FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                      For Quarter Ended September 30, 1997

                         Commission File Number 0-17565


                           FIRST UNITED BANCORPORATION
             (Exact name of registrant as specified in its charter)


          South Carolina                                        57-0850174
       (State or other jurisdiction                        (I. R. S. Employer
         of incorporation)                                 Identification No.)



                                  304 North Main Street
                             Anderson, South Carolina 29621
                             (Address of principal executive
                              offices, including zip code)

                                     (864) 224-1112
                  (Registrant's telephone number, including area code)


                   --------------------------------------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past ninety (90) days.

                              YES [X]   NO

The number of shares outstanding of each of registrant's classes of common stock
as of September 30, 1997:

                    3,971,721 shares of common stock, $1 1/9 Par Value






<PAGE>


                               TABLE OF CONTENTS



                                                                            PAGE

PART I ITEM 1  FINANCIAL INFORMATION

       Consolidated Balance Sheets                                           3
              September 30, 1997 (unaudited) and
              December 31, 1996


       Consolidated Statements of Income                                     4
              Three months ended September 30, 1997
              and 1996 (unaudited)

       Consolidated Statements of Income                                     5
              Nine months ended September 30, 1997
              and 1996 (unaudited)

       Consolidated Statements of Changes in
       Shareholders' Equity                                                  6
              Year ended December 31, 1996 and nine
              months ended September 30, 1997 (unaudited)
       Consolidated Statements of Cash Flows
              Nine months ended September 30, 1997                           7
              and 1996(unaudited)

       Notes to Consolidated Financial Statements                            8
              (unaudited)


PART I ITEM 2  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS                               10


PART II  OTHER INFORMATION                                                  25


SIGNATURES                                                                  26

                                        2

<PAGE>
                           FIRST UNITED BANCORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                   
<TABLE>
<CAPTION>

                                                                                             September 30,              December 31,
                                                                                                  1997                       1996
                                                                                              (Unaudited)
                                                                                                  ----                       ----
                                                                                                           (In thousands)
ASSETS:
<S>                                                                                                  <C>                  <C>      
  Cash and due from banks ................................................................           $   8,967            $   8,128
  Federal funds sold .....................................................................               9,000               13,700
  Investment securities:
    Held to maturity (Market value of $7,327 and 8,006) ..................................               7,193                7,843
    Available for sale (Cost of $26,151 and $26,318) .....................................              26,186               26,304

  Loans ..................................................................................             237,620              205,551
  Less: Allowance for loan losses ........................................................              (3,503)              (3,160)
                                                                                                     ---------            ---------
                                   Net loans .............................................             234,117              202,391

  Premises, furniture and equipment (net) ................................................               7,118                7,627
  Other real estate owned ................................................................                  53                   85
  Other assets ...........................................................................               4,519                4,117
                                                                                                     ---------            ---------

       TOTAL ASSETS ......................................................................           $ 297,153            $ 270,195
                                                                                                     =========            =========

LIABILITIES:
  Demand deposits ........................................................................           $  26,143            $  23,180
  NOW accounts ...........................................................................              27,144               25,143
  Savings and money market deposits ......................................................              36,116               34,113
  Certificates of deposit greater than $100,000 ..........................................              53,115               41,073
  Certificates of deposit less than $100,00 and other time deposits ......................             113,706               94,710
                                                                                                     ---------            ---------

      TOTAL DEPOSITS .....................................................................             256,224              218,219
                                                                                                     ---------            ---------

  Securities sold under repurchase agreements ............................................               2,989                8,167
  Federal Home Loan Bank Borrowings ......................................................               2,750               10,830
  Other borrowed funds ..................................................................               10,300               11,900
  Other liabilities ......................................................................               3,733                2,794
                                                                                                     ---------            ---------

      TOTAL LIABILITIES ..................................................................             275,996              251,910
                                                                                                     ---------            ---------

SHAREHOLDERS' EQUITY:
  Common stock ($1.12 par value, 15,000,000      
    shares authorized; 3,971,721 and 2,587,895
    shares issued and outstanding, respectively) .........................................               4,416                4,315
  Paid-in capital ........................................................................              14,313               13,965
  Retained earnings ......................................................................               2,406                   14
  Unrealized gain (loss) on securities available for 
    sale, net of income taxes ............................................................                  22                   (9)
                                                                                                     ---------            ---------

TOTAL SHAREHOLDERS' EQUITY ...............................................................              21,157               18,285
                                                                                                     ---------            ---------

TOTAL LIABILITIES AND  SHAREHOLDER'S EQUITY ..............................................           $ 297,153            $ 270,195
                                                                                                     =========            =========
</TABLE>

                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                        3

<PAGE>

                           FIRST UNITED BANCORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                                          THREE MONTHS ENDED
                                                                                                    September 30     September 30,
                                                                                                      1997                1996
                                                                                                      ----                ----
                                                                                                (In thousands except per share data)
INTEREST INCOME:
<S>                                                                                                   <C>                    <C>   
  Loans ..............................................................................                $ 7,005                $ 5,649
  Federal funds sold .................................................................                    112                    152
  Taxable investment securities ......................................................                    472                    420
  Non-taxable investment securities ..................................................                     65                     65
                                                                                                      -------                -------

  Total interest income ..............................................................                  7,654                  6,286
                                                                                                      -------                -------

INTEREST EXPENSE:
  Interest on deposits ...............................................................                  2,947                  2,049
  Interest on securities sold under repurchase agreements.............................                     37                     36
  Interest on other borrowed funds ...................................................                    304                    379
                                                                                                      -------                -------
  Total interest expense .............................................................                  3,288                  2,464
                                                                                                      -------                -------
  Net interest income ................................................................                  4,366                  3,822
  Provision for loan losses ..........................................................                    505                    468
                                                                                                      -------                -------

  Net interest income after provision for loan losses.................................                  3,861                  3,354
                                                                                                      -------                -------

OTHER INCOME:
  Service charges on deposit accounts ................................................                    210                    167
  Other service charges, commissions & fees ..........................................                    272                    233
  Other income .......................................................................                     96                     92
                                                                                                      -------                -------

  Total other income .................................................................                    578                    492
                                                                                                      -------                -------

OTHER EXPENSES:
  Salaries, wages and benefits .......................................................                  1,795                  1,646
  Occupancy expenses .................................................................                    219                    204
  Furniture and equipment expenses ...................................................                    203                    149
  Other operating expenses ...........................................................                    904                    977
                                                                                                      -------                -------
  Total other expenses ...............................................................                  3,121                  2,976
                                                                                                      -------                -------
Income before income taxes ...........................................................                  1,318                    870
Provision for income taxes ...........................................................                    456                    317
                                                                                                      -------                -------

NET INCOME ...........................................................................                $   862                $   553
                                                                                                      =======                =======

PER SHARE DATA:
  Primary ............................................................................                $  0.21                $  0.14
  Fully diluted ......................................................................                $  0.21                $  0.14

AVERAGE COMMON SHARES OUTSTANDING:
  Primary ............................................................................                  4,164                  4,042
  Fully diluted ......................................................................                  4,173                  4,042
  Cash dividends .....................................................................                $0.0225                $0.0225
</TABLE>


                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                        4

<PAGE>

                           FIRST UNITED BANCORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                          NINE MONTHS ENDED
                                                                                                   September 30        September 30,
                                                                                                       1997                 1996
                                                                                                       ----                 ----
                                                                                                (In thousands except per share data)
INTEREST INCOME:
<S>                                                                                                    <C>                   <C>    
  Loans ................................................................................               $20,049               $15,809
  Federal funds sold ...................................................................                   370                   405
  Taxable investment securities ........................................................                 1,406                 1,155
  Non-taxable investment securities ....................................................                   190                   191
                                                                                                       -------               -------
  Total interest income ................................................................                22,015                17,560
                                                                                                       -------               -------
INTEREST EXPENSE:
  Interest on deposits .................................................................                 8,077                 5,663
  Interest on securities sold under repurchase agreements ..............................                   121                   117
  Interest on other borrowed funds .....................................................                 1,107                   925
                                                                                                       -------               -------
  Total interest expense ...............................................................                 9,305                 6,705
                                                                                                       -------               -------
  Net interest income ..................................................................                12,710                10,855
  Provision for loan losses ............................................................                 1,075                 1,253
                                                                                                       -------               -------
  Net interest income after provision for loan losses ..................................                11,635                 9,602
                                                                                                       -------               -------
OTHER INCOME:
  Service charges on deposit accounts ..................................................                   611                   490
  Other service charges, commissions & fees ............................................                   720                   748
  Other income .........................................................................                   272                   254
                                                                                                       -------               -------
  Total other income ...................................................................                 1,603                 1,492
                                                                                                       -------               -------
OTHER EXPENSES:
  Salaries, wages and benefits .........................................................                 5,373                 5,017
  Occupancy expenses ...................................................................                   615                   559
  Furniture and equipment expenses .....................................................                   590                   408
  Other operating expenses .............................................................                 2,593                 2,755
                                                                                                       -------               -------
  Total other expenses .................................................................                 9,171                 8,739
                                                                                                       -------               -------
Income before income taxes .............................................................                 4,067                 2,355
Provision for income taxes .............................................................                 1,425                   824
                                                                                                       -------               -------
NET INCOME .............................................................................               $ 2,642               $ 1,531
                                                                                                       =======               =======
PER SHARE DATA:
  Primary ..............................................................................               $  0.64               $  0.38
  Fully diluted ........................................................................               $  0.63               $  0.38
AVERAGE COMMON SHARES OUTSTANDING:
  Primary ..............................................................................                 4,128                 4,067
  Fully diluted ........................................................................                 4,168                 4,067
  Cash dividends .......................................................................               $0.0625               $0.0625
</TABLE>


                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                        5

<PAGE>
                           FIRST UNITED BANCORPORATION
                   STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
              FOR YEAR ENDED DECEMBER 31, 1996 AND THE NINE MONTHS
                             ENDED SEPTEMBER 30,1997

                                   (Unaudited)

                                 (In thousands)
<TABLE>
<CAPTION>


                                              NUMBER OF        COMMON        PAID-IN       RETAINED      UNREALIZED NET     SHARE-
                                               SHARES          STOCK         CAPITAL       EARNINGS       GAIN(LOSS)ON      HOLDERS'
                                             OUTSTANDING                                                   SECURITIES       EQUITY
                                                                                                           AVAILABLE
                                                                                                           FOR SALE
                                             -----------     --------       --------       --------       -----------      --------

<S>                                              <C>         <C>            <C>            <C>             <C>             <C>     
Balance at December 31, 1995...........          3,472       $  3,859       $ 11,269       $  1,343        $    (64)       $ 16,407

Issuance of 174,627 shares
of common stock relating to
5% stock dividend......................            175            195          1,260         (1,458)              -              (3)

Issuance of 184,438 shares of
common stock relating to 5%
stock dividend ........................            184            205          1,317         (1,525)              -              (3)

Cash dividends declared ...............              -              -              -           (292)              -            (292)

Employee stock options exercised ......             51             56            119              -               -             175

Net income ............................              -              -              -          1,946               -           1,946

Change in unrealized net gain/loss
on securities available for sale.......              -              -              -              -              55              55
                                                 -----       --------       --------       --------        --------        --------

Balance at December 31, 1996 ..........          3,882          4,315         13,965             14              (9)         18,285

Cash dividends declared ...............              -              -              -           (245)              -            (245)

Cash in lieu of fractional shares
on 3 for 2 stock split ................              -              -              -             (5)              -              (5)

Employee stock options exercised.......             90            101            348              -               -             449

Net income ............................              -              -              -          2,642               -           2,642

Change in unrealized net gain/loss
on securities available for sale ......              -              -              -              -              31              31

                                                 -----       --------       --------       --------        --------        --------

Balance at September 30, 1997..........          3,972       $  4,416       $ 14,313       $  2,406        $     22        $ 21,157
                                                 =====       ========       ========       ========        ========        ========
</TABLE>


                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                        6

<PAGE>


                           FIRST UNITED BANCORPORATION
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                                                              NINE MONTHS ENDED
                                                                                                     September 30,     September 30,
                                                                                                         1997              1996
                                                                                                     ------------      ------------
                                                                                                             (In thousands)

Cash flows from operating activities :
<S>                                                                                                    <C>                 <C>     
  Net income ...............................................................................           $  2,642            $  1,531
  Adjustments needed to reconcile net income to
  net cash used by operating activities :
    Provision for loan losses ..............................................................              1,075               1,253
    Depreciation and amortization ..........................................................                681                 528
    Gain on sale of investments securities available for sale ..............................                (38)                  -
    Net increase in other assets ...........................................................               (461)               (796)
    Net increase in other liabilities ......................................................              1,058                 302
                                                                                                       --------            --------
      Net cash provided by operating activities ............................................              4,957               2,818
                                                                                                       --------            --------

Cash flows from investing activities :
  Purchases of investment securities held to maturity ......................................             (1,103)               (459)
  Proceeds from maturities of investment securities held to maturity .......................              1,748               1,412
  Purchase of investment securities available for sale .....................................             (8,163)             (9,580)
  Proceeds from maturities of investment securities available for sale .....................              8,310               4,483
  Proceeds from sale of investment securities available for sale ...........................                 63                   -
  Net increase in loans ....................................................................            (32,801)            (38,870)
  Net additions to premises and equipment ..................................................                (99)             (1,883)
                                                                                                       --------            --------
      Net cash used by investing activities ................................................            (32,045)            (44,897)
                                                                                                       --------            --------

Cash flows from financing activities :
  Net increase in deposits .................................................................             38,005              34,176
  Proceeds from other borrowed funds .......................................................             46,160              44,735
  Principal repayment of other borrowed funds ..............................................            (55,840)            (32,706)
  Net decrease in securities sold under repurchase agreements ..............................             (5,178)               (113)
  Proceeds from issuance of common stock ...................................................                319                 175
  Cash dividends ...........................................................................               (239)               (217)
                                                                                                       --------            --------
      Net cash provided by financing activities ............................................             23,227              46,050
                                                                                                       --------            --------
Net increase (decrease) in cash and cash equivalents .......................................             (3,861)              3,971

Cash and cash equivalents, beginning of period .............................................             21,828              11,453
                                                                                                       --------            --------
Cash and cash equivalents, end of period ...................................................           $ 17,967            $ 15,424
                                                                                                       ========            ========
</TABLE>

                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                        7

<PAGE>


                  FIRST UNITED BANCORPORATION AND SUBSIDIARIES

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS


(1)  BASIS OF PRESENTATION

       The interim  consolidated  financial  statements  include the accounts of
       First  United   Bancorporation  (the  "Company")  and  its  wholly  owned
       subsidiaries,  Anderson  National  Bank,  Spartanburg  National Bank, The
       Community Bank of Greenville, N. A., and Quick Credit Corporation.


(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       A summary of the Company's significant accounting policies is included in
       the 1996 Annual Report to Shareholders.


(3)    COMMON STOCK, EARNINGS PER SHARE, STOCK DIVIDEND AND STOCK SPLIT

       On December 13, 1996,  the Company's  Board of Directors  declared a five
       percent stock dividend.  Accordingly,  outstanding shares of common stock
       were  increased  and a transfer  representing  the fair  market  value of
       additional  shares issued was made from retained earnings to common stock
       at par value,  cash for payment of  fractional  shares and the balance to
       additional paid-in-capital.

       On  July  29,  1997,  the  Company's   Board  of  Directors   declared  a
       three-for-two  stock split payable to shareholders of record as of August
       15, 1997.  The  distribution  date was August 29, 1997,  with  fractional
       shares paid in cash based on the  adjusted  market  value of the stock at
       the record date.

       The  components  of   shareholders'   equity,   weighted  average  shares
       outstanding,  and  earnings  per  share  amounts  for the  prior  periods
       presented  have been restated to reflect the  distributions  of the stock
       dividend and the stock split. Shares granted upon exercise of options and
       shares  underlying  exercisable  options  pursuant to the Company's stock
       option plans were increased for the effects of the stock dividend and the
       three-for-two stock split.

       During the nine month period ended September 30,1997,  the Company issued
       90,066  shares of its common stock at an average price of $3.54 per share
       in connection with the exercise of stock options under its employee stock
       option plans.

       The Company  calculates  its  earnings per share by dividing net earnings
       for the periods  presented  by the  weighted  average  equivalent  shares
       outstanding  using the treasury  stock method.  Common stock  equivalents
       include options issued under the Company's employee stock option plans.

                                        8


<PAGE>


(4)    MANAGEMENT'S OPINION

       In the  opinion of  management,  the  accompanying  interim  consolidated
       financial  statements  reflect  all  adjustments,  consisting  of  normal
       recurring  accruals,  necessary for a fair  presentation of the financial
       position of the Company and its  subsidiaries  at September 30, 1997, the
       results of their  operations  for the three and nine month  periods ended
       September 30, 1997 and 1996,  and the  statements of their cash flows for
       the nine month periods ended September 30, 1997 and 1996.













































                                        9


<PAGE>


                                     PART I
                                     ITEM 2


           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


DISCUSSION OF CHANGES IN FINANCIAL CONDITION

     Total  assets  increased  $26,958,000,  or 10%,  from  December 31, 1996 to
$297,153,000 at September 30, 1997.

        As a result of an  increase  in the amount of  outstanding  loans at the
Company's three bank  subsidiaries,  total loans, the largest single category of
assets, increased $32,069,000,  or 15.6%, to $237,620,000 at September 30, 1997.
Total loans  outstanding  at September  30, 1997 for  Spartanburg  National Bank
amounted  to  $99,437,000,  a 9.5%  increase  from the  $90,833,000  reported at
December  31,  1996.  Total  outstanding  loans  at  Anderson  National  Bank at
September  30,  1997  amounted  to  $94,322,000,   a  10.2%  increase  from  the
$85,610,000  in total  outstanding  loans at December 31, 1996. At September 30,
1997,  total  loans  outstanding  for The  Community  Bank of  Greenville,  N.A.
amounted  to  $34,678,000,  an  increase  of  $15,642,000,  or  82.2%,  from the
$19,036,000  in  outstanding  loans at December 31, 1996.  During the nine month
period ended September 30, 1997 Quick Credit Corporation  experienced a decrease
in total outstanding loans of $889,000, or 8.8%.

       Premises,  furniture and equipment  decreased $509,000 during the period.
Of the  decrease,  $389,000  resulted  from the sale of a parcel of real  estate
adjoining  the  Greenville  bank's main office  originally  purchased for future
expansion of the Greenville  bank.  The remaining  decrease is  attributable  to
depreciation associated with these categories of assets.

       The Company's  securities  portfolios,  collectively,  at amortized cost,
decreased  slightly from  year-end 1996 levels as a result of maturities  during
the period. Cash and due from banks increased $839,000,  or 10.3%, to $8,967,000
at  September  30,  1997 as a result  of an  increase  in  uncollected  funds in
correspondent  bank  accounts  at quarter  end.  Federal  funds  sold  decreased
$4,700,000,  or 34.3%, during the period as the Company used these funds to help
fund its loan growth.

       Other real estate  owned  decreased  $32,000,  or 37.7%,  during the nine
month  period ended  September  30, 1997 as a result of the  liquidation  of one
parcel  of other  real  estate  owned  and the  write  down of  another  parcel.
Management  continues  to  pursue  liquidation  of the one  remaining  piece  of
property currently owned.

       Other assets,  comprised  largely of accrued income  receivable,  prepaid
expenses and deferred taxes, increased $402,000, or 9.8%, from the year-end 1996
level primarily as a result of an increase

                                       10

<PAGE>

in the amount of accrued  income  receivable  on the  Company's  loan  portfolio
resulting from the increase in the volume of  outstanding  loans during the nine
month period ended September 30, 1997.

     Total  liabilities  increased  $24,086,000,  or  9.6%,  as  a  result  of a
$38,005,000,  or  17.4%,  increase  in  total  deposits  at the  Company's  bank
subsidiaries.  The largest dollar  increase in a single category of deposits was
in certificates of deposit of less than $100,000,  which increased  $18,996,000,
or 20.1%. The largest  percentage  increase in a single category of deposits was
in  certificates  of deposit of more than $100,000,  which  increased  29.3%, or
$12,042,000.  The Company also experienced increases in various other categories
of deposits during the period.

       Securities  sold under  agreements to  repurchase,  comprised  largely of
overnight  repurchase  agreements,  decreased  $5,178,000,  or  63.4%,  from the
year-end 1996 level.  This  significant  decrease is largely  attributable  to a
single customer of Spartanburg National Bank which reduced its level of invested
temporary  funds  during  the  period  from the  unusually  high level it had at
December 31, 1996.

       During the period ended  September  30, 1997,  the Company  decreased its
balance of Federal Home Loan Bank borrowings $8,080,000, or 74.6%, to $2,750,000
at September  30, 1997.  Other  borrowed  funds,  comprised of various  types of
borrowings by Quick Credit  Corporation  and  borrowings by the parent  company,
decreased  $1,600,000,  or 13.5%,  during  the  period as a result of  principal
reductions  made by Quick  Credit  Corporation  and the parent  company on their
borrowings.

       Other   liabilities,   comprised  largely  of  accrued  expenses  payable
increased $939,000,  or 33.6%, to $3,733,000 at September 30, 1997. The increase
resulted  largely  from an  increase  in  interest  payable on deposit  accounts
resulting  from  an  increase  in  the  amount  of   interest-bearing   deposits
outstanding during the period.

       Shareholders'  equity increased  $2,872,000,  or 15.7%, from December 31,
1996 to  $21,157,000  at September  30, 1997 as a result of net earnings for the
nine  month  period of  $2,642,000,  the  exercise  of stock  options  under the
Company's  Employee  Stock  Option Plans in the amount of $449,000 and a $31,000
increase in the amount of net unrealized  gains on the Company's  "Available For
Sale"  securities  portfolio  . These  increases  were  partially  offset by the
declaration  of cash  dividends  and the  payment of cash in lieu of  fractional
shares relating to the Company's recent  three-for-two stock split in the amount
of $250,000 during the period.








                                       11
<PAGE>

                                  RESULTS OF OPERATIONS

Nine month period ended September 30, 1997 vs. Nine month period ended September
30, 1996

Earnings Review

     The  Company's  operations  for the nine months  ended  September  30, 1997
resulted in net income of  $2,642,000,  a 72.6%  increase over the $1,531,000 in
net income recorded for the comparable  1996 nine month period.  The increase in
earnings for the 1997 period is largely attributable to a $1,855,000,  or 17.1%,
increase in the Company's net interest income resulting largely from an increase
in interest  and fee income  generated  by a larger loan  portfolio  in the 1997
period,  a  $121,000,  or 24.7%,  increase in service  charge  income on deposit
accounts and a $178,000,  or 14.2%,  reduction in the provision for loan losses,
largely attributable to Quick Credit Corporation.

     Anderson  National Bank  recorded net earnings of  $1,312,000  for the nine
month period ended  September  30, 1997, a 21.0%  increase  over the  $1,084,000
recorded  for the nine month period ended  September  30, 1996.  The increase in
earnings  for this  subsidiary  is largely  attributable  to an  increase in net
interest income of $579,000,  or 15.7%,  resulting primarily from an increase of
$1,386,000,  or 25.4%,  in interest and fee income on a larger loan portfolio in
the 1997 period.

     Spartanburg  National  Bank  recorded net earnings of $889,000 for the nine
month  period ended  September  30, 1997,  an 11.4%  increase  over the $798,000
recorded  for the nine month period ended  September  30, 1996.  The increase in
earnings for this subsidiary,  like that of Anderson  National Bank's,  resulted
from an increase in net interest income of $533,000,  or 16.3%. This increase in
net interest income is primarily  attributable to an increase of $1,248,000,  or
22.1%, in interest and fee income on a larger loan portfolio in the 1997 period.

     The Community Bank of Greenville,  N.A., which commenced banking operations
on April 17,  1996,  recorded  net earnings of $62,000 for the nine month period
ended  September  30, 1997 compared to a net loss of $371,000 for the nine month
period ended September 30, 1996.  Profitable operation of this subsidiary in the
1997 period resulted from a larger base of earning assets, primarily loans, when
compared to the 1996 period.

     Quick  Credit  Corporation  recorded  net earnings of $543,000 for the nine
month period ended  September  30,  1997,  a 250.3%  increase  over the $155,000
recorded for the 1996 nine month period.  The  significant  increase in earnings
for this subsidiary resulted primarily from a $780,000,  or 78.8%,  reduction in
the  provision  for loan losses for the 1997  period  when  compared to the 1996
period.




                                       12
<PAGE>

Interest Income, Interest Expense and Net Interest Income

     Net interest income,  the major component of the Company's  income,  is the
amount  by which  interest  and fees on  interest  earning  assets  exceeds  the
interest paid on interest bearing deposits and other interest bearing funds. The
Company's net interest income increased $1,855,000, or 17.1%, to $12,710,000 for
the nine month period ended  September 30, 1997 compared to $10,855,000  for the
nine  month  period  ended   September  30,  1996.  The  increase  is  primarily
attributable to an increase in interest and fee income on loans at the Company's
bank subsidiaries  resulting from an increase in the volume of outstanding loans
for the 1997 period when compared to the 1996 period.

     The Company's  total interest  income  increased  $4,455,000,  or 25.4%, to
$22,015,000 for the 1997 period compared to $17,560,000 for the 1996 period.  Of
the  $4,455,000  increase in total interest  income,  $4,240,000,  or 95.2%,  is
attributable  to an increase in loan  interest and fee income  resulting  from a
$59,136,000,  or 36.2%,  increase  in the  volume of average  outstanding  loans
during the 1997 period.  The Company's  average  outstanding  loans for the 1997
period were  $222,718,000  compared to  $163,582,000  for the 1996  period.  The
average  yield on loans for the nine month  period ended  September  30,1997 was
12.01% compared to 12.89% for the nine month period ended September 30, 1996.

     Primarily as a result of the impact of The  Community  Bank of  Greenville,
N.A. on the Company's consolidated balance sheet, average balances on securities
and federal funds sold, collectively,  increased by $3,840,000,  or 9.7%, in the
1997  period  when  compared  to the 1996  period.  Largely  as a result of this
increase,  interest income on these categories of earning assets,  collectively,
increased by $215,000, or 12.3%.

     Interest expense on deposits increased $2,414,000,  or 42.6%, to $8,077,000
for the nine month period ended  September 30, 1997  compared to $5,663,000  for
the nine month period ended  September 30, 1996. The increase is attributable to
an increase of $54,724,000,  or 34.8%, in the volume of average interest-bearing
deposits  for the 1997 period when  compared to the 1996 period  coupled with an
increase in the Company's  costs of  interest-bearing  deposits  resulting  from
increases in the rates paid for those deposits in the 1997 period.  The weighted
average cost of interest  bearing deposits for the first nine months of 1997 was
5.08% compared to 4.80% for the first nine months of 1996.

     Interest expense on Securities Sold Under Repurchase  Agreements  increased
slightly in the 1997  period  primarily  as a result of a small  increase in the
average volume of outstanding Repurchase Agreements during the 1997 period.

     Interest  expense  incurred by the Company's bank  subsidiaries  on average
borrowings of $9,594,000 from the Federal Home Loan Bank of Atlanta for the 1997
period amounted to $439,000, a 116.3% increase over the $203,000 incurred in the
1996 period. The

                                       13
<PAGE>

increase in interest expense on Federal Home Loan Bank borrowings  resulted from
an increase in the average amount borrowed during the 1997 period.

     Interest  expense  on the  various  categories  of  other  interest-bearing
liabilities, which includes Subordinated Debt, Federal Funds Purchased and Other
Borrowed Funds,  collectively,  decreased  $54,000,  or 8.1%, in the 1997 period
when compared to the 1996 period.  The decrease in interest  expense  associated
with these  other  interest-bearing  liabilities  is largely  attributable  to a
decrease in interest expense  incurred by Quick Credit  Corporation on a smaller
balance of outstanding borrowings in the 1997 period.

Provision and Allowance for Loan Losses, Loan Loss Experience

     The purpose of the  Company's  allowance  for loan losses is to absorb loan
losses  that  occur  in the  loan  portfolio.  The  allowance  for  loan  losses
represents  management's  estimate of an amount adequate in relation to the risk
of  future  losses  inherent  in  the  loan  portfolio  and  also  reflects  the
consideration of the amount of high rate/higher risk loans held by the Company's
consumer finance subsidiary, Quick Credit Corporation.

     While it is the Company's  policy to charge off in the current period loans
on which a loss is considered  probable,  there are  additional  risks of future
losses which cannot be quantified precisely or attributed to particular loans or
classes of loans. Because these risks include the state of the economy, industry
trends and conditions affecting individual  borrowers,  management's judgment of
the allowance is  necessarily  approximate  and  imprecise.  The Company is also
subject to regulatory examinations and determinations as to adequacy,  which may
take  into  account  such  factors  as the  methodology  used to  calculate  the
allowance  for loan  losses  and the size of the  allowance  for loan  losses in
comparison to a group of peer companies identified by the regulatory agencies.

     Management determines the adequacy of the allowance quarterly and considers
a variety of factors in  establishing  the level of the allowance for losses and
the related provision, which is charged to expense. In assessing the adequacy of
the allowance, management relies predominantly on its ongoing review of the loan
portfolio,  which is  undertaken  both to ascertain  whether  there are probable
losses which must be charged off and to assess the risk  characteristics  of the
portfolio in the aggregate. The review considers the judgments of management and
also those of bank regulatory agencies that review the loan portfolio as part of
their regular examination process.  The Comptroller of the Currency,  as part of
its routine  examination  process of various national banks,  including Anderson
National Bank,  Spartanburg  National Bank and The Community Bank of Greenville,
N.A.,  may  require  additions  to the  allowance  for loan  losses  based  upon
information available to the Comptroller at the time of the examination.

     Management  considers  the  allowance  for loan  losses  adequate to absorb
losses on loans outstanding at September 30, 1997 and in the

                                       14
<PAGE>

opinion  of  management,  there  are  no  material  risks  or  significant  loan
concentrations in the present portfolio.

       The  allowance  for loan  losses was  $3,503,000  at  September  30, 1997
compared  to  $3,160,000  at  September  30,  1996.  At  September  30, 1997 and
September 30, 1996, the allowance for loan losses as a percentage of outstanding
loans was 1.48% and 1.54%,  respectively.  During the nine  month  period  ended
September 30, 1997, the Company  experienced  net  charge-offs  of $732,000,  or
0.33%, of average loans,  compared to net  charge-offs of $744,000,  or 0.45% of
average loans for the nine month period ended  September  30, 1996.  The Company
made provisions for loan losses of $1,075,000  during the 1997 nine month period
compared to $1,253,000 for the 1996 nine month period,  a decrease of 14.2%. The
decrease in net  charge-offs  and  resulting  decrease in the provision for loan
losses for the 1997 period is attributable  to improved  results at Quick Credit
Corporation.

       Anderson  National  Bank recorded a provision for loan losses of $195,000
in the 1997  period as a result of  increases  in the volume of its  outstanding
loans and charge-offs experienced during the period. Anderson National Bank made
no provision in the 1996 period.  For the nine month period ended  September 30,
1997,  this  subsidiary  recorded net  charge-offs  of $143,000  compared to net
recoveries of $23,000 for the 1996 nine month period.

       The  Community  Bank of  Greenville,  N.A.  recorded a provision for loan
losses of $170,000 in the 1997 period  compared to $118,000  for the 1996 period
as it continued to establish  its  allowance  for loan losses.  This  subsidiary
recorded net charge-offs of $12,000 in the 1997 period.

       Spartanburg  National  Bank  recorded  a  provision  for loan  losses  of
$500,000  for the 1997  period  compared to $145,000  for the 1996  period.  The
increase in the provision  made by this  subsidiary was a result of loan growth,
an increase in the amount of charged-off  loans and an increase in the amount of
non-accrual loans experienced by this subsidiary during the 1997 period. For the
nine month  period  ended  September  30,  1997,  this  subsidiary  recorded net
charge-offs  of  $162,000  compared to net  charge-offs  of $41,000 for the 1996
comparable period.

       Quick Credit Corporation recorded a provision for loan losses of $210,000
for the nine month period ended  September 30, 1997 compared to $990,000 for the
1996 nine month period and to $1,731,000 for all of fiscal 1996. The decrease in
this subsidiary's  provision for the 1997 period resulted from a decrease in the
number and volume of loans charged off, a decrease in the volume of  outstanding
loans  during the 1997  period  and a moderate  decline in the volume of overdue
loans.  For the nine month period ended  September  30,  1997,  this  subsidiary
recorded net charge offs of $415,000,  or 4.53 % of average  outstanding  loans,
compared to net charge offs of $680,000,  or 6.91%, of average outstanding loans
for the 1996  nine  month  period  and to  $1,144,000,  or  11.66%,  of  average
outstanding loans for fiscal 1996. Quick Credit

                                       15


<PAGE>


Corporation's  customers  are generally in the  low-to-moderate  income group of
borrowers.  Over the past several years there has been a proliferation  of small
consumer loan companies and other  consumer debt providers  competing for pieces
of this segment of the consumer debt market.  It is not unusual for customers of
Quick Credit  Corporation  simultaneously  to have loans  outstanding at several
small loan companies  which results in some  customers  incurring more debt than
they can service.  Quick Credit  Corporation  increased  its  allowance for loan
losses as a percentage of outstanding loans, net of unearned income,  from 9.54%
at  September  30,  1996 to  10.70%  at  September  30,  1997 as a result of the
increase in charge offs  experienced  during  1996.  The increase in charge offs
experienced  during 1996 resulted  from an increase in  customers'  inability to
make scheduled payments and an increase in declarations of bankruptcy.

     At September  30, 1997 the Company had  $1,875,000  in  non-accrual  loans,
which are  considered  impaired,  $422,000 in loans past due 90 days or more and
still accruing interest and $53,000 in OREO, compared to $414,000, $652,000, and
$85,000,  respectively  at  September  30, 1996 and to $437,000,  $416,000,  and
$85,000,  respectively  at  December  31,  1996.  The  significant  increase  in
non-accrual  loans  is  primarily  attributable  to four  loans  at  Spartanburg
National Bank totaling  $1,385,000.  Of these four loans,  three loans  totaling
$808,000  are Small  Business  Administration  loans of which  $606,000 is fully
guaranteed by the Small Business Administration. At September 30, 1997 and 1996,
and  December  31,  1996,  the  Company  did  not  have  a  material  amount  of
restructured loans.

     In the cases of all  non-performing  loans,  management  of the Company has
reviewed the carrying value of any underlying  collateral.  In those cases where
the collateral value may be less than the carrying value of the loan the Company
has taken  specific  write downs to the  credits,  even though such  credits may
still  be  performing.  Management  believes  that  it has  fully  provided  for
potential  losses on these loans in its  Allowance  for Loan Losses and does not
have any  non-accrual  loan which,  individually,  could  materially  impact the
allowance for loan losses or long term future operating results of the Company.

Other Income

     Total other income for the 1997 period  increased  $111,000,  or 7.4%, over
other income  recorded  for the 1996 period.  During the 1997 period the Company
experienced a $121,000,  or 24.7%,  increase in service charge income on deposit
accounts as a result of a larger  deposit  base and  increases in fees levied on
its existing  deposit  base.  The increase in service  charge  income on deposit
accounts was partially  offset by a decline of $28,000 in other service charges,
commission and fee income items.  The largest two  contributors to this decrease
were a decline in fee income  derived  from the sale of  alternative  investment
products  and a  decrease  in  mortgage  loan fees.  During the 1997  period the
Company recorded a gain on the sale of equity  securities from its available for
sale securities portfolio of $38,000, which is included in other income.

                                       16


<PAGE>

Other Expenses

     Total other expenses increased  $432,000,  or 4.9%, in the 1997 period over
the 1996 comparable period.  Salaries, wages and benefits ("personnel expense"),
the largest category of other operating expenses,  increased $356,000,  or 7.1%,
in the 1997 period over the 1996 period.  The  increase in personnel  expense is
attributable to additional staffing for The Community Bank of Greenville,  N.A.,
which  commenced  operations  on April 17, 1996,  normal  merit and  promotional
adjustments and increased incentive accruals tied to performance.

     Occupancy  expense  increased  10.0% in the  1997  period  as a  result  of
expenses  associated with The Community Bank of Greenville,  N.A.,  which opened
for  business  April 17,  1996 and the  opening of a new branch for  Spartanburg
National Bank, which opened in September of 1996.

     Furniture and equipment expense increased  $182,000,  or 44.6%, in the 1997
period  as a result  of  additional  depreciation  expense  associated  with the
Company's  wide area  network  installed  during  the first  quarter of 1997 and
additional  depreciation expense associated with furniture and equipment for The
Community Bank of Greenville and the new branch for Spartanburg National Bank.

     Miscellaneous other operating expenses declined $162,000,  or 5.9%, largely
as a result of a decrease in the amount of consultant  fees incurred in the 1997
period.

Income Taxes

     As a result of increased  income before income taxes,  the Company incurred
income tax expense of $1,425,000  for the nine month period ended  September 30,
1997  compared to income tax expense of $824,000 for the nine month period ended
September 30, 1996.


Quarter ended September 30, 1997 vs. Quarter ended September 30, 1996

Earnings Review

     The  Company's  operations  for the three months ended  September  30, 1997
resulted in net income of $862,000,  a 55.9%  increase  over the $553,000 in net
income  recorded for the  comparable  1996 three month  period.  The increase in
earnings  for the 1997 period is  primarily  attributable  to an increase in the
Company's net interest income resulting largely from an increase in interest and
fee income generated by a larger loan portfolio in the 1997 period.

     Anderson National Bank and Spartanburg  National Bank recorded net earnings
of $420,000 and  $227,000,  respectively,  for the quarter  ended  September 30,
1997,  compared to $421,000 and  $283,000,  respectively,  for the quarter ended
September 30, 1996.

                                       17


<PAGE>

The decrease in earnings for  Spartanburg  National Bank is  attributable  to an
increase in the provision for loan losses in the 1997 period.

     The Community Bank of Greenville, N.A., which commenced operations on April
17, 1996,  recorded net earnings of $61,000 for the quarter ended  September 30,
1997 compared to a recorded loss of $158,000 for the quarter ended September 30,
1996.

     Quick Credit Corporation  recorded net earnings of $236,000 for the quarter
ended  September 30, 1997, a 252.3%  increase over the $67,000  recorded for the
same quarter of 1996. The  significant  increase in earnings for this subsidiary
resulted  primarily  from a $330,000  reduction in the provision for loan losses
for the 1997 quarter when compared to the 1996 quarter.

Interest Income, Interest Expense and Net Interest Income

     The  Company's  net  interest  income  increased  $544,000,  or  14.2%,  to
$4,366,000  for the three month  period  ended  September  30, 1997  compared to
$3,822,000 for the three month period ended  September 30, 1996. The increase is
largely  attributable  to an increase in interest and fee income on loans at the
Company's  bank  subsidiaries  resulting  from  an  increase  in the  volume  of
outstanding loans for the 1997 quarter when compared to the 1996 quarter.

     The Company's  total interest  income  increased  $1,368,000,  or 21.8%, to
$7,654,000 for the 1997 quarter compared to $6,286,000 for the 1996 quarter.  Of
the increase, $1,356,000 is attributable to an increase in loan interest and fee
income  resulting  from a  $57,718,000,  or  32.6%,  increase  in the  volume of
outstanding loans for the 1997 quarter.  The Company's average outstanding loans
for the 1997 quarter were  $234,939,000  compared to  $177,221,000  for the 1996
quarter and the average yield on loans for the 1997 quarter was 11.93%  compared
to 12.76% for the 1996 quarter.

     Primarily as a result of the impact of the  Community  Bank of  Greenville,
N.A. on the Company's consolidated balance sheet, average balances on securities
increased by $2,221,000,  or 6.8%, in the 1997 quarter when compared to the 1996
quarter. Largely as a result of this increase,  interest income on the Company's
securities portfolios, collectively, increased $52,000, or 12.4%.

     Interest income on Federal funds sold decreased  $40,000,  or 26.3%, in the
1997  quarter as a result of a decrease in the average  amounts  sold during the
quarter.  This  source  of funds  was  used to help  fund  the  increase  in the
Company's loan portfolio during the 1997 period.

     Interest expense on deposits  increased  $898,000,  or 43.8%, to $2,947,000
for the 1997 quarter  compared to $2,049,000 for the 1996 quarter.  The increase
is attributable to increases in the Company's costs of interest-bearing deposits
and  an  increase  of   $54,802,000,   or  32.3%,   in  the  volume  of  average
interest-bearing

                                       18
<PAGE>

deposits for the 1997 quarter when  compared to the 1996  quarter.  The weighted
average cost of interest  bearing  deposits for the quarter ended  September 30,
1997 was 5.25% compared to 4.83% for the quarter ended September 30, 1996.

     Interest expense on Securities Sold Under Repurchase  Agreements  increased
slightly in the 1997  quarter  compared to the 1996  quarter.  Interest  expense
incurred by the Company's bank subsidiaries on average  borrowings of $6,020,000
from the  Federal  Home Loan Bank of Atlanta  for the 1997  quarter  amounted to
$78,000,  a $70,000,  or 41.0%  decrease from the $119,000  incurred in the 1996
quarter.  The decrease in interest  expense on Federal Home Loan Bank borrowings
resulted  from a  decrease  in the  amount  borrowed  during  the 1997  quarter.
Interest   expense  on  the  various   categories   of  other   interest-bearing
liabilities, which includes Subordinated Debt, Federal Funds Purchased and Other
Borrowed  Funds,  collectively,  decreased  slightly  in the 1997  quarter  when
compared to the 1996 quarter.

Provision and Allowance for Loan Losses, Loan Loss Experience

     The provision for loan losses was $505,000 for the quarter ended  September
30, 1997, a $37,000,  or 7.9%, increase from the $468,000 provision made for the
quarter ended September 30, 1996. The increase for the 1997 period is the result
of increases in the provision made by the Company's bank subsidiaries during the
1997 quarter. For the quarter ended September 30, 1997, the Company recorded net
loan charge-offs of $448,000, or 0.20%, of average outstanding loans compared to
$263,000, or 0.15%, of average outstanding loans for the 1996 quarter.

     Quick Credit  Corporation  recorded a provision  for loan losses of $15,000
for the  quarter  ended  September  30, 1997  compared to $334,000  for the 1996
quarter and to  $1,731,000  for fiscal 1996.  The decrease in this  subsidiary's
provision for the 1997 period  resulted from a decrease in the number and volume
of loans charged off, a decrease in the volume of  outstanding  loans during the
1997  period and a moderate  decline  in the  volume of overdue  loans.  For the
quarter ended September 30, 1997,  this  subsidiary  recorded net charge offs of
$116,000,  or 1.28% of average outstanding loans, compared to net charge offs of
$210,000,  or 2.19%,  of average  outstanding  loans for the 1996 quarter and to
$1,144,000, or 11.66%, of average outstanding loans for fiscal 1996.

     Anderson National Bank recorded a provision for loan losses of $100,000 for
the quarter ended  September 30, 1997 and made no provision in the 1996 quarter.
For  the  quarter  ended  September  30,  1997,  this  subsidiary  recorded  net
charge-offs  of  $222,000  compared to net  charge-offs  of $38,000 for the 1996
quarter.

                                       19

<PAGE>

     Spartanburg  National Bank recorded a provision for loan losses of $330,000
for the  quarter  ended  September  30,  1997  compared  to $50,000 for the 1996
quarter. The increase in the provision made by this subsidiary was primarily the
result of loan  growth  experienced  by this  subsidiary  during the 1997 period
coupled  with Page 19 a decrease in the  likelihood  of full  collection  on its
portfolio of non-accrual  loans.  For the quarter ended September 30, 1997, this
subsidiary  recorded net  charge-offs of $98,000  compared to net charge-offs of
$15,000 for the 1996 quarter.

     The Community Bank of Greenville, N.A. recorded a provision for loan losses
of $60,000 in the 1997  quarter  compared to $73,000 for the 1996  quarter as it
continued  to  establish  its  allowance  for  loan  losses.   This   subsidiary
experienced loan losses of $12,000 in the 1997 quarter.

Other Income

     Total other income for the 1997 quarter increased  $86,000,  or 17.5%, over
total other income  recorded for the 1996  quarter.  During the 1997 quarter the
Company  experienced a $43,000,  or 25.8%  increase in service  charge income on
deposit  accounts as a result of a larger  deposit  base and  increases  in fees
levied on its existing  deposit  base.  During the 1997 quarter the Company also
experienced an increase in other service charges,  commissions and fee income of
$39,000, or 16.7%,  primarily as a result of an increase in fees associated with
the Company's  mortgage  lending  activities and an increase in fees  associated
with the Company's merchant discount program for credit cards.

Other Expenses

     Total other expenses  recorded in the 1997 quarter increased  $145,000,  or
4.9%. Salaries,  wages and benefits ("personnel expense"),  the largest category
of other operating expenses,  increased  $149,000,  or 9.1%, in the 1997 quarter
when compared to the 1996 quarter.  The increase in personnel expense is largely
attributable to normal merit and promotional  adjustments,  increased  incentive
accruals tied to performance and additional  staffing required for two new Quick
Credit offices opened during the 1997 quarter.

     Occupancy  expense and  furniture  and  equipment  expenses,  collectively,
increased $69,000, or 19.6%, in the 1997 quarter largely as a result of expenses
associated with a new branch facility for Spartanburg National Bank which opened
during the third quarter of 1996 and additional  depreciation expense associated
with the Company's wide area network.

     Other operating  expenses,  the second largest  category of other expenses,
decreased $73,000, or 7.5%, in the 1997 quarter. The decrease resulted primarily
from a decrease in  consultant  fees paid in the 1997  quarter and a decrease in
expenses,  primarily advertising and supplies, in the 1997 quarter when compared
to the 1996.

Income Taxes

     As a result of increased  income before income taxes,  the Company incurred
income tax expense of $456,000 for the quarter

                                       20

<PAGE>

ended  September  30, 1997  compared  to income tax expense of $317,000  for the
quarter ended September 30, 1996.


LIQUIDITY

     Liquidity  management  involves  meeting the cash flow  requirements of the
Company.  The Company's  liquidity position is primarily dependent upon its need
to respond to  short-term  demand for funds caused by  withdrawals  from deposit
accounts and upon the liquidity of its assets.  The Company's  primary liquidity
sources  include  cash and due from banks,  federal  funds sold and  "securities
available for sale". In addition,  the Company (through  Anderson National Bank,
Spartanburg  National Bank and The Community Bank of  Greenville,  N.A.) has the
ability,  on a short-term basis, to borrow funds from the Federal Reserve System
and to purchase  federal funds from other  financial  institutions.  Spartanburg
National Bank, Anderson National Bank and The Community Bank of Greenville, N.A.
are also  members of the  Federal  Home Loan Bank System and have the ability to
borrow both short and longer term funds on a secured  basis.  At  September  30,
1997 Anderson National Bank had $200,000 in long-term  advances from the Federal
Home Loan Bank of Atlanta and  $2,000,000 in short term  advances.  At September
30, 1997 Spartanburg  National Bank had $550,000 in long-term  advances from the
Federal Home Loan Bank of Atlanta.  Both Anderson  National Bank and Spartanburg
National Bank have lines of credit  established  with the Federal Home Loan Bank
of Atlanta in excess of their existing balances at September 30, 1997.

     First  United  Bancorporation,  the parent  holding  company,  has  limited
liquidity  needs.  First  United  requires  liquidity  to pay limited  operating
expenses and dividends,  and to service its debt. In addition,  First United has
two lines of credit  with third  party  lenders  totaling  $6,100,000,  of which
$900,000 was available at September 30, 1997. One of these lines is a $6,000,000
line of credit with an  unaffiliated  third party  lender to be used for general
corporate purposes and allows for interest to be paid on a quarterly basis for a
period  of up to five  years if  certain  criteria  are met.  At the end of five
years, or sooner if the Company desires,  the line of credit can be converted to
a term loan with quarterly  interest  payments and annual  principal  reductions
required  over a period of five years.  The line of credit  bears  interest at a
variable rate.  Further sources of liquidity for First United include management
fees  which  are  paid  by  all of  its  subsidiaries  and  dividends  from  its
subsidiaries.

       At September 30, 1997, the Company's consumer finance  subsidiary,  Quick
Credit Corporation, had debt outstanding of $900,000 in the form of subordinated
debt and $4,200,000  outstanding  under an $18,000,000 line of credit secured by
Quick Credit Corporations's loans receivable with a third party lender.

       Management  believes  its  liquidity  sources  are  adequate  to meet its
operating  needs and does not know of any  trends,  other than those  previously
discussed,  that may result in the Company's liquidity materially  increasing or
decreasing.

                                       21
<PAGE>


CAPITAL ADEQUACY AND RESOURCES

     The capital  needs of the Company  have been met through the  retention  of
earnings and from the proceeds of a prior public stock offering in 1988.

     For bank holding  companies  with total  assets of more than $150  million,
such as the  Company,  capital  adequacy is generally  evaluated  based upon the
capital of its banking  subsidiaries.  Generally,  the Board of Governors of the
Federal  Reserve  System (the  "Federal  Reserve  Board")  expects  bank holding
companies to operate above minimum capital levels. The Office of the Comptroller
of the  Currency  ("Comptroller")  regulations  establish  the minimum  leverage
capital  ratio  requirement  for national  banks at 3% in the case of a national
bank that has the highest regulatory examination rating and is not contemplating
significant  growth or  expansion.  All other  national  banks are  expected  to
maintain a ratio of at least 1% to 2% above the stated minimum. Furthermore, the
Comptroller  reserves the right to require  higher  capital ratios in individual
banks on a case by case  basis  when,  in its  judgment,  additional  capital is
warranted by a deterioration of financial  condition or when high levels of risk
otherwise exist. The Company's subsidiary banks have not been notified that they
must maintain capital levels above regulatory  minimums.  The Company's leverage
capital  ratio was 7.09 and 6.72% at  September  30, 1997 and December 31, 1996,
respectively.   The  leverage   capital  ratios  for  Anderson   National  Bank,
Spartanburg  National  Bank and The  Community  Bank of  Greenville,  N.A.  were
7.65%,7.45% and 8.26%,  respectively  at September 30, 1997,  compared to 7.25%,
6.74% and  10.45%,  respectively,  at  December  31,  1996.  The  decline in The
Community  Bank of  Greenville's  leverage  ratio  is a result  of asset  growth
experienced during the period ended September 30, 1997.

     The Federal  Reserve  Board has  adopted a  risk-based  capital  rule which
requires  bank holding  companies to have  qualifying  capital to  risk-weighted
assets  of at least  8.00%,  with at least 4%  being  "Tier 1"  capital.  Tier 1
capital  consists  principally  of common  stockholders'  equity,  noncumulative
preferred stock, qualifying perpetual preferred stock, and minority interests in
equity  accounts of consolidated  subsidiaries,  less goodwill and certain other
intangible assets.  "Tier 2" (or supplementary)  capital consist of general loan
loss reserves (subject to certain limitations), certain types of preferred stock
and  subordinated  debt, and certain hybrid capital  instruments  and other debt
securities such as equity commitment notes. A bank holding company's  qualifying
capital base for purposes of its risk-based capital ratio consists of the sum of
its Tier 1 and Tier 2 capital  components,  provided that the maximum  amount of
Tier 2 capital that may be treated as  qualifying  capital is limited to 100% of
Tier 1 capital.  The Comptroller  imposes a similar  standard on national banks.
The regulatory  agencies  expect  national  banks and bank holding  companies to
operate above  minimum  risk-based  capital  levels.  The  Company's  risk-based
capital  ratio was 10.35% and its Tier 1 capital to risk  weighted  assets ratio
was 9.02% at September

                                       22
<PAGE>

30, 1997, compared to 10.30% and 8.92%, respectively,  at December 31, 1996. The
risk-based capital ratios for Anderson National Bank,  Spartanburg National Bank
and The  Community  Bank of  Greenville,  N.A.  were 10.49%,  10.88% and 12.42%,
respectively,  at  September  30,  1997  compared  to 10.35%,  9.99% and 18.76%,
respectively, at December 31, 1996. Their Tier 1 capital to risk weighted assets
ratios  were  9.55%,  9.63% and  11.42%,  respectively,  at  September  30, 1997
compared to 9.34%,  8.90% and 17.88%,  respectively,  at December 31, 1996.  The
decline in The Community Bank of Greenville, N.A.'s risk-based capital ratio and
its Tier 1 capital to risk  weighted  assets  ratio was a result of asset growth
experienced during the period ended September 30, 1997.

     The  Company  opened  its  new  bank  subsidiary,  The  Community  Bank  of
Greenville, N. A., in the city of Greenville,  South Carolina on April 17, 1996.
The Company  capitalized  this new bank  subsidiary with $4.5 million of capital
acquired from  proceeds  available to the Company under a line of credit with an
unaffiliated third-party lender which had committed to lend the Company up to $6
million.  In June of 1997, the Company injected  $500,000 of additional  capital
into  Spartanburg  National  Bank to facilitate  continued  asset growth at this
subsidiary.


EFFECT OF INFLATION AND CHANGING PRICES

     The consolidated financial statements have been prepared in accordance with
generally  accepted  accounting  principles  which  require the  measurement  of
financial  position and results of operations  in terms of  historical  dollars,
without  consideration of changes in the relative purchasing power over time due
to  inflation.  Unlike most other  industries,  virtually  all of the assets and
liabilities  of a financial  institution  are  monetary in nature.  As a result,
interest  rates  generally  have  a  more  significant  effect  on  a  financial
institution's  performance than does the effect of inflation.  Interest rates do
not  necessarily  change  in the same  magnitude  as the  prices  of  goods  and
services.

     While the effect of inflation on banks is normally not as significant as is
its  influence on those  businesses  which have large  investments  in plant and
inventories, it does have an effect. During periods of high inflation, there are
normally  corresponding  increases in the money supply,  and banks will normally
experience  above average growth in assets,  loans and deposits.  Also,  general
increases in the prices of goods and services will result in increased operating
expenses.


ACCOUNTING AND REPORTING MATTERS

       In February  1997,  the FASB issued SFAS No. 128,  "Earnings  Per Share."
SFAS No. 128 simplifies the current  computation of earnings per share and makes
the  United  States   standards  for  the   computation   more  compatible  with
international  earnings  per  share  standards.   The  Statement  requires  dual
presentation of earnings

                                       23
<PAGE>

per share for all entities with complex capital structures. It also replaces the
presentation of primary earnings per share with a presentation of basic earnings
per  share.  The  Statement  is  effective  for the  Company  for the year ended
December  31,  1997.  The  Company  does not  anticipate  that  adoption of this
Statement will have a material effect on its financial statements.


FORWARD LOOKING INFORMATION

Statements  included  in  Management's  Discussion  and  Analysis  of  Financial
Condition  and  Results of  Operations  which are not  historical  in nature are
intended to be, and are hereby  identified as "forward  looking  statements" for
purposes of the safe harbor  provided by Section 21E of the Securities  Exchange
Act of 1934,  as amended.  The Company  cautions  readers that  forward  looking
statements, including without limitation, those relating to the Company's future
business  prospects,   revenues,  working  capital,  liquidity,  capital  needs,
interest costs, and income,  are subject to certain risks and uncertainties that
could cause  actual  results to differ  materially  from those  indicated in the
forward looking statements,  due to several important factors herein identified,
among others,  and other risks and factors  identified  from time to time in the
Company's reports filed with the Securities and Exchange Commission.































                                       24
<PAGE>

                                            PART II
                                    OTHER INFORMATION


Item 1.       Legal Proceedings.

     The  Company is from time to time  involved  in various  legal  proceedings
arising  out of the  ordinary  course  of  business,  primarily  related  to the
collection  of loans  receivable.  Based  upon  current  information  available,
management believes there are no legal proceedings threatened or pending against
the Company that could result in a materially  adverse change in the business or
financial condition of the Company.

Item 2.   Changes in Securities.

          None

Item 3.   Defaults Upon Senior Securities.

          None

Item 4.   Submission of Matters to a Vote of Security Holders.

          None

Item 5.   Other Information.

          None

Item 6.   Exhibits and Reports on Form 8-K.

              (a)    Exhibits

                     Exhibit 3.1 - Articles of Incorporation of the  Registrant,
                     as amended.

                     Exhibit 27 - Financial Data Schedule
















                                       25

<PAGE>



                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                                FIRST UNITED BANCORPORATION
                                         
                                                s/Mason Y. Garrett
Dated: November 4, 1997                         ----------------------------
                                                Mason Y. Garrett, President
                                                and Chief Executive Officer
                                         
                                                s/William B. West
                                                ----------------------------
                                                William B. West, Sr. Vice
                                                President and Chief Financial
                                                and Accounting Officer































                                       26


<PAGE>

                                  Exhibit Index


Exhibit 3.1 -        Articles of Incorporation of the Registrant, as amended.

Exhibit 27 -         Financial Data Schedule




















                                       27