UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

             (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002

                                       OR

            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

        For the transition period from ______________ to ________________

                           Commission File No. 0-21078

                             UNION BANKSHARES, LTD.
             (Exact name of Registrant as specified in its charter)

                      DELAWARE                       84-0986148
         (State of other jurisdiction of          (I.R.S Employer)
           incorporation of organization)        Identification No.)

                1825 LAWRENCE STREET, SUITE 444, DENVER, CO 80202
               (Address of principal executive offices) (Zip Code)

                                 (303) 298-5352
              (Registrant's telephone number, including area code)

       -------------------------------------------------------------------
                                   Not Changed
       -------------------------------------------------------------------
         Former name, former address and former fiscal year, if changed
                               since last report.

     Indicate by check mark whether the registrant (1) has filed all reports
   required to be filed by Section 13 or 15(d) of the Exchange Act during the
   preceding twelve months (or for such shorter period that the registrant was
     required to file such reports), and (2) has been subject to such filing
                     requirements for the past 90 days. YES X    NO  .
                                                        ------   ----

  At August 13, 2002, there were 2,410,078 shares of common stock outstanding.


<PAGE>

                             UNION BANKSHARES, LTD.


                                      INDEX

                                                                         PAGE
PART I - FINANCIAL INFORMATION

         Item 1.  Financial Statements.....................................1

         Item 2.  Management's Discussion and Analysis of
                  Financial Condition and Results of
                  Operations...............................................6

         Item 3.  Quantitative and Qualitative Disclosures
                  about Market Risk.......................................12

PART II - OTHER INFORMATION

         Item 4.  Submission of Matters to a Vote of Security Holders.....13

         Item 6.  Exhibits and Reports on Form 8-K........................13


SIGNATURES................................................................18


<PAGE>


PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS


UNION BANKSHARES, LTD.  AND  SUBSIDIARY
CONSOLIDATED  BALANCE  SHEETS


<TABLE>
<CAPTION>
                                                            JUNE  30,      DECEMBER 31,
                       ASSETS                                 2002             2001
                                                          (UNAUDITED)
                                                      ------------------ ----------------
<S>                                                         <C>              <C>
Cash and cash equivalents:
    Cash and due from banks                                 $21,371,000      $15,512,000
    Federal funds sold                                       20,300,000                -
                                                      ------------------ ----------------
       Total cash and cash equivalents                       41,671,000       15,512,000

    Investment securities:
       Available-for-sale securities                        147,025,000      168,742,000
       Securities pledged to repurchase agreement            22,358,000       12,669,000
       Other  investments                                     2,750,000        2,750,000
                                                      ------------------ ----------------
                 Total investment securities                172,133,000      184,161,000

    Loans:
       Commercial                                           167,552,000      163,054,000
       Real estate mortgage                                   3,468,000        3,648,000
       Real estate construction                              25,108,000       36,246,000
       Consumer                                              35,304,000       33,529,000
                                                      ------------------ ----------------
                 Total loans                                231,432,000      236,477,000
       Less:  allowance for loan losses                      (3,418,000)      (3,351,000)
                                                      ------------------ ----------------
                                                            228,014,000      233,126,000

       Mortgage loans held for sale                                   -        2,037,000

       Goodwill                                               5,554,000        5,554,000
       Furniture, equipment and improvements, net             2,423,000        2,325,000
       Accrued interest receivable                            2,201,000        2,308,000
       Other assets                                           1,826,000        2,363,000
                                                      ------------------ ----------------
    TOTAL ASSETS                                           $453,822,000     $447,386,000
                                                      ================== ================

                     LIABILITIES AND STOCKHOLDERS' EQUITY

    Deposits:
       Demand (noninterest -bearing)                        $94,833,000      $93,911,000
       NOW                                                   41,384,000       38,385,000
       Money Market                                         110,234,000       93,788,000
       Savings                                               20,076,000       20,002,000
       Time                                                  77,748,000       87,121,000
                                                      ------------------ ----------------
                 Total deposits                             344,275,000      333,207,000

    Borrowings under securities repurchase agreement         22,358,000       12,669,000
    Advances from FHLB                                       45,000,000       55,000,000
    Guaranteed preferred beneficial interests in
       Company's debentures                                  10,304,000       10,304,000
    Federal funds purchased                                           -        6,500,000
    Accrued interest payable                                    240,000          270,000
    Other liabilities                                         1,379,000        2,014,000
                                                      ------------------ ----------------
                 Total liabilities                          423,556,000      419,964,000


    Stockholders' equity
       Common stock                                               2,000            2,000
       Additional paid in capital                            10,066,000       10,066,000
       Retained earnings                                     18,538,000       17,166,000
       Unrealized appreciation (depreciation) on
         available for sale securities, net of tax            1,660,000          188,000
                                                      ------------------ ----------------
                 Total stockholders' equity                  30,266,000       27,422,000
                                                      ------------------ ----------------
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             $453,822,000     $447,386,000
                                                      ================== ================
</TABLE>

                 See Notes to Consolidated Financial Statements


<PAGE>

UNION BANKSHARES, LTD.  AND  SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001

UNAUDITED
<TABLE>
<CAPTION>
                                                                 SIX MONTHS ENDED              THREE MONTHS ENDED
                                                                     JUNE 30,                        JUNE 30,
                                                           ---------------------------     ---------------------------
                                                               2002             2001           2002             2001

<S>                                                        <C>             <C>             <C>             <C>
INTEREST INCOME:
  Interest and fees on loans                               $ 8,662,000     $10,368,000     $ 4,363,000     $ 5,045,000
  Interest on investment securities:
    U.S. government agencies and corporations                3,193,000       3,335,000     $ 1,425,000       1,727,000
    States and other political subdivisions                  1,349,000         870,000     $   693,000         503,000
  Interest on federal funds sold
    and interest bearing deposits at other banks                39,000         179,000          32,000          74,000
                                                           -----------     -----------     -----------     -----------
        Total interest income                               13,243,000      14,752,000       6,513,000       7,349,000
INTEREST EXPENSE:
  Interest on deposits                                       2,824,000       4,470,000       1,349,000       2,247,000
  Interest on federal funds purchased                          154,000           2,000          93,000           2,000
  Interest on notes payable                                  1,330,000       1,271,000         657,000         646,000
                                                           -----------     -----------     -----------     -----------
        Total interest expense                               4,308,000       5,743,000       2,099,000       2,895,000
                                                           -----------     -----------     -----------     -----------
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSS           8,935,000       9,009,000       4,414,000       4,454,000
PROVISION FOR LOAN LOSS                                        150,000          89,000          75,000              --
                                                           -----------     -----------     -----------     -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSS            8,785,000       8,920,000       4,339,000       4,454,000
NONINTEREST INCOME:
  Service charges                                              482,000         442,000         247,000         226,000
  Gain on sale of securities available for sale                482,000         106,000         331,000          93,000
  Other                                                        366,000         357,000         178,000         197,000
                                                           -----------     -----------     -----------     -----------
        Total non interest income                            1,330,000         905,000         756,000         516,000
                                                           -----------     -----------     -----------     -----------
NONINTEREST EXPENSE:
  Salaries and employee benefits                             4,777,000       4,342,000       2,440,000       2,146,000
  Amortization of goodwill                                          --         269,000              --         134,000
  Occupancy and equipment                                    1,035,000       1,015,000         536,000         503,000
  Other                                                      2,464,000       2,214,000       1,203,000       1,125,000
                                                           -----------     -----------     -----------     -----------
        Total non interest expense                           8,276,000       7,840,000       4,179,000       3,908,000
                                                           -----------     -----------     -----------     -----------


INCOME BEFORE INCOME TAX EXPENSE                             1,839,000       1,985,000         916,000       1,062,000
INCOME TAX EXPENSE                                             466,000         693,000         189,000         398,000
                                                           -----------     -----------     -----------     -----------
NET INCOME                                                 $ 1,373,000     $ 1,292,000     $   727,000     $   664,000
                                                           ===========     ===========     ===========     ===========


EARNINGS PER COMMON SHARE  BASIC
  Net income per share                                     $      0.57     $      0.54     $      0.30     $      0.28
                                                           ===========     ===========     ===========     ===========
  Weighted average number of common shares outstanding       2,410,078       2,399,646       2,410,078       2,399,913
                                                           ===========     ===========     ===========     ===========


EARNINGS PER COMMON SHARE  DILUTED
  Net income per share                                     $      0.52     $      0.49     $      0.28     $      0.26
                                                           ===========     ===========     ===========     ===========
  Weighted average number of common shares outstanding       2,662,067       2,653,645       2,662,067       2,653,911
                                                           ===========     ===========     ===========     ===========
</TABLE>


                 See Notes to Consolidated Financial Statements

<PAGE>

UNION BANKSHARES, LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001

(UNAUDITED)


<TABLE>
<CAPTION>
                                                                        SIX MONTHS ENDED                THREE MONTHS ENDED
                                                                             JUNE 30,                        JUNE 30,
                                                                  ----------------------------      ----------------------------
                                                                        2002              2001            2002             2001
                                                                  -----------      -----------      -----------      -----------

<S>                                                               <C>              <C>              <C>              <C>
NET  INCOME                                                       $ 1,373,000      $ 1,292,000      $   727,000      $   664,000

OTHER  COMPREHENSIVE  INCOME  (LOSS)
  Unrealized appreciation (depreciation) on
  available-for-sale securities, net of income taxes of
  $1,044,000, $605,000, $1,036,000 and $200,000 respectively        1,775,000        1,058,000        1,760,000          271,000


LESS:  reclassification adjustment for realized
  (gain)  losses included in net income, net of
  income  taxes of ($179,000), ($39,000), ($123,000) and
  ($34,000), respectively                                            (303,000)         (67,000)        (208,000)         (59,000)


                                                                  -----------      -----------      -----------      -----------
COMPREHENSIVE  INCOME                                             $ 2,845,000      $ 2,283,000      $ 2,279,000      $   876,000
                                                                  ===========      ===========      ===========      ===========
</TABLE>

                 See Notes to Consolidated Financial Statements


<PAGE>

UNION  BANKSHARES,  LTD.  AND  SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED


(UNAUDITED)
<TABLE>
<CAPTION>
                                                                          JUNE 30,
                                                          -------------------------------------
                                                                   2002                 2001
                                                                   ----                 ----

<S>                                                           <C>                 <C>
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES               $2,531,000            ($212,000)
                                                               -----------           ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Proceeds from maturities of available-for-sale
       securities                                              20,582,000           13,716,000
    Proceeds from sale of available-for-sale
       securities                                              57,439,000           60,796,000
    Purchase of available-for-sale securities                 (65,693,000)        (105,839,000)
    Net decrease in loans                                       7,367,000              111,000
    Purchase of furniture and equipment                          (324,000)            (135,000)

                                                          -------------------------------------
Net cash provided by (used in) investing activities            19,371,000          (31,351,000)
                                                          -------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Increase in deposits                                       11,068,000           29,786,000
    Decrease in fed funds purchased                            (6,500,000)                   -
    Proceeds from issuance of notes payable                    35,000,000          113,600,000
    Principal repayments of notes payable                     (45,000,000)        (102,200,000)
    Proceeds from issuance of common stock                              -               12,000
    Net borrowings under repurchase agreement                   9,689,000                    -
                                                          -------------------------------------
Net cash (used in) provided by financing activities             4,257,000           41,198,000
                                                          -------------------------------------

Net increase in cash and cash equivalents                      26,159,000            9,635,000

Cash and cash equivalents, beginning of year                   15,512,000           19,551,000
                                                          -------------------------------------
Cash and cash equivalents, end of quarter                     $41,671,000          $29,186,000
                                                          =====================================
</TABLE>

                 See Notes to Consolidated Financial Statements


<PAGE>


                      UNION BANKSHARES, LTD. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                                  JUNE 30, 2002



NOTE 1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and do not include all the
information and note disclosures required by generally accepted accounting
principles for complete financial statements. For further information, refer to
the consolidated financial statements and related footnotes included in the
Company's annual report on Form 10-K for the year ended December 31, 2001. In
the opinion of management, the consolidated financial statements presented
herein include all adjustments (consisting of normal recurring accruals)
necessary to present fairly, in all material respects, the consolidated
financial position of Union Bankshares, Ltd. (the "Company") as of June 30, 2002
and the Company's results of operations for the three and six months ended June
30, 2002 and 2001, statements of comprehensive income for the three and six
months ended June 30, 2002 and 2001, and statements of cash flows for the six
months ended June 30, 2002 and 2001.

The consolidated balance sheet of the Company as of December 31, 2001, has been
derived from the audited consolidated balance sheet of the Company as of that
date.

Certain reclassifications have been made to the June 30, 2001 Consolidated
Financial Statements to conform to the June 30, 2002 Consolidated Financial
Statements.


NOTE 2. RESULTS OF OPERATIONS

The results of operations for the three and six months ended June 30, 2002 and
2001 are not necessarily indicative of the results to be expected for the full
year.


NOTE 3. EARNINGS PER COMMON SHARE

Earnings per common share are computed by dividing net income available for
common stockholders by the weighted average number of shares of common stock
outstanding during the period plus the equivalent number of shares purchasable
under common stock options, if dilutive. Earnings per common share were affected
by 251,989 shares purchasable pursuant to exercisable options during the three
months ended June 30, 2002. Earnings per common share were affected by 253,999
shares purchasable pursuant to exercisable options during the three and six
months ended June 30, 2001.

                                       5

<PAGE>

NOTE 4. NOTES PAYABLE

During the first six months of 2002, the Company's subsidiary, Union Bank &
Trust (the "Bank") entered into 7 advance agreements totaling $35.0 million with
the Federal Home Loan Bank of Topeka bearing interest rates ranging from 1.90%
to 3.39%. During this same period the Bank repaid $45.0 million of its advances
from the FHLB. As of June 30, 2002, FHLB advances outstanding are $45.0 million
with $5.0 million maturing each on July 26,2002, August 8, 2002, October 3, 2002
and December 31, 2002, January 31, 2003, July 22, 2003, October 15, 2003,
October 17, 2003 and January 22, 2004.


NOTE 5. GOODWILL

The Company, effective January 1, 2002, adopted Statement of Financial
Accounting Standard (SFAS) 142, "Goodwill and Other Intangible Assets." The
impact of adopting SFAS 142 resulted in no longer being required to record
amortization of goodwill. The effect is an increase in net income of $269,000
for the six months ended June 30, 2002.

Additionally, the Standard requires a transitional evaluation of goodwill
impairment. This evaluation was conducted using standard valuation methodologies
the result of which indicated no impairment of goodwill.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS  OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

The following commentary presents management's discussion and analysis of the
Company's financial performance and financial condition for the second quarter
and six months ended June 30, 2002. The discussion is a supplement to the
unaudited Consolidated Financial Statements provided in Item 1 and the
consolidated financial statements and the management's discussion and analysis
of financial condition and results of operations included in the Company's Form
10-K for the year ended December 31, 2001, and should be read in conjunction
therewith.

GENERAL

The Company's profitability, like that of most similar financial institutions,
depends largely on the Bank's net interest income, which is the difference
between its interest income on interest-earning assets, such as loans and
investments, and its interest expense on interest-bearing liabilities, such as
deposits and borrowings. Accordingly, the Company's results of operations and
financial condition are largely dependent on movements in market interest rates
and its ability to manage its assets and liabilities in response to such
movements. The difference between the amount and rate of the total
interest-bearing assets and the amount and rate of the total interest-bearing
liabilities which reprice within a given time period could have a negative
effect on the Bank's net interest income depending on whether such difference
was positive or negative and whether interest rates are rising or falling.

Results of operations for financial institutions, including the Company, may be
materially and adversely affected by changes in prevailing economic conditions,
including declines in real estate values, rapid changes in interest rates and
the monetary and fiscal policies of the federal government and the Federal
Reserve Bank. The profitability of the Company depends in part on the spread
between the interest rates earned

                                       6


<PAGE>

on assets and the interest rates paid on deposits and other interest-bearing
liabilities. Although management believes that the maturities of the Company's
assets are moderately balanced in relation to maturities of liabilities
("asset/liability management"), asset/liability management involves estimates as
to how changes in the general level of interest rates will impact the yields
earned on assets and the rates paid on liabilities. A decrease in interest rate
spreads has had, and may continue to have a negative effect on the net interest
income and profitability of the Company, and we cannot give any assurance that
this spread will not continue to decrease. Although economic conditions in the
Denver metropolitan area have been generally strong in recent years, the Denver
economy has slowed since early 2001, as has the national economy. Moreover,
substantially all of the loans of the Company are to businesses and individuals
in the Denver area, and any significant decline in the economy of this market
area resulting in lower loan demand, or heightened credit risk within the
Company's existing or prospective loan portfolio, could have an adverse impact
on the Company.

RESULTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 2002 COMPARED TO SIX MONTHS ENDED JUNE 30, 2001

OVERVIEW: The Company reported net income of $1,373,000 for the six months ended
June 30, 2002, an increase of 6.3% from net income of $1,292,000 for the first
six months of 2001. Earnings were positively impacted in the first six months of
2002 by a $376,000 gain on sale of securities available for sale, a $40,000
increase in service charge income, a $9,000 increase in other noninterest
income, a $269,000 decrease in amortization of goodwill and a $227,000 decrease
in income tax expense. These improvements were partially offset by a $74,000
decrease in net interest income, a $61,000 increase in provision for loan loss
and a $705,000 increase in noninterest expense (other than the change in
goodwill amortization). Net income per share (diluted) was $.52 for the six
months ended June 30, 2002 compared to $.49 per share for the comparable 2001
period. Return on average assets and average equity were .62% and 9.76%,
respectively, for the six months ended June 30, 2002 compared to .65% and
10.21%, respectively, for the first six months of 2001.

During the first six months of 2002, the cash and Federal Funds sold at Union
Bank & Trust (the "Bank") increased $26.2 million, its securities portfolio
decreased $12.0 million, its net loan portfolio decreased $7.1 million, its
deposits increased $11.1 million, and its notes payable to the FHLB decreased
$10.0 million. See "Liquidity and Capital Resources" for a discussion of the
Company's FHLB borrowings.

INTEREST INCOME: Interest income decreased $1,509,000, or 10.2%, to $13,243,000
for the period ended June 30, 2002 from $14,752,000 for the comparable 2001
period. This decrease was primarily a result of the decrease in interest rates
which reflected the Federal Reserve's aggressive reductions in the federal funds
rate during 2001 and its stable interest rate policy in 2002, in response to
general economic conditions, partially offset by the increase in total interest
earning assets. The Company's net yield on interest earning assets on a fully
tax equivalent basis was 6.65% for the first six months of 2002, which reflects
a decrease of 170 basis points (each basis point equals 1/100 of 1%) from the
comparable 2001 period. The average yield on loans decreased from 9.53% in the
six months ended June 30, 2001 to 7.37% in the comparable 2002 period, and the
average yield on securities held by the Company decreased from 6.67% in the 2001
period to 5.81% in the 2002 period. Interest income on loans was $1,706,000
lower in the six months ended June 30, 2002, interest income on securities
increased $337,000 in the 2002 period and interest income on federal funds sold
decreased $140,000 in the 2002 period, each when compared to the comparable 2001
period.

                                       7

<PAGE>

INTEREST EXPENSE: Interest expense decreased $1,435,000, or 25.0%, to $4,308,000
for the six months ended June 30, 2002 from $5,743,000 for the six months ended
June 30, 2001. This decrease is primarily due to a decrease of $1,646,000 in
interest expense on deposits partially offset by an increase of $152,000 in
interest expense on federal funds purchased and an increase of $59,000 in
interest expense on notes payable to the Federal Home Loan Bank of Topeka
("FHLB"). Average rates paid on interest bearing deposits decreased 155 basis
points to 2.31% in the first six months of 2002 from 3.86% in the first six
months of 2001.

NET INTEREST INCOME: Net interest income before provision for loan loss was
$8,935,000 for the six months ended June 30, 2002, a decrease of $74,000, or
0.8%, over the first six months of 2001. Net interest margin decreased 59 basis
points from 5.15% in the 2001 period to 4.56% in the 2002 period, which led to
decreased net interest income. The Company experienced a $1,706,000 decrease in
interest income on loans and a $140,000 decrease in interest income on federal
funds sold, which was partially offset by a $337,000 increase in interest income
on investment securities and a $1,435,000 decrease in interest expense. The
Company's average yield on interest earning assets decreased 170 basis points in
the 2002 period compared to the 2001 period, from 8.35% to 6.65%. The Company's
average cost of funds for the six months ended June 30, 2002 was 149 basis
points lower than the comparable 2001 period.

NONINTEREST INCOME: Noninterest income increased $425,000, or 47.0%, for the six
months ended June 30, 2002 to $1,330,000 from $905,000 for the six months ended
June 30, 2001. This increase was due to a $40,000 increase in service charge
income, a $376,000 increase in gain on sale of securities available for sale and
a $9,000 increase in other noninterest income.

NONINTEREST EXPENSE: Noninterest expense increased $436,000, or 5.6%, for the
first six months of 2002 to $8,276,000, compared to $7,840,000 in the first six
months of 2001. This increase is primarily due to increases in salaries and
benefits relating primarily to annual merit increases and professional fees
offset by a $269,000 decrease in amortization of goodwill. The Company,
effective January 1, 2002, adopted Statement of Financial Accounting Standard
(SFAS) 142, "Goodwill and Other Intangible Assets." The impact of adopting SFAS
142 resulted in no longer being required to record amortization of goodwill.

INCOME TAX EXPENSE: Income tax expense decreased $227,000, or 32.8%, for the
first six months of 2002 to $466,000 compared to $693,000 in the first six
months of 2001. This decrease is primarily due to lower pre-tax income and
increases in tax exempt investments in 2002.

THREE MONTHS ENDED JUNE 30, 2002 COMPARED TO THREE MONTHS ENDED JUNE 30, 2001

OVERVIEW: The Company reported net income of $727,000 for the three months ended
June 30, 2002, an increase of 9.5% from net income of $664,000 for the
comparable 2001 period. Net income was $.28 per share (diluted) for the three
month period ended June 30, 2002, compared to $.26 per share (diluted) for the
2001 period. Return on average assets and average equity were .66% and 10.34%,
respectively, for the three month period ended June 30, 2002, compared to .65%
and 10.24%, respectively, for the comparable 2001 period.

                                       8

<PAGE>

INTEREST INCOME: Interest income decreased $836,000, or 11.4%, to $6,513,000 for
the three month period ended June 30, 2002 from $7,349,000 for the comparable
2001 period. This decrease was primarily a result of the decrease in interest
rates which reflected the Federal Reserve's aggressive reductions in the federal
funds rate during 2001 and its stable interest rate policy during 2002, in
response to general economic conditions, partially offset by the increase in
total interest earning assets. The Company's net yield on interest earning
assets on a fully tax equivalent basis was 6.56% for the three month period
ended June 30, 2002, which reflects a decrease of 147 basis points from the
comparable 2001 period. The average yield on loans decreased from 9.23% in the
2001 period to 7.40% in the 2002 period, and the average yield on securities
held by the Company decreased from 6.47% in the 2001 period to 5.62% in the
three months ended June 30, 2002. Interest income on loans was $682,000 lower in
the three months ended June 30, 2002, interest income on securities decreased
$112,000 in the 2002 period and interest income on federal funds sold decreased
$42,000 in the 2002 period.

INTEREST EXPENSE: Interest expense decreased $796,000, or 27.5%, to $2,099,000
for the three months ended June 30, 2002 from $2,895,000 for the three months
ended June 30, 2001. This decrease is due to a decrease of $898,000 in interest
expense on deposits offset by an increase of $91,000 in interest expense on
federal funds purchased and an increase of $11,000 in interest expense on notes
payable to the FHLB. Average rates paid on interest bearing deposits decreased
155 basis points to 2.18% in the three months ended June 30, 2002 from 3.73% in
the three months ended June 30, 2001.

NET INTEREST INCOME: Net interest income before provision for loan loss was
$4,414,000 for the three months ended June 30, 2002, a decrease of $40,000, or
0.9%, over the comparable period of 2001. Net interest margin decreased 38 basis
points between the periods from 4.92% in the 2001 period to 4.54% in the 2002
period, leading to decreased net interest income. The Company experienced a
$682,000 decrease in interest income on loans, a $112,000 decrease in interest
income on securities, a $42,000 decrease in interest income on federal funds
sold and a $796,000 decrease in interest expense. The Company's average yield on
earning assets decreased 147 basis points in the 2002 period compared to the
2001 period, from 8.03% to 6.56%. The Company's average cost of funds for the
three months ended June 30, 2002 was 141 basis points lower than in the
comparable 2001 period.

NONINTEREST INCOME: Noninterest income increased $240,000, or 46.5%, for the
three months ended June 30, 2002 to $756,000 from $516,000 for the three months
ended June 30, 2001. This increase was primarily due to a $238,000 increase in
the gain on sale of securities available for sale and a $21,000 increase in
service charge income, offset by a $19,000 decrease in other noninterest income.

NONINTEREST EXPENSE: Noninterest expense increased $271,000, or 6.9%, for the
three months ended June 30, 2002 to $4,179,000 compared to $3,908,000 in the
three months ended June 30, 2001. This increase is primarily due to increases in
salaries and benefits relating primarily to annual merit increases offset by a
$134,000 decrease in amortization of goodwill. The Company, effective January 1,
2002, adopted Statement of Financial Accounting Standard (SFAS) 142, "Goodwill
and Other Intangible Assets." The impact of adopting SFAS 142 resulted in no
longer being required to record amortization of goodwill.

INCOME TAX EXPENSE: Income tax expense decreased $209,000, or 52.5%, for the
three months ended June 30, 2002 to $189,000 compared to $398,000 in the three
months ended June 30, 2001. This decrease is primarily due to lower pre tax
income and increases in tax exempt investments in 2002.

                                       9

<PAGE>

PROVISION FOR LOAN LOSS

The Company charged $150,000 to the Provision for Loan Loss in the first six
months of 2002 and $89,000 for the comparable period in 2001. The ratio of loan
loss reserve to total loans was 1.48% at June 30, 2002 and 1.48% at June 30,
2001. The Company sets its loan loss reserve at a level considered adequate to
provide for anticipated loan losses based on management's assessment of various
factors affecting the loan portfolio. These factors include a review of problem
loans, business conditions, loan loss experience and an overall evaluation of
the quality of the collateral, holding and disposal costs and costs of capital.
Provision for loan loss is a direct charge against income and is determined by
management based on the adequacy of the loan loss reserve.

LIQUIDITY AND SOURCES OF FUNDS

The Company's total assets increased 1.4% to $453.8 million at June 30, 2002
from $447.4 million at December 31, 2001. During the six months ended June 30,
2002 deposits increased $11.1 million to $344.3 million at June 30, 2002 from
$333.2 million at December 31, 2001. None of the Company's deposits at June 30,
2002 were brokered deposits.

The Company has established a revolving line of credit with Gold Banc in an
amount not to exceed $3.0 million. Any monies advanced under this line would be
used solely for capital needs of the Company or to purchase the stock of banks
or bank holding companies. This line of credit is available for one year only,
with renewals to be negotiated each year. There is currently no amount
outstanding under this line of credit.

During the second quarter of 2002, the Bank borrowed $15.0 million from the FHLB
with rates ranging from 1.98% to 3.39% and maturities ranging from three days to
six months. These borrowings serve as an alternative source of funding to fund
current loan growth at a time when the Bank's deposits have not increased and
liquidation of a portion of the Bank's securities portfolio is not believed to
be advisable. The Company expects that these loans will be repaid with liquidity
from normal increases in deposits coupled with liquidity from the Bank's
securities portfolio.

During the second quarter of 2002, the Bank repaid $20.0 million of the FHLB
loans.

Management anticipates that the Company will continue to rely primarily on
customer deposits, sales and maturities of investment securities, loan sales and
loan repayments, as well as retained earnings to provide liquidity. These funds
are used to make loans, to acquire investment securities and other assets and to
fund continuing operations. The Company believes that its customer deposits will
continue to provide a strong source of liquidity because of the high percentage
of core deposits, many of which are held as compensating balances under
long-standing loan relationships. As a secondary source of funds, management
uses federal funds and borrowings related to its membership in the FHLB.

ASSET QUALITY

The Company's lending activities are guided by its Statement of Lending Policies
and Procedures. These policies are annually reviewed and approved by the Bank's
Board of Directors. The Bank employs an internal auditor to monitor its internal
supervision and audits of its lending operation and the Company supplements
these internal procedures with independent examinations performed by
professional consultants and auditors. The Company monitors concentrations of
loans by collateral, purpose and industry. The

                                       10

<PAGE>

Company has no significant exposure to highly leveraged transactions and has no
foreign credits in its loan portfolio.

Total nonperforming assets were $4,481,000 and $2,557,000 at June 30, 2002 and
December 31, 2001, respectively. This increase is primarily due to one credit.
Management believes it has adequate reserves and collateral for this credit and
should any loss be realized management does not expect this credit to have a
material adverse effect on the Company's results of operations or financial
condition. Other Real Estate Owned (OREO) was $0 and $0 at June 30, 2002 and
December 31, 2001, respectively. At June 30, 2002, securities available for sale
totaled $147.0 million, or 85.4% of the total portfolio, securities pledged to
repurchase agreement totaled $22.3 million, or 13.0% and other securities
(investment in FHLB stock) totaled $2.8 million, or 1.6% of the total portfolio.
Securities available for sale are those securities which may be sold in response
to changes in interest rates, changes in the Company's short term liquidity
needs or changes in prepayment risk, and are stated at estimated market value.
At June 30, 2002, the market value of investments available for sale exceeded
amortized cost by approximately $2,637,000.

MARKET RISK

Market risk arises from changes in interest rates. The Company has risk
management policies to monitor and limit exposure to market risk as discussed in
the Company's Form 10-K for the year ended December 31, 2001.

As noted in the Company's Form 10-K for the year ended December 31, 2001,
management has generally sought to control the exposure of the Company's
securities portfolio to rising interest rates by maintaining a position within a
narrow range around an "earnings neutral position" (i.e. the mix of assets and
liabilities that generate a net interest margin that is least affected by
interest rate changes).

Accordingly, in addition to performing gap analysis, management also evaluates
the impact of differing interest rates on net interest income using an earnings
simulation model. The model incorporates the factors not captured by gap
analysis by projecting income under a variety of interest rate scenarios. The
following table shows the anticipated effect on net interest income with a 100
and 200 basis point parallel shift up or down interest rate scenario.


                                     Change in net        Percent change in net
             Change in rate         interest income          interest income
             --------------         ---------------       ---------------------

                +200 bp                 $124,000               0.7%

                +100 bp                 $ 67,000               0.4%

                -100 bp                ($279.000)             (1.5%)

                -200 bp                ($591,000)             (3.2%)


The Company uses a measurement tool known as dollar duration to help maintain an
earnings neutral position. As of June 30, 2002, the dollar duration of the
investment portfolio was 4.27 compared to 5.34 at December 31, 2001. This
decrease in dollar duration resulted from the replacement of securities which
were sold, matured or called during the first six months of 2002 with securities
with slightly higher yields and similar maturities. The Company may also engage
in hedging transactions to control interest rate risk.

                                       11

<PAGE>

The effect of these efforts in any given period may be to negatively impact
reported net non-interest income and the interest earned on the securities.

CAPITAL RESOURCES

The Company's capital adequacy is a direct measurement of the overall financial
strength of the Company and its ability to absorb adverse market conditions. In
addition, the capital position of the Company provides a mechanism to promote
public confidence in the Company and the Bank.

The Company's total stockholders' equity increased $2.9 million to $30.3 million
at June 30, 2002 from $27.4 million at December 31, 2001. This increase in
stockholders' equity was due to the retention of earnings in the current year
and by the net effect of FAS 115 which requires financial institutions to mark
their available for sale securities portfolio to market.

The Federal Reserve Board and FDIC guidelines require a minimum of a 4% Tier 1
core capital to risk-weighted assets ratio and an 8% total qualifying capital to
risk-weighted assets ratio. Due to the Company's high level of capital and the
level of risk in its current asset mix, the Company's risk based capital ratios
exceed the regulatory minimum ratios. The Company's Tier 1 core capital to risk
weighted assets was 12.63% at June 30, 2002 and its total qualifying capital to
risk weighted assets was 14.16%. As of June 30, 2002 the Bank also exceeded the
minimum regulatory risk based capital ratios.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See Market Risk beginning on page 11.


"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995.

Statements which are not historical facts contained in this document are forward
looking statements that involve risks and uncertainties that could cause actual
results to differ from projected results. Factors that could cause actual
results to differ materially include, among others: continued success of the
Bank's branching strategy, general economic conditions, economic conditions in
the Denver metropolitan area, the monetary policy of the Federal Reserve Board,
changes in interest rates, inflation, instability in the financial markets
relating to terrorist activities and the response thereto, competition in the
banking business, changes in the state and federal regulatory regime applicable
to the Company's and the Bank's operations, the results of financing efforts and
other risk factors detailed in the Company's Forms 10-K,10-Q, and 8-K filed with
the Securities and Exchange Commission.

Information included in this document includes "forward-looking statements"
which can be identified by the use of forward-looking terminology such as "may,"
"will," "anticipate," "believe," "estimate," or "continue," or the negative
thereof or other variations thereon or comparable terminology. The statements in
"risk factors" and other statements and disclaimers in the Company's Annual
Report on Form 10-K constitute cautionary statements identifying important
factors, including certain risks and uncertainties, with respect to such
forward-looking statements that could cause actual results to differ materially
from those reflected in such forward-looking statements.

                                       12

<PAGE>

                             UNION BANKSHARES, LTD.

                           PART II - OTHER INFORMATION


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Annual Meeting of Stockholders of Union Bankshares, Ltd. was held on May 30,
2002. At such meeting, the following proposals were voted on and approved:

1.   Proposal No. 1: To elect to the Board three Class II directors.

                                        FOR               WITHHOLD

     Bruce E. Hall                      2,266,268         13,999

     Charles B. Worthington             2,279,967         300

     Ralph D. Johnson                   2,277,967         2,300

2.   Proposal No. 2: Approval of adoption of the Union Bankshares, Ltd. 2003
     Equity Incentive Plan.

                                        FOR            AGAINST       ABSTAIN

                                        1,601,043      222,811       1,200

3.   Proposal No. 3: Ratify the selection of BKD, LLP as independent auditors
     for the Company for the fiscal year ending December 31, 2002.

                                        FOR            AGAINST       ABSTAIN

                                        2,279,917      350           0


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)   Exhibits

EXHIBIT NO.

     99.1       Certification of Charles R. Harrison, Chief Executive Officer,
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

     99.2       Certification of Bruce E. Hall, Vice President, Treasurer and
                Secretary (principal financial officer), pursuant to Section 906
                of the Sarbanes-Oxley Act of 2002

(b)   Reports on Form 8-K.

      The Company filed no reports on Form 8-K during the quarter for which this
request is filed.

                                       13

<PAGE>


                                   SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                        UNION BANKSHARES, LTD.
                                        ----------------------
                                        (Registrant)



August 13, 2002                         /S/ BRUCE E. HALL
                                        ---------------------------------------
                                        Bruce E. Hall
                                        Vice President, Treasurer and Secretary
                                        (Authorized Officer and Principal
                                         Financial Officer of the Registrant)


                                       14