FORM 10-Q        
                   SECURITIES AND EXCHANGE COMMISSION     
                      Washington, D. C.  20549                 
                             
       
(Mark One)        
        
 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE      
     SECURITIES EXCHANGE ACT OF 1934        
        
 For the quarterly period ended          March 31, 1997       
                                _________________________________ 
                               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                  0-19214       
                     ____________________________________________ 
 
                      Union National Financial Corporation       
_________________________________________________________________ 
           (Exact name of registrant as specified in its charter) 

      
         Pennsylvania                             23-2415179     
___________________________________      ________________________ 
    (State of Incorporation)             (I.R.S. Employer ID No.) 

101 East Main Street, P.O. Box 567, Mount Joy,Pennsylvania  17552 
__________________________________________________________  _____ 
     (Address of principal executive offices)            Zip Code 

 
                           (717) 653 - 1441      
_________________________________________________________________ 
           (Registrant's telephone number, including area code)   

 
                            Not Applicable       
_________________________________________________________________ 
           (former name, former address, & former fiscal year,    
                    if changes since last report)              
 
    Indicate by check mark whether the registrant (1) has filed   
all reports required to be filed by Section 13 or 15 (d) of the   
Securities Exchange Act of 1934 during the preceding 12 months    
(or for such shorter period that the registrant was required to   
file such reports), and (2) has been subject to such filing       
requirements for the past 90 days.                 Yes [X] No [ ] 
                                                   ______________ 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS     
DURING THE PRECEDING FIVE YEARS:       
       
     Indicate by check mark whether the registrant has filed all  
documents and reports required to be filed by Section 12, 13, or  
15 (d) of the Securities Exchange Act of 1934 subsequent to the   
distribution of securities under a plan confirmed by a        
court.                                              Yes [ ] No[ ] 
                                                _________________ 
  
                 APPLICABLE ONLY TO CORPORATE ISSUERS       
       
     Indicate the number of shares outstanding of each of the     
issuer's classes of common stock, as of the latest practicable    
date.         
    2,490,973     shares of $.25 (par) common stock were        
_________________       
outstanding as of     April 30, 1997.       
                   ____________________        
<PAGE>     
                UNION NATIONAL FINANCIAL CORPORATION     
                             10Q INDEX                       Page 

                                                              #   
PART I    - FINANCIAL INFORMATION:                            
            ______________________     
          - Consolidated Statements of Financial Condition    1   

          - Consolidated Statements of Income                 2   
     
          - Consolidated Statements of Cash Flows             3   
     
          - Notes to Consolidated Financial Statements        4   
     
          - Management's Discussion and Analysis of Financial     

            Condition and Results of Operations             5-12  

  
PART II   - OTHER INFORMATION                                13   
            _________________
Signature Page                                               14   

 
     
<PAGE>     
<TABLE>     
Union National Financial Corporation     
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)     
<CAPTION>     
             (In Thousands)                 3/31/97      12/31/96 
                                           ______________________ 
<S>                                           <C>          <C>    

                                
ASSETS     
                     
Cash and Due from Banks                     $7,333        $6,073 
Federal Funds Sold                           1,925         4,790 
Investment Securities Held to Maturity           
(Market Value - 1997-$16,624;1996-$17,228)  16,741        17,124 
Investment Securities Available for Sale    45,894        37,766 
Loans(Net of Unearned Income)              133,239       130,391 
Less: Allowance for Loan Losses             (1,375)       (1,371)
                                           ______________________ 
     Total Net Loans                       131,864       129,020  
   
Premises and Equipment - Net                 5,665         5,741 
Accrued Interest Receivable                  1,440         1,312 
Deferred Income Taxes                          310           252 
Investment in Limited Partnerships             984         1,003 
Other Assets                                   501           391 
                                           ______________________ 
    TOTAL ASSETS                          $212,657      $203,472 
                                          ======================
LIABILITIES     
     
Deposits:     
 Noninterest-Bearing                       $16,878       $16,887 
 Interest-Bearing                          148,883       147,626  
                                           ______________________ 
    Total Deposits                         165,761       164,513  

Short-Term Borrowing                           664         2,989 
Long-Term Debt                              22,491        12,676 
Accrued Interest Payable                       944           883 
Other Liabilities                              364           188 
                                           _____________________ 
     TOTAL LIABILITIES                     190,224       181,249  
   
STOCKHOLDERS' EQUITY          
Common Stock (Par Value $.25)                  629           599 
  Shares: Authorized - 20,000,000; Issued -     
  2,514,012 in 1997 (2,394,164 in 1996)     
  Outstanding - 2,490,973 in 1997 (2,373,222      
  in 1996)     
Surplus                                      4,874         1,968 
Retained Earnings                           17,364        19,916 
Unrealized gain/(loss) on securities       
  available for sale, net of tax               (21)          103 
Less: Treasury Stock - at cost     
 (23,039 shares in 1997 and 20,942 shares      
  in 1996)                                    (413)         (363) 
                                           ______________________ 

      TOTAL STOCKHOLDERS' EQUITY            22,433        22,223 
                                           ______________________ 

     
     TOTAL LIABILITIES AND      
     STOCKHOLDERS' EQUITY                 $212,657      $203,472  

                                           ====================== 

  
     
* The Stockholders' Equity and share information as of March 31,
1997 reflects the 5% stock dividend declared by the Corporation's
Board of Directors on April 10, 1997, payable on May 15, 1997 to
stockholders of record on April 28, 1997.

The accompanying notes are an integral part of the      
consolidated financial statements.     
     
</TABLE>     
     
<PAGE>     
     
<TABLE>     
Union National Financial Corporation     
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)     
<CAPTION>                                 
                                    Three Months Ended March 31,  
                                  _______________________________
(In Thousands, except Per Share Data)          1997       1996    
                                  _______________________________
<S>                                            <C>         <C>    
     
INTEREST INCOME     
Interest and Fees on Loans                   $2,908        $2,734 
Investment Securities:     
   Taxable                                      639           446 
   Exempt from Federal Taxes                    212           194 
Deposits in Banks                                 0             1 
Federal Funds Sold                               45            27 
                                           ______________________ 
   Total Interest Income                      3,804         3,402 

INTEREST EXPENSE     
Deposits                                      1,495         1,380 
Short-Term Borrowing                             42             7 
Long-Term Debt                                  207           102 
                                           ______________________ 
   Total Interest Expense                     1,744         1,489 
                                           ______________________ 
  Net Interest Income                         2,060         1,913 

PROVISION for LOAN LOSSES                        11             8 
                                           ______________________ 
Net Interest Income after Provision      
for Loan Losses                               2,049         1,905 

   
OTHER OPERATING INCOME     
Trust Income                                     30            24 
Service Charges on Deposit Accounts              83            73 
Other Service Charges, Commissions, Fees         78            66 
Other Income                                     46            45 
                                           ______________________ 
    Total Other Operating Income                237           208 

OTHER OPERATING EXPENSES      

Salaries and Wages                              672           640 
Retirement Plan and Other Employee Benefits     225           205 
Net Occupancy Expense                           173           162 
Furniture and Equipment Expense                  88            85 
FDIC Insurance Assessment                         4             1 
Other Operating Expenses                        418           371 
                                           ______________________ 
    Total Other Operating Expenses            1,580         1,464 
                                           ______________________ 
    Income before Income Taxes                  706           649 

PROVISION for INCOME TAXES                      139            92 
                                           ______________________ 
    NET INCOME for PERIOD                      $567          $557 
                                           ====================== 

   
PER SHARE INFORMATION     
 Net Income for Period                        $0.23         $0.22 
 Cash Dividends                              $0.086        $0.062 
 Average Common Shares Outstanding        2,492,515     2,491,800 

 
* Per Share information reflects the 5% stock dividend declared
by the Corporation's Board of Directors on April 10, 1997,
payable on May 15, 1997 to stockholders of record on April 28,
1997.

The accompanying notes are an integral part of the consolidated
financial statements.
</TABLE>     
     
<PAGE>     
<TABLE>     
Union National Financial Corporation 
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) 
<CAPTION> 
                                     Three Months Ended March 31, 
                                    _____________________________ 
         (In Thousands)                        1997         1996 
                                    _____________________________ 

<S>                                             <C>          <C> 
 
CASH FLOWS from OPERATING ACTIVITIES       
Net Income                                      $567        $557 
Adjustments to Reconcile Net Income to Net        
  Cash Provided by Operating Activities: 
    Depreciating and Amortization                127         125 
    Provision for Loan Losses                     11           8 
    Provision for Deferred Income Taxes            5          36 
    (Increase)/Decrease in Accrued               
    Interest Receivable                         (128)       (160) 
    (Increase)/Decrease in Other Assets         (102)        (10) 
    Increase/(Decrease) in Other Liabilities     238         138 
                                          _______________________
    Net Cash Provided by Operating Activities    718         694 
CASH FLOWS from INVESTING ACTIVITIES    
Net (Increase)/Decrease in Federal Funds Sold  2,865           0 
Proceeds from Maturities of  
 Available for Sale Securities                 2,467       4,236  
Proceeds from Maturities of 
 Held to Maturity Securities                   1,110         505 
Purchases of Available for Sale Securities   (10,782)    (10,380) 
Purchases of Held to Maturity Securities        (728)     (2,622) 
Loans Made to Customers, Net of  
 Principal Collected on Loans                 (2,855)       (764) 
Purchases of Property and Equipment              (40)        (35) 
                                          _______________________ 
    Net Cash (Used in)Investing Activities    (7,963)     (9,060) 
CASH FLOWS from FINANCING ACTIVITIES  
Net Increase/(Decrease)in Demand Deposits  
 and Savings Accounts                           (689)       (256) 
Net Increase/(Decrease) in Certificates  
 of Deposits                                   1,936       8,402 
Net Increase/(Decrease) in Short-Term 
 Borrowing                                    (2,325)     (2,304)
Proceeds from Issuance of Long-Term Debt       9,815       1,675 
Acquisition of Treasury Stock                    (51)          0 
Issuance of Treasury Stock                        32          17 
Cash Dividends Paid                             (213)       (154) 

                                          _______________________
   Net Cash Provided by (Used in) 
   Financing Activities                        8,505       7,380 
                                          _______________________ 
Net Increase/(Decrease) in Cash 
 and Cash Equivalents                          1,260        (986) 
CASH and CASH EQUIVALENTS -                        
  Beginning of Period                          6,073       7,214 
                                         _______________________
CASH and CASH EQUIVALENTS - End of Period     $7,333      $6,228 
                                          ======================= 
 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION 
Cash Payments for: 
 Interest Paid to Depositors                  $1,471      $1,342  
 Interest Paid - Other                           211         101
 Income Taxes                                      0           0 
 
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Retirement of Treasury Stock (4,000 shares 
1996)                                             $0         $62  
 
The accompanying notes are an integral part of the consolidated 
financial statements. 
</TABLE> 
     
<PAGE>            
              UNION NATIONAL FINANCIAL CORPORATION     
                     MOUNT JOY, PENNSYLVANIA     
     
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS     
     
1.   The information contained in this interim report is          
     unaudited and subject to year-end adjustment and audit.      
     However, in the opinion of management, the information       
     reflects all adjustments necessary to present fairly the     
     financial condition and results of operations for the latest 
     period.  All such adjustments were of a normal, recurring    
     nature.     
     
2.   These statements should be read in conjunction with notes to 
     the financial statements contained in the 1996 Annual Report 
     to Stockholders.     
     
3.   Management considers the allowance for loan losses (reserve) 
     to be adequate at this time.     
     
4.   No shares of common stock are reserved for issuance in the   
     event of conversions or the exercise of warrants, options or 
     other rights, except as follows: 246,000 shares which are    
     reserved for issuance under the Corporation's 1988 and 1997  
     Stock Incentive Plans, 100,000 shares which are reserved for 
     issuance under the Corporation's 1997 Employee Stock         
     Purchase Plan, and 157,500 shares which are reserved for     
     issuance under the Corporation's Dividend Reinvestment Plan. 
     As of March 31, 1997, options to purchase 4,830 shares have  
     been granted under the Corporation's 1988 Stock Incentive    
     Plan.  The exercise price for such options is $23.26.  No    
     options have been exercised as of March 31, 1997.            
     Information regarding shares above reflect the 5% stock      
     dividend declared by the Corporation's Board of Directors on 
     April 10, 1997, payable on May 15, 1997 to stockholders of   
     record on April 28, 1997.
     
5.   The results of operations for the three month period ended   
     March 31, 1997 are not necessarily indicative of the results 
     to be expected for the full year.     
      
<PAGE> 
  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                         RESULTS OF OPERATIONS

The following is management's discussion and analysis of the
significant changes in the results of operations, capital
resources and liquidity presented in its accompanying
consolidated financial statements for Union National Financial
Corporation, a bank holding company (the Corporation), and its
wholly-owned subsidiary, Union National Mount Joy Bank (the
Bank). The Corporation's consolidated financial condition and
results of operations consist almost entirely of the Bank's
financial condition and results of operations. Such financial
condition and results of operations are not intended to be
indicative of future performance. This discussion should be read
in conjunction with the 1996 Annual Report.

In addition to historical information, this First Quarter Report
contains forward-looking statements. The forward-looking
statements contained herein are subject to certain risks and
uncertainties that could cause actual results to differ
materially from those projected in the forward-looking
statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which reflect management's
analysis only as of the date hereof. The Corporation undertakes
no obligation to publicly revise or update these forward-looking
statements to reflect events or circumstances that arise after
the date hereof. Readers should carefully review the risk factors
described in other documents the Corporation files from time to
time with the Securities and Exchange Commission, including the
Quarterly Reports on Form 10-Q to be filed by the Corporation in
1997, and any Current Reports on Form 8-K filed by the
Corporation.

Results of Operations 
_____________________

Overview

Consolidated net income for the three months ended March 31, 1997
was $567,000, an increase of 1.8%, as compared to the
consolidated net income of $557,000 for the same period in 1996.

On a per share basis, net income for the three months ended March
31, 1997 was $.23, as compared to $.22 for the same period in
1996. Per share information reflects the 5% stock dividend
declared by the Corporation's Board of Directors on April 10,
1997, payable on May 15, 1997 to stockholders of record on April
28, 1997.

Results of operations for the three months ended March 31, 1997
as compared to the same period in 1996 were impacted by the
following items: (1) Net income was positively impacted by a 9.2%
increase in average net loans, primarily residential and
commercial mortgages, which were funded by growth in certificates
of deposit and by additions to average borrowings; (2) net income
was negatively impacted by the narrowing of the spread between
the rates on loans and investments and the rates on certificates
of deposit during 1996; (3) net income was negatively impacted by
a 7.9% increase in other operating expenses; and (4) net income
was negatively impacted by a reduction in income tax credits
available in 1997 as compared to 1996. The above items are
quantified and discussed in further detail under their respective
sections below.

Net income as a percent of total average assets, also known as
return on assets (ROA), was 1.12% on an annualized basis for the
three months ended March 31, 1997, as compared to 1.25% for the
same period in 1996. Net income as a percent of average
stockholders' equity, also known as return on equity (ROE), was
10.2% on an annualized basis for the three months ended March 31,
1997, as compared to 10.6% for the same period in 1996.

The growth in loans is considered a material favorable trend of
the Corporation which Management expects to continue for the
remainder of 1997. Management expects the growth in deposits for
1997 to be comparable to historic growth rates. Management has
taken specific actions to enhance the Bank's competitive position
for core deposits. These actions include the implementation of a
formal officer calling program to enhance the Bank's competitive
position for loans, deposits and other financial services in the
communities it serves and the implementation of a bank-wide
incentive program for employee participation based on the level
of net income increase and the growth in deposits and loans.
Other actions include the strategic promotion of the Bank's
branch offices in light of continued bank consolidation in the
Bank's market

<PAGE>

area; the promotion of intermediate-term certificates of deposit
including the reintroduced push-button certificate allowing a
one-time increase in the interest rate during the term of the
certificate; the promotion of a certificate of deposit which has
a no-penalty for early withdrawal feature during the life of the
certificate; and a special promotion of the Bank's checking
account products. In the first quarter of 1997, the Bank received
new funds exceeding $1,900,000 from a special certificate of
deposit promotion. The funding for the loan growth is further
discussed under the section on Liquidity. 

Management expects the loan growth to continue for the following
reasons: (1) lending rates are at generally affordable rates for
prospective borrowers; (2) implementation of a formal officer
calling program; (3) further enhancement and promotion of the new
loan product first introduced in September, 1996, home equity
lines of credit; (4) new loan originations resulting from the
recently opened Manheim branch office; (5) economic stability of
Lancaster County as discussed later in this section; and (6)
continued population growth in the Bank's market area.

It is anticipated that economic activity in the Bank's market
area during 1997 appears favorable due to the availability of
generally low lending rates and continued construction activity.
Current long-term interest rates remain below levels of late 1994
and early 1995. This decline in long-term interest rates is
expected to augment economic activity. The overall effects of
current and past economic conditions as well as other factors can
be seen by a mild lessening of certain borrowers' financial
strength. Management is monitoring these general and specific
trends closely. Their various effects are discussed later under
the section on Credit Risk and Loan Quality. 

Net Interest Income

For analytical and discussion purposes, net interest income and
corresponding yields are presented on a taxable equivalent basis.
Net interest income for the three months ended March 31, 1997
increased by $159,000, or 7.8%, over the same period in 1996.
Commercial and residential average loan growth of $11,067,000 and
average investment security growth of $13,359,000 was funded by
the growth in average deposits of $14,161,000 and by the growth
in average borrowings of $10,081,000. The additional borrowings
represented fixed-rate and variable-rate advances. Average
earning assets increased in the amount of $25,860,000 over the
same period from 1996. The volume growth in earning assets and
interest-bearing liabilities contributed to the increase in net
interest income by the amount of $221,000.

Commencing July 1995, the Federal Reserve Bank began loosening
the monetary supply causing the prime interest rate to decrease
from 9% to 8.25% by the first quarter of 1996. The immediate
impact of these short-term interest rate decreases was to
decrease the interest rates on loans that adjust according to the
prime lending rate and on reinvested funds from maturing
investment securities. The overall interest rate on the average
total earning assets decreased to 8.2% for the current period as
compared to 8.5% for the same period last year. The decline in
short-term interest rates had the effect of a slight decline in
the average interest rate on the certificate of deposit
portfolio. However, the increase in the mix of interest-bearing
liabilities in the form of long-term debt has the overall effect
of increasing the total cost of funds. See Management's
discussion below concerning the anticipated impact of these
interest rate fluctuations to the results of operations for 1997.
The overall interest rate on the average interest-bearing
liabilities increased to 4.3% for the current period, as compared
to 4.2% for the same period last year. The net effect of all
interest rate fluctuations and funding changes was to decrease
net interest income in the amount of $62,000 for the current
period over the same period in 1996.

The Bank retains an outside consulting group to assist in
monitoring its interest rate risk using income simulation models
on a quarterly basis. Based on the models, it is currently
anticipated that a two percent general rise or decline in
interest rates over a one-year period will have an immaterial
impact to the Bank's net interest income over the next twelve
months. In order to enhance the net interest income in future
periods, Management has entered into transactions that increase
earning assets funded by advances from the Federal Home Loan Bank
of Pittsburgh (FHLB). The structure of these transactions are
similarly matched with investment securities and loans in order
to limit net interest income exposure to interest rate
fluctuations. As of March 31, 1997, the Bank has received short-
term and long-term 

<PAGE>

fixed rate advances of $22,161,000 from its available credit at
the FHLB for purposes of funding loan demand and mortgage-backed
security purchases. The total advances have a current average
effective rate of 5.76% with maturities ranging from May, 1997 to
March, 2002. Additional asset/liability management strategies
available from the FHLB include access to interest rate caps,
floors and swaps. As of March 31, 1997, the Bank did not utilize
any of these aforementioned strategies. 

Other interest rate risk management tools available to the Bank
include the promotion and development of specific loan and
deposit products and the structuring of its investment portfolio.
As of September, 1996, Management offered a new loan product,
home equity lines of credit, that will provide additional rate
sensitive assets. At March 31, 1997, the total lines of credit
balances outstanding amounted to $634,000.

For the remaining months of 1997, Management expects the
effective interest rate in the loan and investment portfolios to
trend slightly upward as compared to their current levels. This
is primarily a result of the recent Federal Reserve Bank's
tightened monetary policy when the prime lending rate was
increased by .25% in March, 1997. This action similarly increased
overnight fed funds investment rates and increased long-term bond
rates impacting interest rates on residential mortgages. In
addition, Management expects a modest rise in the effective rate
on its interest-bearing liabilities as deposits of lower interest
rate structured money market and savings accounts move to higher
interest rate structured certificates of deposit and as the
increase in short-term rates impacts the Bank's certificate of
deposit portfolio. The growth in earning assets during 1996 and
the first three months of 1997 is expected to have a positive
impact on the net interest margin for the remaining months of
1997. Although the effective interest rate impact of expected
cash flows on investments and of renewing certificates of deposit
can be reasonably estimated at current interest rate levels, the
yield curve during 1997, the options selected by customers, and
the future mix of the loan, investment and deposit products in
the Bank's portfolios may significantly change the estimates used
in the simulation models. However, based on the Bank's current
model and estimates as of March 31, 1997, Management expects an
overall immaterial impact to the net interest margin for the
remaining months of 1997, as compared to the same period in 1996. 

Provision for Loan Losses

The provision for loan losses was $11,000 and $8,000 for the
three months ended March 31, 1997 and 1996, respectively. Net
charge-offs for the three months ended March 31, 1997 amounted to
$7,000 as compared to net recoveries that amounted to $1,000 for
the same period in 1996. Future adjustments to the allowance, and
consequently, the provision for loan losses, may be necessary if
economic conditions or loan credit quality differ substantially
from the assumptions used in making Management's evaluation of
the level of the allowance for loan losses as compared to the
balance of outstanding loans.

Other Operating Income

Other operating income for the three months ended March 31, 1997
was $237,000, representing an increase of $29,000, or 13.9%, over
the same period in 1996. Contributing to this increase were
additional earnings resulting from an increase in remote ATM fees
and from an increase in trust income.

Other Operating Expenses 

Other operating expenses for the three months ended March 31,
1997 increased by $116,000, or 7.9%, over the same period in
1996. Of this increase, employee salaries and wages and related
fringe benefits increased by $52,000, or 6.2%, over the same
period in 1996. This increase was essentially due to new staff
positions for teller training and loan administration and due to
annual merit, cost of living, and health care cost increases. 

Occupancy, furniture and equipment expenses for the three months
ended March 31, 1997 increased by $14,000, or 5.7%, over the same
period in 1996. This increase was primarily due to other real
estate expense incurred on a foreclosed property amounting to
$31,200 offset by a reduction in snow removal costs in the amount
of $20,000 due to the milder 1997 Winter season as compared to
1996.
<PAGE>

The FDIC Insurance Assessment expense increased by $3,000 for the
three months ended March 31, 1997, as compared to the same period
in 1996. The FDIC Insurance Assessment rate increased to 1.29
cents for every $100 in deposits in the first quarter of 1997
from $500 per quarter in the first quarter of 1996. See further
discussion under the Section on Regulatory Activity concerning
the expected impact to the FDIC Insurance Assessment rate for
1997.

Other operating expenses for the three months ended March 31,
1997, increased by $47,000, or 12.7%, over the same period in
1996. Contributing factors to the increase in other operating
expenses as compared to the same period in 1996 included an
increase in net losses and charge-offs from the limited
partnerships, in director subcommittee meetings for the period
and per meeting fees, in volume increases impacting the
Pennsylvania shares tax, in consulting fees, in software
maintenance costs and in ATM locations and transactions.

Income Taxes

The Corporation's income tax expense increased by $47,000 for the
three months ended March 31, 1997 to $139,000 from $92,000 for
the same period in 1996. The effective tax rate was 19.7% and
14.2% for the three months ended March 31, 1997 and 1996,
respectively. The increase in income tax expense and the
effective tax rate was due to the increase in corporate earnings
before income taxes and a reduction in available federal income
tax credits from 1996. The tax credits result from the
Corporation's $632,500, 49.5%, investment in Nissly Chocolate
Factory Apartments Associates, which was formed to rehabilitate
the former Nissly Chocolate Factory into 28 housing units to be
marketed to seniors with low-to-moderate incomes. Total income
tax credits from the project amounted to $17,000 of low income
housing credits for the three months ended March 31, 1997 as
compared to $50,000 of historic credits for the same period in
1996. Currently, the effective tax rate of the Corporation for
the remaining months of 1997 is expected to be more than the
effective tax rate in 1996 due to the expected change in Nissly's
tax credits from 1996.


Regulatory Activity
___________________

The United States Supreme Court has recently rendered a decision
in favor of nationwide insurance sales by banks and which also
bars states from blocking insurance sales by national banks in
towns with populations of no more than 5,000; consequently, the
entrance of banks into the insurance industry is inevitable. On
the heels of the Supreme Court's ruling, the Office of the
Comptroller of the Currency has issued guidelines for national
banks to sell insurance. This federal guidance, however, will not
necessarily ease state restrictions which currently hinder bank
insurance sales. States that have traditionally been opposed to
bank insurance sales could impose licensing requirements and
other restrictions hampering bank insurance activities. It is
difficult to determine to what extent banks will be allowed to
engage in insurance activities and the regulatory costs that will
be attached to such activities.  

Congress is currently considering legislative reform centered on
repealing the Glass-Steagall Act which prohibits commercial banks
from engaging in the securities industry. Consequently, equity
underwriting activities of banks may increase in the near future.
However, the Corporation does not currently anticipate entering
into these activities.

On September 30, 1996, the President signed into law the Deposit
Insurance Funds Act of 1996 to recapitalize the Savings
Association Insurance Fund ("SAIF") administered by the Federal
Deposit Insurance Corporation ("FDIC") and to provide for
repayment of the FICO (Financial Institution Collateral
Obligation) bonds issued by the United States Treasury
Department. During 1997, 1998 and 1999, the average regular
annual deposit insurance assessment is estimated to be about 1.29
cents per $100 of deposits for BIF deposits and 6.44 cents per
$100 of deposits for SAIF deposits. Individual institution's
assessments will continue to vary according to their capital and
management ratings. As always, the FDIC will be able to raise the
assessments as necessary to maintain the funds at their target
capital ratios provided by law. 

Based on current deposit levels, Management expects that the
increase in the FDIC assessment rate will adversely impact
results of operations, net of income taxes, in a currently
estimated amount of $9,000 for the remaining months of 1997.

<PAGE>

The Act also provides regulatory relief to the financial services
industry relative to environmental risks, frequency of
examinations, and the simplification of forms and disclosures.

From time to time, various types of federal and state legislation
have been proposed that could result in additional regulation of,
and restrictions on, the business of the Corporation and the
Bank. It cannot be predicted whether such legislation will be
adopted or, if adopted, how such legislation would affect the
business of the Corporation and the Bank. As a consequence of the
extensive regulation of commercial banking activities in the
United States, the Corporation's and the Bank's business is
particularly susceptible to being affected by federal legislation
and regulations that may increase the costs of doing business.
Except as specifically described above, Management believes that
the effect of the provisions of the aforementioned legislation on
the liquidity, capital resources, and results of operations of
the Corporation will be immaterial. Management is not aware of
any other current specific recommendations by regulatory
authorities or proposed legislation, which if they were
implemented, would have a material adverse effect upon the
liquidity, capital resources, or results of operations, although
the general cost of compliance with numerous and multiple federal
and state laws and regulations does have, and in the future may
have, a negative impact on the Corporation's results of
operations.

Further, the business of the Corporation is also affected by the
state of the financial services industry in general. As a result
of legal and industry changes, Management predicts that the
industry will continue to experience an increase in
consolidations and mergers as the financial services industry
strives for greater cost efficiencies and market share.
Management believes that such consolidations and mergers may
enhance its competitive position as a community bank.


Changes in Accounting Standards
_______________________________

In June 1996, the Financial Accounting Standards Board issued
Statement No. 125 (SFAS No. 125), "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of
Liabilities." This Statement becomes effective for transfers and
servicing of financial assets and extinguishments of liabilities
occurring after December 31, 1996 and shall be applied
prospectively. However, Statement No. 127 was issued December,
1996, to defer certain provisions of SFAS No. 125 for
transactions occurring after December 31, 1997. SFAS No. 125
provides consistent standards for distinguishing transfers of
financial assets that are sales from transfers that are secured
borrowings. The accounting approach is called the financial-
components approach that focuses on control. Under that approach,
after a transfer of financial assets, an entity recognizes the
financial and servicing assets it controls and the liabilities it
has incurred, derecognizes financial assets when control has been
surrendered, and derecognizes liabilities when extinguished.
There was no incidence of coverage under SFAS No. 125 with
respect to applicable provisions for the first quarter of 1997.
The Bank does not expect this Statement to have a material effect
on the liquidity, results of operations or capital resources when
the applicable provisions become effective in 1998.

In February 1997, the Financial Accounting Standards Board issued
Statement No. 128 (SFAS No. 128), "Earnings per Share." This
Statement establishes standards for computing and presenting
earnings per share. SFAS No. 128 replaces the presentation of
primary earnings per share with a dual presentation of basic and
diluted earnings per share. Basic earnings per share excludes
dilution and is computed by dividing income available to common
stockholders by the weighted-average number of common shares
outstanding for the period. Diluted earnings per share reflects
the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into
common stock or resulted in the issuance of common stock that
then shared in the earnings of the entity. This Statement is
effective for financial statements issued for periods ending
after December 15, 1997, and earlier application is not
permitted. The Bank does not expect this Statement to have a
material effect on its earnings per share computations.

<PAGE>

Credit Risk and Loan Quality
____________________________

Other than as described herein, Management does not believe there
are any trends, events or uncertainties which are reasonably
expected to have a material impact on future results of
operation, liquidity or capital resources. Further, based on
known information, Management believes that the effects of
current and past economic conditions and other unfavorable
specific business conditions may result in the inability of loans
amounting to $2,141,000 to comply with their respective repayment
terms. These loans are well secured essentially with real estate,
equipment and vehicles. Management believes that potential losses
on these loans have already been provided for in the Allowance
for Loan Losses. The borrowers are of special mention since they
have shown a decline in financial strength and payment quality.
Management has increased its monitoring of the borrowers'
financial strength. In addition, Management expects that a
portion of these loans will be classified as nonperforming in
1997.


At March 31, 1997, total nonperforming assets decreased to a
level of $658,000, or .5% of total net loans, from a level of
$960,000, or .7%, at December 31, 1996. The reduction is a result
of increased review and supervision of the applicable loan
credits. Historically, the percentage of nonperforming assets to
total net loans as of December 31, for the previous five year
period was an average of .8%.

The reserve increased by $4,000 for the three months ended March
31, 1997, and the ratio of the allowance for loan losses to net
loans was 1.03% at March 31, 1997, as compared to 1.05% at
December 31, 1996. Management believes based on information
currently available that the current allowance for loan losses of
$1,375,000 is adequate to meet potential loan losses.

Allowance for Loan Losses
_________________________

The allowance for loan losses is maintained at a level believed
adequate by Management to absorb estimated probable loan losses
and is formally reviewed by Management on a quarterly basis. The
allowance is increased by provisions charged to operating expense
and reduced by net charge-offs. Management's periodic evaluation
of the adequacy of the allowance is based on the Corporation's
past loan loss experience, known and inherent risks in the
portfolio, adverse situations that may affect the borrower's
ability to repay (including the timing of future payments), the
estimated value of any underlying collateral, composition of the
loan portfolio, current economic conditions, and other relevant
factors. While Management uses available information to make such
evaluations, future adjustments to the allowance may be necessary
if economic conditions differ substantially from the assumptions
used in making the evaluation. In addition, various regulatory
agencies, as an integral part of their examination process,
review the Bank's Allowance for Loan Losses. Such agencies may
require the Bank to recognize additions to the allowance based on
their judgement of information available to them at the time of
their examination.

Liquidity
_________

The Corporation's objective is to maintain adequate liquidity
while minimizing interest rate risk. Adequate liquidity provides
resources for credit needs of borrowers, for depositor
withdrawals, and for funding Corporate operations. Sources of
liquidity are maturing investment securities which include
overnight investments in federal funds sold, overnight
correspondent bank borrowings on various credit lines, payments
on loans and mortgage-backed securities, a growing core deposit
base, primarily certificates of deposit, and FHLB funding
products as discussed below. Management believes that its core
deposits are fairly stable even in periods of changing interest
rates. There are no known trends or any known demands,
commitments, events or uncertainties that will result in, or that
are reasonably likely to result in, liquidity increasing or
decreasing in any material way. Membership in the FHLB provides
the Bank with additional liquidity alternatives such as short or
long-term funding on fixed or variable rate terms. Available
funding from the FHLB amounts to an overnight borrowing capacity
of up to $6,532,000 and a maximum available funding capacity of
up to $78,300,000. In order to provide funding for the Bank's
loans and investments, the Bank borrowed from the FHLB
$7,315,000, net of repayment, for the three months ended March
31, 1997 at varying maturities and terms. The outstanding
borrowings from the FHLB amounted to $22,161,000 and $7,475,000
at March 31, 1997 and 1996, respectively. 

<PAGE>

Stockholders' Equity
____________________

The Corporation maintains capital ratios that are well above the
minimum total capital levels required by federal regulatory
authorities including the risk-based capital guidelines. There
are no material commitments for capital expenditures. There are
no known trends, events or uncertainties including regulatory
items that are expected to have a material impact on the capital
resources of the Corporation for the remaining months of 1997.
See discussion on Regulatory Activity.

The Bank has risk-based capital ratios exceeding the regulatory
requirement. The risk-based capital guidelines require banks to
maintain a minimum risk-based capital ratio of 8.0% at March 31,
1997, as compared to the Bank's current risk-based capital ratio
of 17.54%. The total risk-based capital ratio is computed by
dividing stockholders' equity plus the allowance for loan losses
by risk-adjusted assets. Risk-adjusted assets are determined by
assigning credit risk-weighing factors from 0% to 100% to various
categories of assets and off-balance-sheet financial instruments.

A tabular presentation of the risk-based capital ratios for the
Bank is as follows:

<TABLE>
      (In Thousands)                     March 31,   December 31,
                                            1997          1996    
                                       ___________  _____________
<S>                                        <C>            <C> 
Tier I - Total Stockholders' Equity      $ 21,534      $ 21,186
Tier II - Allowance for Loan Losses         1,375         1,371
                                       ___________  _____________
   Total Qualifying Capital              $ 22,909      $ 22,557
                                       ===========  =============
 Risk-adjusted On-balance-sheet Assets   $123,225      $118,844
Risk-adjusted Off-balance-sheet Exposure    7,404         5,666
                                       ___________  _____________
   Total Risk-adjusted Assets            $130,629      $124,510
                                       ===========  =============
Ratios:
Tier I Capital Ratio - Actual               16.48%        17.02%
Minimum Required                             4.00%         4.00%

Total Capital Ratio - Actual                17.54%        18.12%
Minimum Required                             8.00%         8.00%

Total Risk-Based Capital in Excess of the 
  Minimum Regulatory Requirement         $ 12,459      $ 12,596
                                        =========== =============
</TABLE> 
No shares of common stock are reserved for issuance in the event
of conversions or the exercise of warrants, options or other
rights, except as follows: 246,000 shares which are reserved for
issuance under the Corporation's 1988 and 1997 Stock Incentive
Plans, 100,000 shares which are reserved for issuance under the
Corporation's 1997 Employee Stock Purchase Plan, and 157,500
shares which are reserved for issuance under the Corporation's
Dividend Reinvestment Plan. As of March 31, 1997, options to
purchase 4,830 shares have been granted under the Corporation's
1988 Stock Incentive Plan at an exercise price of $23.26. No
options have been exercised as of March 31, 1997. Information
regarding shares above reflect the 5% stock dividend declared by
the Corporation's Board of Directors on April 10, 1997, payable
on May 15, 1997 to stockholders of record on April 28, 1997.

<PAGE>

<TABLE>  
  
SUPPORTING SCHEDULES  
  
<CAPTION>  
  
Schedule of Nonperforming Assets  
________________________________
                                   March 31,       December 31,   
                                  ___________     _______________
      (In Thousands)                 1997             1996  
                                  ___________     _______________
<S>                                  <C>              <C>   
 
Nonaccruing Loans                    $170             $ 91  
Accrual Loans - 90 days or more  
 past due                             401              752  
Restructured Accrual Loans              0                0  
Other Real Estate Owned                87              117  
                                    ______           ______ 
   Total Nonperforming Assets       $ 658           $  960  
                                    ======           ======  
   Nonperforming Assets  
   as a % of Net Loans                0.5%             0.7%  
                                    ======           ======  
   Allowance for Loan Losses  
   as a % of Nonperforming Loans      343%             163%  
                                    ======           ======  
</TABLE>    
<TABLE>    
<CAPTION>  
Analysis of Allowance for Loan Losses  
_____________________________________
                                     Three Months Ended March 31, 
                                    _____________________________
           (In Thousands)                    1997        1996  
                                          ________      ________
<S>                                           <C>          <C>  
Average Total Loans Outstanding     
   (Less Unearned Income)                  $131,763     $120,696  
                                           ========      ======== 

Allowance for Loan Losses,  
   Beginning of Period                       $1,371       $1,265  
Loans Charged-off During Period                  15            3  
Recoveries of Loans Previously  
   Charged-off                                    8            4  
                                           ________      ________ 
   Net Loans Charged-off                          7           (1) 
Addition to Provision for Loan Losses    
   Charged to Operations                         11            8  

                                          _________      _______  
Allowance for Loan Losses,  
   End of Period                             $1,375       $1,274  
                                           ========      ======== 

  
Ratio of Net Loans Charged-off to Average  
    Loans Outstanding (Annualized)            0.02%         0.00% 
                                           ========      ======== 
Ratio of Allowance for Loan Losses to  
    Net Loans at End of Period                1.03%         1.05% 
                                           ========      ======== 

</TABLE> 
<PAGE> 
Part II - Other Information:

Item 1. Legal Proceedings

Management is not aware of any litigation that would have a
material adverse effect on the consolidated financial position of
the Corporation.  There are no proceedings pending other than the
ordinary routine litigation incident to the business of the
Corporation and its subsidiary, Union National Mount Joy Bank. In
addition, no material proceedings are pending or are known to be
threatened or contemplated against the Corporation and the Bank
by government authorities.

Item 2.  Changes in Securities - Nothing to report.

Item 3.  Defaults Upon Senior Securities - Nothing to report.

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

(a) An annual meeting of shareholders was held at 10:00 a.m. on
April 22, 1997 at The Country Table Restaurant, 740 East Main
Street, Mount Joy, Pennsylvania 17552.

(b)-(c) Three matters were voted upon, as follows:

Three Class A directors were elected, as below:
                                Votes*     Votes*
                                 cast       cast          Votes*
Reelected         Term Expires    "FOR"    "AGAINST"  "ABSTAINED"
_________         ____________  _________   _______      _______  
Franklin R. Eichler      2000   1,889,109    2,918           0
E. Ralph Garber          2000   1,889,109    2,918           0
Mark D. Gainer           2000   1,889,109    2,918           0

Directors whose term continued after meeting
____________________________________________
  Class B Directors
Daniel C. Gohn           1998
Daniel H. Raffensperger  1998
David G. Heisey          1998
Carl R. Hallgren         1998

  Class C Directors
Donald H. Wolgemuth      1999
William E. Eby           1999
William D. Linkous       1999
Benjamin W. Piersol, Jr. 1999

Proposal to approve and adopt the
Union National Financial Corporation
1997 Employee Stock Purchase 
  Plan                          1,819,833   33,097      23,066

Proposal to approve and adopt the
Union National Financial Corporation
1997 Stock Incentive Plan       1,744,860  116,766      10,613

* Information of shares voted do not reflect the 5% stock
dividend declared by the Corporation's Board of Directors on
April 10, 1997, payable on May 15, 1997 to stockholders of record
on April 28, 1997.

(d) Nothing to report.


Item 5.  Other Information - Nothing to report.

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

On March 25, 1997, a Form 8-K was filed by the Registrant to file
the Registrant's Articles of Incorporation, as amended, and
Registrant's Bylaws, as amended.

<PAGE>

                                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 National Financial Corporation 
                                   (Registrant) 
 
 
 
                               By:/s/ William E. Eby 
                                  ______________________________ 
                                   William E. Eby 
                                   President & CEO 
                                   (Principal Executive Officer) 
 
                                   Date: May 8, 1997 
 
 
 
                                By:/s/ Clement M. Hoober          

                                   ______________________________ 

                                   Clement M. Hoober, 
                                   Chief Financial Officer 
                                   (Principal Financial and 
                                   Accounting Officer) 
                                    
 
                                   Date: May 8, 1997