UNION BANKSHARES INC
For the period ended Dec 31, 2024. Filed Mar 25, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 25, 2025
UNB$22.96+0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-03-26.
0000706863-24-000028
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-25.
0000706863-25-000044
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 165 previous paragraphs and 165 current paragraphs.
73 unchanged; 78 reworded; 11 added; 12 removed; 2 previous and 3 current paragraphs rearranged.
Tables are not compared: 16 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
The Company completed a balance sheet repositioning related to its investment securities portfolio during the third quarter of 2024. The sale of lower-yielding AFS debt securities with a book value of $38.5 million was executed and recorded in August of 2024, resulting in a pre-tax realized loss on the sale of $1.3 million. The proceeds from the sale of these securities were used to purchase $26.0 million of AFS debt securities at higher yields to improve income going forward, and the remainder was used to fund loan growth. The Company estimates the loss on the sale will be recouped within approximately one year.
Current report
Credit Loss Expense (Benefit). Credit loss expense or benefit is made up of credit loss expense on loans and credit loss expense on off-balance sheet credit exposures. Credit loss expense on loans results from net charge-offs, changes to the projected loss drivers, prepayment speeds, curtailments and time to recovery that the Company forecasted over the reasonable and supportable forecast periods and changes in the volume and mix of the loan portfolio. Credit loss expense on off-balance sheet credit exposures results from changes in outstanding commitments and changes in funding rates and assumed loss rates period over period. For further details, see FINANCIAL CONDITION -Allowance for Credit Losses on Loans and Commitments, Contingent Liabilities, and Off-Balance-Sheet Arrangements below.
Current report
•Net losses on sales of investment securities AFS. As discussed above, the Company completed a balance sheet repositioning related to its investment securities portfolio during 2024. The sale of lower-yielding AFS debt securities with a book value of $38.5 million was executed and recorded in August of 2024, resulting in a pre-tax realized loss on the sale of $1.3 million.
Current report
•Occupancy expense, net. The increase in occupancy expense of $159 thousand is primarily due to increases in depreciation expense related to leasehold improvements to the North Conway location that became a full service branch during the fourth quarter of 2023, as well as increases in repair and maintenance expenses at other locations.
Current report
•Equipment expense. Equipment expense increased primarily due to an increase in software license and maintenance costs associated with outsourcing Union's core application processing system that was finalized during the fourth quarter of 2023.
Current report
•ATM and debit card expense. The $351 thousand increase between years primarily relates to the costs associated with outsourcing Union's core application processing system that was finalized during the fourth quarter of 2023, as well as costs associated with a change in the servicing arrangement in place for the ATM machines.
Current report
•Advertising and public relations. The increase in advertising and public relations costs is primarily related to advertising campaigns and business development activities during 2024 that did not occur in 2023.
Current report
•Electronic banking expense. The increase in electronic banking expense related to software initiatives that were implemented to the online banking platform in the fourth quarter of 2024.
Current report
•Training and development. The cost associated with attending conferences and educational events during 2024 decreased $48 thousand compared to events attended in 2023.
Current report
Total deposits decreased $136.7 million, or 10.5% to $1.17 billion at December 31, 2024, from $1.31 billion at December 31, 2023. There were decreases in noninterest bearing deposits of $24.9 million, or 9.9%, interest bearing deposits of $50.8 million, or 6.6%, and in time deposits of $60.9 million, or 21.1% .
Current report
The Company completed a balance sheet repositioning related to its investment securities portfolio during the third quarter of 2024. This transaction consisted of the sale of lower-yielding AFS debt securities with a book value of $38.5 million, resulting in a pre-tax realized loss on the sale of $1.3 million, which was recorded in August of 2024. $26.0 million of the proceeds from the sale of these securities were used to purchase AFS debt securities at higher yields to improve income going forward, and the remainder was used to fund loan growth.
Removed paragraphs (12)
Previous report
Credit Loss Expense (Benefit). The Company adopted ASU No. 2016-13 to account for the ACL, effective January 1, 2023. As such, ACL and credit loss benefit as of and for the year ended December 31, 2023 were accounted for under CECL in accordance with the ASU. In accordance with previously applicable GAAP, the ACL and credit loss expense as of and for the year ended December 31, 2022 were accounted for under the incurred loss methodology. Refer to Note 1, Significant Accounting Policies for a description of the Company's accounting policies for the ACL.
Previous report
•Occupancy expense, net. The increase in occupancy expense of $122 thousand is primarily due to increases in utilities and taxes, partially offset by a decrease in repair and maintenance expense. Additionally, lease expense increased $67 thousand primarily due to a new lease for a full service branch location in North Conway, NH.
Previous report
•ATM network and debit card expense. The decrease in ATM network and debit card expense between periods is primarily due to the ending of the debit card Scorecard rewards program during 2023, resulting in a decrease of $226 thousand in expense compared to 2022. This decrease was offset by $155 thousand of increases related to an increase in the volume of ATM and debit card transactions and new card issuance costs.
Previous report
•Other loan related expenses. There was an increase of $81 thousand in the costs incurred for originating and servicing loans during 2023. These costs include insurance and property tax tracking expenses, credit report fees and other real estate closing costs.
Previous report
•Communications. The increase in expense between 2023 and 2022 was primarily due to an increase in remote ATM telecommunication costs.
Previous report
•Donations. Charitable donations are made as part of the Company's on-going commitment to enhancing the economic vitality and social welfare of our communities. The $102 thousand increase in donations was primarily due to contributions made to assist communities with recovery efforts related to the July 2023 historic flood that occurred in the State of Vermont.
Previous report
•Training and development. Training and development events that were suspended or held as virtual events in the prior year due to the impacts of COVID-19 have resumed in-person, resulting in increased expense of $112 thousand between comparison periods.
Previous report
•Other losses. Other losses primarily consist of debit card fraud on customer accounts, charged off checking accounts, and fraudulent check cashing schemes. Hackers continue to become more sophisticated and are being more successful in hacking customer debit cards, resulting in an increase in losses sustained by the Company. New debit cards are issued to customers whose accounts have been compromised.
Previous report
•Insurance expense. Blanket bond insurance costs increased in 2023 due to adjustments to the amortization period of the existing policies.
Previous report
Total deposits increased $103.7 million, or 8.6% to $1.3 billion at December 31, 2023, from $1.2 billion at December 31, 2022. There were increases in time deposits of $135.9 million, or 88.8% and interest bearing deposits of $3.0 million, or 0.4%, which were partially offset by a decrease in noninterest bearing deposits of $35.2 million, or 12.3%. (See average balances and rates in the Yields Earned and Rates Paid table on page 32.)
Previous report
In response to recent bank failures, the FRB created the BTFP in March 2023 to provide liquidity to U.S. depository institutions which allows any federally insured depository institution to pledge as collateral its investment portfolio at par, not at fair market value. At December 31, 2023, the Company had an outstanding BTFP advance of $10.0 million at a rate of 4.85% due December 23, 2024.
Previous report
Beginning in March 2022, the FOMC voted to increase the federal funds rate multiple times from a range of 0.00% to 0.25% to a range of 5.25% to 5.50% on July 26, 2023, when the FOMC stated that it will continue to assess additional information and its implications for monetary policy. At its most recent meeting on January 31, 2024, the FOMC decided to maintain the target range for the federal funds rate at the range set following its July 26, 2023 meeting. The FOMC indicated, in consideration of adjustments to the target range for the federal funds rate, it will carefully assess incoming data, the evolving outlook, and the balance of risk. Further, it indicated that it does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward its long-term target of 2%.
Reworded paragraphs (78)
Previous wording
Credit Losses (CECL), requires that expected credit losses for financial assets held at the reporting date that are accounted for at amortized cost be measured and recognized based on historical experience and current and reasonably supportable forecasted conditions to reflect the full amount of expected credit losses. CECL also applies to certain off-balance sheet credit exposures, such as loan commitments, standby letters of credit, financial guarantees and other similar investments. The Company believes the allowance for credit losses (ACL) on loans and off-balance sheet credit exposures is a critical accounting policy that requires the most significant judgments and estimates used in the preparation of its consolidated financial statements. CECL may create more volatility in the level of the ACL from quarter to quarter as the ACL is now dependent upon macroeconomic forecasts and conditions, loan portfolio volumes and credit quality, among other things. For additional information on CECL, refer to Note 1 of the consolidated financial statements.
Current wording
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 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. CECL also applies to certain off-balance sheet credit exposures, such as loan commitments, standby letters of credit, financial guarantees and other similar investments. The Company believes the allowance for credit losses (ACL) on loans and off-balance sheet credit exposures is a critical accounting policy that requires the most significant judgments and estimates used in the preparation of its consolidated financial statements. CECL may create volatility in the level of the ACL from quarter to quarter as the ACL is dependent upon macroeconomic forecasts and conditions, loan portfolio volumes and credit quality, among other things.
Previous wording
The Company, like other financial institutions, has experienced earnings pressure due to the prolonged and steep yield curve inversion. The sharp increases in short-term rates have had a significant impact on the Company's funding costs due to higher rates paid on deposit accounts and increased utilization of wholesale funding at higher costs. The Company’s financial position remains strong, supported by a diverse deposit base, a strong liquidity position, excellent asset quality, and regulatory capital in excess of all required levels. The Company continues to focus on gathering deposits, optimization of the net interest margin and maintaining strong asset quality.
Current wording
The Company, like other financial institutions, has experienced earnings pressure due to the prolonged and steep yield curve inversion. The sharp increases in short-term rates during 2022 and 2023 have had a significant impact on the Company's funding costs due to higher rates paid on deposit accounts and increased utilization of wholesale funding at higher costs. The Company’s financial position remains strong, supported by a diverse deposit base, a strong liquidity position, excellent asset quality, and regulatory capital in excess of all required levels. The Company continues to focus on gathering deposits, optimization of the net interest margin and maintaining strong asset quality.
Previous wording
The Company's earnings have been impacted by the inverted yield curve, as deposit and funding costs have risen at a faster pace than assets have repriced, which has resulted in compression of the net interest margin and spread. The net interest margin was 2.88% for the year ended December 31, 2023 compared to 3.28% for the year ended December 31, 2022, while the net interest spreads for the same periods were 2.50% and 3.13%, respectively. We continue to manage the net interest margin and spread, by remaining disciplined on loan and deposit pricing, utilizing brokered and retail CDs when appropriate to reduce our exposure to high short-term interest rates, and maximizing our balance sheet collateral (i.e. loans and investment securities) to obtain wholesale funding in a cost effective way to fund loan growth.
Current wording
The Company's earnings have been impacted by the inverted yield curve, as deposit and funding costs have risen at a faster pace than assets have repriced, which has resulted in compression of the net interest margin and spread. 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. We continue to manage the net interest margin and spread by remaining disciplined on loan and deposit pricing, utilizing FHLB advances and brokered CDs when appropriate to reduce our exposure to high short-term interest rates, and maximizing our balance sheet collateral (i.e. loans and investment securities) to obtain wholesale funding in a cost effective way to fund loan growth.
Previous wording
The Company's consolidated net income was $11.3 million, with basic earnings per share of $2.50 for 2023 compared to $12.6 million, and basic earnings per share of $2.81 for 2022, while diluted earnings per share for the same periods were $2.48 and $2.79, respectively. The decrease in net income reflects a decrease in net interest income of $1.6 million or 4.0%, an increase in noninterest expenses of $1.7 million, or 5.2%, partially offset by an increase in noninterest income of $451 thousand, or 4.8%, a reduction in the provision for income taxes of $1.0 million, or 38.4%, and a decrease in credit loss expense of $499 thousand.
Current wording
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. The decrease in net income was due to the combined effects of the $1.3 million loss on the sale of AFS debt securities discussed above, increases in noninterest expenses of $2.7 million, or 7.5%, and $1.4 million in credit loss expense, partially offset by increases of $1.1 million in noninterest income, excluding the loss on the sale of AFS debt securities, an increase in net interest income of $521 thousand or 1.4%, and a reduction in the provision for income taxes of $1.3 million, or 77.2%.
Previous wording
Sales of qualifying residential loans to the secondary market for the year ended December 31, 2023 were $75.6 million resulting in gain on sales of $1.2 million, compared to sales of $78.0 million and gain on sales of $1.0 million for the year ended December 31, 2022.
Current wording
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.
Previous wording
As of December 31, 2023, the Company had total consolidated assets of $1.5 billion, an increase of 9.9% compared to total consolidated assets of $1.3 billion at December 31, 2022. Total investments increased $14.4 million, or 5.7%, to $265.9 million, or 18.1% of total assets at December 31, 2023 compared to $251.5 million, or 18.8% of total assets, as of December 31, 2022. Net loans and loans held for sale increased $74.2 million or 7.8%, to $1.0 billion, or 69.9% of total assets, at December 31, 2023, compared to $952.3 million, or 71.3% of total assets, at December 31, 2022. The level of federal funds sold increased $39.9 million, or 119.4%, to $73.2 million at December 31, 2023 compared to $33.4 million at December 31, 2022.
Current wording
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. Total investments decreased $13.6 million, or 5.1%, to $252.3 million, or 16.5% of total assets at December 31, 2024 compared to $265.9 million, or 18.1% of total assets, as of December 31, 2023. Net loans and loans held for sale increased $128.9 million or 12.6%, to $1.2 billion, or 75.6% of total assets, at December 31, 2024, compared to $1.0 billion, or 69.9% of total assets, at December 31, 2023. The level of federal funds sold decreased $62.6 million, or 85.4%, to $10.7 million at December 31, 2024 compared to $73.2 million at December 31, 2023.
Previous wording
Deposits increased $103.7 million, or 8.6%, primarily due to wholesale deposit funding. Total deposits were $1.3 billion at December 31, 2023 and included $103.0 million of retail brokered deposits and $50.2 million of purchased ICS deposits, compared to $1.2 billion at December 31, 2022 that included $33.0 million of retail brokered deposits. Borrowed funds were $65.7 million at December 31, 2023 compared to $50.0 million at December 31, 2022.
Current wording
Deposits decreased $136.7 million, or 10.5%, primarily due to a decrease in wholesale deposit funding. Total deposits were $1.17 billion at December 31, 2024 compared to $1.31 billion at December 31, 2023. There were $103.0 million of retail brokered deposits and $50.2 million of purchased ICS deposits at December 31, 2023, and no retail brokered deposits or purchased ICS deposits at December 31, 2024. Borrowed funds were $259.7 million at December 31, 2024 compared to $65.7 million at December 31, 2023.
Previous wording
The Company's total capital increased from $55.2 million at December 31, 2022 to $65.8 million at December 31, 2023. This increase primarily reflects net income of $11.3 million for 2023 and a decrease of $5.5 million in accumulated other comprehensive loss, partially offset by regular cash dividends paid of $6.5 million. (See Capital Resources on pages 46 to 47.) These changes also resulted in an increase in the Company's book value per share to $14.56 at December 31, 2023 from $12.25 as of December 31, 2022.
Current wording
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. (See Capital Resources on pages 45 to 46.) These changes also resulted in an increase in the Company's book value per share to $14.65 at December 31, 2024 from $14.56 as of December 31, 2023.
Previous wording
Return on average assets is a financial metric often utilized as an indicator of a financial institution's performance. The Company's return on average assets decreased 18 bps for the year ended December 31, 2023 compared to 2022 due to an increase in average assets of $115.2 million and a decrease in net income of $1.4 million for the year ended December 31, 2023.
Current wording
Return on average assets is a financial metric often utilized as an indicator of a financial institution's performance. 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.
Previous wording
For the year ended December 31, 2023, net income was $11.3 million compared to $12.6 million for the year ended December 31, 2022. The primary components of these results, which include net interest income, noninterest income, noninterest expenses, and provision for income taxes, are discussed below:
Current wording
For the year ended December 31, 2024, net income was $8.8 million compared to $11.3 million for the year ended December 31, 2023. The primary components of these results, which include net interest income, noninterest income, noninterest expenses, and provision for income taxes, are discussed below:
Previous wording
Interest earned on average earning assets for the year ended December 31, 2023 was $57.1 million compared to $43.9 million for the year ended December 31, 2022, an increase of $13.2 million, or 29.9%. The average earning asset base increased $126.9 million between periods and the average yield on average earning assets increased 66 bps to 4.31% for the year ended December 31, 2023 compared to 3.65% for the year ended December 31, 2022.
Current wording
Interest earned on average earning assets for the year ended December 31, 2024 was $68.0 million compared to $57.1 million for the year ended December 31, 2023, an increase of $10.8 million, or 19.0%. The 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.
Previous wording
The average yield on federal funds sold and overnight deposits increased 269 bps between the twelve month comparison periods due to an increase in the interest rate paid on balances maintained in Union's master account at the FRB. Interest income on investment securities increased $1.4 million between the comparison periods due to an increase of $19.1 million in the average balance of the portfolio and an increase of 40 bps in the average yield.
Current wording
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. Interest income on investment securities decreased $45 thousand between the comparison periods due to a decrease of $17.0 million in the average balance of the portfolio, partially offset by an increase of 5 bps in the average yield.
Previous wording
Interest income on loans increased $10.9 million between the twelve month comparison periods due to an increase in the average volume of loans outstanding of $118.4 million and an increase of 58 bps in the average yield. Loan demand has remained stable during 2023 despite increases in interest rates and low housing inventory.
Current wording
Interest income on loans increased $10.0 million between the twelve month comparison periods due to an increase in the average volume of loans outstanding of $83.6 million and an increase of 57 bps in the average yield. Loan demand has remained stable during 2024 despite inflationary pressure on construction materials and low housing inventory.
Previous wording
Average interest bearing liabilities increased $187.5 million between the twelve month comparison periods due to growth in customer time deposit balances, utilization of brokered deposits included in time deposits, the purchase of nonreciprocal ICS deposits from IntraFi included in non-time deposits, and an increase in borrowed funds. The average rate paid on interest bearing liabilities increased 129 bps to 1.81% for the year ended December 31, 2023 compared to 0.52% for the year ended December 31, 2022. Interest expense increased $14.7 million, to $19.3 million for the year ended December 31, 2023 compared to $4.5 million for the year ended December 31, 2022. Higher rates paid on customer deposit accounts and utilization of higher cost funding of brokered deposits and advances from the FHLB were drivers of the increase in interest expense.
Current wording
Average interest bearing liabilities increased $95.7 million between the twelve month comparison periods due to an increase in average borrowed funds of $125.8 million partially offset by a decrease in average interest bearing deposits of $30.1 million. The average rate paid on interest bearing liabilities increased 74 bps to 2.55% for the year ended December 31, 2024 compared to 1.81% for the year ended December 31, 2023. Interest expense increased $10.3 million, to $29.6 million for the year ended December 31, 2024 compared to $19.3 million for the year ended December 31, 2023. Higher rates paid on customer deposit accounts and utilization of higher cost funding of brokered deposits and advances from the FHLB and the FRB were drivers of the increase in interest expense.
Previous wording
The net interest spread decreased 63 bps to 2.50% for the year ended December 31, 2023, from 3.13% for the same period last year, reflecting the net effect of the 129 bps increase in the average rate paid on interest bearing liabilities, which was only partially offset by the 66 bps increase in the average yield earned on interest earning assets between periods. The net interest margin decreased 40 bps for the year ended December 31, 2023 compared to the same period last year as a result of the changes discussed above.
Current wording
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 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. Despite the decreases in the net interest spread and net interest margin, net interest income increased $521 thousand to $38.4 million for the year ended December 31, 2024 compared to $37.8 million for the year ended December 31, 2023.
Previous wording
During 2023, Union, like many other financial institutions, offered higher rate time deposit specials to attract new deposit dollars and retain existing customer deposits. Although some new money was obtained, a shift of funds from non-maturity deposits to time deposit specials occurred. Interest expense on time deposits increased $7.6 million to $8.7 million for the year ended December 31, 2023 compared to $1.0 million for the year ended December 31, 2022 due to increases in the average volume of $135.4 million and 255 bps in the average rate paid. Despite a decrease of $36.8 million in the average balance of savings/money market accounts, interest expense increased $2.4 million between the twelve month comparison periods due to an increase of 63 bps in the average rate paid on those accounts.
Current wording
During 2024, Union, like many other financial institutions, offered higher rate time deposit specials to attract new deposit dollars and retain existing customer deposits. Although some new money was obtained, a shift of funds from non-maturity deposits to time deposit specials occurred. Interest expense on time deposits increased $2.9 million to $11.6 million for the year ended December 31, 2024 compared to $8.7 million for the year ended December 31, 2023 due to increases in the average volume of $24.7 million and 74 bps in the average rate paid. Despite a decrease of $30.1 million in the average balance of savings/money market accounts, interest expense increased $1.4 million between the twelve month comparison periods due to an increase of 47 bps in the average rate paid on those accounts. Interest expense on interest bearing checking accounts increased $335 thousand between the twelve month comparison periods resulting from an increase of 20 bps in the average rate paid, which more than offset the decrease of $24.7 million in the average balance. The 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.
Previous wording
Tax exempt interest income amounted to $4.3 million and $2.3 million for the years ended December 31, 2023 and 2022, respectively. The following table presents the effect of tax exempt income on the calculation of net interest income, using a marginal federal corporate income tax rate of 21% for the years ended December 31, 2023 and 2022:
Current wording
Tax exempt interest income amounted to $5.8 million and $4.3 million for the years ended December 31, 2024 and 2023, respectively. The following table presents the effect of tax exempt income on the calculation of net interest income, using a marginal federal corporate income tax rate of 21% for the years ended December 31, 2024 and 2023:
Previous wording
Credit loss (benefit) expense was made up of the following components for the following periods:
Current wording
Credit loss expense (benefit) was made up of the following components for the following periods:
Previous wording
•Service fees. Service fee income increased $143 thousand for the year ended December 31, 2023 compared to the same period in 2022 primarily due to increases of $58 thousand in other loan servicing fees, $57 thousand in ATM network fees, $37 thousand in overdraft fee income and $27 thousand in service charge income, partially offset by a $45 thousand decrease in merchant program fees.
Current wording
•Service fees. Service fee income increased $38 thousand for the year ended December 31, 2024 compared to the same period in 2023 due to increases in loan servicing and service charge income, partially offset by decreases in ATM and debit card network fees, and merchant program fees.
Previous wording
•Net gains on sales of loans held for sale. Residential loans totaling $75.6 million were sold to the secondary market during 2023, compared to residential loan sales of $78.0 million during 2022. The increase of $159 thousand in net gains on sales of loans held for sale despite the lower sales volume reflects higher premiums obtained on sales in 2023 and $31 thousand of recapture on gains from 2021 recorded in 2022 that did not recur in 2023.
Current wording
•Net gains on sales of loans held for sale. Residential loans totaling $113.5 million were sold to the secondary market during 2024, compared to residential loan sales of $75.6 million during 2023. The increase of $534 thousand in net gains on sales of loans reflects the higher sales volume and higher premiums obtained on sales in 2024.
Previous wording
•Net gains (losses) on other investments. Participants in the 2020 Amended and Restated Nonqualified Excess Plan (the "2020 Deferred Compensation Plan") elect to defer receipt of current compensation from the Company or its subsidiary and select designated reference investments consisting of investment funds. The performance of those funds, over which the Company has no control, resulted in net gains of $189 thousand and net losses of $60 thousand for the years ended December 31, 2023 and 2022, respectively.
Current wording
•Net gains on other investments. Participants in the 2020 Amended and Restated Nonqualified Excess Plan (the "2020 Deferred Compensation Plan") elect to defer receipt of current compensation from the Company or its subsidiary and select designated reference investments consisting of investment funds. The performance of those funds, over which the Company has no control, resulted in net gains of $216 thousand and $189 thousand for the years ended December 31, 2024 and 2023, respectively.
Previous wording
•Income from Company-owned life insurance. Death benefit proceeds of $77 thousand were received in 2022 that did not recur in 2023.
Current wording
•Income from Company-owned life insurance. Death benefit proceeds of $235 thousand were received in 2024, while no such proceeds were received in 2023. Income also increased in 2024 due to a higher yield earned on the underlying life insurance policies.
Previous wording
•Other income. The decrease in Other income resulted primarily from $93 thousand in prepayment penalties received from the early payoff of loans during 2022 that did not recur in 2023.
Current wording
•Other income. The Company received $117 thousand in prepayment penalties from the early payoff of loans during 2024 that were not received in 2023.
Previous wording
•Salaries and wages. The $164 thousand increase in salaries and wages was primarily due to annual salary adjustments for the 2023 fiscal year, partially offset by a decrease in accrual amounts for the annual incentive plan payments to select officers of Union for 2023 compared to 2022.
Current wording
•Salaries and wages. Salaries and wages increased $1.4 million due to annual salary adjustments for the 2024 fiscal year and a $380 thousand increase in the accrual amount for the annual incentive plan payments to select officers of Union for 2024 compared to 2023. In addition, $397 thousand of the increase related to a cash bonus payment to employees in December 2024 in lieu of a 401k profit sharing contribution that was included in employee benefits expense in 2023. The increase is also attributable to a separation of service agreement with an employee and the inclusion of salaries and wages for employees at our North Conway location, which became a full service branch during the fourth quarter of 2023.
Previous wording
•Employee benefits. Employee benefit expense increased $335 thousand primarily due to increases of $225 thousand in employee benefits related to the Company's deferred compensation plans and $147 thousand in premium expense for the Company's medical and dental plans, partially offset by decreases of $22 thousand in 401k contributions and $16 thousand in payroll tax expense for 2023.
Current wording
•Employee benefits. Employee benefit expense increased $351 thousand due to increases of $496 thousand in premium expense for the Company's medical and dental plans, $132 thousand in payroll tax expense, and $15 thousand in employee benefits related to the Company's deferred compensation plans. These increases were partially offset by a decrease of $292 thousand in 401k contributions primarily due to no profit sharing contribution in 2024 compared to 2023 as discussed above.
Previous wording
•FDIC insurance assessment. The FDIC insurance assessment increased by $376 thousand primarily due to an increase in the assessment rate as well as overall growth in net assets.
Current wording
•FDIC insurance assessment. The FDIC insurance assessment increased by $169 thousand due to an increase in the assessment rate as well as overall growth in net assets.
Previous wording
•Vermont franchise tax. The Vermont franchise tax is determined based on a quarterly tax rate applied to the Company's average balance of Vermont customer deposit balances. The tax rate remained unchanged throughout 2023 and 2022; however, the average balances in Vermont deposit account balances increased for the year ended December 31, 2023, resulting in an increase in expense.
Current wording
•Vermont franchise tax. The Vermont franchise tax is determined based on a quarterly tax rate applied to the Company's average balance of Vermont customer deposit balances. The tax rate remained unchanged throughout 2024 and 2023; however, the average balances in Vermont deposit account balances decreased for the year ended December 31, 2024, resulting in a decrease in expense.
Previous wording
•Professional fees. Professional fees increased by $139 thousand due to annual increases in engagement fees, payment for additional tax consulting services and internal audit expenses, and other consulting services engagements in 2023 that were not utilized in 2022.
Current wording
•Professional fees. Professional fees increased by $46 thousand due to annual increases in engagement fees and additional consultants that were engaged to assist with employment searches and other consulting services in 2024 that were not utilized in 2023.
Previous wording
•Amortization of MSRs, net. Income from MSRs is derived from servicing rights acquired through the sale of loans on which servicing is retained. Capitalized servicing rights are initially recorded at fair value and amortized in proportion to, and over the period of, the estimated future servicing period of the underlying loans. The amortization of MSRs exceeded new capitalized MSRs which resulted in net expense of $316 thousand and $465 thousand for the years ended December 31, 2023 and 2022, respectively.
Current wording
•Amortization of MSRs, net. Income from MSRs is derived from servicing rights acquired through the sale of loans on which servicing is retained. Capitalized servicing rights are initially recorded at fair value and amortized in proportion to, and over the period of, the estimated future servicing period of the underlying loans. Amortization of MSRs exceeded new capitalized MSRs resulting in net expense of $15 thousand and $316 thousand for the years ended December 31, 2024 and 2023, respectively.
Previous wording
Provision for Income Taxes. The Company has provided for current and deferred federal income taxes for the current and prior period presented. The Company's net provision for income taxes was $1.6 million and $2.6 million for 2023 and 2022, respectively. The Company’s effective federal corporate income tax rate was 12.5% and 16.3% for 2023 and 2022, respectively.
Current wording
Provision for Income Taxes. The Company has provided for current and deferred federal income taxes for the current and prior period presented. The Company's net provision for income taxes was $369 thousand and $1.6 million for 2024 and 2023, respectively, reflecting lower net income and a higher proportion of tax-exempt income year over year, as well as the impact of limited partnership investments and related tax credits, discussed below. The Company’s effective federal corporate income tax rate was 4.6% and 12.5% for 2024 and 2023, respectively.
Previous wording
Amortization expense related to limited partnership investments included as a component of tax expense amounted to $1.4 million and $1.1 million for the years ended December 31, 2023 and 2022, respectively. These investments provide tax benefits, including tax credits. Low income housing tax credits with respect to limited partnership investments are also included as a component of income tax expense and amounted to $1.4 million and $1.1 million for the years ended December 31, 2023 and 2022, respectively. See Note 10 to the Company's consolidated financial statements.
Current wording
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. 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.
Previous wording
At December 31, 2023, the Company had total consolidated assets of $1.5 billion, including gross loans and loans held for sale (total loans) of $1.0 billion, deposits of $1.3 billion and stockholders' equity of $65.8 million. The Company’s total assets increased $132.4 million, or 9.9%, from $1.3 billion at December 31, 2022.
Current wording
At December 31, 2024, the Company had total consolidated assets of $1.53 billion, including gross loans and loans held for sale (total loans) of $1.16 billion, deposits of $1.17 billion and stockholders' equity of $66.5 million. The Company’s total assets increased $59.5 million, or 4.0%, from $1.47 billion at December 31, 2023.
Previous wording
Net loans and loans held for sale increased $74.2 million, or 7.8%, to $1.0 billion, or 69.9% of total assets, at December 31, 2023, compared to $952.3 million, or 71.3% of total assets, at December 31, 2022. (See Loan Portfolio below.)
Current wording
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. (See Loan Portfolio below.)
Previous wording
Borrowed funds at December 31, 2023 were $65.7 million and consisted of $55.7 million of FHLB advances and $10.0 million of borrowings from the FRB. Borrowed funds at December 31, 2022 consisted of FHLB advances of $50.0 million. (See Borrowings on page 44.)
Current wording
Borrowed funds at December 31, 2024 consisted of FHLB advances of $259.7 million. Borrowed funds at December 31, 2023 were $65.7 million and consisted of $55.7 million of FHLB advances and $10.0 million of borrowings from the FRB. (See Borrowings on page 43.)
Previous wording
Total stockholders’ equity increased $10.6 million, or 19.2%, from $55.2 million at December 31, 2022 to $65.8 million at December 31, 2023. (See Capital Resources on pages 46 to 47.)
Current wording
Total stockholders’ equity increased $673 thousand, or 1.0%, from $65.8 million at December 31, 2023 to $66.5 million at December 31, 2024. (See Capital Resources on pages 45 to 46.)
Previous wording
Loans Held for Sale and Loan Portfolio. The Company's gross loan portfolio (including loans held for sale) increased $72.0 million, or 7.5%, to $1.0 billion, representing 70.2% of assets at December 31, 2023, from $959.3 million, representing 71.8% of assets at December 31, 2022. The Company's loans consist primarily of adjustable-rate and fixed-rate mortgage loans secured by one-to-four family, multi-family residential or commercial real estate. Real estate secured loans represented $911.5 million, or 88.4% of total loans, at December 31, 2023 compared to $828.2 million, or 86.3% of total loans, at December 31, 2022. The net change in the Company's loan portfolio from December 31, 2022 (see table below) resulted primarily from an increase in the volume of residential, commercial real estate and residential construction loans originated. There was no material change in the Company's lending programs or terms during 2023.
Current wording
Loans Held for Sale and Loan Portfolio. The Company's gross loan portfolio (including loans held for sale) increased $129.6 million, or 12.6%, to $1.16 billion, representing 76.0% of assets at December 31, 2024, from $1.03 billion, representing 70.2% of assets at December 31, 2023. The Company's loans consist primarily of adjustable-rate and fixed-rate mortgage loans secured by one-to-four family, multi-family residential or commercial real estate. Real estate secured loans represented $1.01 billion, or 87.3% of total loans, at December 31, 2024 compared to $911.5 million, or 88.4% of total loans, at December 31, 2023. 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. There was no material change in the Company's lending programs or terms during 2024.
Previous wording
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. At December 31, 2023, the Company serviced a $1.1 billion residential real estate mortgage portfolio, of which $3.1 million was held for sale and approximately $646.5 million was serviced for unaffiliated third parties. This compares to a residential real estate mortgage servicing portfolio of $987.4 million at December 31, 2022, of which $1.2 million was held for sale and approximately $633.7 million was serviced for unaffiliated third parties. 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.
Current wording
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. 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 $1.07 billion at December 31, 2023, of which $3.1 million was held for sale and approximately $646.5 million was serviced for unaffiliated third parties. 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.
Previous wording
The Company sold $75.6 million of qualified residential real estate loans originated during 2023 to the secondary market compared to sales of $78.0 million during 2022. Residential mortgage loan origination activity continued to be stable during 2023. Despite the low housing inventory and rising interest rates, purchase activity in the Company's markets continues to be stable with an increase in construction loan activity. The Company originates and sells FHA, VA, and RD residential mortgage loans, and also has an Unconditional Direct Endorsement Approval from HUD which allows the Company to approve FHA loans originated in any of its Vermont or New Hampshire locations without needing prior HUD underwriting approval. The Company sells FHA, VA and RD loans as originated with servicing released. Some of the government backed loans qualify for zero down payments without geographic or income restrictions. These loan products increase the Company's ability to serve the borrowing needs of residents in the communities served, including low and moderate income borrowers, while the loan sales and government guaranty mitigates the Company's exposure to credit risk.
Current wording
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. 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. The Company originates and sells FHA, VA, and RD residential mortgage loans, and also has an Unconditional Direct Endorsement Approval from HUD which allows the Company to approve FHA loans originated in any of its Vermont or New Hampshire locations without needing prior HUD underwriting approval. The Company sells FHA, VA and RD loans as originated with servicing released. Some of the government backed loans qualify for zero down payments without geographic or income restrictions. These loan products increase the Company's ability to serve the borrowing needs of residents in the communities served, including low and moderate income borrowers, while the loan sales and government guaranty mitigates the Company's exposure to credit risk.
Previous wording
The Company also originates commercial real estate and commercial loans under various SBA, USDA and State sponsored programs which provide a government agency guaranty for a portion of the loan amount. There was $2.6 million and $3.2 million guaranteed under these various programs at December 31, 2023 and 2022, respectively, on aggregate balances of $3.4 million and $4.2 million in subject loans for the same time periods. The Company occasionally sells the guaranteed portion of a loan to other financial concerns and retains servicing rights, which generates fee income. There were no commercial real estate or commercial loans sold during 2023 or 2022. The Company recognizes gains and losses on the sale of the principal portion of these loans at the time of sale.
Current wording
The Company also originates commercial real estate and commercial loans under various SBA, USDA and State sponsored programs which provide a government agency guaranty for a portion of the loan amount. 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 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.
Previous wording
The Company serviced $25.7 million and $27.0 million of commercial and commercial real estate loans for unaffiliated third parties as of December 31, 2023 and 2022, respectively. This includes $24.7 million and $25.7 million of commercial or commercial real estate loans the Company had participated out to other financial institutions at December 31, 2023 and 2022, respectively. These loans were participated in the ordinary course of business on a nonrecourse basis, for liquidity or credit concentration management purposes.
Current wording
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. These loans were participated in the ordinary course of business on a nonrecourse basis, for liquidity or credit concentration management purposes.
Showing the first 40 of 78 pairs. Open the source sections for the rest.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
Investment Activities. The investment portfolio is used to generate interest and dividend income, manage liquidity and mitigate interest rate sensitivity.
Current report — wording carried from elsewhere
$19.7 million in saving accounts. The decreases in these categories are attributable to customers spending down deposit balances, the loss of deposit dollars to competing financial institutions and brokerage firms, and customers shifting monies into time deposits as they continue to seek higher yields. In addition, average interest bearing checking accounts decreased due to the maturity and early payoff of purchased nonreciprocal ICS deposits from IntraFi during the first quarter of 2024.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Effective January 1, 2023, the Company adopted ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU, which is more commonly referred to as Current Expected
Previous report — wording carried elsewhere
December 2023, the Board reauthorized the limited stock repurchase plan for 2024 on similar terms. The Company also repurchased 30 shares outside of the limited stock repurchase program at a cost of $1 thousand during 2023.