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| Exhibit 99.1 | ||||||
Dear Shareholder, | February 10, 2011 |
| Union Bankshares, Inc. |
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We are pleased to report the financial results of your company for 2010 were solid in a number of areas. Net income increased by 6.9%, return on average assets was 1.26%, and return on average equity was 13.37%, all strong performance indicators. Contributing to the performance improvement were increases in net interest income–$868,000, non interest income–$413,000, and decreases in employee benefits, occupancy, equipment and FDIC insurance expenses combined of $354,000. Partially offsetting the above gains were increases in income taxes–$283,000, salaries–$462,000, and the provision for loan losses–$120,000. Of particular significance to 2010’s results were lending related activities. Interest rates remained at historically low levels contributing to the continued refinancing of residential mortgages. Over $51 million in residential loans were originated and sold, with the vast majority servicing retained, into the secondary mortgage market generating $1 million in premium income. Our portfolio of sold and serviced loans now exceeds $165 million, placing us in the top 5% of banks in our peer group. Service fees generated by these sold loans generated $549,000 in revenue during 2010 and will provide a continuing stream of fees in the years to come. As mentioned earlier, we increased our provision for bad debts for 2010 to $520,000. Although we charged off $316,000 in loans, the main reason for the increase in the provision was the composition of and growth in the loan portfolio of 6.7%. We have continued to experience good demand for commercial real estate as well as residential loans. In addition, we just received notice of our acceptance as an approved lender for the Federal Housing Administration (FHA) loan programs. In mid 2010, Congress passed the Wall Street Reform and Consumer Protection Act (Dodd-Frank bill). This legislation makes sweeping changes in the banking industry, consumer protection, and implements price controls on certain banking fees. Although community banks are exempted from some of these new rules, you can be assured the costs of regulatory compliance will increase for all financial institutions while revenue sources are being reduced. This past November we announced that David Silverman, Senior Vice President and Senior Loan Officer of Union Bank, had been selected the successor to Ken Gibbons. In accordance with the management succession plan adopted by the Board last July, Mr. Silverman will become President of both companies on April 1, 2011, and CEO in May 2012. Mr. Gibbons will become Board Chair upon the retirement of current Board Chair, Richard C. Sargent, at the annual meeting of shareholders in May 2011, and will remain as CEO during the management transition year of May 2011 to May 2012. Mr. Silverman was elected a director of Union Bank on November 17, 2010, and it is also expected that Mr. Silverman will stand for election to the Company’s Board of Directors at the 2011 annual meeting. The transition process has begun and we are all looking forward to the changes it will bring. Enclosed is your dividend check or advice of deposit, representing a dividend of $0.25 per share to shareholders of record January 29, 2011, and payable February 10, 2011.
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| SHAREHOLDER ASSISTANCE AND INVESTOR INFORMATION If you need assistance with a change in registration of certificates, combining your certificates into one, reporting lost certificates, non-receipt or loss of dividend checks, assistance regarding direct deposit of dividends, information about the Company, or to receive copies of financial reports, please contact JoAnn Tallman, Assistant Secretary at 802-888-6600 or contact our Transfer Agent at the address and phone number listed below: |
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Transfer Agent: | Registrar & Transfer Company | ||||||||||
| Phone: | 800-368-5948 | |||||||||
| Fax: | 908-497-2318 | |||||||||
| E-mail: | info@rtco.com | |||||||||
NASDAQ Stock Market Ticker Symbol: | UNB | ||||||||||
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Corporate Name: | Union Bankshares, Inc. | ||||||||||
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Corporate Address: | 20 Lower Main Street | ||||||||||
| P.O. Box 667 | ||||||||||
| Morrisville, VT 05661-0667 | ||||||||||
__________________________ | |||||||||||
UNION BANK OFFICES | |||||||||||
(ATMs at all Branch Locations) | |||||||||||
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DANVILLE | LITTLETON, NH | ST. JOHNSBURY | |||||||||
421 Route 2 East | 263 Dells Road | 364 Railroad St. | |||||||||
802-684-2211 | 603-444-7136 | 802-748-3131 | |||||||||
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FAIRFAX | LYNDONVILLE | 325 Portland St. | |||||||||
Jct. Rtes. 104&128 | 183 Depot St. | 802-748-3121 | |||||||||
802-849-2600 | 802-626-3100 |
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| Green Mtn. Mall | |||||||||
HARDWICK | MORRISVILLE | 1998 Memorial Dr. | |||||||||
103 VT Rte. 15 | 20 Lower Main St. | 802-748-2454 | |||||||||
802-472-8100 | 802-888-6600 |
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| SO. BURLINGTON | |||||||||
JEFFERSONVILLE | 65 Northgate Plaza | Loan Center | |||||||||
44 Main St. | Route 100 | 30 Kimball Ave. | |||||||||
802-644-6600 | 802-888-6860 | 802-865-1000 | |||||||||
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JOHNSON | ST. ALBANS | STOWE | |||||||||
198 Lower Main St. | 15 Mapleville Depot | 47 Park St. | |||||||||
802-635-6600 | 802-524-9000 | 802-253-6600 | |||||||||
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Richard C. Sargent | Kenneth D. Gibbons |
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Fourth Quarter Report | December 31, 2010 |
CONSOLIDATED BALANCE SHEETS (unaudited) |
| CONSOLIDATED STATEMENTS OF INCOME (unaudited) | |||||||
| December 31, 2010 | December 31, 2009 |
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| 12/31/2010 | 12/31/2009 | 12/31/2010 | 12/31/2009 | |
ASSETS |
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| (3 months ended) | (12 months ended) | |||
Cash and due from banks | $5,447,386 | $4,941,612 |
| Interest income | $5,814,504 | $5,705,281 | $22,907,235 | $23,216,587 | |
Federal funds sold & overnight deposits | 8,844,889 | 17,190,525 |
| Interest expense | 995,679 | 1,171,194 | 4,117,246 | 5,294,210 | |
Interest bearing deposits in banks | 14,041,101 | 22,974,800 |
| Net interest income | 4,818,825 | 4,534,087 | 18,789,989 | 17,922,377 | |
Investment securities | 24,279,845 | 24,648,589 |
| Provision for loan losses | 140,000 | 155,000 | 520,000 | 400,000 | |
Loans held for sale | 5,610,436 | 9,262,352 |
| Net interest income after |
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Loans, net | 376,460,215 | 348,904,624 |
| provision for loan losses | 4,678,825 | 4,379,087 | 18,269,989 | 17,522,377 | |
Reserve for loan losses | (3,754,618) | (3,492,783) |
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Premises and equipment, net | 7,842,281 | 7,613,319 |
| Trust income | 138,291 | 101,047 | 481,301 | 379,042 | |
Accrued interest & other assets | 15,095,578 | 15,479,058 |
| Noninterest income | 1,371,509 | 1,288,801 | 5,452,949 | 5,142,265 | |
Total Assets | $453,867,113 | $447,522,096 |
| Noninterest expenses: |
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| Salaries & wages | 1,719,509 | 1,555,542 | 6,558,759 | 6,097,064 | |
LIABILITIES AND SHAREHOLDERS' EQUITY |
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| Pension & employee benefits | 695,449 | 749,135 | 2,828,401 | 2,923,803 | |
Noninterest bearing deposits | $64,526,154 | $60,128,845 |
| Occupancy expense, net | 236,602 | 215,531 | 937,040 | 956,966 | |
Interest bearing deposits | 312,134,328 | 308,698,292 |
| Equipment expense | 285,373 | 264,716 | 1,056,687 | 1,109,626 | |
Borrowed funds | 28,985,907 | 30,992,604 |
| Other expenses | 1,479,126 | 1,332,031 | 5,533,858 | 5,309,714 | |
Accrued interest & other liabilities | 6,072,296 | 6,522,745 |
| Total | 4,416,059 | 4,116,955 | 16,914,745 | 16,397,173 | |
Common stock | 9,843,572 | 9,843,572 |
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Additional paid-in capital | 244,363 | 219,331 |
| Income before taxes | 1,772,566 | 1,651,980 | 7,289,494 | 6,646,511 | |
Retained earnings | 37,622,575 | 36,494,110 |
| Income tax expense | 390,944 | 372,062 | 1,702,707 | 1,419,943 | |
Accumulated other comprehensive loss | (1,739,244) | (1,653,077) |
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Treasury stock at cost | (3,822,838) | (3,724,326) |
| Net income | $1,381,622 | $1,279,918 | $5,586,787 | $5,226,568 | |
Total Liabilities and Shareholders' Equity | $453,867,113 | $447,522,096 |
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| Earnings per Share | $0.31 | $0.29 | $1.25 | $1.17 | |
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| Book value per Share |
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| $9.46 | $9.23 | |
Standby letters of credit were $1,494,000 and $2,438,000 at December 31, 2010 and 2009, respectively. |
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DIRECTORS – UNION BANKSHARES, INC. |
| OFFICERS – UNION BANK | ||||||
Richard C. Sargent (chairman) | Kenneth D. Gibbons | Schuyler W. Sweet |
| Rhonda L. Bennett - Vice President | Morrisville | Edward L. Levite - Senior Loan Originator | So Burlington | |
Cynthia D. Borck | Robert P. Rollins | Neil J. Van Dyke |
| Therese H. Butler - Assistant Treasurer | Morrisville | Carrie R. Locklin - Assistant Treasurer | Morrisville | |
Steven J. Bourgeois | John H. Steel |
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| Stacey L.B. Chase - Assistant Treasurer | Morrisville | Robyn A. Masi - Vice President | Stowe | |
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| Jeffrey G. Coslett - Senior Vice President | Morrisville | Thomas J. Meshako - Senior Vice President | Morrisville | |||
DIRECTORS – UNION BANK |
| Michael C. Curtis - Vice President | St. Albans | Marsha A. Mongeon - Sr. Vice President, CFO | Morrisville | |||
Richard C. Sargent (chairman) | Robert P. Rollins | John H. Steel |
| Peter J. Eley - SVP, Managing Trust Officer | Morrisville | Karen Carlson Noyes - Vice President | Morrisville | |
Cynthia D. Borck | Timothy W. Sargent | Schuyler W. Sweet |
| Kenneth D. Gibbons - President, CEO | Morrisville | Barbara A. Olden - Vice President | St. Johnsbury | |
Steven J. Bourgeois | David S. Silverman | Neil J. Van Dyke |
| Don D. Goodhue - Vice President | Morrisville | Deborah J. Partlow - Asst. VP, Sr. Trust Officer | Morrisville | |
Kenneth D. Gibbons |
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| Melissa A. Greene - Asst. Vice President | Hardwick | Bradley S. Prior - Assistant Treasurer | Morrisville | |
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| Karyn J. Hale - Vice President | Morrisville | Craig S. Provost - Vice President | Stowe | |
OFFICERS – UNION BANKSHARES, INC. |
| Claire A. Hindes - Asst. Vice President | Morrisville | Colleen D. Putvain - Assistant Treasurer | Morrisville | |||
Richard C. Sargent - Chairman | David S. Silverman - Vice President |
| Patricia N. Hogan - Vice President | Morrisville | Robert J. Richardson - Vice President | Morrisville | ||
Kenneth D. Gibbons - President & CEO | John H. Steel - Secretary |
| Tracey D. Holbrook - Regional Vice Pres. | St. Johnsbury | David S. Silverman - Senior Vice President | Morrisville | ||
Marsha A. Mongeon - Vice President/Treasurer | JoAnn A. Tallman - Asst. Secretary |
| Lura L. Jacques - Asst. VP, Trust Officer | St. Albans | Judy R. Smith - Assistant Vice President | St. Albans | ||
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| Lynne P. Jewett - Asst. Vice President | Morrisville | John H. Steel - Secretary | Stowe | ||
REGIONAL ADVISORY BOARD MEMBERS |
| Stephen H. Kendall - Vice President | Morrisville | Curtis C. Swan - Assistant Vice President | Fairfax | |||
Judy F. Aydelott - Littleton | Kenneth D. Gibbons - All |
| Susan O. Laferriere - Vice President | St. Johnsbury | JoAnn A. Tallman - Assistant Secretary | Morrisville | ||
Steven J. Bourgeois - St. Albans | Coleen Kohaut - St. Albans |
| Dennis J. Lamothe - Vice President | St. Johnsbury | Francis E. Welch - Assistant Vice President | Morrisville | ||
J.R. Alexis Clouatre - St. Johnsbury | Daniel J. Luneau - St. Albans |
| Susan F. Lassiter - Vice President | Jeffersonville | Martha J. Wilkins - Assistant Treasurer | Lyndonville | ||
Dwight A. Davis - St. Johnsbury | Samuel H. Ruggiano - St. Albans |
| Christine S. Latulip - Vice President | Littleton | Lorraine G. Willett - Assistant Vice President | Morrisville | ||
Kirk Dwyer - St. Johnsbury | Schuyler W. Sweet - Littleton |
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Stanley T. Fillion - Littleton | Norrine A. Williams – Littleton |
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