Results of Operations and Financial Condition Form 8 K

Union Bankshares, Inc. reported its second quarter earnings in a press release on July 17, 2024. Consolidated net income for the three months ended June 30, 2024 was $2.0 million, or $0.45 per share, compared to $2.7 million, or $0.60 per share, for the same period in 2023, and $4.4 million, or $0.98 per share, for the six months ended June 30, 2024, compared to $5.7 million, or $1.26 per share for the same period in 2023. More detailed financial information will be available in our upcoming quarterly filings.

Earnings are generally in line with expectations from the beginning of the year. We had hoped for some relief on the funding side of the balance sheet; however, the Federal Reserve has held rates higher for longer as well as continued to shrink its balance sheet and reduce liquidity in the economy which has caused funding costs to be persistently higher than expected, negatively impacting earnings. Though "The Fed" may begin a rate reduction cycle later this year, we do not expect this will materially improve our cost of funds until 2025. The rapid steep increase in short-term interest rates initiated as an inflation fighting tool by the Federal Reserve has been unkind to the community banking industry.

There are some bright spots to report. Loan asset quality continues to be very strong with delinquency metrics being unusually low. We are paying close attention to consumer behavior due to reports that credit card debt is at all-time highs and auto portfolios are seeing increased delinquencies nationally. We are not seeing weakness in our 1-4 family residential portfolio and have negligible amounts of consumer loans and no consumer credit card exposure. We have thoroughly reviewed our exposure to commercial real estate and the types of exposure we have are in sound industries with almost no office exposure. We do have

significant investments in multifamily residential loans, but the low vacancy rates in our markets make this exposure low risk. Finally, we have very solid pipelines of both residential and commercial real estate loans, which is somewhat atypical among our peers. Our challenge is less finding attractive loan opportunities than funding this demand.

Parts of Vermont and New Hampshire sustained heaving rains and flooding similar to the flooding that occurred a year ago to the day last summer. While this year's event was less devastating than last year's, it still inflicted major damage to homes, businesses, roads, and bridges. Families, businesses, and municipalities are still assessing the damage while working to cure the most immediate issues such as safety and access to homes and roads. At this point we are working with impacted customers and do not expect a material impact to our financial institution.

The local economy continues to be strong. Travel and tourism remain solid, though cooled a bit from the peak post pandemic, "return to travel" binge, coupled with a return to foreign travel. The unemployment rate in our markets remains at record lows, and available for sale residential home inventory continues to be a major challenge for home buyers. We are hopeful that rate relief in the future will enable new home buyers to find homes while increasing the volume of home financing opportunities.

The Board of Directors declared a cash dividend of $0.36 per share for the quarter payable August 1, 2024, to shareholders of record as of July 27, 2024.

Neil J. Van Dyke

Chair

David S. Silverman

President & Chief Executive Officer

AboutUnion Bankshares

Union Bankshares, Inc. operates as the holding company for Union Bank, which provides commercial, retail and municipal banking services and asset management services throughout northern Vermont and New Hampshire. Union Bank was founded in 1891 in Morrisville, Vermont, where the Bank's and its holding company's headquarters are located. Union Bank operates 19 banking offices, 2 loan centers and several ATMs throughout its geographical footprint.

Union Bank has been helping people buy homes and local businesses create jobs in area communities since opening its doors over 130 years ago. Union Bank has earned an exceptional reputation for residential lending programs and has been recognized by the US Department of Agriculture, Rural Development for the positive impact made in the lives of first time home buyers. Union Bank is consistently one of the top Vermont Housing Finance Agency mortgage originators. Additionally, Union Bank has also been designated as an SBA Preferred lender for its participation in small business lending. Union Bank has received an "Outstanding" rating for its compliance with the Community Reinvestment Act (CRA). An institution in this group has an excellent record of helping to meet the credit needs of its assessment area, particularly in low-and moderate income neighborhoods, in a manner consistent with its resources and capabilities.

Consolidated Balance Sheets

(unaudited, in thousands)

Consolidated Statements of Income

(unaudited, in thousands)

DIRECTORS

Neil J. Van Dyke - Chair

Neil J. Van Dyke - Chair

Timothy W. Sargent - Vice Chair

David S. Silverman - President & CEO

Karyn J. Hale - Chief Financial Officer

Timothy W. Sargent - Secretary

Kristy Adams Alfieri - Assistant Secretary

DIRECTORS

Neil J. Van Dyke - Chair

Michael R. Barrett - St. Johnsbury

Timothy W. Sargent - Vice Chair

Steven J. Bourgeois - St. Albans

Andrew A. Dean - Northern NH

Stanley T. Fillion - Northern NH

Rosemary H. Gingue - St. Johnsbury

John M. Goodrich - Northern NH

Christopher M. Knapp - Northern NH

Coleen K. Kohaut - St. Albans

Justin P. Lavely - St. Johnsbury

Daniel J. Luneau - St. Albans

Samuel H. Ruggiano - St. Albans

Christine A. Sheley - Northern NH

David S. Silverman - All

Union Bank Offices

(ATMs at all Branch Locations)