FIRST UNITED CORP/MD/ New Standards Disclosure

Recent Accounting Pronouncements

Newly Adopted Pronouncements in 2025

In December 2023, FASB issued Accounting Standards Update (“ASU”) No. 2023-09, “Income Taxes (Topic 740):  Improvements to Income Tax Disclosures.”  ASU No. 2023-09 requires public business entities to disclose in their rate reconciliation table additional categories of information about Federal, state, and foreign income taxes and to provide more details about the reconciling items in some categories if items meet a quantitative threshold.  ASU No. 2023-09 also requires all entities to disclose income taxes paid, net of refunds, disaggregated by Federal, state, and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold, among other things.  ASU No. 2023-09 became effective for our financial statements in 2025 and will be effective for interim periods starting in fiscal year 2026.  We elected to apply this standard on a retroactive basis.  See Note 12, Income Taxes, for updated disclosures related to ASU No. 2023-09.

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Recently issued but not yet effective Accounting Pronouncements

In November 2024, FASB issued ASU No. 2024-03, “Income Statement- Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):  Disaggregation of Income Statement Expenses.”  ASU No. 2024-03 requires disaggregated disclosure of income statement expenses for public business entities.  ASU No. 2024-03 requires new financial statement disclosures in tabular format, disaggregating information about prescribed categories underlying any relevant income statement expense caption.  The prescribed categories include, among other things, employee compensation, depreciation, and intangible asset amortization.  Additionally, entities must disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.  ASU No. 2024-03 is effective on a prospective basis for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, though early adoption and retrospective application is permitted.  ASU No. 2024-03 is not expected to have a material impact on our financial statements.

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In July 2025, FASB issued ASU No. 2025-05, “Financial Instruments- Credit Losses (Topic 326):  Measurement of Credit Losses for Accounts Receivable and Contract Assets.”   ASU No. 2025-05 provides all entities with a practical expedient in developing reasonable and supportable forecasts as part of estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606.  ASU No. 2025-05 is effective on a prospective basis or annual periods beginning after December 15, 2025, though early adoption and retroactive application is permitted.  ASU No. 2025-05 is not expected to have a material impact on our financial statements.  

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In September 2025, FASB issued ASU No. 2025-06, “Intangibles-  Goodwill and Other Internal Use Software (Subtopic 350-40):  Targeted Improvements to the Accounting for Internal-Use Software.”  ASU No. 2025-06 applies to all entities subject to internal-use software guidance in Subtopic 350-40 and website development costs in accordance with Subtopic 350-50.  The amendments in ASU No.2025-06 remove all reference to prescriptive and sequential software development stages.  Therefore, an entity is required to start capitalizing software costs when both the following occur:  1) management has authorized and committed to funding the software project and 2) it is probable that the project will be completed and the software will be used to perform the function intended.  ASU No. 2025-06 is effective on a prospective basis on annual periods beginning after December 15, 2027, though early adoption and retroactive application is permitted.  ASU No. 2025-06 is not expected to have a material impact on our financial statements.

In November 2025, FASB issued ASU No. 2025-08, “Financial Instruments- Credit Losses (topic 326):  Purchased Loans.”  ASU No. 2025-08 expands the scope of the “gross-up” method, formerly applicable only to purchased credit-deteriorated (“PCD”) assets, to include acquired non-PCD loans that meet certain criteria, now referred to as “purchased seasoned loans”.  Under this model, an allowance for expected credit losses is recognized at acquisition, offsetting the loan’s amortized cost basis, thereby eliminating the day-one credit-loss expense previously required for non-PCD assets.  PSLs are defined as non-PCD loans acquired either (i) through a business combination, or (ii) purchased more than 90 days after origination when the acquirer was not involved in origination.  ASU No. 2025-08 is effective on a prospective basis on annual periods beginning after December 15, 2026, though early adoption and retroactive application is permitted.  ASU No. 2025-08 is not expected to have a material impact on our financial statements.

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In November 2025, FASB issued ASU No. 2025-09, “Derivatives and Hedging (topic 815):  Hedge Accounting Improvements.”  ASU No. 2025-09 amends ASC Topic 815 to align hedge accounting more closely with an entity’s economic risk management practices.  Key amendments include (i) to allow designating a variable price component of a nonfinancial forecasted purchase or sale as the hedged risk, (ii) to allow grouping individual forecasted transactions with similar (not identical) risk exposures, (iii) a new model for hedging forecasted interest on a variable-rate debt, enabling changes in index or tenor without dedesignation, subject to simplifying assumptions, and (iv) additional clarifications related to hedge accounting of nonfinancial components, net written options, and dual-hedge strategies.  ASU No. 2025-09 is effective on a prospective basis on annual periods beginning after December 15, 2026, though early adoption and retroactive application is permitted.  ASU No. 2025-09 is not expected to have a material impact on our financial statements.

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In November 2025, FASB issued ASU No. 2025-11, “Interim reporting (topic 270):  Narrow Scope Improvements.”  ASU No. 2025-11  clarifies and enhances guidance under ASC Topic 270 on interim financial reporting by (i) clarifying the scope of ASC 270 such that it now explicitly applies only to entities that issue complete interim financial statements and related notes under U.S. GAAP, (ii) establishing clear guidance on the form of interim statements and notes, incorporating a comprehensive list of required interim disclosures drawn from across the ASC, and (iii) introducing a requirement to disclose material events and changes occurring after the end of the last annual period that could impact interim results.  ASU No. 2025-11 is effective on a prospective basis on annual periods beginning after December 15, 2027, though early adoption and retroactive application is permitted.  ASU No. 2025-11 is not expected to have a material impact on our financial statements.