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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000 Commission file number 000-28449
UNION BANKSHARES, INC.
VERMONT 03-0283552
P.O. BOX 667
MAIN STREET
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(g) of the Act:
Common Stock, $2.00 par value
-----------------------------
(Title of class)
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 __X__ No _____
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( )
The aggregate market value of the common stock held by non-affiliates of
the registrant, based on the last known trade price prior to March 15, 2001
was $30,729,846.
As of March 15, 2001, there were 3,029,729 shares of the registrant's $2
par value common stock issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents, in whole or in part, are specifically incorporated
by reference in the indicated Part of this Annual Report on Form 10-K:
Document Part
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Annual Report to Shareholders for the year ended December 31, 2000 I, II
Proxy Statement for the 2001 Annual Meeting of Shareholders III
UNION BANKSHARES, INC.
Table of Contents
Part I
Item 1 --- Business 3
Item 2 --- Properties 7
Item 3 --- Legal Proceedings 7
Item 4 --- Submission of Matters to a Vote of Security Holders 7
Part II
Item 5 --- Market for Registrant's Common Equity and Related Stockholder
Matters* 7
Item 6 --- Selected Financial Data 8
Item 7 --- Management's Discussion and Analysis of Financial Condition and
Results of Operations* 9
Item 7A --- Quantitative and Qualitative Disclosures about Market Risk* 9
Item 8 --- Financial Statements and Supplementary Data* 9
Item 9 --- Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures 9
Part III
Item 10 --- Directors and Executive Officers of Registrant** 9
Item 11 --- Executive Compensation** 9
Item 12 --- Security Ownership of Certain Beneficial Owners and
Management** 10
Item 13 --- Certain Relationships and Related Party Transactions** 10
Part IV
Item 14 --- Exhibits, Financial Statement Schedules and Reports on Form 8-K 10
Signatures 12
[FN]
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* The information required by Part II, Items 5,7, 7A and 10 is
incorporated herein by reference from the 2000 Annual Report to
Shareholders
** The information required by Part III is incorporated herein by
reference from Union's Proxy Statement for the Annual Meeting of
Shareholders to be held on May 16, 2001.
Part I-Item 1 Business
General: Union Bankshares, Inc. (Union) is a two-bank holding company whose
subsidiaries are Citizens Savings Bank & Trust Co. and Union Bank. It was
incorporated in the State of Vermont in 1982. Citizens Savings Bank and
Trust Company was chartered under Vermont law in 1887 as a State bank and
is headquartered in St. Johnsbury, Vermont. Citizens became a wholly owned
subsidiary of Union on November 30, 1999 through a pooling of interests but
kept its separate name and banking franchise. Union Bank was organized and
chartered as a State bank in 1891 and became a wholly owned subsidiary of
Union in 1982 upon its formation. Union and Union Bank are headquartered in
Morrisville, Vermont.
Union has two definable segments that are Citizens Savings Bank & Trust Co.
and Union Bank which both generally operate in the same geographic and
economic environments in Northern Vermont. Citizens Savings Bank & Trust
Co. has 49 full time equivalent employees while Union Bank has 99. Union,
itself, does not have any paid employees.
Union's income is derived principally from interest on loans and earnings
on other investments. Its primary expenses arise from interest paid on
deposits and borrowings and general overhead expenses. The assets of Union
have grown from $256 million to $303 million over the last five years or
18.6% while our total deposits have grown from $224 million to $259 million
or 15.3% during that same period. Please refer to our schedule of Selected
Financial Information, which has been restated for all periods for the
pooling of interest with Citizens, at Item 6 of this annual report for
further details.
The deposits of both banks are insured by the Bank Insurance Fund of the
FDIC up to legal limits (generally $100,000 per depositor).
Competition: Union and its two subsidiaries face substantial competition in
their market area from local commercial banks, savings banks, credit
unions, and financial services affiliates of bank holding companies, as
well as from national financial service providers such as mutual funds,
brokerage houses, consumer finance companies and internet banks. Union
anticipates continued strong competition from such financial institutions
in the foreseeable future. Within Union's market area are branches of
several commercial and savings banks that are substantially larger than
Union. Both the subsidiary banks focus on their niche of being community
banks and focus hours and modes of delivery to provide outstanding customer
service. We compete for checking, savings, money market accounts and other
deposits by offering depositors competitive rates, personal service, local
area expertise, convenient locations and access, and an array of financial
services and products.
The competition in originating real estate and other loans comes
principally from commercial banks, mortgage banking companies and credit
unions. Union competes for loan originations primarily through the interest
rates and loan fees it charges, the types of loans it offers, and the
efficiency and quality of services it provides. In addition to residential
mortgage lending and municipal loans, Union also emphasizes commercial real
estate, construction, and both conventional and SBA commercial lending.
Factors that affect Union's ability to compete for loans include general
and local economic conditions, prevailing interest rates including "prime"
rate, and pricing volatility of the secondary mortgage markets. Union
attempts to promote an increased level of personal service and expertise
within the community to position itself as a lender to small to middle
market business and residential customers, which tend to be under-served by
larger institutions.
Management's strategy includes continued evaluation of changing market
needs and design and implementation of products and services to meet those
needs. The directors and management of Union intend to continue to offer
products and services that will allow Union to manage responsibly the
growth of its assets, while building and enhancing both shareholder value
and both Citizens' and Union Bank's image as premiere Vermont community
banks.
Regulation and Supervision: As Vermont-chartered commercial banks, each
subsidiary is subject to regulation, examination, and supervision by the
Vermont Banking Department and the FDIC. Union, as a bank holding company,
is subject to regulation, examination and supervision by the Federal
Reserve Board. The regulations of these authorities govern certain of the
operations of Union. The following discussion summarizes the material
aspects of federal and state banking laws and regulations that apply to
Union, Citizens, and Union Bank:
Acquisitions and Activities. The activities of bank holding companies, such
as Union, and those of companies that they control or in which they hold
more than 5% of the voting stock, are limited to banking, managing or
controlling banks, furnishing services to or performing services for their
subsidiaries or any other activity that the Federal Reserve Board
determines to be so closely related to banking or managing or to
controlling banks as to be a proper incident thereto. In making such
determinations, the Federal Reserve Board is required to consider whether
the performance of such activities by a bank holding company or its
subsidiaries can reasonably be expected to produce benefits to the public
such as greater convenience, increased competition or gains in efficiency
that outweigh possible adverse effects, such as undue concentration of
resources, decreased or unfair competition, conflicts of interest or
unsound banking practices. Generally, bank holding companies, such as
Union, are required to obtain prior approval of the Federal Reserve Board
to engage in any new activity or to acquire more than 5% of any class of
voting stock of any bank or other company.
According to Federal Reserve Board policy, bank holding companies are
expected to act as a source of financial strength to their subsidiary banks
and to commit resources to support them. This support may be called for at
times when a bank holding company may not have the required resources to
provide such support.
The federal Gramm-Leach-Bliley financial modernization act ("Gramm-Leach-
Bliley"), which became effective on March 11, 2000, permits eligible bank
holding companies to become financial holding companies and thereby
affiliate with securities firms and insurance companies and engage in a
broader range of activities than is otherwise permissible for bank holding
companies. A bank holding company is eligible to elect to become a
financial holding company and to engage in activities that are "financial
in nature" if each of its subsidiary banks is well capitalized for
regulatory capital purposes, is well managed and has at least a
satisfactory rating under the Community Reinvestment Act ("CRA"). No
regulatory approval is required for a financial holding company to acquire
a company, other than a bank or savings association, engaged in activities
that are financial in nature or incident to activities that are financial
in nature, as defined by the Federal Reserve Board. Gramm-Leach-Bliley
defines activities which are "financial in nature" to include securities
underwriting, dealing and market making; sponsoring mutual funds and
investment companies; insurance underwriting and agency; merchant banking
activities; and activities that the Federal Reserve Board has determined to
be closely related to banking. Gramm-Leach-Bliley also contains similar
provisions authorizing eligible national banks to engage indirectly through
a financial subsidiary and subject to limitations on investment, in
activities that are financial in nature, other than insurance underwriting,
insurance company portfolio investment, real estate development and real
estate investment, through a financial subsidiary of the bank, if the bank
is well capitalized, well managed and has at least a satisfactory CRA
rating. State-chartered banks in Vermont would have comparable powers under
the state's national bank parity powers statute.
Implementation of Gramm-Leach-Bliley may result in structural changes to
the financial services industry, the full effect of which cannot be
predicted with any certainty but has had no material effect on the company's
financial statements or business practices to date.
Interstate Banking and Branching. With the passage of the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994, bank holding
companies became able to acquire banks based outside their home states,
generally without regard to whether the state's law would permit the
acquisition. The Riegle-Neal Act also authorizes banks to merge across
state lines, to create interstate branches. This provision, which was
effective June 1, 1997, allowed each state an opportunity to "opt out" of
interstate branching. Neither Vermont nor the contiguous states of New
Hampshire, New York and Massachusetts has "opted out" of interstate
branching. The Riegle-Neal Act also permits a bank to open new branches in
a state in which it does not already have banking operations if the state
has enacted a law permitting such de novo branching. Neither Vermont nor
any of the three contiguous states has adopted legislation permitting de
novo interstate branching, but all of such states except New Hampshire
permits out-of-state banks or bank holding companies to acquire existing
branches. Although interstate banking and branching may result in increased
competitive pressures in the markets in which we operate, we also believe
that they present competitive opportunities for locally owned and managed
banks, such as Union and Citizens, that emphasize personal service and
prompt, local decision-making.
Affiliate Restrictions. Bank holding companies and their affiliates are
subject to certain restrictions under the Federal Reserve Act in their
dealings with each other, such as in connection with extensions of credit,
transfers of assets, and purchase of services among affiliated parties.
Further, under the Federal Reserve Act and Federal Reserve Board
regulations, a bank holding company and its subsidiaries are prohibited
from engaging in certain tie-in-arrangements in connection with extensions
of credit or furnishing of property or services to third parties. Union,
Union Bank and Citizens are subject to these restrictions in their
intercompany transactions.
Banks: The various laws and regulations applicable to Citizens and Union
that are administered by the FDIC and the Vermont Banking Commissioner
affect the banks' corporate practices, such as payment of dividends,
incurring of debt and acquisition of financial institutions and other
companies. These laws also affect their business practices, such as payment
of interest on deposits, the charging of interest on loans, or the location
of offices. There are no outstanding regulatory orders resulting from
regulatory examinations of Union, Union Bank or Citizens.
A comprehensive recodification of Vermont's banking laws was passed by the
Vermont Legislature during 2000. The bill modernizes and streamlines the
laws applicable to state bank corporate practices and regulatory
procedures, but had no material effect on the company's financial
statements or business practices.
Dividend Limitations: As a holding company, Union's ability to pay
dividends to its shareholders is largely dependent on the ability of its
subsidiaries to pay dividends to it. Payment of dividends by Vermont-
chartered banks, such as Union Bank and Citizens, is subject to applicable
state and federal laws. A Vermont bank may pay dividends only if the bank's
board has reviewed the bank's financial results and has found that the
proposed dividend will be paid out of amounts actually earned. The Vermont
Banking Commissioner may limit or condition a bank's ability to pay
dividends, if the bank does not have a segregated surplus fund which,
together with earned surplus, equals at least 10% of the amount of the
bank's deposits and other liabilities, except surplus, capital notes and
debentures. In addition, the Federal Reserve Board, the FDIC and the
Vermont Banking Commissioner are authorized under applicable federal and
state laws to prohibit payment of dividends that they determine would be an
unsafe or unsound practice. Payment of dividends that deplete the capital
of a bank or a bank holding company, or render it illiquid, could be found
to be an unsafe or unsound practice.
Capital Requirements: The Federal Reserve Board, the FDIC and other federal
banking regulators have issued substantially similar risk-based and
leverage capital guidelines for United States Banking organizations. Those
regulatory agencies are also authorized to require that a banking
organization maintain capital above the minimum levels, whether because of
its financial condition of actual or anticipated growth. The Federal
Reserve Board's risk-based capital guidelines define a three-tier capital
framework and specify three relevant capital ratios: Tier 1 Capital Ratio,
a Total Capital Ratio and a "Leverage Ratio." Tier 1 Capital consists of
common and qualifying preferred shareholders' equity, less certain
intangibles and other adjustments. The remainder (Tier 2 and Tier 3
Capital) consists of subordinate and other qualifying debt, preferred stock
that does not qualify as Tier 1 Capital, and the allowance of credit losses
up to 1.25% of risk-weighted assets.
The sum of Tier 1, Tier 2 and Tier 3 Capital, less investments in
unconsolidated subsidiaries, represents qualifying "Total Capital," at
least 50% of which must consist of Tier 1 Capital. Risk-based capital
ratios are calculated by dividing Tier 1 Capital and Total Capital by risk-
weighted assets. Assets and off-balance sheet exposures are assigned to one
of four categories or risk weights, based primarily on relative credit
risk. The minimum Tier 1 Capital Ratio is 4% and the minimum Total Capital
Ratio is 8%. The Leverage Ratio is determined by dividing Tier 1 Capital by
adjusted average total assets. Although the minimum Leverage Ratio is 3%,
most banking organizations are required to maintain Leverage Ratios of at
least 1 to 2 percentage points above 3%.
Federal bank regulatory agencies require banking organizations that engage
in significant trading activity to calculate a capital charge for market
risk. Significant trading activity means trading activity of at least 10%
of total assets or $1 billion, whichever is smaller, calculated on a
consolidated basis for bank holding companies. Federal bank regulators may
apply the market risk measure to other bank holding companies, as the
agency deems necessary or appropriate for safe and sound banking practices.
Each agency may exclude organizations that it supervises that otherwise
meet the criteria under certain circumstances. The market risk charge will
be included in the calculation of an organization's risk-based capital
ratio. Neither Union, Union Bank, nor Citizens is currently subject to this
special capital charge.
Federal Reserve Board policy provides that banking organizations generally,
and, in particular, those that are experiencing internal growth or actively
making acquisitions, will be expected to maintain strong capital positions
substantially above the minimum supervisory levels, without significant
reliance on intangible assets, such as goodwill. Furthermore, the capital
guidelines indicate that the Federal Reserve Board will continue to
consider a "Tangible Tier 1 Leverage Ratio" in evaluating proposals for
expansion or new activities. The Tangible Tier 1 Leverage Ratio is
calculated by dividing a banking organization's Tier 1 Capital less all
intangible assets by its total consolidated quarterly average assets less
all intangible assets.
The Federal Reserve Board's capital adequacy guidelines generally provide
that bank holding companies with a ratio of intangible assets to tangible
Tier 1 Capital in excess of 25% will be subject to close scrutiny for
certain purposes, including the Federal Reserve Board's evaluation of
acquisition proposals. Union does not have a material amount of intangibles
in its capital base, nor was any goodwill intangible created as a result of
the merger.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), among other things, identifies five capital categories for
insured depository institutions (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized, and critically
undercapitalized) and requires the respective federal banking agencies to
implement systems for "prompt corrective action" for insured depository
institutions that do not meet minimum capital requirements. FDICIA imposes
progressively more restrictive constraints on operations, management and
capital distributions, depending on the category in which an institution is
classified. Failure to meet the capital guidelines could also subject a
banking institution to capital raising requirements. An "undercapitalized"
bank must develop a capital restoration plan and its parent holding company
must guarantee that bank's compliance with the plan. The liability of the
parent holding company under any such guarantee is limited to the lesser of
5% of the bank's assets at the time it became undercapitalized or the
amount needed to comply with the plan. Furthermore, in the event of the
bankruptcy of the parent holding company, such guarantee would take
priority over the parent's general unsecured creditors. In addition, FDICIA
requires the various federal banking agencies to prescribe certain
noncapital standards for safety and soundness related generally to
operations and management, asset quality and executive compensation, and
permits regulatory action against a financial institution that does not
meet such standards.
The various federal banking agencies have adopted substantially similar
regulations that define the five capital categories identified by FDICIA,
using the Total Capital, Tier 1 Ratio and the Leverage Ratio as the
relevant capital measures. Such regulations establish various degrees of
corrective action to be taken when an institution is considered
undercapitalized. Under the regulations, a "well capitalized" institution
must have a Tier 1 capital ratio of at least 6%, a total capital ratio of
at least 10% and a leverage ratio of at least 5% and not be subject to a
capital directive order. An "adequately capitalized" institution must have
a Tier 1 capital ratio of at least 4%, a total capital ratio of at least 8%
and a leverage ratio of at least 4%, or 3% in some cases.
Community Reinvestment Act: Union Bank and Citizens are subject to the
federal Community Reinvestment Act ("CRA"), which requires banks to
demonstrate their commitment to serving the credit needs of low and
moderate income residents of their communities. Both banks participate in a
variety of direct and indirect lending programs and other investments for
the benefit of the low and moderate income residents in our communities. At
their last CRA compliance examinations by the FDIC, Union Bank received a
rating of "outstanding" and Citizens received a rating of "satisfactory."
Deposit Insurance Premium Assessments: Under applicable federal laws and
regulations, deposit insurance premium assessments to the Bank Insurance
Fund ("BIF") and the Savings Association Insurance Fund ("SAIF") are based
on a supervisory risk rating system, with the most favorably rated
institutions paying the lowest premiums. The deposits of Union Bank and
Citizens are insured under the BIF. As "well capitalized" institutions, both
banks are presently in the most favorable deposit insurance assessment
category, and pay the minimum deposit premium assessment.
FDICIA Cross-Guarantees: Under the cross-guarantee provisions of FDICIA, in
some circumstances in the event of a loss suffered or anticipated by the
FDIC-either as a result of a bank's insolvency or FDIC assistance provided
to a bank in danger of default-the FDIC may assess the other banks in the
same holding company family to recoup its losses to the deposit insurance
fund.
Part I-Item 2 Properties
As of December 31, 2000, Union's subsidiaries operated 12 community-banking
locations all of which are in Lamoille or Caledonia counties of Vermont.
Eight of these branch locations are Union Bank's and four are Citizens.
Together they also operate 23 automated banking machines in northern
Vermont. The Company owns eight of its branch locations and leases the
other branches and certain ATM premises from third parties under terms and
conditions considered by management to be favorable to the Company.
Additional information relating to the Company's properties is set forth in
Note 7 to the consolidated financial statements and incorporated herein by
reference.
Part I-Item 3 Legal Proceedings
There are no known pending legal proceedings to which Union or its
subsidiaries are a party, or to which any of the properties are subject,
other than ordinary litigation arising in the normal course of business
activities. Although the amount of any ultimate liability with respect to
such proceedings cannot be determined, in the opinion of management, based
upon the opinion of counsel, any such liability will not have a material
effect on the consolidated financial position of Union and its
subsidiaries.
Part I-Item 4 Submission of Matters to a Vote of Security Holders
There was no submission of matters to a vote of security holders during the
fourth quarter of 2000.
Part I-Item 5 Market for Registrant's Common Equity and Related Stockholder
Matters
Please refer to page 49 of the Company's 2000 Annual Report to
Shareholders, which page is incorporated herein by reference.
Part II-Item 6 Selected Historical Financial Information
At or For The Years Ended December 31 (5)
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2000 1999 1998 1997 1996
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(Dollars in thousands except per share data)
Balance Sheet Data:
Total Assets $303,394 $295,476 $290,129 $273,280 $255,747
Investment Securities 56,642 60,441 58,585 45,900 44,341
Loans, net of unearned income 224,796 209,353 202,468 201,918 189,051
Allowance for loan losses (2,863) (2,870) (2,845) (2,811) (2,844)
Total nonperforming loans 4,398 4,123 2,407 4,161 4,028
Total nonperforming assets 4,514 4,150 2,932 4,829 4,462
Other real estate owned 116 27 525 668 434
Deposits 258,737 257,593 248,919 239,229 224,419
Borrowed funds 6,382 2,872 6,084 1,636 1,693
Shareholders' equity (1) 35,157 32,220 31,762 29,023 26,393
Income Statement Data:
Net interest and dividend income $ 14,249 $ 13,747 $ 13,374 $ 12,884 $ 12,291
Provision for loan losses 250 359 400 425 580
Noninterest income 2,569 2,568 2,911 2,412 2,555
Noninterest expense 9,944 10,065 9,278 8,567 8,430
Net income 4,800 4,075 4,551 4,355 4,043
Per Common Shara Data: (2)
Net income (3) $ 1.58 $ 1.35 $ 1.51 $ 1.44 $ 1.31
Cash dividends paid 0.98 0.90 0.82 0.75 0.69
Book value (1) 11.60 10.64 10.50 9.60 8.72
Selected Ratios:
Return on average assets 1.61% 1.39% 1.65% 1.66% 1.60%
Return on average equity 14.54% 12.70% 14.95% 15.73% 15.58%
Dividend payout (4) 62.03% 66.67% 54.30% 52.08% 52.67%
Interest rate spread 4.40% 4.41% 4.61% 4.61% 4.62%
Net interest margin 5.19% 5.13% 5.34% 5.35% 5.35%
Operating expenses to average assets 3.32% 3.42% 3.36% 3.26% 3.34%
Average interest earning assets to
average interest bearing liabilities 122.26% 121.58% 120.42% 121.11% 119.66%
Average Shareholders' equity to
average assets 11.01% 10.92% 11.03% 10.52% 10.29%
Tier 1 leverage capital ratio 11.74% 11.35% 10.87% 10.68% 10.45%
Tier 1 risk-based capital ratio 16.27% 17.27% 16.24% 15.95% 15.43%
Total risk-based capital ratio 17.62% 18.55% 17.57% 17.21% 16.68%
Asset Quality Ratios:
Non-performing loans to total loans 1.96% 1.97% 1.19% 2.06% 2.13%
Non-performing assets to total assets 1.49% 1.40% 1.01% 1.77% 1.74%
Allowance for loan losses to
non-performing loans 65.10% 69.61% 118.20% 67.56% 70.61%
Allowance for loan losses to
percentage of loans 1.27% 1.37% 1.41% 1.39% 1.50%
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Shareholders' equity includes unrealized gains or losses, net of
applicable income taxes, on investments securities classified as
"available for sale."
Adjusted to reflect a two-for-one stock split of Union's common
stock, completed June 6, 1997 and effected in the form of a 100%
stock dividend.
Computed using the weighted average number of shares outstanding for
the period.
Cash dividend declared and paid per share for the holding company
divided by consolidated net income per share.
Restated for all periods presented to reflect the merger with
Citizens accomplished through a pooling of interest.
Part II-Items 7 and 7A Management's Discussion and Analysis of Financial
Condition and Results of Operations; Quantitative and Qualitative
Disclosures About Market Risk
Please refer to pages 35 to 48 of the Company's 2000 Annual Report to
Shareholders, which pages are incorporated herein by reference.
Part II-Item 8 Financial Statements and Supplementary Data
The consolidated balance sheets of Union Bankshares, Inc. as of December
31, 2000 and 1999, and the related consolidated statements of operations,
changes in stockholders' equity and cash flows for each of the three years
in the period ended December 31, 2000, together with related notes and the
opinion of A.M. Peisch and Company, independent public accountants, all as
contained on pages 6 to 34 of the Company's 2000 Annual Report to
Shareholders, are incorporated herein by reference.
Part II-Item 9 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
a) On February 21, 2001, the audit committee of the Board of Directors
recommended to and the Board of Directors approved dismissing A.M.
Peisch & Company, our current independent accountants, after the Form
10-K report for December 31, 2000 is filed.
b) The accountant had not issued a report in the last two fiscal years
containing either a disclaimer or an adverse or qualified opinion,
nor were the reports subsequently modified as to uncertainty, audit
scope or accounting principles.
c) The Registrant had no disagreement with our former accountant on any
matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure during the two most recent
fiscal years.
d) The Registrant requested A.M. Peisch & Company to furnish it with
a letter addressed to the SEC stating whether it agrees with the
above statements. A copy of A.M. Peisch & Company's letter to the
SEC, dated February 26, 2001, was filed as exhibit 16 to the Form 8-K
on February 27, 2001.
e) At its Board meeting of February 21, 2001, the Board of Directors of
Union Bankshares, Inc. engaged the accounting firm of Urbach Kahn &
Werlin LLP as independent accountants for the Registrant for 2001.
Part III-Item 10 Directors and Executive Officers of Registrant
Listing of the names, ages, principal occupations and business experience of
the directors under the caption "PROPOSAL I: TO ELECT DIRECTORS".
Listing of the names, ages, titles and business experience of the executive
officers under the caption "EXECUTIVE OFFICERS".
Information regarding compliance with Section 16(a) of the Securities Exchange
Act of 1934 under the caption "SHARE OWNERSHIP INFORMATION-Section 16(a)
Beneficial Ownership Reporting Compliance".
Part III-Item 11 Executive Compensation
Information regarding compensation of directors under the caption "PROPOSAL I:
TO ELECT DIRECTORS-Directors' Compensation".
Information regarding executive compensation and benefit plans under the
caption "EXECUTIVE OFFICERS-Executive Compensation and Benefit Plans".
Information regarding management interlocks and certain transactions under
the caption "PROPOSAL I: TO ELECT DIRECTORS-Compensation Committee Interlocks
and Insider Participation".
Information set forth under the caption "REPORT OF THE COMPENSATION COMMITTEE".
Part III-Item 12 Security Ownership of Certain Beneficial Owners and
Management
Information regarding the share ownership of management and principal
shareholders under the caption "SHARE OWNERSHIP INFORMATION-Share
Ownership of Management and Principal Holders".
Part III-Item 13 Certain Relationships and Related Party Transactions
Information regarding transactions with management under the caption "PROPOSAL
I: TO ELECT DIRECTORS-Transactions with Management".
Part IV-Item 14 Exhibits, Financial Statement Schedules and Reports on
Form 8-K
A. Documents Filed as Part of this Report:
(1) The following consolidated financial statements, as included in
the 2000 Annual Report to Shareholders, are incorporated herein
by reference.
1) Consolidated Balance Sheets at December 31, 2000 and 1999
2) Consolidated Income Statements for the years ended
December 31, 2000, 1999 and 1998
3) Consolidated Statements of Changes in Stockholders'
Equity for the years ended December 31, 2000, 1999 and
1998
4) Consolidated Statements of Cash Flows for the years ended
December 31, 2000, 1999 and 1998
(2) The following exhibits are either filed or attached as part of
this report, or are incorporated herein by reference.
Item No:
3.1 Amended and Restated Articles of Incorporation of Union Bankshares,
Inc. (as of May 7, 1997), previously filed with the Commission as
Exhibit 3.1 to the Company's Registration Statement on Form S-4
(#333-82709) and incorporated herein by reference.
3.2 Amendment filed May 19, 1998 to Amended and Restated Articles of
Association of Union Bankshares, Inc., adding new sections 8 and 9,
previously filed with the Commission as Exhibit 3.1 to the
Company's Registration Statement on Form S-4 (#333-82709) and
incorporated herein by reference.
3.3 Amendment filed November 24, 1999 to Amended and Restated Articles
of Association of Union Bankshares, Inc. increasing the authorized
common shares to 5,000,000, previously filed with the Commission on
December 10, 1999 as Exhibit 3.3 to the Company's Current Report on
Form 8-K 12g3, and incorporated herein by reference.
3.4 Bylaws of Union Bankshares, Inc., as amended, , previously filed
with the Commission as Exhibit 3.1 to the Company's Registration
Statement on Form S-4 (#333-82709) and incorporated herein by
reference.
10.1 Stock Registration Agreement dated as of February 16, 1999, among
Union Bankshares, Inc., Genevieve L. Hovey, individually and as
Trustee of the Genevieve L. Hovey Trust (U.A. dated 8/22/89), and
Franklin G. Hovey, II, individually, previously filed with the
Commission as Exhibit 3.1 to the Company's Registration Statement
on Form S-4 (#333-82709) and incorporated herein by reference.
10.2 1998 Incentive Stock Option Plan of Union Bankshares, Inc. and
Subsidiary, previously filed with the Commission as Exhibit 3.1 to
the Company's Registration Statement on Form S-4 (#333-82709) and
incorporated herein by reference.*
10.3 Form of Union Bankshares, Inc. Deferred Compensation Plan and
Agreement, previously filed with the Commission as Exhibit 3.1 to
the Company's Registration Statement on Form S-4 (#333-82709) and
incorporated herein by reference.*
10.4 Employment Agreement, dated December 10, 1998, between Citizens
Savings Bank & Trust Company and Jerry S. Rowe., previously filed
with the Commission as Exhibit 10.6 to the Company's 1999 Form 10-K
and incorporated herein by reference.*
11 Statement re: Computation of per share earnings: See footnote 1 to
the consolidated financial statements for details on earnings per
share computations for 2000, 1999 and 1998
13 The following specifically designated portions of Union's 2000
Annual Report to Shareholders have been incorporated by reference
in this Report on Form 10-K, is filed herewith: pages 5 to 49.
16 Letter from A.M. Peisch & Company, our former independent accountants,
dated February 26, 2001, previously filed with the Commission as
Exhibit 16 to Form 8-K filed on February 27, 2001 and incorporated
herein by reference.
21 Subsidiaries of Union Bankshares, Inc.
Union Bank, Morrisville, Vermont
Citizens Savings Bank & Trust Company, St. Johnsbury, Vermont
23 Consent of Independent Public Accountants.
(3) Reports on Form 8-K
Form 8-K filed on October 6, 2000 to report an increase in
third quarter earnings and the declaration of a dividend
announcement.
[FN]
- --------------------
* denotes management contract or compensatory plan.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
Union Bankshares, Inc.
By: /s/ Kenneth D. Gibbons By: /s/ Marsha A. Mongeon
---------------------- ---------------------
Kenneth D. Gibbons Marsha A. Mongeon
President and Chief Executive Officer Treasurer and Chief Financial
Officer
Date: March 21, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Name Title Date
- ---------------------------------------------------------------------------------------------
/s/ W. Arlen Smith Director, Chairman of the Board March 21, 2001
- ------------------------
W. Arlen Smith
/s/ Kenneth D. Gibbons Director, President and Chief Executive Officer March 21, 2001
- ------------------------ (Principal Executive Officer)
Kenneth D. Gibbons
/s/ Marsha A. Mongeon Treasurer and Chief Financial Officer March 21, 2001
- ------------------------ (Principal Financial Officer)
Marsha A. Mongeon
/s/ Cynthia D. Borck Director and Vice President March 21, 2001
- ------------------------
Cynthia D. Borck
/s/ William T. Costa Jr. Director March 21, 2001
- ------------------------
William T. Costa Jr.
/s/ Peter M. Haslam Director and Secretary March 21, 2001
- ------------------------
Peter M. Haslam
/s/ Franklin G. Hovey II Director March 21, 2001
- ------------------------
Franklin G. Hovey II
/s/ William F. Kinney Director March 21, 2001
- ------------------------
William F. Kinney
/s/ Richard C. Marron Director March 21, 2001
- ------------------------
Richard C. Marron
/s/ Robert P. Rollins Director March 21, 2001
- ------------------------
Robert P. Rollins
/s/ Jerry S. Rowe Director and Vice President March 21, 2001
- ------------------------
Jerry S. Rowe
/s/ Richard C. Sargent Director March 21, 2001
- ------------------------
Richard C. Sargent