FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1995. Commission File Number 0-12958
UNION BANKSHARES COMPANY
(Exact name of registrant as specified in its charter)
MAINE 01-0395131
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation of organization).
66 Main Street, Ellsworth, Maine 04605
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (207) 667-2504
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act: Common Stock
$25 Par Value
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES XXX NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K ( 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K [ ](Amended by
Exch Act Rel No. 28869, eff. 5/1/91)
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of February 7, 1996, was approximately $31,670,320.
201,818 shares of the Company's Common Stock, $25 Par Value, were issued and
outstanding on February 17, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Annual Report to stockholders of the registrant for the
year ended December 31, 1995, are incorporated by reference into Parts I
and II.
2. Portions of the registrant's definitive Proxy Statement dated March 29,
1996 for its regular Annual Meeting of stockholders to be held April 18,
1996 are incorporated by reference into Part III.
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UNION BANKSHARES COMPANY
INDEX TO FORM 10-K
PART I Page No.
Item 1: Business 3-14
Item 2: Properties 15-16
Item 3. Legal Proceedings 16
Item 4. Submission of Matters to a Vote of
Security Holders 16
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters 17
Item 6. Selected Financial Data 18-19
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 20
Item 8. Financial Statements and Supplementary Data 20
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 20
PART III
Item 10. Directors and Executive Officers of
the Registrant 20
Item 11. Executive Compensation 20
Item 12. Security Ownership of Certain Beneficial
Owners and Management 20
Item 13. Certain Relationship and Related Transactions 20
PART IV
Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K 21-22
Signatures 23
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PART I
ITEM I: Business
Union Bankshares Company is a one-bank holding company, organized under the
laws of the State of Maine, which has acquired 99.928% of the common stock
of the Union Trust Company (the Bank). The Company's only subsidiary is the
Bank. The Company's holding company structure can be utilized to engage in
permitted banking-related activities, either directly or through newly
formed subsidiaries, or by acquiring companies already established in such
activities. The Company has no immediate plans for such activities, but
could do so, if such action should appear desirable.
Union Trust is a full-service, independent commercial bank with ten offices
in coastal Maine, serving the financial needs of individuals, businesses,
and municipalities in Hancock and Washington Counties. Commitment to
outstanding service, quality products and the ability to anticipate and
respond to the customers financial needs, Union Trust, now in its 107th
year, is proud to have earned the reputation as one of New England's
preeminent community banks.
Union Trust supports the people and communities it serves and believes that
reinvesting local money locally builds strong communities. The Bank's
charitable contribution program supports a broad range of local charities,
community development efforts and the volunteerism of its employees and
retirees.
Union Trust Company offers a full range of banking services, at competitive
rates, at convenient banking hours and locations and is accessible to our
customers 24 hours a day through physical locations and electronic means.
This year the Bank introduced "BankLine" which provides 24 hour access by
phone, whereby customers may check the balance of their checking account,
check recent account activity, verify interest paid and earned, transfer
funds and make loan payments.
Union Trust's deposit services include: regular and basic checking
accounts, NOW accounts, Money Market accounts, savings accounts,
Certificates of Deposits, IRA accounts, KEOGH Plans, ATM Convenience Card,
Convenience Check Card, Reserve Checking, credit cards, BankLine, Unlimited
Club membership and safe deposit boxes. The Bank also provides the
following loan services: installment loans, student loans, mortgages, lines
of credit, commercial loans, home equity loans and Visa credit cards.
Union Trust also offers a full range of investment and trust services. Our
professional trust advisors design and administer personal trusts,
individual retirement accounts, self-employed retirement accounts, company
retirement plans (pension, simplified employee pension, 401(k), profit
sharing), and estate plans. In addition, our trust staff will help people
of all ages and income levels analyze their savings and retirement needs and
plan customized investment strategies to meet the customer's goal. In 1995,
the trust department introduced "Mutual Partners", an Asset Allocation
Program that offers a balanced investment mechanism for our customer. Using
mutual funds and creating portfolios designed to meet each person's
individual situation and risk level, the Bank hopes to appeal to a broad
range of potential trust customers, many of whom might otherwise think that
they don't have enough savings to qualify for a trust.
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The Bank competes actively with other commercial banks and other financial
institutions in its service areas. Strong competition exists among
commercial banks in efforts to obtain new deposits, in the scope and type of
services offered, in interest rates on time deposits and interest rates
charged on loans, and in other aspects of banking. In Maine, savings banks
are major competitors of commercial banks as a result of broadened powers
granted to savings banks. In addition, the Bank like other commercial
banks, encounters substantial competition from other financial institutions
engaged in the business of either making loans or accepting deposit
accounts, such as savings and loan associations, insurance companies,
certain mutual funds, and certain governmental agencies. Furthermore, the
large banks located in Boston, New York, and Providence are active in
servicing some of the large Maine based companies.
As of December 31, 1995 the Bank employed 120 employees of which 14
employees were part-time.
The primary regulator of the Company and the Bank is the Federal Reserve
Bank of Boston.
Please refer to Management's Discussion and Analysis, on page 6 of the 1995
Annual Report of Union Bankshares Company, regarding compliance with capital
requirements.
Any loans classified for regulatory purposes as loss, doubtful, substandard,
or special mention that were not disclosed under Item III of Industry Guide
3 do not (1) represent or result from trends or uncertainties which
management reasonably expects will materially impact future operating
results, liquidity, or capital resources or (2) represent material credits
about which management is aware of any information which causes management
to have serious doubts as to the ability of such borrowers to comply with
the loan repayment terms.
The Company and Bank are not aware of any current recommendations by the
regulatory authorities which if they were to be implemented would have or
would be reasonably likely to have a material effect on the Company's
liquidity, capital resources or operations.
Loans, other than credit card loans, are placed on nonaccrual status when,
in the opinion of management, there are doubts as to collectibility of
interest or principal, or when principal or interest is past due 90 days or
more, and the loan is not well secured and in the process of collection.
Interest previously accrued but not collected is reversed and charged
against interest income at the time the related loan is placed on nonaccrual
status. Principal and accrued interest on credit card loans are charged to
the allowance for credit losses when 180 days past due.
Interest payments received on nonaccrual loans are recorded as reductions of
principal if principal payment is doubtful.
Loans are considered to be restructured when the yield on the restructured
assets is reduced below the current market rates by an agreement with the
borrower. Generally this occurs when the cash flow of the borrower is
insufficient to service the loan under its original terms.
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STATISTICAL PRESENTATION
(The Supplemental Financial Data presented on the following pages contains
information to facilitate analysis and comparison of sources of income and
exposure to risk).
A. INVESTMENT PORTFOLIO
The following table shows the book value of the Company's held to
maturity and investment securities at the end of each of the last three
years. (In Thousands)
December 31
1995 1994 1993
U. S. Treasury Securities
& Other Government Agencies $ -0- $ 0- $ -0-
Obligations of States and
Political Subdivisions 4,120 6,725 7,357
Other Investments Securities 0 0 0
TOTAL $4,120 $6,725 $7,357
The table below shows the relative maturities of investment and held to
maturity securities as of December 31, 1995.
Held to Maturity Securities
Maturity Distribution As Of
December 31, 1995
Security Category Due 1 Yr Due 1- Due 5- Due 10-
or less 5 Yrs 10 Yrs 15 Yrs
State and Municipal Bonds $ 817 $2,600 $ 653 $ 50
Average Weighted Yield 7.50% 6.08% 5.96% 8.38%
TOTAL $ 817 $2,600 $ 653 $ 50
Percent of Total Portfolio 19.8% 63.2% 15.8% 1.20%
NOTE: Average Weighted Yields on tax exempt obligations have been computed
on a tax equivalent basis
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A. 1. AVAILABLE FOR SALE SECURITIES
The following table shows the carrying value of the Company's Available for
Sale Securities at the end of each of the last three years. (In Thousands)
December 31
1995 1994 1993
U S Treasury Notes/Bills
and Other Government Agencies $71,799 $73,901 $70,276
Other Securities 659 659 113
TOTAL $72,458 $74,560 $70,389
The table below shows the relative maturities and carrying value of
available for sale securities as of December 31, 1995.
Securities Available For Sale
Maturity Distribution As Of
December 31, 1995
Security Due 1 Yr Due 1- Due 5-
Category or Less 5 Yrs 10 Yrs
U S Treasury Notes/Bills
and Other Government
Agencies $12,367 $30,717 $28,085
Average Weighted Yield 6.19% 6.60% 7.20%
Other Securities -0- 630 -0-
Average Weighted Yield -0- 6.25% -0-
TOTAL $12,367 $31,347 $28,085
Percent of
Total Portfolio: 17.2% 43.7% 39.1%
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B. LOANS
The following table reflects the composition of the Company's consolidated
loan portfolio at the end of each of the last five years.
1995 1994 1993 1992 1991
(In Thousands)
Real Estate Loans
A. Construction and Land
Development $ 2,023 $ 2,168 $ 1,568 $ 2,504 $ 2,693
B. Secured by 1-4 Family
Residential Properties 27,402 25,528 26,129 25,373 36,203
C. Secured by Multi-Family
(5 or more) Residential
Properties 2 4 7 12 27
D. Secured by Non-Farm,
Non-Residential
Properties 28,273 26,500 24,553 26,560 28,250
Commercial & Industrial Loans 13,778 12,975 12,834 15,564 16,651
Loans to Individuals for
Household, Family & Other
Consumer Expenditures 14,335 12,844 12,463 12,139 8,569
All Other Loans 7,430 4,189 3,439 2,825 2,255
Total Gross Loans $93,243 $84,208 $80,993 $84,977 $94,648
The above data is gathered from loan classifications established by the
Federal Reserve Call Report 033.
The percentages of loans by lending classification to total loans
outstanding at December 31, was as follows:
1995 1994 1993 1992 1991
Real Estate 61.9% 64.4% 64.5% 64.1% 71.0%
Commercial & Industrial
Including single payment
loans to individuals 14.8% 15.4% 15.9% 18.3% 17.6%
Consumer Loans 15.4% 15.3% 15.4% 14.3% 9.1%
All Other Loans 7.9% 4.9% 4.2% 3.3% 2.3%
Total Loans 100.0% 100.0% 100.0% 100.0% 100.0%
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Maturities and Sensitivities of Loans
to Changes in Interest Rates
As of December 31, 1995
Due 1 Year
or Less Due 1-5 Yrs Due 5 yrs +
Real Estate $ 36,806 $ 15,337 $ 5,557
Commercial & Industrial 10,525 3,253 0
Consumer 11,660 2,675 0
Municipal 4,222 1,902 1,306
Total $ 63,213 $ 23,167 $ 6,863
Note: Real Estate Loans in the 1-5 year category have $1,449,000 at a
fixed interest rate and $13,888,000 at a variable interest rate.
Commercial Loans in the 1-5 year category have $536,000 at a fixed
interest rate and $2,717,000 at a variable interest rate.
Real Estate Loans in the 5+ category have $5,015,000 at a
fixed interest rate and $542,000 at a variable interest rate.
Commercial Loans in the 5+ category have $0 at a fixed
interest rate and $0 at a variable rate.
Delinquent Loans
The following schedule is a summary of loans with principal and/or interest
payments over 30 days past due:
DECEMBER 31
1995 1994 1993 1992 1991
Amt % Amt % Amt % Amt % Amt %
Real Estate $867 0.9 $479 0.6 $1,659 2.0 $1,523 1.8 $2,058 2.2
Installment $ 95 0.1 $ 95 0.1 $ 96 0.1 $ 371 0.4 $ 278 0.3
All Others $ 35 0.0 $189 0.2 $ 102 0.2 $ 296 0.4 $ 759 0.8
TOTAL $997 1.0 $763 0.9 $1,857 2.3 $2,190 2.6 $3,095 3.3
It is the policy of the Company to discontinue the accrual of interest on
loans when, in the opinion of the management, the ultimate collectibility
of principal or interest becomes doubtful. The principal amount of loans
which have been placed on non-accrual status were comprised primarily of
certain installment loans. For each of these loans, management has evaluated
the collectibility of the principal based on its best estimate of the
realizable collateral value of the loans and does not anticipate that any
losses from liquidation of these loans will have a material effect on future
operations. There were approximately $614,000, $151,000, and $486,000 as of
December 31, 1995, 1994 and 1993, respectively, of loans on a non-accrual
status.
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LOANS CONCENTRATIONS
As of December 31, 1995 and 1994, the company did not have any concentration
of loans in one particular industry that exceeded 10% of its total loan
portfolio.
The Bank grants residential, commercial and consumer loans to customers
principally located in Hancock and Washington Counties of the State of Maine.
Although the loan portfolio is diversified, a substantial portion of its
debtor's ability to honor their contracts is dependent upon the economic
conditions in the area, especially in the real estate sector. There are
currently no borrowers whose total indebtedness to the Bank exceeds 10% of
the Bank's Shareholders' equity at December 31, 1995.
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
Analysis of the allowance for loan losses for the past five years were as
follows:
(Dollars in Thousands)
December 31,
1995 1994 1993 1992 1991
Balance at beginning of period: $ 1,929 $ 1,802 $ 2,325 $ 1,623 $ 971
Charge-Offs
Commercial & Industrial Loans 44 30 62 27 44
Real Estate Loans 48 256 837 92 187
Loans to Individuals 104 4 87 421 206
196 320 986 540 437
Recoveries:
Commercial & Industrial Loans 43 5 84 11 62
Real Estate Loans 1 390 47 26 21
Loans to Individuals 71 52 302 130 106
115 447 433 167 189
Net Charge-Offs (recoveries) 81 (127) 553 373 248
Provision for loan losses 30 0 30 1,075 900
Balance at end of period $ 1,878 $ 1,929 $ 1,802 $ 2,325 $ 1,623
Average Loans Outstanding $88,725 $82,600 $83,104 $89,813 $89,117
Ratio of Net Charge-Offs
(Recoveries) to average
loans outstanding .09% (.15%) .67% .42% .28%
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ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
December 31,
1995 1994 1993 1992 1991
Amt % of LN Amt % Amt % Amt % Amt %
Categories
To Total
Loans
Balance at end
of Period:
Applicable To:
Real Estate $ 647 61.9% $ 665 64.4% $ 621 64.5% $ 621 64.1% $ 560 71.0%
Commercial &
Industrial 1,024 14.8% 1,051 15.4% 983 15.9% 768 17.5% 884 17.3%
Consumer 207 15.4% 213 15.3% 198 15.4% 246 14.3% 179 9.1%
Municipal -0- 7.9% -0- 4.9% -0- 4.2% -0- 3.3% -0- 2.6%
Identified -0- -0- -0- -0- -0- -0- 690 .8% -0- -0-
$1,878 100.0 $1,929 100.0 $1,802 100.0 $2,325 100.0 $1,623 100.0
The allowance for loan losses is a general allowance established by
management to absorb possible loan losses as they may exist in the loan
portfolio. This allowance is increased by provisions charged to operating
expenses and by recoveries on loans previously charged-off. Management
determines the adequacy of the allowance from continuous reviews of the
quality of new and existing loans, from the results of independent reviews of
the loan portfolio by regulatory agency examiners, evaluation of past
and anticipated loan loss experience, the character and size of the loan
portfolio and anticipated economic conditions.
As of December 31, 1995, the Company had impaired loans totaling some
$59,000, which consisted of commercial and real estate loans. The fair
value of the loan's collateral was used in all instances to determine present
value.
A loan is considered impaired by management when it is probable that the
creditor will be unable to collect all amounts due under the contractual
terms of the loan, including principal and interest. Loans on a non-
accrual status that are deemed collectable are not classified as impaired.
Based upon managements periodic review of loans on non-accrual status,
impairment is based on a loan by loan analysis and not set by a defined
period of delinquency before a loan is considered impaired.
The adoption of Statement 114 has had no material affect on the
comparability of prior reporting periods.
Risk Elements
1995 1994 1993 1992 1991
Loans accounted for on
a non-accrual basis $614 $151 $486 $353 $623
Accruing loans contractually
past due 90-days or more $388 $ 86 $237 $134 $ 88
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In accordance with Industry Guide 3 Item III. c (2), the gross interest
income that would have been recorded in 1995 if non-accrual and restructured
loans had been current in accordance with their original terms and had been
outstanding throughout the period or since origination approximates $28,000.
There was some $2,000 included in the gross interest income on non-accrual
and restructured loans for 1995.
C. DEPOSITS
The following table presents the components of total deposits for the last
three years.
(Dollars in Thousands)
1995 1994 1993
Demand Deposits $ 19,327 $ 20,257 $ 17,237
Savings Deposits 63,621 66,236 66,041
Money Market Accounts 17,420 20,346 22,815
Time Deposits 58,104 49,939 49,705
Certificates of Deposits
of $100,000 or more 6,886 3,471 5,438
TOTAL DEPOSITS $165,358 $160,249 $161,236
Interest Bearing
Deposits to Total 89.4% 87.4% 89.3%
The following schedule summarizes the time remaining to maturity of
Certificates of Deposit $100,000 or greater at December 31, 1995.
Amount
(In Thousands)
3 Months or Less 2,176
3 Through 12 Months 3,679
Over One Year 1,031
D. CAPITAL RATIOS
The following table presents, for the last three years, the Company's
capital expressed as a percentage of average deposits, loans, total assets,
and earning assets.
*1995 *1994 1993
Deposits 13.7% 12.8% 11.8%
Loans 25.1% 24.9% 22.7%
Total Assets 11.9% 11.3% 10.5%
Earning Assets 12.9% 12.8% 11.2%
* Excluding net unrealized gain/(loss) on available for sale securities of
$567,810 and ($1,389,168) at December 31, 1995 and 1994, respectively.
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E. RETURN ON STOCKHOLDERS' EQUITY
The following table presents, for each of the last three years, the Company's
return on stockholders' equity, return on assets, and return on average
earning assets.
1995 1994 1993
Return on Average
Stockholders' Equity 11.4% 11.9% 11.8%
Return on Average Assets 1.3% 1.3% 1.2%
Return on Average Earning Assets 1.4% 1.4% 1.3%
F. FIVE YEAR SUMMARY (in Thousands)
1995 1994 1993 1992 1991
Deposits $165,358 $160,249 $161,236 $158,674 $149,623
Loans 93,243 84,208 80,993 84,977 94,648
Securities *75,716 *83,391 *73,821 76,704 56,981
Shareholders'
Equity **22,227 **20,570 18,875 17,391 15,923
Total Assets 191,353 181,597 182,129 177,767 167,138
Net Earnings 2,418 2,354 2,134 1,920 1,300
Interest Income 13,855 12,677 12,393 13,698 14,902
Net Interest Income 8,803 8,490 7,666 7,548 6,732
Actual Cash Dividend
Declared*** 4.00 3.00 3.00 2.41 2.41
Dividend Payout Ratio 31.3% 25.8% 28.4% 23.8% 35.1%
Average Equity to
Average Asset Ratio 11.5% 10.8% 10.1% 8.44% 9.43%
Earnings Per Share*** $12.78 $11.65 $10.55 $10.15 $6.87
Loans to Deposits
Ratio 56.4% 52.5% 50.2% 53.6% 63.3%
* Stated at amortized cost. Includes available for sale securities with
cost of $70,939 and $76,007 and securities held for sale with cost of $65,816
at December 31, 1995, 1994, and 1993, respectively.
** Excluding net unrealized gain/(loss) on available for sale securities of
$567,810 and ($1,389,168) at December 31, 1995 and 1994, respectively, due
to impact of FAS 115.
*** Earnings per share have been restated to reflect a stock split effected
in the form of a 33 1/3 stock dividend in 1995.
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The following table sets forth, for the periods indicated, information
regarding (1) the total dollar amount of interest income of the Company from
interest-earning assets and the resulting average yields; (2) the total
dollar amount of interest expense on interest bearing liabilities and the
resulting average cost; (3) net interest income; (4) interest rate spread;
and (5) net interest margin. Information is based on average daily balances
during the indicated periods. For the purposes of the table and the
following discussion, (1) income from interest earning assets and net
interest income are not presented on a tax equivalent basis primarily by
adjusting income and yields earned on tax exempt interest received on loans
and certain investments to make them equivalent to income and yields earned
on fully taxable investments - assuming federal income tax rates of 34% in
1995, 1994 and 1993, respectively, and (2) non-accrual loans have been
included in the appropriate average balance loan category, but unpaid
interest on non-accrual loans has not been included for purposes of
determining interest income.
Average Balances/Interest Earned - Paid/Rates 1995, 1994 and 1993
(In Thousands)
1995 1994 1993
Balance Int Rate Balance Int Rate Balance Int Rate
Earned/Paid Earned/Paid Earned/Paid
Assets
Interest Earning Assets:
Securities Available
for Sale $65,896 $ 4,231 6.42 $ 70,584 $ 4,447 6.30 $ 55,575 $4,199 7.56
State and
Municipal 5,926 419 7.07 7,155 520 7.27 9,050 607 6.71
Federal Funds
Sold 7,409 424 5.72 5,490 209 3.81 5,358 263 4.91
Loans(Net) 88,588 8,781 9.91 82,570 7,501 9.08 91,710 7,324 7.99
Total Interest Earning
Assets 167,819 $13,855 8.26 165,799 $12,677 7.65 $161,693 $12,393 7.66
Other non-earning
assets 14,685 15,503 12,213
$182,504 $181,302 $173,906
Interest Bearing Liabilities:
Savings
Deposits $ 65,690 $ 1,302 1.98 $ 66,290 $ 1,341 2.02 $ 64,915 $ 1,631 2.51
Time Dep 59,544 3,198 5.37 54,668 2,279 4.17 54,668 2,451 4.48
Money Market
Accounts 15,142 552 3.65 21,275 567 2.67 22,649 645 2.84
Total Interest Bearing
Deposits 140,376 $ 5,052 3.60 142,233 $ 4,187 2.94 142,232 $ 4,727 3.33
Other non-interest bearing liabilities &
shareholders'
equity 42,128 39,069 31,674
$182,504 $181,302 $173,906
Interest Spread 8,803 4.66 8,907 4.71 8,062 4.40
Interest Revenue/Earning
Assets 167,819 13,855 8.26 165,799 12,677 7.65 161,693 12,393 7.66
Interest Expense/Earning
Assets 167,819 5,052 3.01 165,799 4,187 2.53 161,693 4,727 2.92
Net Yield on Earning Assets 5.25 5.12 4.74
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Volume and Rate Analysis of Net Interest Income
Taxable Equivalent in Thousands
Year Ended December 31, 1995 vs 1994
Increase(Decrease)
Due to Change In
Volume Rate Rate/Volume* Total
Interest Earning Assets:
Assets Available for Sale (296) 84 (4) (216)
State and Political Obligation (135) (282) 48 (369)
Federal Funds Sold 73 105 37 215
Loans, Net 553 533 45 1,131
Total Interest Earning
Assets 195 440 126 761
Interest Bearing Liabilities:
Savings Deposits (14) (28) 3 (39)
Time Deposit 204 657 58 919
Money Market Accounts (163) 209 (61) (15)
Total Interest Bearing
Deposits 27 838 0 865
Increase (Decrease) 168 (398) 126 (104)
Volume and Rate Analysis of Net Interest Income
Taxable Equivalent in Thousands
Year Ended December 31, 1994 vs 1993
Increase (Decrease)
Due to Change In
Volume Rate Rate/Volume* Total
Interest Earning Assets:
Assets Held for Sale 1,137 (698) (191) 248
State and Municipal (190) 90 (18) (118)
Federal Funds Sold 7 (59) (2) (54)
Loans, Net (741) 1,071 (101) 229
Total Interest Earning
Assets 213 404 (312) 305
Interest Bearing Liabilities:
Savings Deposits 33 (320) (3) (290)
Time Deposits (2) (171) 1 (172)
Money Market Accounts 37 (40) (75) (78)
Total Interest Bearing
Deposits 68 (531) (77) (540)
Increase (Decrease) 145 935 (235) 845
The above table reconciles changes in interest and dividend
income on a tax equivalent basis and interest expense of the Company for the
period indicated due to changes in average balances, rates or a combination
of both.
*Represents the change not solely attributable to change in rate or
change in volume but a combination of these two factors.
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BANK'S PROPERTIES
ITEM 2: PROPERTIES
The Bank's principal office is located at 66 Main Street in Ellsworth,
Maine. The main office building consists of three floors, all of which are
utilized by the Bank for banking facilities and administrative offices.
The principal office includes a separate drive-up facility and parking lot.
In August, 1981, plans were finalized for the construction of an 8,000
square foot addition to our existing building. Completed in November of
1982, it provided new and enlarged customer service/teller area with street
level access. During 1982 and 1983, the existing building also received
extensive renovation and remodeling, tying it in to the new addition. The
project was completed in July of 1983. In April, 1985, the Bank opened the
first automated drive-up in Downeast Maine. The automated teller machine
is adjacent to its drive-up facility located at 66 Main Street, in Ellsworth,
Maine. In October, 1985, our new branch in Somesville, Maine opened. The
site is a high traffic area and holds excellent promise for attracting new
accounts and servicing existing ones. In 1988, the Main Office began
construction of an addition to its existing building that would house loan
operations. In September, 1989, construction was completed on the addition.
In May, 1992, the bank opened a trust office in Bangor (Penobscot County) to
serve trust customers in that city and surrounding areas. In May 1995, the
Bank elected not to renew its lease for its Bangor office. In addition, the
Bank owns the following properties:
(a) The Bank's Cherryfield office located on Church Street in
Cherryfield, Maine. A major renovation was undertaken at
Cherryfield in 1983, approximately doubling its size.
These alterations were completed in January of 1984.
(b) The Bank's Jonesport office located on Main Street in
Jonesport, Maine.
(c) The Bank's Blue Hill office located on Main Street in Blue
Hill, Maine.During 1989, the branch was renovated to
include an office for the Assistant Manager.
(d) The Bank's Stonington office located on Atlantic Avenue in
Stonington, Maine. The Stonington office was renovated and
expanded in 1980.
(e) The Bank's Milbridge office located on Main Street in
Milbridge, Maine. In 1987, management decided to replace
the Milbridge Branch with a larger up-to-date facility,
located at the same site. The new branch is now
completed and has been open for business since April 1988.
(f) The Bank purchased in 1989 a parcel of land located on
Route 3 in Ellsworth with the possible intention of
constructing a new branch. There are no plans for
construction at this time.
All of the Bank's offices include drive-up facilities.
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In addition to the above properties, which are owned by the bank, the Bank
leases the following properties:
(a) The bank leases its branch office at the Ellsworth Shopping
Center, High Street Ellsworth, Maine, from Ellsworth
Shopping Center, Inc., a Maine Corporation with principal
offices in Ellsworth, Maine. The current lease will expire
in May of 1997.
(b) The Bank leases its Machias office which is located on
Dublin Street in Machias, Maine. The premises are owned by
Hannaford Bros., Inc. of South Portland, Maine, and are
leased to Gay's Super Markets, Inc., under a lease dated
July 26, 1975. The Bank subleased the premises from Gay's
Super Markets, Inc., under a sublease which expires in
April of 1996. The bank has the right to extend the
sublease for three additional five year terms.
(c) The Bank leases its Somesville Branch Office which is
located on Route 102 in Somesville, Maine. The land and
premises are owned by A.C. Fernald Sons, Inc., Mount
Desert, Maine. The current lease expires on March 24,
2005, with an option to renew for an additional 20 years.
(d) The Bank leases it Castine branch office located on Main
Street from Michael Tonry, Castine, Maine. The current
lease expires on February 1, 1999 with the right to
extend the lease for an additional 4 year term.
All premises are considered to be in good condition and currently
adequate for the purposes for which they are utilized.
ITEM 3: LEGAL PROCEEDINGS
There are no material pending legal proceedings other than ordinary routine
litigation incidental to the business.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
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PART II
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
A. MARKET INFORMATION
The common stock, $25 par value of the Company, is not listed on any
exchange nor actively traded. Since the Company is not aware of the price
of all trades, the price is established by determining what a willing buyer
will pay a willing seller. The stock prices shown below are based upon
trades that the Bank has knowledge of from Paine Webber and represent a
range of the high and low bids for each quarter ended in 1994 and 1995.
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
1994 $155.00/160.00 $160.00/160.00 $160.00/160.00 $160.00/160.00
1995 $160.00/175.00 $125.00/169.26 $150.00/167.00 $167.00/170.00
B. HOLDER
As of March 1, 1996 there were approximately 677 stockholders of record.
C. DIVIDENDS
1. History
The following table shows the cash dividends declared by Union Bankshares
Company on its common stock, $25 par value:
1995 *1994
First Quarter $1.00 $ .75
Second Quarter 1.00 .75
Third Quarter 1.00 .75
Fourth Quarter 1.00 .75
Total $4.00 $3.00
Cash dividends declared
per common share $4.00 $3.00
*Dividends per share have been restated to reflect a stock split effected
in the form of a 33 1/3 percent stock dividend in 1995.
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Item 6: Selected FINANCIAL DATA
(in thousands)
Set forth below is a Consolidated Summary of Operations for the Company for
each of the last five years.
1995 1994 1993 1992 1991
INTEREST AND DIVIDEND INCOME
Interest and Fees on Loans $ 8,781 $ 7,501 $ 7,324 $ 8,824 $ 9,984
Interest on Federal Funds Sold 424 209 263 176 377
Interest on Available for Sale
Securities 4,230 4,447 0 0 0
Interest on Held for Sale
Securities 0 0 4,199 4,025 3,643
Interest on Held to Maturity
Securities 420 520 607 674 899
Total Interest Earned $13,855 $12,677 $12,393 $13,699 $14,903
INTEREST EXPENSE
Interest on Deposits 4,767 4,084 4,556 5,876 7,658
Interest on C/D's $100,000
and Over 274 101 169 273 511
Interest on Short-term Borrowings 11 2 1 1 1
Total Interest Expense 5,052 4,187 4,726 6,150 8,170
NET INTEREST INCOME 8,803 8,490 7,667 7,549 6,733
Provision for loan losses 30 0 30 1,075 900
Net Interest Income after
Loan Provision 8,773 8,490 7,637 6,474 5,833
NONINTEREST INCOME
Net Securities Gains 3 98 267 1,098 330
Trust Department 444 400 413 381 331
Service Charges on Deposit
Accounts 310 311 324 331 276
Other Income 1,232 1,271 1,255 1,189 964
Total Noninterest Income 1,989 2,080 2,259 2,999 1,901
Income Before Non-Interest
Expenses 10,762 10,570 9,896 9,473 7,734
NONINTEREST EXPENSE
Salaries and Employee Benefits 4,019 3,967 3,497 3,239 2,947
Net Occupancy Expense 777 767 780 712 673
Equipment Expense 201 180 173 190 165
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FDIC Insurance 185 345 349 387 360
Other Expenses 2,277 2,161 2,235 2,430 1,952
Total Noninterest Expense 7,459 7,420 7,034 6,958 6,097
INCOME BEFORE TAXES 3,303 3,150 2,862 2,515 1,637
Income Taxes 885 796 797 595 337
Income Before Cumulative Effect 2,418 2,354 2,065 1,920 1,300
of Change in Accounting Principle
Cumulative Effect of Change 0 0 68 0 0
in Accounting for Income Taxes
NET INCOME $2,418 $2,354 $2,133 $1,920 $1,300
Net Income Per Common Share $12.78 $11.65 $10.55 $10.15 $ 6.87
Cash Dividends Declared
Per Common Share $ 4.00 $ 3.00 $ 3.00 $ 2.41 $ 2.41
The above summary should be read in conjunction with the related
consolidated financial statements and notes thereto for the years ended
December 31, 1995, 1994, 1993, 1992, and 1991, and with Management's
discussion and analysis of financial condition.
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ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information contained in the section captioned "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in the
Company's Annual Report is incorporated herein by reference.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(a) The financial statements required are contained in the
Company's 1995 Annual Report and are incorporated herein by reference.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
In May, 1995, the Audit Committee of the Company voted to engage Berry,
Dunn, McNeil & Parker as independent auditors of the Company. The Company's
former auditors, Baker, Newman & Noyes (which was the successor firm as of
1/2/95 to the Portland, Maine office of KPMG Peat Marwick) was dismissed on
the same date. Each of the auditors' report on the financial statements for
the past two fiscal years did not contain an adverse opinion or disclaimer of
opinion and were not qualified as to uncertainty, audit scope or accounting
principles. In connection with the audits of the two most recent fiscal
years preceeding the change in accountants, there were no disagreements of
any type with the Company's former auditor on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure. During the Company's two fiscal years preceeding the change in
accountants, no reportable event which would require disclosure under federal
securities laws, occured.
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information called for by this Item (and Items 11, 12, and 13 below) is
incorporated by reference from the registrant's definitive Proxy Statement
dated March 28, 1996 for its regular annual meeting of stockholders to be
held April 18, 1996, where it appears under the headings "VOTING SECURITIES
AND PRINCIPAL HOLDERS THEREOF AND ELECTION OF DIRECTORS."
ITEM 11: EXECUTIVE COMPENSATION
See Item 10.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
See Item 10.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See Item 10.
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PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements and Exhibits
(1) The financial statements listed below are filed
as part of this report; such financial
statements (including report thereon and notes
thereto) are included in the registrant's
Annual Report to stockholders for its fiscal
year ended December 31, 1995 (a copy of
which is being filed as Exhibit 13 hereto), and
are incorporated herein by reference.
Exhibit 13
Page Number
Consolidated Balance Sheets
December 31, 1995 and 1994 16 - 17
Consolidated Statements of Income
For the years ended December 31, 1995, 1994, 1993 18 - 19
Consolidated Statements of Changes in Stockholders' Equity
For the years ended December 31, 1995, 1994, 1993 20
Consolidated Statements of Cash Flow
For the years ended December 31, 1995, 1994, 1993 21 - 23
Notes to Consolidated Financial Statements 24 - 44
Independent Auditors Opinion 45
Supplementary schedules are omitted as they are not required or included in
the Annual Report to shareholders.
(2) Exhibits required by Item 601 - see Item 14(c)
(b) Reports on Form 8-K
During the registrant's fiscal quarter ended December 31, 1995, the
registrant was not required to and did not file any Reports on Form 8-K.
(c) Exhibits
Exhibit# Description
* 3 Articles of Incorporation and By-laws
of Union Bankshares Company
* 10.1 Employee benefit plan for the employees
of Union Trust Company
Pension Plan for the employees of Union
Trust Company
401(k) Profit Sharing Plan for the
employees of Union Trust Company
Stock Purchase Plan for the employees
of Union Trust Company
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11 Computation of earnings per share, is
incorporated herein by reference to
Note 1 to the Consolidated Financial
Statements on page 16 of the 1995
Annual Report to Stockholders attached
hereto as Exhibit 13.
12 Statement for computation of ratios is
incorporated herein by reference to
"Part I, Item 1-Five Year Summary."
13 The registrant's Annual Report to
Stockholders for its fiscal year ended
December 31, 1995. This exhibit,
except for those portions thereof
expressly incorporated by reference
into the Form 10-K annual report, is
furnished for the information of the
Commission only and is not to be
"filed" as part of the report.
16 A letter from the registrant's former
independent accountant regarding its
concurrence with the statements made by
the registrant in the current report
concerning the dismissal of the
registrant's principal accountant.
*21 Subsidiary information is incorporated
herein by reference to "Part I, Item 1-
Business".
99.1 Report of Berry, Dunn, McNeil & Parker.
99.2 Report of Baker, Newman and Noyes
99.3 Report of KPMG Peat Marwick
*Incorporated herein by reference into this document from the Exhibits to
Form S-1, Registration Statement, initially filed on June 15, 1984,
Registration No. 2-90679.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
UNION BANKSHARES COMPANY UNION BANKSHARES COMPANY
By: Robert S. Boit, President Peter A. Blyberg
and Chief Executive Officer Executive Vice President and
Treasurer
Date: March 27, 1996
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Arthur J Billings, Director
Peter A Blyberg, Director
Robert S Boit, Director
Richard C Carver, Director
Peter A Clapp, Director
Sandra H Collier, Director
Robert B Fernald, Director
Douglas A Gott, Director
David E Honey, Director
Delmont N Merrill, Director
Thomas R Perkins, Director
Casper G Sargent, Director
John V Sawyer, II, Director
Stephen C Shea, Director
Richard W Teele, Director
Paul L Tracy, Director
Richard W Whitney, Director
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