# Union Bankshares Inc: Form 10-Q for the period ended Sep 30, 2025

- Company: [Union Bankshares Inc](/companies/unb.md) (CIK 706863)
- Form: 10-Q
- Filed: 2025-11-10
- Accepted by EDGAR: Nov 10, 2025, 19:38 ET
- Period: 2025-09-30
- Accession: 0000706863-25-000103
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/706863/000070686325000103/unb-20250930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/706863/000070686325000103/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Income tax | 3 months, 2025-07-01 to 2025-09-30 | $414.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2025-01-01 to 2025-09-30 | $666.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-07-01 to 2025-09-30 | $3.4m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2025-01-01 to 2025-09-30 | $8.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-07-01 to 2025-09-30 | $0.75 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2025-01-01 to 2025-09-30 | $1.82 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-07-01 to 2025-09-30 | $0.75 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2025-01-01 to 2025-09-30 | $1.83 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-07-01 to 2025-09-30 | 4,599,367 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2025-01-01 to 2025-09-30 | 4,582,227 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2025-01-01 to 2025-09-30 | $14.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2025-01-01 to 2025-09-30 | $967.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2025-01-01 to 2025-09-30 | $4.9m | us-gaap:PaymentsOfDividendsCommonStock |
| Total assets | at 2025-09-30 | $1.57bn | us-gaap:Assets |
| Total liabilities | at 2025-09-30 | $1.50bn | us-gaap:Liabilities |
| Shareholders' equity | at 2025-09-30 | $77.7m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 84,993 characters.

### 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 September 30, 2025 and December 31, 2024, and its results of operations for the three and nine months ended September 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 September 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, legislative or regulatory initiatives and the impact of the federal government shutdown; 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 the company’s reasons for utilizing the non-GAAP financial measure. The SEC has exempted from the definition of non-GAAP

Union Bankshares, Inc. Page 28 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 nine months ended September 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. In September 2025, the Federal Reserve reduced short-term interest rates by 25 bps; however, there was minimal impact on third quarter financial results from this rate reduction. Noninterest income experienced growth in wealth management income and net gains on sales of loans held for sale, partially offset by decreases in service fees. The increase in noninterest income between both the three and nine month comparison periods of 2025 and 2024 resulted primarily from the balance sheet repositioning in August, 2024 involving the sale of lower-yielding AFS debt securities with a book value of $38.5 million, resulting in a pre-tax realized loss on the sale of $1.3 million that did not recur in 2025. Noninterest expenses increased, particularly in salaries, wages, and employee benefits, due to annual salary adjustments, higher medical and dental plan premiums, and an increase in the number of full time employees. Overall, the Company's financial performance showed robust growth and improved profitability. For further discussion see *Results of Operations* on page 30.

Consolidated net income increased $2.1 million, or 159.5%, to $3.4 million for the third quarter of 2025 compared to $1.3 million for the third quarter of 2024. The increase in net income was due to the combined effects of the non-reccurrence of the $1.3 million loss on sales of AFS debt securities discussed above, increases in net interest income of $1.7 million, and noninterest income of $452 thousand and a decrease of $112 thousand in credit loss expense, partially offset by increases of $934 thousand in noninterest expenses and $537 thousand in income tax expense.

Consolidated net income increased $2.6 million, or 44.7%, to $8.3 million for the nine months ended September 30, 2025 compared to $5.8 million for the nine months ended September 30, 2024. This increase was due to the non-reccurrence of the $1.3 million loss on sales of AFS debt securities discussed above, increases in net interest income of $4.0 million, and noninterest income of $319 thousand, partially offset by increases in noninterest expenses of $2.2 million, credit loss expense of $186 thousand and income tax expense of $563 thousand.

At September 30, 2025, the Company had total consolidated assets of $1.57 billion, including gross loans and loans held for sale (total loans) of $1.18 billion, deposits of $1.19 billion, borrowed funds of $270.8 million, subordinated notes of $16.3 million and stockholders' equity of $77.7 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

Union Bankshares, Inc. Page 29 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 nine months ended September 30, 2025, respectively, the Company issued 30,397 and 38,834 shares for aggregate gross sale proceeds of $802 thousand and $1.1 million, at an average gross sale price of $26.39 and $27.86 per share, which yielded net proceeds to the Company of $749 thousand and $801 thousand after issuance costs, including sales commissions equal to 3% of gross sale proceeds. As of September 30, 2025, approximately $38.9 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, the impact of federal government shutdowns, 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 risks the Company faces, 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 nine months ended September 30, 2025 and 2024:

|  | Three Months Ended or At September 30, 2025 | 2024 | Nine Months Ended or At September 30, 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: |
| Return on average assets (1) | 0.89% | 0.36% | 0.72% | 0.53% |
| Return on average equity (1) | 19.11% | 7.90% | 15.86% | 12.00% |
| Net interest margin (1)(2) | 3.03% | 2.71% | 2.93% | 2.73% |
| Efficiency ratio (3) | 70.15% | 83.42% | 74.43% | 80.04% |
| Net interest spread (4) | 2.58% | 2.22% | 2.47% | 2.27% |
| Loan to deposit ratio | 99.09% | 95.96% | 99.09% | 95.96% |
| Net loan charge-offs to average loans not held for sale | 0.01% | —% | —% | —% |
| ACL on loans to loans not held for sale | 0.72% | 0.66% | 0.72% | 0.66% |
| Nonperforming assets to total assets (5) | 0.86% | 0.13% | 0.86% | 0.13% |
| Equity to assets | 4.94% | 4.76% | 4.94% | 4.76% |
| Total capital to risk weighted assets | 12.99% | 12.77% | 12.99% | 12.77% |
| Book value per share | $16.95 | $15.98 | $16.95 | $15.98 |
| Basic earnings per share | $0.75 | $0.29 | $1.83 | $1.27 |
| Diluted earnings per share | $0.75 | $0.29 | $1.82 | $1.27 |
| Dividends paid per share | $0.36 | $0.36 | $1.08 | $1.08 |
| Dividend payout ratio (6) | 48.00% | 124.14% | 59.02% | 85.04% |

#### (1) Annualized.

*(2) The ratio of tax equivalent net interest income to average earning assets. See pages 32 and 33 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 32 and 33 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

Union Bankshares, Inc. Page 30 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 a fully tax equivalent basis, on average earning assets for the three months ended September 30, 2025 was $19.4 million compared to $17.4 million for the three months ended September 30, 2024, an increase of $2.0 million, or 11.5%. The average earning asset base increased $68.7 million between periods and the average yield on average earning assets increased 30 bps to 5.15% for the three months ended September 30, 2025 compared to 4.85% for the three months ended September 30, 2024.

Interest income, on a fully tax equivalent basis, on investment securities increased $152 thousand between the three month comparison periods due to an increase in the average yield of 27 bps, despite a decrease in the average balance of the portfolio of $7.0 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 a fully tax equivalent basis, on loans increased $1.8 million between the three month comparison periods due to an increase in the average volume of loans outstanding of $78.3 million and an increase of 22 bps in the average yield and due to recoveries of $421 thousand of interest from the payoff of loans that had previously been in nonaccrual, which accounted for 14 bps of the increase in the average loan yield between the three month comparison periods.

Average interest bearing liabilities increased $70.7 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 decreased 6 bps to 2.57% for the third quarter of 2025 compared to 2.63% for the third quarter of 2024. Interest expense increased $290 thousand, to $8.1 million for the three months ended September 30, 2025 compared to $7.8 million for the three months ended September 30, 2024. Interest expense on borrowed funds increased $180 thousand, or 6.8%, between periods due to an increase of $28.3 million in the average volume, despite a decrease of 17 bps in the average rate paid.

The net interest spread increased 36 bps to 2.58% for the third quarter of 2025, from 2.22% for the same period last year, reflecting the net effect of the 30 bps increase in the average yield earned on interest earning assets and a decrease of 6 bps in the average rate paid on interest bearing liabilities between periods. The net interest margin increased 32 bps during the third quarter of 2025 compared to the same period last year as a result of the changes discussed above.

Net interest income was $32.6 million, on a fully tax equivalent basis, for the nine months ended September 30, 2025 compared to $28.6 million for the nine months ended September 30, 2024, an increase of $4.1 million, or 14.2%. The average volume of earning assets increased $91.2 million and the average yield on earning assets increased 33 bps to 5.10% compared to 4.77% for the comparison period. Average loans increased $109.1 million, or 10.3%, to $1.2 billion for the nine months ended September 30, 2025. The increase in average loan volume and the increase of 25 bps in the average loan yield resulted in a $6.7 million increase in interest income on loans between periods. Interest income on loans increased $563 thousand and $445 thousand during the nine months ended September 30, 2025 and 2024, respectively, due to recoveries of interest from the payoff of loans that had previously been in nonaccrual. This resulted in a 6 bps increase in the average loan yield for the nine months ended September 30, 2025 and 2024.

Interest income on federal funds sold and overnight deposits decreased $277 thousand between the nine month comparison periods due to a decrease of 90 bps in the average yield and a decrease in the average balance maintained in Union's master account at the FRB. The average balance of the investment portfolio decreased $11.7 million while the average yield on the portfolio increased by 28 bps, resulting in an increase in interest income on investment securities of $415 thousand between the nine month comparison periods. As noted above, the increases in the average yield and interest income area attributable in part to the balance sheet repositioning completed in the third quarter of 2024.

The average balance of interest bearing liabilities increased $93.6 million between the nine month comparison periods, primarily due to an increase in borrowed funds and interest bearing deposits. The average cost of funds increased 13 bps to 2.63% for the nine months ended September 30, 2025 compared to 2.50% for the nine months ended September 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 $2.9 million, to $24.4 million for the nine months ended September 30, 2025, compared to $21.4 million for the nine months ended September 30, 2024.

The net interest spread increased 20 bps to 2.47% for the nine months ended September 30, 2025, from 2.27% for the same period last year, reflecting the net effect of the 33 bps increase in the average yield earned on interest earning assets, partially offset by the 13 bps increase in the average rate paid on interest bearing liabilities between periods. The net interest margin increased 20 bps for the nine months ended September 30, 2025 compared to the same period last year as a result of the changes discussed above.

Union Bankshares, Inc. Page 31

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.

*(Dollars in thousands)*

| Average Assets: | Three Months Ended September 30, 2025 Average Balance (1) | Interest Earned/ Paid | Average Yield/ Rate | 2024 Average Balance (1) | Interest Earned/ Paid | Average Yield/ Rate |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Federal funds sold and overnight deposits | $26,893 | $192 | 2.78% | $25,451 | $162 | 2.49% |
| Interest bearing deposits in banks | 7,320 | 77 | 4.18% | 13,564 | 127 | 3.71% |
| Investment securities (2), (3) | 281,795 | 1,774 | 2.52% | 288,839 | 1,622 | 2.25% |
| Loans, net (2), (4) | 1,169,626 | 17,199 | 5.83% | 1,091,307 | 15,378 | 5.61% |
| Nonmarketable equity securities | 12,275 | 203 | 6.54% | 10,082 | 147 | 5.77% |
| Total interest earning assets (2) | 1,497,909 | 19,445 | 5.15% | 1,429,243 | 17,436 | 4.85% |
| Cash and due from banks | 4,582 |  |  | 4,887 |  |  |
| Premises and equipment | 20,159 |  |  | 20,567 |  |  |
| Other assets | 24,400 |  |  | 21,534 |  |  |
| Total assets | $1,547,050 |  |  | $1,476,231 |  |  |
| Average Liabilities and Stockholders' Equity: |  |  |  |  |  |  |
| Interest bearing checking accounts | $293,598 | 943 | 1.27% | $277,422 | 748 | 1.07% |
| Savings/money market accounts | 337,912 | 1,008 | 1.18% | 328,887 | 1,014 | 1.23% |
| Time deposits | 312,503 | 3,119 | 3.96% | 295,331 | 3,199 | 4.31% |
| Borrowed funds and other liabilities | 275,712 | 2,838 | 4.03% | 247,446 | 2,658 | 4.20% |
| Subordinated notes | 16,293 | 143 | 3.47% | 16,259 | 142 | 3.49% |
| Total interest bearing liabilities | 1,236,018 | 8,051 | 2.57% | 1,165,345 | 7,761 | 2.63% |
| Noninterest bearing deposits | 219,788 |  |  | 226,094 |  |  |
| Other liabilities | 19,329 |  |  | 17,795 |  |  |
| Total liabilities | 1,475,135 |  |  | 1,409,234 |  |  |
| Stockholders' equity | 71,915 |  |  | 66,997 |  |  |
| Total liabilities and stockholders’ equity | $1,547,050 |  |  | $1,476,231 |  |  |
| Net interest income |  | $11,394 |  |  | $9,675 |  |
| Net interest spread (2) |  |  | 2.58% |  |  | 2.22% |
| Net interest margin (2) |  |  | 3.03% |  |  | 2.71% |

Union Bankshares, Inc. Page 32

*(Dollars in thousands)*

| Average Assets: | Nine Months Ended September 30, 2025 Average Balance (1) | Interest Earned/ Paid | Average Yield/ Rate | 2024 Average Balance (1) | Interest Earned/ Paid | Average Yield/ Rate |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Federal funds sold and overnight deposits | $22,623 | $522 | 3.04% | $26,664 | $799 | 3.94% |
| Interest bearing deposits in banks | 7,767 | 248 | 4.27% | 14,008 | 372 | 3.55% |
| Investment securities (2), (3) | 286,087 | 5,346 | 2.49% | 297,769 | 4,931 | 2.21% |
| Loans, net (2), (4) | 1,164,102 | 50,264 | 5.77% | 1,054,989 | 43,573 | 5.52% |
| Nonmarketable equity securities | 11,466 | 605 | 7.05% | 7,424 | 331 | 5.94% |
| Total interest earning assets (2) | 1,492,045 | 56,985 | 5.10% | 1,400,854 | 50,006 | 4.77% |
| Cash and due from banks | 4,693 |  |  | 4,585 |  |  |
| Premises and equipment | 20,198 |  |  | 20,748 |  |  |
| Other assets | 24,676 |  |  | 18,431 |  |  |
| Total assets | $1,541,612 |  |  | $1,444,618 |  |  |
| Average Liabilities and Stockholders' Equity: |  |  |  |  |  |  |
| Interest bearing checking accounts | $300,729 | 3,087 | 1.37% | $292,177 | 2,524 | 1.15% |
| Savings/money market accounts | 373,040 | 4,511 | 1.62% | 364,894 | 3,866 | 1.42% |
| Time deposits | 287,004 | 8,489 | 3.95% | 281,248 | 8,692 | 4.13% |
| Borrowed funds and other liabilities | 256,017 | 7,836 | 4.04% | 184,875 | 5,933 | 4.22% |
| Subordinated notes | 16,285 | 428 | 3.51% | 16,251 | 427 | 3.52% |
| Total interest bearing liabilities | 1,233,075 | 24,351 | 2.63% | 1,139,445 | 21,442 | 2.50% |
| Noninterest bearing deposits | 220,085 |  |  | 224,651 |  |  |
| Other liabilities | 18,383 |  |  | 16,545 |  |  |
| Total liabilities | 1,471,543 |  |  | 1,380,641 |  |  |
| Stockholders' equity | 70,069 |  |  | 63,977 |  |  |
| Total liabilities and stockholders’ equity | $1,541,612 |  |  | $1,444,618 |  |  |
| Net interest income |  | $32,634 |  |  | $28,564 |  |
| Net interest spread (2) |  |  | 2.47% |  |  | 2.27% |
| Net interest margin (2) |  |  | 2.93% |  |  | 2.73% |

#### (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 33

Tax exempt interest income amounted to $1.6 million for the three months ended September 30, 2025 and 2024, and $5.0 million and $4.2 million for the nine months ended September 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 three and nine month comparison periods of 2025 and 2024:

*(Dollars in thousands)*

|  | For The Three Months Ended September 30, 2025 | 2024 | For the Nine Months Ended September 30, 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: |
| Net interest income, as presented | $11,156 | $9,430 | $31,872 | $27,922 |
| Effect of tax-exempt interest |  |  |  |  |
| Investment securities | 35 | 49 | 104 | 163 |
| Loans | 203 | 196 | 658 | 479 |
| Net interest income, tax equivalent | $11,394 | $9,675 | $32,634 | $28,564 |

*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.

*(Dollars in thousands)*

| Interest earning assets: | Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024 Increase/(Decrease) Due to Change In Volume | Rate | Net | Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024 Increase/(Decrease) Due to Change In Volume | Rate | Net |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Federal funds sold and overnight deposits | $9 | $21 | $30 | $(110) | $(167) | $(277) |
| Interest bearing deposits in banks | (64) | 14 | (50) | (189) | 65 | (124) |
| Investment securities | (43) | 195 | 152 | (204) | 619 | 415 |
| Loans, net | 1,156 | 665 | 1,821 | 4,659 | 2,032 | 6,691 |
| Nonmarketable equity securities | 34 | 22 | 56 | 204 | 70 | 274 |
| Total interest earning assets | 1,092 | 917 | 2,009 | 4,360 | 2,619 | 6,979 |
| Interest bearing liabilities: |  |  |  |  |  |  |
| Interest bearing checking accounts | 47 | 148 | 195 | 73 | 490 | 563 |
| Savings/money market accounts | 30 | (36) | (6) | 87 | 558 | 645 |
| Time deposits | 185 | (265) | (80) | 172 | (375) | (203) |
| Borrowed funds | 291 | (111) | 180 | 2,159 | (256) | 1,903 |
| Subordinated notes | 1 | — | 1 | 1 | — | 1 |
| Total interest bearing liabilities | 554 | (264) | 290 | 2,492 | 417 | 2,909 |
| Net change in net interest income | $538 | $1,181 | $1,719 | $1,868 | $2,202 | $4,070 |

**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 34 further details, see FINANCIAL CONDITION - *Allowance for Credit Losses on Loans on page 40* and *Commitments, Contingent Liabilities, and Off-Balance-Sheet Arrangements on page 43.*

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

*(Dollars in thousands)*

|  | For The Three Months Ended September 30, 2025 | 2024 | For the Nine Months Ended September 30, 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: |
| Credit loss expense for loans | $127 | $468 | $748 | $784 |
| Credit loss expense (benefit) for off-balance sheet credit exposures | 186 | (43) | 21 | (201) |
| Credit loss expense, net | $313 | $425 | $769 | $583 |

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

*(Dollars in thousands)*

|  | For the Three Months Ended September 30, 2025 | 2024 | $ Variance | % Variance | For the Nine Months Ended September 30, 2025 | 2024 | $ Variance | % Variance |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Wealth management income | $297 | $265 | $32 | 12.1 | $868 | $793 | $75 | 9.5 |
| Service fees | 1,793 | 1,855 | (62) | (3.3) | 5,165 | 5,252 | (87) | (1.7) |
| Net gains on sales of loans held for sale | 700 | 540 | 160 | 29.6 | 1,569 | 1,168 | 401 | 34.3 |
| Income from Company-owned life insurance | 328 | 126 | 202 | 160.3 | 569 | 596 | (27) | (4.5) |
| Income from MSRs, net | 83 | — | 83 | 100.0 | 83 | — | 83 | 100.0 |
| Other income | 55 | 29 | 26 | 89.7 | 117 | 210 | (93) | (44.3) |
| Net gains on other investments | 94 | 83 | 11 | 13.3 | 178 | 211 | (33) | (15.6) |
| Net losses on sales of investment securities AFS | — | (1,293) | 1,293 | 100.0 | — | (1,293) | 1,293 | 100.0 |
| Total noninterest income | $3,350 | $1,605 | $1,745 | 108.7 | $8,549 | $6,937 | $1,612 | 23.2 |

The significant changes in noninterest income for the three and nine months ended September 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 September 30, 2025 and 2024, as did the value of assets within those accounts.
- Service fees. Service fees decreased $62 thousand and $87 thousand for the three and nine months ended September 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.
- Net gains on sales of loans held for sale. Residential mortgage loans totaling $46.0 million and $102.8 million were sold during the three and nine months ended September 30, 2025, respectively, compared to sales of $35.2 million and $76.1 million during the same periods in 2024, respectively. The increases of $160 thousand and $401 thousand in net gains on sales of loans for the three and nine month comparison periods, respectively, reflect the higher sales volume and higher premiums obtained on sales in 2025.
- Income from Company-owned life insurance. Death benefit proceeds of $197 thousand were received during the three and nine months ended September 30, 2025 compared to death benefit proceeds of $235 thousand that were received in the second quarter of 2024.
- Income from MSRs, net. Income from MSRs is derived from servicing rights acquired through the sale of loans on which servicing is retained. Capitalized servicing rights are initially recorded at fair value and amortized in proportion to, and over the period of, the estimated future servicing period of the underlying loans. The increase in the volume of residential loan sales discussed above resulted in new capitalized MSRs that exceeded the amortization of MSRs by $83 thousand for the three and nine months ended September 30, 2025. The amortization of MSRs exceeded the new capitalized MSRs for

Union Bankshares, Inc. Page 35 the 2024 comparison periods and the amortization expense is included in Other expenses in the consolidated statements of income.

- Other income. The Company received $117 thousand in prepayment penalties from the early payoff of loans during the first quarter of 2024 compared to $24 thousand of prepayment penalties received during the three and nine months ended September 30, 2025.
- Net gains on other investments. Participants in the 2020 Amended and Restated Nonqualified Excess Plan elect to defer receipt of current compensation from the Company or its subsidiary and select designated reference investments consisting of investment funds. The performance of those funds, over which the Company has no control, resulted in net gains of $94 thousand and $178 thousand for the three and nine months ended September 30, 2025, respectively, and net gains of $83 thousand and $211 thousand for the three and nine months ended September 30, 2024, respectively.
- Net losses on sales of investment securities AFS. During the third quarter of 2024, the Company completed a balance sheet repositioning related to its investment securities portfolio in which the sale of lower-yielding AFS debt securities resulted in a pre-tax realized loss on the sale of $1.3 million.

**Noninterest Expenses.** The following table sets forth the components of noninterest expenses and changes between the three and nine month comparison periods of 2025 and 2024:

*(Dollars in thousands)*

|  | For the Three Months Ended September 30, 2025 | 2024 | $ Variance | % Variance | For the Nine Months Ended September 30, 2025 | 2024 | $ Variance | % Variance |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Salaries and wages | $4,436 | $4,015 | $421 | 10.5 | $12,432 | $11,342 | $1,090 | 9.6 |
| Employee benefits | 1,406 | 1,522 | (116) | (7.6) | 4,958 | 4,642 | 316 | 6.8 |
| Occupancy expense, net | 537 | 505 | 32 | 6.3 | 1,736 | 1,618 | 118 | 7.3 |
| Equipment expense | 1,095 | 1,006 | 89 | 8.8 | 3,244 | 2,966 | 278 | 9.4 |
| Professional fees | 339 | 221 | 118 | 53.4 | 952 | 825 | 127 | 15.4 |
| FDIC insurance assessment | 409 | 296 | 113 | 38.2 | 1,151 | 827 | 324 | 39.2 |
| ATM and debit card expense | 344 | 261 | 83 | 31.8 | 914 | 952 | (38) | (4.0) |
| Electronic banking expenses | 164 | 121 | 43 | 35.5 | 478 | 338 | 140 | 41.4 |
| Advertising and public relations | 258 | 177 | 81 | 45.8 | 584 | 568 | 16 | 2.8 |
| Donations | 32 | 52 | (20) | (38.5) | 151 | 286 | (135) | (47.2) |
| Other expenses | 1,323 | 1,233 | 90 | 7.3 | 4,054 | 4,049 | 5 | 0.1 |
| Total noninterest expenses | $10,343 | $9,409 | $934 | 9.9 | $30,654 | $28,413 | $2,241 | 7.9 |

The significant changes in noninterest expenses for the three and nine months ended September 30, 2025 compared to the same periods in 2024 are described below:

- Salaries and wages. Salaries and wages increased $421 thousand and $1.1 million for the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024 primarily due to annual salary adjustments for the 2025 fiscal year, increases in adjustments and accruals for annual incentive plan payments, and the deferral of loan origination costs. In addition, the number of full time equivalent employees increased from 189 at September 30, 2024 to 201 as of September 30, 2025. Salaries and wages are reduced by deferred loan origination costs at the time of origination. Deferred loan origination costs had a minimal impact on salaries and wages for the three months ended September 30, 2025, and reduced salaries and wages by $23 thousand for the nine months ended September 30, 2025, compared to reductions of $62 thousand and $198 thousand for the three and nine months ended September 30, 2024, respectively. The lower deferred loan origination costs for 2025 compared to 2024 is primarily attributable to loan origination levels.
- Employee benefits. Employee benefit expense decreased $116 thousand for the three months ended September 30, 2025 compared to the same period in 2024 primarily due to a decrease of $195 thousand in medical claims expense due to high-cost claimants reaching the stop loss limit, which reduced the claims required to be paid by the Company for the medical insurance plan. This decrease was partially offset by increases of $49 thousand in 401k plan contribution expense, $19 thousand in payroll taxes and $11 thousand in employee benefits related to the Company's deferred compensation plans. The increase of $316 thousand for the nine months ended September 30, 2025 compared to the same period in 2024 was primarily due to increases of $148 thousand in premium expense for the Company's medical and dental plans, $128

Union Bankshares, Inc. Page 36 thousand in 401k plan contribution expense and $80 thousand in payroll taxes, partially offset by a decrease of $40 thousand in employee benefit expense related to the Company's deferred compensation plans.

- Occupancy expense, net. The increase in occupancy expense for the three and nine months ended September 30, 2025 are primarily due to increases in utilities, repairs and maintenance, and depreciation expenses related to projects completed during 2025 compared to 2024. In addition, real estate tax expense increased $31 thousand between the nine month comparison periods due to rate increases in the towns with branch locations.
- Equipment expense. Equipment expense increased between the three and nine month comparison periods primarily due to an increase in software license and maintenance costs.
- Professional fees. Professional fees increased $118 thousand and $127 thousand for the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024 due to increases in engagement fees and additional consultants that were engaged to assist with employment searches and other consulting services in 2025.
- FDIC insurance assessment. The FDIC insurance assessment increased by $113 thousand and $324 thousand during the three and nine month comparison periods, respectively, due to an increase in the assessment rate as well as overall growth in net average assets.
- ATM and debit card expense. The increase between the three month comparison periods is primarily related to costs associated with a change in the servicing arrangement in place for the ATM machines. During the first half of 2025, debit card contract incentive credits were received, resulting in a decrease in expense for the nine months ended September 30, 2025 compared to 2024.
- Electronic banking expenses. The increase in electronic banking expenses during the three and nine month periods of 2025 related primarily to software initiatives that were implemented to the online banking platform in the fourth quarter of 2024.
- Advertising and public relations. The increase in advertising and public relations costs is primarily related to a focus on advertising campaigns and business development activities during third quarter of 2025 and the increased costs of these campaigns and activities compared to 2024.
- Donations. Charitable donations are made as part of the Company's on-going commitment to enhancing the economic vitality and social welfare of our communities. Donations decreased between the three and nine months ended September 30, 2025 primarily due to contributions made in 2024 related to a state tax credit program to assist a local affordable housing project and local non-profit rehabilitation projects that did not recur in 2025.

**Provision (Benefit) for Income Taxes.** The Company has provided for current and deferred federal income taxes for the three and nine months ended September 30, 2025 and 2024. The Company's net provision for income taxes was $414 thousand for the three months ended September 30, 2025 compared to a net benefit for income taxes of $123 thousand for the same period in 2024, primarily related to the balance sheet repositioning transaction and the resulting income tax benefit of $284 thousand from the loss on the sale of AFS debt securities recorded in August 2024. This resulted in an effective federal corporate income tax rate of 9.8% for the three months ended September 30, 2025 compared to an effective federal corporate income tax benefit rate of 10.4% for the same period in 2024.

The Company's net provision for income taxes was $666 thousand for the nine months ended September 30, 2025, compared to $103 thousand for the same period in 2024, reflecting higher net income year over year. The Company's effective federal corporate income tax rate was 6.8% for the nine months ended September 30, 2025, compared to 2.9% for the same period in 2024.

Amortization expense related to limited partnership investments is included as a component of income tax expense and amounted to $457 thousand and $1.4 million for the three and nine months ended September 30, 2025, respectively, compared to $440 thousand and $1.3 million for the same periods in 2024, respectively. These investments provide tax benefits, including tax credits. Low income housing and rehabilitation tax credits with respect to limited partnership investments are also included as a component of income tax expense and amounted to $484 thousand and $1.5 million for the three and nine months ended September 30, 2025, respectively, and $467 thousand and $1.4 million for the three and nine months ended September 30, 2024, respectively.

### FINANCIAL CONDITION

At September 30, 2025, the Company had total consolidated assets of $1.57 billion, including gross loans and loans held for sale (total loans) of $1.18 billion, investment securities AFS of $260.4 million, deposits of $1.19 billion, borrowed funds of $270.8 million, subordinated notes of $16.3 million and stockholders' equity of $77.7 million. The Company’s total assets at September 30, 2025 increased $45.6 million, or 3.0%, from $1.53 billion at December 31, 2024, and increased $54.4 million, or 3.6%, compared to September 30, 2024.

Union Bankshares, Inc. Page 37

Federal funds sold and overnight deposits increased $19.9 million, or 186.3%, to $30.5 million as of September 30, 2025, from $10.7 million at December 31, 2024.

Net loans and loans held for sale increased $17.1 million, or 1.5%, to $1.17 billion, representing 74.5% of total assets at September 30, 2025, compared to $1.16 billion, or 75.6% of total assets at December 31, 2024. (See *Loans Held for Sale and Loan Portfolio* below.)

Total deposits increased $20.7 million, or 1.8%, to $1.19 billion at September 30, 2025, from $1.17 billion at December 31, 2024. Noninterest bearing deposits increased by $1.2 million, or 0.5%, interest bearing deposits decreased by $63.6 million, or 8.9%, and time deposits increased by $83.1 million, or 36.5%. (See *Deposits* on page 42.)

Borrowed funds consisted of FHLB advances of $270.8 million and $259.7 million at September 30, 2025 and December 31, 2024, respectively. (See *Borrowings* on page 43.)

Stockholders’ equity increased from $66.5 million at December 31, 2024 to $77.7 million at September 30, 2025, reflecting net income of $8.3 million for the first nine months of 2025, a decrease of $6.5 million in accumulated other comprehensive loss due to an increase in the fair market value of the Company's AFS investment securities, an increase of $801 thousand due to net proceeds from the issuance of common stock under the Company's at-the-market offering, an increase of $449 thousand from the vesting of stock based compensation, and a $56 thousand increase due to the issuance of common stock under the DRIP, partially offset by cash dividends declared of $4.9 million. (See *Capital Resources* on page 45.)

***Loans Held for Sale and Loan Portfolio***. Total loans (including loans held for sale) increased $17.9 million, or 1.5%, to $1.18 billion, representing 74.9% of assets at September 30, 2025, from $1.16 billion, representing 76.0% of assets at December 31, 2024. The total loan portfolio at September 30, 2025 increased $52.9 million compared to the September 30, 2024 level of $1.13 billion, which represented 74.1% of assets. The Company’s loans consist primarily of adjustable-rate and fixed-rate mortgage loans secured by 1-to-4 family, multi-family residential or commercial real estate. Real estate secured loans represented $1.02 billion, or 86.7% of total loans at September 30, 2025 and $1.01 billion, or 87.3% of total loans at December 31, 2024. The net change in the Company's loan portfolio from December 31, 2024 (see table below) resulted primarily from an increase in the volume of municipal and construction real estate loans.

The composition of the Company's loan portfolio, including loans held for sale, as of September 30, 2025 and December 31, 2024 was as follows:

*(Dollars in thousands)*

| Loan Class Residential real estate | September 30, 2025 Amount | Percent | December 31, 2024 Amount | Percent |
| --- | ---: | ---: | ---: | ---: |
| Non-revolving residential real estate | $443,152 | 37.6 | $445,425 | 38.4 |
| Revolving residential real estate | 27,750 | 2.3 | 21,884 | 1.9 |
| Construction real estate |  |  |  |  |
| Commercial construction real estate | 56,723 | 4.8 | 54,985 | 4.7 |
| Residential construction real estate | 56,804 | 4.8 | 51,202 | 4.4 |
| Commercial real estate |  |  |  |  |
| Non-residential commercial real estate | 331,191 | 28.1 | 330,010 | 28.4 |
| Multi-family residential real estate | 102,291 | 8.7 | 104,328 | 9.0 |
| Commercial | 32,719 | 2.8 | 35,175 | 3.0 |
| Consumer | 2,659 | 0.2 | 2,523 | 0.3 |
| Municipal | 120,984 | 10.3 | 110,204 | 9.5 |
| Loans held for sale | 4,529 | 0.4 | 5,204 | 0.4 |
| Total loans | 1,178,802 | 100.0 | 1,160,940 | 100.0 |
| ACL on loans | (8,397) |  | (7,680) |  |
| Unamortized net loan costs | 2,107 |  | 2,162 |  |
| Net loans and loans held for sale | $1,172,512 |  | $1,155,422 |  |

The Company originates and sells qualified residential mortgage loans in various secondary market avenues to mitigate long-term interest rate risk and generate fee income, with a majority of sales made to the FHLMC/Freddie Mac, generally with servicing rights retained. At September 30, 2025, the Company serviced a $1.20 billion residential real estate mortgage

Union Bankshares, Inc. Page 38 portfolio, of which $4.5 million was held for sale and approximately $724.6 million of which was serviced for unaffiliated third parties.

The Company sold $102.8 million of qualified residential real estate loans to the secondary market during the first nine months of 2025 compared to sales of $76.1 million during the first nine months of 2024. Residential mortgage loan origination activity was strong during the first nine months of 2025. Despite low housing inventory and higher interest rates, purchase activity in the Company's markets is stable, with continued construction loan activity.

The Company also originates commercial real estate and commercial loans under various SBA, USDA and State sponsored programs which provide a government agency guaranty for a portion of the loan amount. There was $2.0 million guaranteed under these various programs at September 30, 2025 on an aggregate balance of $2.5 million in subject loans.

The Company serviced $37.5 million of commercial and commercial real estate loans for unaffiliated third parties as of September 30, 2025. This included $36.4 million of commercial or commercial real estate loans the Company originated and participated out to other financial institutions. These loans were participated in the ordinary course of business on a nonrecourse basis, for liquidity or credit concentration management purposes.

The Company capitalizes MSRs for all loans sold with servicing retained. The unamortized balance of MSRs on loans sold with servicing retained was $1.8 million at September 30, 2025, with an estimated market value in excess of the carrying value as of such date. Management periodically evaluates and measures the servicing assets for impairment.

Qualifying residential first lien mortgage loans and certain commercial real estate loans with a combined carrying value of $498.1 million were pledged as collateral for borrowings from the FHLB under a blanket lien at September 30, 2025.

***Asset Quality.*** The Company, like all financial institutions, is exposed to certain credit risks, including those related to the value of the collateral that secures its loans and the ability of borrowers to repay their loans. Consistent application of the Company’s conservative loan policies has helped to mitigate these risks and has been prudent for both the Company and its customers. Management closely monitors the Company’s loan and investment portfolios, OREO and OAO for potential problems and reports to the Company’s and Union’s Board at regularly scheduled meetings. Board approved policies set forth portfolio diversification levels to mitigate concentration risk and the Company participates large credits out to other financial institutions to further mitigate that risk.

Repossessed assets, nonaccrual loans, and loans that are 90 days or more past due are considered to be nonperforming assets. The following table details the composition of the Company's nonperforming assets and amounts utilized to calculate certain asset quality ratios monitored by the Company's management as of the balance sheet dates and September 30, 2024:

*(Dollars in thousands)*

|  | September 30, 2025 | December 31, 2024 | September 30, 2024 |
| --- | ---: | ---: | ---: |
| Nonaccrual loans | $12,987 | $1,652 | $1,709 |
| Loans past due 90 days or more and still accruing interest | 470 | 241 | 255 |
| Total nonperforming assets | $13,457 | $1,893 | $1,964 |
| Guarantees of U.S. or state government agencies on the above nonperforming loans | $269 | $— | $72 |
| ACL on loans | $8,397 | $7,680 | $7,366 |
| Net charge-offs (recoveries) | $31 | $(22) | $(16) |
| Total loans outstanding | $1,178,802 | $1,160,940 | $1,125,910 |
| Total average loans outstanding | $1,164,102 | $1,077,543 | $1,054,989 |

The increase in nonaccrual loans at September 30, 2025 primarily relates to a commercial construction loan that was placed in nonaccrual during the first quarter of 2025.

Union Bankshares, Inc. Page 39

The following table shows trends in certain asset quality ratios monitored by the Company's management as of the balance sheet dates and September 30, 2024:

*(Dollars in thousands)*

|  | September 30, 2025 | December 31, 2024 | September 30, 2024 |
| --- | ---: | ---: | ---: |
| ACL on loans to total loans outstanding | 0.71% | 0.66% | 0.65% |
| ACL on loans to nonperforming loans | 62.40% | 405.71% | 375.05% |
| ACL on loans to nonaccrual loans | 64.66% | 464.89% | 431.01% |
| Nonperforming loans to total loans | 1.14% | 0.16% | 0.17% |
| Nonperforming assets to total assets | 0.86% | 0.12% | 0.13% |
| Nonaccrual loans to total loans | 1.10% | 0.14% | 0.15% |
| Delinquent loans (30 days to nonaccruing) to total loans | 1.15% | 0.43% | 0.27% |
| Net charge-offs (recoveries) to total average loans | —% | —% | —% |
| Residential real estate | —% | (0.01)% | —% |
| Net recoveries | $(12) | $(24) | $(17) |
| Total average loans | $471,290 | $441,561 | $433,250 |
| Commercial | 0.11% | —% | —% |
| Net charge-offs (recoveries) | $39 | $(1) | $(1) |
| Total average loans | $33,929 | $38,949 | $39,559 |
| Consumer | 0.15% | 0.12% | 0.08% |
| Net charge-offs | $4 | $3 | $2 |
| Total average loans | $2,707 | $2,499 | $2,443 |

All other loan categories did not have charge-offs or recoveries for any of the periods presented above.

There were no loans in process of foreclosure at September 30, 2025 and one residential real estate loan totaling $8 thousand in process of foreclosure at December 31, 2024. The aggregate interest income not recognized on nonaccrual loans approximated $568 thousand and $235 thousand as of September 30, 2025 and December 31, 2024, respectively.

The Company had loans rated substandard that were on performing status totaling $563 thousand and $768 thousand at September 30, 2025 and December 31, 2024, respectively. In management's view, substandard loans represent a higher degree of risk of becoming nonperforming loans in the future.

***Allowance for Credit Losses on Loans.*** Some of the Company’s loan customers ultimately do not make all of their contractually scheduled payments, requiring the Company to charge off a portion or all of the remaining principal balance due. The Company maintains an ACL to absorb such losses. The level of the ACL on loans at September 30, 2025 represents management's estimate of expected credit losses over the expected life of the loans at the balance sheet date. The Company's policy and methodologies for establishing the ACL on loans, described in the Company's 2024 Annual Report, did not change during the first nine months of 2025. The Company's ACL on loans was $8.4 million and $7.7 million at September 30, 2025 and December 31, 2024, respectively.

The following table reflects activity in the ACL on loans for the three and nine months ended September 30, 2025 and 2024:

*(Dollars in thousands)*

|  | For The Three Months Ended September 30, 2025 | 2024 | For the Nine Months Ended September 30, 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: |
| Balance at beginning of period | $8,307 | $6,893 | $7,680 | $6,566 |
| Charge-offs | (42) | (1) | (46) | (2) |
| Recoveries | 5 | 6 | 15 | 18 |
| Net (charge-offs) recoveries | (37) | 5 | (31) | 16 |
| Credit loss expense | 127 | 468 | 748 | 784 |
| Balance at end of period | $8,397 | $7,366 | $8,397 | $7,366 |

Union Bankshares, Inc. Page 40

The following table (net of loans held for sale) shows the internal breakdown by risk component of the Company's ACL on loans and the percentage of loans in each category to total loans in the respective portfolios at the dates indicated:

*(Dollars in thousands)*

| Residential real estate | September 30, 2025 Amount | Percent | December 31, 2024 Amount | Percent |
| --- | ---: | ---: | ---: | ---: |
| Non-revolving residential real estate | $2,897 | 37.8 | $3,212 | 38.5 |
| Revolving residential real estate | 251 | 2.4 | 280 | 1.9 |
| Construction real estate |  |  |  |  |
| Commercial construction real estate | 1,122 | 4.8 | 651 | 4.8 |
| Residential construction real estate | 202 | 4.8 | 102 | 4.4 |
| Commercial real estate |  |  |  |  |
| Non-residential commercial real estate | 3,253 | 28.2 | 2,766 | 28.6 |
| Multi-family residential real estate | 248 | 8.7 | 212 | 9.0 |
| Commercial | 311 | 2.8 | 377 | 3.0 |
| Consumer | 5 | 0.2 | 6 | 0.2 |
| Municipal | 108 | 10.3 | 74 | 9.6 |
| Total | $8,397 | 100.0 | $7,680 | 100.0 |

Notwithstanding the categories shown in the table above or any specific allocation under the Company's ACL methodology, all funds in the ACL on loans are available to absorb loan losses in the portfolio, regardless of loan category or specific allocation.

Management believes, in its best estimate, that the ACL on loans at September 30, 2025 is appropriate to cover expected credit losses over the expected life of the Company’s loan portfolio as of such date. However, there can be no assurance that the Company will not sustain losses in future periods which could be greater than the size of the ACL on loans at September 30, 2025. In addition, our banking regulators, as an integral part of their examination process, periodically review our ACL. Such agencies may require us to recognize adjustments to the ACL based on their judgments about information available to them at the time of their examination. A large adjustment to the ACL on loans for losses in future periods could require increased credit loss expense to replenish the ACL on loans, which could negatively affect earnings.

***Investment Activities.*** The Company's investment securities classified as AFS, which are carried at fair value, increased $9.9 million to $260.4 million, comprising 16.5% of total assets at September 30, 2025, compared to $250.5 million, or 16.4% of total assets at December 31, 2024. The increase between periods was primarily due to purchases of $22.0 million in AFS debt securities, and improvement in net unrealized losses of $8.3 million, partially offset by returns of principal of $20.0 million.

Net unrealized losses in the Company’s AFS investment securities portfolio were $35.3 million as of September 30, 2025, compared to net unrealized losses of $43.6 million as of December 31, 2024. The Company’s Accumulated OCI component of stockholders’ equity at September 30, 2025 reflected cumulative net unrealized losses on investment securities of $27.5 million. There were no securities classified as HTM at September 30, 2025 or December 31, 2024. The unrealized losses in the Company's AFS investment securities portfolio are primarily attributable to changes in long-term interest rates which are tied to the pricing indexes for the securities. No declines in value were deemed by management to be impairment related to credit losses at September 30, 2025. Deterioration in credit quality and/or imbalances in liquidity that may result from changes in financial market conditions might adversely affect the fair values of the Company’s investment portfolio and the amount of gains or losses ultimately realized on the sale of such securities and may also increase the potential that credit losses may be identified in future periods, resulting in credit loss expense recorded in earnings.

Investment securities AFS with a fair value of $90.2 million and $96.0 million 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, at September 30, 2025 and December 31, 2024, respectively. 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 $9.4 million and $9.7 million at September 30, 2025 and December 31, 2024, respectively.

Union Bankshares, Inc. Page 41

***Deposits.*** The following table shows information concerning the Company's average deposits by account type and weighted average nominal rates at which interest was paid on such deposits for the nine months ended September 30, 2025 and 2024:

*(Dollars in thousands)*

| Nontime deposits: | Nine Months Ended September 30, 2025 Average Amount | Percent of Total Deposits | Average Rate | Nine Months Ended September 30, 2024 Average Amount | Percent of Total Deposits | Average Rate |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Noninterest bearing deposits | $220,085 | 18.6 | —% | $224,651 | 19.3 | —% |
| Interest bearing checking accounts | 300,729 | 25.5 | 1.37% | 292,177 | 25.1 | 1.15% |
| Money market accounts | 229,297 | 19.4 | 2.60% | 220,282 | 19.0 | 2.32% |
| Savings accounts | 143,743 | 12.2 | 0.04% | 144,612 | 12.4 | 0.05% |
| Total nontime deposits | 893,854 | 75.7 | 1.14% | 881,722 | 75.8 | 0.97% |
| Total time deposits | 287,004 | 24.3 | 3.95% | 281,248 | 24.2 | 4.13% |
| Total deposits | $1,180,858 | 100.0 | 1.82% | $1,162,970 | 100.0 | 1.73% |

During the first nine months of 2025, average total deposits increased by $17.9 million, or 1.5%, compared to the nine months ended September 30, 2024. The deposit mix has remained consistent between periods. The average balance of total nontime deposits increased $12.1 million between periods primarily due to increases of $8.6 million in interest bearing checking accounts and $9.0 million in money market accounts, partially offset by decreases of $4.6 million in noninterest bearing deposits and $869 thousand in savings accounts. The average balance in total time deposits increased $5.8 million between periods due to increases of $37.7 million in average customer time deposit accounts as customers took advantage of higher rate paying CDs, and $12.5 million in average purchased CDARS deposits, partially offset by a $44.5 million decrease in average retail brokered deposits.

The Company participates in CDARS, which permits it to offer full deposit insurance coverage to its customers by exchanging deposit balances with other CDARS participants. CDARS also provides the Company with an additional source of funding and liquidity through the purchase of deposits. There were $25.2 million in purchased CDARS deposits at September 30, 2025 and none at December 31, 2024. There were $7.1 million and $13.3 million of time deposits of $250,000 or less on the balance sheet at September 30, 2025 and December 31, 2024, respectively, which were exchanged with other CDARS participants.

The Company also participates in the ICS program, a service through which it can offer its customers demand or savings deposit products with access to unlimited FDIC insurance, while receiving reciprocal deposits from other FDIC-insured banks. Like the exchange of certificate of deposit accounts through CDARS, exchange of demand or savings deposits through ICS provides a depositor with full deposit insurance coverage of excess balances, thereby helping the Company retain the full amount of the deposit on its balance sheet. As with the CDARS program, in addition to reciprocal deposits, participating banks may also purchase one-way ICS deposits. There were no purchased ICS deposits at September 30, 2025 or at December 31, 2024. There were $187.6 million and $256.5 million in exchanged ICS demand and money market deposits on the balance sheet at September 30, 2025 and December 31, 2024, respectively.

At September 30, 2025 there were $40.3 million of retail brokered deposits at a weighted average rate of 4.28% issued under a master certificate of deposit program with a deposit broker for twelve month terms for the purpose of providing a supplemental source of funding and liquidity. There were no retail brokered deposits at December 31, 2024.

Uninsured deposits have been estimated to include deposits with balances greater than the FDIC insurance coverage limit of $250 thousand. This estimate by management is based on the same methodologies and assumptions used for regulatory reporting requirements. At September 30, 2025, the Company had total estimated uninsured deposit accounts totaling $441.0 million, or 37.1% of total deposits. Uninsured deposits include $25.3 million of municipal deposits that were collateralized under applicable state regulations by letters of credit issued by the FHLB at September 30, 2025, as described on page 43 under *Borrowings.*

Union Bankshares, Inc. Page 42

The following table provides a maturity distribution of the Company’s time deposits in amounts in excess of the $250 thousand FDIC insurance limit at September 30, 2025 and December 31, 2024:

*(Dollars in thousands)*

|  | September 30, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| Within 3 months | $31,344 | $24,544 |
| 3 to 6 months | 30,879 | 16,004 |
| 6 to 12 months | 4,980 | 20,257 |
| Over 12 months | 1,131 | 918 |
|  | $68,334 | $61,723 |

***Borrowings.*** Advances from the FHLB are another key source of funds to support earning assets. These funds are also used to manage the Bank's interest rate and liquidity risk exposures. Borrowed funds included FHLB advances of $270.8 million with a weighted average rate of 4.05% at September 30, 2025 and $259.7 million with a weighted average rate of 4.17% at December 31, 2024. Union is required to invest in $100 par value stock of the FHLB in an amount to satisfy unpaid principal balances on qualifying loans, plus an amount to satisfy an activity based requirement. The stock is nonmarketable, and is redeemable by the FHLB at par value. With the increase in FHLB advances outstanding at September 30, 2025, the investment in FHLB Class B common stock has increased to $12.1 million at September 30, 2025 compared to $11.2 million at December 31, 2024. Union's investment in FHLB stock is carried at cost in Other assets on the consolidated balance sheets.

The Company has the authority, up to its available borrowing capacity with the FHLB, to collateralize public unit deposits with letters of credit issued by the FHLB. FHLB letters of credit in the amount of $42.2 million and $47.3 million were utilized as collateral for these deposits at September 30, 2025 and December 31, 2024, respectively. The Company's reimbursement obligations to the FHLB relating to these letters of credit are secured by pledged collateral, which reduces the Company's available borrowing capacity with the FHLB. Total fees paid by the Company in connection with the issuance of these letters of credit were $12 thousand and $40 thousand for the three and nine months ended September 30, 2025, respectively, and $12 thousand and $34 thousand for the three and nine months ended September 30, 2024, respectively.

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 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. The Notes are presented in the consolidated balance sheets net of unamortized issuance costs of $201 thousand and $227 thousand at September 30, 2025 and December 31, 2024, respectively.

***Commitments, Contingent Liabilities, and Off-Balance-Sheet Arrangements.*** The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers, to reduce its own exposure to fluctuations in interest rates and to implement its strategic objectives. These financial instruments include commitments to extend credit, standby letters of credit, interest rate caps and floors written on adjustable-rate loans, commitments to participate in or sell loans, commitments to buy or sell securities, certificates of deposit or other investment instruments and risk-sharing commitments or guarantees on certain sold loans. Such instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized on the balance sheet. The contractual or notional amounts of these instruments reflect the extent of involvement the Company has in a particular class of financial instruments.

The Company's maximum exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. For interest rate caps and floors written on adjustable-rate loans, the contractual or notional amounts do not represent the Company’s exposure to credit loss. The Company controls the risk of interest rate cap agreements through credit approvals, borrowing limits, and monitoring procedures. The Company generally requires collateral or other security to support financial instruments with credit risk.

Union Bankshares, Inc. Page 43

The following table details the contractual or notional amount of financial instruments that represented credit risk at the balance sheet dates:

*(Dollars in thousands)*

|  | September 30, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| Commitments to originate loans | $66,584 | $47,696 |
| Unused lines of credit | 180,567 | 191,392 |
| Standby and commercial letters of credit | 1,635 | 1,640 |
| Credit card arrangements | 102 | 154 |
| FHLB Mortgage Partnership Finance credit enhancement obligation, net | 1,173 | 865 |
| Commitment to purchase investment in a real estate limited partnership | — | 2,000 |
| Total | $250,061 | $243,747 |

Commitments to originate loans are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Loan commitments generally have a fixed expiration date or other termination clause and may require payment of a fee. Since many of the loan commitments are expected to expire without being drawn upon and not all credit lines will be utilized, the total commitment amounts do not necessarily represent future cash requirements. Lines of credit incur seasonal volume fluctuations due to the nature of some customers' businesses, such as tourism. The increase in commitments to originate loans at September 30, 2025 from December 31, 2024 is primarily attributable to an increase in commercial real estate construction loan commitments of $17.0 million.

The Company did not hold any derivative or hedging instruments at September 30, 2025 or December 31, 2024.

In addition to commitments with credit risks arising from the Company’s financial instruments, in the normal course of business the Company enters into other types of contractual arrangements from time to time that represent off-balance sheet commitments such as contracts for the purchase or lease of property, including real property for its banking premises.

The Company records an ACL on off-balance sheet credit exposures through a charge or credit to Credit loss expense (benefit) on the consolidated statements of income to account for the change in the ACL on off-balance sheet exposures between reporting periods. The ACL on off-balance sheet credit exposures totaled $1.1 million at September 30, 2025 and December 31, 2024, and was included in Accrued interest and other liabilities on the consolidated balance sheets. There was $186 thousand and $21 thousand of credit loss expense for off-balance sheet credit exposures recorded for the three and nine months ended September 30, 2025, respectively and $43 thousand and $201 thousand of credit loss benefit recorded for the three and nine months ended September 30, 2024, respectively.

***Liquidity.*** Liquidity is a measurement of the Company’s ability to meet potential cash requirements, including ongoing commitments to fund deposit withdrawals, repay borrowings, fund investment and lending activities, purchase and lease commitments, and for other general business purposes. The primary objective of liquidity management is to maintain a balance between sources and uses of funds to meet our cash flow needs in the most economical and expedient manner. The Company’s principal sources of funds are deposits; whole-sale funding options including purchased deposits, amortization, prepayment and maturity of loans, investment securities, interest bearing deposits and other short-term investments; sales of securities and loans AFS; earnings; and funds provided from operations. Contractual principal repayments on loans have been a relatively predictable source of funds. Deposit flows and loan and investment prepayments are less predictable and can be significantly influenced by market interest rates, economic conditions, and rates offered by our competitors. Managing liquidity risk is essential to maintaining both depositor confidence and earnings stability.

As of September 30, 2025, Union, as a member of FHLB, had access to unused lines of credit up to $67.2 million over and above the $315.7 million in combined outstanding FHLB borrowings and other credit, subject to collateralization and to the purchase of required FHLB Class B common stock and evaluation by the FHLB of the underlying collateral available. This line of credit can be used for either short-term or long-term liquidity or other funding needs.

Union also maintains an IDEAL Way Line of Credit with the FHLB. The total line available was $551 thousand at September 30, 2025. There were no borrowings against this line of credit as of such date. Interest on this line is chargeable at a rate determined by the FHLB and payable monthly. Should Union utilize this line of credit, qualified portions of the loan and investment portfolios would collateralize these borrowings.

In addition to its borrowing arrangements with the FHLB, Union maintains a pre-approved federal funds line of credit totaling $15.0 million with an upstream correspondent bank, a master brokered deposit agreement with a brokerage firm, and one-way buy options with CDARS and ICS. At September 30, 2025, there were $40.3 million in retail brokered deposits issued under a master certificate of deposit program with a broker, $25.2 million in purchased CDARS deposits, and no purchased ICS deposits or outstanding advances on the correspondent line.

Union Bankshares, Inc. Page 44

Union's investment and residential loan portfolios also provide a significant amount of contingent liquidity that could be accessed in a reasonable time period through sales of those portfolios. Additional contingent liquidity sources are available with further access to the brokered deposit market and through the discount window at the FRB. These sources are considered as liquidity alternatives in our contingent liquidity plan. Management believes the Company has sufficient liquidity to meet all reasonable borrower, depositor, and creditor needs in the present economic environment. However, any projections of future cash needs and flows are subject to substantial uncertainty, including factors outside the Company's control.

***Capital Resources.*** Capital management is designed to maintain an optimum level of capital in a cost-effective structure that meets target regulatory ratios, supports management’s internal assessment of economic capital, funds the Company’s business strategies and builds long-term stockholder value. Dividends are generally in line with long-term trends in earnings per share and conservative earnings projections, while sufficient profits are retained to support anticipated business growth, fund strategic investments, maintain required regulatory capital levels and provide continued support for deposits. The Company continues to evaluate growth opportunities both through internal growth or potential acquisitions.

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, 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 months ended September 30, 2025, the Company issued 30,397 shares for aggregate gross sale proceeds of $802 thousand, at an average gross sale price of $26.39 per share, which yielded net proceeds to the Company of $749 thousand after issuance costs, including sales commissions equal to 3% of gross sale proceeds. During the nine months ended September 30, 2025, the Company issued 38,834 shares for aggregate gross sale proceeds of $1.1 million, at an average gross sale price of $27.86 per share, which yielded net proceeds to the Company of $801 thousand, after issuance costs, including sales commissions equal to 3% of gross sale proceeds. As of September 30, 2025, approximately $38.9 million remains available for issuance under the offering.

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 to certain qualified institutional buyers and accredited investors. The Notes are structured to qualify as Tier 2 capital for the Company under regulatory capital guidelines for bank holding companies. Proceeds from the sale of the Notes were utilized primarily to provide additional Tier 1 capital to Union to support its growth and for other general corporate purposes.

Stockholders’ equity increased from $66.5 million at December 31, 2024 to $77.7 million at September 30, 2025, reflecting net income of $8.3 million for the first nine months of 2025, a decrease of $6.5 million in accumulated other comprehensive loss due to an increase in the fair market value of the Company's AFS investment securities, an increase of $801 thousand due to net proceeds from the issuance of common stock under the Company's at-the-market offering, an increase of $449 thousand in additional paid in capital from the vesting of stock-based compensation, and a $56 thousand increase due to the issuance of common stock under the DRIP. These increases were partially offset by cash dividends declared of $4.9 million during the nine months ended September 30, 2025. The components of other comprehensive income are illustrated in Note 10 of the unaudited consolidated financial statements.

The Company has 7,500,000 shares of $2.00 par value common stock authorized. As of September 30, 2025, the Company had 5,054,654 shares issued, of which 4,582,421 were outstanding and 472,233 were held in treasury.

In December 2024, the Company's Board reauthorized for 2025 and 2026 a limited stock repurchase plan that was initially established in May of 2010. The limited stock repurchase plan allows the repurchase of up to a fixed number of shares of the Company's common stock each calendar quarter in open market purchases or privately negotiated transactions, as management deems advisable and as market conditions may warrant. The repurchase authorization for a calendar quarter (currently 2,500 shares) expires at the end of that quarter to the extent it has not been exercised, and is not carried forward into future quarters. The quarterly repurchase authorization expires on December 31, 2026, unless reauthorized. The Company had no repurchases under this program during the first nine months of 2025.

The Company maintains a DRIP whereby registered stockholders may elect to reinvest cash dividends and make optional cash contributions to purchase additional shares of the Company's common stock. The Company has reserved 200,000 shares of its common stock for issuance and sale under the DRIP. As of September 30, 2025, 15,016 shares of stock had been issued from treasury stock under the DRIP.

The Company (on a consolidated basis) and Union are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company's and Union's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the

Union Bankshares, Inc. Page 45

Company and Union must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company's and Union's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Under the standard regulatory capital guidelines, banking organizations must have a minimum total risk-based capital ratio of 8.0%, a minimum Tier I risk-based capital ratio of 6.0%, a minimum common equity Tier I risk-based capital ratio of 4.5%, and a minimum leverage ratio of 4.0% in order to be "adequately capitalized." In addition to these requirements, banking organizations must maintain a 2.5% capital conservation buffer consisting of common Tier I equity, increasing the minimum required total risk-based capital, Tier I risk-based and common equity Tier I capital to risk-weighted assets they must maintain to avoid limits on capital distributions and certain bonus payments to executive officers and similar employees.

As shown in the table below, as of September 30, 2025, both the Company and Union met all capital adequacy requirements to which they are subject and Union exceeded the requirements for a "well capitalized" bank under the FDIC's Prompt Corrective Action framework. There were no conditions or events between September 30, 2025 and the date of this report that management believes have changed either company’s regulatory capital category.

*(Dollars in thousands)*

| As of September 30, 2025 Company: | Actual Amount | Ratio | For Capital Adequacy Purposes Amount | Ratio | To Be Well Capitalized Under Prompt Corrective Action Provisions Amount | Ratio |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Total capital to risk weighted assets | $128,773 | 12.99% | $79,306 | 8.00% | N/A | N/A |
| Tier I capital to risk weighted assets | 102,985 | 10.38% | 59,529 | 6.00% | N/A | N/A |
| Common Equity Tier 1 to risk weighted assets | 102,985 | 10.38% | 44,647 | 4.50% | N/A | N/A |
| Tier I capital to average assets | 102,985 | 6.50% | 63,375 | 4.00% | N/A | N/A |
| Union: |  |  |  |  |  |  |
| Total capital to risk weighted assets | $128,153 | 12.94% | $79,229 | 8.00% | $99,036 | 10.00% |
| Tier I capital to risk weighted assets | 118,664 | 11.98% | 59,431 | 6.00% | 79,241 | 8.00% |
| Common Equity Tier 1 to risk weighted assets | 118,664 | 11.98% | 44,573 | 4.50% | 64,384 | 6.50% |
| Tier I capital to average assets | 118,664 | 7.49% | 63,372 | 4.00% | 79,215 | 5.00% |

Dividends paid by Union are the primary source of funds available to the Company for payment of dividends to its stockholders. Union is subject to certain requirements imposed by federal banking laws and regulations, which among other things, establish minimum levels of capital and restrict the amount of dividends that may be distributed by Union to the Company.

Quarterly cash dividends of $0.36 per share were paid during the third quarter of 2025 and were declared in October for the fourth quarter, payable on November 6, 2025 to stockholders of record on October 25, 2025.

## Market risk

As filed, 151 characters.

Omitted, in accordance with the regulatory relief available to smaller reporting companies in SEC Release Nos. 33-10513 (effective September 10, 2018).

## Controls and procedures

As filed, 1,586 characters.

**Evaluation of Disclosure Controls and Procedures.** The Company’s Chief Executive Officer and Chief Financial Officer, with the assistance of the Disclosure Control Committee, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of September 30, 2025. Based on this evaluation they concluded that those disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files with the Commission is accumulated and communicated to the Company’s management, including its principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required information.

Union Bankshares, Inc. Page 46

**Changes in Internal Controls over Financial Reporting.** There was no change in the Company's internal control over financial reporting, as defined in Rule 13a-15(f) of the Exchange Act, during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

## Risk factors

As filed, 180 characters.

There have been no material changes in the risk factors discussed in Part I-Item 1A, "Risk Factors" in the Company’s 2024 Annual Report since the date of the filing of that report.

Filed Nov 10, 2025.
Source: SEC EDGAR, the filing index for accession 0000706863-25-000103. Last ingested by Listed: Oct 24, 2026, 14:56 ET. No prices; not investment advice.