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What changed in UNION BANKSHARES INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of UNION BANKSHARES INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+273 added−271 removedSource: 10-K (2025-03-25) vs 10-K (2024-03-26)

Top changes in UNION BANKSHARES INC's 2024 10-K

273 paragraphs added · 271 removed · 236 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

34 edited+0 added−3 removed118 unchanged
Biggest changeWe promote an increased level of personal service and expertise within the community to position Union as a lender to small to middle market business and residential customers, which tend to be under-served by larger institutions.
Biggest changeWe promote an increased level of personal service and expertise within the community to position Union as a lender to small to middle market business and residential customers, which tend to be under-served by larger institutions. 6 Through Union's Wealth Management Group we compete for personal and institutional wealth management and trust business with trust companies, commercial banks having trust departments, investment advisory firms, brokerage firms, mutual funds and insurance companies.
The SOX Act includes provisions addressing, among other matters, the duties, functions and qualifications of audit 12 committees for all public companies; certification of financial statements by the chief executive officer and the chief financial officer; the forfeiture of bonuses or other incentive-based compensation and profits from the sale of an issuer’s securities by directors and senior officers in the twelve month period following initial publication of any financial statements that later require restatement; disclosure of off-balance sheet transactions; a prohibition on personal loans to directors and officers, except (in the case of banking companies) loans in the normal course of business; expedited filing requirements for reports of beneficial ownership of company stock by insiders; disclosure of a code of ethics for senior officers, and of any change or waiver of such code; the formation of a public accounting oversight board; auditor independence; disclosure of fees paid to the company's auditors for non-audit services and limitations on the provision of such services; attestation requirements for company management and external auditors, relating to internal controls and procedures; and various increased criminal penalties for violations of federal securities laws.
The SOX Act includes provisions addressing, among other matters, the duties, functions and qualifications of audit committees for all public companies; certification of financial statements by the chief executive officer and the chief financial officer; the forfeiture of bonuses or other incentive-based compensation and profits from the sale of an issuer’s securities by directors and senior officers in the twelve month period following initial publication of any financial statements that later require restatement; disclosure of off-balance sheet transactions; a prohibition on personal loans to directors and officers, except (in the case of banking companies) loans in the normal course of business; expedited filing requirements for reports of beneficial ownership of company stock by insiders; disclosure of a code of ethics for senior officers, and of any change or waiver of such code; the formation of a public accounting oversight board; auditor independence; disclosure of fees paid to the company's auditors for non-audit services and limitations on the provision of such services; attestation requirements for company management and external auditors, relating to internal controls and procedures; and various increased criminal penalties for violations of federal securities laws.
Our next say-on-pay and say-on-frequency advisory votes are scheduled to occur at the 2025 annual meeting; • Requirements that the SEC adopt rules directing the securities exchanges to adopt listing standards with respect to compensation committee independence and the use of consultants; • Provisions calling for the SEC to adopt expanded disclosure requirements for annual proxy statements and other filings, particularly in the area of executive compensation, such as disclosure of pay versus performance, policies with regard to hedging transactions conducted by employees and directors, and, for public companies other than smaller reporting companies, the ratio of CEO pay to the pay of a median employee.
Our next say-on-pay and say-on-frequency advisory votes are scheduled to occur at the 2025 annual meeting; 7 • Requirements that the SEC adopt rules directing the securities exchanges to adopt listing standards with respect to compensation committee independence and the use of consultants; • Provisions calling for the SEC to adopt expanded disclosure requirements for annual proxy statements and other filings, particularly in the area of executive compensation, such as disclosure of pay versus performance, policies with regard to hedging transactions conducted by employees and directors, and, for public companies other than smaller reporting companies, the ratio of CEO pay to the pay of a median employee.
Among other things, these provisions require that extensions of credit to insiders (i) be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features and (ii) not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based in part, on the amount of the bank's capital.
Among other things, these provisions require that extensions of credit to insiders (i) be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features and (ii) not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based in part, 11 on the amount of the bank's capital.
Description of Services: Services or products offered to our customers include, but are not limited to, the following: • Commercial loans for business purposes to business owners and investors for plant and equipment, working capital, real estate renovation and other sound business purposes; • Commercial real estate loans on income producing properties, including commercial construction loans; • SBA guaranteed loans; • Residential construction and mortgage loans; • Municipal financing, including loans and excess deposits secured by FHLBB letters of credit; • Online cash management services, including account reconciliation, credit card depository, Automated Clearing House (ACH) origination, wire transfers, positive pay and night depository; • Merchant credit card services for the deposit and immediate credit of sales drafts; • Remote deposit capture for merchants; • Online mortgage applications; • Online consumer deposit account opening; • Business checking accounts; • Standby letters of credit, bank checks or money orders, and safe deposit boxes; • ATM services; • Debit MasterCard and ATM cards; • Telephone, internet, and mobile banking services, including bill pay; • Home improvement loans and overdraft checking privileges against preauthorized lines of credit; 5 • Retail depository services including personal checking accounts, checking accounts with interest, savings accounts, money market accounts, certificates of deposit, IRA/SEP/KEOGH accounts and Health Savings accounts; and • Wealth management and trust services to individuals and organizations.
Description of Services: Services or products offered to our customers include, but are not limited to, the following: • Commercial loans for business purposes to business owners and investors for plant and equipment, working capital, real estate renovation and other sound business purposes; • Commercial real estate loans on income producing properties, including commercial construction loans; • SBA guaranteed loans; • Residential construction and mortgage loans; • Municipal financing, including loans and excess deposits secured by FHLB letters of credit; • Online cash management services, including account reconciliation, credit card depository, Automated Clearing House (ACH) origination, wire transfers, positive pay and night depository; 5 • Merchant credit card services for the deposit and immediate credit of sales drafts; • Remote deposit capture for merchants; • Online mortgage applications; • Online consumer deposit account opening; • Business checking accounts; • Standby letters of credit, bank checks or money orders, and safe deposit boxes; • ATM services; • Debit MasterCard and ATM cards; • Telephone, internet, and mobile banking services, including bill pay; • Home improvement loans and overdraft checking privileges against preauthorized lines of credit; • Retail depository services including personal checking accounts, checking accounts with interest, savings accounts, money market accounts, certificates of deposit, IRA/SEP/KEOGH accounts and Health Savings accounts; and • Wealth management and trust services to individuals and organizations.
Additionally, Union accepts 8 reciprocal time and money market deposits primarily through its membership with the IntraFi Network in CDARS and ICS, respectively. The Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 allows the Company to hold reciprocal deposits up to 20 percent of total liabilities without those deposits being treated as brokered for regulatory purposes.
Additionally, Union accepts reciprocal time and money market deposits primarily through its membership with the IntraFi Network in CDARS and ICS, respectively. The Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 allows the Company to hold reciprocal deposits up to 20 percent of total liabilities without those deposits being treated as brokered for regulatory purposes.
These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions must interact with customers when taking deposits, making loans, collecting loans and providing other services. Further, the Dodd-Frank Act established the 10 CFPB, which has the responsibility for making rules and regulations under the federal consumer protection laws relating to financial products and services.
These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions must interact with customers when taking deposits, making loans, collecting loans and providing other services. Further, the Dodd-Frank Act established the CFPB, which has the responsibility for making rules and regulations under the federal consumer protection laws relating to financial products and services.
Each agency may exclude organizations that it supervises that otherwise meet the criteria under certain circumstances. The market risk charge will be included in the calculation of an organization's risk based capital ratio. Neither the Company nor Union is currently subject to this special capital charge. Prompt Corrective Action.
Each agency may exclude organizations that it supervises that otherwise meet the criteria under certain circumstances. The market risk charge will be included in the calculation of an organization's risk based capital ratio. Neither the Company nor Union is currently subject to this special capital charge. 9 Prompt Corrective Action.
The Company is subject to restrictions, reporting requirements, and review procedures under federal securities laws and regulations. The Company's common stock is listed on the NASDAQ Global Select Market under the trading symbol “UNB” and accordingly, the Company is subject to the rules of NASDAQ for listed companies. Financial Regulatory Reform Legislation The Dodd-Frank Act.
The Company is subject to restrictions, reporting requirements, and review procedures under federal securities laws and regulations. The Company's common stock is listed on the NASDAQ Global Market under the trading symbol “UNB” and accordingly, the Company is subject to the rules of NASDAQ for listed companies. Financial Regulatory Reform Legislation The Dodd-Frank Act.
The USA Patriot Act also amended the BHC Act and the Bank Merger Act to require the federal banking agencies to consider the effectiveness of a financial institution's anti-money laundering program when reviewing applications under these acts for mergers, acquisitions, and certain other expansion activities. SOX Act.
The USA Patriot Act also amended the BHC Act and the Bank Merger Act to require the federal banking agencies to consider the effectiveness of a financial institution's anti-money laundering program when reviewing applications under these acts for mergers, acquisitions, and certain other expansion activities. 12 SOX Act.
Union Bank was organized and 4 chartered as a State bank in 1891 and became a wholly owned subsidiary of the Company upon completion of the holding company reorganization in 1982. Both Union Bankshares, Inc. and Union Bank are headquartered in Morrisville, Vermont. The Company's business is that of a community bank in the financial services industry.
Union Bank was organized and chartered as a State bank in 1891 and became a wholly owned subsidiary of the Company upon completion of the holding company reorganization in 1982. Both Union Bankshares, Inc. and Union Bank are headquartered in Morrisville, Vermont. The Company's business is that of a community bank in the financial services industry.
The Company included the required pay versus performance disclosures beginning with its 2023 proxy statement; 7 • Provisions requiring the adoption or revision of certain other corporate policies, such as compensation "clawback" policies providing for the recovery of executive compensation in the event of a financial restatement.
The Company included the required pay versus performance disclosures beginning with its 2023 proxy statement; • Provisions requiring the adoption or revision of certain other corporate policies, such as compensation "clawback" policies providing for the recovery of executive compensation in the event of a financial restatement.
FDICIA, among other things, identifies five capital categories for insured depository institutions (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) and requires the respective federal banking agencies to implement systems for “prompt corrective action” for insured depository 9 institutions that do not meet minimum capital requirements.
FDICIA, among other things, identifies five capital categories for insured depository institutions (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) and requires the respective federal banking agencies to implement systems for “prompt corrective action” for insured depository institutions that do not meet minimum capital requirements.
(“Company”) is a one-bank holding company whose sole subsidiary is Union Bank (“Union”). It was incorporated in the State of Vermont in 1982 to serve as a holding company for Union Bank. The Company's common stock is traded on the NASDAQ Global Select Market under the symbol "UNB".
(“Company”) is a one-bank holding company whose sole subsidiary is Union Bank (“Union”). It was incorporated in the State of Vermont in 1982 to serve as a holding company for Union Bank. The Company's common stock is traded on the NASDAQ Global Market under the symbol "UNB".
Under applicable federal laws and regulations, deposit insurance premium assessments to the DIF are currently based on a supervisory risk rating system, with the most favorably rated institutions paying the lowest premiums.
Under applicable federal laws and regulations, deposit insurance premium assessments to the DIF are currently based on a supervisory risk rating system, with the most favorably rated institutions paying the lowest 8 premiums.
Union is also subject to laws and regulations to protect consumers in connection with their deposit or electronic transactions. These laws include the Truth in Savings Act, the Electronic Funds Transfer Act and the Expedited Funds Availability Act.
Union is also subject to laws and regulations to protect consumers in connection with their deposit or electronic transactions. These laws include the Truth in 10 Savings Act, the Electronic Funds Transfer Act and the Expedited Funds Availability Act.
The Company has a Related Persons 11 Transactions Approval Policy administered by the Company's Audit Committee which incorporates applicable regulatory guidelines and requirements. Interstate Banking.
The Company has a Related Persons Transactions Approval Policy administered by the Company's Audit Committee which incorporates applicable regulatory guidelines and requirements. Interstate Banking.
The information on our website is not incorporated by reference into this report. The Company will also provide copies of this 2023 Annual Report on Form 10-K, free of charge, upon written request to its Treasurer at the Company's main address, PO Box 667, Morrisville, VT 05661-0667.
The information on our website is not incorporated by reference into this report. The Company will also provide copies of this 2024 Annual Report on Form 10-K, free of charge, upon written request to its Treasurer at the Company's main address, PO Box 667, Morrisville, VT 05661-0667.
Item 1. Business Certain Definitions: Capitalized terms used in the following discussion and not otherwise defined below have the meanings assigned to them in Note 1 to the Company's audited consolidated financial statements contained in Part II, item 8, page 55 of this Annual Report. General: Union Bankshares, Inc.
Item 1. Business Certain Definitions: Capitalized terms used in the following discussion and not otherwise defined below have the meanings assigned to them in Note 1 to the Company's audited consolidated financial statements contained in Part II, item 8, page 54 of this Annual Report. General: Union Bankshares, Inc.
Under the regulations as in effect during 2023, a “well capitalized” institution must have a Tier 1 capital ratio of at least 8.0%, a Common Equity Tier 1 ratio of 6.5%, a total capital ratio of at least 10% and a leverage ratio of at least 5% and not be subject to a capital directive order.
Under the regulations as in effect during 2024, a “well capitalized” institution must have a Tier 1 capital ratio of at least 8.0%, a Common Equity Tier 1 ratio of 6.5%, a total capital ratio of at least 10% and a leverage ratio of at least 5% and not be subject to a capital directive order.
The Company and Union have filed separate tax returns for each state jurisdiction affected for 2022 and will do the same for 2023. No tax return is currently being examined or audited by any taxing authority that the Company is aware of.
The Company and Union have filed separate tax returns for each state jurisdiction affected for 2023 and will do the same for 2024. No tax return is currently being examined or audited by any taxing authority that the Company is aware of.
The final rule also required accumulated OCI be included for purposes of calculating regulatory capital unless a one time opt-out election was made during the first quarter of 2015. The Company and Union both made the election.
The final rule also requires accumulated OCI be included for purposes of calculating regulatory capital unless a one time opt-out election was made during the first quarter of 2015. The Company and Union both made the election.
Shareholder meeting materials for our 2024 Annual Meeting, including this Annual Report on Form 10-K, are available at www.materials.proxyvote.com/905400 no later than the date on which they are mailed to shareholders.
Shareholder meeting materials for our 2025 Annual Meeting, including this Annual Report on Form 10-K, are available at www.materials.proxyvote.com/905400 no later than the date on which they are mailed to shareholders.
The DFR possesses similar enforcement powers under Vermont law. There are no such enforcement actions currently in place against Union. Deposit Insurance. As a member of the FDIC, the deposits of Union are insured under the Deposit Insurance Fund (“DIF”) maintained by the FDIC up to $250,000 per ownership category.
The DFR possesses similar enforcement powers under Vermont law. There are no such enforcement actions currently in place against Union. Deposit Insurance. As a member of the FDIC, the deposits of Union are insured under the DIF maintained by the FDIC up to $250,000 per ownership category.
Our employees play a vital role in our company-wide vision of delivering the best banking experience to all of our customers, employees, communities, and shareholders. As of December 31, 2023, Union employed 197 full time employees.
Our employees play a vital role in our company-wide vision of delivering the best banking experience to all of our customers, employees, communities, and shareholders. As of December 31, 2024, Union employed 191 full time employees.
The Company has one definable business segment, Union Bank, which provides full retail, commercial, municipal banking, and wealth management and trust services throughout its 20 banking offices, two loan centers, and several ATMs covering northern Vermont and northern New Hampshire. Also, many of Union's services are provided via the telephone, mobile devices, and through its website, www.ublocal.com .
The Company has one definable business segment, Union Bank, which provides full retail, commercial, municipal banking, and wealth management and trust services throughout its 18 branch banking locations, three loan centers, and several ATMs covering northern Vermont and northern New Hampshire. Also, many of Union's services are provided via the telephone, mobile devices, and through its website, www.ublocal.com .
At December 31, 2023, Union's Tier I and Total Risk Based Capital Ratios were 12.5% and 13.4% respectively, and its Leverage Capital Ratio was 7.6%, and it is considered well capitalized under applicable regulatory guidelines in effect as of such date. Safety and Soundness Standards.
At December 31, 2024, Union's Tier I and Total Risk Based Capital Ratios were 11.6% and 12.5% respectively, and its Leverage Capital Ratio was 7.3%, and it is considered well capitalized under applicable regulatory guidelines in effect as of such date. Safety and Soundness Standards.
Under this assessment system, risk is defined and measured using an institution's supervisory ratings, combined with certain other risk measures, including certain financial ratios and long-term debt issuer ratings. For the year ended December 31, 2023, the Bank's total FDIC insurance assessment expense was $998 thousand. Brokered Deposits .
Under this assessment system, risk is defined and measured using an institution's supervisory ratings, combined with certain other risk measures, including certain financial ratios and long-term debt issuer ratings. For the year ended December 31, 2024, the Bank's total FDIC insurance assessment expense was $1.2 million. Brokered Deposits .
Consistent with the Company's objective of serving the financial needs of individuals, businesses and others within our market areas, we seek to concentrate our assets in loans. For the year ended December 31, 2023, the Company's rate of average loans to average deposits was 81.8%.
Consistent with the Company's objective of serving the financial needs of individuals, businesses and others within our market areas, we seek to concentrate our assets in loans. For the year ended December 31, 2024, the Company's rate of average loans to average deposits was 92.2%.
As a bank holding company, the Company is subject to regulation, supervision and examination by the FRB under the Bank Holding Company Act of 1956, as amended (“BHCA”). As a state chartered commercial bank, Union Bank is subject to the regulation and supervision by the FDIC and the Vermont Department of Financial Regulation ("DFR").
As a bank holding company, the Company is subject to regulation, supervision and examination by the FRB under the BHCA. As a state chartered commercial bank, Union Bank is subject to the regulation and supervision by the FDIC and the DFR.
The monetary policies and regulations of the FRB have had a significant effect on the operating results of banks in the past and are expected to continue to do so in the future.
The final rule took effect on April 1, 2024 with staggered compliance dates of January 1, 2026 and January 1, 2027. Federal Reserve Board Policies. The monetary policies and regulations of the FRB have had a significant effect on the operating results of banks in the past and are expected to continue to do so in the future.
This regulatory framework is intended primarily for the protection of depositors, the Federal Deposit Insurance 6 Fund (“DIF”), and the banking system as a whole, rather than the protection of shareholders or non-depository creditors of a bank holding company such as the Company.
Regulation and Supervision General The following discussion addresses elements of the regulatory framework applicable to bank holding companies and their subsidiaries. This regulatory framework is intended primarily for the protection of depositors, the DIF, and the banking system as a whole, rather than the protection of shareholders or non-depository creditors of a bank holding company such as the Company.
We compete for deposit accounts by offering customers competitive products and rates, personal service, local area expertise, convenient locations and access, and an array of financial services and products. The rapid increase in interest rates initiated by the Fed in 2022 and 2023 has resulted in higher deposit rates.
We compete for deposit accounts by offering customers competitive products and rates, personal service, local area expertise, convenient locations and access, and an array of financial services and products. Competition for customer deposits remains high as customers continue to seek maximum earnings on their savings dollars.
Competitive pressures for deposits increased during 2023 as customers sought out the highest yield on their savings dollars and were willing to relocate funds to other institutions or brokerage firms. Union is utilizing a combination of higher rates on non-maturity deposits and time deposit specials to retain customer deposits and attract new customers in our new market areas.
Some relief on interest expense has occurred with the 100bp decline in short term interest rates initiated by the FOMC during 2024. Union is utilizing a combination of rates on non-maturity deposits to retain customer deposits and attract new customers in our new market areas.
Removed
Through Union's Wealth Management Group we compete for personal and institutional wealth management and trust business with trust companies, commercial banks having trust departments, investment advisory firms, brokerage firms, mutual funds and insurance companies. Regulation and Supervision General The following discussion addresses elements of the regulatory framework applicable to bank holding companies and their subsidiaries.
Removed
The final rule takes effect on April 1, 2024 with staggered compliance dates of January 1, 2026 and January 1, 2027. In February 2024, several trade groups filed a complaint in the U.S. District Court for the Northern District of Texas seeking to vacate the final rule.
Removed
It is not known at this time what the final outcome of that litigation will be or how it would impact our CRA requirements. Federal Reserve Board Policies.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

38 edited+9 added−4 removed139 unchanged
Biggest changeDeposits have traditionally been the Company’s primary source of funds for use in lending and investment activities and are emphasized due to the relatively lower cost of these funds. The Company also receives funds from loan repayments, investment maturities and income on other interest-earning assets, as well as borrowings.
Biggest changeThe Company must maintain sufficient funds to respond to the needs of depositors and borrowers and for other liquidity needs. Deposits have traditionally been the Company’s primary source of funds for use in lending and investment activities and are emphasized due to the relatively lower cost of these funds.
If these areas experience adverse economic, political or business conditions, or significant natural hazards, we would likely experience higher rates of loss and delinquency on our loan portfolio than if the portfolio were more geographically diverse. 13 If our allowance for credit losses is not sufficient to cover actual loan losses, our earnings could decrease.
If these areas experience adverse economic, 13 political or business conditions, or significant natural hazards, we would likely experience higher rates of loss and delinquency on our loan portfolio than if the portfolio were more geographically diverse. If our allowance for credit losses is not sufficient to cover actual loan losses, our earnings could decrease.
The speed at which such prepayments occur, as well as the size of such prepayments, are within our customers’ discretion. If customers prepay the principal amount of their loans, and we are unable to lend those funds to other borrowers or invest the funds at the same or 15 higher interest rates, our interest income will be reduced.
The speed at which such prepayments occur, as well as the size of such prepayments, are within our customers’ discretion. If customers prepay the 15 principal amount of their loans, and we are unable to lend those funds to other borrowers or invest the funds at the same or higher interest rates, our interest income will be reduced.
These types of threats may result 19 from human error, fraud or malice on the part of external or internal parties, or from accidental technological failure. Further, to access our products and services our customers may use computers and mobile devices that are beyond our security control systems.
These types of threats may result from human error, fraud or malice on the part of external or internal parties, or from accidental technological failure. Further, to access our products and services our customers may use computers and mobile devices that are beyond our security control 19 systems.
A security breach or other significant disruption could: (i) disrupt the proper functioning of our networks and systems and therefore our operations and/or those of certain of our customers; (ii) result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of confidential, sensitive or otherwise valuable information of ours or our customers, including account numbers and other financial information; (iii) result in a violation of applicable privacy, data breach and other laws, subjecting the Bank to additional regulatory scrutiny and exposing the Bank to civil litigation, governmental fines and possible financial liability; (iv) require significant management attention and resources to remedy the damages that result; or (v) harm our reputation or cause a decrease in the number of customers that choose to do business with us or reduce the level of business that our customers do with us.
A security breach or other significant disruption could: (i) disrupt the proper functioning of our networks and systems and therefore our operations and/or those of certain of our customers; (ii) result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of confidential, sensitive or otherwise valuable information of ours or our customers, including account numbers and other financial information; (iii) result in a violation of applicable privacy, data breach and other laws, subjecting the Bank to additional regulatory scrutiny and exposing the Company to civil litigation, governmental fines and possible financial liability; (iv) require significant management attention and resources to remedy the damages that result; or (v) harm our reputation or cause a decrease in the number of customers that choose to do business with us or reduce the level of business that our customers do with us.
These conditions include short-term and long-term interest rates, inflation, money supply, political issues, legislative and regulatory changes, fluctuations in both debt and equity capital markets, broad trends in industry and finance, unemployment and the condition of the U.S. economy and the local economies in which we operate, all of which are beyond our control.
These conditions include short-term and long-term interest rates, inflation, money supply, political issues, legislative and regulatory changes, fluctuations in both debt and equity capital markets, broad trends in industry and finance, unemployment and the condition of the U.S. economy and the local economies in which we operate, all of which are beyond 21 our control.
Additionally, we compete with banks and other financial institutions with larger capitalization, as well as financial intermediaries not subject to bank regulatory restrictions, which have larger lending limits and are able to serve the credit and investment needs of larger customers. There is also increased competition by out-of-market competitors through the Internet.
Additionally, we compete with banks and 20 other financial institutions with larger capitalization, as well as financial intermediaries not subject to bank regulatory restrictions, which have larger lending limits and are able to serve the credit and investment needs of larger customers. There is also increased competition by out-of-market competitors through the Internet.
In particular, we compete for loans, deposits and other financial products and services with local independent banks, thrift institutions, savings 20 institutions, mortgage brokerage firms, credit unions, finance companies, trust companies, mutual funds, insurance companies and brokerage and investment banking firms operating locally as well as nationally.
In particular, we compete for loans, deposits and other financial products and services with local independent banks, thrift institutions, savings institutions, mortgage brokerage firms, credit unions, finance companies, trust companies, mutual funds, insurance companies and brokerage and investment banking firms operating locally as well as nationally.
These communications may appear to be legitimate messages sent by the Bank or other businesses, but direct recipients to fake websites operated by the sender of the e-mail or request that the recipient send a password or other confidential information via e-mail or download a program.
These communications may appear to be legitimate messages sent by Union Bank or other businesses, but direct recipients to fake websites operated by the sender of the e-mail or request that the recipient send a password or other confidential information via e-mail or download a program.
Any of these factors, among others, could cause impairments and realized and/or unrealized losses in 14 future periods and declines in other comprehensive income, which could have an adverse effect on our business, financial condition and results of operations.
Any of these factors, among others, could cause impairments and realized and/or unrealized losses in future periods and declines in other comprehensive income, which could have an adverse effect on our business, financial condition and results of operations.
As a result, if future events differ significantly from management's judgments, assumptions and estimates in our critical accounting policies, those events or assumptions could have a material impact on our consolidated financial statements and related disclosures. 22
As a result, if future events differ significantly from management's judgments, assumptions and estimates in our critical accounting policies, those events or assumptions could have a material impact on our consolidated financial statements and related disclosures.
The combination of these provisions may inhibit a non-negotiated merger or other business combination, which, in turn, could adversely affect the market price of our common stock. 18 If we identify any material weakness in our internal control over financial reporting and fail to correct it, or otherwise fail to maintain effective internal control over financial reporting, we may not be able to report our financial results accurately and timely, in which case our business may be harmed, investors may lose confidence in the accuracy and completeness of our financial reports, and the price of our common stock may decline.
The combination of these provisions may inhibit a non-negotiated merger or other business combination, which, in turn, could adversely affect the market price of our common stock. 18 If we identify any material weakness in our internal controls over financial reporting and fail to correct it, or otherwise fail to maintain effective internal controls over financial reporting, we may not be able to report our financial results accurately and timely, in which case our business may be harmed, investors may lose confidence in the accuracy and completeness of our financial reports, and the price of our common stock may decline.
Factors beyond our control can significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of these securities.
Factors beyond our control can significantly influence the fair value of securities in our portfolio and can cause potential adverse 14 changes to the fair value of these securities.
We conduct an annual review, or more frequently if events or circumstances warrant such, to determine whether goodwill is impaired. We recently completed our goodwill impairment analysis as of December 31, 2023 and concluded goodwill was not impaired. We conduct a review of our other intangible assets for impairment should events or circumstances warrant.
We conduct an annual review, or more frequently if events or circumstances warrant such, to determine whether goodwill is impaired. We recently completed our goodwill impairment analysis as of December 31, 2024 and concluded goodwill was not impaired. We conduct a review of our other intangible assets for impairment should events or circumstances warrant.
A reduction or elimination of dividends could adversely affect the market price of our common stock. We may need to raise additional capital in the future and such capital may not be available when needed or on acceptable terms. As a bank holding company, we are required by regulatory authorities to maintain adequate levels of capital to support our operations.
A reduction or elimination of dividends could adversely affect the market price of our common stock. We may need to raise additional capital in the future and such capital may not be available when needed or on acceptable terms. As a bank holding company, we are required by the FRB to maintain adequate levels of capital to support our operations.
Our business performance and the trading price of our common stock may be affected by many factors affecting financial institutions, including volatility in the credit, mortgage and housing markets, the markets for securities relating to mortgages or housing, and the value of debt and mortgage-backed and other securities that we hold in our investment portfolio.
Our business performance and the trading price of our common stock may be affected by many factors affecting financial institutions, including the interest rate environment, volatility in the credit, mortgage and housing markets, the markets for securities relating to mortgages or housing, and the value of debt and mortgage-backed and other securities that we hold in our investment portfolio.
Our ability to compete successfully depends on a number of factors, including our ability to develop and execute strategic plans and initiatives; to develop competitive products and technologies; and to attract, retain and develop a highly skilled employee workforce.
Our ability to compete successfully depends on a number of factors, including our ability to develop and execute strategic plans and initiatives; to develop competitive products and utilize evolving technologies; and to attract, retain and develop a highly skilled employee workforce.
Adverse economic, political and business developments or natural hazards may affect these areas and the ability of property owners in these areas to make payments of principal and interest on the underlying mortgages.
Adverse economic, political and business developments or natural hazards may affect these areas and the ability of property owners in these areas to make payments of principal and interest on the underlying loans.
If we identify material weaknesses in our internal control over financial reporting in the future, if we cannot comply with the requirements of FDICIA in a timely manner or attest that our internal control over financial reporting is effective, or if our independent registered public accounting firm cannot express an opinion as to the effectiveness of our internal control over financial reporting when required, we may not be able to report our financial results accurately and timely.
If we identify material weaknesses in our internal controls over financial reporting in the future, if we cannot comply with the requirements of FDICIA in a timely manner or attest that our internal controls over financial reporting are effective, or if our independent registered public accounting firm cannot express an opinion as to the effectiveness of our internal controls over financial reporting when required, we may not be able to report our financial results accurately and timely.
Our right, and consequently the right of our shareholders, to participate in any distribution of the assets or earnings of any subsidiary through the payment of such dividends or otherwise is necessarily subject to the prior claims of creditors (including depositors, in the case of Union Bank), except to the extent that certain claims of Union in a creditor capacity may be recognized.
Our right, and consequently the right of our shareholders, to participate in any distribution of the assets or earnings of any subsidiary through the payment of such dividends or otherwise is necessarily subject to the prior claims of creditors including holders of our subordinated notes, and also including depositors, in the case of Union Bank, except to the extent that certain claims of Union in a creditor capacity may be recognized.
Expansion or contraction of the Company's branch network may adversely affect its financial results. The Company cannot assure that the opening of new branches will be accretive to earnings or that it will be accretive to earnings within a reasonable period of time.
Expansion or contraction of our branch network may adversely affect our financial results. The Company cannot assure that the opening of new branches will be accretive to earnings or that it will be accretive to earnings within a reasonable period of time.
At December 31, 2023, approximately 43% of our loan portfolio was comprised of commercial and commercial real estate loans. In general, commercial and commercial real estate loans have historically posed greater credit risks than owner occupied residential mortgage loans. The repayment of commercial real estate loans depends on the business and financial condition of borrowers.
At December 31, 2024, approximately 41% of our loan portfolio was comprised of commercial and commercial real estate loans. In general, commercial and commercial real estate loans have historically posed greater credit risks than owner occupied residential mortgage loans. The repayment of commercial real estate loans depends on the business and financial condition of borrowers.
Our critical accounting policies, which are described in Item 7 of this report captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, constitute those significant accounting policies and methods used in the preparation of our consolidated financial statements that we consider “critical” because they require judgments, assumptions and estimates that materially affect our consolidated financial statements and related disclosures.
Our critical accounting policies, which are described in Item 7 of this report under “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies”, constitute those significant accounting policies and methods used in the preparation of our consolidated financial statements that we consider “critical” because they require judgments, assumptions and estimates that materially affect our consolidated financial statements and related disclosures.
In addition, we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, the FRB, the FDIC, or other regulatory authorities, which could require additional financial and management resources. These events could have an adverse effect on our business, financial condition and results of operations.
In addition, we could become subject to investigations by the NASDAQ stock exchange, on which our common stock is listed, the SEC, the FRB, the FDIC, or other regulatory authorities, which could require additional financial and management resources. These events could have an adverse effect on our business, financial condition and results of operations.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for evaluating and reporting on our system of internal control. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
Our management is responsible for establishing and maintaining adequate internal controls over financial reporting and for evaluating and reporting on our system of internal controls. Our internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
Changes in monetary or legislative policies may affect the interest rates we must offer to attract deposits and the interest rates we must charge on our loans, as well as the manner in which we offer deposits and make loans.
Changes in monetary or legislative policies may affect the interest rates we offer to attract deposits and the interest rates we charge on our loans in order to remain competitive, as well as the manner in which we offer deposits and make loans.
The fair value of our investment securities can fluctuate due to factors outside of our control, and impairment of investment securities could require charges to earnings, which could result in a negative impact on our results of operations. As of December 31, 2023, the carrying value of our investment securities portfolio was approximately $264.4 million.
The fair value of our investment securities can fluctuate due to factors outside of our control, and impairment of investment securities could require charges to earnings, which could result in a negative impact on our results of operations. As of December 31, 2024, the carrying value of our investment securities portfolio was approximately $250.5 million.
At December 31, 2023, there was no remaining unamortized identifiable intangible asset and our goodwill was approximately $2.2 million. Under current accounting standards, if we determine that goodwill or intangible assets are impaired, we would be required to write down the value of these assets to fair value.
At December 31, 2024, there was no remaining unamortized identifiable intangible asset and our goodwill from the 2011 Branch Acquisition was 22 approximately $2.2 million. Under current accounting standards, if we determine that goodwill or intangible assets are impaired, we would be required to write down the value of these assets to fair value.
Our inability to raise sufficient additional capital on acceptable terms when needed could subject us to certain activity restrictions or to a variety of enforcement remedies available to the regulatory authorities, including limitations on our ability to pay dividends or pursue acquisitions, the issuance by regulatory authorities of a capital directive to increase capital and the termination of deposit insurance by the FDIC.
Our inability to raise sufficient additional capital on acceptable terms when needed could subject us to certain activity restrictions or to a variety of enforcement remedies available to the FRB, including limitations on our ability to pay dividends or pursue acquisitions, the issuance by the FRB of a capital directive to increase capital and to the extent the capital of Union Bank is adversely affected, the termination of deposit insurance by the FDIC.
Difficulties Union experiences in opening new branches may have a material adverse effect on the Company's financial condition and results of operations. Additionally, the Company cannot assure that the closing of branches would not adversely affect earnings.
Difficulties we experience in opening new branches may have a material adverse effect on the our financial condition and results of operations. Additionally, we cannot assure that the closing of branches would not adversely affect earnings.
A lack of liquidity could also attract increased regulatory scrutiny and potential restraints imposed by regulators.
A lack of liquidity could also attract increased regulatory scrutiny and potentially result in restraints imposed by regulators.
Any impairment that has not been recorded through an ACL is recognized in other comprehensive income (loss), net of applicable taxes. A lack of liquidity could adversely affect the Company’s financial condition and results of operations and result in regulatory restrictions. The Company must maintain sufficient funds to respond to the needs of depositors and borrowers.
Any impairment that has not been recorded through an ACL is recognized in other comprehensive income (loss), net of applicable taxes. A lack of liquidity could adversely affect the Company’s financial condition and results of operations and result in regulatory restrictions.
We may incur fines, penalties and other negative consequences from regulatory violations, possibly even inadvertent or unintentional violations. We maintain systems and procedures designed to ensure that we comply with applicable laws and regulations.
We may incur fines, penalties and other negative consequences from regulatory violations, possibly even inadvertent or unintentional violations. As a financial institution, we are subject to a complex system of laws, regulations and regulatory guidance. We maintain systems and procedures designed to ensure that we comply with applicable laws, regulations and regulatory guidance.
Increased ESG related compliance costs could result in increases to our overall operational costs. Operational Risks A failure in or breach of our operational systems, information systems, or infrastructure, or those of our third party vendors and other service providers, may result in financial losses, loss of customers, or damage to our reputation.
Operational Risks A failure in or breach of our operational systems, information systems, or infrastructure, or those of our third party vendors and other service providers, may result in financial losses, loss of customers, or damage to our reputation. We rely heavily on communications and information systems to conduct our business.
These shifts in investing priorities may result in adverse effects on the trading price of the Company's common stock if investors determine, whether real or perceived, that the Company's ESG actions are not satisfactory. In addition, new government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure.
These shifts in investing priorities may result in adverse effects on the trading price of the Company's common stock if investors determine, whether real or perceived, that the Company's ESG actions are not satisfactory.
In addition, we may incur significant training, licensing, maintenance, consulting and amortization expenses during and after systems implementations, and any such costs may continue for an extended period of time. Economic Risks Inflationary pressures and rising prices may affect our results of operations and financial condition. Inflation continued at elevated levels in 2023.
In addition, we may incur significant training, licensing, maintenance, consulting and amortization expenses during and after systems implementations, and any such costs may continue for an extended period of time. Economic Risks External economic factors, such as changes in monetary policy and inflation and deflation, may have an adverse effect on our business, financial condition and results of operations.
Deterioration or continued weakness in any of these factors could result in increases in loan delinquencies and 21 nonperforming assets, decreases in loan collateral values, the value of our investment portfolio and demand for our products and services. General Risks We may be unable to attract and retain key personnel.
Deterioration or continued weakness in any of these factors could result in increases in loan delinquencies and nonperforming assets, and in decreases in loan collateral values, the value of our investment portfolio and the demand for our products and services. Our business and financial results could be adversely affected by the political environment and governmental policies.
These types of information and related systems are critical to the operation of our business and essential to our ability to perform day-to-day operations, and, in some cases, are critical to the operations of certain of our customers.
In addition, we rely on third parties to provide key components of our infrastructure, including internet connections, network access and processing services. These types of information and related systems are critical to the operation of our business and essential to our ability to perform day-to-day operations, and, in some cases, are critical to the operations of certain of our customers.
Removed
Furthermore, while the Federal Reserve Board temporarily made funding available to eligible depository institutions, including Union, secured by U.S. treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral at par, to mitigate the risk of potential losses on the sale of such instruments, that Bank Term Funding Program terminated on March 11, 2024 and there is no guarantee that similar liquidity facilities will be available in the future or effective in addressing liquidity needs as they arise.
Added
The Company also receives funds from loan repayments, investment maturities and income on other interest-earning assets, as well as borrowings.
Removed
We rely heavily on communications and information systems to conduct our business. In addition, we rely on third parties to provide key components of our infrastructure, including internet connections, network access and processing services.
Added
Our financial condition and results of operations are affected by credit policies of monetary authorities, particularly the Federal Reserve. Actions by monetary and fiscal authorities, including the Federal Reserve, could lead to inflation, deflation or other economic phenomena that could adversely affect our financial performance.
Removed
Inflationary pressures, including the impact of recent increases in inflation, may remain elevated in 2024. Small to medium-sized businesses may be impacted more during periods of high inflation as they are not able to leverage economies of scale to mitigate cost pressures compared to larger businesses.
Added
The primary impact of inflation on our operations most likely will be reflected in increased operating costs. Conversely, deflation generally will tend to erode collateral values and diminish loan quality. Virtually all of our assets and liabilities are monetary in nature.
Removed
Consequently, the ability of our business customers to repay their loans may deteriorate, and in some cases this deterioration may occur quickly, which would adversely impact our results of operations and financial condition. Furthermore, a prolonged period of inflation could cause wages and other costs to increase, which could adversely affect our results of operations and financial condition.
Added
As a result, interest rates have a more significant impact on our performance than general levels of inflation or deflation. Inevitably, not all of our interest rate-sensitive assets and liabilities will re-price simultaneously and in equal volume in response to changes in the federal funds rate, and therefore the potential for interest rate exposure exists.
Added
Our business and financial results may also be affected by changes in government policies following the 2024 U.S. election and the new administration. There remains significant market uncertainty as to how the current U.S. administration's corresponding policy changes could impact us or our customers.
Added
For example, the current U.S. administration has adopted and may consider trade policies and tariffs, other controls on imports or exports, and other foreign policy initiatives that could affect our business and supply chains.
Added
The U.S. federal government, U.S. states and certain other countries and regions have adopted or are considering legislation, regulation or policies that reflect diverse, diverging and, in some cases, potentially conflicting policy goals.
Added
Compliance with such laws, regulations or policies, including any that may be adopted in the future, could, among other things, increase the costs of operating our business, reduce the demand for our products and services, impact our ability to meet or maintain current or future goals or targets or continue initiatives and increase our legal, operational and reputational risks, any or all of which could materially adversely affect our results of operations.
Added
Failure, or perceived failure, to comply with any legislation, regulation or policy, including as a result of making good faith interpretations that may differ from those taken by enforcement authorities in relevant jurisdictions, could potentially result in substantial fines, criminal sanctions, reputational harm or operational changes. General Risks We may be unable to attract and retain key personnel.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeTo date, such cybersecurity risks have not materially affected us. We do, from time to time, experience threats to our data and systems that have been halted by the policies and systems in place. For more information about the cybersecurity risks we face, see Operational Risks in Part I, Item 1A of this Annual Report.
Biggest changeTo date, such cybersecurity risks have not materially affected us. We do, from time to time, experience threats to our data and systems that have been halted by the policies and systems in place. For more information about the cybersecurity risks we face, see "Risk Factors - Operational Risks" in Part I, Item 1A of this Annual Report.
Additional trainings are required for employees in certain roles; these additional trainings are tailored to the employees’ specific duties. 23 We regularly review and update our investments in information technology security to identify and protect critical assets, provide monitoring and alerts, and, as needed, engage third-party experts.
Additional trainings are required for employees in certain roles; these additional trainings are tailored to the employees’ specific duties. We regularly review and update our investments in information technology security to identify and protect critical assets, provide monitoring and alerts, and, as needed, engage third-party experts.
Cybersecurity Risk Management Program The program is designed to identify, assess, manage, mitigate, and respond to cyber threats with the goal of preventing cybersecurity incidents to the extent feasible, while also increasing our system resilience to minimize business disruption in the event we experience a cyber event.
Cybersecurity Risk Management Program The program is designed to identify, assess, manage, mitigate, and respond to cyber threats with the goal of preventing cybersecurity incidents to the extent feasible, while also increasing our system resilience to minimize business disruption in the 23 event we experience a cyber event.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn addition as of such date, Union owns, free of encumbrances, 16 of its branch locations and its headquarters and operated several ATMs in northern Vermont and New Hampshire.
Biggest changeIn addition, Union owns a property located in Johnson, VT that was previously a branch location. This property was damaged due to flooding in 2024 and was not re-opened. Union owns, free of encumbrances, 16 of its branch locations and its headquarters and operates several ATMs in northern Vermont and New Hampshire.
Additional information relating to the Company's properties as of December 31, 2023, is set forth in Notes 8 and 9 to the Company's audited consolidated financial statements contained in Part II, Item 8 of this Annual Report.
Additional information relating to the Company's properties as of December 31, 2024, is set forth in Notes 8 and 9 to the Company's audited consolidated financial statements contained in Part II, Item 8 of this Annual Report. 24
Item 2. Properties As of December 31, 2023, Union operated 14 community banking locations in Lamoille, Caledonia, Chittenden, Franklin and Washington counties of Vermont and five in Grafton and Coos counties of New Hampshire. Union also operates three loan centers in St. Johnsbury and Williston, Vermont and Plymouth, New Hampshire.
Item 2. Properties As of December 31, 2024, Union operated 13 community banking locations in Lamoille, Caledonia, Chittenden, Franklin and Washington counties of Vermont and five in Grafton and Coos counties of New Hampshire. Union also operates three loan centers in St. Johnsbury and Williston, Vermont and Plymouth, New Hampshire.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+1 added−2 removed1 unchanged
Biggest changePeriod Ended Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Union Bankshares, Inc. 100.00 78.48 58.70 71.06 60.09 81.30 NASDAQ Composite Index 100.00 136.69 198.10 242.03 163.28 236.17 S&P U.S.
Biggest changePeriod Ended Index 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Union Bankshares, Inc. 100.00 74.80 90.55 76.56 103.59 102.90 NASDAQ Composite Index 100.00 144.92 177.06 119.45 172.77 223.87 S&P U.S.
Securities Authorized for Issuance Under Equity Compensation Plans Information regarding equity securities authorized for issuance under the Company's equity compensation plan is included in Part III, Item 12 of this Annual Report under the caption “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters”, and is incorporated herein by reference. 25 Five Year Performance Graph The following graph illustrates the annual percentage change in the cumulative total shareholder return of the Company's common stock for the period December 31, 2018 through December 31, 2023.
Securities Authorized for Issuance Under Equity Compensation Plans Information regarding equity securities authorized for issuance under the Company's equity compensation plan is included in Part III, Item 12 of this Annual Report under the caption “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters”, and is incorporated herein by reference. 25 Five Year Performance Graph The following graph illustrates the annual percentage change in the cumulative total shareholder return of the Company's common stock for the period December 31, 2018 through December 31, 2024.
For purposes of comparison, the graph illustrates comparable shareholder returns of the S&P U.S. SmallCap Banks Index and the NASDAQ Composite Index. The graph assumes a $100 investment on December 31, 2018 in each case and measures the amount by which the market value, assuming reinvestment of dividends, has changed during the five year period ended December 31, 2023.
For purposes of comparison, the graph illustrates comparable shareholder returns of the S&P U.S. SmallCap Banks Index and the NASDAQ Composite Index. The graph assumes a $100 investment on December 31, 2018 in each case and measures the amount by which the market value, assuming reinvestment of dividends, has changed during the five year period ended December 31, 2024.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Trading Market for Common Stock The common stock of the Company is traded on the NASDAQ Global Select Market under the trading symbol "UNB." On February 28, 2024, there were 4,519,384 shares of common stock outstanding held by 492 stockholders of record.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Trading Market for Common Stock The common stock of the Company is traded on the NASDAQ Global Market under the trading symbol "UNB." On February 28, 2025, there were 4,538,596 shares of common stock outstanding held by 476 stockholders of record.
SmallCap Banks Index 100.00 125.46 113.94 158.62 139.85 140.55 The performance graph and related information furnished under Part II, Item 5 of this Annual Report on Form 10-K shall not be deemed to be “soliciting material” or “filed” with the SEC, nor subject to Exchange Act Regulations 14A or 14C, other than as provided in Item 201 of Regulation S-K, or to the liabilities of Section 18 of the Exchange Act.
SmallCap Banks Index 100.00 90.82 126.43 111.47 112.03 132.44 The performance graph and related information furnished under Part II, Item 5 of this Annual Report on Form 10-K shall not be deemed to be “soliciting material” or “filed” with the SEC, nor subject to Exchange Act Regulations 14A or 14C, other than as provided in Item 201 of Regulation S-K, or to the liabilities of Section 18 of the Exchange Act.
The number of stockholders does not reflect the number of beneficial owners, including persons or entities who may hold the stock in nominee or “street name.” 24 Repurchases of Common Stock The following table summarizes repurchases of the Company's equity securities during the quarter ended December 31, 2023.
The number of stockholders does not reflect the number of beneficial owners, including persons or entities who may hold the stock in nominee or “street name.” Repurchases of Common Stock The Company did not issue any unregistered shares during the quarter ended December 31, 2024.
Removed
Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number of Shares that May Yet be Purchased Under the Plans or Program (1) October 2023 700 $21.51 700 1,800 November 2023 — — — 1,800 December 2023 — — — — __________________ (1) All repurchases were made pursuant to a discretionary stock repurchase program under which the Company may repurchase up to 2,500 shares of its common stock each calendar quarter, in open market or privately negotiated transactions, in management's discretion.
Added
There were no repurchases of the Company's equity securities during the quarter ended December 31, 2024.
Removed
The repurchase authorization for a calendar quarter expires at the end of that quarter to the extent it has not been exercised, and is not carried forward into future quarters. The program was initially authorized in 2010 and was reauthorized most recently in December 2023. The program will expire on December 31, 2024, unless reauthorized by the Board of Directors.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

152 edited+27 added−26 removed79 unchanged
Biggest changeDespite a decrease of $36.8 million in the average balance of savings/money market accounts, interest expense increased $2.4 million between the twelve month comparison periods due to an increase of 63 bps in the average rate paid on those accounts. 31 The following table shows for the periods indicated the total amount of tax equivalent interest income from average interest earning assets, the related average tax equivalent yields, the tax equivalent interest expense associated with average interest bearing liabilities, the related tax equivalent average rates paid, and the resulting tax equivalent net interest spread and margin: Years Ended December 31, 2023 2022 Average Balance (1) Interest Earned/ Paid Average Yield/ Rate Average Balance (1) Interest Earned/ Paid Average Yield/ Rate (Dollars in thousands) Average Assets: Federal funds sold and overnight deposits $ 18,131 $ 630 3.43 % $ 32,707 $ 245 0.74 % Interest bearing deposits in banks 15,527 401 2.59 % 14,105 187 1.33 % Investment securities (2), (3) 311,649 6,533 2.22 % 292,555 5,130 1.82 % Loans, net (2), (4) 993,959 49,283 5.00 % 875,528 38,358 4.42 % Nonmarketable equity securities 3,808 263 6.92 % 1,324 28 2.11 % Total interest earning assets (2) 1,343,074 57,110 4.31 % 1,216,219 43,948 3.65 % Cash and due from banks 4,627 4,573 Premises and equipment 20,380 21,073 Other assets 9,300 20,352 Total assets $ 1,377,381 $ 1,262,217 Average Liabilities and Stockholders' Equity: Interest bearing checking accounts $ 319,824 $ 3,270 1.02 % $ 292,850 $ 919 0.31 % Savings/money market accounts 397,678 3,971 1.00 % 434,492 1,588 0.37 % Time deposits 254,499 8,652 3.40 % 119,081 1,015 0.85 % Borrowed funds and other liabilities 72,946 2,804 3.79 % 11,050 433 3.86 % Subordinated notes 16,222 570 3.51 % 16,188 569 3.51 % Total interest bearing liabilities 1,061,169 19,267 1.81 % 873,661 4,524 0.52 % Noninterest bearing deposits 243,655 311,444 Other liabilities 16,299 12,930 Total liabilities 1,321,123 1,198,035 Stockholders' equity 56,258 64,182 Total liabilities and stockholders’ equity $ 1,377,381 $ 1,262,217 Net interest income $ 37,843 $ 39,424 Net interest spread (2) 2.50 % 3.13 % Net interest margin (2) 2.88 % 3.28 % ____________________ (1) Average balances are calculated based on a daily averaging method.
Biggest changeThe average volume of borrowed funds increased $125.8 million and the average rate paid on borrowed funds increased 39 bps between the twelve month comparison periods, resulting in a $5.6 million increase in interest expense. 31 The following table shows for the periods indicated the total amount of tax equivalent interest income from average interest earning assets, the related average tax equivalent yields, the tax equivalent interest expense associated with average interest bearing liabilities, the related tax equivalent average rates paid, and the resulting tax equivalent net interest spread and margin: Years Ended December 31, 2024 2023 Average Balance (1) Interest Earned/ Paid Average Yield/ Rate Average Balance (1) Interest Earned/ Paid Average Yield/ Rate (Dollars in thousands) Average Assets: Federal funds sold and overnight deposits $ 26,576 $ 1,132 4.19 % $ 18,131 $ 630 3.43 % Interest bearing deposits in banks 13,242 480 3.63 % 15,527 401 2.59 % Investment securities (2), (3) 294,669 6,488 2.27 % 311,649 6,533 2.22 % Loans, net (2), (4) 1,077,543 59,313 5.57 % 993,959 49,283 5.00 % Nonmarketable equity securities 8,207 541 6.58 % 3,808 263 6.92 % Total interest earning assets (2) 1,420,237 67,954 4.85 % 1,343,074 57,110 4.31 % Cash and due from banks 4,560 4,627 Premises and equipment 20,657 20,380 Other assets 19,972 9,300 Total assets $ 1,465,426 $ 1,377,381 Average Liabilities and Stockholders' Equity: Interest bearing checking accounts $ 295,088 $ 3,605 1.22 % $ 319,824 $ 3,270 1.02 % Savings/money market accounts 367,620 5,418 1.47 % 397,678 3,971 1.00 % Time deposits 279,180 11,551 4.14 % 254,499 8,652 3.40 % Borrowed funds and other liabilities 198,745 8,446 4.18 % 72,946 2,804 3.79 % Subordinated notes 16,255 570 3.51 % 16,222 570 3.51 % Total interest bearing liabilities 1,156,888 29,590 2.55 % 1,061,169 19,267 1.81 % Noninterest bearing deposits 226,388 243,655 Other liabilities 16,688 16,299 Total liabilities 1,399,964 1,321,123 Stockholders' equity 65,462 56,258 Total liabilities and stockholders’ equity $ 1,465,426 $ 1,377,381 Net interest income $ 38,364 $ 37,843 Net interest spread (2) 2.30 % 2.50 % Net interest margin (2) 2.77 % 2.88 % ____________________ (1) Average balances are calculated based on a daily averaging method.
While still on a performing status, in accordance with the Company's credit policy, loans are internally classified when a review indicates the existence of any of the following conditions, making the likelihood of collection questionable: • the financial condition of the borrower is unsatisfactory; • repayment terms have not been met; • the borrower has sustained losses that are sizable, either in absolute terms or relative to net worth; • confidence in the borrower's ability to repay is diminished; 40 • loan covenants have been violated; • collateral is inadequate; or • other unfavorable factors are present.
While still on a performing status, in accordance with the Company's credit policy, loans are internally classified when a review indicates the existence of any of the following conditions, making the likelihood of collection questionable: • the financial condition of the borrower is unsatisfactory; • repayment terms have not been met; • the borrower has sustained losses that are sizable, either in absolute terms or relative to net worth; • confidence in the borrower's ability to repay is diminished; • loan covenants have been violated; • collateral is inadequate; or • other unfavorable factors are present.
Contractual principal repayments on loans are a relatively predictable source of funds; however, deposit flows and loan and investment prepayments are less predictable and can be significantly 45 influenced by market interest rates, economic conditions, and rates offered by our competitors. Managing liquidity risk is essential to maintaining both depositor confidence and earnings stability.
Contractual principal repayments on loans are a relatively predictable source of funds; however, deposit flows and loan and investment prepayments are less predictable and can be significantly influenced by market interest rates, economic conditions, and rates offered by our competitors. Managing liquidity risk is essential to maintaining both depositor confidence and earnings stability.
For interest rate caps and floors written on adjustable-rate loans, the contractual or notional amounts do not represent the Company’s exposure to credit loss. The Company controls the risk of interest rate cap agreements through 44 credit approvals, limits and monitoring procedures. The Company generally requires collateral or other security to support financial instruments with credit risk.
For interest rate caps and floors written on adjustable-rate loans, the contractual or notional amounts do not represent the Company’s exposure to credit loss. The Company controls the risk of interest rate cap agreements through credit approvals, limits and monitoring procedures. The Company generally requires collateral or other security to support financial instruments with credit risk.
The Company also monitors its delinquency levels for any adverse trends. Management closely monitors the Company’s loan and investment portfolios, OREO and OAO for potential problems and reports to the Boards of the Company and Union at regularly scheduled meetings.
The Company also monitors its delinquency levels for any adverse trends. Management closely monitors the Company’s loan and investment portfolios, OREO and OAO; if any, for potential problems and reports to the Boards of the Company and Union at regularly scheduled meetings.
The Company's loan review program encompasses a review process for loan documentation and underwriting for select loans as well as a monitoring process for credit extensions to assess the credit quality and degree of risk in the loan portfolio.
The Company's loan review program encompasses a review process for loan documentation and 38 underwriting for select loans as well as a monitoring process for credit extensions to assess the credit quality and degree of risk in the loan portfolio.
Higher rates paid on customer deposit accounts and utilization of higher cost funding of brokered deposits and advances from the FHLB were drivers of the increase in interest expense.
Higher rates paid on customer deposit accounts and utilization of higher cost funding of brokered deposits and advances from the FHLB and the FRB were drivers of the increase in interest expense.
At December 31, 2023 and 2022, Union was categorized as well capitalized under the Prompt Corrective Action regulatory framework and the Company exceeded applicable minimum capital adequacy requirements. There were no conditions or events between December 31, 2023 and the date of this report that management believes have changed either the Company’s or Union's regulatory capital category.
At December 31, 2024 and 2023, Union was categorized as well capitalized under the Prompt Corrective Action regulatory framework and the Company exceeded applicable minimum capital adequacy requirements. There were no conditions or events between December 31, 2024 and the date of this report that management believes have changed either the Company’s or Union's regulatory capital category.
This line of credit can be used for either short-term or long-term liquidity or other funding needs. Union also maintains an IDEAL Way Line of Credit with the FHLB. The total line available was $551 thousand at December 31, 2023. There were no borrowings against this line of credit as of such date.
This line of credit can be used for either short-term or long-term liquidity or other funding needs. Union also maintains an IDEAL Way Line of Credit with the FHLB. The total line available was $551 thousand at December 31, 2024. There were no borrowings against this line of credit as of such date.
However, there can be no assurance that the Company will not sustain losses in future periods which could be greater than the size of the ACL on loans at December 31, 2023. In addition, our banking regulators, as an integral part of their examination process, periodically review our ACL.
However, there can be no assurance that the Company will not sustain losses in future periods which could be greater than the size of the ACL on loans at December 31, 2024. In addition, our banking regulators, as an integral part of their examination process, periodically review our ACL.
Although the FHLB was in compliance with all regulatory capital ratios as of December 31, 2023 and 2022, there is the possibility of future capital calls by the FHLB on member banks to ensure compliance with its capital plan. Union's investment in FHLB stock is carried at cost in Other assets on the consolidated balance sheets.
Although the FHLB was in compliance with all regulatory capital ratios as of December 31, 2024 and 2023, there is the possibility of future capital calls by the FHLB on member banks to ensure compliance with its capital plan. Union's investment in FHLB stock is carried at cost in Other assets on the consolidated balance sheets.
Holding costs and declines in fair value of properties acquired are expensed as incurred. Declines in the fair value after acquisition of the property result in charges against income before tax. The Company evaluates each OREO property at least quarterly for changes in the fair value. The Company had no properties classified as OREO at December 31, 2023 or 2022.
Holding costs and declines in fair value of properties acquired are expensed as incurred. Declines in the fair value after acquisition of the property result in charges against income before tax. The Company evaluates each OREO property at least quarterly for changes in the fair value. The Company had no properties classified as OREO at December 31, 2024 or 2023.
CERTAIN DEFINITIONS Capitalized terms used in the following discussion and not otherwise defined below have the meanings assigned to them in Note 1 to the Company's audited consolidated financial statements contained in Part II, item 8, page 55 of this Annual Report.
CERTAIN DEFINITIONS Capitalized terms used in the following discussion and not otherwise defined below have the meanings assigned to them in Note 1 to the Company's audited consolidated financial statements contained in Part II, item 8, page 54 of this Annual Report.
The unrealized losses are primarily attributable to changes in long-term interest rates which are tied to the pricing indexes for the securities. No declines in value were deemed by management to be impairment related to credit losses at December 31, 2023.
The unrealized losses are primarily attributable to changes in long-term interest rates which are tied to the pricing indexes for the securities. No declines in value were deemed by management to be impairment related to credit losses at December 31, 2024 and 2023.
Similar to evaluating investment securities for potential credit losses, the Company periodically evaluates its investment in the FHLB. Management's most recent evaluation of the Company's holdings of FHLB common stock concluded that the investment was not impaired at December 31, 2023. Deposits.
Similar to evaluating investment securities for potential credit losses, the Company periodically evaluates its investment in the FHLB. Management's most recent evaluation of the Company's holdings of FHLB common stock concluded that the investment was not impaired at December 31, 2024. Deposits.
We continue to manage the net interest margin and spread, by remaining disciplined on loan and deposit pricing, utilizing brokered and retail CDs when appropriate to reduce our exposure to high short-term interest rates, and maximizing our balance sheet collateral (i.e. loans and investment securities) to obtain wholesale funding in a cost effective way to fund loan growth.
We continue to manage the net interest margin and spread by remaining disciplined on loan and deposit pricing, utilizing FHLB advances and brokered CDs when appropriate to reduce our exposure to high short-term interest rates, and maximizing our balance sheet collateral (i.e. loans and investment securities) to obtain wholesale funding in a cost effective way to fund loan growth.
Union is required to invest in $100 par value stock of the FHLB in an amount tied to the unpaid principal balances on qualifying loans, plus an amount to satisfy an activity based requirement. The stock is nonmarketable, and is redeemable by the FHLB at par value.
Union is a member of the FHLB and is required to invest in $100 par value stock of the FHLB in an amount tied to the unpaid principal balances on qualifying loans, plus an amount to satisfy an activity based requirement. The stock is nonmarketable, and is redeemable by the FHLB at par value.
There was $2.6 million and $3.2 million guaranteed under these various programs at December 31, 2023 and 2022, respectively, on aggregate balances of $3.4 million and $4.2 million in subject loans for the same time periods. The Company occasionally sells the guaranteed portion of a loan to other financial concerns and retains servicing rights, which generates fee income.
There was $2.0 million and $2.6 million guaranteed under these various programs at December 31, 2024 and 2023, respectively, on aggregate balances of $2.6 million and $3.4 million in subject loans for the same time periods, respectively. The Company occasionally sells the guaranteed portion of a loan to other financial concerns and retains servicing rights, which generates fee income.
("the Company," "our," "we," "us") and its subsidiary, Union Bank ("Union"), as of December 31, 2023 and 2022, and its consolidated results of operations for the years then ended. The Company is considered a "smaller reporting company" under the disclosure rules of the SEC.
("the Company," "our," "we," "us") and its subsidiary, Union Bank ("Union"), as of December 31, 2024 and 2023, and its consolidated results of operations for the years then ended. The Company is considered a "smaller reporting company" under the disclosure rules of the SEC.
Management believes, in its best estimate, that the ACL on loans at December 31, 2023 is appropriate to cover expected credit losses over the expected life of the Company’s loan portfolio as of such date.
Management believes, in its best estimate, that the ACL on loans at December 31, 2024 is appropriate to cover expected credit losses over the expected life of the Company’s loan portfolio as of such date.
The Company's Board has set forth well-defined lending policies (which are periodically reviewed and revised as appropriate) that include conservative individual lending limits for officers, aggregate and advisory board approval levels, Board approval for large credit relationships, a quality control program, a loan review program and other limits or standards deemed necessary and prudent.
The Company's Board has set forth well-defined lending policies (which are periodically reviewed and revised as appropriate) that include conservative individual lending limits for officers, aggregate and Executive Loan Committee approval levels, Board approval for large credit relationships, a quality control program, a loan review program and other limits or standards deemed necessary and prudent.
Low income housing tax credits with respect to limited partnership investments are also included as a component of income tax expense and amounted to $1.4 million and $1.1 million for the years ended December 31, 2023 and 2022, respectively. See Note 10 to the Company's consolidated financial statements.
Low income housing tax credits with respect to limited partnership investments are also included as a component of income tax expense and amounted to $1.8 million and $1.4 million for the years ended December 31, 2024 and 2023, respectively. See Note 10 to the Company's consolidated financial statements.
At December 31, 2023, there were $103.0 million of retail brokered deposits at a weighted average rate of 5.07% issued under a master certificate of deposit program with a deposit broker for terms of six, nine, and twelve months, which provide a 43 supplemental source of funding and liquidity.
At December 31, 2023, there were $103.0 million of retail brokered deposits at a weighted average rate of 5.07% issued under a master certificate of deposit program with a deposit broker for terms of six, nine and twelve months, which provided a supplemental source of funding and liquidity.
Wealth management income increased as managed fiduciary accounts grew between December 31, 2022 and 2023, as did the value of assets within those accounts. • Service fees.
Wealth management income increased as managed fiduciary accounts grew between December 31, 2023 and 2024, as did the value of assets within those accounts. • Service fees.
As of December 31, 2023, the notional amount of the maximum contingent contractual liability related to this program was $763 thousand, of which $19 thousand was recorded as a reserve through Other liabilities. Since inception of the Company's MPF participation in 2015, the Company has not experienced any losses under this program.
As of December 31, 2024, the notional amount of the maximum contingent contractual liability related to this program was $884 thousand, of which $19 thousand was recorded as a reserve through Other liabilities. Since inception of the Company's MPF participation in 2015, the Company has not experienced any losses under this program.
The sharp increases in short-term rates have had a significant impact on the Company's funding costs due to higher rates paid on deposit accounts and increased utilization of wholesale funding at higher costs.
The sharp increases in short-term rates during 2022 and 2023 have had a significant impact on the Company's funding costs due to higher rates paid on deposit accounts and increased utilization of wholesale funding at higher costs.
Management is not aware of the occurrence of any events after December 31, 2023 which would materially affect the information presented.
Management is not aware of the occurrence of any events after December 31, 2024 which would materially affect the information presented.
Commitments generally have a fixed expiration date or other termination clause and may require payment of a fee. The unused lines of credit total includes $13.7 million of lines available under the overdraft privilege program and is included in the 2024 funding period.
Commitments generally have a fixed expiration date or other termination clause and may require payment of a fee. The unused lines of credit total includes $13.8 million of lines available under the overdraft privilege program and is included in the 2025 funding period.
These funding sources generally have a higher cost than deposits originating within the markets we serve and are not our preferred sources of funding. The cost of funds, which is primarily tied to rates paid on customer deposits, increased 129 bps during 2023.
These funding sources generally have a higher cost than deposits originating within the markets we serve and are not our preferred sources of funding. The cost of funds, which is primarily tied to rates paid on customer deposits, increased 74 bps during 2024.
There were no commercial real estate 37 or commercial loans sold during 2023 or 2022. The Company recognizes gains and losses on the sale of the principal portion of these loans at the time of sale.
There were no commercial real estate or commercial loans sold during 2024 or 2023. The Company recognizes gains and losses on the sale of the principal portion of these loans at the time of sale.
The Vermont unemployment rate was reported at 2.2% for December 2023 compared to 2.6% for December 2022 and the New Hampshire unemployment rate was 2.5% for December 2023 compared to 2.7% for December 2022. These rates compare favorably with the nationwide unemployment rate of 3.7% and 3.5%, respectively, for the comparable periods.
The Vermont unemployment rate was reported at 2.4% for December 2024 compared to 2.2% for December 2023 and the New Hampshire unemployment rate was 2.6% for December 2024 compared to 2.5% for December 2023. These rates compare favorably with the nationwide unemployment rate of 4.1% and 3.7%, respectively, for the comparable periods.
There were $11.7 million of time deposits of $250,000 or less on the balance sheets at December 31, 2023 and $12.3 million at December 31, 2022, which were exchanged with other CDARS participants.
There were $13.3 million of time deposits of $250,000 or less on the balance sheets at December 31, 2024 and $11.7 million at December 31, 2023, which were exchanged with other CDARS participants.
Approximately $37.6 million of the unused lines of credit relate to real estate construction loans that are expected to fund within the next twelve months. The remaining lines primarily relate to revolving lines of credit for other real estate or commercial loans.
Approximately $45.2 million of the unused lines of credit relate to real estate construction loans that are expected to fund within the next twelve months. The remaining lines primarily relate to revolving lines of credit for other real estate or commercial loans.
Loans held for sale are accounted for at the lower of cost or fair value and are reviewed by management at least quarterly based on current market pricing. The Company sold $75.6 million of qualified residential real estate loans originated during 2023 to the secondary market compared to sales of $78.0 million during 2022.
Loans held for sale are accounted for at the lower of cost or fair value and are reviewed by management at least quarterly based on current market pricing. The Company sold $113.5 million of qualified residential real estate loans originated during 2024 to the secondary market compared to sales of $75.6 million during 2023.
(4) Includes loans held for sale as well as nonaccrual loans, unamortized costs and unamortized premiums and is net of the ACL on loans. 32 Tax exempt interest income amounted to $4.3 million and $2.3 million for the years ended December 31, 2023 and 2022, respectively.
(4) Includes loans held for sale as well as nonaccrual loans, unamortized costs and unamortized premiums and is net of the ACL on loans. 32 Tax exempt interest income amounted to $5.8 million and $4.3 million for the years ended December 31, 2024 and 2023, respectively.
The Company had loans rated substandard that were on a performing status totaling $1.2 million and $1.3 million at December 31, 2023 and December 31, 2022, respectively. In management's view, such loans represent a higher degree of risk of becoming nonperforming loans in the future.
The Company had loans rated substandard that were on a performing status totaling $768 thousand and $1.2 million at December 31, 2024 and December 31, 2023, respectively. In management's view, such loans represent a higher degree of risk of becoming nonperforming loans in the future.
The Company may, from time-to-time, enter into commitments to purchase, participate or sell loans, securities, certificates of deposit, or other investment instruments which involve market and interest rate risk. At December 31, 2023, the Company had binding commitments to sell residential mortgage loans at fixed rates totaling $2.7 million.
The Company may, from time-to-time, enter into commitments to purchase, participate or sell loans, securities, certificates of deposit, or other investment instruments which involve market and interest rate risk. At December 31, 2024, the Company had binding commitments to sell residential mortgage loans at fixed rates totaling $3.9 million.
RESULTS OF OPERATIONS For the year ended December 31, 2023, net income was $11.3 million compared to $12.6 million for the year ended December 31, 2022. The primary components of these results, which include net interest income, noninterest income, noninterest expenses, and provision for income taxes, are discussed below: Net Interest Income .
RESULTS OF OPERATIONS For the year ended December 31, 2024, net income was $8.8 million compared to $11.3 million for the year ended December 31, 2023. The primary components of these results, which include net interest income, noninterest income, noninterest expenses, and provision for income taxes, are discussed below: Net Interest Income .
Since inception, as of December 31, 2023, the Company had repurchased 26,140 shares under the program, for a total cost of $682 thousand. In 46 December 2023, the Board reauthorized the limited stock repurchase plan for 2024 on similar terms.
Since inception, as of December 31, 2024, the Company had repurchased 26,140 shares under the program, for a total cost of $682 thousand. In December 2024, the Board reauthorized the limited stock repurchase plan for 2025 and 2026 on similar terms.
The average yield on federal funds sold and overnight deposits increased 269 bps between the twelve month comparison periods due to an increase in the interest rate paid on balances maintained in Union's master account at the FRB.
The average yield on federal funds sold and overnight deposits increased 76 bps between the twelve month comparison periods due to an increase in the average balance maintained in Union's master account at the FRB and an increase in the average rate paid on these balances.
The unamortized balance of MSRs on loans sold with servicing retained was $1.7 million and $2.0 million as of December 31, 2023 and 2022, respectively, with an estimated market value in excess of the carrying value at both year ends. Management periodically evaluates and measures the servicing assets for impairment.
The unamortized balance of MSRs on loans sold with servicing retained was $1.7 million at December 31, 2024 and 2023, with an estimated market value in excess of the carrying value at both year ends. Management periodically evaluates and measures the servicing assets for impairment.
As with the CDARS program, in addition to reciprocal deposits, participating banks may also purchase one-way ICS deposits. There were $232.6 million and $209.3 million in exchanged ICS demand and money market deposits on the balance sheets at December 31, 2023 and December 31, 2022, respectively.
As with the CDARS program, in addition to reciprocal deposits, participating banks may also purchase one-way ICS deposits. There were $256.5 million and $232.6 million in exchanged ICS demand and money market deposits on the balance sheets at December 31, 2024 and December 31, 2023, respectively.
(See Capital Resources on pages 46 to 47.) These changes also resulted in an increase in the Company's book value per share to $14.56 at December 31, 2023 from $12.25 as of December 31, 2022. Return on average assets is a financial metric often utilized as an indicator of a financial institution's performance.
(See Capital Resources on pages 45 to 46.) These changes also resulted in an increase in the Company's book value per share to $14.65 at December 31, 2024 from $14.56 as of December 31, 2023. Return on average assets is a financial metric often utilized as an indicator of a financial institution's performance.
Qualifying residential first lien mortgage loans and certain commercial real estate loans with a carrying value of $343.7 million and $272.9 million were pledged as collateral for borrowings from the FHLB under a blanket lien at December 31, 2023 and 2022, respectively.
Qualifying residential first lien mortgage loans and certain commercial real estate loans with a carrying value of $394.5 million and $343.7 million were pledged as collateral for borrowings from the FHLB under a blanket lien at December 31, 2024 and 2023, respectively.
The following table presents the effect of tax exempt income on the calculation of net interest income, using a marginal federal corporate income tax rate of 21% for the years ended December 31, 2023 and 2022: Years Ended December 31, 2023 2022 (Dollars in thousands) Net interest income as presented $ 37,843 $ 39,424 Effect of tax-exempt interest Investment securities 372 201 Loans 448 301 Net interest income, tax equivalent $ 38,663 $ 39,926 Rate/Volume Analysis.
The following table presents the effect of tax exempt income on the calculation of net interest income, using a marginal federal corporate income tax rate of 21% for the years ended December 31, 2024 and 2023: Years Ended December 31, 2024 2023 (Dollars in thousands) Net interest income as presented $ 38,364 $ 37,843 Effect of tax-exempt interest Investment securities 201 372 Loans 705 448 Net interest income, tax equivalent $ 39,270 $ 38,663 Rate/Volume Analysis.
Borrowed funds included FHLB advances of $55.7 million with a weighted average rate of 3.68% at December 31, 2023 and $50.0 million with a weighted average rate of 4.41% at December 31, 2022. The Company has the authority, up to its available borrowing capacity with the FHLB, to collateralize public unit deposits with letters of credit issued by the FHLB.
Borrowed funds included FHLB advances of $259.7 million with a weighted average rate of 4.17% at December 31, 2024 and $55.7 million with a weighted average rate of 3.68% at December 31, 2023. The Company has the authority, up to its available borrowing capacity with the FHLB, to collateralize public unit deposits with letters of credit issued by the FHLB.
There was one revolving residential real estate loan totaling $17 thousand in process of foreclosure at December 31, 2023 and one residential real estate loan totaling $28 thousand in process of foreclosure at December 31, 2022. The aggregate interest on nonaccrual loans not recognized was $143 thousand and $59 thousand for the years ended December 31, 2023 and 2022, respectively.
There was one residential real estate loan totaling $8 thousand in process of foreclosure at December 31, 2024 and one revolving residential real estate loan totaling $17 thousand in process of foreclosure at December 31, 2023. The aggregate interest on nonaccrual loans not recognized was $235 thousand and $143 thousand for the years ended December 31, 2024 and 2023, respectively.
Tier I capital to risk weighted assets decreased to 10.7% at December 31, 2023, from 11.0% at December 31, 2022, and Tier I capital to average assets decreased to 6.5% at December 31, 2023 from 6.7% at December 31, 2022.
Tier I capital to risk weighted assets decreased to 10.0% at December 31, 2024, from 10.7% at December 31, 2023, and Tier I capital to average assets decreased to 6.3% at December 31, 2024 from 6.5% at December 31, 2023.
The Company serviced $25.7 million and $27.0 million of commercial and commercial real estate loans for unaffiliated third parties as of December 31, 2023 and 2022, respectively. This includes $24.7 million and $25.7 million of commercial or commercial real estate loans the Company had participated out to other financial institutions at December 31, 2023 and 2022, respectively.
The Company serviced $37.3 million and $25.7 million of commercial and commercial real estate loans for unaffiliated third parties as of December 31, 2024 and 2023, respectively. This includes $36.3 million and $24.7 million of commercial or commercial real estate loans the Company had participated out to other financial institutions at December 31, 2024 and 2023, respectively.
At December 31, 2023, the Company serviced a $1.1 billion residential real estate mortgage portfolio, of which $3.1 million was held for sale and approximately $646.5 million was serviced for unaffiliated third parties.
This compares to a residential real estate mortgage servicing portfolio of $1.07 billion at December 31, 2023, of which $3.1 million was held for sale and approximately $646.5 million was serviced for unaffiliated third parties.
Net unrealized losses in the Company's AFS investment securities portfolio were $41.0 million at December 31, 2023 compared to net unrealized losses of $47.4 million at December 31, 2022. The Company's accumulated OCI component of stockholders' equity at December 31, 2023 and 2022 reflected cumulative net unrealized losses on investment securities of $32.0 million and $37.4 million, respectively.
Net unrealized losses in the Company's AFS investment securities portfolio were $43.6 million at December 31, 2024 compared to net unrealized losses of $41.0 million at December 31, 2023. The Company's accumulated OCI component of stockholders' equity at December 31, 2024 and 2023 reflected cumulative net unrealized losses on investment securities of $34.0 million and $32.0 million, respectively.
The following table reflects activity in the ACL on loans for the years ended December 31: 2023 2022 (Dollars in thousands) Balance at beginning of period $ 8,339 $ 8,336 Impact of adoption of ASU No. 2016-13 (1,495) — Charge-offs (8) (4) Recoveries 4 7 Net (charge-offs) recoveries (4) 3 Credit loss benefit (274) — Balance at end of period $ 6,566 $ 8,339 41 The following table (net of loans held for sale) shows the internal breakdown by risk component of the Company's ACL on loans and the percentage of loans in each category to total loans in the respective portfolios at December 31: 2023 2022 Amount Percent Amount Percent Residential real estate (Dollars in thousands) Non-revolving residential real estate $ 2,361 38.6 $ 2,294 35.0 Revolving residential real estate 159 1.8 123 1.8 Construction real estate Commercial construction real estate 1,035 3.6 611 5.9 Residential construction real estate 163 5.0 421 4.2 Commercial real estate Non-residential commercial real estate 2,182 29.0 2,931 29.5 Multi-family residential real estate 244 10.2 1,004 9.9 Commercial 352 4.0 301 4.3 Consumer 5 0.3 10 0.2 Municipal 65 7.5 95 9.2 Unallocated — — 549 — Total $ 6,566 100.0 $ 8,339 100.0 Notwithstanding the categories shown in the table above or any specific allocation under the Company's ACL methodology, all funds in the ACL on loans are available to absorb loan losses in the portfolio, regardless of loan category or specific allocation.
The following table reflects activity in the ACL on loans for the years ended December 31: 2024 2023 (Dollars in thousands) Balance at beginning of period $ 6,566 $ 8,339 Impact of adoption of ASU No. 2016-13 — (1,495) Charge-offs (3) (8) Recoveries 25 4 Net recoveries (charge-offs) 22 (4) Credit loss expense (benefit) 1,092 (274) Balance at end of period $ 7,680 $ 6,566 The following table (net of loans held for sale) shows the internal breakdown by risk component of the Company's ACL on loans and the percentage of loans in each category to total loans in the respective portfolios at December 31: 2024 2023 Amount Percent Amount Percent Residential real estate (Dollars in thousands) Non-revolving residential real estate $ 3,212 38.5 $ 2,361 38.6 Revolving residential real estate 280 1.9 159 1.8 Construction real estate Commercial construction real estate 651 4.8 1,035 3.6 Residential construction real estate 102 4.4 163 5.0 Commercial real estate Non-residential commercial real estate 2,766 28.6 2,182 29.0 Multi-family residential real estate 212 9.0 244 10.2 Commercial 377 3.0 352 4.0 Consumer 6 0.2 5 0.3 Municipal 74 9.6 65 7.5 Total $ 7,680 100.0 $ 6,566 100.0 Notwithstanding the categories shown in the table above or any specific allocation under the Company's ACL methodology, all funds in the ACL on loans are available to absorb loan losses in the portfolio, regardless of loan category or specific allocation.
At December 31, 2023, Union, as a member of FHLB, had access to unused lines of credit up to $135.9 million, over and above the $99.6 million in combined outstanding borrowings and other credit subject to collateralization and to the purchase of required FHLB Class B common stock and evaluation by the FHLB of the underlying collateral available.
At December 31, 2024, Union, as a member of FHLB, had access to unused lines of credit up to $13.2 million, over and above the $309.3 million in combined outstanding borrowings and other credit subject to collateralization and to the purchase of required FHLB Class B common stock and evaluation by the FHLB of the underlying collateral available.
Sales of qualifying residential loans to the secondary market for the year ended December 31, 2023 were $75.6 million resulting in gain on sales of $1.2 million, compared to sales of $78.0 million and gain on sales of $1.0 million for the year ended December 31, 2022.
Sales of qualifying residential loans to the secondary market for the year ended December 31, 2024 were $113.5 million resulting in gain on sales of $1.7 million, compared to sales of $75.6 million and gain on sales of $1.2 million for the year ended December 31, 2023.
The Company's total capital increased from $55.2 million at December 31, 2022 to $65.8 million at December 31, 2023. This increase primarily reflects net income of $11.3 million for 2023 and a decrease of $5.5 million in accumulated other comprehensive loss, partially offset by regular cash dividends paid of $6.5 million.
The Company's total capital increased from $65.8 million at December 31, 2023 to $66.5 million at December 31, 2024. This increase primarily reflects net income of $8.8 million for 2024, partially offset by an increase of $2.0 million in accumulated other comprehensive loss and regular cash dividends paid of $6.5 million.
The net interest spread decreased 63 bps to 2.50% for the year ended December 31, 2023, from 3.13% for the same period last year, reflecting the net effect of the 129 bps increase in the average rate paid on interest bearing liabilities, which was only partially offset by the 66 bps increase in the average yield earned on interest earning assets between periods.
The net interest spread decreased 20 bps to 2.30% for the year ended December 31, 2024, from 2.50% for the same period last year, reflecting the net effect of the 74 bps increase in the average rate paid on interest bearing liabilities, which was only partially offset by the 54 bps increase in the average yield earned on interest earning assets between periods.
With the adoption of CECL, effective January 1, 2023, the Company records an ACL on off-balance sheet credit exposures through a charge or credit to Credit loss expense on the consolidated statements of income to account for the change in the ACL on off-balance sheet credit exposures between reporting periods.
The Company records an ACL on off-balance sheet credit exposures through a charge or credit to Credit loss expense (benefit) on the consolidated statements of income to account for the change in the ACL on off-balance sheet exposures between reporting periods.
The Company's return on average assets decreased 18 bps for the year ended December 31, 2023 compared to 2022 due to an increase in average assets of $115.2 million and a decrease in net income of $1.4 million for the year ended December 31, 2023. 29 The following per share information and key ratios presented in the table below depict several measurements of performance or financial condition at or for the years ended December 31, 2023 and 2022: 2023 2022 Return on average assets 0.82 % 1.00 % Return on average equity 20.01 % 19.65 % Net interest margin (1) 2.88 % 3.28 % Efficiency ratio (2) 72.83 % 67.84 % Net interest spread (3) 2.50 % 3.13 % Loan to deposit ratio 78.99 % 79.82 % Net charge-offs (recoveries) to total average loans — % — % ACL on loans to loans not held for sale 0.64 % 0.87 % Nonperforming assets to total assets (4) 0.14 % 0.18 % Equity to assets 4.48 % 4.13 % Total capital to risk weighted assets 13.34 % 13.98 % Book value per share $ 14.56 $ 12.25 Basic earnings per share $ 2.50 $ 2.81 Diluted earnings per share $ 2.48 $ 2.79 Dividends paid per share $ 1.44 $ 1.40 Dividend payout ratio (5) 57.60 % 49.82 % __________________ (1) The ratio of tax equivalent net interest income to average earning assets.
The Company's return on average assets decreased 22 bps for the year ended December 31, 2024 compared to 2023 due to an increase in average assets of $88.0 million and a decrease in net income of $2.5 million for the year ended December 31, 2024. 29 The following per share information and key ratios presented in the table below depict several measurements of performance or financial condition at or for the years ended December 31, 2024 and 2023: 2024 2023 Return on average assets 0.60 % 0.82 % Return on average equity 13.38 % 20.01 % Net interest margin (1) 2.77 % 2.88 % Efficiency ratio (2) 77.62 % 72.83 % Net interest spread (3) 2.30 % 2.50 % Loan to deposit ratio 99.32 % 78.99 % Net (recoveries) charge-offs to total average loans — % — % ACL on loans to loans not held for sale 0.66 % 0.64 % Nonperforming assets to total assets (4) 0.12 % 0.14 % Equity to assets 4.35 % 4.48 % Total capital to risk weighted assets 12.53 % 13.34 % Book value per share $ 14.65 $ 14.56 Basic earnings per share $ 1.94 $ 2.50 Diluted earnings per share $ 1.92 $ 2.48 Dividends paid per share $ 1.44 $ 1.44 Dividend payout ratio (5) 74.23 % 57.60 % __________________ (1) The ratio of tax equivalent net interest income to average earning assets.
Uninsured deposits include $26.7 million of municipal deposits and were collateralized under applicable state regulations by investment securities or letters of credit issued by the FHLB at December 31, 2023, as described below under Borrowings.
Uninsured deposits include $30.9 million of municipal deposits that were collateralized under applicable state regulations by investment securities or letters of credit issued by the FHLB at December 31, 2024, as described below under Borrowings.
The decreases in the other categories were attributable to customers spending down deposit balances (including COVID-19 relief funds), the loss of deposit dollars to competing financial institutions and brokerage firms, and customers shifting monies into time deposits as they continue to seek higher yields.
The decreases in these categories are attributable to customers spending down deposit balances, the loss of deposit dollars to competing financial institutions and brokerage firms, and customers shifting monies into time deposits as they continue to seek higher yields.
As of December 31, 2023, the Company had sold loans through the MPF program totaling $40.2 million with an outstanding balance of $14.7 million. The volume of loans sold to the MPF program and the corresponding Credit Enhancement Obligation are closely monitored by management.
As of December 31, 2024, the Company had sold loans through the MPF program totaling $53.2 million with an outstanding balance of $25.3 million. The volume of loans sold to the MPF program and the 44 corresponding Credit Enhancement Obligation are closely monitored by management.
See Note 13 to the Company's consolidated financial statements. Commitments, Contingent Liabilities, and Off-Balance-Sheet Arrangements. The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers, to reduce its own exposure to fluctuations in interest rates, and to implement its strategic objectives.
The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers, to reduce its own exposure to fluctuations in interest rates, and to implement its strategic objectives.
The net interest margin was 2.88% for the year ended December 31, 2023 compared to 3.28% for the year ended December 31, 2022, while the net interest spreads for the same periods were 2.50% and 3.13%, respectively.
The net interest margin was 2.77% for the year ended December 31, 2024 compared to 2.88% for the year ended December 31, 2023, while the net interest spreads for the same periods were 2.30% and 2.50%, respectively.
Interest income on loans increased $10.9 million between the twelve month comparison periods due to an increase in the average volume of loans outstanding of $118.4 million and an increase of 58 bps in the average yield.
Interest income on loans increased $10.0 million between the twelve month comparison periods due to an increase in the average volume of loans outstanding of $83.6 million and an increase of 57 bps in the average yield.
The Company's gross loan portfolio (including loans held for sale) increased $72.0 million, or 7.5%, to $1.0 billion, representing 70.2% of assets at December 31, 2023, from $959.3 million, representing 71.8% of assets at December 31, 2022. The Company's loans consist primarily of adjustable-rate and fixed-rate mortgage loans secured by one-to-four family, multi-family residential or commercial real estate.
The Company's gross loan portfolio (including loans held for sale) increased $129.6 million, or 12.6%, to $1.16 billion, representing 76.0% of assets at December 31, 2024, from $1.03 billion, representing 70.2% of assets at December 31, 2023. The Company's loans consist primarily of adjustable-rate and fixed-rate mortgage loans secured by one-to-four family, multi-family residential or commercial real estate.
The net interest margin is calculated as net interest income on a fully tax equivalent basis as a percentage of average interest earning assets. Interest earned on average earning assets for the year ended December 31, 2023 was $57.1 million compared to $43.9 million for the year ended December 31, 2022, an increase of $13.2 million, or 29.9%.
The net interest margin is calculated as net interest income on a fully tax equivalent basis as a percentage of average interest earning assets. Interest earned on average earning assets for the year ended December 31, 2024 was $68.0 million compared to $57.1 million for the year ended December 31, 2023, an increase of $10.8 million, or 19.0%.
The repurchase authorization for a calendar quarter (currently 2,500 shares) expires at the end of that quarter to the extent it has not been exercised, and is not carried forward into future quarters. The Company repurchased 5,700 shares under this program during 2023 at a total cost of $129 thousand.
The repurchase authorization for a calendar quarter (currently 2,500 shares) expires at the end of that quarter to the extent it has not been exercised, and is not carried forward into future quarters. The Company had no repurchases under this program during 2024.
The Company's consolidated net income was $11.3 million, with basic earnings per share of $2.50 for 2023 compared to $12.6 million, and basic earnings per share of $2.81 for 2022, while diluted earnings per share for the same periods were $2.48 and $2.79, respectively.
The Company's consolidated net income was $8.8 million, with basic earnings per share of $1.94 for 2024 compared to consolidated net income of $11.3 million, and basic earnings per share of $2.50 for 2023, while diluted earnings per share for the same periods were $1.92 and $2.48, respectively.
At December 31, 2023, there were no purchased CDARS deposits, $50.2 million in purchased ICS deposits, $103.0 million in retail brokered deposits issued under a master certificate of deposit program with a broker, and no outstanding advances on the Union correspondent line.
There were no purchased CDARS deposits, no purchased ICS deposits, no retail brokered deposits issued under a master certificate of deposit program with a broker, and no outstanding advances on the Union correspondent line as of December 31, 2024.
The Company has reserved 200,000 shares of its common stock for issuance and sale under the DRIP. As of December 31, 2023, 10,749 shares of stock had been issued from treasury stock since inception of the DRIP, including 3,166 shares in 2023.
The Company has reserved 200,000 shares of its common stock for issuance and sale under the DRIP. As of December 31, 2024, 13,174 shares of stock had been issued from treasury stock since inception of the DRIP, including 2,425 shares in 2024.
The ASU, which is more commonly referred to as Current Expected 27 Credit Losses (CECL), requires that expected credit losses for financial assets held at the reporting date that are accounted for at amortized cost be measured and recognized based on historical experience and current and reasonably supportable forecasted conditions to reflect the full amount of expected credit losses.
Allowance for credit losses on loans and on off-balance sheet credit exposures ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which is more commonly referred to as Current Expected Credit Losses (CECL), requires that expected credit losses for 27 financial assets held at the reporting date that are accounted for at amortized cost be measured and recognized based on historical experience and current and reasonably supportable forecasted conditions to reflect the full amount of expected credit losses over the expected life of the asset.
The Company's total capital to risk weighted assets decreased to 13.3% at December 31, 2023, from 14.0% at December 31, 2022.
The Company's total capital to risk weighted assets decreased to 12.5% at December 31, 2024, from 13.3% at December 31, 2023.
For residential loans, the Company generally does not lend more than 80% of the appraised value of the home without a government guaranty or the borrower purchasing private mortgage insurance.
For residential loans, the Company generally does not lend more than 80% of the appraised value of the home without a government guaranty or the borrower purchasing private mortgage insurance. The Company may lend up to 80% of the collateral value on commercial real estate loans to strong borrowers.
The net change in the Company's loan portfolio from December 31, 2022 (see table below) resulted primarily from an increase in the volume of residential, commercial real estate and residential construction loans originated. There was no material change in the Company's lending programs or terms during 2023.
The net change in the Company's loan portfolio from December 31, 2023 (see table below) resulted primarily from an increase in the volume of residential, commercial real estate, commercial construction, and municipal loans originated.
FINANCIAL CONDITION At December 31, 2023, the Company had total consolidated assets of $1.5 billion, including gross loans and loans held for sale (total loans) of $1.0 billion, deposits of $1.3 billion and stockholders' equity of $65.8 million. The Company’s total assets increased $132.4 million, or 9.9%, from $1.3 billion at December 31, 2022.
FINANCIAL CONDITION At December 31, 2024, the Company had total consolidated assets of $1.53 billion, including gross loans and loans held for sale (total loans) of $1.16 billion, deposits of $1.17 billion and stockholders' equity of $66.5 million. The Company’s total assets increased $59.5 million, or 4.0%, from $1.47 billion at December 31, 2023.
The performance of those funds, over which the Company has no control, resulted in net gains of $189 thousand and net losses of $60 thousand for the years ended December 31, 2023 and 2022, respectively. • Income from Company-owned life insurance. Death benefit proceeds of $77 thousand were received in 2022 that did not recur in 2023. • Other income.
The performance of those funds, over which the Company has no control, resulted in net gains of $216 thousand and $189 thousand for the years ended December 31, 2024 and 2023, respectively. • Income from Company-owned life insurance. Death benefit proceeds of $235 thousand were received in 2024, while no such proceeds were received in 2023.
Interest expense on time deposits increased $7.6 million to $8.7 million for the year ended December 31, 2023 compared to $1.0 million for the year ended December 31, 2022 due to increases in the average volume of $135.4 million and 255 bps in the average rate paid.
Interest expense on time deposits increased $2.9 million to $11.6 million for the year ended December 31, 2024 compared to $8.7 million for the year ended December 31, 2023 due to increases in the average volume of $24.7 million and 74 bps in the average rate paid.
Amortization expense related to limited partnership investments included as a component of tax expense amounted to $1.4 million and $1.1 million for the years ended December 31, 2023 and 2022, respectively. These investments provide tax benefits, including tax credits.
The Company’s effective federal corporate income tax rate was 4.6% and 12.5% for 2024 and 2023, respectively. Amortization expense related to limited partnership investments included as a component of income tax expense amounted to $1.7 million and $1.4 million for the years ended December 31, 2024 and 2023, respectively. These investments provide tax benefits, including tax credits.
However, any projections of future cash needs and flows are subject to substantial uncertainty, including factors outside the Company's control. Capital Resources . Capital management is designed to maintain an optimum level of capital in a cost-effective structure that meets target regulatory ratios, supports management’s internal assessment of economic capital, funds the Company’s business strategies and builds long-term stockholder value.
Capital management is designed to maintain an optimum level of capital in a cost-effective structure that meets target regulatory ratios, supports management’s internal assessment of economic capital, funds the Company’s business strategies and builds long-term stockholder value.
Real estate secured loans represented $911.5 million, or 88.4% of total loans, at December 31, 2023 compared to $828.2 million, or 86.3% of total loans, at December 31, 2022.
Real estate secured loans represented $1.01 billion, or 87.3% of total loans, at December 31, 2024 compared to $911.5 million, or 88.4% of total loans, at December 31, 2023.

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