Exhibit 99.1

Dear Shareholder,

February 10, 2011

Union Bankshares, Inc.

We are pleased to report the financial results of your company for 2010 were solid in a number of areas. Net income increased by 6.9%, return on average assets was 1.26%, and return on average equity was 13.37%, all strong performance indicators.

Contributing to the performance improvement were increases in net interest income–$868,000, non interest income–$413,000, and decreases in employee benefits, occupancy, equipment and FDIC insurance expenses combined of $354,000. Partially offsetting the above gains were increases in income taxes–$283,000, salaries–$462,000, and the provision for loan losses–$120,000.

Of particular significance to 2010’s results were lending related activities. Interest rates remained at historically low levels contributing to the continued refinancing of residential mortgages. Over $51 million in residential loans were originated and sold, with the vast majority servicing retained, into the secondary mortgage market generating $1 million in premium income.

Our portfolio of sold and serviced loans now exceeds $165 million, placing us in the top 5% of banks in our peer group. Service fees generated by these sold loans generated $549,000 in revenue during 2010 and will provide a continuing stream of fees in the years to come.

As mentioned earlier, we increased our provision for bad debts for 2010 to $520,000. Although we charged off $316,000 in loans, the main reason for the increase in the provision was the composition of and growth in the loan portfolio of 6.7%. We have continued to experience good demand for commercial real estate as well as residential loans. In addition, we just received notice of our acceptance as an approved lender for the Federal Housing Administration (FHA) loan programs.

In mid 2010, Congress passed the Wall Street Reform and Consumer Protection Act (Dodd-Frank bill). This legislation makes sweeping changes in the banking industry, consumer protection, and implements price controls on certain banking fees. Although community banks are exempted from some of these new rules, you can be assured the costs of regulatory compliance will increase for all financial institutions while revenue sources are being reduced.

This past November we announced that David Silverman, Senior Vice President and Senior Loan Officer of Union Bank, had been selected the successor to Ken Gibbons. In accordance with the management succession plan adopted by the Board last July, Mr. Silverman will become President of both companies on April 1, 2011, and CEO in May 2012. Mr. Gibbons will become Board Chair upon the retirement of current Board Chair, Richard C. Sargent, at the annual meeting of shareholders in May 2011, and will remain as CEO during the management transition year of May 2011 to May 2012. Mr. Silverman was elected a director of Union Bank on November 17, 2010, and it is also expected that Mr. Silverman will stand for election to the Company’s Board of Directors at the 2011 annual meeting. The transition process has begun and we are all looking forward to the changes it will bring.

Enclosed is your dividend check or advice of deposit, representing a dividend of $0.25 per share to shareholders of record January 29, 2011, and payable February 10, 2011.

Sincerely,

SHAREHOLDER ASSISTANCE

AND INVESTOR INFORMATION

If you need assistance with a change in registration of certificates, combining your certificates into one, reporting lost certificates, non-receipt or loss of dividend checks, assistance regarding direct deposit of dividends, information about the Company, or to receive copies of financial reports, please contact JoAnn Tallman, Assistant Secretary at 802-888-6600 or contact our Transfer Agent at the address and phone number listed below:

Transfer Agent:

Registrar & Transfer Company
Attn: Stock Transfer Department
10 Commerce Drive
Cranford, NJ 07016

Phone:

800-368-5948

Fax:

908-497-2318

E-mail:

info@rtco.com

NASDAQ Stock Market Ticker Symbol:

UNB

Corporate Name:

Union Bankshares, Inc.

Corporate Address:

20 Lower Main Street

P.O. Box 667

Morrisville, VT 05661-0667

__________________________

UNION BANK OFFICES

(ATMs at all Branch Locations)

DANVILLE

LITTLETON, NH

ST. JOHNSBURY

421 Route 2 East

263 Dells Road

364 Railroad St.

802-684-2211

603-444-7136

802-748-3131

FAIRFAX

LYNDONVILLE

325 Portland St.

Jct. Rtes. 104&128

183 Depot St.

802-748-3121

802-849-2600

802-626-3100

Green Mtn. Mall

HARDWICK

MORRISVILLE

1998 Memorial Dr.

103 VT Rte. 15

20 Lower Main St.

802-748-2454

802-472-8100

802-888-6600

SO. BURLINGTON

JEFFERSONVILLE

65 Northgate Plaza

Loan Center

44 Main St.

Route 100

30 Kimball Ave.

802-644-6600

802-888-6860

802-865-1000

JOHNSON

ST. ALBANS

STOWE

198 Lower Main St.

15 Mapleville Depot

47 Park St.

802-635-6600

802-524-9000

802-253-6600

Richard C. Sargent
Chairman

Kenneth D. Gibbons
President & CEO

Fourth Quarter Report

December 31, 2010

CONSOLIDATED BALANCE SHEETS  (unaudited)

CONSOLIDATED STATEMENTS OF INCOME  (unaudited)

December 31, 2010

December 31, 2009

12/31/2010

12/31/2009

12/31/2010

12/31/2009

ASSETS

(3 months ended)

(12 months ended)

Cash and due from banks

$5,447,386 

$4,941,612 

Interest income

$5,814,504

$5,705,281

$22,907,235

$23,216,587

Federal funds sold & overnight deposits

8,844,889 

17,190,525 

Interest expense

995,679

1,171,194

4,117,246

5,294,210

Interest bearing deposits in banks

14,041,101 

22,974,800 

    Net interest income

4,818,825

4,534,087

18,789,989

17,922,377

Investment securities

24,279,845 

24,648,589 

    Provision for loan losses

140,000

155,000

520,000

400,000

Loans held for sale

5,610,436 

9,262,352 

    Net interest income after

Loans, net

376,460,215 

348,904,624 

      provision for loan losses

4,678,825

4,379,087

18,269,989

17,522,377

Reserve for loan losses

(3,754,618)

(3,492,783)

Premises and equipment, net

7,842,281 

7,613,319 

Trust income

138,291

101,047

481,301

379,042

Accrued interest & other assets

15,095,578 

15,479,058 

Noninterest income

1,371,509

1,288,801

5,452,949

5,142,265

Total Assets

$453,867,113 

$447,522,096 

Noninterest expenses:

    Salaries & wages

1,719,509

1,555,542

6,558,759

6,097,064

LIABILITIES AND SHAREHOLDERS' EQUITY

    Pension & employee benefits

695,449

749,135

2,828,401

2,923,803

Noninterest bearing deposits

$64,526,154 

$60,128,845 

    Occupancy expense, net

236,602

215,531

937,040

956,966

Interest bearing deposits

312,134,328 

308,698,292 

    Equipment expense

285,373

264,716

1,056,687

1,109,626

Borrowed funds

28,985,907 

30,992,604 

    Other expenses

1,479,126

1,332,031

5,533,858

5,309,714

Accrued interest & other liabilities

6,072,296 

6,522,745 

        Total

4,416,059

4,116,955

16,914,745

16,397,173

Common stock

9,843,572 

9,843,572 

Additional paid-in capital

244,363 

219,331 

Income before taxes

1,772,566

1,651,980

7,289,494

6,646,511

Retained earnings

37,622,575 

36,494,110 

Income tax expense

390,944

372,062

1,702,707

1,419,943

Accumulated other comprehensive loss

(1,739,244)

(1,653,077)

Treasury stock at cost

(3,822,838)

(3,724,326)

Net income

$1,381,622

$1,279,918

$5,586,787

$5,226,568

Total Liabilities and Shareholders' Equity

$453,867,113 

$447,522,096 

Earnings per Share

$0.31

$0.29

$1.25

$1.17

Book value per Share

$9.46

$9.23

Standby letters of credit were $1,494,000 and $2,438,000 at December 31, 2010 and 2009, respectively.