UNION BANKSHARES INCUNB
UNION BANKSHARES INC Fair Value Disclosure
Fair Value Measurement
The following is a description of the valuation methodologies used for the Company’s assets that are measured on a recurring basis at estimated fair value:
Investment securities AFS: Certain U.S. Treasury notes have been valued using unadjusted quoted prices from active markets and therefore have been classified as Level 1. However, the majority of the Company’s AFS investment securities have been valued utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include market maker bids, quotes and pricing models. Inputs to the pricing models include recent trades, benchmark interest rates, spreads and actual and projected cash flows.
Mutual funds: Mutual funds have been valued using unadjusted quoted prices from active markets and therefore have been classified as Level 1.
Assets measured at fair value on a recurring basis at December 31, 2025 and 2024, segregated by fair value hierarchy level, are summarized below:
| Fair Value Measurement | ||||||||||||||
| Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
| December 31, 2025: | (Dollars in thousands) | |||||||||||||
| Investment securities available-for-sale | ||||||||||||||
| Debt securities: | ||||||||||||||
| U.S. Government-sponsored enterprises | $ | 26,094 | $ | 2,843 | $ | 23,251 | $ | — | ||||||
| Agency mortgage-backed | 240,564 | — | 240,564 | — | ||||||||||
| State and political subdivisions | 48,220 | — | 48,220 | — | ||||||||||
| Corporate | 11,377 | — | 11,377 | — | ||||||||||
| Total debt securities | $ | 326,255 | $ | 2,843 | $ | 323,412 | $ | — | ||||||
| Other investments: | ||||||||||||||
| Mutual funds | $ | 2,038 | $ | 2,038 | $ | — | $ | — | ||||||
| December 31, 2024: | ||||||||||||||
| Investment securities available-for-sale | ||||||||||||||
| Debt securities: | ||||||||||||||
| U.S. Government-sponsored enterprises | $ | 26,215 | $ | 2,702 | $ | 23,513 | $ | — | ||||||
| Agency mortgage-backed | 173,275 | — | 173,275 | — | ||||||||||
| State and political subdivisions | 48,550 | — | 48,550 | — | ||||||||||
| Corporate | 2,464 | — | 2,464 | — | ||||||||||
| Total debt securities | $ | 250,504 | $ | 2,702 | $ | 247,802 | $ | — | ||||||
| Other investments: | ||||||||||||||
| Mutual funds | $ | 1,754 | $ | 1,754 | $ | — | $ | — | ||||||
There were no transfers in or out of Levels 1 and 2 during the years ended December 31, 2025 and 2024, nor were there any Level 3 assets at any time during those periods. Certain other assets and liabilities are measured at fair value on a nonrecurring basis, that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). Assets and liabilities measured at fair value on a nonrecurring basis in periods after initial recognition, such as collateral dependent individually evaluated loans and MSRs, were not considered material at December 31, 2025 or 2024. The Company has not elected to apply the fair value method to any financial assets or liabilities other than those situations where other accounting pronouncements require fair value measurements.
FASB ASC Topic 825, Financial Instruments, requires disclosure of the estimated fair value of financial instruments. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Management’s estimates and assumptions are inherently subjective and involve uncertainties and matters of significant judgment. Changes in assumptions could dramatically affect the estimated fair values.
Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Certain financial instruments and all nonfinancial instruments may be excluded from disclosure requirements. Thus, the aggregate fair value amounts presented may not necessarily represent the actual underlying fair value of such instruments of the Company.
As of the balance sheet dates, the estimated fair values and related carrying amounts of the Company's significant financial instruments were as follows:
| December 31, 2025 | |||||||||||||||||
| Fair Value Measurement | |||||||||||||||||
| Carrying Amount | Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Financial assets | |||||||||||||||||
| Cash and cash equivalents | $ | 12,300 | $ | 12,300 | $ | 12,300 | $ | — | $ | — | |||||||
| Interest bearing deposits in banks | 8,955 | 8,955 | — | 8,955 | — | ||||||||||||
| Investment securities | 328,293 | 328,293 | 4,881 | 323,412 | — | ||||||||||||
| Loans held for sale | 4,172 | 4,232 | — | 4,232 | — | ||||||||||||
| Loans, net | |||||||||||||||||
| Residential real estate | 471,932 | 451,963 | — | — | 451,963 | ||||||||||||
| Construction real estate | 103,168 | 102,183 | — | — | 102,183 | ||||||||||||
| Commercial real estate | 441,958 | 430,962 | — | — | 430,962 | ||||||||||||
| Commercial | 30,922 | 30,119 | — | — | 30,119 | ||||||||||||
| Consumer | 2,413 | 2,379 | — | — | 2,379 | ||||||||||||
| Municipal | 118,000 | 115,749 | — | — | 115,749 | ||||||||||||
| Accrued interest receivable | 6,987 | 6,987 | — | 1,488 | 5,499 | ||||||||||||
| Nonmarketable equity securities | 12,283 | N/A | N/A | N/A | N/A | ||||||||||||
| Financial liabilities | |||||||||||||||||
| Deposits | |||||||||||||||||
| Noninterest bearing | 226,939 | 226,939 | 226,939 | — | — | ||||||||||||
| Interest bearing | 725,996 | 725,996 | 725,996 | — | — | ||||||||||||
| Time | 262,047 | 261,693 | — | 261,693 | — | ||||||||||||
| Borrowed funds | |||||||||||||||||
| Short-term | 15,500 | 15,364 | — | 15,364 | — | ||||||||||||
| Long-term | 270,981 | 273,014 | — | 273,014 | — | ||||||||||||
| Subordinated notes | 16,307 | 16,799 | — | 16,799 | — | ||||||||||||
| Accrued interest payable | 2,981 | 2,981 | — | 2,981 | — | ||||||||||||
| December 31, 2024 | |||||||||||||||||
| Fair Value Measurement | |||||||||||||||||
| Carrying Amount | Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Financial assets | |||||||||||||||||
| Cash and cash equivalents | $ | 15,838 | $ | 15,838 | $ | 15,838 | $ | — | $ | — | |||||||
| Interest bearing deposits in banks | 9,462 | 9,449 | — | 9,449 | — | ||||||||||||
| Investment securities | 252,258 | 252,258 | 4,456 | 247,802 | — | ||||||||||||
| Loans held for sale | 5,204 | 5,303 | — | 5,303 | — | ||||||||||||
| Loans, net | |||||||||||||||||
| Residential real estate | 464,691 | 425,103 | — | — | 425,103 | ||||||||||||
| Construction real estate | 105,633 | 103,672 | — | — | 103,672 | ||||||||||||
| Commercial real estate | 432,173 | 395,713 | — | — | 395,713 | ||||||||||||
| Commercial | 34,863 | 33,096 | — | — | 33,096 | ||||||||||||
| Consumer | 2,522 | 2,477 | — | — | 2,477 | ||||||||||||
| Municipal | 110,336 | 108,163 | — | — | 108,163 | ||||||||||||
| Accrued interest receivable | 6,470 | 6,470 | — | 1,226 | 5,244 | ||||||||||||
| Nonmarketable equity securities | 11,352 | N/A | N/A | N/A | N/A | ||||||||||||
| Financial liabilities | |||||||||||||||||
| Deposits | |||||||||||||||||
| Noninterest bearing | 226,048 | 226,048 | 226,048 | — | — | ||||||||||||
| Interest bearing | 714,862 | 714,862 | 714,862 | — | — | ||||||||||||
| Time | 227,984 | 226,890 | — | 226,890 | — | ||||||||||||
| Borrowed funds | |||||||||||||||||
| Short-term | 29,000 | 28,946 | — | 28,946 | — | ||||||||||||
| Long-term | 230,696 | 229,613 | — | 229,613 | — | ||||||||||||
| Subordinated notes | 16,273 | 16,128 | — | 16,128 | — | ||||||||||||
| Accrued interest payable | 3,319 | 3,319 | — | 3,319 | — | ||||||||||||
The carrying amounts in the preceding tables are included in the consolidated balance sheets under the applicable captions. Accrued interest receivable and nonmarketable equity securities are included in Other assets in the consolidated balance sheets.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 20, 2026 | Showing above |
| 2024 | Mar 25, 2025 | |
| 2023 | Mar 26, 2024 | |
| 2022 | Mar 24, 2023 | |
| 2021 | Mar 24, 2022 | |
| 2020 | Mar 19, 2021 | |
| 2019 | Mar 13, 2020 | |
| 2018 | Mar 15, 2019 | |
| 2017 | Mar 16, 2018 | |
| 2016 | Mar 15, 2017 | |
| 2015 | Mar 15, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.