1
                              UNITED STATES
                   SECURITIES AND EXCHANGE COMMISSION
                          Washington, DC  20549
                                FORM 10-K
                                    
(Mark One)
( X )     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
     SECURITIES EXCHANGE ACT OF 1934
               For the fiscal year ended December 31, 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 0-12958
                                    
                        UNION BANKSHARES COMPANY
         (Exact name of registrant as specified in its charter)

       MAINE                                  01-0395131
(State or other jurisdiction            (IRS Employer Identification No.)
of incorporation of organization)

66 Main Street, Ellsworth, Maine                04605
(Address of Principal Executive Offices)      (Zip Code)

Registrant's telephone number, including area code:    (207) 667-2504

Securities registered pursuant to Section 12 (b) of the Act:
 Title of each class         Name of each exchange on which registered
         None                                   None

      Securities registered pursuant to Section 12 (g) of the Act:
                     Common Stock   $12.50 Par Value
                                    
Indicate by checkmark 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 by checkmark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K ( 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this form 10-K   [   ]

The aggregate market value of the voting stock held by non-affiliates of
the registrant as of February 5, 1999, was approximately $56,603,300.

481,896 shares of the Company's Common Stock, $12.50 par value, were
issued and outstanding on February 16, 1999.

                        UNION BANKSHARES COMPANY
                                    
                           INDEX TO FORM 10-K
                                    
PART I                                                              Page No.

Item 1:      Business                                                 3-16
Item 2:      Properties                                              16-17
Item 3:      Legal Proceedings                                         17
Item 4.      Submission of Matters to a Vote of Security Holders       17

PART II

Item 5:      Market for Registrant's Common Equity and Related
             Stockholder Matters                                       18
Item 6:      Selected Financial Data                                   19
Item 7:      Management's Discussion and Analysis of Financial Condition
             and Results of Operations                                 19
Item 7A:     Quantitative and Qualitative Disclosures 
             About Market Risk                                      20-21
Item 8:      Financial Statements and Supplementary Data               21
Item 9:      Changes in and Disagreements with Accountants on Accounting
             and Financial Disclosure                                  21

PART III

Item 10:  Directors and Executive Officers of the Registrant          21
Item 11:  Executive Compensation                                      21
Item 12:  Security Ownership of Certain Beneficial Owners 
          and Management                                              21
Item 13:  Certain Relationship and Related Transactions               21

PART IV

Item 14:  Exhibits, Financial Statement Schedules and
          Reports on Form 8-K                                     22-23

Signatures                                                           24

                                 PART I

ITEM I:  Business

Union Bankshares Company is a one-bank holding company, organized under
the laws of the State of Maine. The Company's only subsidiary is Union
Trust Company, established in 1887 and wholly owned.  Union Bankshares'
holding company structure can be used to engage in permitted banking-
related activities, either directly, through newly formed subsidiaries,
or by acquiring companies already established in those activities.  The
Company has no immediate plans to engage in such activities, but could do
so if such action should appear desirable.

Union Trust is a full-service, independent, community bank that is
locally owned and operated.  Through its eleven offices, Union Trust
serves the financial needs of individuals, businesses, municipalities and
nonprofit organizations in eastern Maine.  Union Trust offers a wide
variety of financial services with competitive interest rates; a helpful,
friendly staff; and quick, local decision-making to meet the needs of the
communities it serves.  As a complement to the services offered by the
Bank, the Trust and Investment Services Department provides a broad range
of investment options to help meet the needs of our customers.  Trust and
Investment Services has served generations of Maine families with estate
planning, investment management, custody, and retirement planning and
employee benefit services.

The long-term goals of Union Trust Company focus on:

    becoming a market-driven sales and service organization;
    becoming effective users of appropriate technology; and
    building the financial strength of the Bank with steady growth of
      earnings and assets and controlled risk taking consistent with
      shareholder expectations.

We encourage our Relationship Managers to visit customers, listen to them
and respond with appropriate solutions to their needs.  Our Relationship
Managers continue to meet with area business owners at their places of
business in an effort to understand their businesses and how the Bank can
play a role in helping them. More visits are being made to more and more
businesses each year.  The Bar Harbor branch, now one-and-a-half years
old, has shown tremendous growth during 1998, confirming our commitment
to the Mount Desert Island market area.

As customers increase their demand for electronic banking services, Union
Trust is responding.  During 1998, scores of customers discovered the
value of BankLinerPC (our computer banking service) and its cash
management features. For example, we have experienced a significant
increase in ACH transaction volume since 1994.  This can be attributed to
the growing appeal of automated services such as direct deposit payroll
services, direct deposit of Government payments and direct debits for
monthly bills.

BankLinerPC is just the most recent 24-hour financial connection that
Union Trust has established to meet its customers' needs.  In October
1998, the Jonesport branch became Union Trust's twelfth and newest 24-
hour ATM location.  BankLiner (our automated 24-hour telephone banking
service) and Customer Service Call Center (answered by real people)
continue to receive record-breaking numbers of calls year after year.
Customers are wanting more information and more ways to access their
accounts more often.

Union Trust Company has a documented record of consistent earnings
growth, posting an earnings increase in 1998 of 14.4%.  Loans grew to
$110 million.  Over the years, as we have worked to expand our fee-based
services, Trust and Investment Services has been a major focus.  The
department's contribution to net income increases every year.  During
1998, trust assets under management grew by 25.6% over 1997.

Union Trust takes pride in delivering personalized, responsive service
and developing quality, innovative products for its customers.  Union
Trust also supports the people and communities it serves through a far-
reaching donation program.  The program addresses human needs within the
community by contributing to various nonprofit organizations, community
development efforts and environmental groups.  It also encourages and
supports the thousands of hours of volunteer time given each year by the
Bank's employees, directors and retirees.  During 1998, we elected two
new directors to the Board, Blake "Cubby" Brown and Jim Markos.  We are
excited to have their business expertise and community connections at
work for the Bank.

The Bank competes actively with other commercial banks and other
financial institutions in its service areas.  In the Bank's immediate
market area, there are two other independent community banks, one savings
and loan association, three savings bank branch offices and three
commercial banks owned outside of the state of Maine.  Strong competition
exists among commercial banks in efforts to obtain new deposits, in the
scope and type of services offered, in interest rates on time deposits
and interest rates charged on loans, and in other aspects of banking.  In
Maine, savings banks are major competitors of commercial banks as a
result of broadened powers granted to savings banks.  In addition, the
Bank like other commercial banks, encounters substantial competition from
other financial institutions engaged in the business of either making
loans or accepting deposit accounts, such as savings and loan
associations, credit unions, insurance companies, certain mutual funds,
and certain governmental agencies.  Furthermore, the large banks located
in Boston, New York and Providence are active in servicing some of the
large Maine based companies.

As of December 31, 1998, the Bank employed 123 employees of which 16
employees were part time.  They are not compensated by the Company for
their service and there are no employees of the Company.

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.

Please refer to Footnote #15 on page 37 of the 1998 Annual Report of
Union Bankshares Company, regarding compliance with capital requirements.

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.

The Company and Bank are not aware of any current recommendations by the
regulatory authorities which if they were to be implemented would have or
would be reasonably likely to have a material effect on the Company's
liquidity, capital resources or operations.

Loans, other than credit card loans, are placed on non accrual status
when, in the opinion of management, there are doubts as to the
collectibility of interest or principal, or when principal or interest is
past due 90 days or more, and the loan is not well secured and in the
process of collection.  Interest previously accrued but not collected is
reversed and charged against interest income at the time the related loan
is placed on non-accrual status.  Principal and accrued interest on
credit card loans are charged to the allowance for credit losses when 180
days past due.

Payments received on non-accrual loans are recorded as reductions of
principal if principal payment is doubtful.

Loans are considered to be restructured when the yield on the
restructured assets is reduced below the current market rates by an
agreement with the borrower.  Generally this occurs when the cash flow of
the borrower is insufficient to service the loan under its original
terms.

In the Bank's market area, the banking business is somewhat seasonal due
to an influx of tourists and seasonal residents returning to the area
each spring and summer.  As a result, the Bank has an annual deposit
swing, from a high point in mid October to a low point in June.  The
deposit swing is predictable and does not have a material adverse effect
on the Bank and its operations.

                        STATISTICAL PRESENTATION

The Supplemental Financial Data presented on the following pages contains
information to facilitate analysis and comparison of sources of income
and exposure to risk.

A.   AVERAGE BALANCE SHEETS AND ANALYSIS OF NET INTEREST INCOME

The following table sets forth the information related to changes in net
interest income.  For purposes of the table and the following discussion,
information is presented regarding (1) the total dollar amount of
interest income of the Company from interest earning assets and the
resulting average yields; (2) the total dollar amount of interest expense
on interest bearing liabilities and the resulting average cost; (3) net
interest income; (4) interest rate spread; and (5) net interest margin.
Information is based on average daily balance during the indicated
periods.  For the purposes of the table and the following discussion, (1)
income from interest earning assets and net interest income are presented
on a tax equivalent basis using a tax rate of 34% and (2) non accrual
loans have been included in the appropriate average balance loan
category, but unpaid interest on non accrual loans has not been included
for purposes of determining interest income.


           AVERAGE BALANCE SHEETS AND ANALYSIS OF NET INTEREST INCOME
                                 (In Thousands)
                           (On a Tax Equivalent Basis)

                      1998                 1997                 1996
                Avg    Int    Yield/ Avg     Int   Yield/ Avg    Int   Yield/
                Bal Earned/Paid Rate Bal Earned/Paid Rate Bal Earned/Paid Rate
Assets
Interest Earning Assets:
 Securities 
  Available 
  for Sale   $ 77,517 $ 5,278 6.81 $ 72,741 $ 5,182 7.12 $ 80,333 $ 5,256 6.54
 Securities Held
  to Maturity  23,968   1,510 6.30   22,689   1,437 6.33    3,772     369 9.78
 Federal Funds
  Sold          6,384     326 5.11      598      41 6.86    1,411      76 5.39
 Loans (Net)  108,057  10,241 9.47  100,208   9,660 9.64   94,139   9,192 9.76
Total Interest
 Earning
 Assets       215,926 $17,355 8.04  196,236 $16,320 8.32  179,655 $14,893 8.28
Other Nonearning
 Assets        19,699                18,878                14,926
             $235,625              $215,114              $194,581

Liabilities
Interest Bearing Liabilities:
 Savings 
 Deposits    $ 69,656 $ 1,131 1.62 $ 65,432 $ 1,119 1.71 $ 65,770 $ 1,172 1.78
 Time Deposits 77,545   4,223 5.44   73,419   4,298 5.85   67,294   3,752 5.57
 Money Market
  Accounts     11,765     560 4.76   12,271     482 3.93   14,107     478 3.39
 Borrowings    18,077   1,260 6.97   14,007     835 5.96    4,012     229 5.71
Total Interest
  Bearing
  Liabilities 177,043 $ 7,174 4.05  165,129 $ 6,734 4.08  151,183 $ 5,631 3.72
Other Noninterest
 Bearing Liabilities
 & Shareholders'
 Equity        58,582                49,985                43,398
             $235,625              $215,114              $194,581

Net Interest Income    $10,181              $ 9,586                $ 9,262

Net Interest Rate Spread      3.99                  4.24                  4.56

Net Interest Margin           4.72                  4.88                  5.16

The following table presents certain information regarding changes in
interest income and interest expense of the Company for the periods
indicated.  For each category of interest earning assets and interest
bearing liabilities, information is provided with respect to changes
attributable to (1) changes in rate (change in rate multiplied by old
volume), (2) changes in volume (change in volume multiplied by old
rate), and (3) changes in rate/volume (change in rate multiplied by
change in volume).

           ANALYSIS OF CHANGES IN INTEREST INCOME AND EXPENSE
          For the years ended December 31, 1998, 1997 and 1996
                             (In Thousands)

                             Year Ended December 31, 1998 vs. 1997
                                      Increase (Decrease)
                                        Due to Change In

                                    Volume    Rate     Rate/Volume*   Total
Interest Earning Assets:
     Assets Available for Sale      $  337   $  (488)     $   83     $ (68)
     Securities Held to Maturity        80       (37)         74       117
     Federal Funds Sold                397      (296)        184       285
     Loans, Net                        757      (751)        575       581
Total Interest Earning Assets        1,571    (1,572)        916       915

Interest Bearing Liabilities:
     Savings Deposits                   72       (71)         11        12
     Time Deposits                     238      (228)        (86)      (76)
     Money Market Accounts             (20)       24          74        78
     Borrowed Funds                    242      (284)        468       426
Total Interest Bearing Liabilities     532      (559)        467       440
Change in Net Interest Income       $1,039   $(1,013)       $449     $ 475


                             Year Ended December 31, 1997 vs. 1996
                                      Increase (Decrease)
                                        Due to Change In

                                    Volume      Rate    Rate/Volume*   Total
Interest Earning Assets:
     Assets Available for Sale      $ (499)    $  463     $  (38)  $   (74)
     Securities Held to Maturity     1,223        (27)      (136)    1,060
     Federal Funds Sold                (44)        21        (12)      (35)
     Loans, Net                        588       (118)        (2)      468
Total Interest Earning Assets        1,268        339       (188)    1,419

Interest Bearing Liabilities:
     Savings Deposits                   (7)       (47)         1       (53)
     Time Deposit                      337        185         24       546
     Money Market Accounts             (62)        76        (10)        4
     Borrowed Funds                    571         10         25       606
Total Interest Bearing Liabilities     839        224         40     1,103
Change in Net Interest Income       $  429      $ 115      $(228)   $  316

*Represents the change not solely attributable to change in rate or
change in volume but a combination of these two factors.


B.    INVESTMENT PORTFOLIO

HELD TO MATURITY SECURITIES

The following table shows the book value of the Company's held to
maturity securities at the end of each of the last three years.  (In
Thousands)

                                                   December 31

                                      1998           1997            1996

U.S. Treasury Securities &
  Other Government Agencies          $    0        $25,814          $  995
Obligations of States &
  Political Subdivisions              4,376          6,985           3,792
TOTAL                                $4,376        $32,799          $4,787

The table below shows the relative maturities of held to maturity
securities as of December 31, 1998.

                       Held to Maturity Securities
                       Maturity Distribution as of
                            December 31, 1998

Security Category             Due 1 Yr   Due 1-     Due 5-  Due After
                              or less    5 Yrs      10 yrs    10 Yrs

State and Municipal Bonds    $   150    $1,611     $1,235    $1,380
Average Weighted Yield         8.39%     7.81%      8.26%     7.26%

TOTAL                         $  150    $1,611     $1,235    $1,380
Percent of Total Portfolio      3.4%     36.8%      28.3%     31.5%

NOTE:  Average Weighted Yields on tax exempt obligations have been
computed on a tax equivalent basis

 AVAILABLE FOR SALE SECURITIES

The following table shows the carrying value of the Company's Available
for Sale Securities and other investment securities at the end of each
of the last three years.  (In Thousands)


                                                 December 31

                                          1998       1997      1996

US Treasury Notes and
 Other Government Agencies             $ 93,971    $60,105    $73,322
Obligations of State and
 Political Subdivisions                   8,769          0      1,513
Other Securities                          4,189      3,160      1,946
TOTAL                                  $106,929    $63,265    $76,781




The table below shows the relative maturities and carrying value of
available for sale debt securities as of December 31, 1998 (excludes
other securities).

                      Securities Available for Sale
                       Maturity Distribution as of
                            December 31, 1998

Security Category           Due 1 Yr     Due 1-     Due 5-  Due After
                            or less      5 Yrs      10 Yrs    10 yrs

US Treasury Notes and Other
   Government Agencies      $ 3,153    $13,959    $46,532   $39,096
Average Weighted Yield        6.93%      6.62%      6.67%     7.01%

TOTAL                       $ 3,153    $13,959    $46,532   $39,096

Percent of Total Portfolio:    2.9%      13.1%      43.5%     36.5%

C.    LOANS

The following table reflects the composition of the Company's
consolidated loan portfolio at the end of each of the last five years.
                               1998       1997     1996      1995     1994
                                          (In Thousands)

Real Estate Loans
A.   Construction & Land
   Development              $  6,431  $  5,925  $  4,073  $  2,023  $  2,168
B.   Secured by 1-4 Family
   Residential Properties     36,944    33,528    30,457    27,402    25,528
C.   Secured by Multi Family
   (5 or more) Residential
   Properties                      0         0         0         2         4
D.   Secured by Non-Farm,
   Non-Residential
   Properties                 30,550    28,386    30,134    28,273    26,500

Commercial & Industrial Loans 15,979    18,566    16,582    13,778    12,975
Loans to Individuals for Household,
  Family & Other Consumer
  Expenditures                15,327    15,806    15,133    14,335    12,844
All Other Loans                5,168     4,852     4,664     7,430     4,189
Total Gross Loans           $110,399  $107,063  $101,043   $93,243   $84,208

The above data is gathered from loan classifications established by the
Federal Reserve Call Report 033.

The percentages of loans by lending classification to total loans
outstanding at December 31 was as follows:

                                    1998     1997     1996     1995    1994

Real Estate                         67.0%    63.4%    64.0%    61.9%  64.4%
Commercial & Industrial - 
 Including single
  payment loans to individuals      14.5%    17.3%    16.4%    14.8%  15.4%
Consumer Loans                      13.9%    14.8%    15.0%    15.4%  15.3%
All Other Loans                      4.6%     4.5%     4.6%     7.9%   4.9%
Total Loans                        100.0%   100.0%   100.0%   100.0% 100.0%

                  Maturities and Sensitivities of Loans
                      To Changes in Interest Rates
                         As of December 31, 1998

                             Due 1 Year    Due 1-5 Years   Due 5 Years +
                               or Less     
Real Estate                    $37,349        $19,262       $17,314
Commercial & Industrial         11,246          3,106         1,627
Consumer                         7,469          2,485         5,373
Municipal                        3,032          1,554           582
Total                          $59,096        $26,407       $24,896

Note: Real estate loans in the 1-5 category have $2,846,353 at a fixed
      interest rate and $16,415,647 at a variable interest rate.
      Commercial loans in the 1-5 year category have $3,052,000 at a
      fixed interest rate and $54,000 at a variable interest rate.

      Real estate loans in the 5+ category have $15,851,148 at a fixed
      interest rate and $1,462,852 at a variable interest rate.
      Commercial loans in the 5+ category have $1,253,695 at a fixed
      interest rate and $373,305 at a variable rate.

Delinquent Loans

The following schedule is a summary of loans with principal and/or
interest payments over 30 days past due:

                                      December 31,

                   1998         1997         1996        1995        1994
                Amt     %     Amt    %    Amt     %    Amt    %     Amt    %

Real Estate   $3,079   2.8  $3,003  2.8  $2,649  2.6  $ 867  0.9  $ 479   0.6
Installment   $  153   0.1  $  128  0.1  $  197  0.2  $  95  0.1  $  95   0.1
All Others    $  134   0.1  $  151  0.1  $  220  0.2  $  35  0.0  $ 189   0.2
TOTAL         $3,366   3.0  $3,282  3.0  $3,066  3.0  $ 997  1.0  $ 763   0.9

It is the policy of the Company to discontinue the accrual of interest
on loans when, in the opinion of the management, the ultimate
collectibility of principal or interest becomes doubtful.  The
principal amount of loans which have been placed on non-accrual status
were comprised primarily of certain installment loans.  For each of
these loans, management has evaluated the collectibility of the
principal based on its best estimate of the realizable collateral value
of the loans and does not anticipate that any losses from liquidation
of these loans will have a material effect on future operations.  There
were approximately $534,000, $503,000 and $491,000 as of December 31,
1998, 1997 and 1996, respectively, of loans on a non-accrual status.

                           LOAN CONCENTRATIONS

As of December 31, 1998 and 1997, the Company did not have any
concentration of loans in one particular industry that exceeded 10% of
its total loan portfolio.

The Bank grants residential, commercial and consumer loans to customers
principally located in Hancock and Washington Counties of the State of
Maine.  Although the loan portfolio is diversified, a substantial
portion of its debtor's ability to honor their contracts is dependent
upon the economic conditions in the area, especially in the real estate
sector.  There are currently no borrowers whose total indebtedness to
the Bank exceeds 10% of the Bank's shareholders' equity at December 31,
1998.

                ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES

Analysis of the allowance for loan losses for the past five years were
as follows:
(Dollars in thousands)

                                            December 31,

                                  1998      1997      1996      1995     1994

Balance at beginning of period:$  2,213  $  2,084  $ 1,878   $ 1,929  $ 1,802
Charge-offs:
     Commercial & Industrial Loans    2         5       15        44       30
     Real Estate Loans                0       123        0        48      256
     Loans to Individuals           111        97       73       104       34
                                    113       225       88       196      320

Recoveries:
     Commercial & Industrial Loans   11       118      138        43        5
     Real Estate Loans                0        67       12         1      390
     Loans to Individuals            39        49       24        71       52
                                     50       234      174       115      447
     Net Charge-offs (recoveries)    63        (9)     (86)       81     (127)
     Provision for loan losses      285       120      120        30        0
Balance at end of period       $  2,435  $  2,213  $ 2,084   $ 1,878  $ 1,929

Average Loans Outstanding      $110,321  $102,321  $97,143   $88,725  $82,600

Ratio of Net Charge-offs (Recoveries) to
average loans outstanding         .057%    (.009%)   (.09%)     .09%    (.15%)

               ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES


                                      December 31,

               1998         1997          1996        1995          1994
             Amt  % of   Amt     %     Amt     %     Amt    %     Amt   %
                  Loan         Loan          Loan         Loan         Loan
               Categories   Categories    Categories  Categories    Categories
                To Total     To Total      To Total     To Total     To Total
                  Loans        Loans         Loans        Loans        Loans

Balance At End of Period:
Applicable To:
Real 
 Estate   $  374  67.0% $  356  63.4% $  318  64.0% $  647  61.9% $  665  64.4%
Commercial &
Industrial 1,780  14.5%  1,558  17.3%  1,405  16.4%  1,024  14.8%  1,051  15.4%
  Consumer   153  13.9%    158  14.8%    151  15.0%    207  15.4%    213  15.3%
  Municipal   58   4.2%     49   4.1%     60   4.5%      0   7.9%      0   4.9%
Identified    62    .4%     67    .4%    100    .1%      0    .0%      0    .0%
Unallocated    8    .0%     25    .0%     50    .0%      0    .0%      0    .0%

TOTAL     $2,435 100.0% $2,213 100.0% $2,084 100.0% $1,878 100.0% $1,929 100.0%

The allowance for loan losses is a general allowance established by
management to absorb possible loan losses as they may exist in the loan
portfolio.  This allowance is increased by provisions charged to
operating expenses and by recoveries on loans previously charged-off.
Management determines the adequacy of the allowance from continuous
reviews of the quality of new and existing loans, from the results of
independent reviews of the loan portfolio by regulatory agency
examiners, evaluation of past and anticipated loan loss experience, the
character and size of the loan portfolio and anticipated economic
conditions.

As of December 31, 1998, the Company had impaired loans totaling
$207,686, which consisted of real estate loans.  The fair value of the
loans' collateral was used to evaluate the adequacy of the Allowance
for Loans Losses allocated to these loans.

A loan is considered impaired by management when it is probable that
the creditor will be unable to collect all amounts due under the
contractual terms of the loan, including principal and interest.  Loans
on a non-accrual status that are deemed collectable are not classified
as impaired.  Based upon management's periodic review of loans on non-
accrual status, impairment is based on a loan by loan analysis and not
set by a defined period of delinquency before a loan is considered
impaired.

                              Risk Elements
                                    
                                  1998    1997     1996     1995    1994
Loans accounted for on a
 non accrual basis                $534    $503     $491     $614    $151
Accruing loans contractually 
 past due 90 days or more         $ 47    $209     $196     $388    $ 86

In accordance with Industry Guide 3 Item III. C (1), the gross interest
income that would have been recorded in 1998 if nonaccrual and
restructured loans had been current in accordance with their original
terms and had been outstanding throughout the period or since
origination approximates $40,000.  There was approximately $2,000
included in the gross interest income on non-accrual and restructured
loans for 1998.

D.   DEPOSITS

The following schedule summarizes the time remaining to maturity of
Certificates of Deposit $100,000 or greater at December 31, 1998.

                                 Amount
                              (In Thousands)

                    3 Months or Less                        $ 5,886
                    Over 3 Through 6                        $ 1,569
                    Over 6 Through 12 Months                $ 3,032
                    Over One Year                           $   993
                    Total                                   $11,480

E.    SHORT-TERM BORROWINGS
                                     December 31
                              1998                   1997

                      Weighted                  Weighted
                      Average                   Average
                   Interest Rate   Amount    Interest Rate   Amount

Fixed advances           6.45     $451,250        6.52       $273,250
Variable advances        5.29  $20,000,000        5.35     $9,000,000
Securities sold 
 under agreement         3.70   $8,965,977        4.00     $5,690,975


                              1998                          1997
                          
                Fixed    Variable   Securities  Fixed    Variable   Securities

Maximum amount $451,250 $20,142,352 $9,512,901 $273,250 $22,903,225 $7,890,521
outstanding of any
month end during the year

Average amount $407,584 $18,077,448 $6,485,367 $206,143 $12,569,863 $3,950,415
outstanding during
the year

Weighted average  6.53%       5.30%      4.05%    6.74%       5.86%      4.17%
interest rate for the year

Advances at December 31, 1998 mature as follows:

    2002       2005      2007       2008         2010     2012      2013

$4,000,000   $55,000   $84,250   $16,089,000   $55,000   $79,000   $89,000

F.   CAPITAL RATIOS

The following table presents, for the last three years, the Company's
average capital expressed as a percentage of average deposits, loans,
total assets, and earning assets.


                                  *1998     *1997     *1996

Deposits                           15.1%     14.9%     14.4%
Loans                              25.4%     24.6%     24.6%
Total Assets                       11.6%     12.0%     12.1%
Earning Assets                     12.8%     13.0%     13.3%

*Excluding net unrealized gain (loss) net of deferred taxes on
available for sale securities of $1,162,032, $437,749 and ($171,460) at
December 31, 1998, 1997 and 1996, respectively.

G.   RETURN ON SHAREHOLDERS' EQUITY

The following table presents, for each of the last three years, the
Company's return on shareholders' equity, return on assets, and return
on average earning assets.

                                              1998      1997      1996

Return on Average Shareholders' Equity       11.6%    10.9%     10.6%
Return on Average Assets                      1.3%     1.3%      1.2%
Return on Average Earning Assets              1.4%     1.4%      1.4%

H.   LIQUIDITY MANAGEMENT

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

Liquidity comes from both assets and liabilities.  The asset side of
the balance sheet provides liquidity through the regular maturities on
our securities and loan portfolios, as well as interest received on
these assets.  In addition, U.S. government securities may be readily
converted to cash by sale on the open market.  On the liability side,
liquidity comes from deposit growth and the Bank's access 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 resources and
strategies to manage and reduce its vulnerability to changes in
interest rates.

A principal objective of the Company is to manage and reduce its
vulnerability 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 December 31, 1998, the Bank's ratio of rate sensitive assets to
rate sensitive liabilities at the one year horizon was 102%, its one
year GAP (measurement of interest sensitivity of interest earning
assets and interest bearing liabilities at a given point in time) was
101%, and $116,522,000 in assets and $114,396,000 in liabilities will
be repriceable in one year.  The Bank becomes asset sensitive between
25 and 36 months.  Bank earnings may be negatively affected, should
interest rates fall.

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 following table presents, as of December 31, 1998, the Company's
interest rate GAP analysis:

                                    Interest Rate GAP Analysis
                              As of December 31, 1998 (000's omitted)
                             0-3       4-12        1-5      Over 5
                           Months     Months      Years      Years     Total
Interest earning assets
Loans:
   Real estate
     Fixed rate         $     677   $  1,983    $  8,052   $  8,385  $  19,097
     Variable rate         17,921     21,982      14,312          0     54,215
Commercial                  9,562      1,844       2,672      1,898     15,976
Municipal                      20      3,003       2,198        577      5,798
Consumer                   11,433        755       3,148          0     15,336
Securities available
 for sale                  15,426     15,884      48,892     21,204    101,406
Held to maturity securities     0        626       2,360      1,390      4,376
Loans held for sale         6,138          0           0          0      6,138
Other earning assets        9,268          0       3,558          0     12,826
TOTAL                     $70,445    $46,077     $85,192    $33,454   $235,168

Interest bearing liabilities
Deposits:
   Savings               $  3,405    $10,215     $16,061    $22,823    $52,504
   NOW                      3,093      9,279      24,743          0     37,115
   Money market             3,153      9,459       6,139          0     18,751
   Time                    29,738     37,088      12,832          0     79,658
Borrowings                  8,966          0      13,000      7,451     29,417
TOTAL                     $48,355    $66,041     $72,775    $30,274   $217,445

Rate sensitivity GAP      $22,090   $(19,964)    $12,417    $ 3,180
Rate sensitivity GAP as a
  percentage of total assets 8.80%     (7.95%)      4.94%      1.27%
Cumulative GAP            $22,090   $  2,126     $14,543    $17,723
Cumulative GAP as a
 percentage of total assets  8.80%      0.09%       5.79%      7.06%


The distribution in the Interest Rate GAP Analysis is based on a
combination of maturities, call provisions, repricing frequencies,
prepayment patterns, historical data and management judgment.  Variable
rate assets and liabilities are distributed based on the repricing
frequency of the investment.  Management has estimated the rate
sensitivity of money market and savings deposits based on a historical
analysis of the Bank and industry data.

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

As of December 31,                                 1998            1997

Net cash provided from operations              $ 4,266,014     $ 3,106,220
Net cash used by investing activities          (17,797,165)    (19,134,989)
Net cash provided from financing activities     20,743,318      16,327,780
Net increase in cash and cash equivalents      $ 7,212,167     $   299,011

                                    
                            BANK'S PROPERTIES

ITEM 2:  PROPERTIES

The Bank's principal office is located at 66 Main Street in Ellsworth,
Maine.  The main office building consists of three floors, all of which
are utilized by the Bank for banking facilities and administrative
offices.  The principal office includes a separate drive-up facility
and parking lot.  In August 1981, plans were finalized for the
construction of an 8,000 square foot addition to our existing building.
Completed in November of 1982, it provided new and enlarged customer
service/teller area with street level access.  During 1982 and 1983,
the existing building also received extensive renovation and
remodeling, tying it in to the new addition.  The project was completed
in July of 1983.  In April 1985, the Bank opened the first automated
drive-up in Downeast Maine.  The automated teller machine is adjacent
to its drive-up facility located at 66 Main Street, in Ellsworth,
Maine.  In 1988, the Main Office began construction of an addition to
its existing building that would house loan operations.  In September
1989, construction was completed on the addition.  In May 1992, the
Bank opened a trust office in Bangor (Penobscot County) to serve trust
customers in that city and surrounding areas.  In May 1995, the Bank
elected not to renew its lease for its Bangor office.  In addition, the
Bank owns the following properties:

     (a)  The Bank's Cherryfield office located on Church Street in
          Cherryfield, Maine.  A major renovation was undertaken at Cherryfield
          in 1983, approximately doubling its size.  These alterations were
          completed in January of 1984.

     (b)  The Bank's Jonesport office located on Main Street in Jonesport,
          Maine.

     (c)  The Bank's Blue Hill office located on Main Street in Blue Hill,
          Maine.  During 1989, the branch was renovated to include an office for
          the Assistant Manager.

     (d)  The Bank's Stonington office located on Atlantic Avenue in
          Stonington, Maine.  The Stonington office was renovated and expanded
          in 1980.

     (e)  The Bank's Milbridge office located on Main Street in Milbridge,
          Maine.  In 1987, management decided to replace the Milbridge Branch
          with a larger up to date facility, located at the same site.  The new
          branch is now completed and has been open for business since April
          1988.

     (f)  The Bank purchased in 1989 a parcel of land located on Route 3 in
          Ellsworth with the possible intention of constructing a new branch.
          This property is currently unoccupied and is available for sale.

All of the Bank's offices include drive-up facilities.

In addition to the above properties, which are owned by the Bank, the
Bank leases the following properties:

          (a) The Bank leases its branch office at the
          Ellsworth Shopping Center, High Street, Ellsworth, Maine,
          from Ellsworth Shopping Center, Inc., a Maine Corporation
          with principal offices in Ellsworth, Maine.  The current
          lease will expire in March of 2000.

          (b) The Bank leases its Machias office which is located on Dublin
          Street in Machias, Maine.  The premises are owned by Hannaford Bros.,
          Inc. of South Portland, Maine, and are leased to Gay's Super Markets,
          Inc., under a lease dated July 26, 1975.  The Bank subleased the
          premises from Gay's Super Markets, Inc., under a sublease which 
          expires in April of 2001.  The Bank has the right to extend the
          sublease for three additional five year terms.

          (c) The Bank leases its Somesville branch office which is located on
          Route 102 in Somesville, Maine.  The land and premises are owned by A.
          C. Fernald Sons, Inc., Mount Desert, Maine.  The current lease expires
          on March 24, 2005, with an option to renew for an additional 20 years.

          (d) The Bank leases its Castine branch office located on Main Street
          from Michael Tonry, Castine, Maine.  The current lease expires on
          February 1, 1999 with the right to extend the lease for an additional
          4 year term.

          (e) The Bank leases its Bar Harbor branch office located on Cottage
          Street from the Swan Agency, a Maine Corporation with a principal
          office in Bar Harbor, Maine.  The current lease will expire in April
          of 2002.

All premises are considered to be in good condition and currently
adequate for the purposes for which they are utilized.

ITEM 3:  LEGAL PROCEEDINGS

There are no material pending legal proceedings other than ordinary
routine litigation incidental to the business.

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

Not applicable.

                                 PART II

ITEM 5:  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS

A.   MARKET INFORMATION

Union Bankshares stock, $12.50 par value, is not listed on any national
exchange, nor is it actively traded.  Since the Company is not aware of
all trades, the market price is established by determining what a
willing buyer will pay a willing seller.  Based upon the trades that
the Company had knowledge of (per quotes from local brokerages), high
and low bids for each quarter for 1998 and 1997 are listed in the
following table.

          1st Quarter       2nd Quarter       3rd Quarter         4th Quarter
1998    120.00 to 125.00  125.00 to 136.50  126.00 to 130.00  130.00 to 130.00
1997     93.00 to 104.00   93.00 to  97.00   88.00 to 100.00  100.00 to 110.00

B.  HOLDER

As of March 1, 1999 there were approximately 698 stockholders of
record.

C.  DIVIDENDS

     1.   History

The following table shows the cash dividends per share declared by
Union Bankshares Company on its common stock, $12.50 par value:

                              1998           1997
                              
       1st Quarter           $ .50          $ .41
       2nd Quarter           $ .50          $ .42
       3rd Quarter           $ .50          $ .50
       4th Quarter           $ .50          $ .50

Cash dividends declared
  per common share           $2.00          $1.83

Item 6:  SELECTED FINANCIAL DATA (in thousands, except for per share
amounts)

                                     Years Ended December 31,
                            1998     1997      1996      1995      1994
SUMMARY OF OPERATIONS
Operating Income        $  3,155  $  2,608  $  2,207  $  1,989   $  2,080
Operating Expense          8,413     8,016     7,723     7,459      7,420
Net Interest Income        9,927     9,452     9,137     8,803      8,490
Provision for Loan Losses    285       120       120        30          0
Net Income                 3,090     2,700     2,452     2,418      2,354

PER COMMON SHARE DATA
Net Income               $  6.41   $  5.59   $  5.07   $  5.00    $  4.86
Cash Dividends Declared     2.00      1.83      1.67      1.56       1.25
Book Value (2)             57.21     52.93     49.34     45.87      42.45
Market Value              130.00    110.00    104.00     75.00      71.00

FINANCIAL RATIOS
Return on Average
 Equity (2)                11.6%     10.9%     10.6%     11.4%      11.9%
Return on Average Assets    1.3%      1.3%      1.2%      1.3%       1.3%
Return on Average 
 Earning Assets             1.4%      1.4%      1.4%      1.4%       1.4%
Net Interest Margin        4.72%     4.88%     5.16%     5.37%      5.46%
Dividend Payout Ratio      31.2%     32.8%     32.9%     31.3%      25.8%
Allowance for Loan
 Losses/Total Loans          .02       .02       .02       .02        .02
Non Performing Loans
 to Total Loans             .005      .007      .007      .007       .003
Non Performing Assets
 to Total Assets            .004      .005      .008      .010       .006
Efficiency Ratio           64.3%     66.5%     67.2%     67.2%      69.1%
Loan to Deposit Ratio      58.7%     60.4%     60.7%     56.7%      52.5%

BALANCE SHEET
Deposits                $188,029  $177,386  $166,445  $164,481   $160,249
Loans                    110,399   107,062   101,044    93,242     84,208
Securities (1)           111,304    96,065    81,568    76,578     83,391
Shareholders' Equity (2)  27,577    25,565    23,885    22,227     20,570
Total Assets             251,195   222,560   202,066   191,353    181,597


(1)  Carrying value.  Includes available for sale securities with cost
  of $101,610, $59,983, $75,095 and $70,938 at December 31, 1998, 1997,
  1996 and 1995, respectively.

(2)  Excluding net unrealized gain (loss) net of deferred taxes on
   available for sale securities of $1,162,032, $437,749, ($171,460),
   $567,810 and ($1,389,168) at December 31, 1998, 1997, 1996, 1995 and
   1994, respectively.

The above summary should be read in conjunction with the related
consolidated financial statements and notes thereto for the years ended
December 31, 1998, 1997, 1996, 1995 and 1994, and with Management's
Discussion and Analysis of Financial Condition and Results of
Operations.

ITEM 7:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
          RESULTS OF OPERATIONS

The information contained in the section captioned "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's 1998 annual Report is incorporated herein
by reference.


ITEM 7A: QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT  MARKET RISK

Market risk is the risk of loss in a financial instrument arising from
adverse changes in market rates/prices such as interest rates, foreign
currency exchange rates, commodity prices, and equity prices.  The
Company's primary market risk exposure is interest rate risk.  The
ongoing monitoring and management of this risk is an important
component of the Company's asset/liability management process which is
governed by policies established by its Board of Directors that are
reviewed and approved annually.  The Board of Directors delegates
responsibility for carrying out the asset/liability management policies
to the Asset/Liability Committee (ALCO).  In this capacity ALCO
develops guidelines and strategies impacting the Company's
asset/liability management related activities based upon estimated
market risk sensitivity, policy limits and overall market interest rate
levels/trends.

INTEREST RATE RISK

Interest rate risk represents the sensitivity of earnings to changes in
market interest rates.  As interest rates change the interest income
and expense streams associated with the Company's financial instruments
also change thereby impacting net interest income (NII), the primary
component of the Company's earnings.  ALCO utilizes the results of a
detailed and dynamic simulation model to quantify the estimated
exposure of NII to sustained interest rate changes.  While ALCO
routinely monitors simulated NII sensitivity over a rolling two year
horizon, it also utilizes additional tools to monitor potential longer
term interest rate risk.

The simulation model captures the impact of changing interest rates on
the interest income received and interest expense paid on all assets
and liabilities reflected on the Company's balance sheet.  This
sensitivity analysis is compared to ALCO policy limits which specify a
maximum tolerance level for NII exposure over a one year horizon,
assuming no balance sheet growth, given both a 200 point basis point
(bp) upward and downward shift in interest rates.  A parallel and pro
rata shift in rates over a 12 month period is assumed.  The table below
presents the potential adverse impact on the Bank's current earnings
due to changes in interest rates.  This measure is based on the Bank's
interest rate sensitivity position at December 31, 1998 and 1997, which
reflects a view on future interest rate movements relative to the
current yield curve.  As indicated in the table, the Bank's interest
rate sensitivity position would increase 400 bp from 1998 over 1997 in
a 200 bp upward interest rate shift and decrease 500 bp in a downward
interest rate shift for the same period.

                                                Estimated
                 Rate Change                 NII Sensitivity

                                              1998     1997

                    +200 bp                  +6.0%    +2.0%
                    -200 bp                 -8.0%    -3.0%

The preceding sensitivity analysis does not represent a Company
forecast and should not be relied upon as being indicative of expected
operating results.  These hypothetical estimates are based upon
numerous assumptions including: the nature and timing of interest rate
levels including yield curve shape, prepayments on loans and
securities, deposit decay rates, pricing decisions on loans and
deposits, reinvestment/replacement of asset and liability cashflows,
and others.  While assumptions are developed based upon current
economic and local market conditions, the Company cannot make any
assurances as to the predictive nature of these assumptions including
how customer preferences or competitor influences might change.

Also, as market conditions vary from those assumed in the sensitivity
analysis, actual results will also differ due to:
prepayment/refinancing levels likely deviating from those assumed, the
potential effect of changing debt service levels on customers with
adjustable rate loans, depositor early withdrawals and product
preference changes, and other internal/external variables.
Furthermore, the sensitivity analysis does not reflect actions that
ALCO might take in responding to or anticipating changes in interest
rates.


ITEM 8:  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     (A)  The financial statements required are contained in the Company's
          1998 Annual Report and are incorporated herein by reference.
          (See item 14 (a) )

ITEM 9:  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE

Previously reported in 8K filing in 1995.

                                PART III

ITEM 10:  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information called for by this Item (and Items 11, 12, and 13
below) is incorporated by reference from the registrant's definitive
Proxy Statement dated March 26, 1999 for its regular annual meeting of
shareholders to be held April 15, 1999, where it appears under the
headings "VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF AND ELECTION
OF DIRECTORS."

ITEM 11:  EXECUTIVE COMPENSATION

See Item 10.

ITEM 12:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

See Item 10.

ITEM 13:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See Item 10.
                                 PART IV
                                    
ITEM 14:  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

     (a)  Financial Statements and Exhibits

        (1)  The financial statements listed below are filed as part of this
             report; such financial statements (including report thereon and
             notes thereto) are included in the registrant's Annual Report to
             shareholders for its fiscal year ended December 31, 1998 (a
             copy of which is being filed as Exhibit 13 hereto), and are
             incorporated herein by reference.

     Consolidated Balance Sheets
       December 31, 1998 and 1997                                         22
     Consolidated Statements of Income
       For the years ended December 31, 1998, 1997 and 1996               23
     Consolidated Statements of Changes in Shareholders' Equity
       For the years ended December 31, 1998, 1997 and 1996               24
     Consolidated Statements of Cash Flow
       For the years ended December 31, 1998, 1997 and 1996            25-26
     Notes to Consolidated Financial Statements                           27
     Independent Auditors Opinion                                         43

        (2)  Financial statement schedules are omitted as they are not
        required or included in the Annual Report to shareholders.

        (3)  Exhibits required by Item 601 - see Item 14(c)

     (b)  Reports on Form 8-K

       During the registrant's fiscal quarter ended December 31, 1998,
       the registrant was not required to and did not file any reports
       on Form 8-K.

     (c)  Exhibits


                    *  3                Articles of Incorporation and
                                        By-laws of Union Bankshares Company

                    *  10.1             Employee Benefit Plan for the
                                        employees of Union Trust Company

                                        Pension Plan for the employees
                                        of Union Trust Company

                                        401 (k) Profit Sharing Plan for the
                                        employees of Union Trust Company

                                        Stock Purchase Plan for the
                                        employees of Union Trust Company

                    11                  Computation of earnings per share, is
                                        incorporated herein by reference to 
                                        Note 1 to the Consolidated Financial 
                                        Statements on page 22 of the 1998 
                                        Annual Report to Shareholders'
                                        attached hereto as Exhibit 13.

                    12                  Statement for computation of ratios is
                                        incorporated herein by reference to
                                        "Part II, Item 6 - Selected Financial
                                        Data."

                    13                  The registrant's Annual Report to 
                                        Shareholders'forits fiscal year ended
                                        December 31, 1998. This exhibit, 
                                        except for those portions thereof
                                        expressly incorporated by reference
                                        into the Form 10 K annual report, is 
                                        furnished for the information of the 
                                        Commission only and is not to be
                                        "filed" as part of the report.
          
                    *21                 Subsidiary information is incorporated
                                        herein by reference to "Part I, Item 1 -
                                        Business".
          
                     27                 Financial Data Schedule
          
                     99.1               Report of Berry, Dunn, McNeil & Parker.


*Incorporated herein by reference into this document from the Exhibits
to Form S-1, Registration Statement, initially filed on June 15, 1984,
Registration No. 2-90679.

                               SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) 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                UNION BANKSHARES COMPANY


By:  ___________________________        By:____________________________
     Peter A. Blyberg, President             Sally J. Hutchins
     and Chief Executive Officer             Vice President, Treasurer
and
                                             Controller

Date: March 25, 1999

Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the date
indicated.

                                     Arthur J. Billings, Director
                                     Peter A. Blyberg, Director
                                     Robert S. Boit, Director
                                     Blake B. Brown, Director
                                     Richard C. Carver, Director
                                     Peter A. Clapp, Director
                                     Sandra H. Collier, Director
                                     Robert B. Fernald, Director
                                     Douglas A. Gott, Director
                                     David E. Honey, Director
                                     James L. Markos, Jr., Director
                                     Casper G. Sargent, Director
                                     John V. Sawyer, II, Director
                                     Stephen C. Shea, Director
                                     Richard W. Teele, Director
                                     Paul L. Tracy, Director
                                     Richard W. Whitney, Director