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defined benefit pension plan and retained earnings, we were able to grow our capital to $45.0 million at year end 2012 compared to $40.3 million, an 11.7% increase year over year.
These financial items of note are but a summary of many factors that contributed to our financial performance.
It is with sadness that we must relay the passing of long time Director Robert P. Rollins. Bob was a bank and holding company director for 29 years and his service to your company was highly valued. Bob will be missed by his friends, colleagues, and family.
In retrospect, 2012 was a good year for Union Bankshares, Inc. In 2013 we expect the regulatory environment to continue to be challenging while the economic environment will likely provide opportunities and challenges in equal doses. We are guardedly optimistic for the coming year.
Enclosed is your dividend check or advice of deposit, representing a dividend of $0.25 per share issued to shareholders of record January 26, 2013, and payable February 7, 2013.
February 7, 2013
ABOUT UNION BANKSHARES
2012 was a solid year for your company. Earnings for the year were $6.8 million, or $1.54 per share, as compared to 2011 earnings of $5.2 million, or $1.17 per share; a 31% increase year over year. Total assets grew to $577.3 million at year end compared to $552.8 million at year end 2011, a 4.4% increase. Total loans grew to $455.3 million, a 6% increase while deposits grew to $510.0 million, a 7.7% increase over 2011. As we have previously advised, earnings for 2011 were negatively affected by one-time pre-tax branch acquisition costs of $407 thousand that were not replicated in 2012. Likewise, 2012 earnings had the full benefit of the increase in assets, loans, and deposits attributable to the purchase of three New Hampshire banking offices while 2011 only had this benefit for 7 months.
We will discuss below some items of note that helped to generate the financial results for 2012 as well as positioning your company for 2013 and beyond. We encourage you to review our annual report for the full story, as there is insufficient room here to relay more than the highlights of the year.
Net interest income increased $1.9 million, or 9.7%, year over year. This is attributable to organic loan portfolio growth and growth through acquisition, as well as actively managing our cost of funds in this extremely low interest rate environment. Residential lending continued to generate strong volume and related income throughout 2012. We sold $125.6 million in 2012 as compared to $80.1 million in 2011. In addition to high volume, the average premium earned on loan sales was higher in 2012 compared to 2011. This resulted in an increase in gain on sale of real estate loans of $2.0 million compared to 2011. The higher volume of this type of lending also generated additional revenue in the form of loan application and closing fees that contributed to our results.
During the fourth quarter of 2012 we undertook a modest deleveraging of our balance sheet, selling investment securities generating gains of $672 thousand while pre-paying Federal Home Loan Bank advances resulting in $890 thousand in pre-payment penalties. The net effect of the deleveraging was to shrink our balance sheet by $11.7 million while reducing our cost of funds going forward.
On October 5 we froze our defined benefit pension plan. We took this action because the cost of the plan for the 2012 plan year was projected to be double the cost for 2011. Despite freezing the plan on October 5, the cost of the defined benefit pension for 2012 was $359 thousand more than in 2011. We have enhanced our defined contribution plan to ensure our retirement benefits remain attractive to our staff. In 2012, a profit-sharing contribution of $242 thousand was made to the Company’s 401k plan on behalf of the employees.
As discussed in previous letters, the regulatory environment has been focusing on bank capital levels. We are pleased to report that between the aforementioned freezing of the
Union Bankshares, Inc. operates as the holding company for Union Bank, which provides commercial, retail and municipal banking services and asset management services throughout northern Vermont and northwestern New Hampshire. Union Bank was founded in 1891 in Morrisville, Vermont, where the Bank's and its holding company's headquarters are located. Union Bank has recently grown through acquisition and operates 17 banking offices, a loan center and 33 ATMs.
Union Bank is committed to the communities it serves, and encourages employee participation in community events and charitable services. The asset base of over $577 million provides the financial strength to successfully serve its constituents.
Union Bank has scored an “Outstanding” rating on all Community Reinvestment Act examinations since 1995 and has been an SBA “Preferred Lender” since 1987.
AND INVESTOR INFORMATION
UNION BANK OFFICES
(ATMS AT ALL BRANCH LOCATIONS)
If you need assistance with a change in registration of certificates, combining your certificates into one, reporting lost certificates, non-receipt or loss of dividend checks, assistance regarding direct deposit of dividends, information about the Company, or to receive copies of financial reports, please contact JoAnn Tallman, Assistant Secretary at 802-888-6600 or contact our Transfer Agent at the address and phone number listed below:
20 Lower Main St.
30 Kimball Ave.
421 Route 2 East
65 Northgate Plaza
Jct. Rtes. 104&128
47 Park St.
Registrar & Transfer Company
Attn: Stock Transfer Department
10 Commerce Drive
Cranford, NJ 07016
15 Mapleville Depot
103 VT Rte. 15
3 State Street
364 Railroad St.
NASDAQ Stock Market
44 Main Street
325 Portland St.
263 Dells Road
Union Bankshares, Inc.
20 Lower Main Street
PO Box 667
Morrisville, VT 05661-0667
198 Lower Main St.
Green Mtn. Mall
1998 Memorial Dr.
76 Main Street
183 Depot St.
155 Main Street
The following information was filed by Union Bankshares Inc (UNB) on Thursday, February 7, 2013 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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