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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2025

Commission file number: 001-15985

UNION BANKSHARES, INC.

03-0283552

20 LOWER MAIN STREET, P.O. BOX 667

MORRISVILLE, VT 05661

Registrant’s telephone number: 802-888-6600

Former name, former address and former fiscal year, if changed since last report: Not applicable

Securities registered pursuant to section 12(b) of the Act:

Common Stock, $2.00 par value

UNB

Nasdaq Stock Market

(Title of class)

(Trading Symbol)

(Exchanges registered on)

Indicate by check mark 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 such 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of July 25, 2025.

Common Stock, $2 par value

4,551,337

UNION BANKSHARES, INC.

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION


Item 1. Financial Statements.
Unaudited Interim Consolidated Financial Statements of Union Bankshares, Inc. and Subsidiary
Consolidated Balance Sheets			1
Consolidated Statements of Income			2
Consolidated Statements of Comprehensive Income			3
Consolidated Statements of Changes in Stockholders' Equity			4
Consolidated Statements of Cash Flows			5
Notes to Unaudited Interim Consolidated Financial Statements			7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.			26
Item 3. Quantitative and Qualitative Disclosures About Market Risk.			44
Item 4. Controls and Procedures.			44

PART II OTHER INFORMATION

Item 1. Legal Proceedings.			45
Item 1A. Risk Factors.			45
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.			45
Item 6. Exhibits.			45

Signatures			45

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

UNION BANKSHARES, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS


	June 30, 2025		December 31, 2024
	(Unaudited)
Assets	(Dollars in thousands)
Cash and due from banks	$	4,731	$	5,168
Federal funds sold and overnight deposits	24,536		10,670
Cash and cash equivalents	29,267		15,838
Interest bearing deposits in banks	6,963		9,462
Investment securities available-for-sale	240,537		250,504

Other investments	1,886		1,754
Total investments	242,423		252,258
Loans held for sale	8,992		5,204
Loans	1,102,766		1,155,736
Allowance for credit losses on loans	(8,307)		(7,680)
Net deferred loan costs	2,156		2,162
Net loans	1,096,615		1,150,218

Premises and equipment, net	20,251		20,225




Other assets	75,853		75,153
Total assets	$	1,480,364	$	1,528,358
Liabilities and Stockholders’ Equity
Liabilities
Deposits
Noninterest bearing	$	217,317	$	226,048
Interest bearing	578,411		714,862
Time	307,618		227,984
Total deposits	1,103,346		1,168,894
Borrowed funds	270,674		259,696
Subordinated notes	16,290		16,273
Accrued interest and other liabilities	18,796		17,015
Total liabilities	1,409,106		1,461,878
Commitments and Contingencies
Stockholders’ Equity
Common stock, $2.00 par value; 7,500,000 shares authorized; 5,024,257 shares issued at June 30, 2025 and 5,012,084 shares issued at December 31, 2024	10,049		10,024
Additional paid-in capital	3,380		3,031
Retained earnings	93,350		91,722
Treasury stock at cost; 472,922 shares at June 30, 2025 and 474,075 shares at December 31, 2024	(4,290)		(4,300)
Accumulated other comprehensive loss	(31,231)		(33,997)
Total stockholders' equity	71,258		66,480
Total liabilities and stockholders' equity	$	1,480,364	$	1,528,358

See accompanying notes to unaudited interim consolidated financial statements.

Union Bankshares, Inc. Page 1

UNION BANKSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Interest and dividend income	(Dollars in thousands, except per share data)
Interest and fees on loans	$	16,563	$	14,540	$	32,610	$	27,912
Interest on debt securities:
Taxable	1,314		1,057		2,726		2,150
Tax exempt	389		527		777		1,045
Dividends	199		104		402		184
Interest on federal funds sold and overnight deposits	178		194		330		637
Interest on interest bearing deposits in banks	78		130		171		245
Total interest and dividend income	18,721		16,552		37,016		32,173
Interest expense
Interest on deposits	5,607		4,882		11,017		10,121
Interest on borrowed funds	2,526		2,044		4,998		3,275
Interest on subordinated notes	142		142		285		285
Total interest expense	8,275		7,068		16,300		13,681
Net interest income	10,446		9,484		20,716		18,492
Credit loss expense	221		388		456		158
Net interest income after credit loss expense	10,225		9,096		20,260		18,334
Noninterest income
Wealth management income	295		273		571		528
Service fees	1,715		1,735		3,372		3,397

Net gains on sales of loans held for sale	480		341		869		628
Net gains on other investments	119		33		84		128
Other income	150		383		303		651
Total noninterest income	2,759		2,765		5,199		5,332
Noninterest expenses
Salaries and wages	4,085		3,774		7,996		7,327
Employee benefits	1,971		1,631		3,552		3,120
Occupancy expense, net	547		544		1,199		1,113
Equipment expense	1,100		1,017		2,149		1,960
Other expenses	2,784		2,815		5,415		5,484
Total noninterest expenses	10,487		9,781		20,311		19,004
Income before provision for income taxes	2,497		2,080		5,148		4,662
Provision for income taxes	102		61		252		226
Net income	$	2,395	$	2,019	$	4,896	$	4,436
Basic earnings per common share	$	0.53	$	0.45	$	1.08	$	0.98
Diluted earnings per common share	$	0.52	$	0.45	$	1.07	$	0.98
Weighted average number of common shares outstanding	4,544,460		4,521,829		4,541,427		4,520,519
Weighted average common and potential common shares for diluted EPS	4,580,028		4,553,124		4,573,535		4,545,153
Dividends per common share	$	0.36	$	0.36	$	0.72	$	0.72

See accompanying notes to unaudited interim consolidated financial statements.

Union Bankshares, Inc. Page 2

UNION BANKSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(Dollars in thousands)
Net income	$	2,395	$	2,019	$	4,896	$	4,436
Other comprehensive income (loss), net of tax:
Investment securities available-for-sale:
Net unrealized holding gains (losses) arising during the period on investment securities available-for-sale	203		(329)		2,766		(3,268)






Total other comprehensive income (loss)	203		(329)		2,766		(3,268)
Total comprehensive income	$	2,598	$	1,690	$	7,662	$	1,168

See accompanying notes to unaudited interim consolidated financial statements.

Union Bankshares, Inc. Page 3

UNION BANKSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited)



	Three Month Periods Ended June 30, 2025 and 2024
	Common Stock									Accumulated other comprehensive loss
	Shares, net of treasury	Amount		Additional paid-in capital		Retained earnings		Treasury stock				Total stockholders’ equity
	(Dollars in thousands, except per share data)
Balances March 31, 2025	4,538,598	$	10,024	$	3,190	$	92,589	$	(4,295)	$	(31,434)	$	70,074
Net income	—	—		—		2,395		—		—		2,395
Other comprehensive income	—	—		—		—		—		203		203
Dividend reinvestment plan	564	—		13		—		5		—		18
Cash dividends declared ($0.36 per share)	—	—		—		(1,634)		—		—		(1,634)
Stock based compensation expense	3,736	8		142		—		—		—		150

Common stock issued, net of issuance costs	8,437	17		35		—		—		—		52

Balances, June 30, 2025	4,551,335	$	10,049	$	3,380	$	93,350	$	(4,290)	$	(31,231)	$	71,258

Balances March 31, 2024	4,519,388	$	9,991	$	2,778	$	90,262	$	(4,317)	$	(34,894)	$	63,820
Net income	—	—		—		2,019		—		—		2,019
Other comprehensive loss	—	—		—		—		—		(329)		(329)
Dividend reinvestment plan	607	—		12		—		5		—		17
Cash dividends declared ($0.36 per share)	—	—		—		(1,627)		—		—		(1,627)
Stock based compensation expense	3,872	8		138		—		—		—		146



Balances, June 30, 2024	4,523,867	$	9,999	$	2,928	$	90,654	$	(4,312)	$	(35,223)	$	64,046



	Six Month Periods Ended June 30, 2025 and 2024
	Common Stock									Accumulated other comprehensive loss
	Shares, net of treasury	Amount		Additional paid-in capital		Retained earnings		Treasury stock				Total stockholders’ equity
	(Dollars in thousands, except per share data)
Balances, December 31, 2024	4,538,009	$	10,024	$	3,031	$	91,722	$	(4,300)	$	(33,997)	$	66,480

Net income	—	—		—		4,896		—		—		4,896
Other comprehensive income	—	—		—		—		—		2,766		2,766
Dividend reinvestment plan	1,153	—		26		—		10		—		36
Cash dividends declared ($0.72 per share)	—	—		—		(3,268)		—		—		(3,268)
Stock based compensation expense	3,736	8		288		—		—		—		296

Common stock issued, net of issuance costs	8,437	17		35								52

Balances, June 30, 2025	4,551,335	$	10,049	$	3,380	$	93,350	$	(4,290)	$	(31,231)	$	71,258

Balances, December 31, 2023	4,518,848	$	9,991	$	2,621	$	89,472	$	(4,322)	$	(31,955)	$	65,807

Net income	—	—		—		4,436		—		—		4,436
Other comprehensive loss	—	—		—		—		—		(3,268)		(3,268)
Dividend reinvestment plan	1,147	—		23		—		10		—		33
Cash dividends declared ($0.72 per share)	—	—		—		(3,254)		—		—		(3,254)
Stock based compensation expense	3,872	8		284		—		—		—		292



Balances, June 30, 2024	4,523,867	$	9,999	$	2,928	$	90,654	$	(4,312)	$	(35,223)	$	64,046

See accompanying notes to unaudited interim consolidated financial statements.

Union Bankshares, Inc. Page 4

UNION BANKSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Six Months Ended June 30,
	2025		2024
Cash Flows From Operating Activities	(Dollars in thousands)
Net income	$	4,896	$	4,436
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	786		823
Credit loss expense	456		158
Deferred income tax provision	8		9
Net amortization of premiums on investment securities	314		276
Equity in losses of limited partnerships	909		824
Stock based compensation expense	296		292
Net decrease (increase) in unamortized loan costs	6		(179)
Proceeds from sales of loans held for sale	57,649		41,591
Origination of loans held for sale	(60,568)		(44,117)
Net gains on sales of loans held for sale	(869)		(628)
Net gains on disposals of premises and equipment	—		(19)




Net gains on other investments	(84)		(128)
Decrease in accrued interest receivable	989		686

Amortization of debt issuance costs	17		17
Increase in other assets	(1,108)		(1,230)

Increase in other liabilities	651		2,300
Net cash provided by operating activities	4,348		5,111
Cash Flows From Investing Activities
Interest bearing deposits in banks
Proceeds from maturities and redemptions	7,719		2,739
Purchases	(5,220)		(1,992)



Investment securities available-for-sale

Proceeds from maturities, calls and paydowns	13,207		8,698
Purchases	—		(1,299)
Net purchases of other investments	(48)		(29)
Net increase in nonmarketable stock	(286)		(6,183)

Net decrease in loans	52,966		22,280
Recoveries of loans charged off	10		12
Net purchases of premises and equipment	(812)		(721)

Proceeds from Company-owned life insurance death benefit	—		235

Investments in limited partnerships	(705)		(1,936)
Proceeds from sales of premises and equipment	—		42


Net cash provided in investing activities	66,831		21,846

Union Bankshares, Inc. Page 5


	Six Months Ended June 30,
	2025		2024

Cash Flows From Financing Activities	(Dollars in thousands)
Advances on long-term borrowings	30,145		205,000
Repayment of long-term borrowings	(20,000)		(90,000)
Net increase in short-term borrowings outstanding	833		66,400
Net decrease in noninterest bearing deposits	(8,731)		(28,064)
Net decrease in interest bearing deposits	(136,451)		(207,031)
Net increase (decrease) in time deposits	79,634		(17,200)


Proceeds from issuance of common stock, net of issuance costs	52		—

Dividends paid	(3,232)		(3,221)
Net cash used by financing activities	(57,750)		(74,116)
Net increase (decrease) in cash and cash equivalents	13,429		(47,159)
Cash and cash equivalents
Beginning of period	15,838		77,666
End of period	$	29,267	$	30,507

Supplemental Disclosures of Cash Flow Information
Interest paid	$	16,553	$	12,664
Income taxes paid	$	200	$	—

Supplemental Schedule of Noncash Investing Activities



Investment in limited partnerships acquired by capital contributions payable	$	1,901	$	1,712



Dividends paid on Common Stock:
Dividends declared	$	3,268	$	3,254
Dividends reinvested	(36)		(33)
	$	3,232	$	3,221

See accompanying notes to unaudited interim consolidated financial statements.

Union Bankshares, Inc. Page 6

UNION BANKSHARES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

The accompanying unaudited interim consolidated financial statements of Union Bankshares, Inc. and Subsidiary (together, the Company) as of June 30, 2025, and for the three and six months ended June 30, 2025 and 2024, have been prepared in conformity with GAAP for interim financial information, general practices within the banking industry, and the accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (2024 Annual Report). The Company's sole subsidiary is Union Bank. In the opinion of the Company’s management, all adjustments, consisting only of normal recurring adjustments and disclosures necessary for a fair presentation of the information contained herein, have been made. This information should be read in conjunction with the Company’s 2024 Annual Report. The results of operations for the interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2025, or any future interim period.

The Company is a “smaller reporting company” and as permitted under the rules and regulations of the SEC, has elected to provide its consolidated statements of income, comprehensive income, cash flows and changes in stockholders’ equity for a two year, rather than three year, period. The Company has also elected to provide certain other scaled disclosures in this report, as permitted for smaller reporting companies. Certain amounts in the 2024 consolidated financial statements have been reclassified to conform to the current year presentation.

In addition to the definitions set forth elsewhere in this report, the acronyms, abbreviations and capitalized terms identified below are used throughout this Form 10-Q, including Part I. "Financial Information" and Part II. "Other Information". The following is provided to aid the reader and provide a reference page when reviewing this Form 10-Q.


ACL:	Allowance for credit losses	FHLMC/Freddie Mac:	Federal Home Loan Mortgage Corporation
AFS:	Available-for-sale	GAAP:	Generally accepted accounting principles in the United States
ASC:	Accounting Standards Codification	HTM:	Held-to-maturity
ASU:	Accounting Standards Update	ICS:	Insured Cash Sweeps of the IntraFi Network
Board:	Board of Directors	MBS:	Mortgage-backed security
bp or bps:	Basis point(s)	MSRs:	Mortgage servicing rights
CDARS:	Certificate of Deposit Accounts Registry Service of the IntraFi Network	OAO:	Other assets owned
CECL:	Current expected credit loss	OCI:	Other comprehensive income
Company:	Union Bankshares, Inc. and Subsidiary	OREO:	Other real estate owned
DCF:	Discounted cash flow	RSU:	Restricted stock unit
DRIP:	Dividend Reinvestment and Stock Purchase Plan	SBA:	U.S. Small Business Administration
EPS:	Earnings per share	SEC:	U.S. Securities and Exchange Commission
FASB:	Financial Accounting Standards Board	Union:	Union Bank, the sole subsidiary of Union Bankshares, Inc
FDIC:	Federal Deposit Insurance Corporation	USDA:	U.S. Department of Agriculture
FDICIA:	The Federal Deposit Insurance Corporation Improvement Act of 1991	2014 Equity Plan:	2014 Equity Incentive Plan, as amended
FHLB:	Federal Home Loan Bank of Boston	2024 Equity Plan:	2024 Equity Incentive Plan
FRB	Federal Reserve Bank of Boston	2024 Annual Report:	Annual Report on Form 10-K for the year ended December 31, 2024

Note 2. Legal Contingencies

In the normal course of business, the Company is involved in various legal and other proceedings. In the opinion of management, any liability resulting from such proceedings is not expected to have a material adverse effect on the Company’s consolidated financial condition or results of operations.

Union Bankshares, Inc. Page 7

Note 3. Per Share Information

The following table presents the reconciliation between the calculation of basic EPS and diluted EPS for the three and six months ended June 30, 2025 and 2024:



	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2025		2024		2025		2024
	(Dollars in thousands, except per share data)
Net income	$	2,395	$	2,019	$	4,896	$	4,436
Weighted average common shares outstanding for basic EPS	4,544,460		4,521,829		4,541,427		4,520,519
Dilutive effect of stock-based awards (1)	35,568		31,295		32,108		24,634
Weighted average common and potential common shares for diluted EPS	4,580,028		4,553,124		4,573,535		4,545,153
Earnings per common share:
Basic EPS	$	0.53	$	0.45	$	1.08	$	0.98
Diluted EPS	$	0.52	$	0.45	$	1.07	$	0.98

____________________

(1)Dilutive effect of stock based awards represents the effect of assumed vesting of all outstanding equity compensation awards, which currently consist solely of restricted stock units to be settled in common stock. Unvested awards do not have dividend or dividend equivalent rights.

Note 4. Recent Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures. This ASU requires public entities, such as the Company, to provide enhanced disclosures on the amount of income taxes paid, disaggregated by type and jurisdiction. The ASU is effective for the Company for 2025 and subsequent annual periods, including interim periods within those annual periods, and is not expected to have a material impact on the Company's consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. Under ASU No. 2024-03, public business entities, such as the Company, will be required to disclose in the notes to their financial statements disaggregated information about certain costs and expenses in both annual and interim filings. ASU 2024-03 is effective for the Company for annual reporting periods beginning after December 15, 2026, including interim periods within those annual periods, and is not expected to have a material impact on the Company's consolidated financial statements.

Note 5. Investment Securities

Debt securities AFS as of the balance sheet dates consisted of the following:


June 30, 2025	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(Dollars in thousands)


U.S. Government-sponsored enterprises	$	28,623	$	—	$	(2,580)	$	26,043
Agency mortgage-backed	193,841		164		(27,510)		166,495
State and political subdivisions	55,587		12		(10,069)		45,530
Corporate	2,500		1		(32)		2,469
Total	$	280,551	$	177	$	(40,191)	$	240,537

Union Bankshares, Inc. Page 8


December 31, 2024	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(Dollars in thousands)


U.S. Government-sponsored enterprises	$	29,664	$	—	$	(3,449)	$	26,215
Agency mortgage-backed	206,170		—		(32,895)		173,275
State and political subdivisions	55,737		14		(7,201)		48,550
Corporate	2,500		2		(38)		2,464
Total	$	294,071	$	16	$	(43,583)	$	250,504

There were no investment securities HTM at June 30, 2025 or December 31, 2024. At such dates, investment securities AFS with a fair value of $91.9 million and $96.0 million, respectively, were pledged as collateral for FHLB borrowings and other credit subject to collateralization, public unit deposits or for other purposes as required or permitted by law. Investment securities AFS pledged as collateral for discount window borrowings at the FRB consisted of U.S. government-sponsored enterprises and Agency MBS with a fair value of $9.5 million and $9.7 million at June 30, 2025 and December 31, 2024, respectively.

The amortized cost and estimated fair value of debt securities by contractual scheduled maturity as of June 30, 2025 were as follows:


	Amortized Cost		Fair Value
Available-for-sale	(Dollars in thousands)
Due in one year or less	$	1,016	$	1,016
Due from one to five years	14,397		13,494
Due from five to ten years	11,579		10,483
Due after ten years	59,718		49,049
	86,710		74,042
Agency mortgage-backed	193,841		166,495
Total debt securities available-for-sale	$	280,551	$	240,537

Actual maturities may differ for certain debt securities that may be called by the issuer prior to the contractual maturity. Actual maturities usually differ from contractual maturities on agency MBS because the mortgages underlying the securities may be prepaid, usually without any penalties. Therefore, these agency MBS are shown separately and are not included in the contractual maturity categories in the above maturity summary.

Information pertaining to all AFS debt securities with gross unrealized losses, for which an ACL has not been recorded, as of the balance sheet dates, aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:


June 30, 2025	Less Than 12 Months					12 Months and over					Total
	Number of Securities	Fair Value		Gross Unrealized Losses		Number of Securities	Fair Value		Gross Unrealized Losses		Number of Securities	Fair Value		Gross Unrealized Losses
		(Dollars in thousands)

U.S. Government- sponsored enterprises	1	$	1,694	$	(64)	26	$	24,349	$	(2,516)	27	$	26,043	$	(2,580)
Agency mortgage-backed	7	22,649		(320)		87	127,716		(27,190)		94	150,365		(27,510)
State and political subdivisions	1	1,522		(50)		52	43,494		(10,019)		53	45,016		(10,069)
Corporate	1	490		(10)		3	1,479		(22)		4	1,969		(32)


Total	10	$	26,355	$	(444)	168	$	197,038	$	(39,747)	178	$	223,393	$	(40,191)

Union Bankshares, Inc. Page 9


December 31, 2024	Less Than 12 Months					12 Months and over					Total
	Number of Securities	Fair Value		Gross Unrealized Losses		Number of Securities	Fair Value		Gross Unrealized Losses		Number of Securities	Fair Value		Gross Unrealized Losses
		(Dollars in thousands)

U.S. Government- sponsored enterprises	1	$	2,012	$	(69)	26	$	24,203	$	(3,380)	27	$	26,215	$	(3,449)
Agency mortgage-backed	11	43,367		(784)		87	129,908		(32,111)		98	173,275		(32,895)
State and political subdivisions	1	1,564		(8)		52	46,470		(7,193)		53	48,034		(7,201)
Corporate	1	499		(1)		3	1,463		(37)		4	1,962		(38)


Total	14	$	47,442	$	(862)	168	$	202,044	$	(42,721)	182	$	249,486	$	(43,583)

AFS debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. For AFS debt securities in an unrealized loss position, management first assesses whether it intends to sell, or it is more likely than not that the Company will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through earnings. For AFS debt securities that do not meet the above criteria, management evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security and the issuer, among other factors. If this assessment indicates that a credit loss exists, management compares the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an ACL is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. For AFS debt securities, any decline in fair value that has not been recorded through an ACL is recognized in other comprehensive income (loss), net of applicable taxes.

No ACL for AFS debt securities was recorded at June 30, 2025 or December 31, 2024. Accrued interest receivable on AFS debt securities totaled $1.2 million at June 30, 2025 and December 31, 2024, and is excluded from the estimate of credit losses.

There were no sales of investment securities AFS for the three and six months ended June 30, 2025 and 2024.

Note 6. Loans

Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their unpaid principal balances, adjusted for any charge-offs, the ACL, and any deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans.

Loan interest income is accrued daily on outstanding balances. The following accounting policies, related to accrual and nonaccrual loans, apply to all portfolio segments and loan classes, which the Company considers to be the same. The accrual of interest is normally discontinued when a loan is specifically determined to be impaired and/or management believes, after considering collection efforts and other factors, that the borrower's financial condition is such that collection of interest is doubtful. In general, loans that are 90 days or more past due are placed in nonaccrual, unless there are circumstances that cause management to believe the collection of interest is not doubtful. Generally, any unpaid interest previously accrued on those loans is reversed against current period interest income. A loan may be restored to accrual status when its financial status has significantly improved and there is no principal or interest past due. A loan may also be restored to accrual status if the borrower makes six consecutive monthly payments or the lump sum equivalent. Income on nonaccrual loans is generally not recognized unless a loan is returned to accrual status or after all principal has been collected. Interest payments received on such loans are generally applied as a reduction of the loan principal balance. Delinquency status is determined based on contractual terms for all portfolio segments and loan classes. Loans past due 30 days or more are considered delinquent. Loans are considered in process of foreclosure when a judgment of foreclosure has been issued by the court.

Loan origination fees and direct loan origination costs are deferred and amortized as an adjustment of the related loan's yield using methods that approximate the interest method. The Company generally amortizes these amounts over the estimated average life of the related loans.

The Company evaluates the risk characteristics of its loans based on regulatory call report code with segmentation based on the underlying collateral or purpose for certain loan types.

Union Bankshares, Inc. Page 10

The composition of Net loans as of the balance sheet dates, by regulatory call report code segmentation based on underlying collateral or purpose for certain loan types, was as follows:


	June 30, 2025		December 31, 2024
Residential real estate	(Dollars in thousands)
Non-revolving residential real estate	$	444,231	$	445,425
Revolving residential real estate	25,455		21,884
Construction real estate
Commercial construction real estate	57,381		54,985
Residential construction real estate	62,193		51,202
Commercial real estate
Non-residential commercial real estate	329,414		330,010
Multi-family residential real estate	106,113		104,328
Commercial	34,116		35,175
Consumer	2,468		2,523
Municipal	41,395		110,204
Gross loans	1,102,766		1,155,736
ACL on loans	(8,307)		(7,680)
Net deferred loan costs	2,156		2,162
Net loans	$	1,096,615	$	1,150,218

Qualifying residential first mortgage loans and certain commercial real estate loans with an aggregate carrying value of $488.3 million and $394.5 million were pledged as collateral for borrowings from the FHLB under a blanket lien at June 30, 2025 and December 31, 2024, respectively.

Accrued interest receivable on loans totaled $4.3 million and $5.2 million at June 30, 2025 and December 31, 2024, respectively, and is excluded from the estimate of credit losses described in Note 7.

Note 7. Allowance for Credit Losses on Loans and Off-Balance Sheet Credit Exposures

The level of the ACL on loans represents management's estimate of expected credit losses over the expected life of the loans at the balance sheet date. For all loan segments, loan losses are charged against the ACL on loans when management believes the loan balance is uncollectible or in accordance with federal guidelines. Subsequent recoveries, if any, are credited to the ACL on loans.

The ACL on loans is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans. The ACL on loans is comprised of reserves measured on a collective (pool) basis based on a lifetime loss-rate model when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated on an individual basis, generally larger non-accruing commercial loans.

The Company uses the DCF method to estimate expected credit losses for all loan pools. For each of the loan segments, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, and loss rates. The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on historical benchmark data.

The Company uses regression analysis of historical internal and peer data to determine suitable loss drivers to utilize when modeling lifetime loss rates. This analysis also determines how expected loss rates will react to forecasted levels of the loss drivers. For all loan pools utilizing the DCF method, management utilizes and forecasts national unemployment as a loss driver.

For all DCF models, management has determined that four quarters represents a reasonable and supportable forecast period and reverts back to a historical loss rate over four quarters on a straight-line basis. Management leverages economic projections from a reputable and independent third party to inform its loss driver forecasts over the four-quarter forecast period.

The combination of adjustments for credit expectations (default and loss) and timing expectations (prepayment, curtailment, and time to recovery) produces an expected cash flow stream at the instrument level that represents the sum of expected losses to determine the estimated ACL on loans.

Union Bankshares, Inc. Page 11

The ACL on loans evaluation also considers various qualitative factors, including changes in policy and/or underwriting standards, actual or expected changes in economic trends and conditions, changes in the nature and volume of the portfolio, changes in credit and lending staff/administration, problem loan trends, credit risk concentrations, loan review results, changes in the value of underlying collateral for loans, and changes in the regulatory and business environment.

Certain loans are individually evaluated for estimated credit losses, including those greater than $500 thousand that are classified as substandard or doubtful and are on nonaccrual or that have other unique characteristics differing from the segment. Specific reserves are established when appropriate for such loans based on the present value of expected future cash flows of the loan or the estimated realizable value of the collateral, if any.

Risk characteristics relevant to each portfolio segment are as follows:

•Residential real estate - Loans in this segment are collateralized by owner-occupied 1-4 family residential real estate, second and vacation homes, 1-4 family investment properties, home equity and second mortgage loans. Repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, could have an effect on the credit quality of this segment.

•Construction real estate - Loans in this segment include residential and commercial construction properties, commercial real estate development loans (while in the construction phase of the projects), land and land development loans. Repayment is dependent on the credit quality of the individual borrower and/or the underlying cash flows generated by the properties being constructed. The overall health of the economy, including unemployment rates, housing prices, vacancy rates and material costs, could have an effect on the credit quality of this segment.

•Commercial real estate - Loans in this segment are primarily properties occupied by businesses or income-producing properties. The underlying cash flows generated by the properties may be adversely impacted by a downturn in the economy as evidenced by a general slowdown in business or increased vacancy rates which, in turn, could have an effect on the credit quality of this segment. Management requests business financial statements at least annually and monitors the cash flows of these loans.

•Commercial - Loans in this segment are made to businesses and are generally secured by non-real estate assets of the business. Repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased consumer or business spending, could have an effect on the credit quality of this segment.

•Consumer - Loans in this segment are made to individuals for personal expenditures, such as automobile purchases, and include unsecured loans. Repayment is primarily dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment, could have an effect on the credit quality of this segment.

•Municipal - Loans in this segment are made to municipalities located within the Company's service area. Repayment is primarily dependent on taxes or other funds collected by the municipalities. Management considers there to be minimal risk surrounding the credit quality of this segment.

Union Bankshares, Inc. Page 12

Changes in the ACL on loans, by loan segment, for the three and six months ended June 30, 2025 and 2024 were as follows:



For The Three Months Ended June 30, 2025	Balance, March 31, 2025		Charge-Offs		Recoveries		Credit Loss Expense (Benefit)		Balance, June 30, 2025
	(Dollars in thousands)
Non-revolving residential real estate	$	2,866	$	—	$	4	$	35	$	2,905
Revolving residential real estate	200		—		—		30		230
Residential real estate	3,066		—		4		65		3,135
Commercial construction real estate	822		—		—		197		1,019
Residential construction real estate	196		—		—		23		219
Construction real estate	1,018		—		—		220		1,238
Non-residential commercial real estate	3,255		—		—		(55)		3,200
Multi-family residential real estate	258		—		—		—		258
Commercial real estate	3,513		—		—		(55)		3,458
Commercial	427		—		—		12		439
Consumer	7		—		1		(2)		6
Municipal	79		—		—		(48)		31

Total	$	8,110	$	—	$	5	$	192	$	8,307



For The Six Months Ended June 30, 2025	Balance, December 31, 2024		Charge-Offs		Recoveries		Credit Loss Expense (Benefit)		Balance, June 30, 2025
	(Dollars in thousands)
Non-revolving residential real estate	$	3,212	$	—	$	9	$	(316)	$	2,905
Revolving residential real estate	280		—		—		(50)		230
Residential real estate	3,492		—		9		(366)		3,135
Commercial construction real estate	651		—		—		368		1,019
Residential construction real estate	102		—		—		117		219
Construction real estate	753		—		—		485		1,238
Non-residential commercial real estate	2,766		—		—		434		3,200
Multi-family residential real estate	212		—		—		46		258
Commercial real estate	2,978		—		—		480		3,458
Commercial	377		—		—		62		439
Consumer	6		(4)		1		3		6
Municipal	74		—		—		(43)		31

Total	$	7,680	$	(4)	$	10	$	621	$	8,307

Union Bankshares, Inc. Page 13



For The Three Months Ended June 30, 2024	Balance, March 31, 2024		Charge-Offs		Recoveries		Credit Loss Expense (Benefit)		Balance, June 30, 2024
	(Dollars in thousands)
Non-revolving residential real estate	$	2,845	$	—	$	10	$	112	$	2,967
Revolving residential real estate	247		—		—		26		273
Residential real estate	3,092		—		10		138		3,240
Commercial construction real estate	420		—		—		124		544
Residential construction real estate	93		—		—		(5)		88
Construction real estate	513		—		—		119		632
Non-residential commercial real estate	2,454		—		—		15		2,469
Multi-family residential real estate	208		—		—		(1)		207
Commercial real estate	2,662		—		—		14		2,676
Commercial	307		—		1		4		312
Consumer	6		(1)		—		2		7
Municipal	65		—		—		(39)		26

Total	$	6,645	$	(1)	$	11	$	238	$	6,893



For The Six Months Ended June 30, 2024	Balance, December 31, 2023		Charge-Offs		Recoveries		Credit Loss Expense (Benefit)		Balance, June 30, 2024
	(Dollars in thousands)
Non-revolving residential real estate	$	2,361	$	—	$	11	$	595	$	2,967
Revolving residential real estate	159		—		—		114		273
Residential real estate	2,520		—		11		709		3,240
Commercial construction real estate	1,035		—		—		(491)		544
Residential construction real estate	163		—		—		(75)		88
Construction real estate	1,198		—		—		(566)		632
Non-residential commercial real estate	2,182		—		—		287		2,469
Multi-family residential real estate	244		—		—		(37)		207
Commercial real estate	2,426		—		—		250		2,676
Commercial	352		—		1		(41)		312
Consumer	5		(1)		—		3		7
Municipal	65		—		—		(39)		26

Total	$	6,566	$	(1)	$	12	$	316	$	6,893

Union Bankshares, Inc. Page 14

The Company's ACL on off-balance sheet credit exposures is recognized as a liability within Accrued interest and other liabilities on the consolidated balance sheets, with adjustments to the ACL recognized in Credit loss expense (benefit) in the consolidated statements of income. The activity in the ACL on off-balance sheet credit exposures for the three and six months ended June 30, 2025 and 2024 was as follows:


	For The Three Months Ended June 30,				For the Six Months Ended June 30,
	2025		2024		2025		2024
ACL on Off-Balance Sheet Credit Exposures	(Dollars in thousands)
Balance at beginning of period	$	877	$	925	$	1,071	$	1,233

Credit loss expense (benefit)	29		150		(165)		(158)
Balance at end of period	$	906	$	1,075	$	906	$	1,075

Risk and collateral ratings are assigned to loans and are subject to ongoing monitoring by lending and credit personnel, with such ratings updated annually or more frequently if warranted. The following is an overview of the Company's loan rating system:

1-3 Rating - Pass

Risk-rating grades "1" through "3" comprise those loans ranging from those with lower than average credit risk, defined as borrowers with high liquidity, excellent financial condition, strong management, favorable industry trends or loans secured by highly liquid assets, through those with marginal credit risk, defined as borrowers that, while creditworthy, exhibit some characteristics requiring special attention by the account officer.

4-4.5 Rating - Satisfactory/Monitor

Borrowers exhibit potential credit weaknesses or downward trends warranting management's attention. While potentially weak, these borrowers are currently marginally acceptable; no loss of principal or interest is envisioned. When warranted, these credits may be monitored on the watch list.

5-7 Rating - Substandard

Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt. The loan may be inadequately protected by the net worth and paying capacity of the obligor and/or the underlying collateral is inadequate.

Union Bankshares, Inc. Page 15

The following tables summarize the Company's loans by year of origination and by loan ratings applied by management to the Company's loans by segment as of June 30, 2025 and December 31, 2024:


June 30, 2025	2025		2024		2023		2022		2021		Prior		Revolving		Total
Residential Real Estate	(Dollars in thousands)
Pass	$	17,947	$	78,367	$	63,915	$	94,702	$	76,343	$	74,821	$	—	$	406,095
Satisfactory/Monitor	2,906		5,711		6,122		11,087		4,112		7,497		—		37,435
Substandard	—		25		—		644		—		32		—		701
Non-revolving residential real estate	20,853		84,103		70,037		106,433		80,455		82,350		—		444,231
Pass	—		—		—		—		—		—		23,805		23,805
Satisfactory/Monitor	—		—		—		—		—		—		1,613		1,613
Substandard	—		—		—		—		—		—		37		37
Revolving residential real estate	—		—		—		—		—		—		25,455		25,455
Construction Real Estate
Pass	5,162		8,882		1,315		1,816		1,192		1,028		—		19,395
Satisfactory/Monitor	2,803		20,559		1,262		—		757		125		—		25,506
Substandard	—		—		12,480		—		—		—		—		12,480
Commercial construction real estate	7,965		29,441		15,057		1,816		1,949		1,153		—		57,381
Pass	11,366		35,671		5,131		971		—		—		—		53,139
Satisfactory/Monitor	1,998		2,341		872		200		2,053		1,590		—		9,054
Substandard	—		—		—		—		—		—		—		—
Residential construction real estate	13,364		38,012		6,003		1,171		2,053		1,590		—		62,193
Commercial Real Estate
Pass	4,042		3,693		10,112		46,154		28,584		77,219		7,681		177,485
Satisfactory/Monitor	2,245		54,119		16,045		19,264		16,210		24,864		14,870		147,617
Substandard	—		—		—		—		—		4,312		—		4,312
Non-residential commercial real estate	6,287		57,812		26,157		65,418		44,794		106,395		22,551		329,414
Pass	—		1,042		275		4,274		9,472		41,026		—		56,089
Satisfactory/Monitor	1,542		1,204		5,590		14,734		10,492		16,215		—		49,777
Substandard	—		—		—		—		—		247		—		247
Multi-family residential real estate	1,542		2,246		5,865		19,008		19,964		57,488		—		106,113
Pass	972		2,562		2,427		2,526		1,322		7,308		4,817		21,934
Satisfactory/Monitor	627		1,811		1,704		1,947		1,742		2,426		1,181		11,438
Substandard	—		43		—		—		—		218		483		744
Commercial	1,599		4,416		4,131		4,473		3,064		9,952		6,481		34,116
Pass	879		678		594		58		20		212		23		2,464
Satisfactory/Monitor	4		—		—		—		—		—		—		4
Substandard	—		—		—		—		—		—		—		—
Consumer	883		678		594		58		20		212		23		2,468
Pass	7,107		18,962		10,466		534		383		3,943		—		41,395
Satisfactory/Monitor	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Municipal	7,107		18,962		10,466		534		383		3,943		—		41,395
Total Loans	$	59,600	$	235,670	$	138,310	$	198,911	$	152,682	$	263,083	$	54,510	$	1,102,766

Union Bankshares, Inc. Page 16


December 31, 2024	2024		2023		2022		2021		2020		Prior		Revolving		Total
Residential Real Estate	(Dollars in thousands)
Pass	$	83,371	$	70,515	$	100,168	$	79,234	$	27,326	$	51,661	$	—	$	412,275
Satisfactory/Monitor	5,381		5,065		10,744		3,642		2,450		5,627		—		32,909
Substandard	—		—		—		—		158		83		—		241
Non-revolving residential real estate	88,752		75,580		110,912		82,876		29,934		57,371		—		445,425
Pass	—		—		—		—		—		—		20,516		20,516
Satisfactory/Monitor	—		—		—		—		—		—		1,344		1,344
Substandard	—		—		—		—		—		—		24		24
Revolving residential real estate	—		—		—		—		—		—		21,884		21,884
Construction Real Estate
Pass	8,968		2,216		4,514		1,460		559		714		—		18,431
Satisfactory/Monitor	13,524		15,276		1,760		5,800		53		141		—		36,554
Substandard	—		—		—		—		—		—		—		—
Commercial construction real estate	22,492		17,492		6,274		7,260		612		855		—		54,985
Pass	34,189		8,725		960		—		—		—		—		43,874
Satisfactory/Monitor	2,199		1,547		136		2,307		1,139		—		—		7,328
Substandard	—		—		—		—		—		—		—		—
Residential construction real estate	36,388		10,272		1,096		2,307		1,139		—		—		51,202
Commercial Real Estate
Pass	3,427		10,481		49,645		31,969		17,227		64,073		5,431		182,253
Satisfactory/Monitor	48,068		17,365		15,874		13,967		5,297		27,610		14,954		143,135
Substandard	—		—		—		—		1,606		2,969		47		4,622
Non-residential commercial real estate	51,495		27,846		65,519		45,936		24,130		94,652		20,432		330,010
Pass	1,720		283		4,329		10,115		1,853		31,787		—		50,087
Satisfactory/Monitor	563		2,484		14,980		10,291		5,535		20,132		—		53,985
Substandard	—		—		—		—		—		256		—		256
Multi-family residential real estate	2,283		2,767		19,309		20,406		7,388		52,175		—		104,328
Pass	3,224		2,583		4,417		1,517		370		7,492		3,483		23,086
Satisfactory/Monitor	1,958		2,438		899		1,977		203		2,595		1,295		11,365
Substandard	—		—		—		—		—		—		724		724
Commercial	5,182		5,021		5,316		3,494		573		10,087		5,502		35,175
Pass	1,253		777		105		53		66		188		24		2,466
Satisfactory/Monitor	57		—		—		—		—		—		—		57
Substandard	—		—		—		—		—		—		—		—
Consumer	1,310		777		105		53		66		188		24		2,523
Pass	93,280		10,482		1,363		606		1,272		3,201		—		110,204
Satisfactory/Monitor	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Municipal	93,280		10,482		1,363		606		1,272		3,201		—		110,204
Total Loans	$	301,182	$	150,237	$	209,894	$	162,938	$	65,114	$	218,529	$	47,842	$	1,155,736

There were no gross charge-offs for the three months ended June 30, 2025. Gross charge-offs for the six months ended June 30, 2025 consisted of two consumer loans totaling $4 thousand that were originated in 2023. Gross charge-offs for the three and six months ended June 30, 2024 consisted of one $1 thousand consumer loan that was originated in 2021.

Union Bankshares, Inc. Page 17

A summary of current and past due loans as of June 30, 2025 and December 31, 2024 follows:


June 30, 2025	30-59 Days		60-89 Days		90 Days and Over		Total Past Due		Current		Total
	(Dollars in thousands)
Residential real estate
Non-revolving residential real estate	$	—	$	996	$	57	$	1,053	$	443,178	$	444,231
Revolving residential real estate	—		—		15		15		25,440		25,455
Construction real estate
Commercial construction real estate	—		—		—		—		57,381		57,381
Residential construction real estate	—		—		—		—		62,193		62,193
Commercial real estate
Non-residential commercial real estate	255		7		—		262		329,152		329,414
Multi-family residential real estate	—		—		—		—		106,113		106,113
Commercial	44		43		—		87		34,029		34,116
Consumer	—		—		—		—		2,468		2,468
Municipal	—		—		—		—		41,395		41,395
Total	$	299	$	1,046	$	72	$	1,417	$	1,101,349	$	1,102,766


December 31, 2024	30-59 Days		60-89 Days		90 Days and Over		Total Past Due		Current		Total
	(Dollars in thousands)
Residential real estate
Non-revolving residential real estate	$	1,560	$	1,158	$	241	$	2,959	$	442,466	$	445,425
Revolving residential real estate	—		—		—		—		21,884		21,884
Construction real estate
Commercial construction real estate	—		—		—		—		54,985		54,985
Residential construction real estate	—		—		—		—		51,202		51,202
Commercial real estate
Non-residential commercial real estate	355		46		—		401		329,609		330,010
Multi-family residential real estate	—		—		—		—		104,328		104,328
Commercial	45		—		—		45		35,130		35,175
Consumer	—		4		—		4		2,519		2,523
Municipal	—		—		—		—		110,204		110,204
Total	$	1,960	$	1,208	$	241	$	3,409	$	1,152,327	$	1,155,736

A summary of nonaccrual loans as of June 30, 2025 and December 31, 2024 follows:


June 30, 2025	Nonaccrual		Nonaccrual With No Allowance for Credit Losses		90 Days and Over and Accruing
Residential real estate	(Dollars in thousands)
Non-revolving residential real estate	$	643	$	—	$	57
Revolving residential real estate	—		—		15
Construction real estate
Commercial construction real estate	12,480		—		—

Commercial real estate
Non-residential commercial real estate	1,540		1,540		—

Commercial	526		—		—


Total	$	15,189	$	1,540	$	72

Union Bankshares, Inc. Page 18


December 31, 2024	Nonaccrual		Nonaccrual With No Allowance for Credit Losses		90 Days and Over and Accruing
Residential real estate	(Dollars in thousands)
Non-revolving residential real estate	$	—	$	—	$	241




Commercial real estate
Non-residential commercial real estate	1,652		1,652		—




Total	$	1,652	$	1,652	$	241

There were no loans in process of foreclosure at June 30, 2025 and one residential real estate loan totaling $8 thousand in process of foreclosure at December 31, 2024. Aggregate interest on nonaccrual loans not recognized was $645 thousand as of June 30, 2025 and $235 thousand as of December 31, 2024.

Loans that do not share risk characteristics are evaluated on an individual basis. Loans that are individually evaluated and collateral dependent represent loans that the Company has determined foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the loan to be provided substantially through the sale of the collateral. For these loans, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan at the measurement date.

The following table presents collateral dependent loans to borrowers experiencing financial difficulty by loan class and collateral type as of the balance sheet dates:


	June 30, 2025		December 31, 2024

	(Dollars in thousands)

Commercial construction real estate	$	12,480		$	—
Non-residential commercial real estate	4,134			4,246
Commercial	526			500


Total	$	17,140		$	4,746

Collateral dependent loans are loans for which the repayment is expected to be provided substantially by the underlying collateral and there are no other available and reliable sources of repayment.

Occasionally, the Company modifies loans to borrowers experiencing financial difficulty by providing interest rate reductions, term extensions, payment deferrals or principal forgiveness. When principal forgiveness is provided, the amount of forgiveness is charged off against the ACL on loans. The following tables summarize loan modifications to borrowers experiencing financial difficulty by loan class, type of modification and the financial effect of the modifications as of and for the three and six months ended June 30, 2025 and 2024.



	Payment Delay
	Three Months Ended June 30, 2025				Six Months Ended June 30, 2025
	Amortized Cost Basis		% of Loan Class		Amortized Cost Basis		% of Loan Class		Financial Effect
	(Dollars in thousands)

Commercial construction real estate	$	12,480	21.75	%	$	12,480	21.75	%	Modification extended loan draw period 6 months, extended interest only payments by 12 months and extended maturity date by 18 months.

Union Bankshares, Inc. Page 19



	Payment Delay
	Three Months Ended June 30, 2024				Six Months Ended June 30, 2024
	Amortized Cost Basis		% of Loan Class		Amortized Cost Basis		% of Loan Class		Financial Effect
	(Dollars in thousands)
Non-revolving residential real estate	$	18	—	%	$	18	—	%	Modification deferred 3 months of principal and interest payments.
Non-residential commercial real estate	266		0.09	%	266		0.09	%	Modification deferred 3 months of principal and interest payments.
Commercial	48		0.12	%	48		0.12	%	Modification deferred 3 months of principal and interest payments.

The following tables present the performance of loans as of June 30, 2025 and December 31, 2024 that had been modified in the previous twelve months:


June 30, 2025	Current		Past Due 30-89 Days		Past Due 90 Days and Over
	(Dollars in thousands)

Commercial construction real estate	$	12,480	$	—	$	—





Total	$	12,480	$	—	$	—


December 31, 2024	Current		Past Due 30-89 Days		Past Due 90 Days and Over
	(Dollars in thousands)
Non-revolving residential real estate	$	14	$	—	$	—

Non-residential commercial real estate	2,851		—		—

Commercial	—		45		—


Total	$	2,865	$	45	$	—

There were no loans to borrowers experiencing financial difficulty that were modified within the previous twelve months that had subsequently defaulted during the three and six months ended June 30, 2025 and 2024. Loans are considered defaulted at 90 days past due.

At June 30, 2025 and December 31, 2024, the Company was not committed to lend any additional funds to borrowers experiencing financial difficulty for which the Company modified the terms of the loans in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension.

Note 8. Stock Based Compensation

Under the Union Bankshares, Inc. 2024 Equity Plan, a total of 250,000 shares of the Company’s common stock have been reserved for equity awards of incentive stock options, nonqualified stock options, restricted stock and RSUs to eligible officers and (except for awards of incentive stock options) nonemployee directors. Shares available for issuance of awards under the 2024 Equity Plan consist of unissued shares of the Company’s common stock and/or shares held in treasury. The 2024 Equity Plan replaces, and is substantially similar to, the Company’s 2014 Equity Plan.

RSUs. Each outstanding RSU represents the right to receive one share of the Company's common stock upon satisfaction of applicable vesting conditions. The general terms of the awards are described in the Company's 2024 Annual Report. Prior to vesting, the RSUs do not earn dividends or dividend equivalents, nor do they bear any voting rights.

Union Bankshares, Inc. Page 20

The following table summarizes the RSUs awarded to Company executives in 2025 under the 2024 Equity Plan, and the number of such RSUs remaining unvested as of June 30, 2025:


	Number of RSUs Granted	Weighted Average Grant Date Fair Value		Number of Unvested RSUs
2025 Award	18,139	$	32.70	18,139
Total	18,139			18,139

The following table summarizes the RSUs awarded to Company executives in 2023 and 2024 under the 2014 Equity Plan, and the number of such RSUs remaining unvested as of June 30, 2025:


	Number of RSUs Granted	Weighted Average Grant Date Fair Value		Number of Unvested RSUs
2023 Award	19,282	$	26.90	2,508
2024 Award	19,910	$	28.87	11,280
Total	39,192			13,788

No new grants will be made under the 2014 Equity Plan.

Unrecognized compensation expense related to the unvested RSUs under both plans as of June 30, 2025 and 2024 was $493 thousand and $554 thousand, respectively, and $393 thousand as of December 31, 2024.

On May 21, 2025, the Company's board of directors, as a component of total director compensation, granted an aggregate of 3,616 RSUs to the Company's non-employee directors under the 2024 Equity Plan. Each RSU represents the right to receive one share of the Company's common stock upon satisfaction of applicable vesting conditions. The RSUs will vest in May 2026, subject to continued board service through the vesting date, other than in the case of the director's death or disability. Prior to vesting, the RSUs do not earn dividends or dividend equivalents, nor do they bear any voting rights. Unrecognized director compensation expense related to the unvested RSUs as of June 30, 2025 was $103 thousand.

Note 9. Subordinated Notes

In August 2021, the Company completed the private placement of $16.5 million in aggregate principal amount of fixed-to-floating rate subordinated notes due 2031 (the "Notes") to certain qualified institutional buyers and accredited investors. The Notes initially bear interest, payable semi-annually, at the rate of 3.25% per annum, until September 1, 2026. From and including September 1, 2026, the interest rate applicable to the outstanding principal amount due will reset quarterly to the then current three-month secured overnight financing rate (SOFR) plus 263 basis points. At its option, the Company may redeem the Notes, in whole or in part, beginning with the interest payment date of September 1, 2026 but not generally prior thereto, and on any scheduled interest payment date thereafter. The Notes qualify as Tier 2 capital instruments for the Company under bank holding company regulatory capital guidelines.

The Company used the proceeds primarily to provide additional Tier 1 capital to the Company's wholly-owned subsidiary, Union Bank, to support its growth and for other general corporate purposes.

The unamortized issuance costs of the Notes were $210 thousand and $227 thousand at June 30, 2025 and December 31, 2024, respectively. The Company recorded $9 thousand and $17 thousand of issuance costs in interest expense for the three and six months ended June 30, 2025 and 2024. The Notes are presented net of unamortized issuance costs in the consolidated balance sheets.

Note 10. Other Comprehensive Income (Loss)

Accounting principles generally require recognized revenue, expenses, gains and losses be included in net income or loss. Certain changes in assets and liabilities, such as the after tax effect of unrealized gains and losses on investment securities AFS that have not been recorded through an ACL are not reflected in the consolidated statements of income. The cumulative effect of such items, net of tax effect, is reported as a separate component of the equity section of the consolidated balance sheets (Accumulated OCI). OCI, along with net income, comprises the Company's total comprehensive income or loss.

Union Bankshares, Inc. Page 21

As of the balance sheet dates, the components of Accumulated OCI, net of tax, were:


	June 30, 2025		December 31, 2024
	(Dollars in thousands)
Net unrealized losses on investment securities AFS	$	(31,231)	$	(33,997)

The following tables disclose the tax effects allocated to each component of OCI for the three and six months ended June 30:


	Three Months Ended
	June 30, 2025						June 30, 2024
	Before-Tax Amount		Tax Expense		Net-of-Tax Amount		Before-Tax Amount		Tax Benefit		Net-of-Tax Amount
Investment securities AFS:	(Dollars in thousands)
Net unrealized holding gains (losses) arising during the period on investment securities AFS	$	261	$	(58)	$	203	$	(422)	$	93	$	(329)







Total other comprehensive income (loss)	$	261	$	(58)	$	203	$	(422)	$	93	$	(329)



	Six Months Ended
	June 30, 2025						June 30, 2024
	Before-Tax Amount		Tax Expense		Net-of-Tax Amount		Before-Tax Amount		Tax Benefit		Net-of-Tax Amount
Investment securities AFS:	(Dollars in thousands)
Net unrealized holding gains (losses) arising during the period on investment securities AFS	$	3,555	$	(789)	$	2,766	$	(4,189)	$	921	$	(3,268)







Total other comprehensive income (loss)	$	3,555	$	(789)	$	2,766	$	(4,189)	$	921	$	(3,268)

There were no reclassification adjustments from OCI for the three and six months ended June 30, 2025 or 2024.

Note 11. Fair Value Measurement

The Company utilizes FASB ASC Topic 820, Fair Value Measurement, as guidance for accounting for assets and liabilities carried at fair value. This standard defines fair value as the price that would be received, without adjustment for transaction costs, to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is a market based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The guidance in FASB ASC Topic 820 establishes a three-level fair value hierarchy, which prioritizes the inputs used in measuring fair value. A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The three levels of the fair value hierarchy are:

•Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

•Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

•Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The following is a description of the valuation methodologies used for the Company’s assets that are measured on a recurring basis at estimated fair value:

Investment securities AFS: Certain U.S. Treasury notes have been valued using unadjusted quoted prices from active markets and therefore have been classified as Level 1. However, the majority of the Company’s AFS securities have been valued utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include market maker bids, quotes and pricing models. Inputs to the pricing models include recent trades, benchmark interest rates, spreads and actual and projected cash flows.

Union Bankshares, Inc. Page 22

Mutual funds: Mutual funds have been valued using unadjusted quoted prices from active markets and therefore have been classified as Level 1.

Assets measured at fair value on a recurring basis at June 30, 2025 and December 31, 2024, segregated by fair value hierarchy level, are summarized below:


	Fair Value Measurements
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2025:	(Dollars in thousands)
Debt securities AFS:
U.S. Government-sponsored enterprises	$	26,043	$	2,789	$	23,254	$	—
Agency mortgage-backed	166,495		—		166,495		—
State and political subdivisions	45,530		—		45,530		—
Corporate	2,469		—		2,469		—
Total debt securities	$	240,537	$	2,789	$	237,748	$	—


Other investments:
Mutual funds	$	1,886	$	1,886	$	—	$	—


December 31, 2024:
Debt securities AFS:
U.S. Government-sponsored enterprises	$	26,215	$	2,702	$	23,513	$	—
Agency mortgage-backed	173,275		—		173,275		—
State and political subdivisions	48,550		—		48,550		—
Corporate	2,464		—		2,464		—
Total debt securities	$	250,504	$	2,702	$	247,802	$	—


Other investments:
Mutual funds	$	1,754	$	1,754	$	—	$	—

There were no transfers in or out of Levels 1 and 2 during the three and six months ended June 30, 2025 or the year ended December 31, 2024, nor were there any Level 3 assets at any time during these periods. Certain other assets and liabilities are measured at fair value on a nonrecurring basis, that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). Assets and liabilities measured at fair value on a nonrecurring basis in periods after initial recognition, such as collateral dependent individually evaluated loans, MSRs and OREO, were not considered material at June 30, 2025 or December 31, 2024. The Company has not elected to apply the fair value method to any financial assets or liabilities other than those situations where other accounting pronouncements require fair value measurements.

FASB ASC Topic 825, Financial Instruments, requires disclosure of the estimated fair value of financial instruments. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Management’s estimates and assumptions are inherently subjective and involve uncertainties and matters of significant judgment. Changes in assumptions could dramatically affect the estimated fair values.

Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Certain financial instruments and all nonfinancial instruments may be excluded from disclosure requirements. Thus, the aggregate fair value amounts presented may not necessarily represent the actual underlying fair value of such instruments of the Company.

Union Bankshares, Inc. Page 23

As of the balance sheet dates, the estimated fair values and related carrying amounts of the Company's significant financial instruments were as follows:


	June 30, 2025
	Fair Value Measurements
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Financial assets
Cash and cash equivalents	$	29,267	$	29,267	$	29,267	$	—	$	—
Interest bearing deposits in banks	6,963		6,950		—		6,950		—
Investment securities	242,423		242,423		4,675		237,748		—
Loans held for sale	8,992		9,142		—		9,142		—
Loans, net
Residential real estate	467,469		437,877		—		—		437,877
Construction real estate	118,570		117,534		—		—		117,534
Commercial real estate	432,920		413,696		—		—		413,696
Commercial	33,744		32,484		—		—		32,484
Consumer	2,467		2,431		—		—		2,431
Municipal	41,445		39,445		—		—		39,445
Accrued interest receivable	5,481		5,481		—		1,176		4,305
Nonmarketable equity securities	11,638		N/A		N/A		N/A		N/A
Financial liabilities
Deposits
Noninterest bearing	$	217,317	$	217,317	$	217,317	$	—	$	—
Interest bearing	578,411		578,411		578,411		—		—
Time	307,618		306,852		—		306,852		—
Borrowed funds
Short-term	29,834		29,778		—		29,778		—
Long-term	240,840		242,571		—		242,571		—
Subordinated notes	16,290		17,153		—		17,153		—
Accrued interest payable	3,066		3,066		—		3,066		—

Union Bankshares, Inc. Page 24


	December 31, 2024
	Fair Value Measurements
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Financial assets
Cash and cash equivalents	$	15,838	$	15,838	$	15,838	$	—	$	—
Interest bearing deposits in banks	9,462		9,449		—		9,449		—
Investment securities	252,258		252,258		4,456		247,802		—
Loans held for sale	5,204		5,303		—		5,303		—
Loans, net
Residential real estate	464,691		425,103		—		—		425,103
Construction real estate	105,633		103,672		—		—		103,672
Commercial real estate	432,173		395,713		—		—		395,713
Commercial	34,863		33,096		—		—		33,096
Consumer	2,522		2,477		—		—		2,477
Municipal	110,336		108,163		—		—		108,163
Accrued interest receivable	6,470		6,470		—		1,226		5,244
Nonmarketable equity securities	11,352		N/A		N/A		N/A		N/A
Financial liabilities
Deposits
Noninterest bearing	$	226,048	$	226,048	$	226,048	$	—	$	—
Interest bearing	714,862		714,862		714,862		—		—
Time	227,984		226,890		—		226,890		—
Borrowed funds
Short-term	29,000		28,946		—		28,946		—
Long-term	230,696		229,613		—		229,613		—
Subordinated notes	16,273		16,128		—		16,128		—
Accrued interest payable	3,319		3,319		—		3,319		—

The carrying amounts in the preceding tables are included in the consolidated balance sheets under the applicable captions. Accrued interest receivable and nonmarketable equity securities are included in Other assets in the consolidated balance sheets.

Note 12. Subsequent Events

Subsequent events represent events or transactions occurring after the balance sheet date but before the financial statements are issued. Financial statements are considered “issued” when they are widely distributed to shareholders and others for general use and reliance in a form and format that complies with GAAP. Events occurring subsequent to June 30, 2025 have been evaluated as to their potential impact to the consolidated financial statements.

On July 16, 2025, the Company declared a regular quarterly cash dividend of $0.36 per share, payable August 7, 2025, to stockholders of record on July 26, 2025.

Union Bankshares, Inc. Page 25

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

GENERAL

The following discussion and analysis focuses on those factors that, in management's view, had a material effect on the financial position of the Company as of June 30, 2025 and December 31, 2024, and its results of operations for the three and six months ended June 30, 2025 and 2024. This discussion is being presented to provide a narrative explanation of the consolidated financial statements and should be read in conjunction with the consolidated financial statements and related notes and with other financial data appearing elsewhere in this filing and with the Company's 2024 Annual Report. In the opinion of the Company's management, the interim unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments and disclosures necessary to fairly present the Company's consolidated financial position and results of operations for the interim periods presented. Management is not aware of the occurrence of any events after June 30, 2025 which would materially affect the information presented.

Please refer to Note 1 in the Company's unaudited interim consolidated financial statements at Part I, Item 1 of this Report for definitions of acronyms, abbreviations and capitalized terms used throughout the following discussion and analysis.

CAUTIONARY ADVICE ABOUT FORWARD LOOKING STATEMENTS

The Company, "we," "us," "our," may from time to time make written or oral statements that are considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include financial projections, statements of plans and objectives for future operations, estimates of future economic performance or conditions and assumptions relating thereto. The Company may include forward-looking statements in its filings with the SEC, in its reports to stockholders, including this quarterly report, in press releases, other written materials, and in statements made by senior management to analysts, rating agencies, institutional investors, representatives of the media and others.

Forward-looking statements are based on the current assumptions underlying the statements and other information with respect to the beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions of management and the financial condition, results of operations, future performance and business are only expectations of future results. Although the Company believes that the expectations reflected in the Company’s forward-looking statements are reasonable when made, the Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, changes in interest rates; competitive pressures from other financial institutions; general economic conditions on a national basis or in the local markets in which the Company operates; downgrades of U.S. government securities; eroding public confidence in the banking system; changes in consumer behavior due to changing political, business and economic conditions, including the impact of inflation, federal tariff and trade policies and legislative or regulatory initiatives; changes in the value of securities and other assets in the Company’s investment portfolio; increases in loan and lease default and charge-off rates; the adequacy of the ACL; decreases in deposit levels that necessitate increases in borrowing to fund loans and investments; operational risks to the Company and our vendors, including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; changes in regulation, war, terrorism, civil unrest; changes in economic assumptions and adverse economic developments; the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Company’s 2024 Annual Report.

In addition to the uncertainties detailed above and in the Company's 2024 Annual Report, the banking industry continues to be faced with an inverted yield curve, unrealized securities losses, and higher funding costs.

When evaluating forward-looking statements to make decisions about the Company and our stock, investors and others are cautioned to consider these and other risks and uncertainties, and are reminded not to place undue reliance on such statements. Investors should not consider the factors referred to above or described in the Company's 2024 Annual Report to be a complete list of the risks or uncertainties that may affect the Company. Forward-looking statements speak only as of the date they are made and the Company undertakes no obligation to update them to reflect new or changed information or events, except as may be required by federal securities laws.

Non-GAAP Financial Measures

Under SEC Regulation G, public companies making disclosures containing financial measures that are not in accordance with GAAP must also disclose, along with each non-GAAP financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure, as well as a statement of

Union Bankshares, Inc. Page 26

the company’s reasons for utilizing the non-GAAP financial measure. The SEC has exempted from the definition of non-GAAP financial measures certain commonly used financial measures that are not based on GAAP. However, two non-GAAP financial measures commonly used by financial institutions, namely tax-equivalent net interest income and tax-equivalent net interest margin (as presented in the tables in the section labeled Yields Earned and Rates Paid), have not been specifically exempted by the SEC, and may therefore constitute non-GAAP financial measures under Regulation G. We are unable to state with certainty whether the SEC would regard those measures as subject to Regulation G. Management believes that these non-GAAP financial measures are useful in evaluating the Company’s financial performance and facilitate comparisons with the performance of other financial institutions. However, that information should be considered supplemental in nature and not as a substitute for related financial information prepared in accordance with GAAP.

CRITICAL ACCOUNTING POLICIES

The Company has established various accounting policies which govern the application of GAAP in the preparation of the Company's consolidated financial statements. Certain accounting policies involve significant judgments and assumptions by management which have a material impact on the reported amount of assets, liabilities, capital, revenues and expenses and related disclosures of contingent assets and liabilities in the consolidated financial statements and accompanying notes. The SEC has defined a company's critical accounting policies as the ones that are most important to the portrayal of the company's financial condition and results of operations, and which require management to make its most difficult and subjective judgments, often as a result of the need to make estimates on matters that are inherently uncertain. Based on this definition, management has identified the accounting policies and judgments most critical to the Company. They include establishing the amount of ACL and valuing our intangible assets. The judgments and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ from estimates and have a material impact on the carrying value of assets, liabilities, or capital, and/or the results of operations of the Company.

Please refer to the Company's 2024 Annual Report on Form 10-K for a more in-depth discussion of the Company's critical accounting policies. There have been no changes to the Company's critical accounting policies since the filing of that report.

OVERVIEW

The financial trends for the three and six months ended June 30, 2025 indicate a positive trajectory for the Company. Net interest income, the largest component of net income, saw an increase due to higher interest earned on average earning assets and an increase in average loan volume. Interest expense also rose, primarily driven by higher rates on customer deposits and increased utilization of wholesale funding. The net interest spread and net interest margin both improved, reflecting the overall positive impact of these changes. Additionally, noninterest income experienced growth in wealth management income and net gains on sales of loans held for sale, although this was partially offset by decreases in service fees and income from company-owned life insurance. Noninterest expenses increased, particularly in salaries, wages, and employee benefits, due to annual salary adjustments and higher medical and dental plan premiums. Overall, the Company's financial performance showed robust growth and improved profitability. For further discussion see Results of Operations on page 28.

Consolidated net income increased $376 thousand, or 18.6%, to $2.4 million for the second quarter of 2025 compared to $2.0 million for the second quarter of 2024. The increase in net income was due to the combined effects of a $962 thousand increase in net interest income and a decrease of $167 thousand in credit loss expense, partially offset by increases of $706 thousand in noninterest expenses and $41 thousand in income tax expense, and a decrease of $6 thousand in noninterest income.

Consolidated net income increased $460 thousand, or 10.4%, to $4.9 million for the six months ended June 30, 2025 compared to $4.4 million for the six months ended June 30, 2024. This increase was due to an increase in net interest income of $2.2 million, partially offset by increases in noninterest expenses of $1.3 million, credit loss expense of $298 thousand and income tax expense of $26 thousand, and a decrease of $133 thousand in noninterest income.

At June 30, 2025, the Company had total consolidated assets of $1.48 billion, including gross loans and loans held for sale (total loans) of $1.11 billion, deposits of $1.10 billion, borrowed funds of $270.7 million, subordinated notes of $16.3 million and stockholders' equity of $71.3 million.

On May 20, 2025, the Company and Union entered into an Equity Distribution Agreement with Piper Sandler & Co., as sales agent, pursuant to which the Company may sell from time to time shares of the Company's common stock, par value $2.00, having an aggregate gross sale price of up to $40,000,000. Sales of common stock under the Equity Distribution Agreement may be made in any transactions that are deemed to be "at-the-market offerings" as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended (the "Securities Act") or, subject to the Company's consent, in privately negotiated transactions. The shares offered and sold in the offering have been registered by the Company under the Securities Act. During the three and six months ended June 30, 2025, the Company issued 8,437 shares for aggregate gross sale proceeds of $280

Union Bankshares, Inc. Page 27

thousand, at an average gross sale price of $33.14 per share, which yielded net proceeds to the Company of $52 thousand, after issuance costs, including sales commissions equal to 3% of gross sale proceeds. As of June 30, 2025, approximately $39.7 million remains available for issuance under the offering.

The current macroeconomic and geopolitical environment is subject to a number of uncertainties, including geopolitical conflicts, tariffs or changes in trade policies, capital markets volatility, and inflation. These and other factors may contribute to slower or negative economic growth and a challenging business environment for our customers. While we remain confident in the resilience and strength of our business and financial model, the current macroeconomic and geopolitical environment could negatively impact our financial condition and results of operations. For more information about these risks, please see “Part I, Item 1A. Risk Factors” in our 2024 Annual Report.

The following unaudited per share information and key ratios depict several measurements of performance or financial condition at or for the three and six months ended June 30, 2025 and 2024:


	Three Months Ended or At June 30,						Six Months Ended or At June 30,
	2025			2024			2025			2024
Return on average assets (1)	0.62		%	0.56		%	0.64		%	0.62		%
Return on average equity (1)	13.73		%	13.29		%	14.16		%	14.21		%
Net interest margin (1)(2)	2.89		%	2.81		%	2.88		%	2.74		%
Efficiency ratio (3)	77.85		%	78.55		%	76.82		%	78.46		%
Net interest spread (4)	2.43		%	2.35		%	2.42		%	2.29		%
Loan to deposit ratio	100.76		%	96.10		%	100.76		%	96.10		%
Net loan charge-offs to average loans not held for sale	—		%	—		%	—		%	—		%
ACL on loans to loans not held for sale	0.75		%	0.69		%	0.75		%	0.69		%
Nonperforming assets to total assets (5)	1.03		%	0.14		%	1.03		%	0.14		%
Equity to assets	4.81		%	4.58		%	4.81		%	4.58		%
Total capital to risk weighted assets	12.71		%	13.15		%	12.71		%	13.15		%
Book value per share	$	15.66		$	14.16		$	15.66		$	14.16
Basic earnings per share	$	0.53		$	0.45		$	1.08		$	0.98
Diluted earnings per share	$	0.52		$	0.45		$	1.07		$	0.98
Dividends paid per share	$	0.36		$	0.36		$	0.72		$	0.72
Dividend payout ratio (6)	67.92		%	80.00		%	66.67		%	73.47		%

__________________

(1)Annualized.

(2)The ratio of tax equivalent net interest income to average earning assets. See pages 30 and 31 for more information.

(3)The ratio of noninterest expenses to tax equivalent net interest income and noninterest income, excluding securities gains (losses).

(4)The difference between the average yield on earning assets and the average rate paid on interest bearing liabilities. See pages 30 and 31 for more information.

(5)Nonperforming assets are loans or investment securities that are in nonaccrual or 90 or more days past due as well as OREO or OAO.

(6)Cash dividends declared and paid per share divided by consolidated net income per share.

RESULTS OF OPERATIONS

Net Interest Income. The largest component of the Company’s operating income is net interest income, which is the difference between interest and dividend income received from earning assets and interest expense paid on interest bearing liabilities. Net interest income is affected by various factors including, but not limited to, changes in interest rates, loan and deposit pricing strategies, funding strategies, the volume and mix of interest earning assets and interest bearing liabilities, and the level of nonperforming assets. Net interest margin is calculated as the net interest income on a fully tax equivalent basis as a percentage of average earning assets.

Interest earned on average earning assets for the three months ended June 30, 2025 was $18.7 million compared to $16.6 million for the three months ended June 30, 2024, an increase of $2.2 million, or 13.1%. The average earning asset base

Union Bankshares, Inc. Page 28

increased $100.7 million between periods and the average yield on average earning assets increased 26 bps to 5.10% for the three months ended June 30, 2025 compared to 4.84% for the three months ended June 30, 2024.

The average yield on federal funds sold and overnight deposits decreased 62 bps and its related interest income also decreased by $16 thousand between the three month comparison periods due to a decrease in the average rate paid on the balances maintained in Union's master account at the FRB. Interest income on investment securities increased $119 thousand between comparison periods due to an increase in the average yield of 26 bps, despite a decrease in the average balance of the portfolio of $15.8 million. The improvement in the average yield and interest income resulted from a balance sheet repositioning completed in the third quarter of 2024, in which the Company sold lower-yielding AFS debt securities at a loss and used the proceeds to purchase higher yielding AFS debt securities and fund loans.

Interest income on loans increased $2.0 million between the three month comparison periods due to an increase in the average volume of loans outstanding of $117.7 million and an increase of 14 bps in the average yield. Interest income on loans increased $140 thousand and $445 thousand during the three months ended June 30, 2025 and 2024, respectively, due to recovery of interest from the payoff of loans that previously had been in nonaccrual. This accounted for 5 bps and 17 bps of the increase in the average loan yield for the three months ended June 30, 2025 and 2024, respectively.

Average interest bearing liabilities increased $102.4 million between the three month comparison periods primarily due to increases in average deposits and borrowed funds. The average rate paid on interest bearing liabilities increased 18 bps to 2.67% for the second quarter of 2025 compared to 2.49% for the second quarter of 2024. Interest expense increased $1.2 million, to $8.3 million for the three months ended June 30, 2025 compared to $7.1 million for the three months ended June 30, 2024. Interest expense on borrowed funds increased $482 thousand, or 23.6%, between periods due to an increase of $59.6 million in the average volume, despite a decrease of 27 bps in the average rate paid.

The net interest spread increased 8 bps to 2.43% for the second quarter of 2025, from 2.35% for the same period last year, reflecting the net effect of the 26 bps increase in the average yield earned on interest earning assets, which was partially offset by the 18 bps increase in the average rate paid on interest bearing liabilities between periods. The net interest margin increased 8 bps during the second quarter of 2025 compared to the same period last year as a result of the changes discussed above.

Net interest income was $20.7 million, on a fully tax equivalent basis for the six months ended June 30, 2025 compared to $18.5 million for the six months ended June 30, 2024, an increase of $2.2 million, or 12.0%. The average volume of earning assets increased $102.6 million and the average yield on earning assets increased 36 bps to 5.08% compared to 4.72% for the comparison period. Average loans increased $124.7 million, or 12.0%, to $1.2 billion for the six months ended June 30, 2025. The increase in average loan volume and the increase of 27 bps in the average loan yield resulted in a $4.7 million increase in interest income on loans between periods.

The average balance of the investment portfolio decreased $14.0 million while the average yield on the portfolio increased by 29 bps, resulting in an increase in interest income on investment securities of $308 thousand between the six month comparison periods. As noted above, the increases in the average yield and interest income were a direct result of the balance sheet repositioning completed in the third quarter of 2024.

The average balance of interest bearing liabilities increased $105.2 million between the six months comparison periods, primarily due to an increase in borrowed funds and interest bearing nonmaturity deposits. The average cost of funds increased 23 bps to 2.66% for the six months ended June 30, 2025 compared to 2.43% for the six months ended June 30, 2024 due to continued customer expectation of higher rates on deposit accounts along with utilization of wholesale funding at rates higher than deposit rates. Interest expense increased $2.6 million, to $16.3 million for the six months ended June 30, 2025, compared to $13.7 million for the six months ended June 30, 2024.

The net interest spread increased 13 bps to 2.42% for the six months ended June 30, 2025, from 2.29% for the same period last year, reflecting the net effect of the 36 bps increase in the average yield earned on interest earning assets, which was only partially offset by the 23 bps increase in the average rate paid on interest bearing liabilities between periods. The net interest margin increased 14 bps for the six months ended June 30, 2025 compared to the same period last year as a result of the changes discussed above.

Union Bankshares, Inc. Page 29

The following tables show for the periods indicated the total amount of tax equivalent interest income recorded from average interest earning assets, the related average tax equivalent yields, the tax equivalent interest expense associated with average interest bearing liabilities, the related tax equivalent average rates paid, and the resulting tax equivalent net interest spread and margin.



	Three Months Ended June 30,
	2025						2024
	Average Balance (1)		Interest Earned/ Paid		Average Yield/ Rate		Average Balance (1)		Interest Earned/ Paid		Average Yield/ Rate
	(Dollars in thousands)
Average Assets:
Federal funds sold and overnight deposits	$	21,477	$	178	3.28	%	$	19,664	$	194	3.90	%
Interest bearing deposits in banks	7,198		78		4.34	%	14,217		130		3.68	%
Investment securities (2), (3)	284,840		1,703		2.44	%	300,676		1,584		2.18	%

Loans, net (2), (4)	1,167,505		16,563		5.77	%	1,049,788		14,540		5.63	%
Nonmarketable equity securities	11,112		199		7.19	%	7,104		104		5.89	%
Total interest earning assets (2)	1,492,132		18,721		5.10	%	1,391,449		16,552		4.84	%
Cash and due from banks	4,875						4,407
Premises and equipment	20,298						20,772
Other assets	26,359						14,935
Total assets	$	1,543,664					$	1,431,563
Average Liabilities and Stockholders' Equity:
Interest bearing checking accounts	$	304,077	1,124		1.48	%	$	286,935	738		1.03	%
Savings/money market accounts	377,037		1,612		1.72	%	359,801		1,200		1.34	%
Time deposits	293,012		2,871		3.93	%	284,594		2,944		4.16	%
Borrowed funds and other liabilities	247,771		2,526		4.03	%	188,194		2,044		4.30	%
Subordinated notes	16,284		142		3.51	%	16,251		142		3.53	%
Total interest bearing liabilities	1,238,181		8,275		2.67	%	1,135,775		7,068		2.49	%
Noninterest bearing deposits	217,060						219,978
Other liabilities	18,672						15,032
Total liabilities	1,473,913						1,370,785
Stockholders' equity	69,751						60,778
Total liabilities and stockholders’ equity	$	1,543,664					$	1,431,563
Net interest income			$	10,446					$	9,484
Net interest spread (2)					2.43	%					2.35	%
Net interest margin (2)					2.89	%					2.81	%

Union Bankshares, Inc. Page 30



	Six Months Ended June 30,
	2025						2024
	Average Balance (1)		Interest Earned/ Paid		Average Yield/ Rate		Average Balance (1)		Interest Earned/ Paid		Average Yield/ Rate
	(Dollars in thousands)
Average Assets:
Federal funds sold and overnight deposits	$	20,452	$	330	3.21	%	$	27,277	$	637	4.62	%
Interest bearing deposits in banks	7,995		171		4.31	%	14,232		245		3.47	%
Investment securities (2), (3)	288,269		3,503		2.48	%	302,282		3,195		2.19	%

Loans, net (2), (4)	1,161,294		32,610		5.74	%	1,036,631		27,912		5.47	%
Nonmarketable equity securities	11,054		402		7.34	%	6,081		184		6.09	%
Total interest earning assets (2)	1,489,064		37,016		5.08	%	1,386,503		32,173		4.72	%
Cash and due from banks	4,750						4,432
Premises and equipment	20,218						20,839
Other assets	24,816						16,863
Total assets	$	1,538,848					$	1,428,637
Average Liabilities and Stockholders' Equity:
Interest bearing checking accounts	$	304,353	2,144		1.42	%	$	299,635	1,776		1.19	%
Savings/money market accounts	390,895		3,503		1.81	%	383,096		2,852		1.50	%
Time deposits	274,044		5,370		3.95	%	274,130		5,493		4.03	%
Borrowed funds and other liabilities	246,006		4,998		4.04	%	153,245		3,275		4.23	%
Subordinated notes	16,280		285		3.53	%	16,246		285		3.53	%
Total interest bearing liabilities	1,231,578		16,300		2.66	%	1,126,352		13,681		2.43	%
Noninterest bearing deposits	220,237						223,922
Other liabilities	17,902						15,913
Total liabilities	1,469,717						1,366,187
Stockholders' equity	69,131						62,450
Total liabilities and stockholders’ equity	$	1,538,848					$	1,428,637
Net interest income			$	20,716					$	18,492
Net interest spread (2)					2.42	%					2.29	%
Net interest margin (2)					2.88	%					2.74	%

__________________

(1)Average balances are calculated based on a daily averaging method.

(2)Average yields reported on a tax equivalent basis using a marginal federal corporate income tax rate of 21%.

(3)Average balances of investment securities are calculated on the amortized cost basis and include nonaccrual securities, if applicable.

(4)Includes loans held for sale as well as nonaccrual loans, unamortized costs and unamortized premiums and is net of the ACL on loans.

Union Bankshares, Inc. Page 31

Tax exempt interest income amounted to $1.7 million and $1.3 million for the three months ended June 30, 2025 and 2024, respectively, and $3.5 million and $2.6 million for the six months ended June 30, 2025 and 2024, respectively. The following table presents the effect of tax exempt income on the calculation of net interest income, using a marginal federal corporate income tax rate of 21% for the 2025 and 2024 three and six month comparison periods:


	For The Three Months Ended June 30,				For the Six Months Ended June 30,
	2025		2024		2025		2024
	(Dollars in thousands)
Net interest income, as presented	$	10,446	$	9,484	$	20,716	$	18,492
Effect of tax-exempt interest
Investment securities	34		58		69		114
Loans	230		146		455		283
Net interest income, tax equivalent	$	10,710	$	9,688	$	21,240	$	18,889

Rate/Volume Analysis. The following table describes the extent to which changes in average interest rates earned and paid (on a fully tax-equivalent basis) and changes in volume of average interest earning assets and interest bearing liabilities have affected the Company's interest income and interest expense during the periods indicated. For each category of interest earning assets and interest bearing liabilities, information is provided on changes attributable to:

•changes in volume (change in volume multiplied by prior rate);

•changes in rate (change in rate multiplied by prior volume); and

•total change in rate and volume.

Changes attributable to both rate and volume have been allocated proportionately to the change due to volume and the change due to rate.


	Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 Increase/(Decrease) Due to Change In						Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024 Increase/(Decrease) Due to Change In
	Volume		Rate		Net		Volume		Rate		Net
	(Dollars in thousands)
Interest earning assets:
Federal funds sold and overnight deposits	$	17	$	(33)	$	(16)	$	(139)	$	(168)	$	(307)
Interest bearing deposits in banks	(73)		21		(52)		(124)		50		(74)
Investment securities	(79)		198		119		(138)		446		308

Loans, net	1,663		360		2,023		3,376		1,322		4,698
Nonmarketable equity securities	68		27		95		174		44		218
Total interest earning assets	1,596		573		2,169		3,149		1,694		4,843
Interest bearing liabilities:
Interest bearing checking accounts	47		339		386		25		343		368
Savings/money market accounts	61		351		412		55		596		651
Time deposits	89		(162)		(73)		(9)		(114)		(123)
Borrowed funds	610		(128)		482		1,868		(145)		1,723
Subordinated notes	—		—		—		—		—		—
Total interest bearing liabilities	807		400		1,207		1,939		680		2,619
Net change in net interest income	$	789	$	173	$	962	$	1,210	$	1,014	$	2,224

Credit Loss Expense. Credit loss expense or benefit is made up of credit loss expense on loans and credit loss expense on off-balance sheet credit exposures. Credit loss expense on loans results from net charge-offs, changes to the projected loss drivers, prepayment speeds, curtailments and time to recovery that the Company forecasted over the reasonable and supportable forecast periods and changes in the volume and mix of the loan portfolio. Credit loss expense on off-balance sheet credit exposures results from changes in outstanding commitments and changes in funding rates and assumed loss rates period over period. For

Union Bankshares, Inc. Page 32

further details, see FINANCIAL CONDITION - Allowance for Credit Losses on Loans and Commitments, Contingent Liabilities, and Off-Balance-Sheet Arrangements below.

Credit loss expense (benefit) was made up of the following components for the following periods:


	For The Three Months Ended June 30,				For the Six Months Ended June 30,
	2025		2024		2025		2024
	(Dollars in thousands)
Credit loss expense for loans	$	192	$	238	$	621	$	316

Credit loss expense (benefit) for off-balance sheet credit exposures	29		150		(165)		(158)
Credit loss expense, net	$	221	$	388	$	456	$	158

Noninterest Income. The following table sets forth the components of noninterest income and changes between the three and six month comparison periods of 2025 and 2024:


	For The Three Months Ended June 30,							For the Six Months Ended June 30,
	2025		2024		$ Variance		% Variance	2025		2024		$ Variance		% Variance
	(Dollars in thousands)
Wealth management income	$	295	$	273	$	22	8.1	$	571	$	528	$	43	8.1
Service fees	1,715		1,735		(20)		(1.2)	3,372		3,397		(25)		(0.7)
Net gains on sales of loans held for sale	480		341		139		40.8	869		628		241		38.4
Income from Company-owned life insurance	122		353		(231)		(65.4)	241		470		(229)		(48.7)

Other income	28		30		(2)		(6.7)	62		181		(119)		(65.7)

Net gains on other investments	119		33		86		260.6	84		128		(44)		(34.4)

Total noninterest income	$	2,759	$	2,765	$	(6)	(0.2)	$	5,199	$	5,332	$	(133)	(2.5)

The significant changes in noninterest income for the three and six months ended June 30, 2025 compared to the same periods of 2024 are described below:

•Wealth management income. Wealth management income increased as managed fiduciary accounts grew between June 30, 2025 and 2024, as did the value of assets within those accounts.

•Service fees. Service fees decreased $20 thousand and $25 thousand for the three and six months ended June 30, 2025, respectively, primarily due to decreases in merchant program fees, ATM and debit card network fees, and overdraft fees, partially offset by an increase in loan servicing fees.

UNION BANKSHARES INC 10-Q