the rate of 9.875% per annum, compounded quarterly, which is payable quarterly on March 15^th, June 15^th, September 15^th and December 15^th of each year, subject to our right to defer interest payments for up to 20 consecutive quarters.

CAPITALIZATION

The following table presents our capitalization as of September 30, 2016 (i) on an actual basis, and (ii) on an as-adjusted basis to give effect to the sale of shares of common stock to rights holders in this offering and, to the extent not purchased by rights holders, to the standby investors at a subscription price of $[•] per share, for net expenses of $(146,084) and net proceeds of $[•], as set forth under “Use of Proceeds.”

The following data should be read in conjunction with the section entitled “USE OF PROCEEDS” and the financial information incorporated by reference in this prospectus, including our historical financial statements and related notes.

The following table presents our capitalization as of September 30, 2016 (i) on an actual basis, and (ii) on an as-adjusted basis to give effect to the sale of shares of common stock to rights holders in this offering and, to the extent not purchased by rights holders, to the standby investors at a subscription price of $[•]per share, our planned redemption of $10 million in Series A Preferred Stock and our planned repayment of $10.8 million of TPS Debentures, for net expenses of $145,954 and net proceeds of $[•], as set forth under “Use of Proceeds.”

DILUTION

Dilution represents the difference between the amount per share paid by purchasers of common stock in the offering and the tangible common equity per share of common stock immediately after the offering.

The following table presents the tangible common equity of the Company as of September 30, 2016 (i) on an actual basis, and (ii) on an as-adjusted basis to give effect to the sale of all of the offered shares of common stock to rights holders in this offering and, to the extent not purchased by rights holders, to the standby investors at a subscription price of $[•] per share, for net expenses of $146,084 and net proceeds of $[•], as set forth under “USE OF PROCEEDS”.

The following table presents the tangible common equity of the Company as of September 30, 2016 (i) on an actual basis, and (ii) on an as-adjusted basis to give effect to the sale of all of the offered shares of common stock to rights holders in this offering and, to the extent not purchased by rights holders, to the standby investors at a subscription price of $[•]per share, the redemption of $10 million in Series A Preferred Stock and the repayment of $10.8 million of TPS Debentures, for net expenses of $146,084 and net proceeds of $[•], as set forth under “USE OF PROCEEDS”.

OUR NET OPERATING LOSS DEFERRED TAX ASSET

As of December 31, 2015 and September 30, 2016, we had a total deferred tax asset of $25.4 million and $24.7, respectively, an offsetting valuation allowance of $1.8 million for both periods, and a deferred tax liability of $3.8 million and $4.4 million, respectively, for a net deferred tax asset of $19.8 million and $18.5 million, respectively.

Included in the total deferred tax asset is $2.7 million associated with a federal net operating loss carryforward which we expect to be substantially utilized in the current year. Also included in total deferred tax asset at December 31, 2015 and September 30, 2016 is $1.8 million of state net operating loss carryforwards associated with separate company tax filings of the Corporation. The Company does not expect these net operating loss carryforwards to be utilized and therefore has established a $1.8 million valuation allowance. A deferred tax asset is reduced by a valuation allowance if, based on the weight of the evidence available, it is more likely than not that some portion or all of the total deferred tax asset will not be realized.

Our ability to utilize our net operating loss carryforwards to offset future taxable income may be significantly limited if we experience an “ownership change,” as determined under Section 382 of the Code. Under Section 382 of the Code, an “ownership change” occurs if, over a rolling three-year period, there has been an aggregate increase of 50 percentage points or more in the percentage of our common stock owned by one or more of our “5-percent stockholders” (as determined under the rules of Section 382 of the Code and the related regulations and guidance thereunder). An entity that experiences an ownership change generally will be subject to an annual limitation on its pre-ownership change tax losses and credit carryforwards equal to the equity value of the corporation immediately before the ownership change, multiplied by the long-term, tax-exempt rate posted monthly by the Internal Revenue Service (the “IRS”) (subject to certain adjustments). The annual limitation would be increased each year to the extent that there is an unused limitation in a prior year. The limitation on our ability to utilize our net operating loss carryforwards arising from an ownership change under Section 382 of the Code would depend on the value of our equity at the time of any ownership change.

If an ownership change were to occur, the limitations imposed by Section 382 of the Code could result in a portion of our net operating loss carryforwards expiring unused, thereby impairing their value. While the complexity of Section 382’s provisions and the limited knowledge any public company has about the ownership of its publicly traded stock make it difficult to determine whether an ownership change has occurred, we currently believe that an ownership change will not occur as a result of the offering.

We have attempted to structure the offering so as to avoid an “ownership change” under Section 382 of the Code. We will not accept a subscription pursuant to the oversubscription privilege if we believe that doing so will have an unfavorable effect on our ability to avoid an “ownership change” or preserve our net operating loss deferred tax asset. We do not believe that the exercise of basic subscription privileges will have any unfavorable effect on our ability to avoid an “ownership change” or preserve our net operating loss deferred tax asset.

It is important to note that, notwithstanding this measure, an ownership change may occur, which would limit the amount of the net operating loss carryforwards that we might otherwise be able to utilize.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

The following summary describes the material U.S. federal income tax consequences of the receipt and exercise (or expiration) of the subscription rights, including the basic subscription privilege and the oversubscription privilege, acquired through the offering and owning and disposing of the shares of common stock received upon exercise of the subscription rights. This summary is based upon the Code, Treasury regulations promulgated thereunder and administrative and judicial interpretations thereof, all as currently in effect and all of which are subject to differing interpretations or to change, possibly with retroactive effect. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below.

This summary is for general information only and does not purport to discuss all aspects of U.S. federal income taxation that may be exhaustiveimportant to a particular holder in light of its particular circumstances or to holders that may be subject to special tax rules, including, but not limited to, partnerships or other pass-through entities, banks and other financial institutions, tax-exempt entities, employee stock ownership plans, certain former citizens or residents of the United States, insurance companies, regulated investment companies, real estate investment trusts, dealers in securities or currencies, brokers, traders in securities that have elected to use the mark-to-market method of accounting, persons holding subscription rights or shares of common stock as part of an integrated transaction, including a “straddle,” “hedge,” “constructive sale,” or “conversion transaction,” persons whose functional currency for tax purposes is qualified in its entirety by referencenot the U.S. dollar, persons holding our common stock through a foreign financial account, and persons subject to our Charter, the Certificate of Designations, our Bylaws, and applicablealternative minimum tax provisions of Maryland law. the Code.

This summary applies to you only if you are a U.S. holder (as defined below) and receive your subscription rights in the offering, and you hold your subscription rights or shares of common stock issued to you upon exercise of the subscription rights as capital assets for tax purposes. This summary does not apply to you if you are not a U.S. holder. Non-U.S. holders should consult with their own tax advisors with respect to U.S. federal income tax consequences that may apply to them.

We have not sought, and will not seek, a ruling from the IRS regarding the federal income tax consequences of the offering or the related share issuances. The following summary does not address the tax consequences of the offering or the related share issuance under foreign, state, or local tax laws.

You are a “U.S. holder” if you are a beneficial owner of subscription rights or common stock and you are:

If a partnership (including any entity treated as a partnership for U.S. federal income tax purposes) receives the subscription rights or holds the common stock received upon exercise of the subscription rights including, if applicable, the oversubscription privilege, the tax treatment of a partner in such partnership generally will depend upon the status of the partner and the activities of the partnership. Such a partner or partnership is urged to consult its own tax advisor as to the U.S. federal income tax consequences of receiving and exercising the subscription rights and acquiring, holding or disposing of our shares of common stock.

You should read our Charter,consult your own tax advisor with respect to the CertificateU.S. federal, state, local, non-U.S., and other tax consequences of Designationsthe receipt and Bylawsownership of the subscription rights acquired in the offering and the ownership of shares of common stock received upon exercise of the subscription rights.

Taxation of Subscription Rights

Receipt of Subscription Rights

Your receipt of subscription rights pursuant to the offering should not be treated as a taxable distribution with respect to your existing shares of common stock for U.S. federal income tax purposes. The discussion below assumes that the receipt of the subscription rights will be treated as a non-taxable distribution.

Tax Basis in the Subscription Rights

If the fair market value of the subscription rights you receive is less than 15% of the fair market value of your existing shares of common stock on the date you receive the subscription rights, the subscription rights will be allocated a zero basis for U.S. federal income tax purposes, unless you elect to allocate your basis in your existing shares of common stock between your existing shares of common stock and the subscription rights in proportion to the relative fair market values of the existing shares of common stock and the subscription rights determined on the date of receipt of the subscription rights. If you choose to allocate basis between your existing shares of common stock and the subscription rights, you must make this election on a statement included with your tax return for the provisionstaxable year in which you receive the subscription rights. Such an election is irrevocable.

However, if the fair market value of the subscription rights you receive is 15% or more of the fair market value of your existing shares of common stock on the date you receive the subscription rights, then you must allocate your basis in your existing shares of common stock between your existing shares of common stock and the subscription rights you receive in proportion to their fair market values determined on the date you receive the subscription rights. The fair market value of the subscription rights on the date the subscription rights will be distributed is uncertain. In determining the fair market value of the subscription rights, you should consider all relevant facts and circumstances.

Exercise and Expiration of Subscription Rights

Generally, you will not recognize gain or loss on the exercise of a subscription right. If you allow subscription rights received in the offering to expire, you should not recognize any gain or loss for U.S. federal income tax purposes, and you should re-allocate any portion of the tax basis in your existing shares of common stock previously allocated to the subscription rights that have expired to the existing shares of common stock.

Taxation of Shares of Common Stock

Basis and Holding Period

Your tax basis in a new share of common stock acquired when you exercise a subscription right will be equal to your adjusted tax basis in the subscription right, if any, plus the subscription price. The holding period of a share of common stock acquired when you exercise your subscription rights will begin on the date of exercise.

Distributions

Distributions with respect to shares of common stock acquired upon exercise of subscription rights will be taxable as dividend income when actually or constructively received to the extent of our current or accumulated earnings and profits as determined for U.S. federal income tax purposes. Subject to the discussion below concerning the additional 3.8% tax on net investment income, dividends received by non-corporate shareholders of common stock are taxed at the shareholder’s capital gain tax rate (a maximum rate of 20%), provided that the shareholder meets applicable holding period and other requirements. To the extent that the amount of a distribution exceeds our current and accumulated earnings and profits, such distribution will be treated first as a tax-free return of capital to the extent of your adjusted tax basis in such shares of common stock and thereafter as capital gain. We currently do not make any cash distributions on our shares of common stock.

Dispositions

If you sell or otherwise dispose of the shares of common stock acquired upon exercise of the subscription rights, you will generally recognize capital gain or loss equal to the difference between the amount realized and your adjusted tax basis in the shares of common stock. Such capital gain or loss will be long-term capital gain or loss if your holding period for the shares of common stock is more than one year. Long-term capital gain of an individual is generally taxed at favorable rates (currently a maximum rate of 20%). Long-term capital gains recognized by corporations are taxable at ordinary corporate tax rates. If you have held your shares of common stock for one year or less, your capital gain or loss will be short-term. Short-term capital gains are taxed at a maximum rate equal to the maximum rate applicable to ordinary income. The deductibility of capital losses is subject to limitations.

Net Investment Income Tax

U.S. shareholders who are individuals, estates, or trusts are subject to a 3.8% tax on net investment income. Net investment income includes, among other things, dividends on and capital gains from the sale or other disposition of stock. More specifically, the 3.8% tax applies to the lesser of (i) “net investment income” and (ii) the excess of “modified adjusted gross income” over $200,000 ($250,000 if married and filing jointly or $125,000 if married and filing separately). “Net investment income” generally equals the taxpayer’s gross investment income reduced by the deductions that are importantattributable to you.such income. U.S. shareholders should consult their tax advisors regarding the effect, if any, of the net investment tax on their ownership and disposition of our common stock.

Information Reporting and Backup Withholding

You may be subject to information reporting or backup withholding with respect to dividend payments on, or the gross proceeds from the disposition of, our common stock acquired through the exercise of subscription rights. Backup withholding may apply under certain circumstances if you (i) fail to furnish your social security or other taxpayer identification number (“TIN”), (ii) furnish an incorrect TIN, (iii) fail to report interest or dividends properly, or (iv) fail to provide a certified statement, signed under penalty of perjury, that the TIN provided is correct, that you are not subject to backup withholding, and that you are a U.S. person. Any amount withheld from a payment under the backup withholding rules is allowable as a credit against (and may entitle you to a refund with respect to) your U.S. federal income tax liability, provided that the required information is furnished to the IRS. Certain persons are exempt from backup withholding, including corporations and financial institutions. You are urged to consult your own tax advisor as to your qualification for exemption from backup withholding and the procedure for obtaining such exemption.

MARKET PRICE OF COMMON STOCK AND DIVIDEND POLICY

Market Price of Common Stock

Our common stock trades on the NASDAQ Global Select Market under the symbol “FUNC.” As of[•], 20[•], there were[•] shares of our common stock issued and outstanding held by approximately[•] shareholders of record. On[•], 20[•], the last reported sale price of our common stock was $[•] per share. The following table shows the high and low sales prices of our common stock during the periods indicated.

Dividends

In an effort to preserve its and the Bank’s capital, the Company has not declared a dividend since December 2010. The ability of the Company to declare dividends is limited by federal banking laws and Maryland corporation laws. Subject to these and the terms of its other securities, including the Series A Preferred Stock and the TPS Debentures, the payment of dividends on the shares of common stock and the amounts thereof are at the discretion of the Company’s Board of Directors. Historically, when declared, cash dividends were typically declared on a quarterly basis. When paid, dividends to shareholders have historically been dependent on the ability of the Company’s subsidiaries, especially the Bank, to declare dividends to the Company. Like the Company, the Bank’s ability to declare and pay dividends is subject to limitations imposed by federal and Maryland banking and Maryland corporation laws. A complete discussion of these and other dividend restrictions is contained in the Risk Factors above under the heading, “Risks Relating to Ownership of Our Common Stock”. Accordingly, there can be no assurance that dividends will be declared on the shares of common stock in any future fiscal quarter.

DESCRIPTION OF SECURITIES

We are authorized by our Charter to issue up to 27,000,000 shares of capital stock. Of these shares, 25,000,000 shares are classified as common stock, par value $.01 per share, and 2,000,000 shares are classified as preferred stock, having no par value per share, which may be issued in one or more series having such voting powers, designations, preferences and other rights, qualifications, limitations and restrictions as may be fixed by theour Board of Directors from time to time. Pursuant to the Certificate of Designations, ourThe Board of Directors has designated 30,000 shares of our preferred stock as Fixed Rate Cumulative Perpetual Preferred Stock, Series A.

In addition to the power to issue shares of our authorized preferred stock in one or more series as discussed above, our Charter permits theour Board of Directors, without general stockholder approval but subject to the rights of any preferred stock, to classify and reclassify authorized but unissued shares of capital stock of any class or series by setting or changing in any one or more respects the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms or conditions of redemption of the shares of stock.

Common Stock

As of the date of this prospectus, we had 6,182,757[•], 2016, there were 6,269,004 shares of common stock issued and outstanding, which were held by approximately 1,899 shareholders[•] owners of record. In addition, we had 30,000 shares

The following is a summary of the Series A Preferred Stock issued and outstanding held by one owner of record, and one outstanding warrant to purchase 326,323 sharesgeneral terms of our common stock, at anincluding the shares of common stock that may be issued upon exercise price of $13.79 per sharesubscription rights. This summary does not purport to be complete in all respects. The full terms of the common stock are set forth in our Charter, our Bylaws and to applicable Maryland laws, including the Maryland General Corporation Law, or the “MGCL”. The Charter, the Bylaws and the other documents that expires on January 30, 2019.may impact the rights of holders of our common stock are filed with the registration statement that contains this prospectus as Exhibit 3.1(i) through Exhibit 3.2(iii), all of which are also available from us upon request. The following summary does not give effect to provisions of applicable statutory or common law.

General

The holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of shareholders. Holders of shares of common stock are not entitled to cumulative voting rights in the election of directors. Subject to preferences that may be applicable to any outstanding preferred stock, holders of common stock are entitled to receive ratable dividends whichthat are declared by our Board of Directors out of funds legally available for such a purpose. Our ability to pay dividends on the shares of common stock is subject to federal and state banking and corporate law limitations and limitations imposed by the terms of our other outstanding securities, all as discussed below. In the event of our liquidation, dissolution or winding up, holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and liquidation preferences, if any, on any outstanding shares of preferred stock. Holders of common stock have no preemptive rights and have no rights to convert their common stock into any other securities. The common stock is not redeemable. All of the outstanding shares of our common stock are fully paid and non-assessable.

The Transfer Agent for the common stock is Broadridge Corporate Issuer Solutions, Inc.Computershare Trust Company, N.A.

Voting LimitationsDividends and Other Distributions

The termsdeclaration of our Series A Preferred Stock provide that whenever, at any time or times, dividends payable on the outstanding sharescommon stock is at the discretion of the Series A Preferred Stock have not been paid for an aggregate of six quarterly dividend periods or more, whether or not consecutive, the authorized number of directors then constituting our Board of Directors will automatically be increased by two, from 13 directors to 15 directors (based on the current board structure). Thereafter, holders of the Series A Preferred Stock, together with holders of any outstanding stock having voting rights similar to the Series A Preferred Stock, voting as a single class, will be entitled to fill the vacancies created by the automatic increase by electing up to two Preferred Stock Directors at the next annual meeting (or at a special meeting called for the purpose of electing the Preferred Stock Directors prior to the next annual meeting) and at each subsequent annual meeting until all accrued and unpaid dividends for all past dividend periods have been paid in full. The holders of our common stock would not be entitled to vote on the election of Preferred Stock Directors.

Limits on Dividends

We are subject to various bank regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums. Because First United Corporation does not engage directly in any significant income generating business activities, itsOur ability to pay dividends to holders of the shares of common stock is largely dependent upon itsour receipt of dividends from the Bank. Both federal and state laws impose restrictions on the ability of the Bankbanks to pay dividends. Federal law prohibits the payment of a dividend by an insured depository institution if the depository institution is considered “undercapitalized” or if the payment of the dividend would make the institution “undercapitalized”. Maryland state-chartered banks may pay dividends only out of undivided profits or, with the prior approval of the Maryland Commissioner, from surplus in excess of 100% of required capital stock. If, however, the surplus of a Maryland bank is less than 100% of its required capital stock, then cash dividends may not be paid in excess of 90% of net earnings. In addition to these specific restrictions, bank regulatory agencies have the ability to prohibit a proposed dividend by a financial institution that would otherwise be permitted under applicable law if the regulatory body determines that the payment of the dividend would constitute an unsafe or unsound banking practice.

As a general corporate law matter, the MGCL prohibits us from paying dividends on our capital stock, including the common stock, unless, after giving effect to a proposed dividend, (i) we will be able to pay our debts as they come due in the normal course of business and (ii) our total assets will be greater than our total liabilities plus, unless our Charter permits otherwise, the amount that would be needed, if we were to be dissolved at the time of the dividend, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights on dissolution are superior to those receiving the dividend. Currently, we have no outstanding class of capital stock with preferential rights upon dissolution that are superior to the Series A Preferred Stock. Notwithstanding our inability to pay dividends pursuant to item (ii) above, we may nevertheless pay dividends out of (a) our net earnings for the fiscal year in which the distribution is made, (b) our net earnings for the preceding fiscal year, or (c) the sum of our net earnings for the preceding eight fiscal quarters.

The terms of the Series A Preferred Stock entitle the holders thereof to receive if, as and when declared by our Board of Directors, out of assets legally available for payment, cumulative cash dividends at a rate per annum of 9% per share on a liquidation preference of $1,000 per share of Series A Preferred Stock with respect to each dividend period. Dividends on the Series A Preferred Stock are payable quarterly in arrears on each February 15, May 15, August 15 and November 15. So long as any shares of the Series A Preferred Stock remain outstanding, unless all accrued and unpaid dividends for all prior dividend periods have been paid or are contemporaneously declared and paid in full, no dividend can be paid or declared on our common stock, other than a dividend payable solely in common stock. We and our subsidiaries also may not purchase, redeem or otherwise acquire for consideration any shares of our common stock unless we have paid in full all accrued dividends on the Series A Preferred Stock for all prior dividend periods, other than:

The

In addition to the limitations imposed by the terms of the Series A Preferred Stock, the terms of our outstanding junior subordinated debentures issued to the Trusts permit us to defer payments of the interest thereon for up to 20 consecutive quarterly periods. DuringShould we make such a deferral period, however,election, we arewould be prohibited from paying dividends or making other distributions on, theor from repurchasing, redeeming or otherwise acquiring any shares of our common stock.

Liquidation Rights

The liquidation rights ofcapital stock, including the holders of our Series A Preferred Stock are senior toand the common stock.

Rights Upon Liquidation

In the event of our liquidation, rights of thedissolution or winding up, holders of our common stock. Accordingly, before any assets may be distributed to the holders of our common stock following ourare entitled to share ratably in all assets remaining after payment of liabilities and liquidation the holderspreferences, if any, on any outstanding shares of preferred stock. The terms of the Series A Preferred Stock mustprovide that, in such events, holders of Series A Preferred Stock will be entitled to receive an amount per share, of Series A Preferred Stockreferred to as the total liquidation amount, equal to the fixed liquidation preference of $1,000 per share, plus any accrued and unpaid dividends, whether or not declared, to the date of payment. Holders of the Series A Preferred Stock will be entitled to receive the total liquidation amount out of our assets that are available for distribution to shareholders, after payment or provision for payment of our debts and other liabilities but before any distribution of assets is made to holders of our common stock.

Anti-Takeover Provisions under Maryland Law, and Our Charter and Our Bylaws

The provisions of Maryland law and our Charter and Bylaws we summarize below may have an anti-takeover effect and may delay, defer or prevent a tender offer or takeover attempt that a shareholder might consider in his or her best interest, including those attempts that might result in a premium over the market price for the common stock.

Business Combinations under Maryland Law. The Maryland Business Combination Act generally prohibits corporations from being involved in any “business combination” (defined as a variety of transactions, including a merger, consolidation, share exchange, asset transfer or issuance or reclassification of equity securities) with any “interested shareholder” for a period of five years following the most recent date on which the interested shareholder became an interested shareholder. An interested shareholder is defined generally as a person who is the beneficial owner of 10% or more of the voting power of the outstanding voting stock of the corporation after the date on which the corporation had 100 or more beneficial owners of its stock or who is an affiliate or associate of the corporation and was the beneficial owner, directly or indirectly, of 10% percent or more of the voting power of the then outstanding stock of the corporation at any time within the two-year period immediately prior to the date in question and after the date on which the corporation had 100 or more beneficial owners of its stock.

A business combination that is not prohibited must be recommended by the Board of Directors and approved by the affirmative vote of at least 80% of the votes entitled to be cast by outstanding shares of voting stock of the corporation, voting together as a single voting group and two-thirds of the votes entitled to be cast by holders of voting stock other than voting stock held by the interested shareholder who will (or whose affiliate will) be a party to the business combination or by an affiliate or associate of the interested shareholder, voting together as a single voting group, unless, among other things, the corporation’s shareholders receive a minimum price, as defined in the Maryland Business Combination Act for their shares, in cash or in the same form as paid by the interested shareholder for its shares. These provisions will not apply if the Board of Directors has exempted the transaction in question or the interested shareholder prior to the time that the interested shareholder became an interested shareholder. In addition, the Board of Directors may adopt a resolution approving or exempting specific business combinations, business combinations generally, or generally by type, as to specifically identified or unidentified existing or future shareholders or their affiliates from the business combination provisions of the Maryland Business Combination Act.

Control Share Acquisitions. The Maryland Control Share Acquisition Act generally provides that “control shares” of a corporation acquired in a “control share acquisition” have no voting rights except to the extent approved by the shareholders at a meeting by the affirmative vote of two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares. “Control shares” are shares of stock that, if aggregated with all other shares of stock of the corporation previously acquired by a person or in respect of which that person is entitled to exercise or direct the exercise of voting power, except solely by virtue of a revocable proxy, entitle that person, directly or indirectly, to exercise or direct the exercise of the voting power of shares of stock of the corporation in the election of directors within any of the following ranges of voting power: one-tenth or more, but less than one-third of all voting power; one-third or more, but less than a majority of all voting power or a majority or more of all voting power. “Control share acquisition” means the acquisition, directly or indirectly, of control shares, subject to certain exceptions. If voting rights or control shares acquired in a control share acquisition are not approved at a shareholders’ meeting, then, subject to certain conditions, the issuer may redeem any or all of the control shares for fair value. If voting rights of such control shares are approved at a shareholders’ meeting and the acquireracquiror becomes entitled to vote a majority of the shares of stock entitled to vote, all other shareholders may exercise appraisal rights.

Preference Stock Authorization. As noted above under the heading “Capital Stock”, the Charter gives our Board of Directors the authority to, without the approval of the holders of our common stock, issue our authorized preferred stock in one or more series and to classify and reclassify any class or series of our authorized but unissued capital stock. A series of preferred stock and any other shares of capital stock that the Board classifies or reclassifies may possess rights superior to the rights of the holders of our common stock. As a result, this “blank check” stock, while not intended as a defensive measure against takeovers, could be issued quickly and easily, could adversely affect the rights of holders of common stock and could be issued with terms calculated to delay or prevent a change of control of the CorporationCompany or make removal of management more difficult.

Advance Notice Procedure for Director Nominations by Shareholders.Our Bylaws allow shareholders to submit director nominations. For nominations to properly come before the meeting, however, the nominating shareholder must have given timely written notice of the nomination to either the Chairman of the Board or the President of the Corporation.First United. To be timely, a nomination must be given not less than 150 days nor more than 180 days prior to the date of the meeting of shareholders called for the election of directors which, for purposes of this requirement, is deemed to be on the same day and month as the annual meeting of shareholders for the preceding year. The notice must contain the following information to the extent known by the notifying shareholder:

Classified Board; Removal of Directors.Our Charter provides that the members of our Board of Directors are divided into three classes as nearly equal as possible. Each class is elected for a three-year term. At each annual meeting of shareholders, approximately one-third of the members of the Board are elected for a three-year term and the other directors remain in office until their three-year terms expire. Our Charter and Bylaws provide that no director may be removed without cause, which term is defined as a final unappealable felony conviction, unsound mind, adjudication of bankruptcy, or action that causes material injury to the Corporation.First United. Any removal for cause requires either the affirmative vote of the entire Board or the affirmative vote of the holders of at least a majority of our outstandingthe outvoting voting stock.stock of First United. Further, shareholders may attempt to remove a director for cause after service of specific charges, adequate notice and a full opportunity to refute the charges. Thus, control of ourthe Board of Directors cannot be changed in one year without removing the directors for cause as described above; rather, at least two annual meetings must be held before a majority of the members of the Board could be changed. An amendment or repeal of these provisions requires the approval of at least two-thirds of the outstanding voting power of the CorporationFirst United entitled to vote on the matter.

USE OF PROCEEDSSeries A Preferred Stock

ToAs of the extentdate of this prospectus, 20,000 shares of the Series A Preferred Stock were issued and outstanding, which were held by nine owners of record. The following is a brief description of the terms of the Series A Preferred Stock. This summary does not purport to be complete in all respects. This description is subject to and qualified in its entirety by reference to our Charter and the Certificate of Designations with respect to the Series A Preferred Stock, which are filed with the registration statement that contains this prospectus as Exhibits 3.1(i) through 3.2(iii), respectively, which are also available from us upon request. The following summary does not give effect to provisions of applicable statutory or common law.

General

Pursuant to the Certificate of Designations that was filed, as part of a Certificate of Notice, with the State Department of Assessments and Taxation of Maryland on January 28, 2009, our Board of Directors designated 30,000 shares of our authorized but unissued preferred stock as Series A Preferred Stock, all of which were issued to the Treasury on January 30, 2009. The Treasury subsequently sold all of its shares of Series A Preferred Stock to third-party investors. On February 15, 2016, we sell newly issuedredeemed 10,000 shares under the Plan, and not shares purchased from others, we will receive the proceeds. We do not know the numberof Series A Preferred Stock.

Dividends Payable on Shares of Series A Preferred Stock

Holders of shares that we will ultimately sell under the Plan, the prices at which we will sell them, or the amount of the proceedsSeries A Preferred Stock are entitled to receive if, as and when declared by our Board of Directors, out of assets legally available for payment, cumulative cash dividends at a rate per annum of 9% per share on a liquidation preference of $1,000 per share of Series A Preferred Stock.

Dividends are payable quarterly in arrears on each February 15, May 15, August 15 and November 15, each a “dividend payment date”. If any dividend payment date is not a business day, then the next business day will be the dividend payment date for that dividend, and no additional dividends will accrue as a result of the postponement of that dividend payment date. Dividends payable during any dividend period are computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends payable with respect to the Series A Preferred Stock are payable to holders of record of shares of Series A Preferred Stock on the date that is 15 calendar days immediately preceding the applicable dividend payment date or such other record date as the Board of Directors or any duly authorized committee of our Board of Directors determines, so long as such record date is not more than 60 nor less than 10 days prior to the applicable dividend payment date.

If we will receive.determine not to pay any dividend or a full dividend with respect to the Series A Preferred Stock, we are required to provide written notice to the holders of shares of Series A Preferred Stock prior to the applicable dividend payment date.

We intendare subject to add any proceedsvarious bank regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums. Our ability to pay dividends to holders of the Series A Preferred Stock is largely dependent upon our receipt of dividends from the Bank. Both federal and state laws impose restrictions on the ability of the Bank to pay dividends. Federal law prohibits the payment of a dividend by an insured depository institution if the depository institution is considered “undercapitalized” or if the payment of the dividend would make the institution “undercapitalized”. Maryland state-chartered banks may pay dividends only out of undivided profits or, with the prior approval of the Maryland Commissioner, from surplus in excess of 100% of required capital stock. If, however, the surplus of a Maryland bank is less than 100% of its required capital stock, then cash dividends may not be paid in excess of 90% of net earnings. In addition to these specific restrictions, bank regulatory agencies have the ability to prohibit a proposed dividend by a financial institution that would otherwise be permitted under applicable law if the regulatory body determines that the payment of the dividend would constitute an unsafe or unsound banking practice.

As a general corporate law matter, the MGCL prohibits us from paying dividends on our capital stock, including the Series A Preferred Stock, unless, after giving effect to a proposed dividend, (i) we receivewill be able to pay our general fundsdebts as they come due in the normal course of business and (ii) our total assets will be greater than our total liabilities plus, unless our Charter permits otherwise, the amount that would be needed, if we were to be useddissolved at the time of the dividend, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights on dissolution are superior to those receiving the dividend. Currently, we have no outstanding class of capital stock with preferential rights upon dissolution that are superior to the Series A Preferred Stock. Notwithstanding our inability to pay dividends pursuant to item (ii) above, we may nevertheless pay dividends out of (a) our net earnings for the fiscal year in which the distribution is made, (b) our general corporate purposes. Such purposes may include:net earnings for the preceding fiscal year, or (c) the sum of our net earnings for the preceding eight fiscal quarters.

As discussed in the risk factor contained in First United Corporation’s Annual Report on Form 10-K for the year ended December 31, 2015 entitled “The Corporation’s ability to pay dividends on its capital securities is also subject to the terms of the outstanding TPS Debentures, which prohibit the Corporation from paying dividends during an interest deferral period”, which risk factor is incorporated into this prospectus by reference, the terms of our junior subordinated debentures underlying the trust preferred securities issued by the Trusts permit us to defer payments of the interest due under those debentures for up to 20 consecutive quarterly periods. During a deferral period, however, we are prohibited from paying dividends or making other distributions on, and from repurchasing, redeeming or otherwise acquiring any, shares of the Series A Preferred Stock.

Priority of Dividends

With respect to the payment of dividends and the amounts to be paid upon liquidation, the Series A Preferred Stock will rank:

So long as any shares of Series A Preferred Stock remain outstanding, unless all accrued and unpaid dividends for all prior dividend periods have been paid or are contemporaneously declared and paid in full, no dividend can be paid or declared on our common stock or other junior stock, other than a dividend payable solely in common stock. We and our subsidiaries also may not purchase, redeem or otherwise acquire for consideration any shares of our common stock or other junior stock unless we have paid in full all accrued dividends on the Series A Preferred Stock for all prior dividend periods, other than:

If we repurchase shares of Series A Preferred Stock from a holder other than the initial selling security holder, then we must offer to repurchase a ratable portion of the Series A Preferred Stock then held by the initial selling security holder.

On any dividend payment date for which full dividends are not paid, or declared and funds set aside therefor, on the Series A Preferred Stock and any other parity stock, all dividends paid or declared for payment on that dividend payment date (or, with respect to parity stock with a different dividend payment date, on the applicable dividend date therefor falling within the dividend period and related to the dividend payment date for the Series A Preferred Stock), with respect to the Series A Preferred Stock and any other parity stock will be declared ratably among the holders of any such shares who have the right to receive dividends, in proportion to the respective amounts of the undeclared and unpaid dividends relating to the dividend period.

Subject to the foregoing, such dividends (payable in cash, stock or otherwise) as may be determined by our Board of Directors (or a duly authorized committee of the Board) may be declared and paid on our common stock, any other junior stock and parity stock from time to time out of any funds legally available for such payment, and the Series A Preferred Stock will not be entitled to participate in any such dividend.

Redemption

The Series A Preferred Stock may be redeemed at any time, subject to the approval of the Federal Reserve, in whole or in part, subject to notice as described below.

In any redemption, the redemption price is an amount equal to the per share liquidation amount plus accrued and unpaid dividends to but excluding the date of redemption.

The Series A Preferred Stock will not be subject to any mandatory redemption, sinking fund or similar provisions. Holders of shares of Series A Preferred Stock have no right to require the redemption or repurchase of the Series A Preferred Stock. If fewer than all of the outstanding shares of Series A Preferred Stock are to be redeemed, the shares to be redeemed will be selected either pro rata from the holders of record of shares of Series A Preferred Stock in proportion to the number of shares held by those holders or in such other manner as our Board of Directors or a committee thereof may determine to be fair and equitable.

We will mail notice of any redemption of Series A Preferred Stock by first class mail, postage prepaid, addressed to the holders of record of the shares of Series A Preferred Stock to be redeemed at their respective last addresses appearing on our books. This mailing will be at least 30 days and not more than 60 days before the date fixed for redemption. Any notice mailed or otherwise given as described in this paragraph will be conclusively presumed to have been duly given, whether or not the holder receives the notice, and failure duly to give the notice by mail or otherwise, or any defect in the notice or in the mailing or provision of the notice, to any holder of Series A Preferred Stock designated for redemption will not affect the redemption of any other Series A Preferred Stock. Each notice of redemption will set forth the applicable redemption date, the redemption price, the place where shares of Series A Preferred Stock are to be redeemed, and the number of shares of Series A Preferred Stock to be redeemed (and, if less than all shares of Series A Preferred Stock held by the applicable holder, the number of shares to be redeemed from the holder).

Shares of Series A Preferred Stock that are redeemed, repurchased or otherwise acquired by us will revert to authorized but unissued shares of preferred stock.

Liquidation Rights

In the event that we voluntarily or involuntarily liquidate, dissolve or wind up our affairs, holders of Series A Preferred Stock will be entitled to receive an amount per share, referred to as the total liquidation amount, equal to the fixed liquidation preference of $1,000 per share, plus any accrued and unpaid dividends, whether or not declared, to the date of payment. Holders of the Series A Preferred Stock will be entitled to receive the total liquidation amount out of our assets that are available for distribution to shareholders, after payment or provision for payment of our debts and other liabilities but before any distribution of assets is made to holders of our common stock or any other shares ranking, as to that distribution, junior to the Series A Preferred Stock.

If our assets are not sufficient to pay the total liquidation amount in full to all holders of Series A Preferred Stock and all holders of any shares of outstanding parity stock, then the amounts paid to the holders of Series A Preferred Stock and shares of parity stock will be paid pro rata in accordance with the respective total liquidation amount for those holders. If the total liquidation amount per share of Series A Preferred Stock has been paid in full to all holders of Series A Preferred Stock and shares of parity stock, then the holders of our common stock or any other shares ranking, as to such distribution, junior to the Series A Preferred Stock will be entitled to receive all of our remaining assets according to their respective rights and preferences.

For purposes of the liquidation rights, neither the sale, conveyance, exchange or transfer of all or substantially all of our property and assets, nor the consolidation or merger by us with or into any other corporation or by another corporation with or into us, will constitute a liquidation, dissolution or winding-up of our affairs.

Voting Rights

Except as indicated below or otherwise required by law, the holders of Series A Preferred Stock have no voting rights.

Election of Two Directors upon Non-Payment of Dividends. If the dividends on the Series A Preferred Stock have been deferred for an aggregate of six quarterly dividend periods or more (whether or not consecutive), then the authorized number of directors then constituting our Board of Directors will be increased by two. Holders of Series A Preferred Stock, together with the holders of any outstanding parity stock with like voting rights, voting as a single class, will be entitled to elect the two additional members of our Board of Directors at the next annual meeting (or at a special meeting called for the purpose of electing the preferred stock directors prior to the next annual meeting) and at each subsequent annual meeting until all accrued and unpaid dividends for all past dividend periods have been paid in full. The election of any Preferred Stock Director is subject to the qualification that the election would not cause us to violate the corporate governance requirement of the NASDAQ Global Select Market (or any other exchange on which our securities may be listed) that listed companies must have a majority of independent directors.

Upon the termination of the right of the holders of Series A Preferred Stock and voting parity stock to vote for Preferred Stock Directors, as described above, the Preferred Stock Directors will immediately cease to be qualified as directors, their terms of office shall terminate immediately and the number of our authorized directors will be reduced by the number of Preferred Stock Directors that the holders of Series A Preferred Stock and voting parity stock had been entitled to elect. The holders of a majority of shares of Series A Preferred Stock and voting parity stock, voting as a class, may remove any Preferred Stock Director, with or without cause, and the holders of a majority of the shares Series A Preferred Stock and voting parity stock, voting as a class, may fill any vacancy created by the removal of a Preferred Stock Director. If the office of a Preferred Stock Director becomes vacant for any other reason, then the remaining Preferred Stock Director may choose a successor to fill such vacancy for the remainder of the unexpired term.

Other Voting Rights. So long as any shares of Series A Preferred Stock are outstanding, in addition to any other vote or consent of shareholders required by law or by our Charter, the vote or consent of the holders of at least two-thirds of the shares of Series A Preferred Stock at the time outstanding, voting separately as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, will be necessary to effect or validate:

We may temporarily investTo the proceeds in investment-grade securities.extent of the voting rights of the Series A Preferred Stock, each holder of Series A Preferred Stock will have one vote for each such share on any matter on which holders of Series A Preferred Stock are entitled to vote, including any action by written consent.

The foregoing voting provisions will not apply if, at or prior to the time when the vote or consent would otherwise be required, all outstanding shares of Series A Preferred Stock have been redeemed or called for redemption upon proper notice and sufficient funds have been set aside by us for the benefit of the holders of Series A Preferred Stock to effect the redemption.

PLAN OF DISTRIBUTION

On or about[•],20[•], we intend to issue subscription rights and distribute the rights certificates and copies of this prospectus to individuals who owned shares of common stock on[•], 20[•]. Upon completion of the offering, we intend to issue shares of our common stock directly to those persons who properly exercised their subscription rights prior to the expiration of the offering. We have no specific plans for any proceeds. Our principle purpose in makingalso entered into the Standby Purchase Agreements with the standby investors pursuant to which they have committed to buy certain shares following the consummation of the offering is to provide ourthe extent that shareholders withto not subscribe for all 783,626 shares reserved for issuance in the offering.

The shares are being offered directly by us without the services of an underwriter or selling agent.

Our directors and officers may participate in the solicitation of the exercise of subscription rights for the purchase of common stock. Other trained employees of the Company may assist in the offering in ministerial capacities, providing clerical work in effecting an exercise of subscription rights, or answering questions of a convenientministerial nature. Our officers, directors, and automatic way to increase their ownershipemployees will rely on the safe harbor from broker-dealer registration set forth in Rule 3a4-1 of the Exchange Act. None of our officers, directors, or employees will be compensated in connection with their participation in the offering by the payment of commissions or other remuneration based either directly or indirectly on the transactions in the shares of common stock.

INDEMNIFICATION OF OUR DIRECTORS AND OFFICERS

Our Charter provides that no director or officerWe will pay the fees and out-of-pocket expenses of Computershare Inc., the Corporation willsubscription agent, and Georgeson LLC, the information agent, which are estimated to be personally liable for monetary damages except: (1) to the extent that the person actually received an improper benefit or profit in money, property, or services; or (2) to the extent that a judgment or other final adjudication adverse to the person is entered in a proceeding based on a finding that the person’s action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding. An amendment or repeal of this Charter provision requires the approval of at least two-thirds of the outstanding voting power of the Corporation entitled to vote on the matter. This provision mayapproximately $41,000. We have the practical effect in certain cases of eliminating the ability of our shareholders to collect monetary damages from directors and executive officers. We believe that this provision is necessary to attract and retain qualified persons as directors and executive officers.

Our Bylaws obligate usalso agreed to indemnify the subscription agent and advance expenses to a director or an officer in connection with a proceeding to the fullest extent permitted by and in accordance with MGCL Section 2-418. However, weinformation agent for certain losses that they may not indemnify a director or an officer in connection with a proceeding commenced by such director or officer against the Corporation or one of its directors or officers unless the board authorized the proceeding. We may indemnify and advance expenses to employees and agents, other than directors and officers, as determined by and in the discretion of the Board, in connection with a proceeding to the extent permitted by and in accordance with MGCL Section 2-418.

MGCL Section 2-418 permits us to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that the person was a director, officer, employee or agent of First United if he or she (1) acted in good faith, (2) reasonably believed her actions to be in or not opposed to the best interests of First United, (3) did not actually receive an improper personal benefit in money, property, or services, and (4) in a criminal proceeding, had no reasonable cause to believe her conduct was unlawful.

Under MGCL Section 2-418, indemnification may be against judgments, penalties, fines, settlements, and reasonable expenses actually incurred by the directorsuffer in connection with the proceeding. Indemnification may not be made unless authorized foroffering.

If you have any questions regarding completing a specific proceeding after a determinationrights certificate or submitting payment in the offering, please contact our information agent, Georgeson LLC, at (800) 561-2871. If you have any general questions regarding the offering, the Company or the Bank, please contact Tonya K. Sturm, our Senior Vice President & Chief Financial Officer, at (301) 533-2390.

LEGAL MATTERS

The validity of the shares of common stock issuable upon exercise of the subscription rights and offered under this prospectus has been made that the director has met the applicable standard of conduct. This determination is required to be made: (1)passed upon for us by the Board of Directors; (2) by special legal counsel selected by the Board of Directors or a committee of the board by vote; or (3) by the shareholders.Gordon Feinblatt LLC, Baltimore, Maryland.

We may pay, before final disposition, the expenses, including attorneys’ fees, incurred by a director, officer, employee or agent in defending a proceeding when the director of officer gives and undertaking to the Corporation to repay the amounts advanced if it is ultimately determined that he or she is not entitled to indemnification. We are required to indemnify any director who has been successful on the merits or otherwise, in defense of a proceeding for reasonable expenses incurred in connection with the proceeding.

These indemnification and advancement of expenses provisions are not exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of shareholders, vote of directors or otherwise.

EXPERTS

The consolidated statementsstatement of financial condition as of December 31, 20112015 and 2010,2014, and the consolidated statements of operations,income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the two years in the periodthen ended, December 31, 2011, incorporated by reference ininto this prospectus, have been included herein in reliance on the report of ParenteBeard LLC,Baker Tilly Virchow Krause, LLP, independent registered public accountants, given on the authority of that firm as experts in auditing and accounting.

LEGAL MATTERS

The validity of the securities offered pursuant to this prospectus has been passed upon for us by Gordon Feinblatt LLC, Baltimore, Maryland.

WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form S-1 with the SECCommission covering the shares of common stocksecurities that may be sold under this prospectus. This prospectus is only a part of that registration statement and does not contain all the information in the registration statement. Because this prospectus may not contain all the information that you may find important, and because references to our contracts and other documents made in this prospectus are only summaries of those contracts and other documents, you should review the full text of the registration statement, as amended from time to time, and the exhibits that are a part of the registration statement. We have included copies of these contracts and other documents as exhibits to the registration statement that contains this prospectus.

We are subject to the information requirements of the Exchange Act, which means that we are required to file annual reports, quarterly reports, current reports, proxy statements and other information with the SEC.Commission. You may read and copy any document we file with the SECCommission at the SEC’sits public reference room in Washington, D.C., located at 100 F Street, N.E., Washington D.C. 20549. Please call the SECCommission at 1-800-SEC-0330 for further information on the public reference room. Our SECCommission filings are also available to the public from the SEC’sits Internet site athttp://www.sec.gov and from our Internet site athttp://www.mybank4.comwww.mybank.com. However, information found on, or otherwise accessible through, these Internet sites is not incorporated into, and does not constitute a part of, this prospectus or any other document we file or furnish to the SEC.Commission. You should not rely on any of this information in deciding whether to purchase the securities.

INCORPORATION OF CERTAIN INFORMATIONDOCUMENTS BY REFERENCE

The SEC’sCommission’s rules allow us to incorporate information into this prospectus by reference to documents that we have filed with the SEC.Commission. This means that we can disclose information to you beby referring you to those documents. Any information incorporated by reference is an important part of this prospectus, and you should review that information so that you understand the nature of any investment by you in the securities. We are incorporating by reference the documents listed below (other than, in each case, documents or information deemed to have been furnished and not filed in accordance with SECthe Commission’s rules):

(i)            Annual Report on Form 10-K for the year ended December 31, 20112015 filed on March 14, 20129, 2016 (which includes certain information contained in our definitive proxy statement on Schedule 14A for the 20122016 Annual Meeting of Shareholders, filed on March 15, 2012,30, 2016, and incorporated therein by reference); and

(ii)

(viii)        Description of our common stock which appears in our Registration Statement on Form 8-A filed on February 19, 1986, or any description of the common stock that appears in any prospectus forming a part of any subsequent registration statement of the Corporation or in any registration statement filed pursuant to Section 12 of the Exchange Act, including any amendments or reports filed for the purpose of updating such description.

Any statement contained in a document incorporated or deemed to be incorporated by reference in this prospectus shall be deemed to be modified or superseded to the extent that a statement contained in this prospectus modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.

We will promptly provide without charge to each person to whom this prospectus is delivered a copy of any or all information that has been incorporated herein by reference (not including exhibits to the information that is incorporated by reference unless such exhibits are specifically incorporated by reference into such information) upon the written or oral request of such person. Written requests should be directed to: First United Corporation, Corporate Secretary, 19 South Second Street, Oakland, Maryland 21550. Telephone requests should be directed to the Corporate Secretary at (888) 692-2654. (301) 533-2390.

You also may access the documents that have been incorporated by reference into this prospectus on our website,www.mybank4.comwww.mybank.com, under the heading “SEC Filings” found under the “Investors” section of the “My Community” tab, or at:http://www.corporatewindow.com/fl/func/func-sec.html.

Common Stock, Par Value $.01 Per Share, Underlying Subscription Rights

to Purchase up to 783,626 Shares of Common Stock