UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
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:
Title of each class Name of each exchange on which registered
None 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 [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of February 7, 1997, was approximately $39,136,020.
201,903 shares of the Company's Common Stock, $25 Par Value, were issued and
outstanding on February 17, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Annual Report to stockholders of the registrant for the
year ended December 31, 1996, are incorporated by reference into Parts
I and II.
2. Portions of the registrant's definitive Proxy Statement dated March 28,
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1997 for its regular Annual Meeting of stockholders to be held April
17, 1997 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 4-16
Item 2: Properties 17-18
Item 3. Legal Proceedings 18
Item 4. Submission of Matters to a Vote of Security Holders 18
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 19
Item 6. Selected Financial Data 20-21
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 22
Item 8. Financial Statements and Supplementary Data 22
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 22
PART III
Item 10. Directors and Executive Officers of the Registrant 22
Item 11. Executive Compensation 22
Item 12. Security Ownership of Certain Beneficial Owners and
Management 22
Item 13. Certain Relationship and Related Transactions 22
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 23-24
Signatures 25
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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 Union Trust Company. 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, 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. With its commitment
to outstanding service, quality products and the ability to anticipate and
respond to the customers financial needs, Union Trust, now in its 109th
year, is proud to have earned the reputation as one of New England's
preeminent independent 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,
directors and retirees.
Union Trust Company offers a full range of banking services, at competitive
rates and at convenient banking hours and locations and is accessible to
customers 24 hours a day through physical locations and electronic means.
The Bank is committed to be in the forefront as a financial service provider
and during 1996 the Bank implemented the following products and services:
*Expanded Cash Management Capabilities.
Currently marketing fully electronic Automated Clearing House
(ACH) programs.
*Redesigned Mobile Home Loan Program.
Competitive rates, 24 hour turnaround.
*Freddie Mac Loan Prospector Program.
An automated underwriting system that can cut mortgage loan
processing time in half. Union Trust was the first in Maine to
offer this program.
*Expanded Electronic Banking Products.
*New Bankline Telephone Banking Features.
Faxed account statements, plus a nationwide toll free number now
available.
*Customer Service Call Center.
Specially trained employees respond to customer's telephone
inquiries. Some 8,300 calls since July 1996.
*Saturday lobby hours at Ellsworth Shopping Center Branch
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*Internet access at www.uniontrust.com
Union Trust's deposit services include: regular and basic checking
accounts, NOW accounts, money market accounts, savings accounts,
certificates of deposit, IRA accounts, KEOGH Plans, ATM Convenience Cards,
Convenience Check Cards, 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 administer personal trusts, investment
management accounts, custody accounts, individual retirement accounts, self-
employed retirement accounts, company retirement plans (pension, simplified
employee pension, 401(k), simple 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 1996, the Trust Department saw
growth in Mutual Partners, an asset allocation program that offers an
individualized investment program for our customers using mutual fund
portfolios. Trust services are available for almost all customers, no matter
what their investable assets may be.
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, 1996 the Bank employed 117 employees of which 17
employees were part-time.
The primary regulator of the Company and the Bank is the Federal Reserve
Bank of Boston.
Please refer to Footnote #13, on page 46 of the 1996 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
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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.
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 securities at the end of each of the last three years. (In
Thousands)
December 31
1996 1995 1994
U. S. Treasury Securities
& Other Government Agencies $ 995 $ -0- $ -0-
Obligations of States and
Political Subdivisions 3,792 4,120 6,725
TOTAL $4,787 $4,120 $6,725
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The table below shows the relative maturities of investment and held to
maturity securities as of December 31, 1996.
Held to Maturity Securities
Maturity Distribution As Of
December 31, 1996
Security Category Due 1 Yr Due 1- Due 5- Due 10-
or less 5 Yrs 10 Yrs 15 Yrs
State and Municipal Bonds $ 752 $2,298 $ 742 $ 0
Average Weighted Yield 7.18% 6.14% 5.15% 0%
Other Government Agencies $ 0 $ 0 $ 0 $ 995
Average Weighted Yield 0% 0% 0% 7.00%
TOTAL $ 752 $2,298 $ 742 $ 995
Percent of Total Portfolio 15.7% 48.0% 15.5% 20.8%
NOTE: Average Weighted Yields on tax exempt obligations have been computed
on a tax equivalent basis
A. 1. AVAILABLE FOR SALE SECURITIES
The following table shows the carrying value of the Company's Available for
Sale Securities and other investment securities at the end of each of the
last three years. (In Thousands)
December 31
1996 1995 1994
U S Treasury Notes/Bills
and Other Government Agencies $73,322 $71,799 $73,901
Other Corporate Securities 1,513 0 0
Other Securities 1,946 659 659
TOTAL $76,781 $72,458 $74,560
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The table below shows the relative maturities and carrying value of
available for sale debt securities as of December 31, 1996.
Securities Available For Sale
Maturity Distribution As Of
December 31, 1996
Security Due 1 Yr Due 1- Due 5-
Category or Less 5 Yrs 10 Yrs
U S Treasury Notes/Bills
and Other Government Agencies $ 7,287 $20,713 $44,782
Average Weighted Yield 5.55% 6.28% 6.54%
Other Securities -0- 1,513 -0-
Average Weighted Yield -0- 6.20% -0-
TOTAL $ 7,287 $22,226 $44,782
Percent of
Total Portfolio: 9.7% 29.7% 59.8%
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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.
1996 1995 1994 1993 1992
(In Thousands)
Real Estate Loans
A. Construction and Land
Development $ 4,073 $ 2,023 $ 2,168 $ 1,568 $ 2,504
B. Secured by 1-4 Family
Residential Properties 30,457 27,402 25,528 26,129 25,373
C. Secured by Multi-Family
(5 or more) Residential
Properties 0 2 4 7 12
D. Secured by Non-Farm,
Non-Residential
Properties 30,134 28,273 26,500 24,553 26,560
Commercial & Industrial Loans 16,582 13,778 12,975 12,834 15,564
Loans to Individuals for
Household, Family & Other
Consumer Expenditures 15,133 14,335 12,844 12,463 12,139
All Other Loans 4,664 7,430 4,189 3,439 2,825
Total Gross Loans $101,043 $93,243 $84,208 $80,993 $84,977
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:
1996 1995 1994 1993 1992
Real Estate 64.0% 61.9% 64.4% 64.5% 64.1%
Commercial & Industrial
Including single payment
loans to individuals 16.4% 14.8% 15.4% 15.9% 18.3%
Consumer Loans 15.0% 15.4% 15.3% 15.4% 14.3%
All Other Loans 4.6% 7.9% 4.9% 4.2% 3.3%
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, 1996
Due 1 Year or Less Due 1-5 Yrs Due 5 yrs+
Real Estate $42,885 $ 9,887 $ 11,892
Commercial & Industrial 12,395 2,566 1,621
Consumer 6,448 7,908 777
Municipal 1,784 1,432 1,448
Total $63,512 $21,793 $15,738
Note: Real Estate Loans in the 1-5 year category have $2,544,000 at a
fixed interest rate and $7,343,000 at a variable interest rate.
Commercial Loans in the 1-5 year category have $0 at a fixed
interest rate and $2,566,000 at a variable interest rate.
Real Estate Loans in the 5+ category have $10,409,000 at a fixed
interest rate and $1,483,000 at a variable interest rate.
Commercial Loans in the 5+ category have $1,621,000 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
1996 1995 1994 1993 1992
Amt % Amt % Amt % Amt % Amt %
Real Estate $2,649 2.6 $ 867 0.9 $ 479 0.6 $1,659 2.0 $1,523 1.8
Installment $ 197 0.2 $ 95 0.1 $ 95 0.1 $ 96 0.1 $ 371 0.4
All Others $ 220 0.2 $ 35 0.0 $ 189 0.2 $ 102 0.2 $ 296 0.4
TOTAL $3,066 3.0 $ 997 1.0 $ 763 0.9 $1,857 2.3 $2,190 2.6
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 $492,000, $614,000, and $151,000 as of December 31,
1996, 1995 and 1994, respectively, of loans on a non-accrual status.
LOANS CONCENTRATIONS
As of December 31, 1996 and 1995, the company did not have any concentration
of loans in one particular industry that exceeded 10% of its total loan
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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, 1996.
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,
1996 1995 1994 1993 1992
Balance at beginning of period: $ 1,878 $ 1,929 $ 1,802 $ 2,325 $ 1,623
Charge-Offs
Commercial & Industrial Loans 15 44 30 62 27
Real Estate Loans 0 48 256 837 92
Loans to Individuals 73 104 34 87 421
88 196 320 986 540
Recoveries:
Commercial & Industrial Loans 138 43 5 84 11
Real Estate Loans 12 1 390 47 26
Loans to Individuals 24 71 52 302 130
174 115 447 433 167
Net Charge-Offs (recoveries) (86) 81 (127) 553 373
Provision for loan losses 120 30 0 30 1,075
Balance at end of period $ 2,084 $ 1,878 $ 1,929 $ 1,802 $ 2,325
Average Loans Outstanding $97,143 $88,725 $82,600 $83,104 $89,813
Ratio of Net Charge-Offs
(Recoveries) to average
loans outstanding (.09%) .09% (.15%) .67% .42%
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ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
December 31,
1996 1995 1994 1993 1992
Amt % of Amt % Amt % Amt % Amt %
Loan
Categor
ies to
Total
Loans
Balance At End
of Period:
Applicable To:
Real Estate $ 418 64.0% $ 647 61.9% $ 665 64.4% $ 621 64.5% $ 621 64.1%
Commercial &
Industrial 1,312 16.4% 1,024 14.8% 1,051 15.4% 983 15.9% 768 17.5%
Consumer 194 15.0% 207 15.4% 213 15.3% 198 15.4% 246 14.3%
Municipal 60 4.5% 0 7.9% 0 4.9% 0 4.2% 0 3.3%
Identified 100 .1% 0 0 0 0 0 0 690 .8%
$2,084 100.0% $1,878 100.0% $1,929 100.0% $1,802 100.0% $2,325 100.0%
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, 1996, the Company had impaired loans totaling $21,000,
which consisted of commercial 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.
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Risk Elements
1996 1995 1994 1993 1992
Loans accounted for on a
non-accrual basis $492 $614 $151 $486 $353
Accruing loans contractually
past due 90-days or more $196 $388 $ 86 $237 $134
In accordance with Industry Guide 3 Item III. c (2), the gross interest
income that would have been recorded in 1996 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 $32,000. There was approximately $2,200 included in the gross
interest income on non-accrual and restructured loans for 1996.
C. DEPOSITS
The following schedule summarizes the time remaining to maturity of
Certificates of Deposit $100,000 or greater at December 31, 1996.
Amount
(In Thousands)
3 Months or Less 2,754
Over 3 through 6 1,403
Over 6 Through 12 Months 1,549
Over One Year 848
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.
*1996 *1995 *1994
Deposits 14.3% 13.7% 12.8%
Loans 24.6% 25.1% 24.9%
Total Assets 12.1% 11.9% 11.3%
Earning Assets 13.4% 12.9% 12.8%
* Excluding net unrealized gain/(loss) on available for sale securities of
($171,460), $567,810 and ($1,389,168) at December 31, 1996, 1995 and 1994,
respectively.
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.
1996 1995 1994
Return on Average
Stockholders' Equity 10.6% 11.4% 11.9%
Return on Average Assets 1.2% 1.3% 1.3%
Return on Average Earning Assets 1.4% 1.4% 1.4%
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F. FIVE YEAR SUMMARY (in Thousands)
1996 1995 1994 1993 1992
Deposits $168,829 $165,358 $160,249 $161,236 $158,674
Loans 101,044 93,242 84,208 80,993 84,977
Securities *81,568 *76,578 *83,391 *73,821 76,704
Shareholders' Equity **23,885 **22,227 **20,570 18,875 17,391
Total Assets 202,066 191,353 181,597 182,129 177,767
Net Earnings 2,452 2,418 2,354 2,134 1,920
Interest Income 14,768 13,855 12,677 12,393 13,699
Net Interest Income 9,138 8,803 8,490 7,667 7,549
Actual Cash Dividend
Declared 4.00 3.75 3.00 3.00 2.26
Dividend Payout Ratio 32.9% 31.3% 25.8% 28.4% 23.8%
Average Equity to
Average Asset Ratio 10.5% 11.5% 10.8% 10.1% 8.44%
Earnings Per Share $12.14 $11.98 $11.66 $10.55 $ 9.51
Loans to Deposits Ratio 59.8% 56.4% 52.5% 50.2% 53.6%
* Stated at carrying value.
** Excluding net unrealized gain/(loss) on available for sale securities of
($171,460), $567,810 and ($1,389,168) at December 31, 1996, 1995 and 1994,
respectively, due to impact of FAS 115.
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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 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 1996, 1995 and 1994
(In Thousands)
1996 1995 1994
Balance Int Rate Balance Int Rate Balance Int Rate
Earned/Paid Earned/Paid Earned/Paid
Assets
Interest Earning Assets:
Sec AFS $ 80,333 $ 5,256 6.54 $ 65,896 $ 4,231 6.42 $ 70,584 $ 4,447 6.30
Sec HTM 3,772 244 6.47 5,926 419 7.07 7,155 520 7.27
Fed Funds Sold 1,411 76 5.39 7,409 424 5.72 5,490 209 3.81
Loans (Net) 94,139 9,192 9.76 88,588 8,781 9.91 82,570 7,501 9.08
Total Interest
Earning Assets 179,655 $14,768 8.22 167,819 $13,855 8.26 165,799 $12,677 7.65
Other non-earning
assets 14,926 14,685 15,503
$194,581 $182,504 $181,302
Interest Bearing Liabilities:
Savings Dep $ 65,770 $ 1,172 1.78 $ 65,690 $ 1,302 1.98 $ 66,290 $ 1,341 2.02
Time Deposits 67,294 3,752 5.57 59,544 3,187 5.35 54,668 2,279 4.17
Money Mkt Accts 14,107 478 3.39 15,142 552 3.65 21,275 567 2.67
Borrowings 4,012 229 5.71 96 11 11.4 0 0 0
Total Interest Bearing
Liabilities 151,183 $ 5,631 3.67 140,472 $ 5,052 3.59 142,233 $ 4,187 2.94
Other non-interest bearing
liabilities & shareholders'
equity 43,398 42,032 39,069
$194,581 $182,504 $181,302
Interest Spread 9,366 4.55 8,814 4.67 8,490 4.71
Interest Revenue/Earnings
Assets 179,655 14,768 8.22 167,819 13,855 8.26 165,799 12,677 7.65
Interest Expense/Earning
Assets 179,655 5,631 3.13 167,819 5,052 3.01 165,799 4,187 2.53
Net Yield on Earning Assets 5.09 5.25 5.12
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Volume and Rate Analysis of Net Interest Income
In Thousands
Year Ended December 31, 1996 vs 1995
Increase(Decrease)
Due to Change In
Volume Rate Rate/Volume* Total
Interest Earning Assets:
Assets Available for Sale 926 111 (12) 1,025
Securities Held to Maturity (152) (224) 201 (175)
Federal Funds Sold (343) 136 (141) (348)
Loans, Net 548 1,322 (1,459) 411
Total Interest Earning
Assets 979 1,345 (1,411) 913
Interest Bearing Liabilities:
Savings Deposits 0 (462) 332 (130)
Time Deposit 416 1,074 (707) 783
Money Market Accounts (37) 35 (72) (74)
Total Interest Bearing
Deposits 379 647 (447) 579
Increase (Decrease) 600 698 (964) 334
Volume and Rate Analysis of Net Interest Income
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)
Securities Held to Maturity (135) (282) 316 (101)
Federal Funds Sold 73 105 37 215
Loans, Net 553 533 194 1,280
Total Interest Earning
Assets 195 440 543 1,178
Interest Bearing Liabilities:
Savings Deposits (14) (28) 3 (39)
Time Deposits 204 657 58 919
Money Market Accounts (163) 209 (61) (15)
Total Interest Bearing
Deposits 27 838 0 865
Increase (Decrease) 168 (398) 543 313
The above table reconciles changes in interest and dividend income 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.
BANK'S PROPERTIES
ITEM 2: PROPERTIES
The Bank's principal office is located at 66 Main Street in Ellsworth,
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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 2001. 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 1995 and 1996.
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
1995 $160.00/175.00 $125.00/169.26 $150.00/167.00 $167.00/170.00
1996 $170.00/180.00 $180.00/210.00 $198.00/210.00 $200.00/235.00
B. HOLDER
As of March 1, 1997 there were approximately 665 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:
1996 1995
First Quarter $1.00 $ .75
Second Quarter 1.00 1.00
Third Quarter 1.00 1.00
Fourth Quarter 1.00 1.00
Total $4.00 $3.75
Cash dividends declared
per common share $4.00 $3.75
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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.
1996 1995 1994 1993 1992
INTEREST AND DIVIDEND INCOME
Int and Fees on Loans $ 9,192 $ 8,781 $ 7,501 $ 7,324 $ 8,824
Int on Fed Funds Sold 76 424 209 263 176
Int on AFS Securities 5,256 4,230 4,447 0 0
Int on HFS Securities 0 0 0 4,199 4,025
Int on HTM Securities 244 420 520 607 674
Total Interest Earned $14,768 $13,855 $12,677 $12,393 $13,699
INTEREST EXPENSE
Interest on Deposits 5,174 4,767 4,084 4,556 5,876
Interest on C/D's
$100,000 and Over 227 274 101 169 273
Interest on Short-term
Borrowings 229 11 2 1 1
Total Interest Expense 5,630 5,052 4,187 4,726 6,150
NET INTEREST INCOME 9,138 8,803 8,490 7,667 7,549
Provision for loan losses 120 30 0 30 1,075
Net Interest Income
after Loan Provision 9,018 8,773 8,490 7,637 6,474
NONINTEREST INCOME
Net Securities Gains 3 3 98 267 1,098
Trust Department 488 444 400 413 381
Service Charges on
Deposit Accounts 338 310 311 324 331
Other Income 1,378 1,232 1,271 1,255 1,189
Total Noninterest Income 2,207 1,989 2,080 2,259 2,999
Income Before Non-Interest
Expenses 11,225 10,762 10,570 9,896 9,473
NONINTEREST EXPENSE
Salaries and Employee
Benefits 4,010 4,019 3,967 3,497 3,239
Net Occupancy Expense 845 777 767 780 712
Equipment Expense 233 201 180 173 190
FDIC Insurance 2 185 345 349 387
Other Expenses 2,633 2,277 2,161 2,235 2,430
Total Noninterest Expense 7,723 7,459 7,420 7,034 6,958
INCOME BEFORE TAXES 3,502 3,303 3,150 2,862 2,515
Income Taxes 1,050 885 796 797 595
Income Before Cumulative
Effect of Change in
Accounting Principle 2,452 2,418 2,354 2,065 1,920
Cumulative Effect of
Change in Accounting for
Income Taxes 0 0 0 68 0
NET INCOME $2,452 $2,418 $2,354 $2,133 $1,920
Net Income Per
Common Share $12.14 $11.98 $11.66 $10.55 $ 9.51
Cash Dividends Declared
Per Common Share $ 4.00 $ 3.75 $ 3.00 $ 3.00 $ 2.26
The above summary should be read in conjunction with the related
consolidated financial statements and notes thereto for the years ended
December 31, 1996, 1995, 1994, 1993 and 1992, 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 1996 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 1996 Annual Report and are incorporated herein by
reference.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Previously reported in 8K filing in 1995.
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, 1997 for its regular annual meeting of stockholders to be
held April 17, 1997, 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,
1996 (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, 1996 and 1995 34
Consolidated Statements of Income
For the years ended December 31, 1996, 1995, 1994 35
Consolidated Statements of Changes in Stockholders' Equity
For the years ended December 31, 1996, 1995, 1994 36
Consolidated Statements of Cash Flow
For the years ended December 31, 1996, 1995, 1994 37 - 38
Notes to Consolidated Financial Statements 39 - 50
Independent Auditors Opinion 51
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,
1996, 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 39 of the 1996 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, 1996. 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.
*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
*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
Peter A. Blyberg, President Sally J. Hutchins
and Chief Executive Officer Vice President, Treasurer and
Controller
March 27, 1997
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