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          June 30, 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.         
    2,488,927     shares of $.25 (par) common stock were        
_________________       
outstanding as of     July 29, 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)                 6/30/97      12/31/96 
                                           ______________________ 
<S>                                           <C>          <C>    

                                
ASSETS     
                     
Cash and Due from Banks                     $6,668        $6,073 
Federal Funds Sold                           2,990         4,790 
Investment Securities Held to Maturity           
(Market Value - 1997-$16,723;1996-$17,228)  16,623        17,124 
Investment Securities Available for Sale    39,305        37,766 
Loans(Net of Unearned Income)              140,300       130,391 
Less: Allowance for Loan Losses             (1,442)       (1,371)
                                           ______________________ 
     Total Net Loans                       138,858       129,020  
   
Premises and Equipment - Net                 5,580         5,741 
Accrued Interest Receivable                  1,436         1,312 
Deferred Income Taxes                          191           252 
Investment in Limited Partnerships             966         1,003 
Other Assets                                   431           391 
                                           ______________________ 
    TOTAL ASSETS                          $213,048      $203,472 
                                          ======================
LIABILITIES     
     
Deposits:     
 Noninterest-Bearing                       $16,582       $16,887 
 Interest-Bearing                          152,908       147,626  
                                           ______________________ 
    Total Deposits                         169,490       164,513  

Short-Term Borrowing                           900         2,989 
Long-Term Debt                              18,351        12,676 
Accrued Interest Payable                       968           883 
Other Liabilities                              374           188 
                                           _____________________ 
     TOTAL LIABILITIES                     190,083       181,249  
   
STOCKHOLDERS' EQUITY*         
Common Stock (Par Value $.25)                  629           599 
  Shares: Authorized - 20,000,000; Issued -     
  2,515,587 in 1997 (2,394,164 in 1996)     
  Outstanding - 2,489,547 in 1997 (2,373,222      
  in 1996)     
Surplus                                      4,910         1,968 
Retained Earnings                           17,718        19,916 
Unrealized gain/(loss) on securities       
  available for sale, net of tax               192           103 
Less: Treasury Stock - at cost     
 (26,040 shares in 1997 and 20,942 shares      
  in 1996)                                    (484)         (363) 
                                           ______________________ 

      TOTAL STOCKHOLDERS' EQUITY            22,965        22,223 
                                           ______________________ 

     
     TOTAL LIABILITIES AND      
     STOCKHOLDERS' EQUITY                 $213,048      $203,472  

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

  
     
* The Stockholders' Equity and 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 INCOME (UNAUDITED)     
<CAPTION>                                 
                                    Three Months Ended June 30,   
                                 _______________________________
(In Thousands, except Per Share Data)          1997       1996    
                                  _______________________________
<S>                                            <C>         <C>    
     
INTEREST INCOME     
Interest and Fees on Loans                   $3,063        $2,768 
Investment Securities:     
   Taxable                                      677           517 
   Exempt from Federal Taxes                    200           205 
Deposits in Banks                                 1             1 
Federal Funds Sold                               54            22 
                                           ______________________ 
   Total Interest Income                      3,995         3,513 

INTEREST EXPENSE     
Deposits                                      1,527         1,427 
Short-Term Borrowing                             24            25 
Long-Term Debt                                  270           106 
                                           ______________________ 
   Total Interest Expense                     1,821         1,558 
                                           ______________________ 
  Net Interest Income                         2,174         1,955 

PROVISION for LOAN LOSSES                       101            41 
                                           ______________________ 
Net Interest Income after Provision      
for Loan Losses                               2,073         1,914 

   
OTHER OPERATING INCOME     
Trust Income                                     30            23 
Service Charges on Deposit Accounts              89            80 
Other Service Charges, Commissions, Fees         87            73 
Investment Securities Gains                       4             2 
Other Income                                      8             9 
                                           ______________________ 
    Total Other Operating Income                218           187 

OTHER OPERATING EXPENSES      

Salaries and Wages                              682           642 
Retirement Plan and Other Employee Benefits     214           198 
Net Occupancy Expense                           134           131 
Furniture and Equipment Expense                 113            92 
FDIC Insurance Assessment                         5             1 
Other Operating Expenses                        430           415 
                                           ______________________ 
    Total Other Operating Expenses            1,578         1,479 
                                           ______________________ 
    Income before Income Taxes                  713           622 

PROVISION for INCOME TAXES                      144            80 
                                           ______________________ 
    NET INCOME for PERIOD                      $569          $542 
                                           ====================== 

   
PER SHARE INFORMATION*     
 Net Income for Period                        $0.23         $0.22 
 Cash Dividends                              $0.086        $0.076 
 Average Common Shares Outstanding        2,490,275     2,493,919 

                                      Six Months Ended June 30,   
                                  _______________________________
(In Thousands, except Per Share Data)          1997       1996    
                                  _______________________________
<S>                                            <C>         <C>    
     
INTEREST INCOME     
Interest and Fees on Loans                   $5,971        $5,503 
Investment Securities:     
   Taxable                                    1,316           962 
   Exempt from Federal Taxes                    411           400 
Deposits in Banks                                 2             2 
Federal Funds Sold                               99            48 
                                           ______________________ 
   Total Interest Income                      7,799         6,915 

INTEREST EXPENSE     
Deposits                                      3,021         2,807 
Short-Term Borrowing                             66            32 
Long-Term Debt                                  477           208 
                                           ______________________ 
   Total Interest Expense                     3,564         3,047 
                                           ______________________ 
  Net Interest Income                         4,235         3,868 

PROVISION for LOAN LOSSES                       112            49 
                                           ______________________ 
Net Interest Income after Provision      
for Loan Losses                               4,123         3,819 

   
OTHER OPERATING INCOME     
Trust Income                                     60            47 
Service Charges on Deposit Accounts             172           154 
Other Service Charges, Commissions, Fees        165           139 
Investment Securities Gains                       4             2 
Other Income                                     54            54 
                                           ______________________ 
    Total Other Operating Income                455           396 

OTHER OPERATING EXPENSES      

Salaries and Wages                            1,355         1,283 
Retirement Plan and Other Employee Benefits     440           403 
Net Occupancy Expense                           307           293 
Furniture and Equipment Expense                 201           177 
FDIC Insurance Assessment                        10             2 
Other Operating Expenses                        848           786 
                                           ______________________ 
    Total Other Operating Expenses            3,161         2,944 
                                           ______________________ 
    Income before Income Taxes                1,417         1,271 

PROVISION for INCOME TAXES                      282           172 
                                           ______________________ 
    NET INCOME for PERIOD                    $1,135        $1,099 
                                           ====================== 

   
PER SHARE INFORMATION*     
 Net Income for Period                        $0.46         $0.44 
 Cash Dividends                              $0.171        $0.138 
 Average Common Shares Outstanding        2,491,310     2,492,859 



 
* 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> 
                                     Six Months Ended June 30, 
                                    _____________________________ 
         (In Thousands)                        1997         1996 
                                    _____________________________ 

<S>                                             <C>          <C> 
 
CASH FLOWS from OPERATING ACTIVITIES       
Net Income                                    $1,135      $1,099 
Adjustments to Reconcile Net Income to Net        
  Cash Provided by Operating Activities: 
    Depreciating and Amortization                254         254 
    Provision for Loan Losses                    112          49 
    Investment Securities (Gains)/Losses          (4)         (2)
    Provision for Deferred Income Taxes           14          14
    (Increase)/Decrease in Accrued               
    Interest Receivable                         (123)       (131) 
     (Increase)/Decrease in Other Assets         (25)       (106) 
    Increase/(Decrease) in Other Liabilities     272         349 
                                          _______________________
    Net Cash Provided by Operating Activities  1,635       1,526
CASH FLOWS from INVESTING ACTIVITIES    
Net (Increase)/Decrease in Federal Funds Sold  1,800      (1,280)
Proceeds from Sales of 
 Available for Sale Securities                 3,801       1,996  
Proceeds from Maturities of                                       
 Available for Sale Securities                 9,803       6,408  
Proceeds from Maturities of 
 Held to Maturity Securities                   1,823         512 
Purchases of Available for Sale Securities   (15,005)    (17,353) 
Purchases of Held to Maturity Securities      (1,323)     (3,318) 
Loans Made to Customers, Net of  
 Principal Collected on Loans                 (9,950)     (4,264) 
Purchases of Property and Equipment              (70)       (147) 
                                          _______________________ 
    Net Cash (Used in)Investing Activities    (9,121)    (17,446) 
CASH FLOWS from FINANCING ACTIVITIES  
Net Increase/(Decrease)in Demand Deposits  
 and Savings Accounts                          1,565       2,019  
Net Increase/(Decrease) in Certificates  
 of Deposits                                   3,412      11,421 
Net Increase/(Decrease) in Short-Term 
 Borrowing                                    (2,089)       (268)
Proceeds from Issuance of Long-Term Debt       5,675       1,535 
Acquisition of Treasury Stock                   (121)          0 
Issuance of Treasury Stock                        68          72 
Cash Dividends Paid                             (429)       (344) 
                                          _______________________
   Net Cash Provided by (Used in) 
   Financing Activities                        8,081      14,435 
                                          _______________________ 
Net Increase/(Decrease) in Cash 
 and Cash Equivalents                            595      (1,485) 
CASH and CASH EQUIVALENTS -                        
  Beginning of Period                          6,073       7,214 
                                         _______________________
CASH and CASH EQUIVALENTS - End of Period     $6,668      $5,729 
                                          ======================= 
 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION 
Cash Payments for: 
 Interest Paid to Depositors                  $2,959      $2,693  
 Interest Paid - Other                           520         222
 Income Taxes                                    275         110 
 
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 June 30, 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 $23.27.  No    
     options have been exercised as of June 30, 1997 under this   
     plan. As of June 30, 1997, options to purchase 5,000 have    
     been granted under the Corporation's 1997 Employee Stock     
     Purchase Plan.  The current exercise price for such options  
     is $19.55.  As of June 30, 1997, 175 options have been       
     exercised under the plan.       

5.   The results of operations for the six month period ended     
     June 30, 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 report for the six
months ended June 30, 1997 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 six months ended June 30, 1997
was $1,135,000, an increase of 3.3%, as compared to the
consolidated net income of $1,099,000 for the same period in
1996.

Consolidated net income for the three months ended June 30, 1997
was $569,000, an increase of 5.0%, as compared to the
consolidated net income of $542,000 for the same period in 1996.

On a per share basis, net income for the six months ended June
30, 1997 was $.46, as compared to $.44 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 six months ended June 30, 1997 as
compared to the same period in 1996 were impacted by the
following items: (1) Net income was positively impacted by a
10.1% 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 as compared to the same period in 1996; (3) net income
was negatively impacted by a 7.4% 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 average assets (ROAA), was 1.10% on an annualized basis
for the six months ended June 30, 1997, as compared to 1.21% for
the same period in 1996. Net income as a percent of average
stockholders' equity, also known as return on average equity
(ROAE), was 10.1% on an annualized basis for the six months ended
June 30, 1997, as compared to 10.4% 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 for 1997 of a bank-wide incentive 
program for employee participation based on the level of net income 

<PAGE>
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 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. For the six months ended June 30, 1997, the
Bank received new funds exceeding $2,400,000 from special
certificate of deposit promotions. 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 including bank wide business development efforts;
(3) further enhancement and promotion of the new loan product
first introduced in September, 1996, home equity lines of credit;
(4) economic stability of Lancaster County as discussed later in
this section; and (5) 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 six months ended June 30, 1997
increased by $380,000, or 9.3%, over the same period in 1996.
Commercial and residential average loan growth of $12,313,000 and
average investment security growth of $10,700,000 was funded by
the growth in average deposits of $12,774,000 and by the growth
in average borrowings of $10,692,000. The additional borrowings
represented fixed-rate and variable-rate advances. Average
earning assets increased in the amount of $24,922,000 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 $402,000.

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 8.3% for the current period as
compared to 8.4% 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 $22,000 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

<PAGE>

fluctuations. As of June 30, 1997, the Bank has received short-term and long-
term fixed rate advances of $18,161,000 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 5.73% with 
maturities ranging from August, 1998 to March, 2002. Additional asset/liability
management strategies available from the FHLB include access to
interest rate caps, floors and swaps. As of June 30, 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 June 30, 1997, the total lines of credit
balances outstanding amounted to $1,099,000.

For the remaining months of 1997, Management expects no material
change to the effective interest rate in the loan and investment
portfolios as compared to their current levels. This is a result
of the stabilization of the financial markets, as short-term and
long-term interest rates are currently comparable to the interest
rates as of December, 1996. In addition, Management expects no
material change in the effective rate on its interest-bearing
liabilities for the remaining months of 1997. The growth in
earning assets during 1996 and the first six 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 the remaining months
of 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 June 30, 1997, Management expects an overall
impact to the net interest margin for the remaining months of
1997 to be immaterial, as compared to the same period in 1996. 

Provision for Loan Losses

The provision for loan losses was $112,000 and $49,000 for the
six months ended June 30, 1997 and 1996, respectively. Net
charge-offs for the six months ended June 30, 1997 amounted to
$41,000 as compared to $5,000 for the same period in 1996. The
increase in the provision over the same period of last year is a
result of the additional net charge-offs and the increase in
loans, primarily residential and commercial mortgage loans,
amounting to $9,909,000 for the current period as compared to
$4,260,000 for the same period of last year. 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 six months ended June 30, 1997 was
$455,000, representing an increase of $59,000, or 14.9%, over the
same period in 1996. Contributing to this increase were
additional earnings resulting from an increase in  ATM usage fees
and from an increase in estate settlements generating additional 
trust income.

Other Operating Expenses 

Other operating expenses for the six months ended June 30, 1997
increased by $217,000, or 7.4%, over the same period in 1996. Of
this increase, employee salaries and wages and related fringe
benefits increased by $109,000, or 6.5%, 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 six months
ended June 30, 1997 increased by $38,000, or 8.1%, over the same
period in 1996. This increase was primarily due to other real
estate expense incurred on a foreclosed property amounting to
$34,000 and due to an increase in equipment service agreement
costs 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 $8,000 for the
six months ended June 30, 1997, as compared to the same period in
1996. The FDIC Insurance Assessment rate increased to 1.29 cents
for every $100 in deposits as of January 1, 1997 from $500 per
quarter in 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 six months ended June 30, 1997,
increased by $62,000, or 7.9%, 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
director 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 $110,000 for
the six months ended June 30, 1997 to $282,000 from $172,000 for
the same period in 1996. The effective tax rate was 19.9% and
13.5% for the six months ended June 30, 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 $34,000 of low income
housing credits for the six months ended June 30, 1997 as
compared to $101,000 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
___________________

Recently, Pennsylvania enacted a law to permit State chartered
financial institutions to sell insurance. This follows a United
States Supreme Court 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, banks are permitted to sell insurance in
Pennsylvania. The Office of the Comptroller of the Currency has
issued guidelines for national banks to sell insurance. The Bank
is evaluating its options regarding the sale of insurance.

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.

Since the Deposit Insurance Funds Act of 1996 was enacted, it is
anticipated that changes in the FDIC assessment rate will
adversely impact results of operations, net of income taxes, in a
currently estimated amount of $7,000 for the remaining months of
1997.

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 

<PAGE>

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 also expects increased diversification of financial
products and services that may be offered by the Bank. Management
believes that such consolidations and mergers, and product and
service diversification 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 six months of
1997. The Corporation 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 (FASB)
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 Corporation does not expect this Statement to have
a material effect on its earnings per share computations.

In February 1997, the Financial Accounting Standards Board issued
Statement No. 129, (SFAS No. 129), "Disclosure of Information
about Capital Structure." This Statement establishes standards
for disclosing information about an entity's capital structure.
This Statement is effective for financial statements for periods
ending after December 15, 1997. The adoption of this Statement is
not expected to have a material effect on the financial position
or results of operations of the Corporation.

In June 1997, the Financial Accounting Standards Board issued
Statement No. 130, (SFAS No. 130), "Reporting Comprehensive
Income." This Statement establishes standards for reporting and
display of comprehensive income and its components (revenues,
expenses, gains, and losses) in a full set of general-purpose
financial statements. This Statement requires that all items that
are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other
financial statements. This Statement is effective for fiscal
years beginning after December 15, 1997. The Corporation has not
completed the analysis required to estimate the impact of this
Statement.

In June 1997, the Financial Accounting Standards Board issued
Statement No. 131, (SFAS No. 131), "Disclosures about Segments of
an Enterprise and Related Information." This Statement
establishes standards for the way that public business
enterprises report information about operating segments in annual
financial statements and requires that those enterprises report
selected information about

<PAGE>
operating segments in interim financial reports issued to
shareholders. It also establishes standards for related
disclosures about products and services, geographic areas, and
major customers. This Statement supersedes FASB Statement No. 14,
"Financial Reporting for Segments of a Business Enterprise", but
retains the requirement to report information about major
customers. It amends FASB Statement No. 94, "Consolidation of All
Majority-Owned Subsidiaries", to remove the special disclosure
requirements for previously unconsolidated subsidiaries. The
Statement is effective for fiscal years beginning after December
15, 1997. The Corporation has not completed the analysis required
to estimate the impact of this Statement.


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 $2,026,000 to comply with their respective repayment
terms. These loans are well secured essentially with real estate,
equipment and vehicles. Management currently 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 June 30, 1997, total nonperforming assets amounted to
$931,000, or .7% of total net loans, from a level of $960,000, or
 .7%, at December 31, 1996. 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%.

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.

The allowance for loan losses increased by $71,000 for the six
months ended June 30, 1997, and the ratio of the allowance for
loan losses to net loans was 1.03% at June 30, 1997, as compared
to 1.05% at December 31, 1996. The increase in the allowance for
loan losses was due to an increase in loans outstanding amounting
to $9,909,000 for the six month period. Management believes based
on information currently available that the current allowance for
loan losses of $1,442,000 is adequate to meet potential loan
losses.


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 moderately 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. 

<PAGE>
<TABLE>  
  
SUPPORTING SCHEDULES  
  
<CAPTION>  
  
Schedule of Nonperforming Assets  
________________________________
                                   June 30,       December 31,   
      (In Thousands)                 1997             1996  
                                  ___________     ____________   
<S>                                  <C>              <C>   
 
Nonaccruing Loans                    $142             $ 91  
Accrual Loans - 90 days or more  
 past due                             789              752  
Restructured Accrual Loans              0                0  
Other Real Estate Owned                 0              117  
                                    ______           ______ 
   Total Nonperforming Assets       $ 931           $  960  
                                    ======           ======  
   Nonperforming Assets  
   as a % of Net Loans                0.7%             0.7%  
                                    ======           ======  
   Allowance for Loan Losses  
   as a % of Nonperforming Loans      155%             163%  
                                    ======           ======  
</TABLE>    
<TABLE>    
<CAPTION>  
Analysis of Allowance for Loan Losses  
_____________________________________
                                        Six Months Ended June 30, 
                                     ____________________________
           (In Thousands)                    1997        1996  
                                          ________      ________
<S>                                           <C>          <C>  
Average Total Loans Outstanding     
   (Less Unearned Income)                  $134,250     $121,937  
                                           ========      ======== 

Allowance for Loan Losses,  
   Beginning of Period                       $1,371       $1,265  
Loans Charged-off During Period                  52           19  
Recoveries of Loans Previously  
   Charged-off                                   11           14  
                                           ________      ________ 
   Net Loans Charged-off                         41            5  
Addition to Provision for Loan Losses    
   Charged to Operations                        112           49  

                                          _________      _______  
Allowance for Loan Losses,  
   End of Period                             $1,442       $1,309  
                                           ========      ======== 

  
Ratio of Net Loans Charged-off to Average  
    Loans Outstanding (Annualized)             0.06%        0.01% 
                                            ========     ======== 
Ratio of Allowance for Loan Losses to  
    Net Loans at End of Period                 1.03%        1.05% 
                                            ========     ======== 

</TABLE>
<PAGE>

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 $7,829,000
and a maximum available funding capacity of up to $86,200,000. In
order to provide funding for the Bank's loans and investments,
the Bank borrowed from the FHLB $3,315,000, net of repayments,
for the six months ended June 30, 1997 at varying maturities and
terms. The outstanding borrowings from the FHLB amounted to
$18,161,000 and $9,975,000 at June 30, 1997 and 1996,
respectively. 

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 June 30,
1997, as compared to the Bank's current risk-based capital ratio
of 17.41%. 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)                     June 30,   December 31,
                                            1997          1996    
                                       ___________  _____________
<S>                                        <C>            <C> 
Tier I - Total Stockholders' Equity      $ 21,732      $ 21,186
Tier II - Allowance for Loan Losses         1,442         1,371
                                       ___________  _____________
   Total Qualifying Capital              $ 23,174      $ 22,557
                                       ===========  =============
 Risk-adjusted On-balance-sheet Assets   $126,112      $118,844
Risk-adjusted Off-balance-sheet Exposure    6,966         5,666
                                       ___________  _____________
   Total Risk-adjusted Assets            $133,078      $124,510
                                       ===========  =============
Ratios:
Tier I Capital Ratio - Actual               16.33%        17.02%
Minimum Required                             4.00%         4.00%

Total Capital Ratio - Actual                17.41%        18.12%
Minimum Required                             8.00%         8.00%

Total Risk-Based Capital in Excess of the 
  Minimum Regulatory Requirement         $ 12,528      $ 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 June 30, 1997, options to
purchase 4,830 shares have been granted under the Corporation's
1988 Stock Incentive Plan at an exercise price of $23.27. No
options have been exercised as of June 30, 1997 under this plan. 
As of June 30, 1997, options to purchase 5,000 shares have been
granted under the Corporation's 1997 Employee Stock Purchase
Plan.  The current exercise price for such options is $19.55.  As
of June 30, 1997, 175 options have been exercised under this
plan.  

<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 -    
         Nothing to report.

Item 5.  Other Information:

On May 27, 1997 an amendment to the Registrant's Form S-3
Registration Statement was filed with the Securities and Exchange
Commission in order to file the prospectus for the Registrant's
Amended and Restated Dividend Reinvestment and Stock Purchase
Plan.

On May 27, 1997 a Form S-8 Registration Statement was filed with
the Securities and Exchange Commission by the Registrant for the
Registrant's 1988 Stock Incentive Plan, 1997 Employee Stock
Purchase Plan and 1997 Stock Incentive Plan.


Item 6.  Exhibits and Reports on Form 8-K - Nothing to report.

<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: August 7, 1997 
 
 
 
                                By:/s/ Clement M. Hoober          

                                   ______________________________ 

                                   Clement M. Hoober, 
                                   Chief Financial Officer 
                                   (Principal Financial and 
                                   Accounting Officer) 
                                    
 
                                   Date: August 7, 1997