UNITED
        STATES
 SECURITIES
        AND EXCHANGE COMMISSION
 Washington,
        DC 20549
 
 **FORM
        10-K**
 
 x
              ANNUAL
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934
 
 For
        the
        fiscal year ended December 31, 2006
 
 OR
 
 o
              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
                  or Other Jurisdiction of
              
              (I.R.S.
                  Employer Identification Number)Incorporation
                  or Organization)570
                  Lausch LaneLancaster,
                  Pennsylvania
              
              17601(Address
                  of Principal Executive Offices)
              
              (Zip
                  Code)
  (717)
        653-1441
 (Registrant's
        Telephone Number, Including Area Code)
 
 Securities
        registered pursuant to Section 12(b) of the Act:  None
 
 Securities
        registered pursuant to Section 12(g) of the Act: Common
        Stock, $0.25 Par Value
 (Title
        of
        Class)
 
 
  Indicate
        by check mark if the registrant is a well-known seasoned issuer, as defined
        in
        Rule 405 of the Securities Act. Yes o No
x
 
 Indicate
        by check mark if the registrant is not required to file reports pursuant
        to
        Section 13 or Section 15(d) of the Act. Yes oNo x
 
 Note
        -
        Checking the box above will not relieve any registrant required to file reports
        pursuant to Section 13 or Section 15(d) of the Exchange Act from their
        obligations under those sections.
 
 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 xNo o
 
 Indicate
    by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
    S-K (§229.405 of this chapter) is not contained herein, and will not
    be contained, to the best of registrant's knowledge, in definitive proxy or
    information statements incorporated by reference in Part III of this Form
    10-K or any amendment to this Form 10-K. o
  Indicate
        by check mark whether the registrant is a large accelerated filer, an
        accelerated filer, or a non-accelerated filer. See definition of “accelerated
        filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
        One)
 
 Large
        accelerated filer o Accelerated
        filer
o Non-accelerated
        filer
x
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Act. Yes oNo x
 
 The
        aggregate market value of the shares of Common Stock of the Registrant held
        by
        nonaffiliates of the Registrant was $48,113,008 as of June 30, 2006. As of
        March
        9, 2007 the Registrant had approximately 2,527,070 shares of Common Stock
        outstanding.
 
 DOCUMENTS
        INCORPORATED BY REFERENCE:
 
 Excerpts
        from Union National Financial Corporation’s 2006 Annual Report to Stockholders
        are incorporated by reference into Parts I, II and IV, hereof. Union National
        Financial Corporation's Proxy Statement for its 2007 Annual Meeting is
        incorporated by reference in response to Parts II and III, hereof.
 
 
  UNION
        NATIONAL FINANCIAL CORPORATION
 FORM
        10-K
 INDEX
 
 PAGE
                  NO.PART
                  IItem
                  1 -
              
              Business
              
              4Item
                  1A -
              
              Risk
                  Factors
              
              11Item
                  1B -
              
              Unresolved
                  Staff Comments
              
              19Item
                  2 -
              
              Properties
              
              19Item
                  3 -
              
              Legal
                  Proceedings
              
              21Item
                  4 -
              
              Submission
                  of Matters to a Vote of Security
                  Holders
              
              21PART
                  IIItem
                  5 -
              
              Market
                  for Registrant's Common Equity, Related Stockholder
                  Matters and Issuer Purchases of Equity Securities
              
              22Item
                  6 -
              
              Selected
                  Financial Data
              
              25Item
                  7 -
              
              Management's
                  Discussion and Analysis of Financial Condition
                  and Results of Operations
              
              25Item
                  7A-
              
              Quantitative
                  and Qualitative Disclosure About Market
                  Risk
              
              25Item
                  8 -
              
              Financial
                  Statements and Supplementary
                  Data
              
              25Item
                  9 -
              
              Changes
                  In and Disagreements With Accountants on Accounting
                  and Financial Disclosure
              
              25Item
                  9A -
              
              Controls
                  and Procedures
              
              25Item
                  9B -
              
              Other
                  Information
              
              26PART
                  IIIItem
                  10 -
              
              Directors,
                  Executive Officers, and Corporate
                  Governance
              
              27Item
                  11 -
              
              Executive
                  Compensation
              
              27Item
                  12 -
              
              Security
                  Ownership of Certain Beneficial Owners and
                  Management and Related Stockholder Matters
              
              27Item
                  13 -
              
              Certain
                  Relationships and Related Transactions, and
                  Director Independence
              
              27Item
                  14 -
              
              Principal
                  Accountant Fees and Services
              
              28PART
                  IVItem
                  15 -
              
              Exhibits,
                  Financial Statement Schedules
              
              29Signatures
              
              34Exhibit
                  Index
              
              36
  3
  *Unless
        the context otherwise requires, the terms “Union National,” “we,” “us,” and
“our” refer to Union National Financial Corporation and its consolidated
        subsidiary.*
 
 PART
        I
 
 Union
        National Financial Corporation’s management has made forward-looking statements
        in this document, and in documents that it incorporates by reference, that
        are
        subject to risks and uncertainties. Forward-looking statements include the
        information concerning possible or assumed future results of operations of
        Union
        National Financial Corporation, Union National Community Bank or the combined
        company. When management uses words such as "believes," "expects," "anticipates"
        or similar expressions, management is making forward-looking
        statements.
 
 Readers
        should note that many factors, some of which are discussed elsewhere in this
        document and in the documents that management incorporates by reference,
        could
        affect the future financial results of Union National Financial Corporation,
        Union National Community Bank or the combined company and could cause those
        results to differ materially from those expressed in the forward-looking
        statements contained or incorporated by reference in this document. These
        factors include the following:
  ·
            operating,
                legal and regulatory risks;  ·
            economic,
                political, and competitive forces;  ·
            rapidly
                changing technology; and  ·
            the
                risk that our analyses of these risks and forces could be incorrect
                and/or
                that the strategies developed to address them could be
                unsuccessful. 
 **Critical
        Accounting Policies**
 
 Disclosure
        of the corporation's significant accounting policies is included in
 Note
        1 to
        the consolidated financial statements on pages 8 through 12 and in Management’s
        Discussion and Analysis on page 31 of the 2006 Annual Report to Stockholders
        (Exhibit 13). The corporation’s accounting policies have been approved by the
        Audit Committee.
 
 ITEM
                1.
              BUSINESS.
 
 Union
        National Financial Corporation (“UNFC”), a Pennsylvania business corporation, is
        a bank holding company registered under the Bank Holding Company Act of 1956,
        as
        amended, and is supervised by the Board of Governors of the Federal Reserve
        System. UNFC was incorporated on June 26, 1986, under the Business Corporation
        Law of the Commonwealth of Pennsylvania. UNFC commenced operations on January
        2,
        1987, upon consummation of the acquisition of all of the outstanding shares
        of
        The Union National Mount Joy Bank, which effective February 6, 1998, changed
        its
        name to Union National Community Bank. UNFC's business consists primarily
        of
        managing and supervising Union National Community Bank (“the bank”), and its
        principal source of income is dividends paid by the bank. UNFC has three
        wholly-owned subsidiaries: the bank; Union National Capital Trust I; and,
        Union
        National Capital Trust II. UNFC’s two trust subsidiaries were formed on December
        19, 2003, and October 23, 2004, respectively, for the purpose of issuing
        trust
        capital securities. The bank has a wholly owned subsidiary, Union National
        Insurance Agency, Inc. formed on May 21, 2001. The bank formed a new mortgage
        company, Home Team Financial, LLC (“Home Team”) that began operations in July
        2005. The members of Home Team are the bank, with a 98% ownership interest,
        and
        John Neihart and Kevin Glackin who have an aggregate 2% ownership interest
        in
        the new company. Mr. Neihart and Mr. Glackin previously owned and operated
        Home
        Team Mortgage, Inc., a mortgage company located in Landisville, PA, and they
        initially will receive a greater proportion than the bank of the net profit
        of
        the new company. In addition, in accordance with various agreements, UNFC
        will
        begin to buy Mr. Neihart’s and Mr. Glackin’s interests in the company in 2011
        and will complete this purchase over a total five-year period of time. Mr.
        Neihart’s and Mr. Glackin’s ownership interests and net profit distributions
        will be gradually reduced over the buyout period. Home Team acquired certain
        assets of Home Team Mortgage, Inc. and the employees of Home Team Mortgage,
        Inc.
        became employees of Home Team Financial, LLC. Mr. Neihart serves as President
        of
        Home Team and Mr. Glackin serves as Executive Vice President of the entity
        and
        together they have the authority to manage the day-to-day operations of the
        company. Home Team also offers title insurance and settlement services through
        its subsidiary, TA of Lancaster, LLC.
  4
  Union
        National Community Bank was organized in 1865 under a national bank charter.
        The
        bank is a national banking association, a member of the Federal Reserve System
        and is regulated by the Office of the Comptroller of the Currency. The deposits
        of the bank are insured by the Federal Deposit Insurance Corporation to the
        maximum extent permitted by law. It is a full-service commercial bank, providing
        a wide range of services to individuals and small to medium-sized businesses
        in
        its south central Pennsylvania market area. The bank accepts time, demand,
        and
        savings deposits and makes secured and unsecured commercial, real estate
        and
        consumer loans. The bank also has a full-service trust department located
        at its
        corporate office center. Through a third party provider affiliation, the
        bank
        offers certain non-depository products to its customers to include annuities
        and
        brokerage services.
 
 The
        bank
        has nine branch locations within Lancaster County, Pennsylvania, including
        seven
        traditional branch locations and two innovative retail offices featuring
        our new
        Gold Café brand and concept. Functioning as both a retail banking office and an
        upscale coffee house, the objective of Gold Café is to deliver a remarkably
        different banking experience to the customer. The physical environment of
        Gold
        Café connects to metropolitan culture through its layout, design and use of
        technology. The artwork, color palettes and architectural and design elements
        combined with Wi-Fi access, convenient hours 7-days a week and plasma screens
        that broadcast everything from major news networks to music videos, create
        a
        space reminiscent of something found in a major city. The experience is
        delivered via another novel concept: the "financial barista." These specially
        trained team members serve as dual employees of the bank and the coffee
        operation, and are experts on bank products, customer experience and the
        preparation of espresso and espresso based beverages.
  5
  UNFC’s
        executive offices are located in its corporate office center at 570 Lausch
        Lane,
        Lancaster, Pennsylvania 17601. Its telephone number is (717)
        653-1441.
 
 The
        bank
        experiences substantial competition in attracting and retaining deposits
        and in
        lending funds. Financial institutions compete for deposits by offering
        attractive rates and convenient office locations. Direct competition for
        deposits comes primarily from other commercial banks and thrift institutions.
        Competition for deposits also comes from money market mutual funds, corporate
        and government securities and credit unions. The primary factors in the
        competition for loans are interest rates, loan origination fees and the range
        of
        products and services offered. Competition for origination of real estate
        loans
        normally comes from other commercial banks, thrift institutions, mortgage
        bankers, mortgage brokers and insurance companies.
  For
        additional information concerning UNFC’s business activities, see Part II, Item
        7  of
        this
        Annual Report on Form 10-K.
 
 Supervision
        and Regulation - UNFC
 
 UNFC
        operates in a heavily regulated environment. Changes in laws and regulations
        affecting UNFC and its subsidiary, Union National Community Bank, may have
        an
        impact on operations. See “Supervision and Regulation—Union National Financial
        Corporation” and “Supervision and Regulation—Union National Community Bank”
below and pages 24 and 48 of the 2006 Annual Report to Stockholders.
 
 Without
        the prior approval of the Federal Reserve, the Bank Holding Company Act
        prohibits UNFC from:
  ·
              
              acquiring
                  direct or indirect control of more than 5% of the voting stock
                  of any
                  bank; or  ·
              
              acquiring substantially all of the assets of any
                bank;
                or  ·
              
              merging with another bank holding
                company.
  The
        Pennsylvania Department of Banking also must approve any similar consolidation.
        Pennsylvania law permits Pennsylvania bank holding companies to control an
        unlimited number of banks.
 
 The
        Bank
        Holding Company Act restricts UNFC from engaging in activities other than
        those
        that the Federal Reserve has found:
 ·
                
                to be closely related to banking;
                  and  ·
                
                which are expected to produce benefits for the
                  public
                  that will outweigh any potentially adverse
                  effects.
 To
        this
        end, the Bank Holding Company Act prohibits UNFC from:
 ·
                
                engaging in most non-banking businesses;
                  or  ·
                
                acquiring ownership or control of more than
                  5% of the
                  outstanding voting stock of any company engaged in a non-banking
                  business;
                  unless  ·
                
                the
                    Federal Reserve has determined that the non-banking business
                    is closely
                    related to banking.
 
 6
 
 Under
        the
        Bank Holding Company Act, the Federal Reserve may require a bank holding
        company
        to end a non-banking business if it constitutes a serious risk to the financial
        soundness and stability of any bank subsidiary of the bank holding
        company.
 
 Other
        than making equity investments in low to moderate income housing limited
        partnerships, UNFC does not at this time engage in any other permissible
        activities, nor does UNFC have any current plans to engage in any other
        permissible activities in the foreseeable future.
 
 Subsidiary
        banks of a bank holding company are subject to restrictions imposed by the
        Federal Reserve Act on any extensions of credit to the bank holding company
        or
        any of its subsidiaries, on investments in the stock or other securities
        of the
        bank holding company and on taking of such stock or securities as collateral
        for
        loans to any borrower.
 
 Legislation
        and Regulatory Changes .
        From
        time to time, Congress or the Pennsylvania legislature enacts legislation
        which
        has the effect of increasing the cost of doing business, limiting or expanding
        permissible activities or affecting the competitive balance between banks
        and
        other financial institutions. Proposals to change the laws and regulations
        governing the operations and taxation of banks, bank holding companies and
        other
        financial institutions are frequently made in Congress, and before various
        bank
        regulatory agencies. Management cannot predict the likelihood of any major
        changes or the impact such changes might have on UNFC and its subsidiary.
        The
        following paragraphs discuss legislative or regulatory changes of potential
        significance to UNFC which Congress has recently enacted and others which
        Congress or various regulatory or professional agencies currently are
        discussing.
 
 The
        Federal Reserve Board, the Federal Deposit Insurance Corporation and the
        Comptroller of the Currency have issued certain risk-based capital guidelines,
        which supplement existing capital requirements. The guidelines require all
        United States banks and bank holding companies to maintain a minimum risk-based
        capital ratio of 8%, of which at least 4% must be in the form of common
        stockholders' equity. Assets are assigned to five risk categories, with higher
        levels of capital required for the categories perceived as representing greater
        risk. The required capital will represent equity and (to the extent permitted)
        nonequity capital as a percentage of total risk-weighted assets. The risk-based
        capital rules are designed to make regulatory capital requirements more
        sensitive to differences in risk profiles among banks and bank holding companies
        and to minimize disincentives for holding liquid assets. On the basis of
        an
        analysis of the rules and the projected composition of UNFC's consolidated
        assets, management does not believe that the risk-based capital rules have
        a
        material effect on UNFC's business and capital plans. The bank has capital
        ratios exceeding the regulatory requirements. See page 24 of UNFC's 2006
        Annual
        Report to Stockholders for information concerning the corporation’s and the
        bank’s capital ratios, which are included in Exhibit 13 and incorporated herein
        by reference.
  7
  Pending
        Legislation .
        Management cannot anticipate what changes Congress may enact or, if enacted,
        their impact on UNFC’s financial position and reported results of operations. As
        a consequence of the extensive regulation of commercial banking activities
        in
        the United States, UNFC’s and the bank’s businesses may be adversely affected by
        federal and state legislation and regulations that may increase the costs
        of
        doing business. See also pages 24 and 48 of UNFC's 2006 Annual Report to
        Stockholders, which is included in Exhibit 13 and incorporated herein by
        reference.
 
 Effects
        of Inflation .
        Inflation has some impact on UNFC’s and the bank’s operating costs. Unlike many
        industrial companies, however, substantially all of the bank’s assets and
        liabilities are monetary in nature. As a result, interest rates have a more
        significant impact on UNFC’s and the bank's performance than the general level
        of inflation. Over short periods of time, interest rates may not necessarily
        move in the same direction or in the same magnitude as prices of goods and
        services.
 
 Monetary
        Policy .
        Domestic economic conditions and the monetary and fiscal policies of the
        United
        States Government and its agencies affect the earnings of UNFC and the bank.
        An
        important function of the Federal Reserve System is to regulate the money
        supply
        and interest rates. Among the instruments used to implement those objectives
        are
        open market operations in United States government securities and changes
        in
        reserve requirements against member bank deposits. The Federal Reserve uses
        these instruments in varying combinations to influence overall growth and
        distribution of bank loans, investments and deposits, and their use may also
        affect rates charged on loans or paid for deposits.
 
 Union
        National Community Bank is a member of the Federal Reserve System. The policies
        and regulations of the Federal Reserve Board have a significant effect on
        its
        deposits, loans and investment growth, as well as the rate of interest earned
        and paid, and are expected to affect the bank's operations in the future.
        The
        effect of Federal Reserve Board policies and regulations upon the future
        business and earnings of UNFC and the bank cannot be predicted.
 
 Environmental
        Laws .
        Neither
        UNFC nor the bank anticipates that compliance with environmental laws and
        regulations will have any material effect on capital, expenditures, earnings
        or
        on its competitive position. However, environmentally related hazards have
        become a source of high risk and potentially unlimited liability for financial
        institutions. Environmentally contaminated properties owned by an institution’s
        borrowers may result in a drastic reduction in the value of the collateral
        securing the institution’s loans to such borrowers, high environmental clean up
        costs to the borrower affecting its ability to repay the loans, the
        subordination of any lien in favor of the institution to a state or federal
        lien
        securing clean up costs, and liability to the institution for clean up costs
        if
        it forecloses on the contaminated property or becomes involved in the management
        of the borrower. To minimize this risk, the bank may require an environmental
        examination of and report with respect to the property of any borrower or
        prospective borrower if circumstances affecting the property indicate a
        potential for contamination, taking into consideration a potential loss to
        the
        institution in relation to the borrower. Such examination must be performed
        by
        an engineering firm experienced in environmental risk studies and acceptable
        to
        the institution, and the cost of such examinations and reports are the
        responsibility of the borrower. These costs may be substantial and may deter
        a
        prospective borrower from entering into a loan transaction with the bank.
        UNFC
        is not aware of any borrower who is currently subject to any environmental
        investigation or clean up proceeding that is likely to have a material adverse
        effect on the financial condition or results of operations of the
        bank.
  8
  Sarbanes-Oxley
        Act of 2002 .
        The
        Sarbanes-Oxley Act of 2002 implemented a broad range of corporate governance,
        accounting and reporting measures for companies that have securities registered
        under the Exchange Act, including publicly-held bank holding companies. The
        more
        significant reforms of the Sarbanes-Oxley Act of 2002 include: (1) new
        requirements for audit committees, including independence, expertise, and
        responsibilities; (2) certification of financial statements by the Chief
        Executive Officer and Chief Financial Officer of the reporting company; (3)
        new
        standards for auditors and regulation of audits, including independence
        provisions that restrict non-audit services that accountants may provide
        to
        their audit clients; (4) increased disclosure and reporting obligations for
        the
        reporting company and their directors and executive officers, including
        accelerated reporting of stock transactions and a prohibition on trading
        during
        pension blackout periods; and (5) a range of new and increased civil and
        criminal penalties for fraud and other violations of the securities
        laws.
 
 USA
        Patriot Act .
        The
        Uniting and Strengthening America by Providing Appropriate Tools Required
        to
        Intercept and Obstruct Terrorism Act of 2001 (USA Patriot Act) imposes
        additional obligations on financial institutions, including banks and
        broker-dealer subsidiaries, to implement policies, procedures and controls
        which
        are reasonably designed to detect and report instances of money laundering
        and
        the financing of terrorism. In addition, provisions of the USA Patriot Act
        require the federal financial institution regulatory agencies to consider
        the
        effectiveness of a financial institution’s anti-money laundering activities when
        reviewing bank mergers and bank holding company acquisitions.
 
 As
        discussed above, there are several federal and state statutes that regulate
        the
        obligations and liabilities of financial institutions pertaining to
        environmental issues. In addition to the potential for attachment of liability
        resulting from its own actions, a bank may be held liable under certain
        circumstances for the actions of its borrowers, or third parties, when such
        actions result in environmental problems on properties that collateralize
        loans
        held by the bank. Further, the liability has the potential to far exceed
        the
        original amount of the loan issued by the bank. Currently, neither UNFC nor
        the
        bank is a party to any pending legal proceeding pursuant to any environmental
        statute, nor is UNFC or the bank aware of any circumstances that may give
        rise
        to liability under any such statute.
  9
  Supervision
        and Regulation - Union National Community Bank
 
 The
        operations of Union National Community Bank are subject to federal and state
        statutes applicable to banks chartered under the banking laws of the United
        States, to members of the Federal Reserve System and to banks whose deposits
        are
        insured by the FDIC. Bank operations are also subject to regulations of the
        Office of the Comptroller of the Currency, the Federal Reserve Board and
        the
        FDIC.
 
 The
        primary supervisory authority of the bank is the Office of the Comptroller
        of
        the Currency, which regulates and examines the bank. The Comptroller of the
        Currency has the authority under the Financial Institutions Supervisory Act
        to
        prevent a national bank from engaging in an unsafe or unsound practice in
        conducting its business.
 
 Federal
        and state banking laws and regulations govern, among other things, the scope
        of
        a bank's business, the investments a bank may make, the reserves against
        deposits a bank must maintain, loans a bank makes and collateral it takes,
        the
        maximum interest rates a bank may pay on deposits, the activities of a bank
        with
        respect to mergers and consolidations and the establishment of branches.
 
 As
        a
        subsidiary of a bank holding company, the bank is subject to certain
        restrictions imposed by the Federal Reserve Act on any extensions of credit
        to
        the parent bank holding company or its subsidiaries, on investments in the
        stock
        or other securities of the bank holding company or its subsidiaries and on
        taking such stock or securities as collateral for loans. The Federal Reserve
        Act
        and Federal Reserve Board regulations also place certain limitations and
        reporting requirements on extensions of credit by a bank to principal
        shareholders of its parent holding company, among others, and to related
        interests of such principal shareholders. In addition, such legislation and
        regulations may affect the terms upon which any person becoming a principal
        shareholder of a holding company may obtain credit from banks with which
        the
        subsidiary bank maintains a correspondent relationship. The Union National
        Insurance Agency, Inc. provides insurance-related products to the bank’s
        customers. The agency is subject to supervision and regulation by the Insurance
        Department of the Commonwealth of Pennsylvania, the Office of the Comptroller
        of
        Currency and other regulatory agencies.
 
 Other .
        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 bank’s
        business. It cannot be predicted whether any such legislation will be adopted
        or, if adopted, how such legislation would affect the bank’s business. As a
        consequence of the extensive regulation of commercial banking activities
        in the
        United States, the bank’s business is particularly susceptible to being affected
        by federal legislation and regulations that may increase the costs of doing
        business.
 
 Statistical
        Data .
        The
        information required by this Item is incorporated by reference from pages
        30
        through 48 of UNFC’s 2006 Annual Report to Stockholders.
  10
  Employees .
        As of
        March 9, 2007, the bank, including Home Team, had 185 full-time employees
        and 25
        part-time employees. None of these employees is represented by a collective
        bargaining agent, and UNFC believes it enjoys good relations with its personnel.
        The corporation’s website address is www.uncb.com. The
        corporation makes available free of charge its annual report on Form 10-K,
        quarterly reports on Form 10-Q, current reports on Form 8-K and amendments
        to
        those reports as soon as reasonably practicable after it electronically files
        such reports with the Securities and Exchange Commission. Copies of such
        reports
        are available at no charge by contacting Clement M. Hoober, Executive VP,
        Chief
        Financial Officer at P.O. Box 567, 101 E. Main Street, Mount Joy, PA 17552-567.
        (The information found on the corporation’s website does not constitute a part
        of this or any other report.)
 
 ITEM
                1A.
              RISK
                  FACTORS.
 
 An
        investment in UNFC’s common stock is subject to risks inherent to our business.
        The material risks and uncertainties that management believes affect us are
        described below. Before making an investment decision, you should carefully
        consider the risks and uncertainties described below together with all of
        the
        other information included or incorporated by reference in this report. The
        risks and uncertainties described below are not the only ones facing us.
        Additional risks and uncertainties that we not aware of or focused on or
        that we
        currently deem immaterial may also impair our business operations. This report
        is qualified in its entirety by these risk factors.
 
 If
        any of
        the following risks actually occur, our financial condition and results of
        operations could be materially and adversely affected. If this were to happen,
        the value of our common stock could decline significantly, and you could
        lose
        all or part of your investment.
 
 *We
        are Subject to Interest Rate Risk, and Variations in Interest Rates May
        Negatively Affect our Financial Performance.*
 
 Changes
        in the interest rate environment may reduce profits. Our primary source of
        income is the differential or "spread" between the interest earned on loans,
        securities and other interest-earning assets, and interest paid on deposits,
        borrowings and other interest-bearing liabilities. As prevailing interest
        rates
        change, net interest spreads are affected by the difference between the
        maturities and repricing characteristics of interest-earning assets and
        interest-bearing liabilities. In addition, loan volume and yields are affected
        by market interest rates on loans, and rising interest rates generally are
        associated with a lower volume of loan originations. An increase in the general
        level of interest rates may also adversely affect the ability of certain
        borrowers to pay the interest on and principal of their obligations. Although
        we
        believe we have implemented effective asset and liability management strategies
        to reduce the potential effects of changes in interest rates on the results
        of
        operations, any substantial, unexpected, prolonged change in market interest
        rates could have a material adverse effect on our net interest spread, asset
        quality, loan origination volume and overall profitability.
  11
  *We
        are Subject to Lending Risk*
 
 There
        are
        inherent risks associated with our lending activities. These risks include,
        among other things, the impact of changes in interest rates and changes in
        the
        economic conditions in the markets where we operate as well as those across
        the
        Commonwealth of Pennsylvania and the United States. As noted above, increases
        in
        interest rates and/or weakening economic conditions could adversely impact
        the
        ability of borrowers to repay outstanding loans or the value of the collateral
        securing these loans. We are also subject to various laws and regulations
        that
        affect our lending activities. Failure to comply with applicable laws and
        regulations could subject us to regulatory enforcement action that could
        result
        in the assessment of significant civil money penalties.
 
 As
        of
        December 31, 2006, approximately 59% of our loan portfolio consisted of
        commercial, industrial, agricultural, construction, and commercial and
        agricultural real estate loans. These types of loans are generally viewed
        as
        having more risk of default than residential real estate loans or consumer
        loans. These types of loans are also typically larger than residential real
        estate loans and consumer loans. Because our loan portfolio contains a
        significant number of commercial, industrial, agricultural, construction,
        and
        commercial and agricultural real estate loans with relatively large balances,
        the deterioration of one or a few of these loans could cause a significant
        increase in non-performing loans. An increase in non-performing loans could
        result in a net loss of earnings from these loans, an increase in the provision
        for loan and lease losses and an increase in loan charge-offs, all of which
        could have a material adverse effect on our financial condition and results
        of
        operations.
 
 *Our
        Allowance for Loan and Lease Losses May Be Insufficient*
 
 Our
        loan
        customers may not repay their loans according to their terms, and the collateral
        securing the payment of their loans may be insufficient to assure repayment.
        We
        maintain an allowance for loan and lease losses, which is a reserve established
        through a provision for losses charged to expense that represents our best
        estimate of probable losses that have been incurred within the existing
        portfolio of loans and leases (“loans”). The allowance, in our judgment, is
        necessary to reserve for estimated loan losses and risks inherent in the
        loan
        portfolio. The level of the allowance reflects our continuing evaluation
        of
        industry concentrations; specific credit risks; loan loss experience; current
        loan portfolio quality; present economic, political and regulatory conditions;
        and unidentified losses inherent in the current loan portfolio. The
        determination of the appropriate level of the allowance for loan losses
        inherently involves a high degree of subjectivity and requires us to make
        significant estimates of current credit risks and future trends, all of which
        may undergo material changes. Changes in economic conditions affecting
        borrowers, new information regarding existing loans, identification of
        additional problem loans and other factors, both within and outside of our
        control, may require an increase in the allowance for loan losses. In addition,
        bank regulatory agencies periodically review our allowance for loan losses
        and
        may require an increase in the provision for loan losses or the recognition
        of
        further loan charge-offs, based on judgments different than ours. Also, if
        charge-offs in future periods exceed the allowance for loan losses, we will
        need
        additional provisions to increase the allowance for loan losses. Any increases
        in the allowance for loan losses will result in a decrease in net income
        and,
        possibly, capital, and may have a material adverse effect on our financial
        condition and results of operations.
  12
  *We
        are Subject to Extensive Government Regulation and Supervision*
 
 We
        are subject to extensive federal and state regulation and supervision. Banking
        regulations are primarily intended to protect depositors’ funds, federal deposit
        insurance funds and the banking system as a whole, not shareholders. These
        regulations affect our lending practices, capital structure, investment
        practices, dividend policy and growth, among other things. Congress and federal
        regulatory agencies continually review banking laws, regulations and policies
        for possible changes. Changes to statutes, regulations or regulatory policies,
        including changes in interpretation or implementation of statutes, regulations
        or policies, could affect us in substantial and unpredictable ways. Such
        changes
        could subject us to additional costs, limit the types of financial services
        and
        products we may offer, and/or increase the ability of non-banks to offer
        competing financial services and products, among other things. Failure to
        comply
        with laws, regulations or policies could result in sanctions by regulatory
        agencies, civil money penalties, and/or reputation damage, which could have
        a
        material adverse effect on our business, financial condition, and results
        of
        operations. While we have policies and procedures designed to prevent any
        such
        violations, there can be no assurance that such violations will not occur.
        In
        addition, we are subject to changes in federal and state tax laws, accounting
        principles, and governmental economic and monetary policies. We cannot predict
        whether any of these changes may adversely and materially affect us. Compliance
        with the various statutes and other regulations increases our expense, requires
        management's attention, and can be a disadvantage from a competitive standpoint
        with respect to non-regulated competitors.
 
 *We
        May Not be Able to Successfully Manage Growth*
 
 During
        the last five years, we have experienced significant growth. Continued growth
        and expansion is a key aspect of our business strategy. Our ability to continue
        to grow depends, in part, upon our ability to:
 
 ·
            Expand
                our core deposit base;  ·
            Open
                new branch offices;  ·
            Attract
                deposits to those locations;  ·
            Identify
                attractive loan and investment opportunities;
                and  ·
            Obtain
                capital necessary for growth on terms that are
                favorable. 
 We
        may
        not be able to successfully implement our growth strategy if attractive
        locations and opportunities to expand in the future cannot be identified.
        The
        ability to manage growth successfully will also depend upon whether it is
        possible to maintain capital levels adequate to support growth, maintain
        cost
        controls and asset quality, and introduce new products and services. We
        anticipate that some growth will be supported through the generation of
        additional deposits at new branch locations; however, it may be necessary
        to
        raise additional capital through other means. Our ability to raise capital
        through the sale of securities will depend primarily upon our financial
        condition and the condition of financial markets at the time, and it may
        not be
        possible to obtain additional capital in the amounts or on terms satisfactory
        to
        us. Future growth may be constrained if we are unable to raise additional
        capital as needed.
  13
  As
        we
        continue to expand by opening new branches, we expect to incur increased
        personnel, occupancy, and other operating expenses. These higher expenses
        must
        be absorbed while new deposits are beginning to be generated, and there is
        also
        a time lag in deploying the new deposits into attractively priced loans and
        other higher yielding earning assets. Thus, our plans to grow aggressively
        could
        depress earnings in the short run, even if the growth strategy is well
        executed.
 
 *We
        are Subject to Environmental Liability Risk Associated With Lending
        Activities*
 
 A
        significant portion of our loan portfolio is secured by real property. During
        the ordinary course of business, we may foreclose on and take title to
        properties securing certain loans. In doing so, there is a risk that hazardous
        or toxic substances could be found on these properties. If hazardous or toxic
        substances are found, we may be liable for remediation costs, as well as
        for
        personal injury and property damage. Environmental laws may require us to
        incur
        substantial expenses and may materially reduce the affected property’s value or
        limit our ability to use or sell the affected property. In addition, future
        laws
        or more stringent interpretations or enforcement policies with respect to
        existing laws may increase our exposure to environmental liability. The
        remediation costs and any other financial liabilities associated with an
        environmental hazard could have a material adverse effect on our financial
        condition and results of operations.
 
 *Our
        Profitability Depends Significantly on Economic Conditions in the Commonwealth
        of Pennsylvania*
 
 Our
        success depends primarily on the general economic conditions of the Commonwealth
        of Pennsylvania and the specific local markets in which we operate. Unlike
        larger national or other regional banks that are more geographically
        diversified, we provide banking and financial services to customers primarily
        in
        Lancaster County, PA. The local economic conditions in this area have a
        significant impact on the demand for our products and services as well as
        the
        ability of our customers to repay loans, the value of the collateral securing
        loans, and the stability of our deposit funding sources. A significant decline
        in general economic conditions, caused by inflation, recession, acts of
        terrorism, outbreak of hostilities or other international or domestic
        occurrences, unemployment, changes in securities markets, or other factors
        could
        impact these local economic conditions and, in turn, have a material adverse
        effect on our financial condition and results of operations.
 
 *We
        Operate In a Highly Competitive Industry and Market Area*
 
 We
        compete for loans, deposits and investment dollars with numerous regional
        and
        national banks and other community banking institutions, as well as other
        kinds
        of financial institutions and enterprises, such as securities firms, insurance
        companies, savings associations, credit unions, mortgage brokers, and private
        lenders. Many competitors have substantially greater resources than we do,
        and
        operate under less stringent regulatory environments. The differences in
        resources and regulations may make it harder for us to compete profitably,
        reduce the rates that we can earn on loans and investments, increase the
        rates
        we must offer on deposits and other funds, and adversely affect our overall
        financial condition and earnings.
  14
  Our
        ability to compete successfully depends on a number of factors, including,
        among
        other things:
 
 ·
            The
                ability to develop, maintain and build upon long-term customer
                relationships based on top quality service, high ethical standards
                and
                safe, sound assets;  ·
            The
                ability to expand our market position;  ·
            The
                scope, relevance and pricing of products and services offered to
                meet
                customer needs and demands;  ·
            The
                rate at which we introduce new products and services relative to
                our
                competitors;  ·
            Customer
                satisfaction with our level of service;
                and  ·
            Industry
                and general economic trends. 
 Failure
        to perform in any of these areas could significantly weaken our competitive
        position, which could adversely affect our growth and profitability. This
        could,
        in turn, have a material adverse effect on our financial condition and results
        of operations.
 
 *Our
        Controls and Procedures May Fail or Be Circumvented*
 
 We
        regularly review and update our internal controls, disclosure controls and
        procedures, and corporate governance policies and procedures. Any system
        of
        controls, however well designed and operated, is based in part on certain
        assumptions and can provide only reasonable, not absolute, assurances that
        the
        objectives of the system are met. Any failure or circumvention of our controls
        and procedures or failure to comply with regulations related to controls
        and
        procedures could have a material adverse effect on our business, results
        of
        operations, and financial condition.
 *New
          Lines of Business or New Products and Services May Subject Us to Additional
          Risk*
 
 From
          time
          to time, we may implement new lines of business or offer new products and
          services within existing lines of business. There are substantial risks
          and
          uncertainties associated with these efforts, particularly in instances
          where the
          markets are not fully developed. In developing and marketing new lines
          of
          business and/or new products and services, we may invest significant time
          and
          resources. Initial timetables for the introduction and development of new
          lines
          of business and/or new products or services may not be achieved and price
          and
          profitability targets may not prove feasible. External factors, such as
          compliance with regulations, competitive alternatives, and shifting market
          preferences, may also impact the successful implementation of a new line
          of
          business or a new product or service. Furthermore, any new line of business
          and/or new product or service could have a significant impact on the
          effectiveness of our system of internal controls. Failure to successfully
          manage
          these risks in the development and implementation of new lines of business
          or
          new products or services could have a material adverse effect on our business,
          results of operations, and financial condition.
 15
 
 *We
        Rely On Dividends from Our Subsidiaries for Most of Our
        Revenue*
 
 Union
        National Financial Corporation (“UNFC”) is a separate and distinct legal entity
        from its subsidiaries. It receives substantially all of its revenue from
        dividends from its subsidiary, Union National Community Bank. These dividends
        are the principal source of funds to pay dividends on our common stock and
        interest and principal on our debt. Various federal and/or state laws and
        regulations limit the amount of dividends that the bank may pay to us. Also,
        our
        right to participate in a distribution of assets upon a subsidiary’s liquidation
        or reorganization is subject to the prior claims of the subsidiary’s creditors.
        In the event the bank is unable to pay dividends to us, we may not be able
        to
        service debt, pay obligations, or pay dividends on our common stock. The
        inability to receive dividends from the bank could have a material adverse
        effect on our business, financial condition, and results of operations.
 
 *We
        May Not be Able to Attract and Retain Skilled People*
 
 We
        are a
        customer-focused and relationship-driven organization. Our success depends,
        in
        large part, on our ability to attract and retain key people. We currently
        have
        employment agreements with several of our senior officers; however, the
        existence of such agreements does not necessarily assure that we will be
        able to
        continue to retain their services. We also maintain bank-owned life insurance
        that would help cover some of the economic impact of a loss caused by death.
        The
        unexpected loss of services of one or more of our key personnel could have
        a
        material adverse impact on our business because of their skills, knowledge
        of
        our market, years of industry experience, and the difficulty of promptly
        finding
        qualified replacement personnel. Competition for the best people in most
        activities we engage in can be intense, and we may not be able to hire people
        or
        to retain them.
 
 *Our
        Information Systems May Experience an Interruption or Breach in
        Security*
 
 We
        rely
        heavily on communications and information systems to conduct our business.
        Any
        failure, interruption, or breach in security of these systems could result
        in
        failures or disruptions in our customer relationship management, general
        ledger,
        deposit, loan, and other systems. While we have policies and procedures designed
        to prevent or limit the effect of the failure, interruption, or security
        breach
        of our information systems, there can be no assurance that any such failures,
        interruptions, or security breaches will not occur or, if they do occur,
        that
        they will be adequately addressed. The occurrence of any failures,
        interruptions, or security breaches of our information systems could damage
        our
        reputation, result in a loss of customer business, subject us to additional
        regulatory scrutiny, or expose us to civil litigation and possible financial
        liability, any of which could have a material adverse effect on our financial
        condition and results of operations.
  16
  *We
        Continually Encounter Technological Change*
 
 The
        financial services industry is continually undergoing rapid technological
        change
        with frequent introductions of new technology-driven products and services.
        The
        effective use of technology increases efficiency and enables financial
        institutions to better serve customers and to reduce costs. Our future success
        depends, in part, upon our ability to address the needs of our customers
        by
        using technology to provide products and services that will satisfy customer
        demands, as well as to create additional efficiencies in our operations.
        Many of
        our competitors have substantially greater resources to invest in technological
        improvements. We may not be able to effectively implement new technology-driven
        products and services or be successful in marketing these products and services
        to our customers. Failure to successfully keep pace with technological change
        affecting the financial services industry could have a material adverse impact
        on our business and, in turn, our financial condition and results of operations.
 
 Technology
        and other changes are allowing parties to complete financial transactions
        that
        historically have involved banks through alternative methods. For example,
        consumers can now maintain funds that would have historically been held as
        bank
        deposits in brokerage accounts or mutual funds. Consumers can also complete
        transactions such as paying bills and/or transferring funds directly, without
        the assistance of banks. The process of eliminating banks as intermediaries,
        known as “disintermediation,” could result in the loss of fee income, as well as
        the loss of customer deposits and the related income generated from those
        deposits. The loss of these revenue streams and the lower cost deposits as
        a
        source of funds could have a material adverse effect on our financial condition
        and results of operations.
 
 *We
        are Subject to Claims and Litigation Pertaining to Fiduciary
        Responsibility*
 
 From
        time
        to time, customers may make claims and take legal action pertaining to our
        performance of our fiduciary responsibilities. Whether customer claims and
        legal
        action related to our performance of fiduciary responsibilities are founded
        or
        unfounded, if such claims and legal actions are not resolved in a manner
        favorable to us they may result in significant financial liability and/or
        adversely affect the market perception of us and our products and services
        as
        well as impact customer demand for those products and services. Any financial
        liability or reputation damage could have a material adverse effect on our
        business, which, in turn, could have a material adverse effect on our financial
        condition and results of operations.
 
 *Severe
        Weather, Natural Disasters, Acts of War or Terrorism, and Other External
        Events
        Could Significantly Impact Our Business*
  17
  Severe
        weather, natural disasters, acts of war or terrorism, and other adverse external
        events could have a significant impact on our ability to conduct business.
        Such
        events could affect the stability of our deposit base, impair the ability
        of
        borrowers to repay outstanding loans, impair the value of collateral securing
        loans, cause significant property damage, result in loss of revenue, and/or
        cause us to incur additional expenses. Severe weather or natural disasters,
        acts
        of war or terrorism, or other adverse external events may occur in the future.
        Although we have established disaster recovery policies and procedures, the
        occurrence of any such event could have a material adverse effect on our
        business, which, in turn, could have a material adverse effect on our financial
        condition and results of operations.
 
 *Our
        Stock Price Can Be Volatile*
 
 Stock
        price volatility may make it more difficult for you to resell your common
        stock
        when you want and at prices you find attractive. Our stock price can fluctuate
        significantly in response to a variety of factors including, among other
        things:
 
 ·
              Actual
                  or anticipated variations in quarterly results of operations;·
              Recommendations
                  by securities analysts;·
              Operating
                  and stock price performance of other companies that investors deem
                  comparable to us;·
              News
                  reports relating to trends, concerns, and other issues in the financial
                  services industry;·
              Perceptions
                  in the marketplace regarding us and/or our competitors;·
              New
                  technology used, or services offered, by competitors;·
              Changes
                  in government regulations; or·
              Geopolitical
                  conditions such as acts or threats of terrorism or military conflicts.
 
 General
        market fluctuations, industry factors, and general economic and political
        conditions and events, such as economic slowdowns or recessions, interest
        rate
        changes, or credit loss trends, could also cause our stock price to decrease
        regardless of operating results.
 
 *The
        Trading Volume in Our Common Stock is Less Than That of Some Other Financial
        Services Companies*
 
 Our
        common stock is traded on the OTC Bulletin Board and the trading volume is
        less
        than that of some other financial services companies. A public trading market
        having the desired characteristics of depth, liquidity, and orderliness depends
        on the presence in the marketplace of willing buyers and sellers of our common
        stock at any given time. This presence depends on the individual decisions
        of
        investors and general economic and market conditions over which we have no
        control. Given the lower trading volume of our common stock, significant
        sales
        of the common stock or the expectation of these sales could cause our stock
        price to fall.
  18
  *Our
        Articles of Incorporation, By-Laws and Certain Banking Laws May Have an
        Anti-Takeover Effect*
 
 Provisions
        of our articles of incorporation and by-laws, and federal banking laws,
        including regulatory approval requirements, could make it more difficult
        for a
        third party to acquire Union National, even if doing so would be perceived
        to be
        beneficial to our shareholders. The combination of these provisions effectively
        inhibits a non-negotiated merger or other business combination, which, in
        turn,
        could adversely affect the market price of our common stock.
 
 ITEM
                1B.
              UNRESOLVED
                  STAFF COMMENTS.
 
 None.
 
 ITEM
                2.
              PROPERTIES.
 
 The
        bank
        owns six branch offices, the administration services center and certain parking
        facilities related to its banking offices, all of which are free and clear
        of
        any lien. Below is a table containing the location and date of acquisition
        of
        the bank’s properties. In addition, the bank leases office space for three
        branch offices and a professional office center (executive offices). The
        bank's
        executive offices are located at 570 Lausch Lane, Lancaster, Pennsylvania.
 
 **PROPERTIES
        OWNED BY UNION NATIONAL COMMUNITY BANK**
 
 Office
                  and Address
              
              Description
                  of Property
              
              Date
                  AcquiredMount
                  Joy Branch Office
                101
                  East Main Street
                Mount
                  Joy, PA 17552
              
              Branch
                  Bank, cut limestone and brick. 1995 addition is concrete over steel
                  construction. Containing approximately 22,251 sq. ft. of
                  space.
              
              1911Mount
                  Joy Office Annex
                115
                  East Main Street
                Mount
                  Joy, PA 17552
              
              Wood
                  frame construction with aluminum siding. Containing approximately
                  1,632
                  sq. ft. of space.
              
              September,
                  1992MotorBank
                  Branch Office
                21
                  North Barbara Street
                Mount
                  Joy, PA 17552
              
              Drive-up
                  Bank Branch Brick on frame. Containing approximately 445 sq. ft.
                  of
                  space.
              
              November
                  1972Maytown
                  Branch Office
                100
                  West High Street
                Maytown,
                  PA 17550
              
              Branch
                  Bank, brick veneer, shingled roof with wood trusses. Containing
                  approximately 4,960 sq. ft. of space.
              
              April
                  1972
  19
  Hempfield
                  Branch Office
                190
                  Stony Battery Road
                Salunga,
                  PA 17538
              
              Branch
                  Bank Brick with wood shingle roof. Containing approximately 4,619
                  sq. ft.
                  of space.
              
              June
                  1979Administration
                  Services Center
                Bank
                  Administration Building
                25
                  North Barbara Street
                Mount
                  Joy, PA 17552
              
              Brick
                  on concrete block with wood and steel frame. Containing approximately
                  12,798 sq. ft. of space.
              
              December
                  1984Elizabethtown
                  Branch Office
                1275
                  South Market Street
                Elizabethtown,
                  PA 17022
              
              Branch
                  Bank Brick veneer, shingled roof with wood trusses. Containing
                  approximately 6,808 sq. ft. of space.
              
              January
                  1988Elizabethtown
                  MotorBank Office
              
              Drive-up
                  Bank
                Brick
                  on Frame Containing approximately 574 sq. ft. of space.
              
              September
                  2001HACC
                  Gold Café
                1625
                  Old Philadelphia Pike
                Lancaster,
                  PA 17602
              
              Branch
                  Bank
                One
                  story masonry and brick building with metal trusses, containing
                  approximately 3,486 sq. ft. of space.
              
              February
                  2005Columbia
                  Branch Office
                921
                  Lancaster Avenue
                Columbia,
                  PA 17512
              
              Branch
                  Bank
                One
                  story brick building containing approximately 2,257 sq. ft. of
                  space.
              
              October
                  1992
 
 **PROPERTY
                  LEASED BY THE BANK**Office
                  and Address
              
              Description
                  of Property
              
              Date
                  LeasedManheim
                  Branch Office
                701
                  Lancaster Road
                Manheim,
                  PA 17545
              
              Concrete
                  block building containing 4,266 sq. ft. of space of which approximately
                  2,600 sq. ft. of space is currently used for banking
                  purposes.
              
              January
                  1995
  20
  Manheim
                  Township Branch Office Branch Bank
                38
                  E. Roseville Road
                Lancaster,
                  PA 17601
              
              One
                  story brick and metal siding building containing approximately
                  2,000 sq.
                  ft. of space.
              
              April
                  2003Centerville
                  Gold Café
                301
                  Centerville Rd.
                Lancaster,
                  PA 17602
              
              Branch
                  Bank
                One
                  story masonry and brick building with metal trusses, containing
                  approximately 3,575 sq. ft. of space.
              
              November
                  2006Union
                  National Professional Center
                570
                  Lausch Lane
                Lancaster,
                  PA 17601
              
              Three
                  story masonry, stone and brick over steel building with concrete
                  floors,
                  containing approximately 27,000 sq. ft of office space, of which
                  approximately 18,000 sq. ft. is currently used for bank administrative
                  purposes and the remainder of which is available for
                  sub-lease.
              
              February
                  2006
 
 In
        management’s opinion, the above properties are in good condition and are
        adequate for Union National Financial Corporation’s and Union National Community
        Bank's purposes.
 
 ITEM
                3.
              LEGAL
                  PROCEEDINGS.
 
 Management,
        after consulting with legal counsel, is not aware of any litigation that
        would
        have a material adverse effect on the consolidated financial position of
        UNFC.
        There are no proceedings pending other than ordinary routine litigation incident
        to the business of UNFC and its subsidiary, Union National Community
        Bank.
 
 ITEM
                4.
              SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
 None.
        There were no matters submitted to a vote of security holders during the
        fourth
        quarter of 2006.
 
 21


PART
      II





ITEM
              5.
            MARKET
                FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
                PURCHASES OF EQUITY SECURITIES.





Market
      and dividend information required by this Item is incorporated herein by
      reference from the inside front cover of Union National Financial Corporation's
      2006 Annual Report to Stockholders which is included in Exhibit 13 to this
      Annual Report on Form 10-K. Union National Financial Corporation's common stock
      is traded on a limited basis in the local over-the-counter market and on the
      OTCBB under the symbol UNNF. Bid and asked information is available on some
      internet websites providing financial market news. Information concerning actual
      trades is included on the inside front cover of Union National Financial
      Corporation's 2006 Annual Report to Stockholders and is also available on some
      internet websites. This information represents a limited amount of share
      transfer activity.





Union
      National Financial Corporation and, prior to Union National Financial
      Corporation's organization as a bank holding company, Union National Community
      Bank, have paid regular cash dividends on their common stock for more than
      forty
      years. Union National Financial Corporation expects to pay future dividends;
      however, payment of such dividends will depend upon earnings of Union National
      Financial Corporation and of Union National Community Bank, their financial
      condition, capital requirements and other factors, such as regulatory and legal
      requirements. It is anticipated that substantially all of the funds available
      for the payment of dividends by Union National Financial Corporation will be
      derived from dividends paid to it by Union National Community Bank.





**Securities
      Authorized for Issuance under Equity Compensation Plans**





The
      following table discloses the number of outstanding options, warrants and rights
      granted by the Corporation to participants in equity compensation plans, as
      well
      as the number of securities remaining available for future issuance under these
      plans, as of December 31, 2006. The table provides this information separately
      for equity compensation plans that have and have not been approved by security
      holders.




(A)(#)
            
            (B)($)
            
            (C)(#)Number
                of SecuritiesNumber
                of Securities
              to
                be Issued Upon Exercise of Outstanding Options, Warrants,
              and
                Rights
            
            Weighted
                Average Exercise Price of Outstanding Options,
              Warrants,
                and Rights
            
            Remaining
                Available
              for
                Future Issuance Under Equity Compensation Plans Excluding
                Securities
              Reflected
                in Column (A)Equity
                Compensation Plans Approved by Shareholders(1)
            
            
            177,330
            
            $
            18.14
            
            
            31,920Equity
                Compensation Plans Not Approved by Shareholders
            
            
            0
            
            
            0
            
            
            0Totals
            
            
            177,330
            
            $
            18.14
            
            
            31,920




(1) Includes
      shares issued under Union National Financial Corporation’s 1988 and 1997 Stock
      Incentive Plans, 1997 Stock Purchase Plan (which expired in 2003) and 1997
      Independent Director Plan (expired).




22





Additional
      information required by this item regarding dividend restrictions is
      incorporated herein by reference from Note 15 on page 24 and from page 48 of
      Union National Financial Corporation's 2006 Annual Report to Stockholders,
      which
      is included in Exhibit 13 to this Form 10-K.





As
      of
      March 16, 2007, there were approximately 1,303 holders of record of UNFC's
      common stock.





**Issuer
      Purchases of Equity Securities:**





Period
            
            (a)
              Total
                Number of Shares Purchased
            
            (b)
              Average
                Price Paid per Share
            
            (c)
              Total
                Number of Shares Purchased as Part of Publicly Announced Plans or
                Programs*
            
            (d)
              Maximum
                Number of Shares that May Yet Be Purchased Under the Plans or
                Programs*October
                1, 2006 to October 31, 2006
            
            
            988
            
            $
            18.96
            
            
            988
            
            
            52,357November
                1, 2006 to November 30, 2006
            
            
            1,300
            
            $
            18.98
            
            
            1,300
            
            
            51,057December
                1, 2006 to December 31, 2006
            
            
            993
            
            $
            18.13
            
            
            993
            
            
            50,064Total
            
            
            3,281
            
            $
            18.72
            
            
            3,281




* On
      April
      21, 2005, the Board of Directors of Union National authorized and approved
      a
      plan to purchase up to 100,000 shares of its outstanding common stock in open
      market or privately negotiated transactions.




23




**Union
      National Financial Corporation**











***Period
                Ending******Index***
            
            **12/31/01**
            
            **12/31/02**
            
            **12/31/03**
            
            **12/31/04**
            
            **12/31/05**
            
            **12/31/06**Union
                National Financial Corporation
            
            
            100.00
            
            
            122.94
            
            
            167.93
            
            
            213.86
            
            
            184.22
            
            
            156.59NASDAQ
                Composite
            
            
            100.00
            
            
            68.76
            
            
            103.67
            
            
            113.16
            
            
            115.57
            
            
            127.58Mid-Atlantic
                Custom Peer Group*
            
            
            100.00
            
            
            119.20
            
            
            178.39
            
            
            200.93
            
            
            198.36
            
            
            208.68Custom
                Peer Group**
            
            
            100.00
            
            
            125.82
            
            
            166.33
            
            
            188.30
            
            
            178.38
            
            
            187.68





**Mid-Atlantic
      Custom Peer Group consists of Mid-Atlantic commercial banks with assets less
      than $1B.*





***Custom
      Peer Group index consists of ACNB, First Chester County Corporation, Chester
      Valley Bancorp, Inc., Leesport Financial Corp., Franklin Financial Services
      Corporation, Ephrata National Bank, Orrstown Financial Services, Inc., DNB
      Financial Corporation, Juniata Valley Financial Corporation, Mid Penn Bancorp,
      Inc., Codorus Valley Bancorp, Inc., and Tower Bancorp
      Incorporated.*


**Source
                  : SNL Financial LC, Charlottesville, VA**
              **(434)
                  977-1600****©
                  2007**
              ******www.snl.com**
  24




ITEM
              6.
            SELECTED
                FINANCIAL DATA.





The
      information required by this Item is incorporated herein by reference from
      page
      30 of Union National Financial Corporation's 2006 Annual Report to Stockholders,
      which is included in Exhibit 13 to this Annual Report on Form
      10-K.





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





The
      information required by this Item is incorporated by reference from pages 31
      through 48 of Union National Financial Corporation's 2006 Annual Report to
      Stockholders, which pages are included in Exhibit 13 to this Annual Report
      on
      Form 10-K.





ITEM
              7A.
            QUANTITATIVE
                AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.





The
      information required by this Item is incorporated herein by reference from
      pages
      46 and 47 of Union National Financial Corporation's 2006 Annual Report to
      Stockholders, which pages are included in Exhibit 13 to this Annual Report
      on
      Form 10-K.





ITEM
              8.
            FINANCIAL
                STATEMENTS AND SUPPLEMENTARY DATA.





The
      information required by this Item is incorporated herein by reference from
      pages
      4 through 29 of Union National Financial Corporation's 2006 Annual Report to
      Stockholders, which pages are included in Exhibit 13 to this Annual Report
      on
      Form 10-K.





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





None.





ITEM
              9A.
            CONTROLS
                AND PROCEDURES





(a)  Evaluation
      of disclosure controls and procedures.





Under
      the
      supervision and with the participation of management, including the Chief
      Executive Officer and Chief Financial Officer, the effectiveness of the design
      and operation of the Corporation's disclosure controls and procedures (as
      defined in Rule 13a-15(e) under the Exchange Act) was evaluated as of December
      31, 2006. Based upon that evaluation, the Chief Executive Officer and Chief
      Financial Officer concluded that, as of the Evaluation Date, the corporation's
      disclosure controls and procedures were effective in alerting them to the
      material information relating to the corporation (or the corporation's
      consolidated subsidiaries) required to be included in its periodic SEC
      filings.




25





(b)  Changes
      in internal controls.





There
      were no changes made in the corporation's internal controls during the period
      covered by this report or, to their knowledge, in other factors that have
      materially affected or are reasonably likely to materially affect these controls
      subsequent to the date of their evaluation.





ITEM
              9B.
            OTHER
                INFORMATION





None.


26


PART
      III





ITEM
              10.
            DIRECTORS,
                EXECUTIVE OFFICERS, AND CORPORATE
                GOVERNANCE.





The
      information required by this Item is incorporated herein by reference from
      the
      information under the captions “Election of Directors - Information about
      Nominees and Continuing Directors”, “Share Ownership - Executive Officers”,
“Section 16(a) Beneficial Ownership Reporting Compliance”, “Governance of the
      Company - Nomination of Directors” and “Governance of the Company - Meetings and
      Committees of the Board of Directors” of Union National Financial Corporation's
      Proxy Statement for its 2007 Annual Meeting of Stockholders. As of July 2003,
      Union National Financial Corporation put in place the Directors and Senior
      Management Code of Ethics. The code of ethics encourages individuals to report
      any conduct that they believe in good faith to be an actual or apparent
      violation of the code of ethics. The code of ethics is incorporated herein
      by
      reference from Exhibit 14 to Union National Financial Corporation’s Annual
      Report on Form 10-K, filed with the Commission on March 30, 2004.





ITEM
              11.
            EXECUTIVE
                COMPENSATION.





The
      information required by this Item is incorporated herein by reference from
      the
      information under the captions “Compensation and Plan Information”, “Potential
      Payments Upon Termination or Change-In-Control”, “Compensation Committee Report”
and “Compensation Committee Interlocks and Insider Participation” of Union
      National Financial Corporation's Proxy Statement for its 2007 Annual Meeting
      of
      Stockholders.





ITEM
              12.
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                STOCKHOLDER MATTERS.





The
      information required by this Item is incorporated herein by reference from
      the
      information under the caption “Share Ownership” of Union National Financial
      Corporation's Proxy Statement for its 2007 Annual Meeting of Stockholders.
      The
      information related to Equity Compensation Plans as required is incorporated
      herein by reference to Part II, Item 5 of this Form 10-K.





ITEM
              13.
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
                INDEPENDENCE.





The
      information required by this Item is incorporated herein by reference from
      the
      information under the captions “Transactions with Directors and Executive
      Officers” and “Governance of the Company - Director Independence” of Union
      National Financial Corporation's Proxy Statement for its 2007 Annual Meeting
      of
      Stockholders.


27


ITEM
              14.
            PRINCIPAL
                ACCOUNTING FEES AND SERVICES.





The
      information required by this Item is incorporated herein by reference from
      the
      information under the caption “Report of the Audit Committee” of Union National
      Financial Corporation’s Proxy Statement for its 2007 Annual Meeting of
      Stockholders.




28





PART
      IV





ITEM
              15.
            EXHIBITS,
                FINANCIAL STATEMENT SCHEDULES





(a)
            1.
            Financial
                Statements.


The
      following financial statements are included by reference in Part II, Item 8
      hereof.


Consolidated
      Balance Sheets


Consolidated
      Statements of Income


Consolidated
      Statements of Changes in Stockholders' Equity


Consolidated
      Statements of Cash Flows


Notes
      to
      Consolidated Financial Statements


Report
      of
      Independent Registered Public Accounting Firm




2.
            The
                financial statement schedules required by this Item are omitted because
                the information is either inapplicable, not required or is in the
                consolidated financial statements as a part of this
                Report.





3.
            The
                following Exhibits are filed herewith, or incorporated by reference
                as a
                part of this Report:





3(i)
            Union
                National Community Bank’s Amended Articles of Incorporation. (Incorporated
                by reference to Exhibit 3(i) to Union National Financial Corporation’s
                Registration Statement No. 333-27837 on Form S-8, filed with the
                Commission on May 27, 1997.)





3(ii)
            Union
                National Financial Corporation’s Amended and Restated By-laws.
                (Incorporated by reference to Exhibit 3(ii) to Union National Financial
                Corporation’s current report on Form 8-K, filed with the Commission on
                March 30, 2001.)




10.1
            Union
                National Financial Corporation 1988 Stock Incentive Plan. (Incorporated
                by
                reference to Exhibit 4.3 to Union National Financial Corporation’s
                Registration Statement No. 333-27837 on Form S-8, filed with the
                Commission on May 27, 1997.)





10.2
            Union
                National Financial Corporation 1997 Stock Incentive Plan. (Incorporated
                by
                reference to Exhibit 4.5 to Union National Financial Corporation’s
                Registration Statement No. 333-27837 on Form S-8, filed with the
                Commission on May 27, 1997 and incorporated by reference to Amendment
                1 to
                Union National Financial Corporation’s Registration Statement No.
                333-107326 on Form S-8 filed with the commission on July 25,
                2003.)




29




10.3
            Union
                National Financial Corporation’s Employee Stock Purchase Plan
                (Incorporated by Reference to Exhibit 4.4 to Union National Financial
                Corporation’s Registration Statement No. 333-27837 on Form S-8, filed with
                the Commission on May 27, 1997).





10.4
            Change
                of Control Agreement, dated May 29, 2001, between Clement M. Hoober
                and
                Union National Financial Corporation. (Incorporated by Reference
                to Union
                National Financial Corporation’s Quarterly Report on Form 10-Q for the
                Period Ended June 30, 2001).





10.5
            Executive
                Incentive Retirement Agreement, CFO, dated January 1, 2004 between
                Clement
                M. Hoober and Union National Community Bank. (Incorporated by reference
                to
                Exhibit 10.7 to Union National Financial Corporation’s Annual Report on
                Form 10-K, filed with the Commission on March 30,
                2004.)





10.6
            Group
                Term Replacement Plan for Certain Officers, CFO, dated January 1,
                2004
                between Clement M. Hoober and Union National Community Bank. (Incorporated
                by reference to Exhibit 10.8 to Union National Financial Corporation’s
                Annual Report on Form 10-K, filed with the Commission on March 30,
                2004.)





10.7
            Executive
                Incentive Retirement Agreement, COO, dated January 1, 2004 between
                Michael
                A. Frey and Union National Community Bank. (Incorporated by reference
                to
                Exhibit 10.9 to Union National Financial Corporation’s Annual Report on
                Form 10-K, filed with the Commission on March 30,
                2004.)





10.8
            Group
                Term Replacement Plan for Certain Officers, COO, dated January 1,
                2004
                between Michael A. Frey and Union National Community Bank. (Incorporated
                by reference to Exhibit 10.10 to Union National Financial Corporation’s
                Annual Report on Form 10-K, filed with the Commission on March 30,
                2004.)





10.9
            Group
                Term Replacement Plan for Certain Officers, CEO, dated January 1,
                2004
                between Mark D. Gainer and Union National Community Bank. (Incorporated
                by
                reference to Exhibit 10.12 to Union National Financial Corporation’s
                Annual Report on Form 10-K, filed with the Commission on March 30,
                2004.)




30




10.10
              Union
                  National Financial Corporation, 1999 Independent DirectorsStock
                  Option Plan. (Incorporated by Reference to Exhibit 4.3 toUnion
                  National Financial Corporation’s Registration StatementNo.
                  333-80739 on Form S-8, filed with the Commission on June15,
                  1999.)





10.11
              Board
                  of Director Fees





10.12
              Office
                  Lease between Lausch Lane Associates LP as Landlord and Union National
                  Community Bank as Tenant for 570 Lausch Lane, Lancaster, PA 17601.
                  (Incorporated by reference to Exhibit 99.1 to Union National Financial
                  Corporation’s Current Report of Form 8-K, filed with the Commission on May
                  17, 2005.)





10.13
              Employment
                  agreement between Michael A. Frey, Executive Vice President and
                  Chief
                  Operating Officer and Union National Financial Corporation and
                  its
                  subsidiary, Union National Community Bank. (Incorporated by reference
                  to
                  Exhibit 99.1 to Union National Financial Corporation’s Current Report of
                  Form 8-K,
                  filed with the Commission on June 23,
                  2005.)





10.14
              (a)
                  Members Agreement dated as of July 15, 2005 by and among Union
                  National
                  Community Bank, John Neihart, and Kevin Glackin, regarding the
                  formation
                  of Home Team Financial, LLC. (Incorporated by reference to Exhibit
                  10.16
                  (a) to Union National Financial Corporation’s Annual Report on Form 10-K,
                  filed with the Commission on March 31,
                  2006.)





10.14
            (b)
                Operating Agreement of Home Team Financial, LLC dated as of July
                15, 2005
                (Incorporated by reference to Exhibit 10.16 (b) to Union National
                Financial Corporation’s Annual Report on Form 10-K, filed with the
                Commission on March 31, 2006.)





10.14
            (c)
                Employment Agreement dated as of the July 15, 2005 betweenHome
                Team Financial, LLC, Union National Community Bank,and
                John Neihart. (Incorporated by reference to Exhibit 10.16 (c) to
                Union
                National Financial Corporation’s Annual Report on Form 10-K, filed with
                the Commission on March 31, 2006.)


31




10.14
            (d)
                Employment Agreement dated as of the July 15, 2005 betweenHome
                Team Financial, LLC, Union National Community Bank,and
                Kevin Glackin. (Incorporated by reference to Exhibit 10.16 (d) to
                Union
                National Financial Corporation’s Annual Report on Form 10-K, filed with
                the Commission on March 31, 2006.)




10.15
            (a)
                Amended and Restated Employment Agreement dated
                as of December 29, 2006 with Mark D. Gainer, Chairman, President
                and Chief
                Executive Officer.  10.15
            (b) Amended and Restated Executive
              Salary
              Continuation Agreement dated as of December 29, 2006, with Mark D.
              Gainer,
              Chairman, President and Chief Executive
              Officer.





10.16
            Office
                Lease dated as of October 30, 2006 between 301 Centerville Road
                Associates, LP as Landlord and Union National Community Bank as Tenant
                for
                301 Centerville Road, Lancaster, PA 17601 (Incorporated by reference
                to
                Exhibit 99.1 to Union National Financial Corporation’s current report on
                Form 8-K, filed with the Commission on November 3,
                2006.)





10.17
            Amended
                and Restated Declaration of Trust of Union National Capital Trust
                II,
                dated as of October 14, 2004, among Union National Financial Corporation,
                as sponsor, the Delaware and institutional trustee named therein,
                and the
                administrators named therein.





10.18
            Indenture,
                dated as of October 14, 2004, between Union National Financial
                Corporation, as issuer, and the trustee named therein, relating to
                the
                Junior Subordinated Debt Securities due
                2034.





10.19
            Guarantee
                Agreement, dated as of October 14, 2004, between Union National Financial
                Corporation and the guarantee trustee named
                therein.





10.20
            Indenture,
                dated as of July 27, 2006, between Union National Community Bank,
                as
                issuer, and the trustee named therein, relating to the Junior Subordinated
                Debt Securities due 2036. (Incorporated by reference to Exhibit 4
                to Union
                National Financial Corporation’s quarterly  report on Form 10-Q,
                filed with the Commission on August 14,
                2006.)





13
            Excerpts
                from Union National Financial Corporation’s 2006 Annual Report to
                Stockholders.




32




14
            Union
                National Financial Corporation Directors and Senior Management Code
                of
                Ethics. (Incorporated by reference to Exhibit 14 to Union National
                Financial Corporation’s Annual Report on Form 10-K, filed with the
                Commission on March 30, 2004.)





21
            Subsidiaries
                of the Union National Financial
                Corporation.





23.1
            Consent
                of Beard Miller Company LLP, Independent Registered Public Accounting
                Firm.





31.1
            Certification
                of Principal Executive Officer Pursuant to Exchange Act Rules
                13a-14(a)/15d-14(a) as added by Section 302 of the Sarbanes-Oxley
                Act of
                2002.





31.2
            Certification
                of Principal Financial Officer Pursuant to Exchange Act Rules
                13a-14(a)/15d-14(a) as added by Section 302 of the Sarbanes-Oxley
                Act of
                2002.





32
              Certification
                  of Principal Executive Officer and Principal Financial Officer
                  Pursuant to
                  U.S.C. Section 1350 as added by Section 906 of the Sarbanes-Oxley
                  Act of
                  2002.





(b)
            The
                exhibits required to be filed by this Item are listed under Item
                15(a)3,
                above.





(c)
            NOT
                APPLICABLE.


33


SIGNATURES





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the Registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized.


UNION
                NATIONAL FINANCIAL CORPORATION(Registrant)By
            /s/
                Mark D. GainerMark
                D. Gainer,Chairman
                of the Board of Directors,President
                and Chief Executive Officer


Date:
            March
                  28, 2007




Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of Union National Financial
      Corporation and in the capacities and on the dates indicated.




DATEBy/s/
                  Mark D. Gainer
              
              March
                  28, 2007Mark
                  D. Gainer,Chairman
                  of the Board of Directors,President,
                  Chief Executive Officerand
                  Director (principal executive officer)By/s/
                  Clement M. Hoober, CPA
              
              March
                  28, 2007Clement
                  M. Hoober, CPA,Chief
                  Financial Officer (principalfinancial
                  officer and principalaccounting
                  officer)By/s/
                  Michael A. Frey
              
              March
                  28, 2007Michael
                  A. Frey, Vice Presidentand
                  DirectorBy/s/ Donald Cargas, Jr.
              
              March
                  28, 2007Donald
                  Cargas, Jr., Director
  34
  By/s/
                  Nancy Shaub Colarik
              
              March
                  28, 2007Nancy
                  Shaub Colarik, DirectorBy/s/
                  Kevin Dolan
              
              March
                  28, 2007Kevin
                  Dolan, DirectorBy/s/
                  James R. Godfrey
              
              March
                  28, 2007James
                  R. Godfrey, DirectorBy/s/
                  Carl R. Hallgren
              
              March
                  28, 2007Carl
                  R. Hallgren, Vice Chairmanof
                  the Board of Directors andDirectorBy/s/
                  Barry C. Huber, CPA
              
              March
                  28, 2007Barry
                  C. Huber, CPA, DirectorBy/s/
                  Thomas J. McGrath, DVM
              
              March
                  28, 2007Thomas
                  J. McGrath, DVM,DirectorBy/s/
                  William M. Nies
              
              March
                  28, 2007William
                  M. Nies, DirectorBy/s/ Darwin A. Nissley
              
              March
                  28, 2007Darwin
                  A. Nissley, DirectorBy/s/
                  Lloyd C. Pickell
              
              March
                  28, 2007Lloyd
                  C. Pickell, Director


35


**EXHIBIT
        INDEX**




Exhibit
              Number10.11
            
            Board of Director
              Fees10.15
            
            (a)
                  Amended and Restated Employment Agreement dated
                  as of December 29, 2006 with Mark D. Gainer, Chairman, President
                  and Chief
                  Executive Officer.10.15
            
            (b) Amended
              and
              Restated Executive Salary Continuation Agreement dated as of December
              29,
              2006, with Mark D. Gainer, Chairman, President and Chief Executive
              Officer.




10.17
            
            Amended
                and Restated Declaration of Trust of Union National Capital Trust
                II,
                dated
                as of October 14, 2004, among Union National Financial Corporation,
                as
                sponsor,
                the Delaware and institutional trustee named therein, and the
                administrators named therein.10.18
            
            Indenture,
                dated as of October 14, 2004, between Union National Financial
                Corporation, as issuer, and the trustee named therein, relating to
                the
                Junior Subordinated Debt Securities due 2034.10.19
            
            Guarantee
                Agreement, dated as of October 14, 2004, between Union National Financial
                Corporation and the guarantee trustee named therein.13
            
            Excerpts
                from Union National Financial Corporation’s 2006 Annual Report to
                Stockholders.21
            
            Subsidiaries
                of Union National Financial Corporation.23.1
            
            Consent
                of Beard Miller Company LLP, Independent Registered Public Accounting
                Firm.31.1
            
            Certification
                of Principal Executive Officer Pursuant to Exchange Act Rules
                13a-14(a)/15d-14(a) as added by Section 302 of the Sarbanes-Oxley
                Act of
                2002.31.2
            
            Certification
                of Principal Financial Officer Pursuant to Exchange Act Rules 13a-
                14(a)/15d-14(a) as added by Section 302 of the Sarbanes-Oxley Act
                of
                2002.32
            
            Certification
                of Principal Executive Officer and Principal Financial Officer Pursuant
                to
                U.S.C. Section 1350 as added by Section 906 of the Sarbanes-Oxley
                Act of
                2002.




36