1

                              UNITED STATES
                   SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C.  20549
                                FORM 10-Q
                                    
(Mark One)
(  x  )   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
          OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998

                                   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 Number 2-90679

                        UNION BANKSHARES COMPANY
         (Exact name of registrant as specified in its charter)
                                    
     MAINE                                         01-0395131
(State or other jurisdiction           (I.R.S. Employer Identification No.)
of incorporation of organization)

                    66 Main Street, Ellsworth, Maine
                (Address of Principal Executive Offices)
                                    
                               (Zip Code)
                                  04605
                                    
           Registrant's telephone number, including area code
                             (207) 667-2504
                                    
     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 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   XXX   NO_____

     Indicate the number of shares outstanding of each of the issue's
classes of common stock, as of the latest practicable date.

          Class                    Outstanding at September 30, 1998
(Common stock, $12.50 Par Value)                       481,819



                        UNION BANKSHARES COMPANY
                                    
                           INDEX TO FORM 10-Q
                                    
PART I         Financial Information                           Page
                                                               No
                                                                  
        Item 1               Financial Statements                  
        
                                                                  
               Condensed consolidated balance sheets-             
               September 30, 1998, September 30, 1997, and       3
               December 31, 1997
                                                                  
               Condensed consolidated statements of income-       
               nine months ended September 30, 1998 and           
               September 30, 1997
               three months ended September 30, 1998 and        4-5
               September 30, 1997
                                                                  
               Condensed consolidated statements of cash          
               flows-
               nine months ended September 30, 1998 and          6
               September 30, 1997
                                                                  
               Consolidated Statement of Changes in              8
               Shareholders' Equity
               nine months ended September 30, 1998 and 1997
               
        Item 2      Management's Discussion and Analysis of Financial
                    Condition and Results of Operations         9-18
                                                                  
PART II           Other Information                                  

                                                                  
        Item 1:   Legal Proceedings                                 19
       
                                                                  
        Item 2:   Changes in Securities                             19
       
                                                                  
        Item 3:   Defaults Upon Senior Securities                   19
        
                                                                  
        Item 4:   Submission of Matters to a Vote of Security       19
        
                                                                  
        Item 5:   Other Information                                 19
       
                                                                  
        Item 6:   Exhibits and Reports on Form 8-K                  19
        
                                                                  

                 UNION BANKSHARES COMPANY AND SUBSIDIARY
                  CONDENSED CONSOLIDATED BALANCE SHEET

                                   September 30    September 30   December 31
                                      1998            1997           1997
                                   (Unaudited)     (Unaudited)     (Audited)*

ASSETS

Cash and due from banks         $    7,022,450   $   8,883,318  $   7,650,086
Assets held for sale               110,932,643      72,825,300     66,403,649
(MARKET VALUE AT 9/30/98)
Held to maturity securities at cost  3,384,603      26,998,978     32,799,686
Federal funds sold                   8,178,416         149,068      2,251,105

Loans (net of unearned discount)   111,084,153     104,659,319    107,037,968
Less: Allowance for loan losses      2,263,852       2,166,766      2,212,740
Net Loans                         $108,820,301    $102,492,553   $104,825,228

Premises, furniture & equip net      2,721,271       2,913,776      2,842,151
Other assets                         6,007,592       5,510,746      5,787,926
Total Assets                      $247,067,275    $219,773,738   $222,559,831

LIABILITIES

Deposits:
  Demand                         $  22,324,197   $  20,325,536  $  20,574,024
  Savings                           84,863,302      77,303,178     80,170,160
  Time                              78,686,907      75,723,826     76,641,681
Total Deposits                     185,874,406     173,352,540    177,385,865
Borrowed Funds                      28,588,433      17,625,893     14,964,225
Accrued Expenses & Other
 Liabilities                         5,018,103       4,128,243      4,206,501
Total Liabilities                 $219,480,942    $195,106,676   $196,556,591

SHAREHOLDERS' EQUITY

Common Stock                      $  6,069,300    $  6,069,300   $  6,069,300
Surplus                              3,948,797       3,948,797      3,948,797
Retained Earnings                   16,939,780      14,613,212     15,708,089
Net Unrealized Gain/(Loss) on
 Securities Available for Sale         927,485         199,845        437,749
Less:   Treasury Stock                 299,029         164,092        160,695
Total Shareholders' Equity        $ 27,586,333    $ 24,667,062   $ 26,003,240
Total Liabilities & Shareholders' 
 Equity                           $247,067,275    $219,773,738   $222,559,831

*Condensed from audited financial statements

The accompanying consolidated financial statements include the accounts
of the Company and its majority-owned subsidiary.  Minority interests,
which are not significant are included in other liabilities in the
balance sheet and other operating expenses in the consolidated statement
of income.


                        UNION BANKSHARES COMPANY
               Condensed Consolidated Statements of Income
                               (UNAUDITED)

                                             Nine Months Ended - September 30,
                                                       1998            1997
INTEREST INCOME
  Interest and Fees on Loans                     $  7,508,785    $  6,976,452
  Interest and Fees on Municipal Loans and Bonds      604,678         434,442
  Interest and Dividends on Securities              4,549,552       4,573,982
  Interest on Federal Funds Sold                      207,485          26,613
  Amortization & Accretion - Net                     (144,186)         56,484
     Total Interest Earned                         12,726,314      12,067,973

INTEREST EXPENSE
  Interest on Deposits                              4,405,078       4,326,960
  Interest on Funds Purchased/Borrowed                795,010         627,734
     Total Interest Expense                         5,200,088       4,954,694

NET INTEREST INCOME                                 7,526,226       7,113,279
  Provision for Loan Losses                           213,000          90,000

NET INTEREST INCOME AFTER LOAN PROVISION            7,313,226       7,023,279

NONINTEREST INCOME
  Exchange, Commission & Fees                         738,521         642,825
  Trust Department                                    526,377         426,329
  Financial Service Fees                               53,451          52,154
  Other Income                                      1,003,675         698,001
  Net Securities Gains/(Losses)                        25,376          (5,298)
     Total Noninterest Income                       2,347,400       1,814,011

NONINTEREST EXPENSE
  Salaries and Employee Benefits                    3,171,128       3,038,990
  Building Maintenance & Operations                   405,738         359,768
  FDIC Insurance                                       20,859          20,312
  Other Expenses                                    2,699,685       2,539,239
     Total Noninterest Expense                      6,297,410       5,958,309

INCOME BEFORE TAXES                                 3,363,216       2,878,981
  Income Taxes                                      1,075,000         914,000

NET INCOME                                        $ 2,288,216     $ 1,964,981

Per Share Data:
  Net Income                                            $4.75           $4.08
  Dividends Declared                                    $ .50           $ .50


                        UNION BANKSHARES COMPANY
               Condensed Consolidated Statements of Income
                               (UNAUDITED)

                                              Three Months Ended-September 30,
                                                        1998          1997
INTEREST INCOME
  Interest and Fees on Loans                        $2,541,540     $2,349,079
  Interest and Fees on Municipal Loans and Bonds       229,232        160,951
  Interest and Dividends on Securities               1,543,925      1,648,918
  Interest on Federal Funds Sold                        81,050          6,760
  Amortization & Accretion - Net                       (39,013)        10,909
     Total Interest Earned                           4,356,734      4,176,617

INTEREST EXPENSE
  Interest on Deposits                               1,496,614      1,496,107
  Interest on Funds Purchased/Borrowed                 348,320        344,696
     Total Interest Expense                          1,844,934      1,840,803

NET INTEREST INCOME                                  2,511,800      2,335,814
  Provision for Loan Losses                             73,000         30,000

NET INTEREST INCOME AFTER LOAN PROVISION             2,438,800      2,305,814

NONINTEREST INCOME
  Exchange, Commission & Fees                          281,049        297,519
  Trust Department                                     179,761        149,609
  Financial Service Fees                                18,330         18,427
  Other Income                                         443,561        338,124
  Net Securities Gains/(Losses)                         14,506         (7,581)
     Total Noninterest Income                          937,207        796,098

NONINTEREST EXPENSE
  Salaries and Employee Benefits                     1,118,943      1,108,417
  Building Maintenance & Operations                    133,587        121,971
  FDIC Insurance                                         4,950          5,046
  Other Expenses                                       971,224        936,171
     Total Noninterest Expense                       2,228,704      2,171,605

INCOME BEFORE TAXES                                  1,147,303        930,307
  Income Taxes                                         365,000        290,000

NET INCOME                                         $   782,303    $   640,307

Per Share Data:
  Net Income                                             $1.62          $1.33
  Dividends Declared                                     $ .50          $ .50


                 UNION BANKSHARES COMPANY AND SUBSIDIARY
                  Consolidated Statements of Cash Flows
          For the Nine Months Ended September 30, 1998 and 1997

                                                         1998        1997
Net Cash Flows Provided by Operating Activities:
  Net Income                                         $2,288,216    $1,964,981
    Adjustments to reconcile net income to net
    cash provided by operating activities:
     Depreciation and amortization                      289,842       315,156
     Provision for loan losses                          213,000        90,000
     Net securities gains                                25,376             0
     Disposal of fixed assets                            84,141             0
     Loss on sale of other real estate owned                  0        27,399
     Provision for other real estate owned                    0        15,000
     Net change in other assets                        (219,666)     (126,613)
     Net change in other liabilities                    811,602     6,169,498
     Net amortization of premium on investments         384,473       241,029
     Net change in deferred loan origination fees         6,661        27,580
     Origination of loans held for sale             (17,247,605)   (5,811,159)
     Proceeds from loans held for sale               16,001,930     5,651,685
     Total adjustments                                  349,754     6,599,575
  Net cash provided by operating activities           2,637,970     8,564,556
Cash Flows From Investing Activities:
     Purchase of investments                        (48,388,964)  (63,810,745)
     Proceeds from sales of investments              11,993,610    36,280,474
     Proceeds from maturities of investments         22,348,943    12,436,521
     Net change in loans to customers                (4,214,734)   (3,723,573)
     Proceeds from sale of other real estate owned            0       424,519
     Capital expenditures                              (253,103)     (311,820)
   Net cash used in investing activities            (18,514,248)  (18,704,624)
Cash Flows From Financing Activities:
     Net increase/(decrease) in
        other Borrowed Funds                         13,624,208     6,064,213
     Net increase/(decrease) in deposits              8,409,791     4,523,529
     Purchase of Treasury Stock                        (177,334)     (115,407)
     Proceeds from sale of Treasury Stock                39,000         7,350
     Proceeds from issuance of Common Stock                   0             0
     Payment for fractional shares                            0       (29,699)
     Dividends paid                                    (719,712)     (879,712)
  Net cash provided by financing activities          21,175,953     9,570,274
Net increase/(decrease) in cash
    and cash equivalents                              5,299,675      (569,794)
Cash and cash equivalents at beginning of year        9,901,191     9,602,180
Cash and cash equivalents at 9/30/98 & 9/30/97      $15,200,866    $9,032,386
                                    
  Supplemental Schedule of Non-Cash Investing and Financing Activities
                                                          1998         1997
Net increase/(decrease) as a result of adopting Statement
  of Financial Accounting Standards No. 115
     Available for sale securities                      351,021       356,011
     Deferred income/(expense) liability                119,346      (156,166)
Net unrealized gain/(loss) on available
    for sale securities                                $231,673      $199,845
Net transfer from Investments Held to Maturity 
  to AFS in accordance with FAS 133                 $28,502,694      $      0




UNION BANKSHARES COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Nine months ended September 30, 1998 and 1997

                                                       ACCUMULATED
                                                          OTHER       SHARE-
             COMMON                TREASURY  RETAINED COMPREHENSIVE  HOLDER'S
              STOCK     SURPLUS     STOCK    EARNINGS    INCOME      EQUITY

Balance at December 31,
 1996      $6,069,300 $3,948,797 $ (56,035) $13,923,256 $(171,460) $23,713,858

Net income, September 30,
 1997               0          0         0    1,964,981         0    1,964,981
Change in net unrealized
 gain (loss) on available
 for sale securities, net of 
 tax of $151,074    0          0         0            0   278,742      278,742
Total Comprehensive
 Income             0          0         0            0         0    1,603,416
Sale of 35 shares
 Treasury stock     0          0     7,350            0         0        7,350
Repurchase of 512 shares
 Treasury stock     0          0  (115,407)           0         0     (115,407)
Cash dividends
 declared           0          0         0     (641,174)        0     (641,174)
Balance at September 30,
 1997      $6,069,300 $3,948,797 $(164,092) $14,613,212  $107,282  $24,574,499

Balance at December 31,
 1997      $6,069,300 $3,948,797 $(160,695) $15,708,089  $437,749  $26,003,240

Net income, September 30,
 1998               0          0         0    2,288,216         0    2,288,216
Change in net unrealized gain
 (loss) on available for sale
 securities, net of tax
 of $64,956         0          0         0            0   489,736      489,736
Total Comprehensive
 Income             0          0         0            0         0    2,777,952
Sale of 312 shares
 Treasury stock     0          0    43,536            0         0       43,536
Repurchase of 1,452 shares
 Treasury stock     0          0  (181,870)           0         0     (181,870)
Cash dividends
 declared           0          0         0     (719,712)        0     (719,712)
Balance at September 30,
 1998      $6,069,300 $3,948,797 $(299,029) $16,939,780  $927,485  $27,586,333


               Notes to Consolidated Financial Statements
                                Unaudited
                                    
(A)  Basis of Presentation

The accompanying consolidated financial statements of Union Bankshares
Company and its subsidiary (Union Trust Company) for the nine month
period ended September 30, 1998 and 1997 are unaudited.  However, in the
opinion of the Company, all adjustments consisting of normal, recurring
accruals necessary for a fair presentation have been reflected therein.

Certain financial information which is normally included in financial
statements prepared in accordance with generally accepted accounting
principles, but which is not required for interim reporting purposes,
has been omitted.  The accompanying consolidated financial statements
should be read in conjunction with the financial statements and notes
thereto included in the Company's annual report on Form 10-K for the
fiscal year ended December 31, 1997.

(B)  Earnings Per Share

Earnings per common share are computed by dividing the net income
available for common stock by the weighted average number of common
shares outstanding during this period.  Weighted shares as of September
30, 1998 were 485,544 and have been restated for 1997, 1996 and 1995 to
reflect the July 1997 20% stock dividend and 2 for 1 stock split.

(C)  Off-Balance Sheet Items

In the normal course of business, the Bank is a party to financial
instruments with off balance sheet risk to meet the financing needs of
its customers.  These financial instruments include commitments to
extend credit and letters of credit.  The instruments involve, to
varying degrees, elements of credit risk in excess of the amount
recognized in the statement of financial position.  The contract amounts
of these instruments reflect the extent of involvement the Bank has in
particular classes of financial instruments.  At September 30, 1998, and
September 30, 1997, the following financial instruments, whose contract
amounts represent credit risk, were outstanding.
                                                           September 30
                                                          (000's omitted)
                                                         1998          1997
1.  Unused Commitments:

  A.  Revolving, open-end lines secured by
           1-4 family residential properties,
            e.g., Home Equity lines                       6,796       6,191
  B.   Credit card lines                                  5,924       6,088
  C.   Secured real estate loans                          4,264       5,785
  D.   Other                                             17,409      11,223

2.   Financial Standby Letters of Credit:                    97          35

3.   Mortgages Transferred With Recourse:                     0           0
                                  
                               
(D)  Regulatory Agencies

The Bank's primary regulator is the Federal Reserve Bank of Boston and
as a state chartered bank to the Bureau of Banking of the State of
Maine.

(E)  General
                                    
Any loans classified for regulatory purposes as loss, doubtful,
substandard or special mention that were not disclosed under Item III of
Industry Guide 3 do not (1) represent or result from trends or
uncertainties which management reasonably expects will materially impact
future operating results, liquidity or capital resources or (2)
represent material credits about which management is aware of any
information which causes management to have serious doubts as to the
ability of such borrowers to comply with the loan repayment terms.

(F)  Impact of Inflation and Changing Prices
                                    
The Consolidated Financial Statements have been prepared in accordance
with generally accepted accounting principles which require the
measurement of financial position and operating results in terms of
historical dollars without considering changes in the relative
purchasing power of money over time due to inflation.

Unlike many industrial companies, substantially all of the assets and
virtually all of the liabilities of the Company are monetary in nature.
As a result, interest rates have a more significant impact on the
Company's performance than the general level of inflation.  Over short
periods of time, interest rates may not necessarily move in the same
direction or in the same magnitude as inflation.

(G)  Recent Accounting Developments

The Financial Accounting Standards Board issued the following Statements
of Financial Accounting Standards during 1997:

     SFAS No. 130   Reporting Comprehensive Income
     SFAS No. 131   Disclosures about Segments of an Enterprise and
                    Related Information

These two statements do not change the measurement or recognition
methods used in the financial statements but rather deal with disclosure
and presentation requirements.

SFAS No. 130 and No. 131 are effective for periods beginning after
December 15, 1997.  The financial statements include unrealized gains
and losses on available for sale securities as the only item reported as
other comprehensive income under SFAS No. 130.  SFAS No. 131 has no
effect on disclosure requirements as the Company has no reportable
segments.

In February 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 132, "Employers'
Disclosures about Pensions and Other Post Retirement Benefits" effective
for financial statements for the fiscal year beginning after December
15, 1997.  SFAS No. 132, which supersedes the benefit disclosure
requirements in FASB Statements No's 87, 88 and 106, requires entities
to standardize the disclosure requirements for pension and other post
retirement benefits to the extent practicable, requires additional
information on changes in the benefit obligations and fair value of plan
assets that will facilitate financial analysis.  The Company expects no
material impact from adopting SFAS No. 132.

In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities" effective for financial
statements for fiscal years beginning after June 15, 1999.  SFAS No. 133
requires entities to recognize all derivatives for either assets or
liabilities in the statement of financial position and measure those
instruments at fair value.  The Company adopted SFAS No. 133 in July and
expects no material impact.

Year 2000 Readiness

It has been widely publicized that many computer applications will not
operate past the year 2000 without modifications.  This problem results
from the fact that some computer systems store dates in two digit format
(i.e., 98) instead of four digit format (1998).  On January 1, 2000, it
is possible that some systems with time sensitive software programs will
recognize that year as "00" and may incorrectly interpret the year as
1900.

In 1997, the Company adopted a plan of action to minimize the risk of
the Year 2000 event.  The plan included the formation of a Technology
Steering Committee to assess, monitor, and review vendor compliance and
certification and to identify clearly all systems and equipment used in
the day to day operations of the Bank that might be affected.

During 1998, the Bank has completed the assessment phase, identified
mission critical systems, put a testing strategy in place, worked on
contingency plans and undertaken steps to verify that all vendors,
suppliers and other related business parties will be ready for the year
2000.  Union Trust is currently conducting tests of its mission critical
systems and is on track with the FFIEC time frames.  The following table
identifies each phase and its estimated timetable for completions for
Union Trust Company:

                     Phase                      Completed By

           1.  Awareness                         June 30, 1997
           2.  Assessment                    December 31, 1997
           3.  Implementation & Approval        March 31, 1999
           4.  Final Review & Approval           June 30, 1999
           5.  Monitoring                    Through year 2000

The Company has estimated that the total costs directly relating to
fixing Year 2000 issues, such as software modification and system
testing, will not have a material effect on the performance of the Bank.
The Year 2000 Budget is currently $100,000.  No direct costs (other than
human resource hours) have been expensed as of this date.

The Bank's most reasonable likely worst case Year 2000 scenarios may
include the failure of a vendor or third party provider - which is
beyond the Bank's control.  In the event a failure occurs -  the Bank
will implement manual contingency systems without serious impact on the
Bank's financial condition.

As of June 1998, the Company has created several basic contingency
plans.  Planning efforts will continue during 1998 based on the latest
FFIEC guidelines.  Management believes the Bank is adequately addressing
the Year 2000 issue and that the current preparations and testing being
conducted throughout the organization, all seek to minimize any
potential adverse effect on the Bank or its customers.
                                    
                                    
                                    
             MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION
                        AND RESULTS OF OPERATION
                                    

Earnings and Performance Overview

Net income increased $323,235 or 16.5% for the first nine months of 1998
versus the same period in 1997.  The following table summarizes the
status of the bank's earnings per share:

                                                   September 30,
                                                  1998        1997
Earnings Per Share                               4.75        4.08
Return on Average Shareholders Equity            8.76%A      8.43%B
Return on Average Assets                         0.98%A      0.94%B
Return on Average Earning Assets                 1.05%A      1.03%B

A=annualized returns are:  11.68%, 1.30%, and 1.40%, respectively.
B=annualized returns are:  11.24%, 1.25%, and 1.37%, respectively.

The healthy increase in net income for the third quarter and the first
nine months of 1998 versus the same periods in 1997 results primarily
from an increase in net interest income and noninterest income.

Despite narrowing margins, net interest income was up some $413,000 or
5.8% from the same period last year, due to increased loan and
investment volumes.

The increase in noninterest income results primarily from improvements
in virtually all fee income categories, in particular, in bankcard fees,
trust fees and loan and bank fees.

Noninterest expenses, consisting primarily of employee compensation and
benefits, occupancy and equipment expense and other general operating
expenses increased some $339,000 from the same period in 1997 due to
increased staffing and the expenses related to upgrading equipment and
facilities.

During 1998, the Company will implement specific strategic priorities
that will focus on increasing fee based revenues and controlling overall
expense.  With the everchanging environment of interest rate risk, fee
income has developed into a significant component in the Bank's total
revenue generation goals.  While revenue generation is a top priority,
the Company will also focus on productivity and maximizing the returns
of its financial and human resources.

The Bank is constantly monitoring the economy and its effect on the
banking industry in New England, and in particular, in Maine, in Hancock
and Washington Counties (our service territories).  The economy of this
area continues to be sluggish, inflation remains low, and growth will be
moderate and as in years past, we will continue to operate in a
conservatively planned manner.  We are growing according to our
strategic plan and remain within the risk parameters we have set forth
for ourselves, with the goals of improved earnings and productivity.

NET INTEREST INCOME

Net interest income, the difference between interest income on earning
assets such as loans and investment securities and interest expense on
interest bearing liabilities such as funds on deposit and borrowed funds
continues to be the most significant determinant of the Company's
earnings performance.  Because of the significance of net interest
income, the management of interest rate risk has become increasing
important to ensure the continued profitability of the Bank.  Interest
rate risk results from volatile interest rates, increased competition,
and changes in the regulatory environment.  As a banking company, our
exposure to interest rate movements is controlled by matching the
interest rates as well as the maturities of assets and liabilities.

Net interest income for the third quarter of 1998 was $2,511,800, up
$175,986 or 7.5% and for the first nine months of 1998 was $7,526,226,
up $412,947 or 5.8% over the same periods in 1997.

The following table illustrates the bank's net interest spread position:

                                         Nine Months Ended September 30,
                                                 1998        1997
                                                 
Yield on Earning Assets                          7.88%       8.26%
Cost of all Funds                                3.04%       3.22%
Net Interest Spread                              4.86%       5.04%

The Bank continues to monitor short and long-term interest rates,
balance sheet volumes and maturities in order to evaluate the potential
impact on its net interest spreads and capital.

PROVISION FOR LOAN LOSSES

The provision for loan losses increased $123,000 to $213,000 from the
same period last year, resulting from management's ongoing evaluation of
the allowance for loan losses.  This increase was due to the desire to
maintain the Allowance for Loan Losses at 2.0% of gross loans.  The
process to evaluate the adequacy of the allowance for loan losses
involves a high degree of management judgement.  Such judgement is
based, in part, on systematic methods.  These methods, which are
generally quantitative measures, are employed, not so the allowance will
be the result of routine mathematical exercises, but to help ensure that
all relevant matters affecting loan collectability will consistently be
identified.  Such methods at September 30, 1998 included a loan-by-loan
analysis of all larger commercial loans and commercial real estate loans
which were  non-performing or which were being closely monitored by
management for potential problems, and a quantitive analysis of
residential real estate and consumer loans.  Based on these analyses, an
estimation of potential loss exposure was made and an allowance
allocated.  The estimation of potential loss exposure reflects declining
real estate values, as evidenced by appraisals and other available
information.

During May 1998, the Bank implemented a Loan Review Program whereas an
independent loan review service firm conducted a review of the
commercial loan portfolio.  The review included updates to comments on
all criticized and classified assets over $100,000, all loans delinquent
over 30 days and over $100,000, non accruals over $100,000, new (closed)
and renewed loans over $100,000 as well as the adequacy of the loan loss
reserve.

Although management utilized its best judgement in providing for
possible losses, there can be no assurance that the Company will not
have to increase its provision for possible loan losses in the future as
a result of increased loan demand in the Company's primary market areas,
future increases in non-performing assets or otherwise which would
adversely affect the Company's results of operations.
The following table reflects the quality of the Bank's loan portfolio
and the emphasis placed upon the management of credit risk:

                                                             (000's Omitted)
                                                            Nine Months Ended
                                                              September 30,
                                                             1998        1997

1.   Nonaccrual Loans                                         397         524
2.   Loans past due 90 days & accruing                         46          69
3.   Restructured loans                                         0           0
4.   Other real estate owned (including 
          insubstance foreclosure)                            376         376
5.   Total nonperforming assets                               819         969
6.   Ratio of total nonperforming loans to capital and the
          allowance for loan losses (Texas ratio)            1.48        2.21
7.   Ratio of net chargeoffs to loans                        0.14        0.006
8.   Ratio of allowance for loan losses to loans             2.04         2.07
9.   Coverage ratio (allowance for loan losses divided by
          nonperforming assets)                            276.43       223.63
10.  Ratio of nonperforming assets to total assets            .33          .44
11.  Ratio of nonperforming loans to total loans              .18          .57

It is important to note that the directors, officers and employees of
the Bank are proud of the above data and their efforts in serving its
community while simultaneously working hand-in-hand with state and
federal regulators in structuring its financial position during these
times.  Most assuredly all parties concerned benefit from just such
cooperative effort.

NONINTEREST INCOME

The Company receives noninterest income from trust fees, service charges
on deposit accounts and other income comprised of fees earned from a
variety of other services.  Securities gains and losses are another
major component of this category.

Noninterest income, excluding securities gains/(losses), increased
$119,022 or 14.8% and $502,715 or 27.6% for the three and nine months
ended September 30, 1998 over the same period in 1997.

This increase is primarily due to an increase of loan department fees of
$164,495 or 68.6%, credit card income of $31,853 or 7.1%, trust income
of $100,048 or 23.5%, and customer account income of $95,696 or 14.9%.

Net security gains/(losses) amounted to $14,506 and $25,376 for the
three and nine months ended September 30, 1998 compared to $(7,581) and
$(5,298) for the same periods in 1997.

NONINTEREST EXPENSES

Noninterest expenses consist of employee compensation and benefits,
occupancy and equipment expenses and miscellaneous expenses.  Management
is continually reviewing expenses to control them and develop more
efficient delivery systems for all Bank services.

A generally flat economy in Maine and in particular in Downeast Maine,
has compelled or should compel banking institutions of our size to
manage their institutions prudently and conservatively.  This we are
committed to do.

Noninterest expenses increased $57,099 or 2.6% and $339,101 or 5.7% for
the three and nine months ended September 30, 1998 over the same period
in 1997.  The increase was primarily attributable to increased staffing
and the expenses related to upgrading equipment and facilities.

INCOME TAXES

Income taxes are provided in accordance with the comprehensive income
tax allocation method which recognizes the tax effects of all income and
expense transactions in each year's statement of income, regardless of
the year the transactions are reported for tax purposes.  The tax
effects of these timing differences are reflected in deferred income tax
accounts in the consolidated financial statements.

Deferred income taxes are recognized for income and expense items that
are reported in different years for financial reporting purposes and
income tax purposes using the tax rate applicable for the year of the
calculation.

The status of the Bank's income tax expense is as follows:

                                           Tax Expense         Effective Rate
                                         1998         1997       1998    1997
Nine Months Ended September 30,      $1,075,000     $914,000     32.0%   31.8%

INTEREST RATE GAP ANALYSIS

Attention should be directed to the interest rate gap analysis as of
December 31, 1997 as provided on page 14 in the Bank's 1997 Annual
Report.  Data as of September 30, 1998 is essentially identical to that
reported in the Annual Report.

SHAREHOLDERS' EQUITY AND CAPITAL RESOURCES

Shareholders' Equity was as follows for the following periods:

                                    SHAREHOLDERS' EQUITY
                                    Amount          Book Value
                                                     Per Share

September 30, 1998               $27,586,333          $57.25
September 30, 1997               $24,667,062          $51.20
December 31, 1997                $26,003,240          $53.97

The Federal Reserve Board guidelines for a risk-based approach to
measuring the capital adequacy of bank holding companies and state-
chartered banks that are members of the Federal Reserve System generally
call for an 8% total capital ratio of which 3% must be comprised of Tier
1 capital.  Risk-based capital ratios are calculated by weighing assets
and off-balance sheet instruments according to their relative credit
risks.  At September 30, 1998, the Company had met the minimum capital
ratios.  In fact, the Bank's strong capital position at September 30,
1998 exceeded the minimums established by the Federal Reserve Board as
follows:




                                                          Minimum Regulatory
                                    September 30, 1998       Requirements

Tier 1 Capital Ratio                      21.4                    3.0%
Total Capital Ratio                       22.6                    8.0%
Leverage Ratio                            11.2

DIVIDENDS

The common stock is not actively traded and therefore, we are not aware
of the price of all trades.  The price is established by determining
what a willing buyer will pay a willing seller.

Cash dividends per share declared on common stock were $.50 for the
third quarter of 1998 and $.50 for the third quarter of 1997, adjusted
for a July 1997 20% stock dividend and two for one stock split

STOCK DIVIDENDS

On June 11, 1997, the Board of Directors of Union Bankshares Company
declared a 20% stock dividend payable to stockholders of record on June
27, 1997.  The Board also declared a two for one stock split, subject to
shareholder approval of an amendment to the Articles of Incorporation of
the Company.  A special shareholders meeting was held on July 30, 1997
to vote said amendment.

LIQUIDITY MANAGEMENT

Liquidity management is the process by which the Bank structures its
cash flow to meet requirements of its customers as well as day to day
operating expenses.

Liquidity is provided from both assets and liabilities.  The asset side
of the balance sheet provides liquidity through the regular maturities
on our securities portfolio, as well as the interest received on these
assets.  In addition, US Government securities may be readily converted
to cash by sale in the open market.  On the liability side, liquidity
comes from deposit growth and the Bank's accessibility to other sources
of borrowed funds.  In this respect, liquidity is enhanced by a
significant amount of core demand and savings deposits from a broad
customer base.

As a part of the Bank's asset and liability management and liquidity
needs, management actively evaluates its funding resource and strategies
to reduce and manage the vulnerability of its operation to changes in
interest rates.

When a Company's ability to reprice interest bearing liabilities exceeds
its ability to reprice interest earning assets within shorter time
periods, material and prolonged increases in interest rates generally
adversely affect net interest income, while material and prolonged
decreases in interest rates generally have the opposite effect.

A principal objective of the Company is to reduce and manage the
vulnerability of its operations to changes in interest rates by managing
the ratio of interest rate sensitive assets to interest rate sensitive
liabilities within specified maturities or repricing dates.

As of September 30, 1998, Union Trust Company is asset sensitive as
measured by GAP.  The Bank is asset sensitive between 37 and 60 month
horizons.  Bank earnings may be negatively affected, should interest
rates fall.

As of September 30, 1998, the Bank's ratio of rate sensitive assets to
rate sensitive liabilities at the one year horizon was 114%, its one
year GAP (measurement of interest sensitivity of interest earning assets
and interest bearing liabilities at a point in time) was 6% which is
106% matched, and $118,940,000 in assets and $104,521,000 in liabilities
will be repriceable in one year.

In addition to the "traditional" GAP calculation, the Company analyzes
future net interest income based on budget projections including
anticipated business activity, anticipated changes in interest rates and
other variables, which are adjusted periodically by management to take
into account current economic conditions, the current interest rate
environment, and other factors.

The status of the Bank's sources of cash to fund its operation are as
follows:

                                             September 30,
                                            1998         1997
Net cash from operations                      $  2,637,970     $  8,564,556
Net cash from investing activities            $(18,514,248)    $(18,704,624)
Net cash from financing activities            $ 21,175,953     $  9,570,274
Net increase (decrease)                       $  5,299,675     $   (569,794)

BALANCE SHEET ANALYSIS

The Bank experienced an increase in loan demand during the first nine
months of 1998; the quality and strength of the balance sheet remains
strong.

The following financial statistics give a general overview and profile
of the Company:

                                   As of September 30,          Increase
                                  1998            1997         (Decrease)

Total Assets                  $247,067,275    $219,773,738    $ 27,293,537
Total Earnings Assets         $231,315,962    $202,465,898    $ 28,850,064
Loans                         $108,820,301    $102,492,553    $  6,327,748
Assets Held for Sale          $110,932,643    $ 72,825,300    $ 38,107,343
Assets Held to Maturity       $  3,384,603    $ 26,998,978    $(23,614,375)
Deposits                      $185,874,406    $173,352,540    $ 12,521,866
Capital                       $ 27,586,333    $ 24,667,062    $  2,919,271

SECURITIES PORTFOLIO

The objective of the securities portfolio is to provide for a stable
earnings base and the investment of excess liquidity.  As shown under
the section "Balance Sheet Analysis", the securities portfolio increased
$14,492,968 to $114,317,246 or 58.7% of total assets as of September 30,
1998, as compared to 45.4% at September 30, 1997.  The Bank continues
its prefunding strategy for its security portfolio during the third
quarter of 1998 as evidenced by security and borrowing balances.

Upon adoption of FAS 133 in July, 1998, $21,270,958 in Mortgage Backed
Securities and $7,231,736 in State and Municipal Bonds were reclassified
from Held to Maturity to Available for Sale.

The Company has reviewed its investment policy regarding securities.  In
recognition of current economic conditions and the attendant
responsibility of management to consider known liquidity requirements
and to provide for capital planning, securities may be sold as part of
prudent asset/liability management.



LOANS

Loan demand continues to show signs of moderate growth during the third
quarter of 1998 and thus the Bank experienced an increase of $6,327,748
or 6.2% at September 30, 1998 vs September 30, 1997.

It should be pointed out that the Bank has sold and serviced $51,848,096
of real estate loans and $3,171,190 of commercial mortgages and has over
$4,322,875 of loans held for sale at September 30, 1998.

The section of management's discussion and analysis entitled "Provision
for Loan Losses" clearly indicates the quality of the loan portfolio at
September 30, 1998.

The Bank's loan to deposit ratio was 59.8% and the allowance for loan
losses 2.03% of total loans at September 30, 1998.

Management's approach to loan growth is to seek out and work with
borrowers whose financial condition, credit history, and performance
would warrant extensions of credit.

In brief, the Company's loan portfolio is driven by a desire to maintain
our credit standards while meeting the financial needs of qualified
borrowers in the community.

DEPOSITS

Total deposits increased $12,521,866, or 7.2% over the comparable period
in 1997, primarily due to competitive interest rates on products offered
and an active calling program.  The proportion of interest bearing funds
continues to place emphasis on the need for properly matching our assets
and liabilities to maintain stable net interest margins.

The Company has continued its overall asset and liability management
strategy which is to maintain flexibility in its interest sensitivity
gap in order to take advantage of both short term and long term changes
in market rates while minimizing the risk of adverse effects on
operations.

The Bank is not reliant on volatile liabilities as evidenced by such
comprising only 5.88% of its deposit base.


                                 PART II

Item 1:                           N/A

Item 2:                           N/A

Item 3:                           N/A

Item 4:                           N/A

Item 5:                           N/A

Item 6:Exhibits, Financial Statement Schedules and Reports on Form 8-K

      A.   Non-Applicable

      B.   Reports on Form 8-K

During the Registrant's fiscal quarter ended September 30, 1998, the
Registrant was not required to and did not file any reports on Form 8-K.



                               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 COMPANY


                              Peter A. Blyberg, President


November 5, 1998

                              Sally J. Hutchins, Vice President/Treasurer