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What changed in UNION BANKSHARES INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of UNION BANKSHARES INC's 2024 and 2025 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 2025 report.

+302 added−291 removedSource: 10-K (2026-03-20) vs 10-K (2025-03-25)

Top changes in UNION BANKSHARES INC's 2025 10-K

302 paragraphs added · 291 removed · 251 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

41 edited+3 added−1 removed110 unchanged
Biggest changeThe competition in originating real estate and other loans comes principally from commercial banks, savings banks, mortgage banking companies and tax exempt credit unions. We compete for loan originations primarily through the interest rates and loan fees we charge, the types of loans we offer, and the efficiency and quality of services we provide.
Biggest changeWe compete for loan originations primarily through the interest rates and loan fees we charge, the types of loans we offer, and the efficiency and quality of services we provide. The Company emphasizes residential mortgage lending, commercial real estate and construction lending, as well as municipal loans and both conventional and SBA guaranteed commercial lending.
The taxing authorities also regulate the information reporting requirements that Union is subject to, and which continue to increase and require resources to comply with. Available Information The Company files annual, quarterly, and current reports, proxy statements, and other documents with the SEC under the Securities Exchange Act of 1934 (the “Exchange Act”).
The taxing authorities also regulate the information reporting requirements that Union is subject to, and which continue to increase and require resources to comply with. Available Information The Company files annual, quarterly, current reports, proxy statements, and other documents with the SEC under the Securities Exchange Act of 1934 (the “Exchange Act”).
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.
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 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.
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.
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.
Consumer Protection Regulation The Company and Union are subject to a number of federal and state laws designed to protect consumers and prohibit unfair or deceptive business practices, including, but not limited to, the Equal Credit Opportunity Act, the Fair Housing Act, the Home Ownership Protection Act, the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act of 2003 (the “FACT Act”), GLBA, the Truth in Lending Act, CRA, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the National Flood Insurance Act and various state law counterparts.
Consumer Protection Regulation The Company and Union are subject to a number of federal and state laws designed to protect consumers and prohibit unfair or deceptive business practices, including, but not limited to, the Equal Credit Opportunity Act, the Fair Housing Act, the Home 10 Ownership Protection Act, the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act of 2003 (the “FACT Act”), GLBA, the Truth in Lending Act, the CRA, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the National Flood Insurance Act and various state law counterparts.
Competition: The Company and Union face substantial competition for loans and deposits in northern Vermont and New Hampshire from local and regional commercial banks, savings banks, tax exempt credit unions, mortgage brokers, and financial services affiliates of bank holding companies, as well as from national and regional financial service providers such as mutual funds, brokerage houses, insurance companies, consumer finance companies and internet banks.
Competition: The Company and Union face substantial competition for loans and deposits in northern Vermont and New Hampshire from local and regional commercial banks, savings banks, tax exempt credit unions, mortgage brokers, financial services affiliates of bank holding companies, brokerage houses, insurance companies, consumer finance companies, internet banks and national and regional financial service providers such as mutual funds.
In addition, the USA Patriot Act amended certain provisions of the federal Right to Financial Privacy Act to facilitate the access of law enforcement to bank customer records in connection with investigating international terrorism. The Bank Secrecy Act/Anti-Money Laundering statutory regime was significantly amended by the Anti-Money Laundering Act of 2020 (“AMLA”), which became effective on January 1, 2021.
In addition, the USA Patriot Act amended certain provisions of the federal Right to Financial Privacy Act to facilitate the access of law enforcement to bank customer records in connection with investigating international terrorism. The Bank Secrecy Act/Anti-Money Laundering statutory regime was significantly amended by the Anti-Money Laundering Act 12 of 2020 (“AMLA”), which became effective on January 1, 2021.
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.
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.
HMDA applies to financial institutions that have their main office or any branch in a Metropolitan Statistical Area ("MSA"). Union is subject to HMDA as it has branch offices within the Burlington, Vermont MSA. Regulation of Other Activities Transactions with Related Parties.
HMDA applies to financial institutions that have their main office or any branch in a Metropolitan Statistical Area ("MSA"). Union is subject to HMDA as it has branch offices within the Burlington, Vermont MSA. 11 Regulation of Other Activities Transactions with Related Parties.
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.
Our next say-on-pay and say-on-frequency advisory votes are scheduled to occur at the 2028 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.
Source of Strength. Under long-standing FRB policy and now codified in the Dodd-Frank Act, bank holding companies, such as Union Bankshares, are required to act as a source of financial and management strength to their subsidiary banks, such as Union, and to commit resources to support them.
Source of Strength. Under long-standing FRB policy and codified in the Dodd-Frank Act, bank holding companies, such as Union Bankshares, are required to act as a source of financial and management strength to their subsidiary banks, such as Union, and to commit resources to support them.
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.
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.
The ability to branch interstate has also benefited Union, as it permitted the expansion of its banking operations into New Hampshire, with the conversion of its loan production office in Littleton to a full service branch in March of 2006, the May 2011 acquisition of three New Hampshire branches, the opening of a full service branch in Lincoln in 2014, and the opening of a full-service branch in North Conway in 2023.
The ability to branch interstate has also benefited Union, as it permitted the expansion of its banking operations into New Hampshire, including the conversion of its loan production office in Littleton to a full service branch in March of 2006, the May 2011 acquisition of three New Hampshire branches and the opening of full service branches in Lincoln in 2014 and North Conway in 2023.
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.
The information on our website is not incorporated by reference into this report. The Company will also provide copies of this 2025 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 54 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 55 of this Annual Report. General: Union Bankshares, Inc.
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.
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 strong as customers continue to seek maximum earnings on their savings dollars.
The FDICIA restricts the ability of an FDIC insured bank to accept brokered deposits unless it is a well capitalized institution under FDICIA's prompt corrective action guidelines. Union has established an account with one of its approved investment brokers to accept brokered deposits as an approved liquidity source.
The FDICIA restricts the ability of an FDIC insured bank to accept brokered deposits unless it is a well capitalized institution under FDICIA's prompt corrective action guidelines. Union has established an account with two of its approved investment brokers to accept brokered deposits as an approved liquidity source.
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.
Under the regulations as in effect during 2025, 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.
Banks, such as Union, with total assets of $600 million or more and less than $2 billion will be evaluated under the Retail Lending Test and, at the bank's option, either the current Intermediate Bank Community Development Test or the new Community Development Financing Test.
Banks, such as Union, with total assets of $600 million or more and less than $2 billion would be evaluated under the Retail Lending Test and, at the bank's option, either the current Intermediate Bank Community Development Test or the new Community Development Financing Test.
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 Company and Union have filed separate tax returns for each state jurisdiction affected for 2024 and will do the same for 2025. No tax return is currently being examined or audited by any taxing authority that the Company is aware of.
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.
Shareholder meeting materials for our 2026 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.
We provide numerous training and development opportunities, as well as a robust tuition reimbursement program. We are also deeply committed to the health and well-being of our employees. This includes market-competitive compensation, medical and dental insurance, paid time off, life insurance, short term and long-term disability, and a 401(k) plan.
We provide numerous training and development opportunities, and maintain a tuition reimbursement program. We are also deeply committed to the health and well-being of our employees. This includes market-competitive compensation, medical and dental insurance, paid time off, life insurance, short-term and long-term disability, and a 401(k) plan.
There are no FRB enforcement actions currently in place against the Company. The FRB has the power to prohibit dividends by bank holding companies if their actions constitute unsafe or unsound practices.
There are no FRB enforcement actions currently in place against the Company. The FRB has the power to prohibit the payment of dividends by bank holding companies if their actions constitute unsafe or unsound practices.
The Company's last say-on-pay vote was hel d at the 2022 annual meeting with shareholders approving the Company's executive compensation program by a wide margin.
The Company's last say-on-pay vote was hel d at the 2025 annual meeting with shareholders approving the Company's executive compensation program by a wide margin.
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 .
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, 2025, the Bank's total FDIC insurance assessment expense was $1.5 million. Brokered Deposits .
Congress continues to consider federal legislation that would require consumer notice of data security breaches. Pursuant to the FACT Act, we have developed and implemented a written identity theft prevention program to detect, prevent, and mitigate identity theft in connection with the opening of certain accounts or certain existing accounts. Home Mortgage Disclosure Act (“HMDA”).
Congress continues to consider federal legislation that would require consumer notice of data security breaches. Pursuant to the FACT Act, we have developed and implemented a written identity theft prevention program to detect, prevent, and mitigate identity theft in connection with the opening of certain accounts or certain existing accounts.
Community Reinvestment Act ("CRA"). Union is subject to the federal CRA, which requires banks to demonstrate their commitment to serving the credit needs of low and moderate income residents of their communities. Union participates in a variety of direct and indirect lending programs and other investments for the benefit of low and moderate income residents in its local communities.
Community Reinvestment Act ("CRA"). Union is subject to the federal CRA, which requires banks to demonstrate their commitment to serving the credit needs of communities and residents with low- and moderate-incomes. Union participates in a variety of direct and indirect lending programs and other investments for the benefit of such residents in its local communities.
The FDIC conducts examinations of insured banks' compliance with CRA requirements and rates institutions as "Outstanding," "Satisfactory," "Needs to Improve," and "Substantial NonCompliance." Failure of an institution to receive at least a "Satisfactory" CRA rating could adversely affect its ability to undertake certain activities, such as branching and acquisitions of other financial institutions, which require regulatory approval based, in part, on the institution's record of CRA compliance.
The FDIC conducts examinations of insured banks' compliance with CRA requirements and rates institutions as "Outstanding," "Satisfactory," "Needs to Improve," and "Substantial NonCompliance." Failure of an institution to receive at least a "Satisfactory" CRA rating could adversely affect its ability to undertake certain activities, such as branching and acquisitions of other financial institutions, which require regulatory approval.
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.
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, 2025, Union employed 195 full time employees.
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.
The final rule also requires accumulated OCI be included for purposes of calculating regulatory capital unless a one time opt-out election was made. The Company and Union both made the election.
Changes in applicable laws or regulations, and in their interpretation and application by regulatory agencies and other governmental authorities, cannot be predicted, but may have a material effect on our business, financial condition or results of operations. This regulation and supervision establishes a comprehensive framework of activities in which a bank holding company or a bank can engage.
Changes in applicable laws or regulations, and in their interpretation and application by regulatory agencies and other governmental authorities, cannot be predicted, but may have a material effect on our business, financial condition or results of operations. This regulatory and supervisory framework establishes the permissible range of activities in which a bank holding company or a bank can engage.
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%.
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, 2025, the Company's rate of average loans to average deposits was 98.4%.
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.
At December 31, 2025, Union's Tier I and Total Risk Based Capital Ratios were 11.87% and 12.81% respectively, and its Leverage Capital Ratio was 7.36%, and it is considered well capitalized under applicable regulatory guidelines in effect as of such date. Safety and Soundness Standards.
Under the new regulations, banks with $2 billion or more in assets will be evaluated under a Retail Lending Test, a Retail Services and Products Test, a Community Development Financing Test, and a Community Development Services Test.
Under the 2023 final rule, banks with $2 billion or more in assets would be evaluated under a Retail Lending Test, a Retail Services and Products Test, a Community Development Financing Test, and a Community Development Services Test.
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 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.
The Company emphasizes residential mortgage lending, commercial real estate and construction lending, as well as municipal loans and both conventional and SBA guaranteed commercial lending. Factors that affect our ability to compete for loans include general and local economic conditions, prevailing interest rates including FHLB rates, the prime rate, and pricing volatility of the secondary loan markets.
Factors that affect our ability to compete for loans include general and local economic conditions, prevailing interest rates including FHLB rates, the prime rate, and pricing volatility of the secondary loan markets.
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.
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.
Significant trading activity means trading activity of at least 10% of total assets or $1 billion, whichever is smaller, calculated on a consolidated basis for bank holding companies. Federal bank regulators may apply the market risk measure to other bank holding companies, as the agency deems necessary or appropriate for safe and sound banking practices.
Significant trading activity means trading activity of at least 10% of total assets or $1 billion, whichever is smaller, calculated on a consolidated basis for bank holding companies.
Under the Dodd-Frank Act, prepayment penalties are prohibited for certain mortgage transactions and creditors are prohibited from financing credit life/disability insurance policies in connection with a residential mortgage loan or home equity line of credit.
The Dodd-Frank Act, in addition to requiring a mortgage lender to ascertain a borrower's ability to repay, allows borrowers to assert violations of certain provisions of the Truth-in-Lending Act as a defense to foreclosure proceedings, significantly limits or prohibits prepayment penalties for certain mortgage transactions, and prohibits creditors from financing credit life/disability insurance policies in connection with a residential mortgage loan or home equity line of credit.
In October 2023, the FDIC and other federal bank regulatory agencies jointly issued a final rule that is designed to strengthen and modernize regulations implementing the CRA.
In October 2023, the FDIC and other federal bank regulatory agencies jointly issued a final rule substantially revising the CRA compliance framework in effect since 1995.
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.
Union utilizes a combination of rates on non-maturity deposits to retain customer deposits and attract new customers, including in our new market areas. The competition in originating real estate and other loans comes principally from commercial banks, savings banks, mortgage banking companies and tax exempt credit unions.
Removed
The Dodd-Frank Act prescribes certain standards that mortgage lenders must consider before making a residential mortgage loan, including verifying a borrower’s ability to repay such mortgage loan, and allows borrowers to assert violations of certain provisions of the Truth-in-Lending Act as a defense to foreclosure proceedings.
Added
Although the final rule took effect on April 1, 2024, it was effectively rescinded on July 17, 2025, when the Federal Reserve, FDIC and OCC issued a joint proposal to rescind the 2023 final rule and to continue to apply the 1995 regulations to banks. Thus, Union remains subject to the 1995 CRA regulations. Federal Reserve Board Policies.
Added
Federal bank regulators may apply the market risk measure to other bank holding companies, as the agency deems necessary or appropriate for safe and sound banking practices. 9 Each agency may exclude organizations that it supervises that otherwise meet the criteria under certain circumstances.
Added
The Bank is also subject to the Vermont Financial Privacy Act, which prohibits financial institutions from disclosing customer information, except in accordance with specified exceptions, and to the Vermont Consumer Protection Act which, among other things, generally requires a consumer's consent to obtain a credit report. Home Mortgage Disclosure Act (“HMDA”).

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

47 edited+23 added−9 removed130 unchanged
Biggest changeAn interruption or breach in security of our information systems or those related to merchants and third party vendors, including as a result of cyber attacks, could disrupt our business, result in the disclosure or misuse of confidential customer or proprietary information, damage our reputation, or result in financial losses.
Biggest changeAlthough we have safeguards and business continuity plans in place, our business operations may be adversely affected by significant and widespread disruption to our physical infrastructure or operating systems that support our business and our customers, resulting in financial losses, loss of customers, or damage to our reputation. 20 An interruption or breach in security of our information systems or those related to merchants and third party vendors, including as a result of cyber attacks, could disrupt our business, result in the disclosure or misuse of confidential customer or proprietary information, damage our reputation, or result in financial losses.
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 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 securities and other securities that we hold in our investment portfolio.
Our actual or perceived failure to (i) identify and address potential conflicts of interest, ethical issues, money-laundering, or privacy issues; (ii) meet legal and regulatory requirements applicable to Union and to the Company; (iii) maintain the privacy of customer and accompanying personal information; or (iv) maintain adequate record keeping; and (v) identify the legal, reputational, credit, liquidity and market risks inherent in our products, could give rise to reputational risk that could harm our business prospects and adversely affect our financial condition and results of operations.
Our actual or perceived failure to (i) identify and address potential conflicts of interest, ethical issues, money-laundering, or privacy issues; (ii) meet legal and regulatory requirements applicable to Union and to the Company; (iii) maintain the privacy of customer and accompanying personal information; (iv) maintain adequate record keeping; or (v) identify the legal, reputational, credit, liquidity and market risks inherent in our products, could give rise to reputational risk that could harm our business prospects and adversely affect our financial condition and results of operations.
Although amendments to the QM Rule adopted by the CFPB in March 2021 will make it less challenging for a loan to meet the definition, the QM Rule and related ability-to-repay requirements and similar rules could nevertheless still limit Union's ability to make certain types of loans or loans to certain 16 borrowers, or could make it more expensive and time-consuming to make these loans, which could limit the Bank’s growth or profitability.
Although amendments to the QM Rule adopted by the CFPB in March 2021 will make it less challenging for a loan to meet the definition, the QM Rule and related ability-to-repay requirements and similar rules could nevertheless still limit Union's ability to make certain types of loans or loans to certain borrowers, or could make it more expensive and time-consuming to make these loans, which could limit the Bank’s growth or profitability.
However, despite these measures there can be no assurance that a change in interest rates will not negatively impact our results of operations or financial condition. Because market interest rates may change by differing magnitudes and at different times, significant changes in interest rates over an extended period of time could reduce overall net interest income.
However, despite these measures there can be no assurance that a change in interest rates will not negatively impact our results of operations or financial condition. 14 Because market interest rates may change by differing magnitudes and at different times, significant changes in interest rates over an extended period of time could reduce overall net interest income.
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.
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. If our allowance for credit losses is not sufficient to cover actual loan losses, our earnings could decrease.
Failure to comply with laws, regulations, or policies could result in sanctions by regulatory agencies, civil money penalties, and/or reputational damage, which could have a material adverse effect on our business, financial condition, or results of operations. Additional requirements imposed by the Dodd-Frank Act could adversely affect us.
Failure to 16 comply with laws, regulations, or policies could result in sanctions by regulatory agencies, civil money penalties, and/or reputational damage, which could have a material adverse effect on our business, financial condition, or results of operations. Additional requirements imposed by the Dodd-Frank Act could adversely affect us.
Future actions against us may result in judgments, settlements, fines, penalties or other results adverse to us, which could materially adversely affect our business, financial condition or results of operations, or cause serious reputational harm to us. As a participant in the financial services industry, we are exposed to a high level of litigation related to our businesses and operations.
Future actions against us may result in judgments, settlements, fines, penalties or other results adverse to us, which could materially adversely affect our business, financial condition or results of operations, or cause serious reputational harm to us. As a participant in the financial services industry, we are exposed to a high level of litigation related to our business and operations.
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.
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.
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.
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.
The unexpected loss of services of one or more of our key personnel could have a material adverse impact on our business because of the loss of their skills, knowledge of the markets in which we operate and years of industry experience, and because of the difficulty of promptly finding qualified replacement personnel. We are subject to reputational risk.
The unexpected loss of services of one or more of our key personnel could have a material adverse impact on our business because of the loss of their skills, knowledge of the markets in which we operate and years of industry experience, and because of the difficulty of promptly finding qualified replacement personnel. 23 We are subject to reputational risk.
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.
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 systems.
Failure to successfully implement and integrate future system enhancements could adversely impact the ability to provide timely and accurate financial information in compliance with legal and regulatory requirements, which could result in sanctions from regulatory authorities. Such sanctions could include fines and suspension of trading in our stock, among others.
Failure to successfully implement and integrate future system enhancements could adversely impact our ability to provide timely and accurate financial information in compliance with legal and regulatory requirements, which could result in sanctions from regulatory authorities. Such sanctions could include fines and suspension of trading in our stock, among others.
Risks Relating to the Company's Stock If we do not maintain net income growth, the market price of our common stock could be adversely affected. Our return on stockholders’ equity and other measures of profitability, which affect the market price of our common stock, depend in part on our continued growth and expansion.
Risks Relating to the Company's Stock If we do not maintain net income growth, the market price of our common stock could be adversely affected. Our return on stockholders’ equity and other measures of profitability, which affect the market price of our common stock, 18 depend in part on our continued growth and expansion.
Any problems caused by these third parties, including as a result of their not providing us their services for any reason or their performing their services poorly, could adversely affect our ability to deliver products and services to our customers or otherwise conduct our business efficiently and effectively.
Any 21 problems caused by these third parties, including as a result of their not providing us their services for any reason or their performing their services poorly, could adversely affect our ability to deliver products and services to our customers or otherwise conduct our business efficiently and effectively.
These and other initiatives from federal and state officials could result in judgments, settlements, fines or penalties, or require us to restructure our operations and activities, all of which could lead to reputational damage, or higher operational costs, or both, thereby reducing our revenue.
These and other initiatives from federal and state officials could result in judgments, 17 settlements, fines or penalties, or require us to restructure our operations and activities, all of which could lead to reputational damage, or higher operational costs, or both, thereby reducing our revenue.
Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for convenience, as well as to create additional efficiencies in our operations.
Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy 22 customer demands for convenience, as well as to create additional efficiencies in our operations.
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.
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.
We are subject to stringent capital requirements which may adversely impact return on equity, require additional capital raises, or limit the ability to pay dividends or repurchase shares. Federal regulations establish minimum capital requirements for insured depository institutions, including minimum risk-based capital and leverage ratios, and define “capital” for calculating these ratios.
We are subject to stringent capital requirements which may adversely impact our return on equity, require additional capital raises, or limit our ability to pay dividends or repurchase shares. Federal regulations establish minimum capital requirements for insured depository institutions, including minimum risk-based capital and leverage ratios, and define “capital” for calculating these ratios.
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.
At December 31, 2025, 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.
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.
At December 31, 2025, there was no remaining unamortized identifiable intangible asset and our goodwill from the 2011 Branch Acquisition 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.
Changes in accounting standards can be difficult to predict and can materially impact how we record and report our financial condition and results of operations. Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations.
Accounting and Tax Risks Changes in accounting standards can be difficult to predict and can materially impact how we record and report our financial condition and results of operations. Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations.
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.
We conduct an annual review, or more frequently if events or circumstances warrant, to determine whether goodwill is impaired. We recently completed our goodwill impairment analysis as of December 31, 2025 and concluded goodwill was not impaired. We conduct a review of our other intangible assets for impairment should events or circumstances warrant.
These firms attempt to use technology and mobile platforms to enhance the ability of companies and individuals to borrow money, save and invest.
These firms attempt to use technology and mobile platforms to enhance the ability of companies and individuals to make payments, borrow money, save and invest.
Current and future legal and regulatory requirements, restrictions, and regulations, including those imposed under the Dodd-Frank Act, may adversely impact our profitability and may have a material and adverse effect on our business, financial condition, or results of operations; may require us to invest significant management attention and resources to evaluate and make any changes required by the legislation and related regulations; and may make it more difficult for us to attract and retain qualified executive officers and employees.
Current and future legal and regulatory requirements, restrictions, and regulations may adversely impact our profitability and may have a material and adverse effect on our business, financial condition, or results of operations; may require us to invest significant management attention and resources to evaluate and make any changes required by the legislation and related regulations; and may make it more difficult for us to attract and retain qualified executive officers and employees.
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.
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, 2025, the carrying value of our investment securities portfolio was approximately $326.3 million.
Further, because a substantial portion of our loan portfolio is secured by real estate in Vermont and New Hampshire, the value of the associated collateral is subject to real estate market conditions in those states and in the northern New England region more generally.
We are exposed to real estate and economic factors throughout Vermont and New Hampshire. Further, because a substantial portion of our loan portfolio is secured by real estate in Vermont and New Hampshire, the value of the associated collateral is subject to real estate market conditions in those states and in the northern New England region more generally.
Although we have historically declared regular cash dividends on our common stock, we are not required to do so and our board of directors may reduce or eliminate our common stock dividend in the future.
Although we have historically declared regular quarterly cash dividends on our common stock, we are not required to do so and our board of directors may reduce or eliminate our common stock dividend, or change the frequency at which dividends are paid, in the future.
If we are not able to compete successfully, we could be placed at a competitive disadvantage, which could result in the loss of customers and market share, and our business, results of operations and financial condition could suffer. We may be required to write down goodwill and other identifiable intangible assets.
If we are not able to compete successfully, we could be placed at a competitive disadvantage, which could result in the loss of customers and market share, and our business, results of operations and financial condition could suffer.
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.
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.
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.
Additionally, it takes time for a new branch to gather sufficient loans and deposits to generate income sufficient to cover its operating expenses. 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.
Replacing these third party vendors could also entail significant business disruption, delay and expense. Strategic Risks Competition in the local banking industry may impair our ability to attract and retain customers at current levels. Competition in the markets in which we operate may limit our ability to attract and retain customers.
Strategic Risks Competition in the local banking industry may impair our ability to attract and retain customers at current levels. Competition in the markets in which we operate may limit our ability to attract and retain customers.
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.
Any of these factors could adversely affect our business, results of operations, and financial condition. 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.
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.
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 within a reasonable period of time or at all. Numerous factors contribute to the performance of a new branch, such as suitable location, qualified personnel, and an effective marketing strategy.
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.
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. 19 We are subject to FDICIA and other rules that govern financial institutions.
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.
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. Operational Risks We are exposed to losses from fraud, theft, and other financial crimes, which could adversely affect our results of operations and financial condition.
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.
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.
Any of the following risks could affect the Company’s financial condition and results of operations and could be material and/or adverse in nature. You should consider all of the following risks together with all of the other information in this Annual Report on Form 10-K.
Any of the following risks could affect the Company’s financial condition and results of operations and could be material and/or adverse in nature.
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.
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 higher interest rates, our interest income will be reduced. A significant reduction in interest income could have a negative impact on our results of operations and financial condition.
A significant reduction in interest income could have a negative impact on our results of operations and financial condition. Environmental liability associated with our lending activities could result in losses. In the course of business, we may acquire, through foreclosure, properties securing loans we have originated or purchased that are in default.
Environmental liability associated with our lending activities could result in losses. In the course of business, we may acquire, through foreclosure, properties securing loans we have originated or purchased that are in default. Particularly in commercial real estate lending, there is a risk that material environmental violations could be discovered at these properties.
Risks Relating to Regulation of the Industry We operate in a highly regulated environment and may be adversely affected by changes in laws, regulations and monetary policy. We are subject to regulation and supervision by the FRB and Union Bank is subject to regulation and supervision by the FDIC and the DFR.
These events could have an adverse effect on our financial condition and results of operations. Risks Relating to Regulation of the Industry We operate in a highly regulated environment and may be adversely affected by changes in laws, regulations and monetary policy.
From time to time, the FASB changes the financial accounting and reporting standards that govern the preparation of our financial statements.
From time to time, the FASB changes the financial accounting and reporting standards that govern the preparation of our financial statements. These changes can be hard to anticipate and implement and can materially impact how we record and report our financial condition and results of operations.
Rising interest rates have decreased the value of the Company’s securities portfolio, and the Company would realize losses if it were required to sell such securities to meet liquidity needs.
Elevated and volatile interest rates have reduced the value of the Company’s securities portfolio, and the Company could realize losses if it is required to sell such securities to meet liquidity needs. The Company’s securities portfolio consists primarily of fixed income securities whose market values are sensitive to changes in interest rates.
We may not have adequate remedies against the prior owners or other responsible parties and could find it difficult or impossible to sell the affected properties. These events could have an adverse effect on our financial condition and results of operations.
In this event, we might be required to remedy these violations at the affected properties at our sole cost and expense. The cost of remedial action could substantially exceed the value of affected properties. We may not have adequate remedies against the prior owners or other responsible parties and could find it difficult or impossible to sell the affected properties.
Credit and Interest Rate Risks Our loans are concentrated in certain areas of Vermont and New Hampshire and adverse conditions in those markets could adversely affect our operations. We are exposed to real estate and economic factors throughout Vermont and New Hampshire.
You should consider all of the following risks together with all of the other information in this Annual Report on Form 10-K. 13 Credit and Interest Rate Risks Our loans are concentrated in certain areas of Vermont and New Hampshire and adverse conditions in those markets could adversely affect our operations.
As a result of inflationary pressures and the resulting rapid increases in interest rates over the last year, the trading value of previously issued government and other fixed income securities has declined significantly.
Although interest rates have declined somewhat over the past year and a half, rates remain elevated compared to historical levels; and are subject to volatility. As a result, the trading values of previously issued government and other fixed income securities continue to be lower than their historical levels, resulting in unrealized losses embedded in the Company’s securities portfolio.
In addition, our independent registered public accounting firm is required to report on the effectiveness of our internal control over financial reporting.
Under the revised framework, institutions that meet applicable asset thresholds are required to provide management’s assessment of the effectiveness of internal control over financial reporting, and institutions that exceed higher asset thresholds are also required to obtain an attestation report from their independent registered public accounting firm on the effectiveness of those controls.
Removed
These securities make up a majority of the securities portfolio of most banks in the U.S., including the Company’s, resulting in unrealized losses embedded in the securities portfolios.
Added
While unrealized losses do not directly affect earnings unless realized, they reduce the market value of securities that may otherwise serve as a source of liquidity. The Company generally intends to hold its investment securities to maturity or recovery of amortized cost and does not currently anticipate selling such securities.
Removed
While the Company does not currently intend to sell these securities, if the Company were required to sell such securities to meet liquidity needs, it may incur losses, which could impair the Company’s capital, financial condition, and results of operations and require the Company to raise additional capital on unfavorable terms, thereby negatively impacting its profitability.
Added
However, under certain circumstances—including unanticipated deposit outflows, reduced access to wholesale funding markets, or other liquidity stress events—the Company may be required to sell securities prior to maturity. If the Company were to sell securities in a period of elevated interest rates or adverse market conditions, it could be required to realize losses that were previously unrealized.
Removed
While the Company has taken actions to diversify its funding sources, there is no guarantee that such actions will be successful or sufficient in the event of sudden liquidity needs.
Added
Such realized losses could adversely affect the Company’s earnings, regulatory capital ratios, financial condition, and results of operations, and could limit financial flexibility or require the Company to raise additional capital or funding on less favorable terms. 15 Although the Company has taken, and continues to take, actions to manage interest rate risk and diversify its funding sources, including maintaining contingent liquidity resources and rebalancing its investment portfolio, there can be no assurance that these measures would be sufficient to prevent the need to sell securities at unfavorable prices in the event of significant or sustained liquidity stress.
Removed
Particularly in commercial real estate lending, there is a risk that material environmental violations could be discovered at these properties. In this event, we might be required to remedy these violations at the affected properties at our sole cost and expense. The cost of remedial action could substantially exceed the value of affected properties.
Added
The speed at which such prepayments occur, as well as the size of such prepayments, are within our customers’ discretion and are influenced by the interest rate environment, over which we have no control.
Removed
These changes can be hard to anticipate and implement and can materially impact how we record and report our financial condition and results of operations. 17 Our financial statements are based in part on assumptions and estimates, which, if wrong, could cause unexpected losses in the future.
Added
We are subject to regulation and supervision by the FRB and Union Bank is subject to regulation and supervision by the FDIC and the DFR.
Removed
Pursuant to GAAP, we are required to use certain assumptions and estimates in preparing our financial statements, including in determining credit loss reserves, the fair value of certain assets and liabilities and reserves related to litigation, among other items. If the assumptions or estimates underlying our financial statements are incorrect, we may experience material losses.
Added
Changes in tax laws and regulations and differences in interpretation of tax laws and regulations may adversely impact our financial statements. State or federal tax authorities may interpret tax laws and regulations differently than we do and challenge tax positions that we have taken on tax returns.
Removed
We are required to comply with the FDICIA and other rules that govern financial institutions with total assets of $1 billion or more. In particular, we are required to provide management's report on the effectiveness of our internal control over financial reporting.
Added
This may result in differences in the treatment of revenues, deductions, credits and/or differences in the timing of these items. The differences in treatment may result in payment of additional taxes, interest or penalties that could have a material adverse effect on our results.
Removed
Although we have safeguards and business continuity plans in place, our business operations may be adversely affected by significant and widespread disruption to our physical infrastructure or operating systems that support our business and our customers, resulting in financial losses, loss of customers, or damage to our reputation.
Added
In addition, there may be future changes to tax laws, administrative rulings or court decisions that could adversely affect our financial condition, including an increased provision for income taxes and/or reduced net income. We are not able to predict the timing or impact of any changes in state or federal tax laws.
Removed
Numerous factors contribute to the performance of a new branch, such as suitable location, qualified personnel, and an effective marketing strategy. Additionally, it takes time for a new branch to gather sufficient loans and deposits to generate income sufficient to cover its operating expenses.
Added
The taxing authorities also regulate the information reporting requirements that Union is subject to, and which continue to increase and require resources to comply with. We may be required to write down goodwill and other identifiable intangible assets.
Added
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.
Added
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.
Added
Recent amendments to FDICIA and its implementing regulations increased the asset-size thresholds and modified certain requirements related to internal control reporting and auditor attestation.
Added
While these changes may affect the scope, timing, and cost of compliance, they do not reduce management’s responsibility to maintain effective internal controls over financial reporting or the risk that control deficiencies could arise. As we grow or as regulatory requirements evolve, we may become subject to additional or more stringent FDICIA requirements, including expanded documentation, testing, and governance expectations.
Added
We face the risk of losses arising from fraudulent or criminal activity, including unauthorized transactions, account takeovers, forged, altered, or counterfeit instruments, and other schemes targeting our customers, employees, or systems. These risks include, among others, check fraud, wire and ACH fraud, debit card fraud, mobile and remote deposit fraud, and other payment‑related misconduct.
Added
Fraudulent activity may be difficult to detect or prevent, particularly where transactions are initiated through customer channels or where applicable funds availability requirements require us to make funds available before fraudulent activity is identified. Despite the implementation of fraud detection systems, internal controls, customer authentication procedures, and employee training, such measures may not be effective in preventing all losses.
Added
Losses resulting from fraud may result in direct financial exposure, customer reimbursement obligations, litigation, regulatory scrutiny, reputational harm, or increased operational and compliance costs. In addition, evolving fraud techniques, including those that exploit remote deposit capture and other electronic delivery channels, may increase the frequency or severity of losses.
Added
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
Replacing these third party vendors could also entail significant business disruption, delay and expense. We are piloting and selectively using artificial intelligence and machine learning technologies in limited, primarily internal functions, which exposes us to operational, regulatory, and reputational risks that could adversely affect our business.
Added
We have begun piloting artificial intelligence (“AI”) and machine learning tools in certain internal and support functions, such as data analysis, fraud monitoring support, compliance processes, and operational efficiency initiatives. These technologies are complex and evolving, and our experience with them remains limited.
Added
AI systems may produce inaccurate, incomplete, or misleading outputs, or behave in ways that are difficult to predict or explain. Errors or failures in these tools—whether due to data limitations, model design, third‑party technology, or employee misuse—could impair decision‑making, reduce the effectiveness of internal controls, or require us to suspend or modify pilot programs.
Added
The legal and regulatory framework governing AI use in banking is developing and uncertain. Banking regulators have increased focus on governance, risk management, and controls related to emerging technologies, including AI. Although our current AI use is limited, our existing policies, procedures, and internal control frameworks may not fully address the risks associated with AI technologies.
Added
If regulators determine that our oversight, documentation, or controls are inadequate, we could be required to enhance governance, incur additional compliance costs, or limit future use of AI tools. In addition, even limited AI use may create reputational risk.
Added
Internal system failures, data issues, cybersecurity incidents, or negative perceptions regarding the appropriateness of AI use in banking could adversely affect our relationships with customers, regulators, and other stakeholders. As we evaluate whether to expand AI use over time, these risks may increase and could have a material adverse effect on our business, results of operations, or financial condition.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

10 edited+1 added−1 removed12 unchanged
Biggest changeIn the event a third-party vendor is unable to provide either a SOC 1 or SOC 2 report, this group conducts additional reviews to assess the cybersecurity preparedness of the specific vendor. This assessment of the risks associated with the use of third-party service providers is part of our overall vendor management and cybersecurity risk management framework.
Biggest changeMembers of our Information Security team work with department managers and application owners to review System and Organization Controls (“SOC”) 1 or SOC 2 reports. In the event a third-party vendor is required but unable to provide either a SOC 1 or SOC 2 report, this group conducts additional reviews to assess the cybersecurity preparedness of the specific vendor.
The Information Security team consists of Union's ISO, members of the risk and compliance department, security staff, and information technology members, all of whom collaboratively work together to manage cybersecurity risks. The ISO reports directly to Union's Senior Risk Officer.
The Information Security team consists of Union's ISO, members of the risk and compliance department, 24 security staff, and information technology members, all of whom collaboratively work together to manage cybersecurity risks. The ISO reports directly to Union's Senior Risk Officer.
As part of our assessment of the risks to our Company, the Information Security team conducts annual cybersecurity risk assessments to evaluate the inherent risk of our applications and the strength of our controls, and identify the residual risk for each application. In addition, we conduct regular reviews and testing of critical network and application systems to monitor their security.
As part of our assessment of the risks to our Company, the Information Security team conducts annual cybersecurity risk assessments to evaluate the inherent risk of our applications and the strength of our controls, and identify the residual risk for each application. In addition, we conduct regular reviews and testing of critical network and application systems to assess their security.
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.
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 and ability to minimize business disruption in the event we experience a cyber incident.
Union's IT Steering Committee has representation from the following departments: information technology, information security, other department leaders and stakeholders, and Union's senior management team. This Committee receives regular updates on the state of Union's cybersecurity program, including any incidents, as well as approving information technology or information security related projects and proposals.
Union's IT Steering Committee includes Bank information technology personnel, information security personnel, other department leaders and stakeholders, and Union's senior management team. This Committee receives regular updates on the state of Union's cybersecurity program, including any incidents, and reviews and approves information technology or information security related projects and proposals.
Before purchasing third-party technology or other solutions that could expose the Company’s assets and electronic information, our Information Security team completes security reviews on the vendors. Contracts are also negotiated to ensure language is included to address cybersecurity risk limitation and remediation. We also conduct ongoing reviews of cybersecurity risks associated with our third-party service providers.
Contracts are also negotiated to ensure language is included to address cybersecurity risk limitation and remediation. We also conduct ongoing reviews of cybersecurity risks associated with our third-party service providers. As part of the Company’s Vendor Management Program, periodic reviews are conducted for certain third-party vendors.
To assess the effectiveness of our program, we have engaged consultants to conduct penetration testing and other vulnerability assessments. Additionally, our Internal Audit department and external auditors conduct assessments of different systems to provide the Audit Committee with information on our risk management processes, including cybersecurity risk management.
Additionally, our Internal Audit department and external auditors conduct assessments of different systems to provide the Audit Committee with information on our risk management processes, including cybersecurity risk management. We also test our defenses internally and conduct regular cybersecurity simulations and tabletop exercises with members of senior management present.
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.
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. To assess the effectiveness of our program, we have engaged consultants to conduct penetration testing and other vulnerability assessments.
To 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.
For more information about the cybersecurity risks we face, see "Risk Factors - Operational Risks" in Part I, Item 1A of this Annual Report.
We also test our defenses internally and conduct regular cybersecurity simulations and tabletop exercises with members of senior management present. These tests and assessments provide useful insights into the strengths and weaknesses of our cybersecurity framework. Our cybersecurity framework is designed to protect our customers, employees, investors, and our intellectual property.
These tests and assessments provide useful insights into the strengths and weaknesses of our cybersecurity framework. Our cybersecurity framework is designed to protect our customers, employees, investors, and our intellectual property. Before purchasing third-party technology or other solutions that could expose the Company’s assets and electronic information, our Information Security team completes security reviews on the vendors.
Removed
As part of the Company’s Vendor Management Program, annual reviews are conducted for certain third-party vendors. Members of our Information Security team work with department managers and application owners to review System and Organization Controls (“SOC”) 1 or SOC 2 reports.
Added
This assessment of the risks associated with the use of third-party service providers is part of our overall vendor management and cybersecurity risk management framework. To date, cybersecurity risks have not materially affected us. We do experience attacks on our data and systems that have been halted by the technical policies and cybersecurity systems in place.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed1 unchanged
Biggest changeAdditional 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
Biggest changeUnion also owns or leases certain properties contiguous to its branch locations for staff and customer parking convenience. 25 Additional information relating to the Company's properties as of December 31, 2025, 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.
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 2. Properties As of December 31, 2025, 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.
Union leases three branch locations, one loan production office, land upon which the Williston branch was built, and certain ATM premises from third parties under terms and conditions considered by management to be favorable to Union. Union also owns or leases certain properties contiguous to its branch locations for staff and customer parking convenience.
Union leases three branch locations, one loan production office, land upon which the Williston branch was built, and certain ATM premises from third parties under terms and conditions considered by management to be favorable to Union.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+0 added−0 removed1 unchanged
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.
Biggest changePeriod Ended Index 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 Union Bankshares, Inc. 100.00 121.05 102.36 138.49 137.57 118.52 Nasdaq Composite Index 100.00 122.18 82.43 119.22 154.48 187.14 S&P U.S.
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.
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.” Issuances of Unregistered Shares; Repurchases of Common Stock The Company did not issue any unregistered shares during the quarter ended December 31, 2025.
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.
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, 2019 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, 2025.
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.
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. 26 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, 2019 through December 31, 2025.
There were no repurchases of the Company's equity securities during the quarter ended December 31, 2024.
There were no repurchases of the Company's equity securities during the quarter ended December 31, 2025.
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.
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, 2026, there were 4,614,047 shares of common stock outstanding held by 468 stockholders of record.
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.
SmallCap Banks Index 100.00 139.21 122.74 123.35 145.82 160.37 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.

Item 7. Management's Discussion & Analysis

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

143 edited+24 added−29 removed86 unchanged
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.
Biggest changeNet interest income, on a fully tax equivalent basis, increased $4.8 million to $44.0 million for the year ended December 31, 2025 compared to $39.3 million for the year ended December 31, 2024. 32 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, 2025 2024 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 $ 23,095 $ 740 3.16 % $ 26,576 $ 1,132 4.19 % Interest bearing deposits in banks 8,108 342 4.22 % 13,242 480 3.63 % Investment securities (2), (3) 296,683 7,674 2.59 % 294,669 6,689 2.27 % Loans, net (2), (4) 1,167,901 67,215 5.76 % 1,077,543 60,018 5.57 % Nonmarketable equity securities 11,733 831 7.09 % 8,207 541 6.58 % Total interest earning assets (2) 1,507,520 76,802 5.09 % 1,420,237 68,860 4.85 % Cash and due from banks 4,769 4,560 Premises and equipment 20,115 20,657 Other assets 26,084 19,972 Total assets $ 1,558,488 $ 1,465,426 Average Liabilities and Stockholders' Equity: Interest bearing checking accounts $ 305,321 $ 4,259 1.39 % $ 295,088 $ 3,605 1.22 % Savings/money market accounts 371,935 5,821 1.57 % 367,620 5,418 1.47 % Time deposits 288,878 11,332 3.92 % 279,180 11,551 4.14 % Borrowed funds and other liabilities 264,263 10,786 4.03 % 198,745 8,446 4.18 % Subordinated notes 16,289 570 3.50 % 16,255 570 3.51 % Total interest bearing liabilities 1,246,686 32,768 2.62 % 1,156,888 29,590 2.55 % Noninterest bearing deposits 220,993 226,388 Other liabilities 18,352 16,688 Total liabilities 1,486,031 1,399,964 Stockholders' equity 72,457 65,462 Total liabilities and stockholders’ equity $ 1,558,488 $ 1,465,426 Net interest income $ 44,034 $ 39,270 Net interest spread (2) (5) 2.47 % 2.30 % Net interest margin (2) (6) 2.93 % 2.77 % ____________________ (1) Average balances are calculated based on a daily averaging method.
The Company’s principal sources of funds are deposits; wholesale funding options including purchased deposits, amortization, prepayment and maturity of loans, investment securities, interest bearing deposits and other short-term investments; sales of securities AFS and loans; earnings; and funds provided from operations.
The Company’s 45 principal sources of funds are deposits; wholesale funding options including purchased deposits, amortization, prepayment and maturity of loans, investment securities, interest bearing deposits and other short-term investments; sales of securities AFS and loans; earnings; and funds provided from operations.
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.
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 28 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 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 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.
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.
At December 31, 2025 and 2024, 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, 2025 and the date of this report that management believes have changed either the Company’s or Union's regulatory capital category.
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.
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, 2025. In addition, our banking regulators, as an integral part of their examination process, periodically review our ACL.
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.
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, 2025 or 2024.
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 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 2025.
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.
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.
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.
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, 2025 and 2024.
See page 32 for more information. (2) The ratio of noninterest expenses to tax equivalent net interest income and noninterest income, excluding securities gains (losses). (3) The difference between the average yield on earning assets and the average rate paid on interest bearing liabilities. See page 32 for more information.
See page 33 for more information. (2) The ratio of noninterest expenses to tax equivalent net interest income and noninterest income, excluding securities gains (losses). (3) The difference between the average yield on earning assets and the average rate paid on interest bearing liabilities. See page 33 for more information.
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.
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, 2025. Deposits.
("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.
("the Company," "our," "we," "us") and its subsidiary, Union Bank ("Union"), as of December 31, 2025 and 2024, 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, 2024 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, 2025 is appropriate to cover expected credit losses over the expected life of the Company’s loan portfolio 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.
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 as of December 31, 2025 and 2024. There were no borrowings against this line of credit as of such date.
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.
The Company's loan review program encompasses a review process for loan documentation and 39 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.
Residential mortgage loan origination activity was strong throughout 2024. Despite the low housing inventory and higher interest rates, purchase activity in the Company's markets is stable with continued construction loan activity.
Residential mortgage loan origination activity was strong throughout 2025. Despite low housing inventory and higher interest rates, purchase activity in the Company's markets is stable, with continued construction loan activity.
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.
There were no commercial real estate or commercial loans sold during 2025 or 2024. The Company recognizes gains and losses on the sale of the principal portion of these loans at the time of sale.
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.
Wealth management income increased as managed fiduciary accounts grew between December 31, 2024 and 2025, as did the value of assets within those accounts. • Service fees.
See Note 22 to the Company's consolidated financial statements for additional discussion of the Company's and Union's regulatory capital ratios. Impact of Inflation and Changing Prices.
See Note 23 to the Company's consolidated financial statements for additional discussion of the Company's and Union's regulatory capital ratios. Impact of Inflation and Changing Prices.
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.
Although the FHLB was in compliance with all regulatory capital ratios as of December 31, 2025 and 2024, 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 classified as restricted and carried at cost in Other assets on the consolidated balance sheets.
The level of the ACL on loans at December 31, 2024 represents management's estimate of expected credit losses over the expected life of the loans at the balance sheet date.
The level of the ACL on loans at December 31, 2025 represents management's estimate of expected credit losses over the expected life of the loans at the balance sheet date.
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.
Low income housing tax credits with respect to limited partnership investments are also included as a component of income tax expense and amounted to $1.9 million and $1.8 million for the years ended December 31, 2025 and 2024, respectively. See Note 10 to the Company's consolidated financial statements.
Management is not aware of the occurrence of any events after December 31, 2024 which would materially affect the information presented.
Management is not aware of the occurrence of any events after December 31, 2025 which would materially affect the information presented.
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.
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 7 bps during 2025.
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.
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 $143.5 million of qualified residential real estate loans originated during 2025 to the secondary market compared to sales of $113.5 million during 2024.
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.
The Vermont unemployment rate was reported at 2.6% for December 2025 compared to 2.4% for December 2024 and the New Hampshire unemployment rate was 3.1% for December 2025 compared to 2.6% for December 2024. These rates compare favorably with the nationwide unemployment rate of 4.4% and 4.1%, respectively, for the comparable periods.
The proceeds from the sale of the Notes were utilized to provide additional capital to Union to support its growth and for other general corporate purposes.
Proceeds from the sale of the Notes were utilized primarily to provide additional Tier 1 capital to Union to support its growth and for other general corporate purposes.
FHLB letters of credit in the amount of $47.3 million and $42.4 million were utilized as collateral for these deposits at December 31, 2024 and December 31, 2023, respectively. Total fees paid by the Company in connection with the issuance of these letters of credit were $44 thousand for the years ended December 31, 2024 and 2023.
FHLB letters of credit in the amount of $42.9 million and $47.3 million were utilized as collateral for these deposits at December 31, 2025 and 2024, respectively. Total fees paid by the Company in connection with the issuance of these letters of credit were $50 thousand and $44 thousand for the years ended December 31, 2025 and 2024, respectively.
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.
Approximately $43.6 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.
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.
At December 31, 2025, Union, as a member of FHLB, had access to unused lines of credit up to $48.3 million, over and above the $332.2 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.
Management is projecting some relief in the cost of funds for 2025 as interest rates on customer deposits decline in 2025 due to the cumulative 100 bps decrease in the Federal Funds target range during 2024. Market rates are out of the Company's control but can have a dramatic impact on net interest income.
Management is projecting some relief in the cost of funds for 2026 as interest rates on customer deposits decline in 2026 due to the cumulative 75 bps decrease in the Federal Funds target range during 2025. Market rates are out of the Company's control but can have a significant impact on net interest income.
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.
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, 2025, the Company had binding commitments to sell residential mortgage loans at fixed rates totaling $4.2 million.
Investment securities AFS with a fair value of $96.0 million and $926 thousand were pledged as collateral for FHLB borrowings and other credit subject to collateralization, public unit deposits or for other purposes as required or permitted by law at December 31, 2024 and 2023, respectively.
Investment securities AFS with a fair value of $87.8 million and $96.0 million were pledged as collateral for FHLB borrowings and other credit subject to collateralization, for public unit deposits or for other purposes as required or permitted by law at December 31, 2025 and 2024, respectively.
The ACL on off-balance sheet credit exposures totaled $1.1 million and $1.2 million at December 31, 2024 and 2023, respectively, and was included in Accrued interest and other liabilities on the consolidated balance sheets.
The ACL on off-balance sheet credit exposures totaled $1.1 million at December 31, 2025 and 2024 and was included in Accrued interest and other liabilities on the consolidated balance sheets.
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.
Qualifying residential first lien mortgage loans and certain commercial real estate loans with a carrying value of $492.9 million and $394.5 million were pledged as collateral for borrowings from the FHLB under a blanket lien at December 31, 2025 and 2024, respectively.
Repossessed assets and loans or investments that are 90 days or more past due or in nonaccrual status are considered to be nonperforming assets.
Repossessed assets, nonaccrual loans, and loans that are 90 days or more past due are considered to be nonperforming assets.
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.
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 $14.6 million of lines available under the overdraft privilege program and is included in the 2026 funding period.
Uninsured deposits have been estimated to include deposits with balances greater than the FDIC insurance coverage limit of $250 thousand. This estimate is based on the same methodologies and assumptions used for regulatory reporting requirements. At December 31, 2024, the Company had estimated uninsured deposit accounts totaling $436.6 million, or 37.4% of total deposits.
Uninsured deposits have been estimated to include deposits with balances greater than the FDIC insurance coverage limit of $250 thousand. This estimate is based on the same methodologies and assumptions used for regulatory reporting requirements. At December 31, 2025, the Company had estimated uninsured deposit accounts totaling $437.6 million, or 36.0% of total deposits.
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.
Sales of qualifying residential loans to the secondary market for the year ended December 31, 2025 were $143.5 million, resulting in gain on sales of $2.1 million, compared to sales of $113.5 million and gain on sales of $1.7 million for the year ended December 31, 2024.
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 had loans rated substandard that were on a performing status totaling $531 thousand and $768 thousand at December 31, 2025 and 2024, respectively. In management's view, such loans represent a higher degree of risk of becoming nonperforming loans in the future.
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.
The Company capitalizes MSRs for all loans sold with servicing retained. The unamortized balance of MSRs on loans sold with servicing retained was $1.8 million and $1.7 million at December 31, 2025 and 2024, 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.
Management performs, and shares with the Board, periodic concentration analyses based on various factors such as industries, collateral types, location, large credit sizes and officer portfolio loads. Board approved policies set forth portfolio diversification levels to mitigate concentration risk and the Company participates large credits out to other financial institutions to further mitigate that risk.
Management performs, and shares with the Board, periodic concentration analyses based on various factors such as industries, collateral types, location, large credit sizes and officer portfolio loads. Board approved policies set forth portfolio diversification levels to mitigate concentration risk and the Company participates a portion of significant loan balances to other financial institutions to further mitigate that risk.
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.
The net change in the Company's loan portfolio from December 31, 2024 (see table below) resulted primarily from an increase in the volume of revolving residential, commercial real estate and municipal loans.
At December 31, 2024, the Company serviced a $1.16 billion residential real estate mortgage portfolio, of which $5.2 million was held for sale and approximately $684.8 million was serviced for unaffiliated third parties.
This compares to a residential real estate mortgage servicing portfolio of $1.16 billion at December 31, 2024, of which $5.2 million was held for sale and approximately $684.8 million was serviced for unaffiliated third parties.
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.
Borrowed funds included FHLB advances of $286.5 million with a weighted average rate of 4.05% at December 31, 2025 and $259.7 million with a weighted average rate of 4.17% at December 31, 2024. 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.
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.
Uninsured deposits include $22.0 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, 2025, as described below under Borrowings.
In December 2023, the Company's Board reauthorized for 2024 the limited stock repurchase plan that was initially established in May of 2010.
In December 2024, the Company's Board reauthorized for 2025 and 2026 the limited stock repurchase plan that was initially established in May of 2010.
For further details, see FINANCIAL CONDITION - Allowance for Credit Losses on Loans and Commitments, Contingent Liabilities, and Off-Balance-Sheet Arrangements below. 33 Credit loss expense (benefit) was made up of the following components for the following periods: For the Years Ended December 31, 2024 2023 (Dollars in thousands) Credit loss expense (benefit) for loans $ 1,092 $ (274) Credit loss benefit for off-balance sheet credit exposures (162) (225) Credit loss expense (benefit), net $ 930 $ (499) Noninterest Income.
For further details, see FINANCIAL CONDITION - Allowance for Credit Losses on Loans and Commitments, Contingent Liabilities, and Off-Balance-Sheet Arrangements below. 34 Credit loss expense was made up of the following components for the following periods: For the Years Ended December 31, 2025 2024 (Dollars in thousands) Credit loss expense for loans $ 755 $ 1,092 Credit loss expense (benefit) for off-balance sheet credit exposures 19 (162) Credit loss expense, net $ 774 $ 930 Noninterest Income.
The Company's policy and methodologies related to establishing the ACL on loans are described in Note 1, Significant Accounting Policies and 40 Note 7, Allowance for Credit Losses on Loans and Off-Balance Sheet Credit Exposures to the Company's financial statements. The Company's ACL on loans was $7.7 million and $6.6 million at December 31, 2024 and December 31, 2023, respectively.
The Company's policy and methodologies related to establishing the ACL on loans are described in Note 1, Significant Accounting Policies and Note 7, Allowance for Credit Losses on Loans and Off-Balance Sheet Credit Exposures, to the Company's consolidated 41 financial statements. The Company's ACL on loans was $8.4 million and $7.7 million at December 31, 2025 and 2024, respectively.
There was $162 thousand and $225 thousand of credit loss benefit for off-balance sheet credit exposures recorded for the years ended December 31, 2024 and 2023, respectively. Liquidity .
There was $19 thousand of credit loss expense and $162 thousand of credit loss benefit for off-balance sheet credit exposures recorded for the years ended December 31, 2025 and 2024, respectively. Liquidity .
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.
As with the CDARS program, in addition to reciprocal deposits, participating banks may also purchase one-way ICS deposits. There were $270.5 million and $256.5 million in exchanged ICS demand and money market deposits on the balance sheets at December 31, 2025 and 2024, respectively. There were no purchased ICS deposits at December 31, 2025 or December 31, 2024.
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.
As of December 31, 2025, the notional amount of the maximum contingent contractual liability related to this program was $1.3 million, of which $19 thousand was recorded as a reserve through Accrued interest and other liabilities. Since inception of the Company's MPF participation in 2015, the Company has not experienced any losses under this program.
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.
Net unrealized losses in the Company's AFS investment securities portfolio were $33.1 million at December 31, 2025 compared to net unrealized losses of $43.6 million at December 31, 2024. The Company's accumulated OCI component of stockholders' equity at December 31, 2025 and 2024 reflected cumulative net unrealized losses on investment securities of $25.9 million and $34.0 million, respectively.
These loans were participated in the ordinary course of business on a nonrecourse basis, for liquidity or credit concentration management purposes. 37 As of December 31, 2024, total loans serviced had grown to $1.88 billion, which includes total loans on the balance sheet of $1.16 billion as well as total loans sold with servicing retained of $722.1 million, compared to total loans serviced of $1.70 billion as of December 31, 2023.
These loans were participated in the ordinary course of business on a nonrecourse basis, for liquidity or credit concentration management purposes. 38 As of December 31, 2025, total loans serviced had grown to $1.95 billion, which includes total loans on the balance sheet of $1.18 billion as well as total loans sold with servicing retained of $773.0 million, compared to total loans serviced of $1.88 billion as of December 31, 2024.
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.
There were no loans in process of foreclosure at December 31, 2025 and one residential real estate loan totaling $8 thousand in process of foreclosure at December 31, 2024. The aggregate interest on nonaccrual loans not recognized was $791 thousand and $235 thousand for the years ended December 31, 2025 and 2024, respectively.
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 average yield on federal funds sold and overnight deposits decreased 103 bps between the twelve month comparison periods due to a decrease in the average balance maintained in Union's master account at the FRB and the average rate paid on these balances.
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.
The Company serviced $38.1 million and $37.3 million of commercial and commercial real estate loans for unaffiliated third parties as of December 31, 2025 and 2024, respectively. This includes $33.6 million and $36.3 million of commercial or commercial real estate loans the Company had participated out to other financial institutions at December 31, 2025 and 2024, 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.
Consolidated net income was $11.1 million, with basic earnings per share of $2.43 for 2025 compared to consolidated net income of $8.8 million, and basic earnings per share of $1.94 for 2024, while diluted earnings per share for the same periods were $2.41 and $1.92, 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, 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.
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, 2025 and 2024: Years Ended December 31, 2025 2024 (Dollars in thousands) Net interest income as presented $ 43,020 $ 38,364 Effect of tax-exempt interest Investment securities 139 201 Loans 875 705 Net interest income, tax equivalent $ 44,034 $ 39,270 Rate/Volume Analysis.
The net interest margin decreased 11 bps for the year ended December 31, 2024 compared to the year ended December 31, 2023 as a result of the changes discussed above.
The net interest margin increased 16 bps for the year ended December 31, 2025 compared to the year ended December 31, 2024 as a result of the changes discussed above.
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.
There were $10.0 million of retail brokered deposits issued under a master certificate of deposit program with a broker, $248 thousand in purchased CDARS deposits, and no purchased ICS deposits or outstanding advances on the Union correspondent line as of December 31, 2025.
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.
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.
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.
There was $1.7 million and $2.0 million guaranteed under these various programs at December 31, 2025 and 2024, respectively, on aggregate balances of $2.2 million and $2.6 million in subject loans as of such dates, 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'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 Company's total capital increased from $66.5 million at December 31, 2024 to $80.9 million at December 31, 2025. This increase primarily reflects net income of $11.1 million for 2025 and a decrease of $8.1 million in accumulated other comprehensive loss, partially offset by regular cash dividends paid of $6.6 million.
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.
The following table reflects activity in the ACL on loans for the years ended December 31: 2025 2024 (Dollars in thousands) Balance at beginning of period $ 7,680 $ 6,566 Charge-offs (47) (3) Recoveries 19 25 Net (charge-offs) recoveries (28) 22 Credit loss expense 755 1,092 Balance at end of period $ 8,407 $ 7,680 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: 2025 2024 Amount Percent Amount Percent Residential real estate (Dollars in thousands) Non-revolving residential real estate $ 2,913 34.6 $ 3,212 38.5 Revolving residential real estate 263 3.1 280 1.9 Construction real estate Commercial construction real estate 654 7.8 651 4.8 Residential construction real estate 186 2.2 102 4.4 Commercial real estate Non-residential commercial real estate 3,755 44.7 2,766 28.6 Multi-family residential real estate 239 2.8 212 9.0 Commercial 292 3.5 377 3.0 Consumer 5 0.1 6 0.2 Municipal 100 1.2 74 9.6 Total $ 8,407 100.0 $ 7,680 100.0 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 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.
The net interest margin was 2.93% for the year ended December 31, 2025 compared to 2.77% for the year ended December 31, 2024, while the net interest spread for the same periods were 2.47% and 2.30%, respectively.
Investment securities classified as AFS are marked-to-market, with any unrealized gain or loss after estimated taxes charged to the equity portion of the balance sheet through the accumulated OCI component of stockholders' equity.
There were no investment securities classified as HTM or as trading at December 31, 2025 or 2024. 42 Investment securities classified as AFS are marked-to-market, with any unrealized gain or loss after estimated taxes charged to the equity portion of the balance sheet through the accumulated OCI component of stockholders' equity.
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.
As of December 31, 2025, the Company had sold loans through the MPF program totaling $68.7 million with an outstanding balance of $35.5 million. The volume of loans sold to the MPF program and the corresponding Credit Enhancement Obligation are closely monitored by management.
With the increase in FHLB advances outstanding of $204.0 million, the investment in FHLB Class B common stock has increased to $11.2 million at December 31, 2024 compared to $3.1 million at December 31, 2023.
With the increase in FHLB advances outstanding of $26.8 million, the investment in FHLB Class B common stock has increased to $12.2 million at December 31, 2025 compared to $11.2 million at December 31, 2024.
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.
Tier I capital to risk weighted assets increased to 10.3% at December 31, 2025, from 10.0% at December 31, 2024, and Tier I capital to average assets increased to 6.4% at December 31, 2025 from 6.3% at December 31, 2024.
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.
The net interest spread increased 17 bps to 2.47% for the year ended December 31, 2025, from 2.30% for the same period last year, reflecting the net effect of the 24 bps increase in the average yield earned on interest earning assets, partially offset by the 7 bps increase in the average rate paid on interest bearing liabilities between periods.
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.
Amortization expense related to limited partnership investments included as a component of income tax expense amounted to $1.8 million and $1.7 million for the years ended December 31, 2025 and 2024, respectively. These investments provide tax benefits, including tax credits.
The average earning asset base increased $77.2 million between periods and the average yield on average earning assets increased 54 bps to 4.85% for the year ended December 31, 2024 compared to 4.31% for the year ended December 31, 2023.
The average earning asset base increased $87.3 million between periods and the average yield on average earning assets increased 24 bps to 5.09% for the year ended December 31, 2025 compared to 4.85% for the year ended December 31, 2024.
There was no material change in the Company's lending programs or terms during 2024. 36 The composition of the Company's loan portfolio, including loans held for sale, were as follows as of December 31 : December 31, 2024 December 31, 2023 Loan Class Amount Percent Amount Percent Residential real estate (Dollars in thousands) Non-revolving residential real estate $ 445,425 38.4 $ 397,409 38.5 Revolving residential real estate 21,884 1.9 18,902 1.8 Construction real estate Commercial construction real estate 54,985 4.7 36,973 3.6 Residential construction real estate 51,202 4.4 51,662 5.0 Commercial real estate Non-residential commercial real estate 330,010 28.4 298,148 29.0 Multi-family residential real estate 104,328 9.0 105,344 10.2 Commercial 35,175 3.0 40,448 3.9 Consumer 2,523 0.3 2,589 0.3 Municipal 110,204 9.5 76,795 7.4 Loans held for sale 5,204 0.4 3,070 0.3 Total loans 1,160,940 100.0 1,031,340 100.0 ACL on loans (7,680) (6,566) Unamortized net loan costs 2,162 1,752 Net loans and loans held for sale $ 1,155,422 $ 1,026,526 The Company originates and sells qualified residential mortgage loans in various secondary market avenues, with a majority of sales made to the FHLMC/Freddie Mac, generally with servicing rights retained.
There was no material change in the Company's lending programs or terms during 2025. 37 The composition of the Company's loan portfolio, including loans held for sale, was as follows as of December 31 : December 31, 2025 December 31, 2024 Loan Class Amount Percent Amount Percent Residential real estate (Dollars in thousands) Non-revolving residential real estate $ 445,199 37.8 $ 445,425 38.4 Revolving residential real estate 29,075 2.5 21,884 1.9 Construction real estate Commercial construction real estate 51,347 4.4 54,985 4.7 Residential construction real estate 52,478 4.5 51,202 4.4 Commercial real estate Non-residential commercial real estate 345,900 29.3 330,010 28.4 Multi-family residential real estate 99,269 8.4 104,328 9.0 Commercial 31,159 2.6 35,175 3.0 Consumer 2,414 0.1 2,523 0.3 Municipal 117,893 10.0 110,204 9.5 Loans held for sale 4,172 0.4 5,204 0.4 Total loans 1,178,906 100.0 1,160,940 100.0 ACL on loans (8,407) (7,680) Unamortized net loan costs 2,066 2,162 Net loans and loans held for sale $ 1,172,565 $ 1,155,422 The Company originates and sells qualified residential mortgage loans in various secondary market avenues, with a majority of sales made to the FHLMC/Freddie Mac, generally with servicing rights retained.
As of December 31, 2024, the Company had total consolidated assets of $1.53 billion, an increase of 4.0% compared to total consolidated assets of $1.47 billion at December 31, 2023.
As of December 31, 2025, the Company had total consolidated assets of $1.62 billion, an increase of 5.8% compared to total consolidated assets of $1.53 billion at December 31, 2024.
Net loans and loans held for sale increased $128.9 million, or 12.6%, to $1.16 billion, or 75.6% of total assets, at December 31, 2024, compared to $1.03 billion, or 69.9% of total assets, at December 31, 2023.
Net loans and loans held for sale increased $17.1 million or 1.5%, to $1.17 billion, or 72.5% of total assets, at December 31, 2025, compared to $1.16 billion, or 75.6% of total assets, at December 31, 2024.
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.
Risk Factors". 30 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, 2025 and 2024: 2025 2024 Return on average assets 0.71 % 0.60 % Return on average equity 15.29 % 13.38 % Net interest margin (1) 2.93 % 2.77 % Efficiency ratio (2) 75.14 % 77.62 % Net interest spread (3) 2.47 % 2.30 % Loan to deposit ratio 97.03 % 99.32 % Net charge-offs (recoveries) to total average loans — % — % ACL on loans to loans not held for sale 0.72 % 0.66 % Nonperforming assets to total assets (4) 0.85 % 0.12 % Equity to assets 5.00 % 4.35 % Total capital to risk weighted assets (5) 12.80 % 12.53 % Book value per share $ 17.53 $ 14.65 Basic earnings per share $ 2.43 $ 1.94 Diluted earnings per share $ 2.41 $ 1.92 Dividends paid per share $ 1.44 $ 1.44 Dividend payout ratio (6) 59.26 % 74.23 % __________________ (1) The ratio of tax equivalent net interest income to average earning assets.
The following table provides a maturity distribution of the Company’s time deposits in amounts in excess of the $250 thousand FDIC insurance limit at December 31: 2024 2023 (Dollars in thousands) Three months or less $ 24,544 $ 11,512 Over three months through six months 16,004 10,800 Over six months through twelve months 20,257 19,872 Over twelve months 918 622 $ 61,723 $ 42,806 Borrowings.
The following table provides a maturity distribution of the Company’s time deposits in amounts in excess of the $250 thousand FDIC insurance limit at December 31: 2025 2024 (Dollars in thousands) Three months or less $ 29,593 $ 24,544 Over three months through six months 17,267 16,004 Over six months through twelve months 21,713 20,257 Over twelve months 523 918 $ 69,096 $ 61,723 Borrowings.
The Company's maximum exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.
The Company's maximum exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those 44 instruments.

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