The board of First United Corp., on Dec. 19, concluded that the company's consolidated financial statements for the year ended Dec. 31, 2015, that were included in the company's 2015 annual report on Form 10-K should no longer be relied upon.
The Oakland, Md.-based company disclosed that there was an error relating to the company's accounting for the transfer of eight pooled trust preferred securities in the 2015 fourth quarter from unit First United Bank & Trust to the company. In connection with that transfer, the company recorded a $3.5 million realized loss, or $2.1 million net of tax, in the quarter ended Dec. 31, 2015.
The board's conclusion followed a consultation with management and accounting firm Baker Tilly Virchow Krause LLP.
The company believes that with the correction, the amount reported as net income available to common shareholders for the year ended Dec. 31, 2015, will be increased by approximately 21%, to $10.3 million from the $8.2 million. The pretax net losses/gains income statement line item will increase by $3.5 million to net gains of $1.0 million as a result of the nonrecurring transfer from the bank to the company. Earnings per common share will increase to $1.65 from the previously reported $1.31 representing an increase of approximately 26%.
The correction, the company believes, will have no material impact on the interim consolidated financial statements filed for the quarters ended March 31, June 30 and Sept. 30 in 2016. The only change for these periods is a shift within total shareholders' equity between retained earnings and accumulated other comprehensive loss.
Total shareholders' equity will remain unchanged at Dec. 31, 2015, and for the 2016 quarters ended March 31, June 30 and Sept. 30.