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

                                     OR

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

             For the quarterly period ending:    March 31, 2000

                      Commission file number: 000-28449

                           UNION BANKSHARES, INC.

                        VERMONT            03-0283552

                                P.O. BOX 667
                                 MAIN STREET
                           MORRISVILLE, VT   05661

               Registrant's telephone number:    802-888-6600

Former name, former address and former fiscal year, if changed since last
report:    Not applicable

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.    Yes  [X]      No  [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of March 31, 2000:

      Common Stock, $2 par value               3,029,529 shares


                           UNION BANKSHARES, INC.
                              TABLE OF CONTENTS

PART 1    FINANCIAL INFORMATION


Financial Statements
  Union Bankshares, Inc.
  Consolidated Balance Sheet                                       3
  Consolidated Statement of Income - Year to Date                  4
  Consolidated Statement of Changes in Stockholder's Equity        5
  Consolidated Statement of Cash Flows                             6
Notes to Financial Statements                                      8

Management's Discussion and Analysis of Financial Condition
 and Results of Operations                                        10

PART II   OTHER INFORMATION


      Item 6    EXHIBITS AND REPORTS ON FORM 8-K                  23

Signatures                                                        23


                   Union Bankshares, Inc. and Subsidiaries
                           Statement of Condition
                                 (Unaudited)

<TABLE>
<CAPTION>
                                                    March 31     December 31
(Dollars in Thousands)                                2000          1999
                                                    -----------------------

<S>                                                 <C>           <C>
Assets
  Cash and due from banks                           $ 10,043      $ 11,627
  Federal funds sold and overnight deposits            3,380         3,474
                                                    ----------------------

      Total cash and cash equivalents                 13,423        15,101

  Interest bearing deposits                            2,053         1,957
  Securities available-for-sale                       57,165        60,441
  Federal Home Loan Bank stock                         1,019           939
  Loans held for sale                                  6,798         8,102

Loans                                                204,231       201,525
  Unearned loan fees                                    (268)         (273)
  Allowance for loan losses                           (2,899)       (2,870)
                                                    ----------------------
    Loans, net                                       201,064       198,382
                                                    ----------------------
Accrued interest receivable                            2,253         2,199
Bank premises and equipment, net                       4,081         4,040
Other real estate owned, net                              83            27
Other assets                                           4,165         4,288
                                                    ----------------------
      Total assets                                  $292,105      $295,476
                                                    ======================

Liabilities and Stockholders' equity:

Liabilities:
  Deposits:
    Non-interest bearing                            $ 32,025      $ 32,989
    Interest bearing                                 219,883       224,604
                                                    ----------------------
      Total deposits                                 251,908       257,593

  Borrowed funds                                       4,126         2,872
  Accrued interest and other liabilities               3,617         2,791
                                                    ----------------------
      Total liabilities                              259,651       263,256
                                                    ----------------------

Stockholders' equity:
  Common stock, $2 par value; 5,000,000 shares
   authorized; 3,263,489 shares issued
    at 3/31/00 and 12/31/99.                           6,527         6,527
  Paid-in capital and surplus                            238           238
  Retained earnings                                   28,534        28,180
  Treasury stock at cost (233,960 shares
   at 3/31/00 and 12/31/99)                           (1,592)       (1,592)
  Accumulated other comprehensive income              (1,253)       (1,133)
                                                    ----------------------
      Total stockholders' equity                      32,454        32,220
                                                    ----------------------

      Total liabilities and stockholders' equity    $292,105      $295,476
                                                    ======================
</TABLE>

See accompanying notes to unaudited financial statements


                   Union Bankshares, Inc. and Subsidiaries
                     Consolidated Statements of Income
                                 (Unaudited)

<TABLE>
<CAPTION>
                                                        March 31      March 31
(Dollars in Thousands)                                    2000          1999
                                                       ------------------------

<S>                                                    <C>           <C>
Interest income:
  Interest and fees on loans                           $    4,741    $    4,520
  Interest and dividends on investment securities             924           902
  Interest on federal funds sold                               49            75
  Interest on interest bearing deposits                        29            28
                                                       ------------------------
                                                       $    5,743    $    5,525
                                                       ------------------------

Interest expense:
  Interest on deposits                                      2,227         2,158
  Interest on federal funds purchased                           1             0
  Interest on borrowed funds                                   38            90
                                                       ------------------------
                                                       $    2,266    $    2,248
                                                       ------------------------

      Net interest income                                   3,477         3,277
Provision for loan losses                                      62           100
                                                       ------------------------
Net interest income after provision for loan losses         3,415         3,177

Noninterest income:
  Trust department income                                      42            37
  Service fees                                                554           563
  Security gains                                               37             0
  Gain on sale of loans                                         9            16
  Other                                                         6             7
                                                       ------------------------
                                                              648           623
                                                       ------------------------

Noninterest expense:
  Salaries and wages                                        1,099         1,034
  Pension and other employee benefits                         298           261
  Occupancy expense, net                                      157           144
  Equipment expense                                           300           275
  Other operating expense                                     672           712
                                                       ------------------------
                                                            2,526         2,426
                                                       ------------------------

  Income before income tax expense                          1,537         1,374
Income tax expense                                            459           401
                                                       ------------------------
      Net income                                       $    1,078    $      973
                                                       ========================
Earnings per common share                              $      .36    $      .32
                                                       ========================
Weighted average number of common
 shares outstanding                                     3,029,529     3,025,331
                                                       ========================
</TABLE>

See accompanying notes to unaudited financial statements


                   Union Bankshares, Inc. and Subsidiaries
          Consolidated Statements of Changes in Stockholders Equity
                                 (Unaudited)

<TABLE>
<CAPTION>
                                                                                            Accumulated
                                                                                                Other            Total
                                      Common    Paid-in Capital     Retained    Treasury    Comprehensive    Stockholders'
                                      Stock        & Surplus        Earnings      Stock     Income (Loss)       Equity
                                      ------------------------------------------------------------------------------------
                                                                      (Dollars in Thousands)

<S>                                   <C>             <C>           <C>         <C>            <C>              <C>
Balance, December 31, 1999            $6,527          $238          $28,180     $(1,592)       $(1,133)         $32,220

Net income                                                            1,078                                       1,078
Net unrealized holding gain on
 securities available-for-sale,
 net of tax                                                                                       (120)            (120)
                                                                                                                -------

Comprehensive income                                                                                                958
                                                                                                                -------
Cash dividends declared                    0             0             (724)          0              0             (724)
Treasury stock purchased                   0             0                0           0              0                0
Exercise of stock option                   0             0                0           0              0                0
                                      ---------------------------------------------------------------------------------
Balance, March 31, 2000               $6,527          $238          $28,534     $(1,592)       $(1,253)         $32,454
                                      =================================================================================
</TABLE>


                   Union Bankshares, Inc. and Subsidiaries
                    Consolidated Statement of Cash Flows
                                 (UNAUDITED)

<TABLE>
<CAPTION>
                                                      March 31   March 31
(Dollars in Thousands)                                  2000       1999
                                                      -------------------

<S>                                                    <C>        <C>
Cash Flows From Operating Activities
  Net Income                                           $1,078     $   973
  Adjustments to reconcile net income to net cash
   provided by operating activities
  Depreciation                                            247         213
  Provision for loan losses                                62         100
  Provision (credit) for deferred income taxes            (78)          9
  Amortization, net Securities                             65          16
  Amortization, net Limited Partnerships                    8           0
  Increase (decrease) in unamortized loan fees             (5)         15
  (Increase) decrease in loans held for sale            1,313        (646)
  Increase in accrued interest receivable                 (54)        (38)
  Decrease in other assets                                247         219
  Increase in income taxes payable                        532         393
  Increase in accrued interest payable                    112          10
  Increase (decrease) in other liabilities                189          (4)
  Gain on securities                                      (37)          0
  Gain on sale of loans                                    (9)        (16)
  (Gain) loss on sale of OREO                              (1)          2
                                                       ------------------
      Net cash provided by operating activities         3,669       1,246

Cash Flows From Investing Activities
  Interest bearing deposits
    Maturities and redemptions                            297         198
    Purchases                                            (393)       (276)
  Securities available for sale
    Maturities and redemptions                          5,259       4,032
    Purchases                                          (2,193)     (5,230)
  Purchase of Federal Home Loan Bank Stock                (80)        (16)
  (Increase) decrease in loans, net                    (2,839)      1,930
  Recoveries of loans charged off                          45          22
  Purchases of premises and equipment, net               (288)        (78)
  Proceeds from sale of OREO                                0          24
  Investment in Ltd Partnerships                            0        (373)
  Proceeds from sale of repossessed property                0          31
                                                       ------------------

      Net cash used in investing activities              (192)        264

Cash Flows From Financing Activities
  Borrowings, net of repayments                         1,254         (91)
  Proceeds from exercise of stock options                   0          37
  Net increase (decrease) in demand, NOW, savings,
   and money market accounts                           (8,488)     (2,333)
  Net increase in time deposits                         2,803       1,652
  Dividends paid                                         (724)       (790)
                                                       ------------------

      Net cash provided by financing activities        (5,155)     (1,525)

      Decrease in cash and cash equivalents            (1,678)        (15)
Cash and cash equivalents
  Beginning                                            15,101      19,196
  Ending                                               13,423      19,181

Supplemental Disclosure of Cash Flow Information:
  Interest Paid                                        $2,154     $ 2,238
                                                       ==================

  Income Taxes Paid                                    $    0     $     0
                                                       ==================
</TABLE>

                           UNION BANKSHARES, INC.

                       NOTES TO FINANCIAL STATEMENTS:

Note 1.

The accompanying interim consolidated financial statements of Union
Bankshares, Inc. (the Company) for the interim period ended March 31, 2000
and 1999 which are unaudited, have been prepared in accordance with the
accounting policies described in the company's annual report to shareholders
and Form 10K.  In the opinion of management, all adjustments (consisting
only of normal recurring adjustments) necessary for a fair presentation of
the information contained herein have been made.  Certain amounts reported
in prior periods have been reclassified for comparative purposes.  This
information should be read in conjunction with the Company's 1999 Annual
report, Form S-4, and Form 8K.

Note 2.  Acquisition

Effective November 30, 1999, following the receipt of all required
stockholder, state and federal regulatory approvals, Union Bankshares, Inc.
acquired Citizens Saving Bank and Trust Co..  This makes Union a two bank
holding company.  The accompanying consolidated financial statements reflect
the merger accounted for in a tax-free transaction as a pooling of interests
and are presented as if the companies were combined as of the earliest
period presented.  However, the financial information is not necessarily
indicative of the results of operations, financial position or cash flows
that would have occurred had the acquisition been consumated for the periods
for which it is given effect, nor is it necessarily indicative of future
results of operations, financial position, or cash flows.  The financial
statements reflect the conversion of each outstanding share of Citizens
common stock into 6.5217 shares of Union common stock, with the exchange of
991,089 shares (net of 196 fractional shares redeemed for approximately
$4,516) of newly-issued Company common stock.

Note 3.  Commitments and Contingencies

In the normal course of business, the Company is involved in various legal
proceedings.  In the opinion of management, after consulting with the
Company's legal counsel, any liability resulting from such proceedings would
not have a material adverse effect on the Company's financial statements.

Note 4  Earnings Per Share

Earnings per common share amounts are computed based on the weighted average
number of shares of common stock outstanding during the period
(retroactively adjusted for stock dividends) and reduced for shares held in
Treasury.  The assumed conversion of available stock options does not result
in material dilution.

Note 5  Reportable Segments

The company has two reportable operating segments, Union Bank (Union) and
Citizens Savings Bank and Trust Company (Citizens).  Management regularly
evaluates separate financial information for each segment in deciding how to
allocate resources and in assessing performance.

The Company accounts for intersegment sales and transfers as if the sales or
transfers were to third parties, that is, at current market prices.


Information about reportable segments, and reconciliation of such
information to the consolidated financial statements as of and for the
period ended March 31, follows:

<TABLE>
<CAPTION>
                                                       Intersegment             Consolidated
2000                             Union     Citizens    Elimination     Other       Totals
--------------------------------------------------------------------------------------------

<S>                            <C>         <C>             <C>          <C>       <C>
Interest income                $  3,841    $ 1,902         $  0         $  0      $  5,743
Interest expense                  1,451        815            0            0         2,266
Provision for loan loss               0         62            0            0            62
Service fee income                  444        110            0            0           554
Income tax expense (benefit)        373        103            0          (17)          459
Net income (loss)                   903        201            0          (26)        1,078
Assets                          193,030     98,737          (21)         359       292,105

<CAPTION>
                                                       Intersegment             Consolidated
1999                             Union     Citizens    Elimination     Other       Totals
--------------------------------------------------------------------------------------------

<S>                            <C>         <C>             <C>          <C>       <C>
Interest income                $  3,607    $ 1,918         $  0         $  0      $  5,525
Interest expense                  1,396        852            0            0         2,248
Provision for loan loss              38         62            0            0           100
Service fee income                  427        136            0            0           563
Income tax expense (benefit)        287        120            0           (6)          401
Net income (loss)                   804        219            0          (50)          973
Assets                          191,136     98,119            0          332       289,587
</TABLE>

Amounts in the "Other" column encompass activity in Union Bankshares, Inc.,
the "parent company."  Holding company assets are stated after intercompany
eliminations.


       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                            RESULTS OF OPERATIONS

                                   GENERAL

The following discussion and analysis provides information regarding Union
Bankshares, Inc.'s (Union's) financial position as of March 31, 2000 and as
of December 31, 1999, and its results of operations for the three months
ended March 31, 2000 and 1999.  This discussion should be read in
conjunction with the information in this document under Financial Statements
and related notes and with other financial data appearing elsewhere in this
filing.  In the opinion of Union's management, the unaudited interim data
reflect all adjustments, consisting only of normal recurring adjustments,
necessary to fairly present Union's consolidated financial position and
results of operations to be expected for the interim period.  Management is
not aware of the occurrence of any events after March 31, 2000, which would
materially affect the information presented below.

The millennium change was basically a non-event as far as problems and both
banks completed their year-end processing on schedule.

On February 4, 2000, Citizens upgraded their main application software from
Jack Henry 20/20 to Jack Henry Silverlake.  On that day, Union Bank became
the Electronic Data Processing Server for Citizens.  Therefore, both of
Union's subsidiaries are processed on Union Bank's IBM AS400 located in
Morrisville, Vermont.  The transition was planned to be as transparent as
possible to customers and line staff of Citizens.  Citizens reimburses Union
for costs incurred under a data processing agreement between the banks.
Intercompany revenues and costs have been eliminated in consolidation.  Only
a few other, non-material operational changes have resulted from the switch
and internal controls have been maintained.

The Company 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 and assumptions
relating thereto.  The Company may include forward-looking statements in its
filings with the Securities and Exchange Commission, in its reports to
stockholders, including this Quarterly Report, in other written materials,
and in statements made by senior management to analysts, rating agencies,
institutional investors, representatives of the media and others.

By their very nature, forward-looking statements are subject to
uncertainties, both general and specific, and risk exists that predictions,
forecasts, projections and other estimates contained in forward-looking
statements will not be achieved.  Also when we use any of the words
"believes," "expects," "anticipates" or similar expressions, we are making
forward-looking statements.  Many possible events or factors could affect
the future financial results and performance of our company.  This could
cause results or performance to differ materially from those expressed in
our forward-looking statements.  The possible events or factors that might
affect our forward-looking statements include, but are not limited to, the
following:

*   uses of monetary, fiscal and tax policy by various governments
*   political, legislative or regulatory  developments in Vermont or the
    United States including changes in laws concerning taxes, banking and
    other aspects of the financial services industry
*   developments in general economic or business conditions, including
    interest rate fluctuations, market fluctuations and perceptions, and
    inflation
*   changes in the competitive environment for financial services
    organizations
*   the Company's ability to retain key personnel
*   changes in technology including demands for greater automation and
    systems integration of Citizens
*   timely integration of Citizens, unanticipated lower revenues,  loss of
    customers or business, or higher operating expenses
*   adverse changes in the securities market

When relying on forward-looking statements to make decisions with respect to
the Company, investors and others are cautioned to consider these and other
risks and uncertainties.

                            RESULTS OF OPERATIONS

The Company's net income for the quarter ended March 31, 2000 was $ 1.08
million, compared with net income of $973 thousand for the first quarter of
1999.  Net income per share was $.36 for the first quarter of 2000 compared
to $.32 for the same quarter of 1999.

Net Interest Income.   The largest component of Union's operating income is
net interest income, which is the difference between interest and dividend
income received from interest-earning assets and the interest expense paid
on its interest-bearing liabilities.

Yields Earned and Rates Paid.  The following tables show, for the periods
indicated, the total amount of income recorded from interest-earning assets,
and the related average yields, the interest expense associated with
interest-bearing liabilities, expressed in dollars and average rates, and
the relative net interest spread and net interest margin.  All yield and
rate information is calculated on an annualized basis.  Yield and rate
information for a period is average information for the period, and is
calculated by dividing the income or expense item for the period by the
average balances of the appropriate balance sheet item during the period.
Net interest margin is net interest income divided by average interest-
earning assets.  Nonaccrual loans are included in asset balances for the
appropriate periods, but recognition of interest on such loans is
discontinued and any remaining accrued interest receivable is reversed, in
conformity with federal regulations.  The yields and net interest margins
appearing in the following tables have been calculated on a pre-tax basis:

<TABLE>
<CAPTION>
                                                              Three months ended March 31,
                                                         2000                              1999
                                            ----------------------------------------------------------------
                                                       Interest    Average               Interest    Average
                                            Average     Earned/     Yield/    Average     Earned/     Yield/
                                            Balance      Paid        Rate     Balance      Paid        Rate
                                            ----------------------------------------------------------------
                                                                  (dollars in thousands)

<S>                                         <C>         <C>         <C>      <C>          <C>         <C>
Average Assets:
  Federal funds sold                        $  3,635    $   49      5.39%    $  6,588     $   75      4.55%
  Interest bearing deposits                    1,982        29      5.85%       2,015         28      5.56%
  Investments (1) (2)                         60,683       924      6.26%      59,147        902      6.24%
  Loans, net (1), (3)                        206,946     4,741      9.25%     199,164      4,520      9.17%
                                            --------------------------------------------------------------
      Total interest-earning assets (1)      273,246     5,743      8.51%     266,914      5,525      8.38%

Cash and due from banks                        8,766                            9,297
Premises and equipment                         4,033                            4,529
Other assets                                   6,579                            5,605
                                            --------                         --------
      Total assets                          $292,624                         $286,345
                                            ========                         ========

Average Liabilities and
  Shareholders' Equity:
  NOW accounts                              $ 32,008       153      1.91%    $ 32,259        152      1.88%
  Savings and money market accounts           90,868       825      3.63%      83,140        716      3.44%
  Certificates of deposit                     97,925     1,249      5.10%      98,912      1,290      5.22%
  Borrowed funds                               2,443        39      6.39%       6,026         90      5.97%
                                            --------------------------------------------------------------
      Total interest-bearing Liabilities     223,244     2,266      4.06%     220,337      2,248      4.08%

Non-interest bearing deposits                 32,250                           31,427
Other liabilities                              5,085                            2,831
                                            --------                         --------
      Total liabilities                      260,579                          254,595

Shareholders' equity                          32,045                           31,750
                                            --------                         --------
      Total liabilities and
       shareholders' equity                 $292,624                         $286,345
                                            ========                         ========

Net interest income (1)                                 $3,477                            $3,277
                                                        ======                            ======

Net interest spread (1)                                             4.45%                             4.30%
Net interest margin (1)                                             5.19%                             5.01%

--------------------
<FN>
<F1>  Average yield reported on a tax-equivalent basis.
<F2>  The average balance of investments is calculated using the amortized
      cost basis.
<F3>  Net of unearned income and allowance for loan loss.
</FN>
</TABLE>

Union's net interest income increased by $200 thousand, or 6.1%, to $3.48
million for the three months ended March 31, 2000, from $3.28 million for
the three months ended March 31, 1999.  This increase was primarily due to
the lower cost of interest-bearing liabilities as a result of lower interest
rates paid on deposits and the increased yield on loans.  The net interest
spread increased by 15 basis points to 4.45% for the three months ended
March 31, 2000, from 4.30% for the three months ended March 31, 1999.  The
net interest margin for the 2000 period increased by 18 basis points to
5.19% from 5.01% for the 1999 period.  This improvement is mainly due to
retaining loans held for sale in our portfolio, the payoff of some long term
borrowings with Federal Home Loan Bank of Boston, and the increase in
interest rates in general between the two periods which is in our favor.

Rate/Volume Analysis.  The following table describes the extent to which
changes in interest rates and changes in volume of interest-earning assets
and interest-bearing liabilities have affected Union'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.

<TABLE>
<CAPTION>
                                           Three Months Ended March 31, 2000 Compared
                                              to Three Months Ended March 31, 1999
                                           ------------------------------------------
                                              Increase/(Decrease) Due to Change In
                                               Volume         Rate         Net
                                           ------------------------------------------

                                                  (dollars in thousands)

<S>                                             <C>           <C>          <C>
Interest-earning assets:
  Federal funds sold                            $(34)         $  8         $(26)
  Interest bearing deposits                        0             1            1
  Investments                                     17             5           22
  Loans, net                                     178            43          221
                                                -------------------------------
      Total interest-earning assets              161            57          218
                                                -------------------------------
Interest-bearing liabilities:
  NOW accounts                                    (1)            2            1
  Savings and money market accounts               67            42          109
  Certificates of deposit                        (13)          (28)         (41)
  Borrowed funds                                 (54)            3          (51)
                                                -------------------------------
      Total interest-bearing liabilities          (1)           19           18
                                                -------------------------------
Net change in net interest income               $162          $ 38         $200
                                                ===============================
</TABLE>

Interest and Dividend Income.  Union's interest and dividend income
increased by $218,000, or 3.94%, to $5.7 million for the three months ended
March 31, 2000, from $5.5 million for the three months ended March 31, 1999.
Average earning assets increased by $6.3 million, or 2.37%, to $273.2
million for the three months ended March 31, 2000, from $266.9 million for
the three months ended March 31, 1999.  Average loans approximated $207
million for the three months ended March 31, 2000 up from $199.2 million for
the three months ended March 31, 1999.  Increases in construction loans of
$1 million or 18.33%, the $5.9 million or 8.50% increase in residential real
estate secured loans, and the $5.7 million or 6.65% increase in commercial
loans was partially offset by the $4.9 million or 29.4% decrease in personal
loans.  Construction Lending was strong throughout 1999 and into the winter
of 2000.  A conscious decision to retain loans packaged for sale in our
portfolio in mid 1999 accounts for the majority of the increase in both the
residential real estate and commercial loan portfolios.  The decrease in
personal loans is due to a late 1998 decision to exit the Dealer floorplan
business at Citizens.

The average balance of investment securities (including mortgage-backed
securities) increased by $1.5 million, or 2.6%, to $60.7 million for the
three months ended March 31, 2000, from $59.1 million for the three months
ended March 31, 1999.  The average level of federal funds sold decreased by
$3 million or 44.8%, to $3.6 million for the three months ended March 31,
2000, from $6.6 million for the three months ended March 31, 1999.  The
slight increase in the investment portfolio and the decrease in Federal
Funds Sold and Interest Bearing Deposits in 2000 reflects the closer
attention to cash management since Y2 passed with no liquidity crisis, the
paydown of debt and the continuing growth in our loan portfolio.  Interest
Income on non-loans was $1 million for both years reflecting the increase in
yields offset by the overall decrease in volume.

Interest Expense. Union's interest expense increased by $18 thousand, or 8%,
to $2.27 million for the three months ended March 31, 2000 from $2.25
million for the three months ended March 31, 1999.  Average interest-bearing
liabilities increased by $2.9 million, or 1.3% to $223.2 million for the
three months ended March 31, 2000, from $220.3 million for the three months
ended March 31, 1999.  Average time deposits decreased $1.0 million, or
1.0%, to $97.9 million for the three months ended March 31, 2000, from $98.9
million for the three months ended March 31, 1999, while the average
balances for money market and saving accounts increased by $7.7 million to
$90.9 million for the three months ended March 31, 2000, from $83.1 million
for the three months ended March 31, 1999.  The 9.3% increase in balances
was all in money market accounts as the rate structure was tiered to remain
competitive with other financial institutions.  Customers have maintained
very liquid positions during the last 15 months as they anticipate the
interest rates paid on all deposit instruments will continue to rise.

The average balance on funds borrowed has dropped from $6 million on average
in 1999 to $2.4 million in 2000 as Union paid off some long term Federal
Home Loan Bank borrowings during the second quarter of 1999.

Noninterest Income.  Union's noninterest income increased $25,000, or 4.0%,
to $648 thousand for the three months ended March 31, 2000, from $623
thousand for the three months ended March 31, 1999.  The results for the
period reflected a net gain of $37 thousand from the sale of securities
compared to no gain or loss from sales during 1999.  Trust department income
rose to $42,000 in the first quarter of 2000 from $37,000 in the same period
of 1999 or a 13.5% increase.  Gain on Sale of Loans dropped $7,000 to $9,000
for 2000 from $16,000 for 1999.  This change can be explained by
management's decision to retain in portfolio a higher percentage of loans
that could be sold due to the interest rate environment and other
reinvestment rates available.  Other noninterest income and service fees
(sources of which include deposit and loan fees, ATM fees, and safe deposit
fees) decreased by $9,000, or 1.6%, to $554 thousand for the three months
ended March 31, 2000, from $563 thousand for the three months ended March
31, 1999.  This was primarily caused by a drop in Overdraft Fee income due
to the continuing strong economy.

Noninterest Expense.  Union's noninterest expense increased $100,000, or
4.1%, to $2.5 million for the three months ended March 31, 2000, from $2.4
million for the three months ended March 31, 1999.  Salaries increased
$65,000, or 6.3%, to $1.1 million for the three months ended March 31, 2000,
from $1.03 million for the three months ended March 31, 1999, reflecting
normal salary activity and pay for overtime during the 1st quarter of 2000
related to a systems conversion at Citizens.  Pension and employee benefits
increased $37 thousand or 14.2% to $298 thousand for the three months ended
March  31, 2000, from $261 thousand for the three months ended March 31,
1999 mainly due to a $23,000 increase in health insurance costs and a
$14,000 increase in retirement plans expense.  Net occupancy expense
increased $13 thousand, or 9.0%, to $157,000 for the three months ended
March 31, 2000, from $144,000 for the three months ended March 31, 1999 due
mainly to the increase in fuel costs and building maintenance expense.
Equipment expense increased $25 thousand to $300 thousand for the three
months ended March 31, 2000, from $275 thousand for the same period in 1999
primarily resulting from increased depreciation cost on computer equipment
and software purchases which are depreciated as an expense over a time
period of three to five years.

During the quarter ended March 31, 2000, Union incurred approximately $2
thousand of expenses related to the merger, including legal and advisory
fees compared to $94 thousand during the 1st quarter of 1999.

Income Tax Expense.  Union's income tax expense increased by $58,000, or
14.5%, to $459,000 for the three months ended March 31, 2000, from $401,000
for the comparable period of 1999 because of our increased income and the
absence of the historic rehabilitation credit that was available to us for
the 1999 tax year due to our partnership investment in a low income housing
project sponsored by Housing Vermont in our market area.

                            FINANCIAL CONDITION

At March 31, 2000, Union had total consolidated assets of $292 million,
including net loans and loans held for sale of $208 million, deposits of
$252 million and shareholders' equity of $32.5 million.  Based on the most
recent information published by the Vermont Banking Commissioner, in terms
of total assets at December 31, 1999, Union Bank ranked as the 11th largest
institution of the 26 commercial banks and savings institutions
headquartered in Vermont, and Citizens ranked as the 20th.

Union's total assets decreased by $3.4 million or 1.1% to $292.1 million at
March 31, 2000 from $295.5 million at December 31, 1999.  Total net loans
and loans held for sale increased by $1.4 million or .7% to $207.9 million
or 71.2% of total assets at March 31, 2000 as compared to $206.5 million or
69.9% of total assets at December 31, 1999, an increase of $3 million in
Commercial Real Estate loans held in portfolio offset by a $1.3 million
decrease in loans held for sale and a $1.6 million decrease in consumer
loans accounted for most of the growth, the remaining growth was among the
other loans types.  Cash and cash equivalents, including Federal funds sold,
decreased approximately $1.7 million or 11.1% to $13.4 million at March 31,
2000 from $15.1 million at December 31, 1999, which was primarily
attributable to the temporary drop in balances of municipal Now accounts
whose balances are cyclical.  Deposits decreased $5.7 million or 2.2% to
$251.9 million at March  31, 2000 from $257.6 million at December 31, 1999.
A $7.2 million drop in Now accounts, mainly Municipal accounts, offset by
increased investment in time deposits of $2.8 million accounted for the
majority of the decrease.  Total borrowings increased $1.2 million to $4.1
million at March 31, 2000 from $2.9 million at December 31, 1999.  The
increase was in short-term liquidity borrowing from the Federal Home Loan
Bank under existing lines of credit.

Loan Portfolio.  Union's loan portfolio (including loans held for sale)
primarily consists of adjustable- and fixed-rate mortgage loans secured by
one-to-four family, multi-family residential or commercial real estate.  As
of March 31, 2000, Union's loan portfolio totaled $211.0 million, or 72.2%,
of assets, of which $90.7 million, or 43% of gross loans, consisted of
residential mortgages and construction loans, and $76.3 million, or 36.1%,
of total loans consisted of commercial real estate loans.  As of such date,
Union's loan portfolio also included $16.8 million of commercial loans,
$10.2 million of municipal loans, and $17.0 million of consumer loans
representing, in order, 8.0%, 4.8% and 8.1% of total loans outstanding on
March 31, 2000.

The following table shows information on the composition of Union's loan
portfolio as of March 31, 2000 and December 31, 1999:

<TABLE>
<CAPTION>
                                                   March 31,     December 31,
                                                 ----------------------------
Loan Type                                            2000            1999
---------                                        ----------------------------

<S>                                              <C>             <C>
Real Estate                                      $ 87,582,899    $ 87,153,823
Commercial real estate                             72,847,139      69,806,893
Commercial                                         16,606,057      16,246,118
Consumer                                           17,033,783      18,661,352
Municipal loans                                    10,161,219       9,656,703
Loans held for sale                                 6,798,349       8,101,815
                                                 ----------------------------
      Total loans                                 211,029,446     209,626,704

Deduct:
Allowance for loan losses                           2,899,412       2,869,983
Net deferred loan fees, premiums & discounts          268,065         273,305
                                                 ----------------------------
                                                    3,167,477       3,143,288
                                                 ----------------------------
                                                 $207,861,969    $206,483,416
                                                 ============================
</TABLE>

Union originates and sells residential mortgages into the secondary market,
with most such sales made to the Federal Home Loan Mortgage Corporation
(FHLMC).  Union services a $138.6 million residential mortgage portfolio,
approximately $47.9 million of which is serviced for unaffiliated third
parties at March 31, 2000.  Additionally, Union originates commercial loans
under various SBA programs that provide an agency guarantee for a portion of
the loan amount.  Union will typically sell the guaranteed portion of the
loan to other financial concerns and will retain servicing rights, which
generates fee income.  Union capitalizes mortgage servicing rights on these
fees and recognizes gains and losses on the sale of the principal portion of
these notes as they occur.  As of March 31, 2000, Union serviced $12.9
million of commercial and commercial real estate loans for unaffiliated
third parties.

Gross loans and loans held for sale have increased $1.4 million or .7% since
December 31, 1999.  The increase in Commercial Real Estate loans was $3
million or a growth rate of 4.36%.  There was growth in the residential real
estate loan arena but it was mainly negated by the sale of $2.3 million of
these loans during the quarter.  We also experienced moderate growth in both
the commercial and municipal loan markets.  The growth was offset by the
shrinkage of our consumer loan portfolio by $1.6 million or 8.7%.  This
runoff is the continuing result of the discontinuance of the dealer
floorplan program in late 1998.

Asset Quality.  Union, like all financial institutions, is exposed to
certain credit risks related to the value of the collateral that secures its
loans and the ability of borrowers to repay their loans.  Management closely
monitors Union's loan and investment portfolios and other real estate owned
for potential problems on a periodic basis and reports to Union's Board of
Directors at regularly scheduled meetings.

Union had loans on nonaccrual status totaling $709,000 at March 31, 2000,
$951,000 at December 31, 1999 and $706,000 at March 31, 1999.  Interest
income not recognized on such loans amounted to approximately $215 thousand
and $133 thousand as of March 31, 2000 and 1999, respectively and $183
thousand as of December 31, 1999.

Union had $2.61 million and $3.17 million in loans past due 90 days or more
and still accruing at March 31, 2000 and December 31, 1999, respectively.
At March 31, 2000, Union had internally classified certain loans totaling
$1.1 million.  In management's view, such loans represent a higher degree of
risk and could become nonperforming loans in the future.  While still on a
performing status, in accordance with Union's credit policy, loans are
internally classified when a review indicates any of the following
conditions making the likelihood of collection highly questionable:

*   the financial condition of the borrower is unsatisfactory;
*   repayment terms have not been met;
*   the borrower has sustained losses that are sizable, either in absolute
    terms or relative to net worth;
*   confidence is diminished;
*   loan covenants have been violated;
*   collateral is inadequate; or
*   other unfavorable factors are present.

At March 31, 2000, Union had acquired by foreclosure or through repossession
real estate worth $83,000, consisting of commercial property, undeveloped
land and a residential home.

Allowance for Loan Losses.  Some of Union's loan customers ultimately do not
make all of their contractually scheduled payments, requiring Union to
charge off the remaining principal balance due.  Union maintains an
allowance for loan losses to absorb such losses.  The allowance for loan
losses is maintained at a level which, in management's judgment, is adequate
to absorb credit losses inherent in the loan portfolio.  The amount of the
allowance is based on management's evaluation of the collectibility of the
loan portfolio, including the nature of the portfolio, credit
concentrations, trends in historical loss experience, specific impaired
loans, and economic conditions.  Allowances for impaired loans are generally
determined based on collateral values or the present value of estimated cash
flows.  The allowance is increased by a provision for loan losses, which is
charged to expense and reduced by charge-offs, net of recoveries.  While
Union allocates the allowance for loan losses based on the percentage
category to total loans, the portion of the allowance for loan losses
allocated to each category does not represent the total available for future
losses which may occur within the loan category since the total allowance
for possible loan losses is a valuation reserve applicable to the entire
portfolio.

The following table reflects activity in the allowance for loan losses for
the three months ended March 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                       Three Months Ended, March 31
                                       ----------------------------
                                             2000        1999
                                       ----------------------------
                                          (dollars in thousands)

<S>                                         <C>         <C>
Balance at the beginning of period          $2,870      $2,845
Charge-offs:
  Real Estate                                    0          16
  Commercial                                    14           3
  Consumer and other                            64          62
                                            ------------------
      Total charge-offs                         78          81
                                            ------------------
Recoveries:
  Real Estate                                    0           1
  Commercial                                    21           4
  Consumer and other                            24          16
                                            ------------------
      Total recoveries                          45          21
                                            ------------------
Net charge-offs                                (33)        (60)
Provision for loan losses                       62         100
                                            ------------------
Balance at end of period                    $2,899      $2,885
                                            ==================
</TABLE>

The following table shows the breakdown of Union's allowance for loan loss
by category of loan and the percentage of loans in each category to total
loans in the respective portfolios at the dates indicated:

<TABLE>
<CAPTION>
                                             March 31,         December 31,
                                       --------------------------------------
                                               2000               1999
                                       --------------------------------------
                                             (dollars in thousands)

                                       Amount    Percent    Amount    Percent
                                       ------    -------    ------    -------

<S>                                    <C>        <C>       <C>        <C>
Real Estate
  Residential                          $  550      42.3%    $  557      42.3%
  Commercial                            1,050      31.0%     1,014      30.6%
  Construction                             80       3.8%        77       3.7%
Other Loans
  Commercial                              468       8.3%       416       8.1%
  Consumer installment                    415       7.8%       448       8.6%
  Home equity loans                        28       1.8%        28       1.8%
  Municipal, Other and
   Unallocated                            308       5.0%       330       4.9%
                                       -------------------------------------
      Total                            $2,899     100.0%    $2,870     100.0%
                                       =====================================
Ratio of Net Charge Offs to
 Average Loans (1)                                  .06%                0.16%
                                                  --------------------------
Ratio of Allowance for Loan
 Losses to Loans                                   1.42%                1.42%
                                                  --------------------------

<FN>
<F1>  Annualized
</FN>
</TABLE>

Investment Activities  At March 31, 2000, the reported value of investment
securities available-for-sale was $57.2 million or 19.6% of its assets.
Union had no securities classified as held-to-maturity or trading
securities.  The reported value of securities available-for-sale at March
31, 2000, reflects a negative valuation adjustment of $1.9 million. The
offset of this adjustment, net of income tax effect, was a $1.25 million
decrease in Union's other comprehensive income component of shareholders'
equity and an increase in net deferred tax assets of $645,300.

Deposits.  The following table shows information concerning Union's deposits
by account type, and the weighted average nominal rates at which interest
was paid on such deposits as of March 31, 2000 and December 31, 1999:

<TABLE>
<CAPTION>
                                 Three Months Ended, March 31         Year Ended December 31,
                                ----------------------------------------------------------------
                                             2000                              1999
                                ----------------------------------------------------------------
                                                     (dollars in thousands)
                                           Percent                           Percent
                                Average    of Total    Average    Average    of Total    Average
                                Amount     Deposits     Rate      Amount     Deposits     Rate
                                ----------------------------------------------------------------

<S>                            <C>         <C>          <C>      <C>         <C>          <C>
Non-certificate
 deposits:
  Demand deposits              $ 32,250     12.74%               $ 32,505     12.83%
  Now accounts                   32,008     12.65%      1.91%      34,654     13.67%      1.95%
  Money Markets                  54,675     21.61%      4.26%      49,296     19.45%      4.14%
  Savings                        36,193     14.30%      2.69%      38,064     15.02%      2.71%
                               ------------------                ------------------
Total non-certificate
 deposits                       155,126     61.30%                154,519     60.97%
                               ------------------                ------------------
Certificates of deposit:
  Less than $100,000             76,595     30.27%      4.97%      78,030     30.79%      5.05%
  $100,000 and over              21,330      8.43%      5.59%      20,870      8.24%      5.48%
                               ------------------                ------------------
Total certificates of
 deposit                         97,925     38.70%                 98,900     39.03%
                               ------------------                ------------------
Total deposits                 $253,051    100.00%      3.54%    $253,419    100.00%      3.49%
                               ==================                ==================
</TABLE>

The following table sets forth information regarding the amounts of Union's
certificates of deposit in amounts of $100,000 or more at March 31, 2000 and
December 31, 1999 that mature during the periods indicated:

<TABLE>
<CAPTION>
                                     March 31, 2000    December 31, 1999
                                     -----------------------------------
                                           (dollars in thousands)

          <S>                            <C>                <C>
          Within 3 months                $13,107            $ 2,301
          3 to 6 months                    2,620             11,872
          6 to 12 months                   4,591              3,751
          Over 12 months                   2,508              3,491
                                         --------------------------
                                         $22,826            $21,415
                                         ==========================
</TABLE>

Borrowings. Borrowings from the Federal Home Loan Bank of Boston were $4.1
million at March 31, 2000 at a weighted average rate of 6.09%.  Borrowings
from the Federal Home Loan Bank of Boston were $2.9 million at December 31,
1999 at a weighted average rate of 5.94%.  The change between year end 1999
and the end of the first quarter of 2000 is a net increase of $1.3 million
in short-term borrowing to fund loan demand.

Other Financial Considerations

Market Risk and Asset and Liability Management.  Market risk is the risk of
loss in a financial instrument arising from adverse changes in market prices
and rates, foreign currency exchange rates, commodity prices and equity
prices.  Union's market risk arises primarily from interest rate risk
inherent in its lending and deposit taking activities.  To that end,
management actively monitors and manages its interest rate risk exposure.
Union does not have any market risk sensitive instruments acquired for
trading purposes.  Union attempts to structure its balance sheet to maximize
net interest income while controlling its exposure to interest rate risk.
Union's Asset/Liability Committee formulates strategies to manage interest
rate risk by evaluating the impact on earnings and capital of such factors
as current interest rate forecasts and economic indicators, potential
changes in such forecasts and indicators, liquidity, and various business
strategies.  Union's Asset/Liability Committee's methods for evaluating
interest rate risk include an analysis of Union's interest-rate sensitivity
"gap", which provides a static analysis of the maturity and repricing
characteristics of Union's entire balance sheet, and a simulation analysis,
which calculates projected net interest income based on alternative balance
sheet and interest rate scenarios, including "rate shock" scenarios
involving immediate substantial increases or decreases in market rates of
interest.

Union's Asset/Liability Committee meets at least weekly to set loan and
deposit rates, make investment decisions, monitor liquidity and evaluate the
loan demand pipeline.  Deposit runoff is monitored daily and loan
prepayments evaluated monthly.  Union historically has maintained a
substantial portion of its loan portfolio on a variable rate basis and plans
to continue this ALM strategy in the future.  The investment portfolio is
classified as available for sale and the modified duration is relatively
short.  Union does not utilize any derivative products or invest in any
"high risk" instruments.

Our interest rate sensitivity analysis (simulation) as of December 1999 for
a flat rate environment projected a Net Interest Income of $3.54 million for
the first three months of 2000 compared to actual results of $3.48 million
or a .17% difference.  Net income was projected to be $1.15 million compared
to actual results of $1.08 million.  Of the $69 thousand difference, the
majority is related to net interest margin being lower than anticipated.
Interest income was $22K less than anticipated due to a contraction in our
consumer loan portfolio resulting from the discontinuance of the Dealer
Floorplan program and reduced investment income as our portfolio shrank from
$63 million to $60 million due to stronger loan demand than expected combined
with a temporary reduction in deposit growth.  The second component of net
interest margin that was lower than predicted was loan fees due to the
continuing strong economy and the market's preference for "no point" loans.
The third component of net interest margin is interest expense which was
higher than anticipated as we had to raise interest rates paid faster than
expected to remain competitive and we drew down some short term borrowing
lines at the Federal Home Loan Bank of Boston for liquidity utilization.
Return on Assets was projected to be 1.57% and actual results were 1.48%.
Return on Equity was projected to be 14.37% compared to actual of 13.48%.
The lower results of these ratios is based on lower net income as explained
above.

The Company generally requires collateral or other security to support
financial instruments with credit risk.  As of March 31, 2000, the contract
or notional amount of financial instruments whose contract amount represents
credit risk were as follows:

<TABLE>
<S>                                                           <C>
Commitments to extend credit                                  $19,503,000
                                                              -----------
Standby letters of credit and commercial letters of credit    $   675,000
                                                              -----------
Credit Card arrangements                                      $ 1,995,000
                                                              -----------
Home Equity Lines of Credit                                   $ 3,679,000
                                                              -----------
</TABLE>

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee.

Interest Rate Sensitivity "Gap" Analysis.  An interest rate sensitivity
"gap" is defined as the difference between interest-earning assets and
interest-bearing liabilities maturing or repricing within a given time
period.  A gap is considered positive when the amount of interest rate
sensitive assets exceeds the amount of interest rate sensitive liabilities.
A gap is considered negative when the amount of interest rate sensitive
liabilities exceeds the amount of interest rate sensitive assets.  During a
period of rising interest rates, a negative gap would tend to adversely
affect net interest income, while a positive gap would tend to result in an
increase in net interest income.  During a period of falling interest rates,
a negative gap would tend to result in an increase in net interest income,
while a positive gap would tend to affect net interest income adversely.
Because different types of assets and liabilities with the same or similar
maturities may react differently to changes in overall market interest rates
or conditions, changes in interest rates may affect net interest income
positively or negatively even if an institution were perfectly matched in
each maturity category.

Union prepares its interest rate sensitivity "gap" analysis by scheduling
interest-earning assets and interest-bearing liabilities into periods based
upon the next date on which such assets and liabilities could mature or
reprice.  The amounts of assets and liabilities shown within a particular
period were determined in accordance with the contractual terms of the
assets and liabilities, except that:

*   adjustable-rate loans, securities, and FHLB advances are included in the
    period when they are first scheduled to adjust and not in the period in
    which they mature;

*   fixed-rate mortgage-related securities reflect estimated prepayments,
    which were estimated based on analyses of broker estimates, the results
    of a prepayment model utilized by Union, and empirical data;

*   fixed-rate loans reflect scheduled contractual amortization, with no
    estimated prepayments; and

*   NOW, money markets, and savings deposits, which do not have contractual
    maturities, reflect estimated levels of attrition, which are based on
    detailed studies by Union of the sensitivity of each such category of
    deposit to changes in interest rates.

Management believes that these assumptions approximate actual experience and
considers them reasonable.  However, the interest rate sensitivity of
Union's assets and liabilities in the tables could vary substantially if
different assumptions were used or actual experience differs from the
historical experience on which the assumptions are based.

The following tables show Union's rate sensitivity analysis as of March 31,
2000:

<TABLE>
<CAPTION>
                                                                           March 31, 2000
                                                                     Cumulative repriced within
                                                3 Months     4 to 12      1 to 3       3 to 5      Over 5
                                                or Less      Months       Years        Years       Total        Total
                                                ----------------------------------------------------------------------
                                                              (dollars in thousands, by repricing date)

<S>                                             <C>         <C>          <C>          <C>         <C>         <C>
Interest sensitive assets:
  Federal Funds Sold                            $  3,308    $     -0-    $     -0-    $    -0-    $    -0-    $  3,308
  Interest bearing deposits                          397         693          772         191          -0-       2,053
  Investments available for sale (1)               1,748       4,053       15,709      12,791      22,226       56,527
  FHLB Stock                                          -0-         -0-          -0-         -0-      1,019        1,019
  Loans (fixed and
   adjustable rate)                               61,771      34,532       26,598      32,200      55,928      211,029
                                                ----------------------------------------------------------------------
      Total interest sensitive assets           $ 67,224    $ 39,298     $ 43,079     $45,182     $79,173     $273,936
                                                ----------------------------------------------------------------------

Interest sensitive liabilities:
  Certificates of deposit                       $ 32,753    $ 44,309     $ 20,513     $ 1,010     $    -0-    $ 98,585
  Money markets                                   45,108          -0-          -0-         -0-      8,936       54,044
  Regular savings                                 15,865          -0-          -0-         -0-     21,015       36,880
  Now accounts                                    20,104          -0-          -0-         -0-     10,270       30,374
  Borrowed funds                                   2,080         228          719         529         570        4,126
                                                ----------------------------------------------------------------------
      Total interest sensitive liabilities      $115,910    $ 44,537     $ 21,232     $ 1,539     $40,791     $224,009
                                                ----------------------------------------------------------------------
Net interest rate sensitivity gap                (48,686)     (5,259)      21,847      43,643      38,382       49,927
Cumulative net interest rate
 Sensitivity gap                                 (48,686)    (53,945)     (32,098)     11,545      49,927
Cumulative net interest rate
 sensitivity gap as a
  percentage of total assets                      (16.67%)    (18.47%)     (10.99%)      3.95%      17.09%
Cumulative interest sensitivity gap
 as a percentage of total
  interest-earning assets                         (17.77%)    (19.69%)     (11.72%)      4.21%      18.16%
Cumulative net interest earning
 assets as a percentage of
  cumulative interest-bearing
   liabilities                                    (21.72%)    (24.08%)     (14.33%)      5.15%      22.29%

--------------------
<FN>
<F1>  Investments available for sale exclude marketable equity securities
      with a fair value of $638,000 which may be sold by Union at any time.
</FN>
</TABLE>

Simulation Analysis.  In its simulation analysis, Union uses computer
software to simulate the estimated impact on net interest income and capital
under various interest rate scenarios, balance sheet trends, and strategies.
These simulations incorporate assumptions about balance sheet dynamics such
as loans and deposit growth, product pricing, changes in funding mix, and
asset and liability repricing and maturity characteristics.  Based on the
results of these simulations, Union is able to quantify its interest rate
risk and develop and implement appropriate strategies.

The following chart reflects the results of our latest simulation analysis
for each of the next three year ends on Net Interest Income, Net Income,
Return on Assets, Return on Equity and Capital Value.  The projection
utilizes a rate shock of 150 basis points from the current prime rate of 9%,
this is the highest internal slope monitored and shows the best and worse
scenarios analyzed.  This slope range was determined to be the most relevant
during this economic cycle.

                           UNION BANKSHARES, INC.
                  INTEREST RATE SENSITIVITY ANALYSIS MATRIX
                               MARCH 31, 2000
                               (in thousands)

<TABLE>
<CAPTION>
                                                       Return      Return
                                                         on          on
Year             Prime     Net Interest     Change       Net       Assets     Equity     Capital     Change
Ending           Rate         Income           %        Income       %           %        Value         %
-----------------------------------------------------------------------------------------------------------

<S>              <C>          <C>          <C>          <C>         <C>        <C>       <C>         <C>
December-00      10.50        14,229         2.37       4,645       1.57       13.48     20,566      (28.01)
                  9.00        13,900         0.00       4,424       1.50       12.87     28,567        0.00
                  7.50        13,570        (2.38)      4,201       1.42       12.26     37,465       31.15

December-01      10.50        15,674         4.22       5,528       1.79       14.84     23,279      (25.47)
                  9.00        15,039         0.00       5,103       1.65       13.86     31,237        0.00
                  7.50        14,410        (4.18)      4,681       1.52       12.86     40,077       28.31

December-02      10.50        17,135         6.13       6,319       1.94       15.58     26,000      (23.57)
                  9.00        16,146         0.00       5,660       1.74       14.30     34,019        0.00
                  7.50        15,176        (6.00)      5,015       1.55       12.99     42,914       26.15
</TABLE>

Liquidity.  Liquidity is a measurement of Union's ability to meet potential
cash requirements, including ongoing commitments to fund deposit
withdrawals, repay borrowings, fund investment and lending activities, and
for other general business purposes.  Union's principal sources of funds are
deposits, amortization and prepayment of loans and securities, maturities of
investment securities and other short-term investments, sales of securities
available-for-sale, and earnings and funds provided from operations.  In
addition, as members of the FHLB, Union's subsidiaries have access to
preapproved lines of credit up to 5.62% of total assets or $16.4 million.

In addition, both subsidiaries maintain Federal Fund lines of credit with
upstream correspondent banks and repurchase agreement lines with selected
brokerage houses.

While scheduled loan and securities payments and FHLB advances are
relatively predictable sources of funds, deposit flows and prepayments on
loans and mortgage-backed securities are greatly influenced by general
interest rates, economic conditions, and competition.  Union's liquidity is
actively managed on a daily basis, monitored by the Asset/Liability
Committee, and reviewed periodically with the Board of Directors.  Union's
Asset/Liability Committee sets liquidity targets based on Union's financial
condition and existing and projected economic and market conditions.  The
committee measures Union's marketable assets and credit available to fund
liquidity requirements and compares the adequacy of that aggregate amount
against the aggregate amount of Union's sensitive or volatile liabilities,
such as core deposits and time deposits in excess of $100,000, term deposits
with short maturities, and credit commitments outstanding.  The committee's
primary objective is to manage Union's liquidity position and funding
sources in order to ensure that it has the ability to meet its ongoing
commitment to its depositors, to fund loan commitments, and to maintain a
portfolio of investment securities.  Since many of the loan commitments are
expected to expire without being drawn upon, the total commitment amounts do
not necessarily represent future cash requirements.

Union's management monitors current and projected cash flows and adjusts
positions as necessary to maintain adequate levels of liquidity.  Although
approximately 78.2% of Union's certificates of deposit will mature within
twelve months, management believes, based upon past experience, that Union
will retain a substantial portion of these deposits.  Management will
continue to offer a competitive but prudent pricing strategy to facilitate
retention of such deposits.  Any reduction in total deposits could be offset
by purchases of federal funds, short-term FHLB borrowings, or liquidation of
investment securities or loans held for sale.  Such steps could result in an
increase in Union's cost of funds and adversely impact the net interest
margin.

Regulatory Capital Requirements.:  Union Bank and Citizens (the Banks) are
subject to various regulatory capital requirements administered by the
federal banking agencies.  Management believes, as of March 31, 2000 that
the Banks meet all capital adequacy requirements to which they are subject.

As of March 31, 2000, the most recent notification from the FDIC categorized
the Banks as well capitalized under the regulatory framework for prompt
corrective action.  To be categorized as well capitalized, the Banks must
maintain minimum total risk-based, Tier I risk-based, and Tier I leverage
ratios as set forth in the table below.  There are no conditions or events
since the notification that management believes have changed either Bank's
category.

The Banks' actual capital amounts (000's omitted) and ratios are presented
in the table:

<TABLE>
<CAPTION>
                                                                                       Minimums
                                                                                      To Be Well
                                                                   Minimums        Capitalized Under
                                                                  For Capital      Prompt Corrective
                                                 Actual           Requirements     Action Provisions
                                           ---------------------------------------------------------
                                            Amount    Ratio      Amount   Ratio     Amount    Ratio
                                           ---------------------------------------------------------

<S>                                        <C>        <C>       <C>        <C>     <C>        <C>
As of March 31, 2000:
Total capital to risk weighted assets
  Union Bank                               $23,893    18.86%    $10,134    8.0%    $12,669    10.0%
  Citizens                                  11,998    17.50%      5,486    8.0%      6,857    10.0%

Tier I capital to risk weighted assets
  Union Bank                               $22,295    17.60%    $ 5,067    4.0%    $ 7,601     6.0%
  Citizens                                  11,138    16.24%      2,743    4.0%      4,114     6.0%

Tier I capital to average assets
  Union Bank                               $22,295    11.44%    $ 7,795    4.0%    $ 9,744     5.0%
  Citizens                                  11,138    11.52%      3,866    4.0%      4,833     5.0%
</TABLE>

Impact of Inflation and Changing Prices.  Union's consolidated financial
statements, included in this document, have been prepared in accordance with
generally accepted accounting principles, which require the measurements of
financial position and results of operations in terms of historical dollars,
without considering changes in the relative purchasing power of money over
time due to inflation.  Banks have asset and liability structures that are
essentially monetary in nature, and their general and administrative costs
constitute relatively small percentages of total expenses.  Thus, increases
in the general price levels for goods and services have a relatively minor
effect on Union's total expenses.  Interest rates have a more significant
impact on Union's financial performance than the effect of general
inflation.  Interest rates do not necessarily move in the same direction or
change in the same magnitude as the prices of goods and services, although
periods of increased inflation may accompany a rising interest rate
environment.

PART II  OTHER INFORMATION


ITEM 6:  EXHIBITS AND REPORTS IN FORM 10-Q

A.    Exhibits.
      27 - Financial Data Schedule

B.    Current Reports on Form 8-K
      Report to Shareholders on Fourth Quarter Results filed on
      February 16, 2000

                                  SIGNATURES

Pursuant to 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, Inc.

                                       /s/ Kenneth D. Gibbons
                                       ------------------------------
                                       Kenneth D. Gibbons
                                       Director and Chief Executive Officer

                                       /s/ Marsha A. Mongeon
                                       ------------------------------
                                       Marsha A. Mongeon
                                       Chief Financial Officer and Treasurer