UNION BANKSHARES INC
For the period ended Mar 31, 2025. Filed May 14, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 14, 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-Q
Period ended 2024-09-30; filed 2024-11-14.
0000706863-24-000073
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-14.
0000706863-25-000060
Item 2. 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 168 previous paragraphs and 149 current paragraphs.
68 unchanged; 71 reworded; 9 added; 25 removed; 4 previous and 1 current paragraphs rearranged.
Tables are not compared: 17 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 (9)
Current report
The current macroeconomic and geopolitical environment is subject to a number of uncertainties, including geopolitical conflicts, tariffs or changes in trade policies, capital markets volatility, and inflation. These and other factors may contribute to slower or negative economic growth and a challenging business environment for our customers. While we remain confident in the resilience and strength of our business and financial model, the current macroeconomic and geopolitical environment could negatively impact our financial condition and results of operations. For more information about these risks, please see “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024.
Current report
Average interest bearing liabilities increased $108.0 million between the three month comparison periods primarily due to an increase in borrowed funds, partially offset by decreases in each of the deposit classes. The average rate paid on interest bearing liabilities increased 28 bps to 2.65% for the first quarter of 2025 compared to 2.37% for the first quarter of 2024. Interest expense increased $1.4 million, to $8.0 million for the three months ended March 31, 2025 compared to $6.6 million for the three months ended March 31, 2024. Interest expense on borrowed funds increased $1.2 million, or 100.8%, for the comparison periods due to an increase of $125.9 million in the average volume despite a decrease of 7 bps in the average rate paid. Higher rates paid on customer deposit accounts, despite lower balances, resulted in an increase in interest expense of $171 thousand, or 3.26%, between periods.
Current report
•Electronic banking expenses. 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
•Legal expense. The $21 thousand increase in legal expense between periods primarily relates to an increase in loan collection legal expenses during the first quarter of 2025 compared to 2024.
Current report
•Training and development. The cost associated with attending conferences and educational events during 2025 decreased $22 thousand compared to events attended in 2024.
Current report
Borrowed funds consisted of FHLB advances of $240.7 million and $259.7 million at March 31, 2025 and December 31, 2024, respectively. (See Borrowings on page 37.)
Current report
The increase in nonaccrual loans at March 31, 2025 primarily relates to a commercial construction loan that was placed in nonaccrual during the first quarter of 2025.
Current report
Union Bankshares, Inc. Page 38
Current report
Union Bankshares, Inc. Page 39
Removed paragraphs (25)
Previous report
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. Despite these challenges, 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 report
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. In September 2024, the Federal Reserve reduced short-term interest rates by 50 bps; however, there was minimal impact on third quarter financial results from this rate reduction. The net interest margin was 2.73% for the nine months ended September 30, 2024 compared to 2.95% for the nine months ended September 30, 2023, while the net interest spreads for the same periods were 2.27% and 2.59%, 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 report
The Company completed a balance sheet repositioning related to its investment securities portfolio during the three months ended September 30, 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.
Previous report
Consolidated net income decreased $2.4 million, or 29.8%, to $5.8 million for the nine months ended September 30, 2024 compared to $8.2 million for the nine months ended September 30, 2023. This decrease was due to the combined effects of the $1.3 million loss on the sale of AFS debt securities discussed above, a decrease in net interest income of $819 thousand and increases in noninterest expenses of $1.7 million and credit loss expense of $744 thousand, partially offset by an increase in
Previous report
Union Bankshares, Inc. Page 28 noninterest income, excluding the loss on the sale of AFS debt securities, of $995 thousand and a reduction in income tax expense of $1.1 million.
Previous report
Average interest bearing liabilities increased $83.6 million between the three month comparison periods due to growth in customer time deposit balances, utilization of brokered deposits included in time deposits, and an increase in borrowed funds. The average rate paid on interest bearing liabilities increased 54 bps to 2.63% for the third quarter of 2024 compared to 2.09% for the third quarter of 2023. Interest expense increased $2.1 million, to $7.8 million for the three months ended September 30, 2024 compared to $5.7 million for the three months ended September 30, 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 report
Net interest income was $27.9 million, on a fully tax equivalent basis for the nine months ended September 30, 2024 compared to $28.7 million for the nine months ended September 30, 2023, a decrease of $819 thousand, or 2.8%. The average volume of earning assets increased $70.9 million and the average yield on earning assets increased 52 bps to 4.77% compared to 4.25% for the comparison period. Average loans increased $72.9 million, or 7.4%, to $1.1 billion for the nine months ended September 30, 2024. The increase in average loan volume and the increase of 58 bps in the average loan yield resulted in a $7.1 million increase in interest income on loans between periods. There was a $445 thousand recovery of interest income on loans during the nine months ended September 30, 2024 related to the payoff of a loan that had previously been in nonaccrual. This accounted for 6 bps of the increase in the average loan yield between the nine month comparison periods.
Previous report
The average balance of the investment portfolio decreased $15.2 million while the average yield on the portfolio increased by 1 bp, resulting in a decrease in interest income on investment securities of $132 thousand between the nine month comparison periods.
Previous report
The average cost of funds increased 84 bps to 2.50% for the nine months ended September 30, 2024 compared to 1.66% for the nine months ended September 30, 2023. Interest expense increased $8.5 million, to $21.4 million for the nine months ended September 30, 2024 compared to $13.0 million for the nine months ended September 30, 2023. The increases in the average cost of funds and in interest expense were due to an increase of $96.0 million in the average balance of interest bearing liabilities and increases in the average rates paid in all liability categories between periods, with the exception of the Company's subordinated notes.
Previous report
During the first half of 2024, Union, like many other financial institutions, continued to offer higher rate paying time deposit specials to attract new deposit dollars and retain existing customer deposits. Although some new money was obtained, a shift of funds in the Company's deposit base from non-maturity deposits to time deposit specials occurred. Interest expense on time deposits increased $2.8 million to $8.7 million for the nine months ended September 30, 2024 compared to $5.9 million for the nine months ended September 30, 2023 due to increases of $37.5 million in the average balance and 90 bps in the average rate paid. Despite a decrease of $31.9 million in the average balance of savings/money market accounts, interest expense increased $1.4 million between the nine month comparison periods due to an increase of 58 bps in the average rate paid. Interest expense on interest bearing checking accounts increased $411 thousand between the nine month comparison periods resulting from an increase of 26 bps in the average rate paid, which more than offset the decrease of $24.0 million in the average balance. The average volume of borrowed funds increased $114.4 million and the average rate paid on borrowed funds increased 40 bps between the nine month comparison periods, resulting in a $3.9 million increase in interest expense.
Previous report
The net interest spread decreased 32 bps to 2.27% for the nine months ended September 30, 2024, from 2.59% for the same period last year, reflecting the net effect of the 84 bps increase in the average rate paid on interest bearing liabilities, which was
Previous report
•Service fees. Service fees increased $70 thousand for the three month comparison period due to increases in loan servicing fees, ATM and debit card network fees and service charge income. Service fees increased $33 thousand for the nine month comparison period due to increases in overdraft fee income and service charge income, partially offset by decreases in ATM and debit card network fees, and merchant program fees.
Previous report
•Income from Company-owned life insurance. Death benefit proceeds of $235 thousand were received in the second quarter of 2024 that were not received during the same period in 2023. Income also increased during the three and nine month comparison periods due to a higher yield earned on the underlying life insurance policies.
Previous report
Union Bankshares, Inc. Page 34 gains of $83 thousand and $211 thousand for the three and nine months ended September 30, 2024, respectively, and net losses of $41 thousand and net gains of $61 thousand for the three and nine months ended September 30, 2023, respectively.
Previous 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 the three months ended September 30, 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.
Previous report
•Professional fees. Professional fees increased $69 thousand for the nine months ended September 30, 2024 compared to the same period in 2023 due to annual increases in engagement fees and additional consultants that were engaged to assist with employment searches and other consulting services in 2024. Professional fees decreased $16 thousand during the three month comparison period due to a reduction in consulting engagements during the three months ended September 30, 2024 compared to those utilized in the same period of 2023.
Previous report
•Vermont franchise tax. The decrease in expense between the three and nine month comparison periods was due to the decrease in average deposit balances for customer accounts allocated to Vermont.
Previous report
•Wealth management expenses. The increase in expense between three and nine month comparison periods is primarily attributable to the growth in managed fiduciary accounts and the associated data processing and professional services.
Previous report
•Legal expense. The decrease in legal expense of $32 thousand between the three month comparison period primarily relates to the recovery of legal fees expensed in prior years that were reimbursed by borrowers in 2024.
Previous report
•Communications. The decrease in communication expense between the three and nine month comparison periods is due to a change in the communication services arrangement for ATM machines in 2024 compared to 2023.
Previous report
The Company's net provision for income taxes was $103 thousand for the nine months ended September 30, 2024, compared to $1.2 million for the same period in 2023, 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 credits, discussed below. The Company's effective federal corporate income tax rate was 2.9% for the nine months ended September 30, 2024, compared to 12.9% for the same period in 2023.
Previous report
Borrowed funds at September 30, 2024 were $240.7 million and consisted of $230.7 million of FHLB advances and $10.0 million of borrowings from the FRB. 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 42.)
Previous report
Investment Activities. The Company completed a balance sheet repositioning related to its investment securities portfolio during the three months ended September 30, 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.
Previous report
In March 2023, the FRB created the BTFP, a temporary program to provide an additional source of liquidity funding to U.S. depository institutions. Advances under this program are secured by qualifying investment assets consisting of eligible U.S. Government-sponsored enterprises and Agency MBS securities valued at par. At September 30, 2024 the Company had outstanding BTFP advances of $10.0 million with a weighted average rate of 4.76% and $10.0 million with a weighted average rate of 4.85% at December 31, 2023. The FRB ceased making new loans under this program on March 11, 2024.
Previous report
In response to high profile bank failures in 2023, the Federal Reserve created the BTFP to provide liquidity to U.S. Depository institutions which allowed any federally insured depository institution to pledge as collateral investment securities at par, rather than at fair market value. At September 30, 2024, the Company had outstanding BTFP advances of $10.0 million. As of March 11, 2024, the BTFP ceased making new advances.
Reworded paragraphs (71)
Previous wording
The following discussion and analysis focuses on those factors that, in management's view, had a material effect on the financial position of the Company as of September 30, 2024 and December 31, 2023, and its results of operations for the three and nine months ended September 30, 2024 and 2023. This discussion is being presented to provide a narrative explanation of the consolidated financial statements and should be read in conjunction with the consolidated financial statements and related notes and with other financial data appearing elsewhere in this filing and with the Company's 2023 Annual Report. In the opinion of the Company's management, the interim unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments and disclosures necessary to fairly present the Company's consolidated financial position and results of operations for the interim periods presented. Management is not aware of the occurrence of any events after September 30, 2024 which would materially affect the information presented.
Current wording
The following discussion and analysis focuses on those factors that, in management's view, had a material effect on the financial position of the Company as of March 31, 2025 and December 31, 2024, and its results of operations for the three months ended March 31, 2025 and 2024. This discussion is being presented to provide a narrative explanation of the consolidated financial statements and should be read in conjunction with the consolidated financial statements and related notes and with other financial data appearing elsewhere in this filing and with the Company's 2024 Annual Report. In the opinion of the Company's management, the interim unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments and disclosures necessary to fairly present the Company's consolidated financial position and results of operations for the interim periods presented. Management is not aware of the occurrence of any events after March 31, 2025 which would materially affect the information presented.
Previous wording
Forward-looking statements are based on the current assumptions underlying the statements and other information with respect to the beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions of management and the financial condition, results of operations, future performance and business are only expectations of future results. Although the Company believes that the expectations reflected in the Company’s forward-looking statements are reasonable when made, the Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, changes in interest rates; competitive pressures from other financial institutions; general economic conditions on a national basis or in the local markets in which the Company operates; downgrades of U.S. government securities; eroding public confidence in the banking system; changes in consumer behavior due to changing political, business and economic conditions, including concerns about inflation, or legislative or regulatory initiatives; changes in the value of securities and other assets in the Company’s investment portfolio; increases in loan and lease default and charge-off rates; the adequacy of the ACL; decreases in deposit levels that necessitate increases in borrowing to fund loans and investments; operational risks to the Company and our vendors, including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; changes in regulation, war, terrorism, civil unrest; changes in economic assumptions and adverse economic developments; the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Company’s 2023 Annual Report.
Current wording
Forward-looking statements are based on the current assumptions underlying the statements and other information with respect to the beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions of management and the financial condition, results of operations, future performance and business are only expectations of future results. Although the Company believes that the expectations reflected in the Company’s forward-looking statements are reasonable when made, the Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, changes in interest rates; competitive pressures from other financial institutions; general economic conditions on a national basis or in the local markets in which the Company operates; downgrades of U.S. government securities; eroding public confidence in the banking system; changes in consumer behavior due to changing political, business and economic conditions, including the impact of inflation, federal tariff and trade policies and legislative or regulatory initiatives; changes in the value of securities and other assets in the Company’s investment portfolio; increases in loan and lease default and charge-off rates; the adequacy of the ACL; decreases in deposit levels that necessitate increases in borrowing to fund loans and investments; operational risks to the Company and our vendors, including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; changes in regulation, war, terrorism, civil unrest; changes in economic assumptions and adverse economic developments; the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Company’s 2024 Annual Report.
Previous wording
Under SEC Regulation G, public companies making disclosures containing financial measures that are not in accordance with GAAP must also disclose, along with each non-GAAP financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure, as well as a statement of the company’s reasons for utilizing the non-GAAP financial measure. The SEC has exempted from the definition of non-GAAP financial measures certain commonly used financial measures that are not based on GAAP. However, two non-GAAP financial
Current wording
Under SEC Regulation G, public companies making disclosures containing financial measures that are not in accordance with GAAP must also disclose, along with each non-GAAP financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure, as well as a statement of the company’s reasons for utilizing the non-GAAP financial measure. The SEC has exempted from the definition of non-GAAP
Previous wording
Union Bankshares, Inc. Page 27 measures commonly used by financial institutions, namely tax-equivalent net interest income and tax-equivalent net interest margin (as presented in the tables in the section labeled Yields Earned and Rates Paid), have not been specifically exempted by the SEC, and may therefore constitute non-GAAP financial measures under Regulation G. We are unable to state with certainty whether the SEC would regard those measures as subject to Regulation G. Management believes that these non-GAAP financial measures are useful in evaluating the Company’s financial performance and facilitate comparisons with the performance of other financial institutions. However, that information should be considered supplemental in nature and not as a substitute for related financial information prepared in accordance with GAAP.
Current wording
Union Bankshares, Inc. Page 24 financial measures certain commonly used financial measures that are not based on GAAP. However, two non-GAAP financial measures commonly used by financial institutions, namely tax-equivalent net interest income and tax-equivalent net interest margin (as presented in the tables in the section labeled Yields Earned and Rates Paid), have not been specifically exempted by the SEC, and may therefore constitute non-GAAP financial measures under Regulation G. We are unable to state with certainty whether the SEC would regard those measures as subject to Regulation G. Management believes that these non-GAAP financial measures are useful in evaluating the Company’s financial performance and facilitate comparisons with the performance of other financial institutions. However, that information should be considered supplemental in nature and not as a substitute for related financial information prepared in accordance with GAAP.
Previous wording
Consolidated net income decreased $1.2 million, or 47.7%, to $1.3 million for the third quarter of 2024 compared to $2.5 million for the third quarter of 2023. 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 of $483 thousand in noninterest expenses and $564 thousand in credit loss expense, partially offset by increases of $282 thousand in net interest income and $431 thousand in noninterest income, excluding the loss on the sale of AFS debt securities, and a decrease of $419 thousand in income tax expense.
Current wording
Consolidated net income increased $84 thousand, or 3.5%, to $2.5 million for the first quarter of 2025 compared to $2.4 million for the first quarter of 2024. The increase in net income was due to the combined effects of a $1.26 million increase in net interest income and a decrease of $15 thousand in income tax expense, partially offset by increases of $601 thousand in noninterest expenses and $465 thousand in credit loss expense, and a decrease of $127 thousand in noninterest income.
Previous wording
At September 30, 2024, the Company had total consolidated assets of $1.52 billion, including gross loans and loans held for sale (total loans) of $1.13 billion, deposits of $1.17 billion, borrowed funds of $240.7 million, subordinated notes of $16.3 million and stockholders' equity of $72.3 million.
Current wording
At March 31, 2025, the Company had total consolidated assets of $1.52 billion, including gross loans and loans held for sale (total loans) of $1.17 billion, deposits of $1.18 billion, borrowed funds of $240.7 million, subordinated notes of $16.3 million and stockholders' equity of $70.1 million.
Previous wording
The Company's total capital increased to $72.3 million at September 30, 2024 from $65.8 million at December 31, 2023. This increase primarily reflects an improvement of $5.1 million in accumulated other comprehensive loss due to an increase in the fair market value of the Company's AFS investment securities, net income of $5.8 million for the first nine months of 2024, partially offset by regular cash dividends declared of $4.9 million. (See Capital Resources on page 44.) These changes also resulted in an increase in the Company's book value per share to $15.98 at September 30, 2024 from $14.56 at December 31, 2023.
Current wording
The Company's total capital increased to $70.1 million at March 31, 2025 from $66.5 million at December 31, 2024. This increase primarily reflects an improvement of $2.6 million in accumulated other comprehensive loss due to an increase in the fair market value of the Company's AFS investment securities, net income of $2.5 million for the first three months of 2025, partially offset by regular cash dividends declared of $1.6 million. (See Capital Resources on page 39.) These changes also resulted in an increase in the Company's book value per share to $15.44 at March 31, 2025 from $14.65 at December 31, 2024.
Previous wording
The following unaudited per share information and key ratios depict several measurements of performance or financial condition at or for the three and nine months ended September 30, 2024 and 2023:
Current wording
The following unaudited per share information and key ratios depict several measurements of performance or financial condition at or for the three months ended March 31, 2025 and 2024:
Previous wording
(2)The ratio of tax equivalent net interest income to average earning assets. See pages 31 and 32 for more information.
Current wording
(2)The ratio of tax equivalent net interest income to average earning assets. See page 28 for more information.
Previous wording
(4)The difference between the average yield on earning assets and the average rate paid on interest bearing liabilities. See pages 31 and 32 for more information.
Current wording
(4)The difference between the average yield on earning assets and the average rate paid on interest bearing liabilities. See page 28 for more information.
Previous wording
Interest earned on average earning assets for the three months ended September 30, 2024 was $17.2 million compared to $14.8 million for the three months ended September 30, 2023, an increase of $2.3 million, or 15.8%. The average earning asset base increased $78.1 million between periods and the average yield on average earning assets increased 42 bps to 4.85% for the three months ended September 30, 2024 compared to 4.43% for the three months ended September 30, 2023.
Current wording
Interest earned on average earning assets for the three months ended March 31, 2025 was $18.3 million compared to $15.6 million for the three months ended March 31, 2024, an increase of $2.7 million, or 17.1%. The average earning asset base increased $104.4 million between periods and the average yield on average earning assets increased 46 bps to 5.06% for the three months ended March 31, 2025 compared to 4.60% for the three months ended March 31, 2024.
Previous wording
The average yield on federal funds sold and overnight deposits decreased 81 bps while interest income increased $9 thousand between the three month comparison period due to an increase in the average balance maintained in Union's master account at the FRB, partially offset by a decrease in the average interest rate paid on these balances. Interest income on investment securities decreased $72 thousand between comparison periods due to a $23.2 million decrease in the average balance of the portfolio, partially offset by an increase in the average yield of 2 bps. Interest income on loans increased $2.3 million between the three month comparison periods due to an increase in the average volume of loans outstanding of $90.0 million and an increase of 46 bps in the average yield.
Current wording
The average yield on federal funds sold and overnight deposits decreased 188 bps and its related interest income also decreased by $291 thousand between the three month comparison periods due to a decrease in the average balance maintained in Union's master account at the FRB and a decrease in average rate paid on these balances. Interest income on investment securities increased $189 thousand between comparison periods due to an increase in the average yield of 33 bps despite a decrease in the average balance of the portfolio of $12.2 million. The reduction in volume of the portfolio between periods was primarily related to the previously disclosed balance sheet repositioning transaction in the third quarter of 2024, whereby $38.5 million of lower yielding AFS debt securities were sold and proceeds of $26.0 million were reinvested in higher yielding AFS debt securities. Interest income on loans increased $2.7 million between the three month comparison periods due to an increase in the average volume of loans outstanding of $131.5 million and an increase of 40 bps in the average yield.
Previous wording
The net interest spread decreased 12 bps to 2.22% for the third quarter of 2024, from 2.34% for the same period last year, reflecting the net effect of the 54 bps increase in the average rate paid on interest bearing liabilities, which was only partially offset by the 42 bps increase in the average yield earned on interest earning assets between periods. The net interest margin decreased 5 bps during the third quarter of 2024 compared to the same period last year as a result of the changes discussed above. Even with the decreases in the net interest spread and net interest margin, net interest income increased $282 thousand to $9.4 million for the three months ended September 30, 2024 compared to $9.1 million for the three months ended September 30, 2023.
Current wording
The net interest spread increased 18 bps to 2.41% for the first quarter of 2025, from 2.23% for the same period last year, reflecting the net effect of the 46 bps increase in the average yield earned on interest earning assets, which was partially offset by the 28 bps increase in the average rate paid on interest bearing liabilities between periods. The net interest margin increased 20 bps during the first quarter of 2025 compared to the same period last year as a result of the changes discussed above.
Previous wording
Tax exempt interest income amounted to $1.6 million and $1.2 million for the three months ended September 30, 2024 and 2023, respectively, and $4.2 million and $3.0 million for the nine months ended September 30, 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 2024 and 2023 three and nine month comparison periods:
Current wording
Tax exempt interest income amounted to $1.7 million and $1.3 million for the three months ended March 31, 2025 and 2024, 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 2025 and 2024 three month comparison periods:
Previous wording
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
Current wording
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.
Previous wording
Noninterest Income. The following table sets forth the components of noninterest income and changes between the three and nine month comparison periods of 2024 and 2023:
Current wording
Noninterest Income. The following table sets forth the components of noninterest income and changes between the three month comparison periods of 2025 and 2024:
Previous wording
The significant changes in noninterest income for the three and nine months ended September 30, 2024 compared to the same periods of 2023 are described below:
Current wording
The significant changes in noninterest income for the three months ended March 31, 2025 compared to the same period of 2024 are described below:
Previous wording
•Net gains on sales of loans held for sale. Residential mortgage loans totaling $35.2 million and $76.1 million were sold during the three and nine months ended September 30, 2024, respectively, compared to sales of $24.7 million and $54.2 million during the same periods in 2023, respectively. The increases of $204 thousand and $332 thousand in net gains on sales of loans held for the three and nine month comparison periods, respectively, reflect the higher sales volume and higher premiums obtained on sales in 2024.
Current wording
•Net gains on sales of loans held for sale. Residential mortgage loans totaling $25.8 million were sold during the three months ended March 31, 2025 compared to sales of $21.7 million during the same period in 2024. The increase of $102 thousand in net gains on sales of loans reflects the higher sales volume and higher premiums obtained on sales in 2025.
Previous wording
•Net gains (losses) on other investments. Participants in the 2020 Amended and Restated Nonqualified Excess 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
Current wording
•Net (losses) gains on other investments. Participants in the 2020 Amended and Restated Nonqualified Excess 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 losses of $35 thousand and net gains of $95 thousand for the three months ended March 31, 2025 and 2024, respectively.
Previous wording
Noninterest Expenses. The following table sets forth the components of noninterest expenses and changes between the three and nine month comparison periods ended September 30, 2024 and 2023:
Current wording
Noninterest Expenses. The following table sets forth the components of noninterest expenses and changes between the three month comparison periods ended March 31, 2025 and 2024:
Previous wording
The significant changes in noninterest expenses for the three and nine months ended September 30, 2024 compared to the same periods in 2023 are described below:
Current wording
The significant changes in noninterest expenses for the three months ended March 31, 2025 compared to the same period in 2024 are described below:
Previous wording
•Salaries and wages. Salaries and wages increased $295 thousand and $447 thousand for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023 primarily due to annual salary adjustments for the 2024 fiscal year. The increases are also attributable to 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. $110 thousand of the increase for the three and nine month comparison periods was attributable to a separation of service agreement with an employee. The increase for the nine month comparison period was partially offset by a $72 thousand accrual adjustment related to the annual incentive plan payments to select officers of Union recorded in the first quarter of 2024.
Current wording
•Salaries and wages. Salaries and wages increased $358 thousand for the three months ended March 31, 2025 compared to the same period in 2024 primarily due to annual salary adjustments for the 2025 fiscal year and to an increase of $60 thousand in the accrual related to the annual incentive plan payments to select officers of Union during the first quarter of 2025 compared to 2024.
Previous wording
•Employee benefits. Employee benefit expense increased $305 thousand for the three months ended September 30, 2024 compared to the same period in 2023 primarily due to increases of $158 thousand in premium expense for the Company's medical and dental plans, $34 thousand in payroll taxes and $121 thousand in employee benefits related to the Company's deferred compensation plans. The increase of $577 thousand for the nine months ended September 30, 2024 compared to the same period in 2023 was primarily due to increases of $394 thousand in premium expense for the Company's medical and dental plans, $140 thousand in employee benefits related to the Company's deferred compensation plans and $43 thousand in payroll taxes.
Current wording
•Employee benefits. Employee benefit expense increased $92 thousand for the three months ended March 31, 2025 compared to the same period in 2024 primarily due to increases of $113 thousand in premium expense for the Company's medical and dental plans, $37 thousand in payroll taxes and $80 thousand in 401k contributions expense. These increases were partially offset by a decrease of $138 thousand in employee benefit expense related to the Company's deferred compensation plans.
Previous wording
•Occupancy expense, net. The increase in occupancy expense between the three and nine month comparison periods 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 wording
•Occupancy expense, net. The increase in occupancy expense is primarily due to increases in utilities and repair and maintenance expenses as a result of the winter conditions experienced during the three months ended March 31, 2025 compared to 2024.
Previous wording
•Equipment expense. Equipment expense increased between the three and nine month comparison periods 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 wording
•Equipment expense. Equipment expense increased between the three month comparison periods primarily due to an increase in software license and maintenance costs.
Previous wording
•FDIC insurance assessment. The FDIC insurance assessment increased by $29 thousand and $93 thousand during the three and nine month comparison periods, respectively, 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 $96 thousand between the three month comparison periods due to an increase in the assessment rate as well as overall growth in net assets.
Previous wording
•ATM and debit card expense. The increase between the nine month comparison period is primarily related 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. During the third quarter of 2024, debit card processing contract renewal incentive credits were received, resulting in a decrease in expense for the three months ended September 30, 2024 compared to 2023.
Current wording
•ATM and debit card expense. During the first quarter of 2025, debit card contract incentive credits were received resulting in a decrease in expense for the three months ended March 31, 2025 compared to 2024.
Previous wording
•Advertising and public relations. The increase in advertising and public relations costs is primarily related to advertising campaigns and business development activities during the three and nine months ended September 30, 2024 that did not occur in 2023.
Current wording
•Advertising and public relations. The decrease in advertising and public relations costs is primarily related to advertising campaigns and business development activities during the first quarter of 2024 that did not occur in 2025.
Previous wording
•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. Donations increased between the nine month comparison period primarily due to contributions made during the first half of 2024 related to a state tax credit program to assist a local affordable housing project and local non-profit rehabilitation projects. The decrease between the three month comparison periods is primarily due to increased contributions made in 2023 to assist communities with recovery efforts related to the July 2023 historic flood that occurred in the State of Vermont.
Current wording
•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. Donations decreased $125 thousand between comparison periods primarily due to contributions made during the first quarter of 2024 related to a state tax credit program to assist a local affordable housing project and local non-profit rehabilitation projects that did not recur in 2025.
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. New capitalized MSRs exceeded amortization of MSRs for the three months ended September 30, 2024 resulting in net income of $45 thousand, while amortization of MSRs exceeded new capitalized MSRs resulting in net expense of $57 thousand for the nine months ended September 30, 2024, and net expenses of $47 thousand and $248 thousand for the three and nine months ended September 30, 2023, 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. The amortization of MSRs exceeded new capitalized MSRs during both comparison periods, resulting in net expense of $16 thousand and $40 thousand for the three months ended March 31, 2025 and 2024, respectively.
Previous wording
(Benefit) Provision for Income Taxes. The Company has provided for current and deferred federal income taxes for the three and nine months ended September 30, 2024 and 2023. The income tax benefit related to the balance sheet repositioning transaction and the resulting loss on the sale of AFS debt securities recorded in August 2024 was $284 thousand and was the primary cause for the Company's overall net benefit for income taxes of $123 thousand for the three months ended September 30, 2024 compared to the net provision for income taxes of $296 thousand for the same period in 2023. This resulted in an effective federal corporate income tax benefit rate of 10.4% for the three months ended September 30, 2024 compared to an effective federal corporate income tax rate of 10.8% for the same period in 2023.
Current wording
Provision for Income Taxes. The Company has provided for current and deferred federal income taxes for the three months ended March 31, 2025 and 2024. The Company's net provision for income taxes was $150 thousand and $165 thousand for the three months ended March 31, 2025 and 2024, respectively. The Company's effective federal corporate income tax rate was 4.9% for the three months ended March 31, 2025, compared to 8.8% for the same period in 2024.
Previous wording
Amortization expense related to limited partnership investments is included as a component of income tax expense and amounted to $440 thousand and $1.3 million for the three and nine months ended September 30, 2024, respectively, compared to $363 thousand and $1.0 million for the same period in 2023, respectively. These investments provide tax benefits, including tax credits. Low income housing and rehabilitation tax credits with respect to limited partnership investments are also included as a component of income tax expense and amounted to $467 thousand and $1.4 million for the three and nine months ended September 30, 2024, respectively, and $358 thousand and $1.1 million the three and nine months ended September 30, 2023, respectively.
Current wording
Amortization expense related to limited partnership investments is included as a component of income tax expense and amounted to $452 thousand for the three months ended March 31, 2025 compared to $412 thousand for the same period in 2024. These investments provide tax benefits, including tax credits. Low income housing and rehabilitation tax credits with respect to limited partnership investments are also included as a component of income tax expense and amounted to $483 thousand for the three months ended March 31, 2025 and $450 thousand for the three months ended March 31, 2024.
Previous wording
At September 30, 2024, the Company had total consolidated assets of $1.52 billion, including gross loans and loans held for sale (total loans) of $1.13 billion, investment securities AFS of $244.9 million, deposits of $1.17 billion, borrowed funds of $240.7 million, subordinated notes of $16.3 million and stockholders' equity of $72.3 million. The Company’s total assets at September 30, 2024 increased $50.6 million, or 3.4%, from $1.47 billion at December 31, 2023, and increased $123.9 million, or 8.9%, compared to September 30, 2023.
Current wording
At March 31, 2025, the Company had total consolidated assets of $1.52 billion, including gross loans and loans held for sale (total loans) of $1.17 billion, investment securities AFS of $247.9 million, deposits of $1.18 billion, borrowed funds of $240.7 million, subordinated notes of $16.3 million and stockholders' equity of $70.1 million. The Company’s total assets at March 31, 2025 decreased $3.5 million, or 0.2%, from $1.53 billion at December 31, 2024, and increased $107.2 million, or 7.6%, compared to March 31, 2024.
Previous wording
Federal funds sold and overnight deposits decreased $30.4 million, or 41.6%, to $42.8 million as of September 30, 2024, from $73.2 million at December 31, 2023.
Current wording
Federal funds sold and overnight deposits decreased $1.7 million, or 16.2%, to $8.9 million as of March 31, 2025, from $10.7 million at December 31, 2024.
Previous wording
Net loans and loans held for sale increased $94.0 million, or 9.2%, to $1.12 billion, representing 73.7% of total assets at September 30, 2024, compared to $1.03 billion, or 69.9% of total assets at December 31, 2023. (See Loans Held for Sale and Loan Portfolio below.)
Current wording
Net loans and loans held for sale increased $3.8 million, or 0.3%, to $1.16 billion, representing 76.0% of total assets at March 31, 2025, compared to $1.16 billion, or 75.6% of total assets at December 31, 2024. (See Loans Held for Sale and Loan Portfolio below.)
Previous wording
Total deposits decreased $132.3 million, or 10.1%, to $1.17 billion at September 30, 2024, from $1.31 billion at December 31, 2023. Noninterest bearing deposits decreased by $17.2 million, or 6.9%, interest bearing deposits decreased by $122.1 million, or 15.9%, and time deposits increased by $7.0 million, or 2.4%. (See Deposits on page 41.)
Current wording
Total deposits increased $12.5 million, or 1.1%, to $1.18 billion at March 31, 2025, from $1.17 billion at December 31, 2024. Noninterest bearing deposits increased by $6.5 million, or 2.9%, interest bearing deposits decreased by $32.0 million, or 4.5%, and time deposits increased by $38.0 million, or 16.6%. (See Deposits on page 36.)
Previous wording
Stockholders’ equity increased from $65.8 million at December 31, 2023 to $72.3 million at September 30, 2024, reflecting a decrease of $5.1 million in accumulated other comprehensive loss due to an increase in the fair market value of the Company's AFS investment securities, net income of $5.8 million for the first nine months of 2024, an increase of $442 thousand in additional paid in capital from the vesting of stock based compensation, and a $50 thousand increase due to the issuance of common stock under the DRIP, partially offset by cash dividends declared of $4.9 million. (See Capital Resources on page 44.)
Current wording
Stockholders’ equity increased from $66.5 million at December 31, 2024 to $70.1 million at March 31, 2025, reflecting a decrease of $2.6 million in accumulated other comprehensive loss due to an increase in the fair market value of the Company's AFS investment securities, net income of $2.5 million for the first three months of 2025, an increase of $146 thousand in additional paid in capital from the vesting of stock based compensation, and an $18 thousand increase due to the issuance of common stock under the DRIP, partially offset by cash dividends declared of $1.6 million. (See Capital Resources on page 39.)
Previous wording
Loans Held for Sale and Loan Portfolio. Total loans (including loans held for sale) increased $94.6 million, or 9.2%, to $1.13 billion, representing 74.1% of assets at September 30, 2024, from $1.03 billion, representing 70.2% of assets at December 31, 2023. The total loan portfolio at September 30, 2024 increased $97.9 million compared to the September 30, 2023 level of $1.03 billion, which represented 73.7% of assets. 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 $982.5 million, or 87.3% of total loans at September 30, 2024 and $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, municipal, commercial construction and commercial real estate loans originated.
Current wording
Loans Held for Sale and Loan Portfolio. Total loans (including loans held for sale) increased $4.3 million, or 0.4%, to $1.17 billion, representing 76.4% of assets at March 31, 2025, from $1.16 billion, representing 76.0% of assets at December 31, 2024. The total loan portfolio at March 31, 2025 increased $127.6 million compared to the March 31, 2024 level of $1.04 billion, which represented 73.2% of assets. 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 $1.02 billion, or 87.2% of total loans at March 31, 2025 and $1.01 billion, or 87.3% of total loans at December 31, 2024. 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 residential construction, municipal and commercial real estate loans originated.
Previous wording
The Company originates and sells qualified residential mortgage loans in various secondary market avenues to mitigate long-term interest rate risk and generate fee income, with a majority of sales made to the FHLMC/Freddie Mac, generally with servicing rights retained. At September 30, 2024, the Company serviced a $1.13 billion residential real estate mortgage portfolio, of which $8.4 million was held for sale and approximately $671.7 million of which was serviced for unaffiliated third parties.
Current wording
The Company originates and sells qualified residential mortgage loans in various secondary market avenues to mitigate long-term interest rate risk and generate fee income, with a majority of sales made to the FHLMC/Freddie Mac, generally with servicing rights retained. At March 31, 2025, the Company serviced a $1.16 billion residential real estate mortgage portfolio, of which $4.1 million was held for sale and approximately $694.8 million of which was serviced for unaffiliated third parties.
Previous wording
The Company sold $76.1 million of qualified residential real estate loans to the secondary market during the first nine months of 2024 compared to sales of $54.2 million during the first nine months of 2023. Residential mortgage loan origination activity was strong throughout 2024. Despite low housing inventory and higher interest rates, purchase activity in the Company's markets is stable, with continued construction loan activity.
Current wording
The Company sold $25.8 million of qualified residential real estate loans to the secondary market during the first three months of 2025 compared to sales of $21.7 million during the first three months of 2024. 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.
Showing the first 40 of 71 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Net unrealized losses in the Company’s AFS investment securities portfolio were $40.3 million as of March 31, 2025, compared to net unrealized losses of $43.6 million as of December 31, 2024. The Company’s Accumulated OCI component of stockholders’ equity at March 31, 2025 reflected cumulative net unrealized losses on investment securities of $31.4 million.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Union Bankshares, Inc. Page 30 only partially offset by the 52 bps increase in the average yield earned on interest earning assets between periods. The net interest margin decreased 22 bps for the nine months ended September 30, 2024 compared to the same period last year as a result of the changes discussed above.
Previous report — wording carried elsewhere
Union Bankshares, Inc. Page 33 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.
Previous report — wording carried elsewhere
The Company also participates in the ICS program, a service through which it can offer its customers demand or savings deposit products with access to unlimited FDIC insurance, while receiving reciprocal deposits from other FDIC-insured banks.
Previous report — wording carried elsewhere
Union Bankshares, Inc. Page 43 influenced by market interest rates, economic conditions, and rates offered by our competitors. Managing liquidity risk is essential to maintaining both depositor confidence and earnings stability.