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 June 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 June 30, 1997:

                2,629,025 shares of common stock, $1.67 Par Value












<PAGE>



                                TABLE OF CONTENTS



                                                                          PAGE

PART I ITEM 1  FINANCIAL INFORMATION

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

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

         Consolidated Statements of Income.................................  5
                  Six Months ended June 30, 1997
                  and 1996 (unaudited)

         Consolidated Statements of Changes in
         Shareholders' Equity..............................................  6
                  Year ended December 31, 1996 and six
                  months ended June 30, 1997 (unaudited)

         Consolidated Statements of Cash Flows
                  Six months ended June 30, 1997 and.......................  7
                  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................................................. 24


SIGNATURES................................................................. 26



















                                        2

<PAGE>



                           FIRST UNITED BANCORPORATION
                           CONSOLIDATED BALANCE SHEETS

                                                         June 30,   December 31,
                                                           1997          1996
                                                        (Unaudited)   
                                                         ---------       ----
                                                               (In thousands)

ASSETS:
  Cash and due from banks ..........................    $   9,835     $   8,128
  Federal funds sold ...............................        6,250        13,700
  Investment securities:
    Held to maturity (Market value of $7,149         
      and $8,006) ..................................        7,006         7,843
    Available for sale (Cost of $28,810             
      and $26,218) .................................       28,794        26,304

  Total loans ......................................      231,925       205,551
  Less: Allowance for loan losses ..................       (3,445)       (3,160)
                                                        ---------     ---------
  
    Net loans ......................................      228,480       202,391

  Premises, furniture and equipment (net) ..........        7,524         7,627
  Other real estate owned ..........................           74            85
  Other assets .....................................        4,503         4,117
                                                        ---------     ---------

      TOTAL ASSETS .................................    $ 292,466     $ 270,195
                                                        =========     =========

LIABILITIES:
  Demand deposits ..................................    $  24,604     $  23,180
  NOW accounts .....................................       26,846        25,143
  Savings and money market deposits ................       35,283        34,113
  Certificates of deposit greater than $100,000 ....       46,673        41,073
  Certificates of deposit less than $100,00         
    and other time deposits ........................      108,037        94,710
                                                        ---------     ---------

      TOTAL DEPOSITS ...............................      241,443       218,219
                                                        ---------     ---------

  Securities sold under repurchase agreements ......        3,360         8,167
  Federal Home Loan Bank Borrowings ................       13,290        10,830
  Other borrowed funds .............................       10,800        11,900
  Other liabilities ................................        3,309         2,794
                                                        ---------     ---------

      TOTAL LIABILITIES ............................      272,202       251,910
                                                        ---------     ---------

SHAREHOLDERS' EQUITY:
  Common stock ($1.67 par value, 15,000,000         
    shares authorized; 2,629,025 and 2,587,895
    shares issued and outstanding, respectively) ...        4,384         4,315
  Paid-in capital ..................................       14,252        13,965
  Retained earnings ................................        1,638            14
  Unrealized gain (loss) on securities              
     available for sale, net of income taxes .......          (10)           (9)
                                                        ---------     ---------

TOTAL SHAREHOLDERS' EQUITY .........................       20,264        18,285
                                                        ---------     ---------

TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY .........    $ 292,466     $ 270,195
                                                        =========     =========



                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                        3

<PAGE>



                           FIRST UNITED BANCORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

                                                            THREE MONTHS ENDED
                                                           June 30,     June 30,
                                                             1997          1996
                                                             ----          ----
                                                           (In thousands except
                                                               per share data)
INTEREST INCOME:
  Loans ..............................................       $6,691       $5,257
  Federal funds sold .................................          116          175
  Taxable investment securities ......................          480          386
  Non-taxable investment securities ..................           61           62
                                                             ------       ------
  Total interest income ..............................        7,348        5,880
                                                             ------       ------
INTEREST EXPENSE:
  Interest on deposits ...............................        2,665        1,889
  Interest on securities sold under                    
    repurchase agreements ............................           47           41
  Interest on other borrowed funds ...................          385          283
                                                             ------       ------
  Total interest expense .............................        3,097        2,213
                                                             ------       ------

  Net interest income ................................        4,251        3,667
  Provision for loan losses ..........................          300          464
                                                             ------       ------
  Net interest income after provision
    for loan losses ..................................        3,951        3,203
                                                             ------       ------
OTHER INCOME:
  Service charges on deposit accounts ................          215          157
  Other service charges, commissions & fees ..........          228          239
  Other income .......................................           70          103
                                                             ------       ------
  Total other income .................................          513          499
                                                             ------       ------
OTHER EXPENSES:
  Salaries, wages and benefits .......................        1,758        1,637
  Occupancy expenses .................................          195          182
  Furniture and equipment expenses ...................          194          133
  Other operating expenses ...........................          839        1,031
                                                             ------       ------
  Total other expenses ...............................        2,986        2,983
                                                             ------       ------

Income before income taxes ...........................        1,478          719
Provision for income taxes ...........................          517          250
                                                             ------       ------

NET INCOME ...........................................       $  961       $  469
                                                             ======       ======

PER SHARE DATA:
  Primary ............................................       $ 0.35       $ 0.17
  Fully diluted ......................................       $ 0.35       $ 0.17

AVERAGE COMMON SHARES OUTSTANDING:
  Primary ............................................        2,747        2,717
  Fully diluted ......................................        2,757        2,717

  Cash dividends .....................................       $ 0.03       $ 0.03


                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                        4

<PAGE>



                           FIRST UNITED BANCORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

                                                             SIX MONTHS ENDED
                                                         June 30,      June 30,
                                                           1997         1996
                                                           ----         ----
                                                          (In thousands except
                                                             per share data)
INTEREST INCOME:
  Loans ............................................       $13,044       $10,160
  Federal funds sold ...............................           256           250
  Taxable investment securities ....................           936           738
  Non-taxable investment securities ................           125           126
                                                           -------       -------
  Total interest income ............................        14,361        11,274
                                                           -------       -------
INTEREST EXPENSE:
  Interest on deposits .............................         5,130         3,614
  Interest on securities sold                        
    under repurchase agreements ....................            84            81
  Interest on other borrowed funds .................           803           546
                                                           -------       -------
  Total interest expense ...........................         6,017         4,241
                                                           -------       -------

  Net interest income ..............................         8,344         7,033
  Provision for loan losses ........................           570           785
                                                           -------       -------
   Net interest income after provision 
     for loan losses ...............................         7,774         6,248
                                                           -------       -------
OTHER INCOME:
  Service charges on deposit accounts ..............           401           316
  Other service charges, commissions 
    and fees .......................................           448           538
  Other income .....................................           176           146
                                                           -------       -------
  Total other income ...............................         1,025         1,000
                                                           -------       -------
OTHER EXPENSES:
  Salaries, wages and benefits .....................         3,578         3,371
  Occupancy expenses ...............................           396           355
  Furniture and equipment expenses .................           387           259
  Other operating expenses .........................         1,689         1,778
                                                           -------       -------
   Total other expenses .............................        6,050         5,763
                                                           -------       -------

Income before income taxes .........................         2,749         1,485
Provision for income taxes .........................           969           507
                                                           -------       -------

NET INCOME .........................................       $ 1,780       $   978
                                                           =======       =======

PER SHARE DATA:
  Primary ..........................................       $  0.65       $  0.36
  Fully diluted ....................................       $  0.65       $  0.36

AVERAGE COMMON SHARES OUTSTANDING:
  Primary ..........................................         2,732         2,723
  Fully diluted ....................................         2,751         2,723

  Cash dividends ...................................       $  0.03       $  0.03



                 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 SIX MONTHS
                               ENDED June 30,1997  
                                   (Unaudited)     
                                 (In thousands)    
<TABLE>                                            
<CAPTION>                                          
                                                   
                                                 

                                                                                                        UNREALIZED
                                                                                                         NET GAIN
                                                                                                        (LOSS) ON
                                                NUMBER OF                                               SECURITIES          SHARE-
                                                  SHARES        COMMON       PAID-IN      RETAINED      AVAILABLE          HOLDERS'
                                               OUTSTANDING       STOCK       CAPITAL      EARNINGS       FOR SALE           EQUITY
                                                                        
<S>                                                <C>           <C>           <C>          <C>             <C>            <C>     
Balance at December 31, 1995................       2,315         $3,859        $11,269      $ 1,343         $(64)          $ 16,407

Issuance of 116,418                         
shares of common stock
relating to 5% stock
dividend ...................................         116            195          1,260       (1,458)           -                 (3)

Issuance of 122,959                            
shares of common stock
relating to 5% stock
dividend ...................................         123            205          1,317       (1,525)           -                 (3)


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

Employee stock options                      
exercised ..................................          34             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................       2,588          4,315         13,965           14           (9)            18,285

Cash dividends declared ....................           -              -              -         (156)           -               (156)

Employee stock options                      
exercised ..................................          41             69            287            -            -                356

Net income .................................           -              -              -        1,780            -              1,780

Change in unrealized                         
net gain/loss on
securities available
for sale ...................................           -              -              -            -           (1)                (1)
                                                   -----         ------        -------      -------         ----           --------


Balance at June 30, 1997....................       2,629         $4,384        $14,252      $ 1,638         $(10)          $ 20,264
                                                   =====         ======        =======      =======         ====           ========
                                                                                                                             
</TABLE>




                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.



                                        6

<PAGE>



                           FIRST UNITED BANCORPORATION
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)



                                                            SIX MONTHS ENDED
                                                        June 30,       June 30,
                                                          1997           1996
                                                          ----           ----
                                                              (In thousands)

Cash flows from operating activities :
  Net income .......................................     $  1,780      $    978
  Adjustments needed to reconcile net income to
  net cash used by operating activities :
    Provision for loan losses ......................          570           785
    Depreciation and amortization ..................          455           316
    Net increase in other assets ...................         (429)         (492)
    Net increase in other liabilities ..............          645           182
                                                         --------      --------
      Net cash provided by operating activities ....        3,021         1,769
                                                         --------      --------

Cash flows from investing activities :
  Purchases of investment securities held           
    to maturity ....................................         (549)         (100)
  Proceeds from maturities of investment            
    securities held to maturity ....................        1,386         1,237
  Purchase of investment securities available       
    for sale .......................................       (5,987)       (8,064)
  Proceeds from maturities of investment            
    securities available for sale ..................        3,495         3,243
  Net increase in loans ............................      (26,659)      (23,374)
  Net additions to premises and equipment ..........         (297)       (1,244)
                                                         --------      --------
    Net cash used by investing activities ..........      (28,611)      (28,302)
                                                         --------      --------

Cash flows from financing activities :
  Net increase in deposits .........................       23,224        27,522
  Proceeds from other borrowed funds ...............       39,960        19,360
  Principal repayment of other borrowed funds ......      (38,600)      (13,645)
  Net increase (decrease) in securities             
    sold under repurchase agreements ...............       (4,807)        1,078
  Proceeds from issuance of common stock ...........          226            96
  Cash dividends ...................................         (156)         (140)
                                                          -------      --------
    Net cash provided by financing activities ......       19,847        34,271
                                                          -------      --------
Net increase (decrease) in cash and cash            
  equivalents ......................................       (5,743)        7,738

Cash and cash equivalents, beginning of period .....       21,828        11,453
                                                         --------      --------

Cash and cash equivalents, end of period ...........     $ 16,085      $ 19,191
                                                         ========      ========



                 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, AND STOCK DIVIDENDS

On July 15,  1996 and  December  13,  1996,  the  Company's  Board of  Directors
declared five percent stock dividends. 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.  Per share data for the 1996 periods have been  restated to reflect
these dividends as if they had occurred prior to the 1996 periods presented.

During the period ended June  30,1997,  the Company  issued 41,130 shares of its
common  stock at an  average  price of $5.49  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.


(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 June 30,  1997,  the results of their  operations  for the
quarters  and six months  ended June 30, 1997 and 1996,  and the  statements  of
their cash flows for the six months ended June 30, 1997 and 1996.

(5)      FORWARD LOOKING STATEMENTS

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.


                                        8

<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  $22,271,000,  or 8.2%,  from  December 31, 1996 to
$292,466,000 at June 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 $26,374,000, or 12.8%, to $231,925,000 at June 30, 1997. Total
loans  outstanding  at June 30, 1997 for  Spartanburg  National Bank amounted to
$100,049,000,  a 10.2%  increase from the  $90,833,000  reported at December 31,
1996. Total outstanding loans, net of inter-company  loans, at Anderson National
Bank at June  30,  1997  amounted  to  $91,252,000,  a 6.6%  increase  from  the
$85,610,000 in total outstanding loans, net of inter-company  loans, at December
31, 1996. At June 30, 1997,  total loans  outstanding  for The Community Bank of
Greenville,  N.A. amounted to $31,567,000, an increase of $12,531,000, or 65.8%,
from the $19,036,000 in outstanding  loans at December 31, 1996.  During the six
month period ended June 30, 1997 Quick Credit Corporation experienced a decrease
in total  outstanding  loans of  $1,015,000,  or 10.1%,  largely  as a result of
seasonal pay downs.

     Premises, furniture and equipment decreased slightly during the period as a
result of depreciation associated with these assets.

     The  Company's  securities  portfolios,  collectively,  at amortized  cost,
increased slightly from year-end 1996 levels as a result of additional purchases
during the period.  Cash and due from banks increased  $1,707,000,  or 21.0%, to
$9,835,000 at June 30, 1997 as a result of an increase in  uncollected  funds in
correspondent  bank  accounts  at quarter  end.  Federal  funds  sold  decreased
$7,450,000,  or 54.4%, during the period as the Company used these funds to help
fund its loan growth and to purchase additional securities.

     During the six month period ended June 30, 1997, the Company liquidated one
parcel of other real estate owned valued at $11,000, thus reducing the amount of
other real estate  owned to $74,000 at June 30,  1997.  Management  continues to
pursue liquidation of the remaining piece of property currently owned.

     Other assets,  comprised  largely of accrued interest  receivable,  prepaid
expenses and deferred taxes, increased $386,000, or 9.4%, from the year-end 1996
level  primarily  as a result of an increase  in the amount of accrued  interest
receivable on the Company's  loan  portfolio  resulting from the increase in the
volume of outstanding loans during the six-month period ended June 30, 1997.

     Total  liabilities  increased  $20,292,000,  or  8.1%,  as  a  result  of a
$23,224,000,  or 10.6%,  increase  in total  deposits at the  Company's  banking
subsidiaries. The largest dollar and percentage increase in a single category of
deposits was in certificates  of deposit of less than $100,000,  which increased
$13,327,000,  or 14.1%.  During the six month period  ended June 30,  1997,  the
Company also  experienced an increase in the volume of  certificates  of deposit
greater than $100,000 of $5,600,000, or 13.6%.


                                        9

<PAGE>



     Securities  sold  under  agreements  to  repurchase,  comprised  largely of
overnight  repurchase  agreements,  decreased  $4,807,000,  or  58.9%,  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  levels it had at
year-end 1996.

     During the period ended June 30, 1997,  the Company  increased its level of
Federal Home Loan Bank advances $2,460,000, or 22.7%, to $13,290,000 at June 30,
1997.  The increased  Federal Home Loan Bank advances were utilized to help fund
the Company's loan growth during the period. Other borrowed funds,  comprised of
various types of borrowings by Quick Credit  Corporation  and  borrowings by the
parent company,  decreased $1,100,000, or 9.2%, during the period as a result of
principal reductions made by Quick Credit Corporation on its borrowings.

     Other liabilities,  comprised largely of accrued expenses payable increased
$515,000,  or 18.4%,  to  $3,309,000  at June 30, 1997.  The  increase  resulted
largely from an increase in interest payable on deposit accounts and an increase
in income taxes payable.

     Shareholders'  equity  increased  $1,979,000  from  December  31,  1996  to
$20,264,000  at June 30,  1997 as a result  of net  earnings  for the six  month
period of  $1,780,000  and the  exercise of stock  options  under the  Company's
Employee  Stock  Option Plans in the amount of $356,000.  These  increases  were
partially  offset by the declaration of cash dividends in the amount of $156,000
during the period and an increase in the amount of net unrealized  losses on the
Company's "available for sale" securities portfolio of $1,000.


RESULTS OF OPERATIONS

Six month period ended June 30, 1997 vs. Six month period ended June 30, 1996

Earnings Review

     The  consolidated  Company's  operations  for the six months ended June 30,
1997 resulted in net income of  $1,780,000,  an 82.0% increase over the $978,000
in net income recorded for the comparable 1996 six month period. The increase in
consolidated  earnings  for  the  1997  period  is  largely  attributable  to  a
$1,311,000,  or 18.6%,  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,  an increase in earnings recorded by the Company's
consumer finance subsidiary, Quick Credit Corporation,  mainly attributable to a
decrease in this  subsidiary's  provision for loan losses in the 1997 period and
to profitable operations of the Company's newest bank subsidiary,  The Community
Bank of Greenville, N.A. during the 1997 period.

     Anderson  National Bank recorded net earnings of $892,000 for the six month
period ended June 30, 1997, a 34.5% increase over the $663,000  recorded for the
six month  period  ended  June 30,  1996.  The  increase  in  earnings  for this
subsidiary  is largely  attributable  to an increase in net  interest  income of
$454,000, or 19.1%,  resulting primarily from an increase of $989,000, or 28.4%,
in interest and fee income on a larger loan portfolio in the 1997 period.

     Spartanburg  National  Bank  recorded  net earnings of $663,000 for the six
month period ended June 30, 1997, a 29.0%  increase  over the $514,000  recorded
for the six month period ended June 30, 1996.  The increase in earnings for this
subsidiary,  like that of Anderson  National Bank,  resulted from an increase in
net interest income of $377,000,  or 17.7%, and is primarily  attributable to an
increase of  $820,000,  or 22.4%,  in  interest  and fee income on a larger loan
portfolio in the 1997 period.


                                       10

<PAGE>



     The Community Bank of Greenville,  N.A., which commenced banking operations
on April 17,  1996,  recorded  net  earnings of $1,000 for the six month  period
ended June 30, 1997  compared to a net loss of $214,000 for the six month period
ended June 30, 1996.

     Quick  Credit  Corporation  recorded  net  earnings of $307,000 for the six
month period ended June 30, 1997, a 248.9%  increase  over the $88,000  recorded
for the 1996 six month  period.  The  significant  increase in earnings for this
subsidiary  resulted  primarily  from a  $450,000,  or 69.8%,  reduction  in the
provision for loan losses for the 1997 period when compared to the 1996 period.

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 $1,311,000,  or 18.6%, to $8,344,000 for
the six month  period  ended June 30, 1997  compared to  $7,033,000  for the six
month period ended June 30, 1996. The increase is primarily  attributable  to an
increase  in  interest  and  fee  income  on  loans  at  the  Company's  banking
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  $3,087,000,  or 27.4%, to
$14,361,000 for the 1997 period compared to $11,274,000 for the 1996 period.  Of
the  $3,087,000  increase in total interest  income,  $2,884,000,  or 93.4%,  is
attributable  to an increase in loan  interest and fee income  resulting  from a
$60,223,000,  or 38.4%,  increase  in the  volume of average  outstanding  loans
during the 1997 period.  The Company's  average  outstanding  loans for the 1997
period were  $217,050,000  compared to  $156,827,000  for the 1996  period.  The
average  yield on loans for the six month  period  ended June 30,1997 was 12.02%
compared to 12.97% for the six month period ended June 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 $5,914,000, or 15.5%, 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 $203,000, or 18.2%.

     Interest expense on deposits increased $1,516,000,  or 42.0%, to $5,130,000
for the six month period ended June 30, 1997 compared to $3,614,000  for the six
month period ended June 30, 1996. The increase is attributable to an increase of
$54,235,000,  or 35.8%, 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 six months of 1997 was 5.00% compared to
4.78% for the first six 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  banking  subsidiaries  on average
borrowings  of  $12,164,000  from the Federal  Home Loan Bank of Atlanta for the
1997 period amounted to $360,000, a 328.6% increase over the $84,000 incurred in
the 1996  quarter.  The  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 $19,000, or 4.1%, 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 lower average of outstanding borrowings in the 1997 period.


                                       11

<PAGE>




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
in 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 June 30, 1997 and in the opinion of management,
there are no material risks or significant  loan  concentrations  in the present
portfolio.

     The allowance  for loan losses was  $3,445,000 at June 30, 1997 compared to
$2,622,000 at June 30, 1996.  At June 30, 1997 and June 30, 1996,  the allowance
for loan  losses as a  percentage  of  outstanding  loans  was 1.49% and  1.54%,
respectively.  During the six month  period  ended June 30,  1997,  the  Company
experienced net charge-offs of $285,000, or 0.14%, of average loans, compared to
net charge offs of $482,000,  or 0.31% of average loans for the six month period
ended June 30,  1996.  The Company made  provisions  for loan losses of $570,000
during the 1997 six month  period  compared to  $785,000  for the 1996 six month
period,  a decrease of 27.4%.  The  decrease in net  charge-offs  and  resulting
decrease in the provision for loan losses for the 1997 period is attributable to
improved collection results at Quick Credit Corporation.

     Anderson  National  Bank recorded a provision for loan losses of $95,000 in
the 1997 period as a result of  increases  in the volume of  outstanding  loans.
Anderson  National Bank made no provision in the 1996 period.  For the six month
period ended June 30, 1997, this  subsidiary  recorded net recoveries of $79,000
compared to net recoveries of $14,000 for the 1996 six month period.


                                       12

<PAGE>



     The Community Bank of Greenville, N.A. recorded a provision for loan losses
of  $110,000  in the 1997  period  compared to $45,000 for the 1996 period as it
continued to establish its allowance for loan losses.  This  subsidiary  has not
experienced any loan losses since commencing operations.

     Spartanburg  National Bank recorded a provision for loan losses of $170,000
for the 1997 period compared to $95,000 for the 1996 period. The increase in the
provision made by this subsidiary was a result of loan growth and an increase in
the amount of charged-off  loans  experienced by this subsidiary during the 1997
period.  For the six month period ended June 30, 1997, this subsidiary  recorded
net  charge-offs of $63,000  compared to net charge-offs of $26,000 for the 1996
comparable period.

     Quick Credit  Corporation  recorded a provision for loan losses of $195,000
for the six month period  ended June 30, 1997  compared to $645,000 for the 1996
six 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 six month period ended June 30, 1997, this  subsidiary  recorded
net charge offs of $300,000,  or 3.28% of average outstanding loans, compared to
net charge offs of $471,000, or 4.74%, of average outstanding loans for the 1996
six month period and to $1,144,000,  or 11.66%, of average outstanding loans for
fiscal  1996.  Quick  Credit  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 8.15% at June 30, 1996 to 11.96% at June 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 June 30, 1997 the Company had $692,000 in non-accrual  loans,  which are
considered  impaired,  $278,000  in loans  past  due 90 days or more  and  still
accruing  interest  and $74,000 in OREO,  compared to  $233,000,  $296,000,  and
$74,000,  respectively at June 30, 1996 and to $437,000,  $416,000, and $85,000,
respectively  at December 31, 1996. At June 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  of the  Company  does not  believe it has 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 slightly over other income
recorded for the 1996 period.  During the 1997 period the Company experienced an
$85,000,  or 26.9%  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 more
than  offset by a  decline  of  $90,000,  or 16.7%,  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

                                       13

<PAGE>



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.

Other Expenses

     Total other expenses increased  $287,000,  or 5.0%, in the 1997 period over
the 1996 comparable period.  Salaries, wages and benefits ("personnel expense"),
the largest category of other operating expenses,  increased $207,000,  or 6.1%,
in the 1997 period over the 1996 period.  The  increase in personnel  expense is
largely   attributable  to  additional   staffing  for  The  Community  Bank  of
Greenville, N.A., which commenced operations in April 1996.

     Occupancy expense and furniture and equipment expense increased, 11.55% and
49.4%, respectively,  in the 1997 period as a result of expenses associated with
The Community  Bank of Greenville,  N.A.,  which opened in April of 1996 and the
opening of a new branch for Spartanburg National Bank, which opened in September
of 1996.

     Miscellaneous  other operating expenses declined $89,000,  or 5.0%, largely
as a result of a decrease in the amount of consultant  fees incurred in the 1997
period and a reduction in expenses  attributable to the Company's  reengineering
project conducted in 1996.

Income Taxes

     As a result of increased  income before income taxes,  the Company incurred
income tax expense of $969,000 for the  year-to-date  period ended June 30, 1997
compared to income tax expense of $507,000 for the period ended June 30, 1996.

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

Earnings Review

     The consolidated  Company's  operations for the three months ended June 30,
1997 resulted in net income of $961,000,  a 104.9% increase over the $469,000 in
net income recorded for the comparable 1996 three month period.  The increase in
consolidated earnings for the 1997 period is largely 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,
an increase in earnings recorded by the Company's  consumer finance  subsidiary,
Quick  Credit  Corporation,  as a result of lower loan loss  provisions,  and to
profitable operations of the Company's newest subsidiary,  The Community Bank of
Greenville, N.A., during the 1997 period.

     Anderson National Bank and Spartanburg  National Bank recorded net earnings
of $455,000 and  $367,000,  respectively,  for the quarter  ended June 30, 1997,
compared to $357,000 and $275,000,  respectively, for the quarter ended June 30,
1996. The increases in earnings for these two  subsidiaries  are attributable to
increases  in the net  interest  margin for both  banks  resulting  from  larger
volumes of outstanding loans for the 1997 quarter.

     The Community Bank of Greenville,  N.A., which commenced  operations during
the second  quarter of 1996,  recorded  net  earnings of $23,000 for the quarter
ended June 30,  1997  compared  to a recorded  loss of  $171,000  for the second
quarter of 1996.

     Quick Credit Corporation  recorded net earnings of $165,000 for the quarter
ended June 30, 1997, a 180.0% increase over the $59,000  recorded for the second
quarter of 1996.  The  significant  increase  in  earnings  for this  subsidiary
resulted  primarily  from a $254,000,  or 70.9%,  reduction in the provision for
loan losses for the 1997 period when compared to the 1996 period.

                                       14

<PAGE>




Interest Income, Interest Expense and Net Interest Income

     The  Company's  net  interest  income  increased  $584,000,  or  15.9%,  to
$4,251,000 for the three month period ended June 30, 1997 compared to $3,667,000
for the three  month  period  ended  June 30,  1996.  The  increase  is  largely
attributable to an increase in interest and fee income on loans at the Company's
banking  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  $1,468,000,  or 25.0%, to
$7,348,000 for the 1997 quarter compared to $5,880,000 for the 1996 quarter.  Of
the  $1,468,000  increase,  $1,434,000  is  attributable  to an increase in loan
interest  and fee  income  resulting  from a 38.1%  increase  in the  volume  of
outstanding loans for the 1997 quarter.  The Company's average outstanding loans
for the 1997 quarter were  $223,488,000  compared to  $161,841,000  for the 1996
quarter.  The average yield on loans for the 1997 quarter was 11.98% compared to
13.01% 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
and federal funds sold, collectively,  increased by $1,891,000,  or 4.5%, in the
1997  quarter  when  compared to the 1996  quarter.  Largely as a result of this
increase,  interest income on these categories of earning assets,  collectively,
increased by $34,000, or 5.5%.

     Interest expense on deposits  increased  $776,000,  or 41.1%, to $2,665,000
for the 1997 quarter  compared to $1,889,000 for the 1996 quarter.  The increase
is attributable to increases in the Company's costs of interest-bearing deposits
and  an  increase  of   $52,560,000,   or  33.2%,   in  the  volume  of  average
interest-bearing  deposits  for the  1997  quarter  when  compared  to the  1996
quarter.  The weighted  average cost of interest bearing deposits for the second
quarter of 1997 was 5.06% compared to 4.77% for the second quarter of 1996.

     Interest expense on Securities Sold Under Repurchase  Agreements  increased
$6,000,  or 14.6%,  in the 1997 quarter  primarily as a result of an increase in
the rates paid on these short-term  funds in the 1997 quarter.  Interest expense
incurred  by  the  Company's  banking  subsidiaries  on  average  borrowings  of
$12,165,000  from the  Federal  Home Loan Bank of Atlanta  for the 1997  quarter
amounted to $179,000,  a 347.5%  increase from the $40,000  incurred in the 1996
quarter.  The increase in interest  expense on Federal Home Loan Bank borrowings
resulted  from an  increase  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 $37,000, or 18.0%, in the 1997 quarter
when compared to the 1996 quarter.  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 lesser
amount of borrowings in the 1997 quarter.

Provision and Allowance for Loan Losses, Loan Loss Experience

     The  provision  for loan losses was $300,000 for the quarter ended June 30,
1997, a $164,000,  or 35.3%,  decrease from the $464,000  provision made for the
quarter  ended June 30,  1996.  The  decrease for the 1997 period is largely the
result of a decrease in the provision  made by Quick Credit  Corporation  during
the 1997 period when compared to the 1996 period. For the quarter ended June 30,
1997,  the Company  recorded  net loan  charge-offs  of $263,000,  or 0.12%,  of
average outstanding loans compared to $232,000,  or 0.14% of average outstanding
loans for the 1996 quarter.

     Quick Credit  Corporation  recorded a provision for loan losses of $105,000
for the quarter ended June 30, 1997 compared to $359,000 for the 1996

                                       15

<PAGE>



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 June 30,  1997,  this  subsidiary  recorded  net  charge  offs of
$132,000,  or 1.61% of average outstanding loans, compared to net charge offs of
$223,000,  or 2.40%,  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 $20,000 for
the quarter ended June 30, 1997 and made no provision in the 1996  quarter.  For
the quarter ended June 30,1997,  this  subsidiary  recorded net  charge-offs  of
$88,000 compared to net recoveries of $5,000 for the 1996 quarter.

     Spartanburg  National Bank recorded a provision for loan losses of $120,000
for the quarter  ended June 30, 1997  compared to $45,000 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.  For the
quarter ended June 30, 1997, this subsidiary recorded net charge-offs of $42,000
compared to net charge-offs of $14,000 for the 1996 quarter.

     The Community Bank of Greenville, N.A. recorded a provision for loan losses
of $55,000 in the 1997  quarter  compared to $45,000 for the 1996  quarter as it
continued to establish its allowance for loan losses.  This  subsidiary  has not
experienced any loan losses since commencing operations.

Other Income

     Total  consolidated  other income for the 1997 quarter  increased  slightly
over consolidated  total other income recorded for the 1996 quarter.  During the
1997 quarter the Company  experienced  a $58,000,  or 36.9%  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 declines in other
service  charges,  commissions and fee income accounts and  miscellaneous  other
income items.

Other Expenses

     Total other  expenses  recorded  in the 1997  quarter  remained  relatively
unchanged from the levels  recorded in the 1996  comparable  quarter.  Salaries,
wages  and  benefits  ("personnel  expense"),  the  largest  category  of  other
operating  expenses,  increased  $121,000,  or 7.4%,  in the 1997  quarter  when
compared  to the 1996  quarter.  The  increase in  personnel  expense is largely
attributable to additional staffing for The Community Bank of Greenville,  N.A.,
which commenced operations in the second quarter of 1996 and to normal increases
in employees salaries.

     Occupancy  expense and  furniture  and  equipment  expenses,  collectively,
increased $74,000, or 23.5%, in the 1997 quarter largely as a result of expenses
associated with The Community Bank of Greenville, N.A. and a new branch facility
for Spartanburg National Bank which opened during the third quarter of 1996.

     Other operating  expenses,  the second largest  category of other expenses,
decreased  $192,000,  or 18.6%, in the 1997 quarter.  The  significant  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 quarter  associated  with the opening of The
Community  Bank of  Greenville,  N.A.  which opened during the second quarter of
1996.



                                       16

<PAGE>



Income Taxes

     As a result of increased  income before income taxes,  the Company incurred
income tax expense of $517,000 for the quarter  ended June 30, 1997  compared to
income tax expense of $250,000 for the quarter ended June 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 June 30, 1997
Anderson National Bank had $240,000 in long-term  advances from the Federal Home
Loan Bank of Atlanta and  $8,000,000  in short term  advances.  At June 30, 1997
Spartanburg  National Bank had $550,000 in long-term  advances and $4,500,000 in
short-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  advances
at June 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
$300,000 was available at June 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 (5) years if certain  criteria  are met. At the end of five
(5) 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 (5) 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 June 30, 1997, the Company's consumer finance  subsidiary,  Quick Credit
Corporation,  had debt outstanding of $800,000 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.


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.


                                       17

<PAGE>


     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  6.90% and 6.72% at June 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
7.42%,7.26% and 8.63%,  respectively at June 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 June 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 10.26% and its Tier 1 capital to risk  weighted  assets ratio
was 8.94% at June 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
10.50%,  10.63% and 13.47%,  respectively,  at June 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 9.39%, 9.51% and 12.51%, respectively,  at June
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  from
asset growth experienced during the period ended June 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.  During the quarter ended June 30, 1997, the Company injected  $500,000
in additional capital in Spartanburg National Bank to facilitate continued asset
growth at this subsidiary.




                                       18

<PAGE>



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 Financial  Accounting Standards Board ("FASB") issued
Statement of Financial  Accounting  Standards  ("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  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.

     In June  1997,  the FASB  issued  SFAS  No.  130  "Reporting  Comprehensive
Income."  This  Statement  requires  that  all  items  that are  required  to be
recognized under accounting  standards as comprehensive  income be reported in a
financial  statement  that is  displayed  with  the  same  prominence  as  other
financial statements. SFAS No. 130 requires that an enterprise classify items of
other comprehensive  income by their nature in a financial statement and display
the accumulated balance of other  comprehensive  income separately from retained
earnings and additional  paid-in-capital in the equity section of a statement of
financial position.  The Statement is effective for fiscal years beginning after
December 15, 1997. The Company does not anticipate that adoption of SFAS No. 130
will have a material effect on its financial statements.

     In June 1997, the FASB issued SFAS No. 131  "Disclosures  about Segments of
an Enterprise and Related  Information."  This Statement  requires that a public
business  enterprise  report  financial and  descriptive  information  about its
reportable   operating  segments.   Operating  segments  are  components  of  an
enterprise  about which  separate  financial  information  is available  that is
evaluated  regularly by the chief  operating  decision  maker in deciding how to
allocate  resources and in assessing  performance.  SFAS No. 131 requires that a
public enterprise  report a measure of segment profit or loss,  certain specific
revenue  and  expense  items,  segment  assets,  information  about  the way the
operating segments were determined, and other items. This Statement is effective
for fiscal  years  beginning  after  December  15,  1997.  The Company  does not
anticipate  that  adoption  of SFAS No. 131 will have a  material  effect on its
financial  statements  other than possible  reporting  changes relative to Quick
Credit Corporation, its consumer finance subsidiary.

                                       19

<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.

                  The Company's annual shareholders'  meeting was held April 22,
                  1997.  The  purpose  of the  meeting  was:  (1) to  elect  ten
                  directors  of  the  Company,  with  four  directors  to  serve
                  one-year terms; two directors to serve two-year terms and four
                  directors  to  serve  three-year  terms;  (2)  to  ratify  the
                  appointment of KPMG Peat Marwick as  independent  auditors for
                  the Company for fiscal year-ending  December 31, 1997; and (3)
                  to transact  such other  business as may properly  come before
                  the Annual Meeting or any adjournment thereof.

                  Results  of the meeting  were (1) James G. Bagnal III,  Ronald
                  K.  Earnest,  Frank W.  Wingate and J. Donald  King,  Sr. were
                  elected  to serve  one-year  terms  as  directors;  Donald  C.
                  Roberts,  M.D.  and G.  Weston  Nalley  were  elected to serve
                  two-year  terms as  directors;  and Mason Y.  Garrett,  Dan C.
                  Breeden,  Jr.,  T.Ree  McCoy,  Jr. and Robert V.  Pinson  were
                  elected to serve  three-year  terms as  directors by a vote of
                  2,283,055 shares For and 61 shares to Withhold Authority;  and
                  (2)  the  election  of  KPMG  Peat  Marwick  as the  Company's
                  auditors  for fiscal 1997 was  approved by a vote of 2,280,831
                  shares  For and 2,285  shares  Abstaining.  There was no other
                  business to come before the meeting.

Item 5.           Other Information.

                  None


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

                  (a)      Exhibits

                           Exhibit 27- Financial Data Schedule

                  (b)      Reports on Form 8-K

                           None



                                       20

<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

Dated: July 30, 1997            s/Mason Y. Garrett, President
                                  and Chief Executive Officer


                                s/William B. West, Sr. Vice
                                  President and Chief Financial
                                  and Accounting Officer



                                       21

<PAGE>


Exhibit Index

Exhibit No.         Description

    27              Financial Data Schedule