EXHIBIT 13

          Excerpts From Union National Financial Corporation's
                 1999 Annual Report to Shareholders
<PAGE>

                  STOCK AND DIVIDEND INFORMATION

   Union National Financial Corporation has only one class of
common stock authorized, issued and outstanding.  The outstanding
common stock is traded in the local over-the-counter market,
primarily in Lancaster County, Pennsylvania.  Prices presented in
the table below reflect actual transactions known to management.
Prices and dividends per share are adjusted for stock splits and
stock dividends.  Cash Dividends are payable on the 5th day of
February, May, August and November. Stockholders of record may
elect to have cash dividends deposited directly to their checking
or savings account.

   The Corporation offers its stockholders a Dividend
Reinvestment and Stock Purchase Plan, whereby holders of stock
may have their quarterly cash dividends automatically invested in
additional shares of common stock of the Corporation and may
purchase additional shares within specified limits.

<TABLE>
<CAPTION>
                                                      Dividends
Quarter                 High             Low          Per Share
_________________________________________________________________
<S>                     <C>               <C>             <C>
First, 1999            $20.00           $17.62          $0.129
Second                  25.75            19.29           0.138
Third                   23.50            21.25           0.150
Fourth                  22.25            16.25           0.150

First, 1998            $22.74           $21.43          $0.095
Second                  22.62            21.19           0.100
Third                   22.62            18.10           0.105
Fourth                  20.00            17.14           0.110

</TABLE>

FOR FURTHER INFORMATION, WE REFER YOU TO:

Dean Witter Reynolds, Inc.    F.J. Morrissey & Company, Inc.
46 East King Street           1700 Market Street
P.O. Box 358                  Suite 1420
Lancaster, PA 17603           Philadelphia, PA 19103
(717) 293-4811                (800) 842-8928

Hazlett, Burt, & Watson, Inc. Tucker Anthony
100 East King Street          Formally Hopper Soliday & Co.,Inc.
P.O. Box 1267                 2101 Oregon Pike
Lancaster, PA 17608           Lancaster, PA 17601
(717) 397-5515                (800) 526-6371

Janney Montgomery Scott, Inc.
61 North Duke Street
Lancaster, PA 17602
(717) 293-4100

REGISTRAR AND TRANSFER AGENT

Trust Department
Union National Community Bank
P.O. Box 567
Mount Joy, PA 17552

<PAGE>
<TABLE>
                          FINANCIAL HIGHLIGHTS
<CAPTION>
                             December 31,  December 31,
                                  1999         1998    %Increase
_________________________________________________________________
<S>                               <C>           <C>         <C>
For the Year
  Total Interest Income     $19,079,621     $18,063,621     5.6%
  Total Interest Expense      8,810,334       8,694,963     1.3%
  Net Interest Income        10,269,287       9,368,658     9.6%
  Net Income                  3,084,811       2,767,632    11.5%

Per Share*
  Net Income (Basic and Assuming
     Dilution)                    $1.23           $1.09    12.8%
  Cash Dividends Paid             0.567           0.410    38.3%
  Stockholders' Equity             9.29            9.36    (0.7%)

Average Balances
  Net Loans                $169,667,000    $162,090,000     4.7%
  Investments and Other
     Earning Assets          81,384,000      67,672,000    20.3%
  Total Assets              263,075,000     241,639,000     8.9%
  Total Deposits            206,470,000     188,179,000     9.7%
  Stockholders' Equity       23,218,000      22,971,000     1.1%

Return on Average
   Assets                          1.17%           1.15%
   Stockholders' Equity           13.29%          12.05%

*Per Share information reflects the 5% stock dividend effective
on May 14, 1999.
</TABLE>
<PAGE>
<TABLE>
                      CONSOLIDATED SUMMARY OF OPERATIONS
<CAPTION>

(Dollars in thousands, except per share data)
                                  Years Ended December 31,
                       __________________________________________

                                1999         1998        1997
                             __________   __________   __________
<S>                             <C>           <C>         <C>
INCOME AND EXPENSE
Interest Income              $ 19,080     $ 18,064     $ 16,205
Interest Expense                8,811        8,695        7,550
                             __________   __________   __________
Net Interest Income            10,269        9,369        8,655
Provision for Loan Losses         214          325          390
                             __________   __________   __________
Net Interest Income
  after Provision for
  Loan Losses                  10,055        9,044        8,265
Other Operating Income          1,477        1,157          986
Other Operating Expenses        7,725        6,718        6,347
                             __________   __________   __________
Income before Income Taxes      3,807        3,483        2,904
Provision for Income Taxes        722          715          579
                             __________   __________   __________
Net Income for Year          $  3,085     $  2,768     $  2,325
                             ==========   ==========   ==========
PER SHARE *

Net Income (Basic and
  Assuming Dilution)         $   1.23     $   1.09     $   0.89
Cash Dividends Paid             0.567        0.410        0.335
Average Shares Outstanding
 (Basic)                    2,507,925    2,541,581    2,613,873

FINANCIAL RATIOS

Return on Average Assets         1.17%        1.15%        1.09%
Return on Average
  Stockholders' Equity          13.29        12.05        10.17
Dividend Payout Ratio           46.18        37.74        37.68
Average Stockholders' Equity
 to Average Assets               8.83         9.51        10.68

AVERAGE BALANCE SHEET

Net Loans                   $ 169,667    $ 162,090     $140,925
Investments                    79,078       63,461       57,551
Other Earning Assets            2,306        4,211        3,564
Total Assets                  263,075      241,639      213,986
Deposits                      206,470      188,179      168,814
Short-Term Borrowings           2,020          412        1,461
Long-Term Debt                 29,882       28,584       19,425
Stockholders' Equity           23,218       22,971       22,859

BALANCE SHEET AT YEAR-END

Net Loans                    $174,854     $163,796     $152,699
Investments                    80,826       75,756       64,737
Other Earning Assets                0        7,795        2,835
Total Assets                  269,579      261,368      233,243
Deposits                      209,181      205,544      180,135
Short-Term Borrowing            9,100          187          900
Long-Term Debt                 27,035       30,624       27,329
Stockholders' Equity           23,063       23,697       23,756

* Per Share information reflects two-for-one stock split of the
Union National's common stock effective on June 1, 1995, the 5%
stock dividend effective on May 15, 1997, and the 5% stock
dividend effective on May 14, 1999.

<CAPTION>
                                  Years Ended December 31,
                       __________________________________________

                                1996         1995
                             __________   __________
<S>                              <C>         <C>
INCOME AND EXPENSE
Interest Income              $ 14,218     $ 12,773
Interest Expense                6,380        5,175
                             __________   __________

Net Interest Income             7,838        7,598
Provision for Loan Losses         150          159
                             __________   __________

Net Interest Income
  after Provision for
  Loan Losses                   7,688        7,439
Other Operating Income            811          753
Other Operating Expenses        5,951        5,479
                             __________   __________
Income before Income Taxes      2,548        2,713
Provision for Income Taxes        356          614
                             __________   __________
Net Income for Year          $  2,192     $  2,099
                             ==========   ==========
PER SHARE *

Net Income (Basic and
  Assuming Dilution)         $   0.84     $   0.80
Cash Dividends Paid             0.290        0.213
Average Shares Outstanding
 (Basic)                    2,618,648    2,626,626

FINANCIAL RATIOS

Return on Average Assets         1.17%        1.28%
Return on Average
  Stockholders' Equity          10.24        10.42
Dividend Payout Ratio           34.68        26.68
Average Stockholders' Equity
 to Average Assets              11.40        12.24

AVERAGE BALANCE SHEET

Net Loans                   $ 124,483     $115,026
Investments                    48,707       38,320
Other Earning Assets            2,576          880
Total Assets                  187,814      164,631
Deposits                      154,474      139,896
Short-Term Borrowings           2,009        1,197
Long-Term Debt                  8,411        2,320
Stockholders' Equity           21,411       20,149

BALANCE SHEET AT YEAR-END

Net Loans                    $130,391     $120,417
Investments                    54,890       39,437
Other Earning Assets            4,790            0
Total Assets                  203,472      174,657
Deposits                      164,513      143,368
Short-Term Borrowing            2,989        3,399
Long-Term Debt                 12,676        6,270
Stockholders' Equity           22,223       20,769

* Per Share information reflects two-for-one stock split of Union
National's common stock effective on June 1, 1995, the 5% stock
dividend effective on May 15, 1997, and the 5% stock dividend
effective on May 14, 1999.
</TABLE>
<PAGE>

<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
                                     December 31,    December 31,
                                        1999            1998
                                    ____________     ____________
<S>                                     <C>              <C>
ASSETS
Cash and Due from Banks            $  7,004,064    $   7,341,240
Federal Funds Sold                            0        7,795,000
Investment Securities Held
 to Maturity (Market Value:
 1999-$27,620,119;1998-$24,523,740)  28,712,219       24,079,161
Investment Securities Available
 for Sale                            52,114,270       51,676,350
Loans(Net of Unearned Income)       174,854,230      163,795,702
 Less: Allowance for Loan Losses     (1,782,747)      (1,742,620)
                                    ____________     ____________
    Total Net Loans                 173,071,483      162,053,082

Premises and Equipment - Net          5,190,860        5,247,349
Accrued Interest Receivable           1,715,645        1,560,703
Deferred Income Taxes                   812,781          218,708
Investments in Limited Partnerships     823,158          882,161
Other Assets                            134,936          513,759
                                    ____________     ____________
    TOTAL ASSETS                   $269,579,416     $261,367,513
                                    ============     ============
LIABILITIES
Deposits:
 Noninterest-Bearing               $ 21,889,233     $ 20,606,222
 Interest-Bearing                   187,291,986      184,937,546
                                    ____________     ____________
    Total Deposits                  209,181,219      205,543,768

Short-Term Borrowing                  9,100,000          186,691
Long-Term Debt                       27,035,360       30,623,660
Accrued Interest Payable                962,677        1,060,439
Other Liabilities                       236,706          256,218
                                    ____________     ____________
    TOTAL LIABILITIES               246,515,962      237,670,776

STOCKHOLDERS' EQUITY
Common Stock (Par Value $.25)           656,734          627,121
Shares: Authorized - 20,000,000; Issued -
  2,626,935 in 1999 (2,508,484 in 1998);
  Outstanding - 2,483,072 in 1999 (2,410,820
  in 1998)
Surplus                               7,249,699        4,793,416
Retained Earnings                    19,322,781       20,183,938
Accumulated Other Comprehensive
  Income -                           (1,037,597)         241,515
Less: Treasury Stock -
  143,863 shares in 1999
  (97,664 in 1998), at cost          (3,128,163)      (2,149,253)
                                    ____________     ____________
  TOTAL STOCKHOLDERS' EQUITY         23,063,454       23,696,737
                                    ____________     ____________
  TOTAL LIABILITIES and
     STOCKHOLDERS' EQUITY          $269,579,416     $261,367,513
                                    ============     ============

See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
                                      Years Ended December 31,
                                    _____________________________
                                          1999            1998
                                    _______________   ___________
<S>                                       <C>              <C>
INTEREST INCOME
Interest and Fees on Loans          $ 14,365,563    $ 14,048,363
Investment Securities:
 Taxable                               3,336,797       2,796,098
 Exempt from Federal Taxes             1,267,659         995,140
Deposits in Banks                          1,750           1,796
Federal Funds Sold                       107,852         222,224
                                    _______________   ___________
 Total Interest Income                19,079,621      18,063,621

INTEREST EXPENSE
Deposits                               7,070,267       7,051,458
Short-Term Borrowing                     112,643          22,806
Long-Term Debt                         1,627,424       1,620,699
                                    _______________   ___________
 Total Interest Expense                8,810,334       8,694,963
                                    _______________   ___________
 Net Interest Income                  10,269,287       9,368,658

PROVISION for LOAN LOSSES                214,150         325,350
                                    _______________   ___________
Net Interest Income after Provision
  for Loan Losses                     10,055,137       9,043,308

OTHER OPERATING INCOME
Trust Income                             142,252         119,600
Service Charges on Deposit Accounts      601,337         471,126
Other Service Charges, Commissions, Fees 632,220         488,882
Investment Securities Gains/(Losses)           0          (6,716)
Other Income                             101,514          84,526
                                    _______________   ___________
  Total Other Operating Income         1,477,323       1,157,418

OTHER OPERATING EXPENSES
Salaries and Wages                     3,588,327       3,145,664
Retirement Plan and Other
  Employee Benefits                      798,967         633,011
Net Occupancy Expense                    600,119         556,608
Furniture and Equipment Expense          392,654         399,058
FDIC Insurance Assessment                 23,502          21,737
Other Operating Expenses               2,321,884       1,962,103
                                    _______________    __________
  Total Other Operating Expenses       7,725,453       6,718,181
                                    _______________    __________
  Income before Income Taxes           3,807,007       3,482,545

PROVISION for INCOME TAXES               722,196         714,913
                                    _______________    __________
  NET INCOME for YEAR                $ 3,084,811     $ 2,767,632
                                    ===============    ==========
PER SHARE INFORMATION*
Net Income for Year (Basic and Assuming
   Dilution)                        $       1.23    $       1.09
Cash Dividends                      $      0.567    $      0.410

*Per share information reflects the 5% stock dividend effective
on May 14, 1999.
See notes to consolidated financial statements.

<CAPTION>
                                      Years Ended December 31,
                                    _____________________________
                                          1997
                                    _______________
<S>                                       <C>
INTEREST INCOME
Interest and Fees on Loans          $ 12,483,471
Investment Securities:
 Taxable                               2,659,213
 Exempt from Federal Taxes               868,149
Deposits in Banks                          3,328
Federal Funds Sold                       191,531
                                    ______________
 Total Interest Income                16,205,692
INTEREST EXPENSE
Deposits                               6,354,343
Short-Term Borrowing                      87,259
Long-Term Debt                         1,108,307
                                    ______________
 Total Interest Expense                7,549,909
                                    ______________
 Net Interest Income                   8,655,783

PROVISION for LOAN LOSSES                390,250
                                    _______________
Net Interest Income after Provision
  for Loan Losses                      8,265,533

OTHER OPERATING INCOME
Trust Income                             134,645
Service Charges on Deposit Accounts      374,697
Other Service Charges, Commissions, Fees 405,007
Investment Securities Gains/(Losses)       2,063
Other Income                              69,692
                                    _______________
  Total Other Operating Income           986,104

OTHER OPERATING EXPENSES
Salaries and Wages                     2,783,105
Retirement Plan and Other
  Employee Benefits                      857,410
Net Occupancy Expense                    562,661
Furniture and Equipment Expense          411,484
FDIC Insurance Assessment                 20,109
Other Operating Expenses               1,712,285
                                    _______________
  Total Other Operating Expenses       6,347,054
                                    _______________
Income before Income Taxes             2,904,583

PROVISION for INCOME TAXES               579,096
                                    _______________
  NET INCOME for YEAR               $  2,325,487
                                    ===============
PER SHARE INFORMATION*
Net Income for Year (Basic and Assuming
   Dilution)                        $       0.89
Cash Dividends                      $      0.335

*Per share information reflects the 5% stock dividend effective
on May 14, 1000.
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
                                       Years Ended December 31,
                                   ______________________________
                                          1999            1998
                                   ______________     ___________
<S>                                        <C>             <C>
CASH FLOWS from OPERATING ACTIVITIES
Net Income                            $ 3,084,811    $ 2,767,632
Adjustments to Reconcile Net Income to Net
  Cash Provided by Operating Activities:
   Depreciation and Amortization          442,869        464,567
   Provision for Loan Losses              214,150        325,350
   Investment Securities (Gains)/Losses         0          6,716
   Provision for Deferred Income Taxes     64,864        (37,317)
   (Increase)/Decrease in Accrued
     Interest Receivable                 (154,942)      (114,936)
   (Increase)/Decrease in Other Assets    417,861       (356,821)
   Increase/(Decrease) in Other
     Liabilities                         (117,274)       193,434
                                       ____________   ___________
Net Cash Provided by
    Operating Activities                3,952,339      3,248,625

CASH FLOWS from INVESTING ACTIVITIES
Net(Increase)/Decrease in
 Federal Funds Sold                     7,795,000     (4,960,000)
Proceeds from Sales of
 Available for Sale Securities                  0      4,935,869
Proceeds from Maturities of
 Available for Sale Securities         18,911,344     38,352,132
Proceeds from Maturities of
 Held to Maturity Securities            2,800,317      1,068,938
Purchases of Available for Sale
 Securities                           (21,287,313)   (49,184,910)
Purchases of Held to Maturity
 Securities                            (7,433,375)    (6,278,251)
Loans Made to Customers, Net of
 Principal Collected on Loans         (11,232,551)   (11,271,946)
Purchases of Property and Equipment      (366,415)      (275,461)
                                       ____________   ___________
    Net Cash (Used in)Investing
       Activities                     (10,812,993)   (27,613,629)
CASH FLOWS from FINANCING ACTIVITIES
Net Increase/(Decrease)in Demand Deposits
 and Savings Accounts                  (3,956,090)    19,559,864
Net Increase in Certificates
 of Deposits                            7,593,541      5,849,031
Net Increase/(Decrease) in Short-Term
 Borrowing                              8,913,309       (713,309)
Proceeds from Issuance of Long-Term
 Debt                                   2,586,700     10,455,600
Payment of Long-Term Debt              (6,175,000)    (7,161,000)
Acquisition of Treasury Stock          (1,352,675)    (1,995,379)
Issuance of Common and Treasury Stock     338,190        266,265
Cash Dividends Paid                    (1,424,497)    (1,044,423)
                                     ____________     ___________
  Net Cash Provided by
   Financing Activities                 6,523,478     25,216,649
                                     ____________     ___________
Net Increase/(Decrease) in Cash
 and Cash Equivalents                    (337,176)       851,645

CASH and CASH EQUIVALENTS-
Beginning of Year                       7,341,240      6,489,595
                                     ___________     ____________
CASH and CASH EQUIVALENTS-
End of Year                           $ 7,004,064    $ 7,341,240
                                     ============   =============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash Payments for:
Interest Paid to Depositors           $ 7,072,155    $ 7,016,409
Interest Paid - Other                   1,835,941      1,626,477
Income Taxes                              761,231        726,748

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
 ACTIVITIES
Retirement of Treasury Stock (17,000 shares
  in 1999, 13,000 shares in 1998,
  and 12,000 shares in 1997)         $    373,765   $    288,035

See notes to consolidated financial statements.

<CAPTION>
                                       Years Ended December 31,
                                   ______________________________
                                           1997
                                     ______________
<S>                                        <C>

CASH FLOWS from OPERATING ACTIVITIES
Net Income                            $ 2,325,487
Adjustments to Reconcile Net Income to Net
  Cash Provided by Operating Activities:
  Depreciation and Amortization           506,353
  Provision for Loan Losses               390,250
  Investment Securities (Gains)/Losses     (2,063)
  Provision for Deferred Income Taxes      (1,302)
  (Increase)/Decrease in Accrued
    Interest Receivable                  (133,324)
  (Increase)/Decrease in Other Assets     292,578
  Increase/(Decrease) in Other
    Liabilities                            52,625
                                     ______________
Net Cash Provided by
    Operating Activities                3,430,604

CASH FLOWS from INVESTING ACTIVITIES
Net(Increase)/Decrease in
 Federal Funds Sold                     1,955,000
Proceeds from Sales of
 Available for Sale Securities          5,548,285
Proceeds from Maturities of
 Available for Sale Securities         15,337,934
Proceeds from Maturities of
 Held to Maturity Securities            2,564,118
Purchases of Available for Sale
 Securities                           (28,694,305)
Purchases of Held to Maturity
 Securities                            (4,310,406)
Loans Made to Customers, Net of
 Principal Collected on Loans         (22,476,796)
Purchases of Property and Equipment      (139,226)
                                     _____________
    Net Cash (Used in)Investing
       Activities                     (30,215,396)

CASH FLOWS from FINANCING ACTIVITIES
Net Increase/(Decrease)in Demand Deposits
 and Savings Accounts                   7,532,740
Net Increase in Certificates
 of Deposits                            8,088,803
Net Increase/(Decrease) in Short-Term
 Borrowing                             (2,089,414)
Proceeds from Issuance of Long-Term
 Debt                                  14,793,060
Payment of Long-Term Debt                (140,000)
Acquisition of Treasury Stock            (306,746)
Issuance of Common and Treasury Stock     198,827
Cash Dividends Paid                      (876,280)
                                   ______________
  Net Cash Provided by
   Financing Activities                27,200,990
                                   ______________
Net Increase/(Decrease) in Cash
 and Cash Equivalents                     416,198

CASH and CASH EQUIVALENTS-
Beginning of Year                       6,073,397
                                   ______________
CASH and CASH EQUIVALENTS-
End of Year                           $ 6,489,595
                                   ==============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash Payments for:
Interest Paid to Depositors           $ 6,291,787
Interest Paid - Other                   1,132,613
Income Taxes                              616,710

SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Retirement of Treasury Stock (17,000 shares
  in 1999, 13,000 shares in 1998,
  and 12,000 shares in 1997)          $   227,542

See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<CAPTION>
                               Common                  Retained
                               Stock       Surplus     Earnings
                             __________  __________   __________
<S>                               <C>         <C>         <C>
BALANCE, December 31, 1996    $ 598,541  $1,967,838  $19,916,165
Comprehensive Income:
 Net Income                                            2,325,487
 Unrealized Holding Gains/(Losses) on
   Investment Securities Available for
   Sale Arising During the Year, Net of
   Tax of $99,451.
  Reclassification Adjustment for (Gains)/Losses
   Included in Net Income,
   Net of Tax $701
         Total Comprehensive Income
 Acquisition of Treasury Stock
 Issuance of Common Stock under
  Dividend Reinvestment and
  Stock Purchase Plan             1,970     182,652
 Issuance of Common Stock under
  Employee Plans                    181      14,024
 Issuance of Common Stock under
  5% Common
    Stock Dividend               29,640   2,875,003   (2,904,643)
 Retirement of Treasury Stock
    (12,000 shares)              (3,000)   (224,542)
 Cash Dividends ($.335 per share)                       (876,280)
                             __________  __________   __________
BALANCE, December 31, 1997      672,332   4,814,975   18,460,729
Comprehensive Income:
 Net Income                                            2,767,632
 Unrealized Holding Gains/(Losses) on
   Investment Securities Available for
   Sale Arising During the Year, Net of
   Tax Benefit of $29,694
 Reclassification Adjustment for (Gains)/Losses
   Included in Net Income,
   Net of Tax Benefit of $2,283
         Total Comprehensive Income
 Acquisition of Treasury Stock
 Issuance of Common Stock Under
   Dividend Reinvestment and Stock
   Purchase Plan                  2,925     254,892
 Issuance of Common Stock under
   Employee Plans                   114       8,334
 Retirement of Treasury Stock
   (13,000 shares)               (3,250)   (284,785)
 Cash Dividends ($.410 per share)                     (1,044,423)
                                                     ____________
 Balance, December 31, 1998     627,121   4,793,416   20,183,938

  Comprehensive Income:
 Net Income                                            3,084,811
 Unrealized Holding Gains/(Losses) on
   Investment Securities Available for
   Sale Arising During the Year, Net of
   Tax Benefit of $658,936
     Total Comprehensive Income
 Acquisition of Treasury Stock
 Issuance of Common Stock under
   Dividend Reinvestment and Stock
   Purchase Plan                  3,735     320,682
 Issuance of Common Stock under
   Employee Plans                   200      13,573
 Issuance of Common Stock under
   5% Common Stock Dividend      29,928   2,491,543   (2,521,471)
 Retirement of Treasury Stock
    (17,000 shares)              (4,250)   (369,515)
 Cash Dividends ($.567 per share)                     (1,424,497)
                             __________  __________   __________
BALANCE, December 31, 1999     $656,734  $7,249,699  $19,322,781
                             ==========  ==========   ==========
See notes to consolidated financial statements.

<CAPTION>
                         Accumulated Other
                          Comprehensive    Treasury
                              Income        Stock         Total
                          _____________   _________   ___________
<S>                             <C>           <C>          <C>
BALANCE, December 31, 1996     $103,033  $ (362,705) $22,222,872
                                                     ____________
Comprehensive Income:
 Net Income                                            2,325,487
 Unrealized Holding Gains/(Losses) on
   Investment Securities Available for
   Sale Arising During the Year, Net of
   Tax of $99,451               193,052                  193,052
 Reclassification Adjustment for (Gains)/Losses
   Included in Net Income,
   Net of Tax $701               (1,362)                  (1,362)
                                                      ___________
         Total Comprehensive Income                    2,517,177
                                                      ___________
 Acquisition of Treasury Stock             (306,746)    (306,746)
 Issuance of Common Stock under
  Dividend Reinvestment and Stock
  Purchase Plan                                          184,622
 Issuance of Common Stock under
  Employee Plans                                          14,205
 Issuance of Common Stock under
  5% Common Stock Dividend                                     0
 Retirement of Treasury Stock
    (12,000 shares)                         227,542            0
 Cash Dividends ($.335 per share)                       (876,280)
                             __________  __________   __________
BALANCE, December 31, 1997      294,723    (441,909)  23,755,850
                                                      ___________
 Comprehensive Income:
 Net Income                                            2,767,632
 Unrealized Holding Gains/(Losses) on
   Investment Securities Available for
   Sale Arising During the Year, Net of
   Tax Benefit of $29,694       (57,641)                 (57,641)
  Reclassification Adjustment for (Gains)/Losses
   Included in Net Income,
   Net of Tax Benefit of $2,283   4,433                    4,433
                                                      ___________
         Total Comprehensive Income                    2,714,424
                                                      ___________
 Acquisition of Treasury Stock           (1,995,379)  (1,995,379)
 Issuance of Common Stock under
   Dividend Reinvestment and Stock
   Purchase Plan                                         257,817
 Issuance of Common Stock under
   Employee Plans                                          8,448
 Retirement of Treasury Stock
  (13,000 shares)                           288,035            0
 Cash Dividends ($.410 per share)                     (1,044,423)
                              __________  __________  ___________
BALANCE, December 31, 1998      241,515  (2,149,253)  23,696,737
                                                      ___________
Comprehensive Income:
 Net Income                                            3,084,811
 Unrealized Holding Gains/(Losses) on
   Investment Securities Available for
   Sale Arising During the Year, Net of
   Tax Benefit of $658,936   (1,279,112)              (1,279,112)
                                                      ___________
         Total Comprehensive Income                    1,805,699
                                                      ___________
 Acquisition of Treasury Stock           (1,352,675)  (1,352,675)
 Issuance of Common Stock under
   Dividend Reinvestment and Stock
   Purchase Plan                                         324,417
 Issuance of Common Stock under
   Employee Plans                                         13,773
 Issuance of Common Stock under
   5% Common Stock Dividend                                    0
 Retirement of Treasury Stock
    (17,000 shares)                         373,765            0
 Cash Dividends ($.567 per share)                     (1,424,497)
                            ___________   _________   __________
BALANCE, December 31, 1998 $(1,037,597) $(3,128,163) $23,063,454
                            ==========    =========   ==========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
  The accounting and reporting policies of Union National
Financial Corporation (Union National) and its subsidiary, Union
National Community Bank (the Bank), conform with generally
accepted accounting principles and prevailing practices within
the banking industry. Union National and the Bank provide banking
and related services to residents and businesses primarily in
northwestern Lancaster County, Pennsylvania.

Basis of Presentation
  The consolidated financial statements include the accounts of
Union National and the Bank. All material intercompany  accounts
and transactions have been eliminated in the consolidation.

Use of Estimates
  The process of preparing financial statements in conformity
with generally accepted accounting principles requires the use of
estimates and assumptions regarding certain types of assets,
liabilities, revenues and expenses. Accordingly, actual results
may differ from estimated amounts.

Investment Securities
  Investment securities include both debt securities and equity
securities. Union National has segregated its investment
securities into two categories: those "held to maturity" and
those "available for sale."
  Securities classified as held to maturity are those debt
securities Union National has both the intent and ability to hold
to maturity regardless of changes in market conditions, liquidity
needs or general economic conditions. These securities are
carried at cost adjusted for amortization of premiums or
accretion of discounts, computed by the interest method.
  Securities classified as available for sale are those debt
securities that Union National intends to hold for an indefinite
period of time, but not necessarily to maturity, and all equity
securities. Any decision to sell a security classified as
available for sale would be based on various factors, including
significant movements in interest rates, changes in maturity mix
of Union National's assets and liabilities, liquidity needs,
regulatory capital considerations and other similar factors.
Securities available for sale are carried at fair value with
premiums and discounts amortized or accreted to interest income
using the interest method. Changes in unrealized gains or losses
for available for sale securities, net of taxes, are recorded as
other comprehensive income, a component of stockholders' equity.
  When a determination is made that a market value decline below
cost on a marketable equity or debt security is other than
temporary, the cost basis of the individual security is written
down to the market value. The amount of the write-down is charged
to expense. Realized security gains and losses are computed using
the specific identification method.

Loans
  Loans generally are stated at their outstanding unpaid
principal balances, net of any deferred fees or costs on
originated loans. Interest income is accrued on the unpaid
principal balance. Loan origination fees, net of certain direct
origination costs, are deferred and recognized as an adjustment
to interest income generally over the contractual life of the
related loans.

  Impaired Loans   Union National determines a loan impaired
when, based on current information and events, it is probable
that all interest and principal payments due according to the
contractual terms of the loan agreement will not be collected.
Larger groups of small-balance loans, such as residential
mortgages and consumer installment loans, are collectively
evaluated for impairment.
  An insignificant delay or shortfall in the amounts of payments
would not cause a loan to be rendered impaired. Union National
determines a "delay" and "shortfall" insignificant when the loan
is generally under 90 days past due or when the loan is
sufficiently secured so that all amounts due including late
charges and costs of collection would be expected to be
collected.
  Interest income is recognized on impaired loans, excluding
loans that are classified as nonaccrual, as the increase in the
net carrying amount attributable to the passage of time.

  Allowance for Loan Losses   The allowance for loan losses is
established through provisions for loan losses charged against
income. Loans, including impaired loans, deemed to be
uncollectible are charged against the allowance for loan losses,
and subsequent recoveries, if any, are credited to the allowance.
  The allowance for loan losses is maintained at a level believed
adequate by Management to absorb estimated probable loan losses.
Management's periodic evaluation of the adequacy of the allowance
is based on Union National's past loan loss experience, known and
inherent risks in the portfolio, adverse situations that may
affect the borrower's ability to repay (including the timing of
future payments), the estimated value of any underlying
collateral, composition of the loan portfolio, current economic
conditions and other relevant factors. This evaluation is
inherently subjective as it requires material estimates including
the amounts and timing of future cash flows expected to be
received on impaired loans that may be susceptible to significant
change.
  Specifically, Union National measures impairment based on the
present value of expected future cash flows discounted at the
loan's effective interest rate or the fair value of the
collateral for certain collateral dependent loans where
foreclosure is probable. If the measure of the impaired loan is
less than the recorded investment in the loan, the allowance for
loan losses is credited and the provision for loan losses is
charged. Subsequent measures in the impairment of the loan will
increase or decrease the allowance for loan losses. However, the
net carrying amount of the loan will not exceed the recorded
investment in the loan.

  Nonaccrual Loans   Generally, a loan (including an impaired
loan as discussed above) is classified as nonaccrual and the
accrual of interest on such loan is discontinued when the
contractual payment of principal or interest has become 90 days
past due or Management has serious doubts about further
collectibility of principal or interest. A loan may remain on
accrual status if it is in the process of collection and is
either guaranteed or well secured. When a loan is placed on
nonaccrual status, unpaid interest previously credited to
interest income, that is now deemed uncollectible, is reversed.
Interest received on nonaccrual loans is either applied against
principal or reported as interest income, according to
Management's judgment as to the collectibility of principal.
Generally, loans are restored to accrual status when both
principal and interest are brought current, the loan has
performed in accordance with the contractual terms for a
reasonable period of time and the ultimate collectibility of the
total contractual principal and interest is no longer in doubt.
  Impaired loans that are classified as nonaccrual will have a
net carrying amount that will not exceed the individual loan's
measure of impairment as noted under the Section on Allowance for
Loan Losses.

  Other Real Estate Owned   Other real estate owned includes
assets acquired through foreclosure and loans identified as in-
substance foreclosures. A loan is classified as in-substance
foreclosure when Union National has taken possession of the
collateral regardless of whether formal foreclosure proceedings
have taken place. Other real estate owned is valued at the lower
of the loan balance at the time of foreclosure or estimated fair
market value, net of selling costs, and is included in other
assets. Gains and losses resulting from the sale or write-down of
other real estate owned and income and expenses related to the
operation of other real estate owned are recorded in other
expenses. Other real estate owned amounted to $20,000 at December
31, 1999, and $379,150 at December 31, 1998.

Premises and Equipment
  Premises and equipment are stated at cost less accumulated
depreciation, which is computed over the assets' estimated useful
lives on both the accelerated and the straight-line methods.
Leasehold improvements are stated at cost less accumulated
amortization, which is computed over the term of the lease
including renewal options on the straight-line method. Gains and
losses on premises and equipment are recognized upon disposal of
the asset. Charges for maintenance and repairs are charged to
expense as incurred.

Investments in Limited Partnerships
  Union National has investments in two limited partnerships
providing low to moderate income housing in the community of
Mount Joy. Union National's 18.8% investment of $478,000 is
carried on the cost method, which is being reduced to the
investment's currently estimated residual value over the
remaining period that tax credits are being realized, and Union
National's 49.995% investment of $632,500 is carried on the
equity method.

Advertising Costs
  Advertising costs are charged to expense when incurred.
Advertising expense for the years ended December 31, 1999, 1998
and 1997 amounted to $157,173, $76,122 and $80,062, respectively.

Income Taxes
  The provision for income taxes is based upon the results of
operations, adjusted principally for tax-exempt income.
Accounting for income taxes is under the asset/liability method.
Under this method, the deferred tax asset is recorded based on
the difference between the tax basis of assets and liabilities
and their carrying amounts for financial reporting purposes. The
deferred tax asset is measured by the enacted tax rates which
will be in effect when these differences reverse. Valuation
allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized in the future.
Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax
assets and liabilities.

<PAGE>

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Net Income per Share
  In February 1997, the Financial Accounting Standards Board
(FASB) issued Statement No. 128 (SFAS No. 128), "Earnings per
Share." This Statement establishes standards for computing and
presenting earnings per share. SFAS No. 128 replaces the
presentation of primary earnings per share with a dual
presentation of basic and diluted earnings per share. Basic
earnings per share excludes dilution and is computed by dividing
income available to common stockholders by the weighted average
number of common shares outstanding for the period. Diluted
earnings per share reflects the potential dilution that could
occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the
entity. See Note 13 - Stockholders' Equity for the computation of
basic and diluted earnings per share.
  All per share amounts and average shares outstanding reflected
in the accompanying statements were adjusted to give retroactive
effect to the 5% stock dividend effective on May 15, 1997, and
the 5% stock dividend effective on May 14, 1999.

Comprehensive Income
  Union National adopted SFAS No. 130, "Reporting Comprehensive
Income," as of January 1, 1998. Accounting principles generally
require that recognized revenue, expenses, gains and losses be
included in net income. However, certain changes in assets and
liabilities, such as unrealized gains and losses on investment
securities available for sale, are reported as a separate
component of the equity section of the balance sheet. Such items,
along with net income, are components of comprehensive income.
Union National reports comprehensive income and the components of
other comprehensive income in the Consolidated Statements of
Changes in Stockholders' Equity. Union National's only component
of other comprehensive income is changes in unrealized gains and
losses on investment securities available for sale. Changes in
the interest rate environment and other factors result in
fluctuations in the value of investment securities available for
sale. The adoption of SFAS No. 130 had no effect on Union
National's net income or stockholders' equity.

Segment Reporting
  In June 1997, the Financial Accounting Standards Board issued
Statement No. 131 (SFAS No. 131), "Disclosures about Segments of
an Enterprise and Related Information." This Statement
establishes standards for the way that public business
enterprises report information about operating segments in annual
financial statements and requires that those enterprises report
selected information about operating segments in interim
financial reports issued to shareholders. It also establishes
standards for related disclosures about products and services,
geographic areas and major customers. Union National has only one
operating segment which comprises the Bank's banking and
fiduciary activities.

Statements of Cash Flows
  For purposes of the statements of cash flows, Union National
considers cash and amounts due from banks to be cash equivalents.

Recent Accounting Standards Issued
  In June 1998, the Financial Accounting Standards Board issued
Statement No. 133 (SFAS No. 133), "Accounting for Derivative
Instruments and Hedging Activities." This Statement establishes
accounting and reporting standards for derivative instruments and
for hedging activities. In addition, the transition provisions of
this Statement allow Union National to reclassify held to
maturity securities to an available for sale classification.
Union National does not expect the provisions of this Statement
to have a material effect on the liquidity, results of operations
or capital resources of Union National. The effective date of
this pronouncement was delayed until the first quarter of 2001
through the issuance of SFAS No. 137, how-ever, earlier
application is encouraged.

<TABLE>
NOTE 2 - INVESTMENT SECURITIES
The amortized costs and fair values of investment securities are
as follows:
<CAPTION>
                                       At December 31, 1999
                                 ________________________________
                                                         Gross
                                   Amortized           Unrealized
                                      Cost               Gains
                                 _______________   ______________
<S>                                    <C>                <C>
SECURITIES HELD to MATURITY:
Obligations of State and
  Political Subdivisions        $  25,451,771       $     98,984
Corporate Securities                3,260,448                  0
                                 _______________   ______________
  TOTAL                         $  28,712,219       $     98,984
                                 ===============   ==============
SECURITIES AVAILABLE for SALE:
U.S. Treasury Securities        $   2,005,614       $          0
Obligations of Other U.S.
  Government Agencies              11,512,191                  0
Mortgage-Backed Securities         31,248,868             57,373
Corporate Securities                5,698,743                  0
Equity Securities                   3,220,971            179,366
                                 _______________   ______________
  TOTAL                         $  53,686,387       $    236,739
                                 ===============   ==============
<CAPTION>
                                       At December 31, 1999
                                 ________________________________
                                     Gross
                                  Unrealized             Fair
                                     Losses             Values
                                 _______________   ______________
<S>                                    <C>              <C>
SECURITIES HELD to MATURITY:
Obligations of State and
  Political Subdivisions        $  (1,113,797)     $  24,436,958
Corporate Securities                  (77,287)         3,183,161
                                 _______________   ______________
  TOTAL                         $  (1,191,084)      $ 27,620,119
                                 ===============   ==============
SECURITIES AVAILABLE for SALE:
U.S. Treasury Securities        $      (5,115)     $   2,000,499
Obligations of Other U.S.
  Government Agencies                (498,825)        11,013,366
Mortgage-Backed Securities         (1,196,009)        30,110,232
Corporate Securities                 (106,460)         5,592,283
Equity Securities                      (2,447)         3,397,890
                                 _______________   ______________
  TOTAL                         $  (1,808,856)      $ 52,114,270
                                 ===============   ==============

<CAPTION>
                                       At December 31, 1998
                                 ________________________________
                                                         Gross
                                   Amortized           Unrealized
                                      Cost               Gains
                                 _______________   ______________
<S>                                    <C>                <C>
SECURITIES HELD to MATURITY:
Obligations of State and
  Political Subdivisions        $ 21,805,749       $    471,358
Corporate Securities               2,273,412             16,997
                                _______________   ______________
 TOTAL                         $  24,079,161       $    488,355
                                ===============   ==============
SECURITIES AVAILABLE for SALE:
U.S. Treasury Securities        $  3,522,874       $     37,441
Obligations of Other U.S.
  Government Agencies             14,143,678             81,071
Mortgage-Backed Securities        29,019,819             68,220
Corporate Securities               1,956,885              2,451
Equity Securities                  2,667,162            288,579
                                _______________   ______________
 TOTAL                         $  51,310,418       $    477,762
                                ===============   ==============
<CAPTION>
                                       At December 31, 1998
                                 ________________________________
                                     Gross
                                  Unrealized             Fair
                                     Losses             Values
                                 _______________   ______________
<S>                                    <C>               <C>
SECURITIES HELD to MATURITY:
Obligations of State and
  Political Subdivisions        $     (42,980)     $ 22,234,127
Corporate Securities                     (796)        2,289,613
                                _______________    _____________
TOTAL                           $     (43,776)     $ 24,523,740
                                ===============   ==============
SECURITIES AVAILABLE for SALE:
U.S. Treasury Securities        $           0      $  3,560,315
Obligations of Other U.S.
  Government Agencies                  (4,096)       14,220,653
Mortgage-Backed Securities           (106,144)       28,981,895
Corporate Securities                   (1,590)        1,957,746
Equity Securities                           0         2,955,741
                                _______________   ______________
 TOTAL                         $     (111,830)     $ 51,676,350
                                ===============   ==============
</TABLE>
<PAGE>

NOTE 2 - INVESTMENT SECURITIES (continued)

  There are no significant concentrations of investments (greater
than 10% of stockholders' equity) in any individual security
issuer.
   Investment securities carried at $24,162,164 and $21,882,546
at December 31, 1999 and 1998, respectively, were pledged to
secure public, trust and government deposits.
  The amortized cost and fair value of debt securities at
December 31, 1999, by contractual maturity, are shown below.
Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
                                      Debt Securities
                            _____________________________________
                                      Held to Maturity
                            _____________________________________
                              Amortized               Fair
                                Cost                 Values
                            ______________      _________________
<S>                               <C>                 <C>
Due in One Year or Less      $    501,280      $     498,537
Due After One Year Through
 Five Years                     1,227,580          1,218,119
Due After Five Years Through
 Ten Years                      3,009,384          2,963,198
Due After Ten Years            23,973,975         22,940,265
                            ______________      _________________
                               28,712,219         27,620,119

Mortgage-Backed Securities              0                  0
                            ______________      _________________
                             $ 28,712,219      $  27,620,119

                            ==============      =================
<CAPTION>
                                      Debt Securities
                            _____________________________________
                                     Available for Sale
                            _____________________________________
                              Amortized               Fair
                                Cost                 Values
                            ______________      _______________
<S>                               <C>                <C>
Due in One Year or Less      $  2,005,614      $   2,000,499
Due After One Year Through
 Five Years                     7,916,068          7,801,012
Due After Five Years Through
 Ten Years                      7,295,552          6,862,117
Due After Ten Years             1,999,314          1,942,520
                            ______________      _______________
                               19,216,548         18,606,148

Mortgage-Backed Securities     31,248,868         30,110,232
                            ______________      _______________
                             $ 50,465,416      $  48,716,380
                            ==============      ================

</TABLE>
  There were no sales of available for sale securities during
1999. During 1998, proceeds from the sale of available for sale
securities were $4,935,869. During 1998, investment securities
gains/losses from these sales of securities include gross
realized gains of $12,897 and gross realized losses of $19,613.
The related income tax expense (benefit) for net investment
securities gains/losses amounted to $(2,283) during 1998. During
1997, proceeds for the sale of available for sale securities were
$5,548,285. Investment securities gains/losses from these sales
in 1997 included gross realized gains of $4,838 and gross
realized losses of $2,775. The related income tax expense for net
investment securities gains/losses for 1997 amounted to $701.
  Mortgage-backed securities, as disclosed in the two preceding
tables, are issued by U. S. Government agencies or corporations.

NOTE 3 - LOANS

  Loans, net of unamortized loan origination fees of $1,287,104
and $1,429,650 at December 31, 1999 and 1998, respectively, are
summarized as follows:
<TABLE>
<CAPTION>
                                   December 31,     December 31,
                                      1999              1998
                                   ____________    ______________
<S>                                    <C>               <C>
Real Estate-Mortgage:
  First and Second Residential     $103,263,624   $ 99,984,129
  Commercial and Industrial          34,332,379     29,967,643
  Construction and Land Development   5,942,944      6,585,711
  Agricultural                        6,355,519      5,727,829
Commercial and Industrial             7,570,523      6,041,639
Consumer                              8,724,764      9,310,576
Agricultural                          2,073,173      2,549,598
Political Subdivisions                5,388,317      2,842,255
Other                                 1,264,441        856,241
                                    ____________   ______________
   Total Loans                      174,915,684    163,865,621
Less:  Unearned Income                  (61,454)       (69,919)
                                    ____________   ______________
   Net Loans                       $174,854,230   $163,795,702
                                    ============   ==============
</TABLE>

  Union National grants commercial, residential and consumer
loans to customers primarily located in northwestern Lancaster
County. Although Union National has a diversified loan portfolio,
its debtors' ability to honor their contracts is influenced by
the region's economy.
  The recorded investment in loans that is considered to be
impaired was $1,040,719 and $70,099 at December 31, 1999 and
1998, respectively. This entire amount is included in the
nonaccrual loans reflected below. The measure of impairment is
based on the fair value of the collateral, since foreclosure is
probable. The related allowance for loan losses amounted to
$82,230 and $22,124 at December 31, 1999 and 1998, respectively.
The average recorded investment in impaired loans was $366,615,
$450,876 and $302,655 during the years ended December 31, 1999,
1998 and 1997, respectively. For the year ended December 31,
1999, Union National recognized interest income of $3,838 on
impaired loans. For the years ended December 31, 1998 and 1997,
Union National did not recognize interest income on impaired
loans.
  Nonperforming loans, which consist of loans 90 days or more
past due and nonaccruing loans, amounted to $1,474,569, $974,271
and $706,046 at December 31, 1999, 1998 and 1997, respectively.
  Loans to certain directors and principal officers of Union
National, including their immediate families and companies in
which they are principal owners (more than 10%), amounted to
$5,754,565 at December 31, 1999. Such loans were made in the
ordinary course of business at Union National's normal credit
terms, including interest rates and security, and do not
represent more than a normal risk of collection. Transactions on
these loans for the years ended December 31 are as follows:
<TABLE>
<CAPTION>
                                1999          1998        1997
                             __________    __________  __________
<S>                             <C>           <C>         <C>
Balance, Beginning of Year  $5,011,513    $4,878,930  $3,380,461
Additions                    5,898,611     2,327,784   4,336,242
Deductions                  (5,155,559)   (2,195,201) (2,837,773)
                             __________    __________  __________
Balance, End of Year        $5,754,565    $5,011,513  $4,878,930
                             ==========    ==========  ==========
</TABLE>
NOTE 4 - ALLOWANCE FOR LOAN LOSSES

An analysis of changes in the allowance for loan losses for the
years ended December 31 is as follows:
<TABLE>
<CAPTION>
                                 1999        1998         1997
                             __________    __________ ___________
<S>                             <C>            <C>         <C>
Balance, Beginning of Year   $1,742,620   $1,592,763  $1,371,245
Provision Charged to
    Operating Expense           214,150      325,350     390,250
Recoveries of Charged-Off Loans  48,915       60,964      31,254
Charged-Off Loans              (222,938)    (236,457)   (199,986)
                             __________    __________ ___________
Balance, End of Year         $1,782,747   $1,742,620  $1,592,763
                             ==========    ========== ===========

</TABLE>
<PAGE>
NOTE 5 - PREMISES AND EQUIPMENT

A summary of premises and equipment is as follows:
<TABLE>
<CAPTION>
                        Estimated     December 31,   December 31,
                      Useful Lives        1999            1998
                      _____________   ____________   ____________
<S>                        <C>             <C>           <C>
Land                                  $  437,519     $  411,593
Construction in Progress                 143,811              0
Land Improvements        20 years        495,390        499,927
Buildings and
  Improvements        15-50 years      5,110,764      5,115,889
Leasehold Improvements   20 years        278,207        266,120
Furniture, Fixtures and
   Equipment           5-20 years      3,526,058      3,333,247
                                      ____________   ____________
    Subtotal                           9,991,749      9,626,776
Less:  Accumulated Depreciation
        and Amortization              (4,800,889)    (4,379,427)
                                      ____________   ____________
Premises and Equipment - Net          $5,190,860     $5,247,349
                                      ============   ============
</TABLE>
Depreciation and amortization expense amounted to $422,904 in
1999, $442,976 in 1998, and $465,748 in 1997.

Total rental expense amounted to $61,951, $50,961, and $43,461
for the years ended December 31, 1999, 1998, and 1997,
respectively.

At December 31, 1999, the Corporation was obligated under
noncancelable operating leases for real estate with the future
minimum payments as follows:

<TABLE>
                              <S>               <C>
                             2000            $ 81,044
                             2001              79,656
                             2002              63,636
                             2003              59,616
                             2004              59,616
                             Thereafter        21,330
                                             ________
                                             $364,898
                                             ========
</TABLE>
NOTE 6 - SHORT-TERM BORROWINGS

Short-term borrowings and weighted average interest rates at
December 31, were as follows:

[CAPTION]
<TABLE>
                              1999                   1998
                     ___________________   __________________
                     Amount       Rate      Amount      Rate
                     ________   ________   ________   _______
<S>                    <C>        <C>        <C>        <C>
Treasury Tax and
 Loan Notes          $   900,000   4.54%    $ 186,691   4.11%
FHLB Fixed-Rate
 Advances              8,200,000   5.11             0      -
                     ___________            __________
Total                $ 9,100,000            $ 186,691
                     ===========           ===========
</TABLE>

  Under an agreement with the Federal Home Loan Bank of
Pittsburgh (FHLB), Union National has a line of credit available
in the amount of $15,000,000.  As of December 31, 1999 and 1998,
no balance was outstanding on this line of credit. All FHLB
advances are collateralized by a security agreement covering
qualifying mortgage loans and unpledged treasury, agency and
mortgage-backed securities which at December 31, 1999, had a
combined carrying value of $108,226,721. In addition, all FHLB
advances are secured by the FHLB capital stock owned by Union
National having a fair value of $3,011,500 and $2,469,700 at
December 31, 1999 and 1998, respectively. Under the Bank's
membership agreement with the FHLB, additional stock purchases
are required when total advances from the FHLB are increased.

NOTE 7 - LONG-TERM DEBT
A summary of long-term debt as of December 31 is as follows:
[CAPTION]
<TABLE>
                              1999                   1998
                     ___________________   __________________
                     Amount       Rate      Amount      Rate
                     ________   ________   ________   _______
<S>                    <C>        <C>        <C>        <C>
FHLB Fixed-Rate Advances
 Maturing:
  1999           $        0       - %  $ 1,675,000    5.18%
  2000            1,300,000     5.89     3,300,000    6.02
  2001              808,600     5.39       808,600    5.39
  2003            2,347,000     5.71     2,347,000    5.71
  2004            1,000,000     6.65             0       -
  2007            1,460,660     6.00     1,460,660    6.00
FHLB Adjustable-Rate Advances Maturing:
  2002            3,532,400     4.99     3,532,400    5.23
FHLB Floating-Rate Advance Maturing:
  2004            1,586,700     5.61             0       -
FHLB Convertible Fixed-Rate Advances Maturing:
  2002           10,000,000     5.65    12,500,000    5.62
  2008            5,000,000     4.70     5,000,000    4.70
                 ___________    ____    ___________   ____
  Total         $27,035,360     5.45%  $30,623,660    5.46%
                 ===========    ====    ===========   ====
</TABLE>

  The FHLB advances are collateralized by the security agreement
and FHLB capital stock described in Note 6. The FHLB's
convertible fixed-rate advances allow the FHLB the periodic
option to convert to a LIBOR adjustable-rate advance at the
three-month LIBOR plus .07% to .14%. Options to convert all of
the $15,000,000 in outstanding convertible advances commence in
2000. Upon the FHLB's conversion, the Bank has the option to
repay the respective advances in full. The FHLB's adjustable-rate
advances adjust annually at .06% to .07% above the interest rate
on the one-year treasury's constant maturity. The FHLB's
floating-rate advance reprices at 2.89% below prime.

NOTE 8 - PROFIT-SHARING PLAN

 Union National's subsidiary implemented a new 401(k) profit-
sharing plan effective January 1, 1999, covering substantially
all full-time employees. This plan allows employees to contribute
a portion of their salaries and wages to the plan. The Bank may
elect to make a discretionary contribution to the plan and may
also match a portion of employee-elected salary deferrals,
subject to a 6% maximum of their salaries and wages. For 1999,
the Bank elected to make a discretionary contribution of 5% of
eligible salaries and to match 50% of employee-elected salary
deferrals that do not exceed 6% of their salaries and wages.
Prior to the implementation of the new plan, the Bank maintained
a noncontributory profit-sharing plan with contributions
determined annually by the Board of Directors and costs funded as
accrued.
  The Bank's expense relative to its profit-sharing plans
amounted to $178,524 for the year ended December 31, 1999,
$125,156 for 1998 and $374,283 for 1997.

<PAGE>
NOTE 9 - INCOME TAXES

  Union National accounts for income taxes under the
asset/liability method. Under this method, the deferred tax asset
is recorded based on the difference between the tax basis of
assets and liabilities and their carrying amounts for financial
reporting purposes. The deferred tax asset is measured by the
enacted tax rates that will be in effect when these differences
reverse. Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be realized
in the future. Income tax expense is the tax payable or
refundable for the period, plus or minus the change during the
period in deferred tax assets and liabilities.

Deferred income taxes consists of the following components as of
December 31:
<TABLE>
<CAPTION>
                                          1999            1998
                                      ___________      __________
<S>                                        <C>              <C>
Deferred Tax Assets(Liabilities)
  Deferred Net Loan Fees                 $(92,220)      $ (7,284)
  Provision for Loan Losses               498,989        485,346
  Depreciation                           (154,234)      (147,036)
  Investment in Limited Partnerships      (20,000)       (24,334)
  Unrealized Loss/(Gain) on Investment
   Securities Available for Sale          534,520       (124,417)
  Amortization on Securities               55,740         52,020
  Other                                   (10,014)       (15,587)
                                      ___________      __________
Net Deferred Tax Asset                   $812,781       $218,708
                                      ===========      ==========

</TABLE>
Union National, as of December 31, 1999, has not established any
valuation allowance against deferred tax assets since these tax
benefits are realizable through carryback availability against
prior years' taxable income or the reversal of existing deferred
tax liabilities.

An analysis of the income tax expense included in the
consolidated statements of income for the years ended December 31
is as follows:
<TABLE>
<CAPTION>
                              1999          1998           1997
                           _________    __________     __________
<S>                          <C>           <C>             <C>
Taxes Currently Payable    $667,550       $748,043      $580,399
Deferred Income Taxes/(Benefit)
   Related to:
   Provision for
      Loan Losses           (13,643)       (50,951)      (68,430)
   Deferred Net Loan Fees    84,936         29,281        40,871
   Fixed Asset Depreciation   7,198         13,093        25,060
   Other - Net              (23,845)       (24,553)        1,196
                           _________    __________     __________
   Provision for Income
      Taxes                $722,196       $714,913      $579,096
                           =========    ==========     ==========
</TABLE>

The reasons for the difference between the Union National's
provision for income taxes and the amount computed by applying
the statutory federal income tax rate to income before income
taxes for the years ended December 31 are as follows:
<TABLE>
<CAPTION>

                                    1999              1998
                            __________________   ________________
                                Amount     %      Amount     %
                            ___________   ____   ________ _____
<S>                             <C>        <C>      <C>    <C>
Tax at Statutory
   Federal Income Tax Rate   $1,294,382   34.0  $1,184,065 34.0
(Reduction)/Increase in Tax
   Resulting From:
   Tax-Exempt Income           (444,792) (11.7)  (361,366)(10.4)
   Income Tax Credits          (118,229)  (3.1)  (118,229) (3.4)
   Other                         (9,165)   (.2)    10,443    .3
                            ___________   ____   ________ _____
Provision for Income Taxes    $ 722,196   19.0  $ 714,913  20.5
                            ===========   ====   ======== =====

<CAPTION>
                                    1997
                            __________________
                                Amount     %
                            ___________   ____
<S>                              <C>       <C>
Tax at Statutory
   Federal Income Tax Rate    $ 987,558   34.0
(Reduction)/Increase in Tax
   Resulting From:
   Tax-Exempt Income           (298,629) (10.3)
   Income Tax Credits          (113,672)  (3.9)
   Other                          3,839     .1
                            ___________   ____
Provision for Income Taxes    $ 579,096   19.9
                            ===========   ====
</TABLE>

NOTE 10 - COMMITMENTS AND CONTINGENT LIABILITIES

  The Bank is a party to financial instruments with off-balance
sheet risk in the normal course of business to meet the financing
needs of its customers. These financial instruments include
commitments to extend credit, standby letters of credit and
financial guarantees. Those instruments involve, to varying
degrees, elements of credit risk and interest rate risk in excess
of the amount recognized in the consolidated balance sheets. The
contract amounts of those instruments reflect the exposure to
credit loss in the event of nonperformance by the other party to
the financial instrument.
<TABLE>
<CAPTION>
                                   December 31,   December 31,
                                        1999          1998
                                  ______________   ____________
<S>                                     <C>             <C>
Financial Instruments whose
  Contract Amounts Represent
  Credit Risk:
   Commitments to Extend Credit $ 7,892,090     $ 7,933,093
  Unused Portion of Home Equity and
  Overdraft Lines                 9,838,149       7,305,673
   Other Unused Commitments, Principally
  Commercial Lines of Credit      9,481,749      12,574,835
   Standby Letters of Credit and Financial
  Guarantees Written              2,018,184       1,990,759
</TABLE>
  Commitments to extend credit are agreements to lend to a
customer as long as there is no violation of any condition
established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require
payment of a fee. Certain commitments may expire without being
drawn upon and, therefore, future cash may not be required. The
Bank evaluates each customer's creditworthiness on a case-by-case
basis. The Bank generally requires collateral or other security
to support financial instruments with credit risk.
  Standby letters of credit and financial guarantees written are
conditional commitments issued by the Bank to guarantee the
performance  of a customer to a third party. Those guarantees are
primarily issued to support public and private borrowing
arrangements. Most guarantees are less than two years. The credit
risk involved in issuing letters of credit is essentially the
same as that involved in extending loan advances to customers.
  With respect to derivative financial instruments, Union
National does not currently engage in the use of futures,
forward, swap or option contracts that are typically defined as
derivatives according to SFAS No. 119, "Disclosure about
Derivative Financial Instruments and Fair Value of Financial
Instruments" (SFAS No. 119). SFAS No. 119 defines fixed-rate loan
commitments, variable-rate loan commitments and other variable-
rate financial instruments as derivatives for purposes of this
Statement. Those financial instruments shown in the previous
table would represent the only derivatives as defined by SFAS No.
119 currently held by Union National. See Note 15 for the
estimated fair value and related valuation assumptions of these
financial instruments.

<PAGE>
NOTE 11 - TIME DEPOSITS

At December 31, 1999, the scheduled maturities of certificates of
deposit are as follows:
<TABLE>
                        <S>             <C>
                        2000       $81,816,191
                        2001        18,194,153
                        2002         3,976,890
                        2003         2,838,444
                        2004           824,879
                                  _____________
                                  $107,650,557
                                  =============
</TABLE>

  Certificates of deposit in denominations of $100,000 or more
amounted to $23,885,233 and $16,349,539 at December 31, 1999 and
1998, respectively. Interest expense on certificates of deposit
in denominations of $100,000 or more amounted to $1,061,767,
$890,193 and $958,253 for the years ended December 31, 1999, 1998
and 1997, respectively.
NOTE 12 - REGULATORY RESTRICTIONS
  The Bank is required to maintain reserves, in the form of cash
and balances with the Federal Reserve Bank, against their deposit
liabilities. The average amount of required reserves during 1999
was approximately $1,785,000.
  Union National's Bank subsidiary is subject to certain
restrictions in connection with the payment of dividends. The
National Banking Laws require the approval of the Comptroller of
the Currency if the total of all dividends declared by a national
bank in any calendar year exceeds the net profits of the bank (as
defined) for that year combined with its retained net profits for
the preceding two calendar years. Under this formula, the Bank
may declare dividends to its parent Corporation in 2000 of
approximately $818,514 plus an amount equal to the net profits of
the Bank in 2000 up to the date of any such dividend declaration.
  Banking regulations also require the Bank to maintain certain
minimum capital levels in relation to Bank assets. Failure to
meet minimum capital requirements could result in prompt
corrective action by the federal banking agencies. As of December
31, 1999 and 1998, the Bank was categorized as well-capitalized
under the regulatory framework for prompt corrective action.
There are no conditions or events since year end that Management
believes have changed the Bank's category. The Bank maintains the
following leverage and risk-based capital ratios:
<TABLE>
<CAPTION>
                                              December 31,
                                        _________________________
                                            1999            1998
                                        __________       ________
<S>                                         <C>             <C>
Actual Capital Ratio:
 Tier I Capital to Average Total Assets     8.70%           8.84%
 Minimum Required                           4.00            4.00
 To Be Well Capitalized Under Prompt
  Corrective Action Provisions              5.00            5.00
Risk-based Capital Ratios:
 Tier I Capital Ratio - Actual             12.89%          13.51%
 Minimum Required                           4.00            4.00
 To Be Well Capitalized Under Prompt
  Corrective Action Provisions              6.00            6.00
 Total Capital Ratio - Actual              13.88%          14.57%
 Minimum Required                           8.00            8.00
 To Be Well Capitalized Under Prompt
  Corrective Action Provisions             10.00           10.00

</TABLE>

  Additionally, banking regulations limit the amount of
investments, loans, extensions of credit and advances the Bank
can make to Union National at any time to 10% of the Bank's
capital stock and surplus. At December 31, 1999, this limitation
amounted to approximately $2,496,000. These regulations also
require that any such investment, loan, extension of credit or
advance be secured by securities having a market value in excess
of the amount thereof.

NOTE 13 - STOCKHOLDERS' EQUITY

  On April 8, 1999, Union National's Board of Directors declared
a 5% common stock dividend that was paid on May 14, 1999. On
April 10, 1997, Union National's Board of Directors declared a 5%
common stock dividend that was paid May 15, 1997. All per share
amounts and average shares outstanding reflected in the
accompanying statements were adjusted to give retroactive effect
to these common stock dividends.
  In addition, Union National maintains a Dividend Reinvestment
and Stock Purchase Plan (the Plan). Stockholders of common stock
may participate in the Plan, which provides that additional
shares of common stock may be purchased with reinvested dividends
and optional cash payments within specified limits at prevailing
market prices. To the extent that shares are not available for
purchase by the Plan in the open market, Union National has
reserved 165,375 shares of common stock to be issued under the
Plan. At December 31, 1999, 40,344 shares have been issued under
the Plan. The number  of shares available for issuance under the
Plan are adjusted for stock dividends and stock splits. Open
market purchases are usually made by an independent purchasing
agent retained to act as agent for Plan participants, and the
purchase price to participants will be the actual price paid,
excluding brokerage commissions and other expenses that will be
paid by Union National.

The earnings per share, net income and weighted average number of
shares outstanding for the years ended December 31, 1999, 1998
and 1997 as computed under the basic and diluted earnings per
share methods are as follows:

<TABLE>
<CAPTION>
                             Net Income      Shares     Per Share
                            ______________ ___________
_________
<S>                             <C>            <C>          <C>
Year Ended December 31, 1999
Basic Earnings per Share:
 Income Available to
   Common Stockholders       $3,084,811    2,507,925      $1.23
Effect of Dilutive Securities:
 Independent Directors' Stock Option,
   Employee Stock Incentive and
   Employee Stock Purchase Plans      0        7,628
                             ____________ ____________ __________
Diluted Earnings per Share:
 Income Available to Common Stockholders
   Plus Assumed Exercised
   Options                   $3,084,811    2,515,553 $     1.23
                             =========== ============ ===========

Year Ended December 31, 1998
Basic Earnings per Share:
 Income Available to
   Common Stockholders       $2,767,632    2,541,581      $1.09
Effect of Dilutive Securities:
 Employee Stock Incentive
   and Purchase Plans                 0        3,573
                            _____________  __________  __________
Diluted Earnings Per Share:
 Income Available to Common Stockholders
 Plus Assumed Exercised
   Options                   $2,767,632   $2,545,154      $1.09
                            ============== ===========
=========
Year Ended December 31, 1997
Basic Earnings per Share:
 Income Available to
   Common Stockholders       $2,325,487    2,613,873       $.89
Effect of Dilutive Securities:
 Employee Stock Incentive
    and Purchase Plans                0          735
                             ___________ ______________ _________
Diluted Earnings per Share:
 Income Available to
   Common Stockholders       $2,325,487    2,614,608    $   .89
                           ============== ===========   =========
</TABLE>
<PAGE>
NOTE 14 - STOCK OPTION PLANS

  Union National currently has three separate stock option plans
in place. First, there is the Employee Stock Purchase Plan, which
allows eligible employees to purchase stock in Union National.
Options granted under this plan have a five-year term and can be
exercised at 85% of the fair market value of the stock on the
date of exercise. The other two plans are the Stock Incentive
Plan, where options are granted to key personnel, and the
Independent Directors' Stock Option Plan, which was implemented
in 1999. Options granted under these two plans have terms up to
10 years and have option prices equal to the fair value of the
shares on the date of the grant. No shares have been issued under
either of these plans.
  Stock option transactions for the years ended December 31,
1999, 1998 and 1997 are summarized below:

<TABLE>
<CAPTION>
                                   Stock       Weighted-Average
                                  Options       Exercise Price
                                  ________     _________________
<S>                                 <C>               <C>
Year Ended December 31, 1997:
Options Granted:
  Employee Stock Purchase Plan      15,750           $18.87
  Stock Incentive Plans              5,071            22.16

 Options Exercised
  (at $18.59 to $18.83)               (762)           18.63
                                  ________
Options Outstanding and Exercisable
  at December 31, 1997 (Prices range
  from $18.79 to $22.16)            20,059           $19.64

Year Ended December 31, 1998:
Options Granted:
  Employee Stock Purchase Plan      21,000           $18.13
  Stock Incentive Plans             12,600            18.81
  Options Exercised
   (at $15.88 to $18.85)              (478)           17.68
  Options Forfeited                 (4,959)           18.28
                                   ________
Options Outstanding and Exercisable
  at December 31, 1998 (Prices range
  from $15.74 to $22.16)            48,222           $17.22
Year Ended December 31, 1999:
Options Granted:
  Employee Stock Purchase Plan      21,000           $18.58
  Stock Incentive Plans             26,100           20.39
 Independent Directors'Stock
   Option Plan                      10,500           22.75
Options Exercised
   (at $15.12 to $19.58)              (803)          17.14
Options Forfeited                   (4,573)          19.38
                                      _________
Options Outstanding and Exercisable at
 December 31, 1999 (Prices range from
 $15.12 to $22.75)                 100,446          $18.03
                                   =========
</TABLE>

  The remaining average contractual life of options outstanding
as of December 31, 1999, is 6.7 years.
  The Financial Accounting Standards Board issued Statement No.
123 (SFAS No. 123), "Accounting for Stock-Based Compensation."
This Statement defines a fair value-based method of accounting
for an employee stock option or similar equity instrument. Under
this method, compensation cost is measured at the grant date, or
other measurement date, based on the calculated fair value of the
stock options granted. The accounting requirements of SFAS No.
123 were adopted as of January 1, 1996. As permitted by SFAS No.
123, Union National has chosen to apply APB No. 25, "Accounting
for Stock Issued to Employees," and related interpretations in
accounting for the Stock Option Plans. Accordingly, no
compensation cost has been recognized for its stock options in
the financial statements. Had Union National determined
compensation cost based on the fair value at the grant date for
its stock options under SFAS No. 123, Union National's net income
and earnings per share would have been reduced to the pro forma
amounts as follows:
<TABLE>
<CAPTION>
                                        Years Ended
                                    December 31, 1999
                                    _________________
<S>                                        <C>
Net Income
  As Reported                           $3,084,811
  Pro Forma                              2,826,499
Net Income per Share (Basic and
 Assuming Dilution)
  As Reported                                $1.23
  Pro Forma (Basic)                           1.13
  Pro Forma (Assuming Dilution)               1.12

<CAPTION>
                                        Years Ended
                                    December 31, 1998
                                    _________________
<S>                                        <C>
Net Income
  As Reported                           $2,767,632
  Pro Forma                              2,641,592
Net Income per Share (Basic and
 Assuming Dilution)
  As Reported                                $1.09
  Pro Forma (Basic)                           1.04
  Pro Forma (Assuming Dilution)               1.04

<CAPTION>

                                        Years Ended
                                    December 31, 1997
                                    _________________
<S>                                        <C>
Net Income
  As Reported                           $2,325,487
  Pro Forma                              2,211,846
Net Income per Share As Reported
 (Basic and
  Assuming Dilution)                          $.89
  Pro Forma (Basic)                            .85
  Pro Forma (Assuming Dilution)                .85
</TABLE>

The fair value of each option is estimated on the date of grant
using the Black-Scholes option pricing model.  The per share
weighted-average fair value of stock options granted is as
follows with the weighted-average assumptions also noted for the
year:

<TABLE>
<CAPTION>
                                       Years Ended
                                    December 31, 1999
                                    _________________
<S>                                       <C>
Weighted-Average Fair
 Value of Options Granted               $ 4.48
Weighted-Average Assumptions:
Expected Dividend Yield                   3.01%
Risk-Free Interest Rate                   5.84%
Expected Life (Years)                     6.0
Expected Volatility Over the
 Expected Life                           35.1%

<CAPTION>
                                       Years Ended
                                    December 31, 1998
                                    _________________
<S>                                       <C>
Weighted-Average Fair
 Value of Options Granted               $ 3.75
Weighted-Average Assumptions:
Expected Dividend Yield                   2.74%
Risk-Free Interest Rate                   4.89%
Expected Life (Years)                     4.6
Expected Volatility Over the
 Expected Life                           25.4%

<CAPTION>
                                       Years Ended
                                    December 31, 1997
                                    _________________
<S>                                       <C>
Weighted-Average Fair
 Value of Options Granted               $ 5.46
Weighted-Average Assumptions:
Expected Dividend Yield                   1.71%
Risk-Free Interest Rate                   6.13%
Expected Life (Years)                     3.8
Expected Volatility Over the
 Expected Life                           22.5%
</TABLE>
<PAGE>


NOTE 15 - FAIR VALUE OF FINANCIAL INSTRUMENTS
  As required by SFAS No. 107, "Disclosures about Fair Value of
Financial Instruments" (SFAS No. 107), Union National has
presented estimated fair value information about financial
instruments, whether or not recognized in the Consolidated
Balance Sheets, for which it is practicable to estimate that
value. Fair value is best determined by values quoted through
active trading markets. Because no active trading market exists
for various types of financial instruments, many of the fair
values disclosed were derived using present value or other
valuation techniques. These fair values are significantly
affected by assumptions used, principally the timing of future
cash flows and the discount rate. As a result, Union National's
ability to realize these derived values cannot be assured.
Further, certain financial instruments and all nonfinancial
instruments are excluded. Accordingly, the aggregate fair value
amounts presented do not necessarily represent the underlying
value of Union National.
  The following methods and assumptions were used by Union
National in estimating the fair value of its financial
instruments:
  Cash and cash equivalents   The carrying amounts reported in
the consolidated balance sheets for cash and short-term
investments approximate their fair values.
  Investment securities   Fair values for investment securities
are based on quoted prices, where available. If quoted prices are
not available, fair values are based on quoted prices of
comparable instruments.
  Loans   For variable-rate loans that reprice frequently and
with no significant change in credit risk, fair values are based
on carrying values. The fair values of other loans are determined
using estimated future cash flows, discounted at the interest
rates currently being offered for loans with similar terms to
borrowers with similar credit quality. The carrying amount of
accrued interest receivable approximates its fair value.
  Off-balance-sheet instruments   For Union National's off-
balance-sheet instruments, consisting of commitments to extend
credit and financial and performance standby letters of credit,
the estimated fair value is the same as the instrument's contract
or notional values since they are generally short-term in nature
or they are priced at market when funded.
  Deposit liabilities   The fair values of deposits with no
stated maturities, such as demand deposits, savings accounts, NOW
and money market deposits, equal their carrying amounts, which
represent the amount payable on demand. Fair values for fixed-
rate certificates of deposit are estimated using a discounted
cash flow calculation that applies interest rates currently being
offered on certificates to a schedule of aggregated expected
monthly maturities on time deposits.
  Short-term borrowings   The carrying amounts of federal funds
purchased, advances from the Federal Home Loan Bank and other
short-term borrowings approximate their fair values.
  Long-term debt   The fair values of Union National's long-term
debt are estimated using discounted cash flow analyses, based on
Union National's incremental borrowing rates for similar types of
borrowing arrangements.

At December 31, 1999 and 1998, the estimated fair values of
financial instruments based on the disclosed assumptions are as
follows:

<TABLE>
<CAPTION>
                                         December 31, 1999
                                 ______________________________
                                      Carrying
                                        Value       Fair Value
                                 _____________   _______________
<S>                                    <C>             <C>
Assets:
 Cash and Due from Banks          $  7,004,064    $  7,004,064
   Investment Securities
 Held to Maturity                   28,712,219      27,620,119
 Investment Securities
  Available for Sale                52,114,270      52,114,270
 Loans, Net of Unearned Income
  and Allowance for Loan Losses    173,071,483     172,299,000
 Accrued Interest Receivable         1,715,645       1,715,645

Liabilities:
 Demand and Savings Deposits       101,530,662     101,530,662
 Time Deposits                     107,650,557     107,671,000
 Short-term Borrowing                9,100,000       9,100,000
 Long-term Debt                     27,035,360      26,768,000

<CAPTION>
                                    Contract
                                     Amount         Fair Value
                                  ____________    _____________
<S>                                   <C>              <C>
Off-balance-sheet Items:
  Commitments to Extend Credit
   and Standby Letters of Credit  $ 29,230,172    $ 29,230,172

<CAPTION>
                                         December 31, 1998
                                 ______________________________
                                      Carrying
                                        Value       Fair Value
                                 _____________   _______________
<S>                                    <C>            <C>
Assets:
 Cash and Due from Banks          $  7,341,240    $ 7,341,240
 Investment Securities
 Held to Maturity                   24,079,161     24,523,740
 Investment Securities
  Available for Sale                51,676,350     51,676,350
 Loans, Net of Unearned Income
  and Allowance for Loan Losses    162,053,082    165,035,000
 Accrued Interest Receivable         1,560,703      1,560,703
Liabilities:
 Demand and Savings Deposits       105,486,752    105,486,752
 Time Deposits                     100,057,016    100,543,000
 Short-term Borrowing                  186,691        186,691
 Long-term Debt                     30,623,660     30,800,000

<CAPTION>
                                    Contract
                                     Amount         Fair Value
                                  ____________    _____________
<S>                                   <C>              <C>
Off-balance-sheet Items:
  Commitments to Extend Credit
   and Standby Letters of Credit  $ 29,804,360   $ 29,804,360
</TABLE>
<PAGE>
NOTE 16 - UNION NATIONAL FINANCIAL CORPORATION (PARENT COMPANY
ONLY)

<TABLE>
                       CONDENSED BALANCE SHEETS
<CAPTION>
                                     December 31,   December 31,
                                          1999           1998
                                    ____________   _____________
<S>                                      <C>             <C>
ASSETS
   Cash in Subsidiary Bank          $     8,108    $     35,477
   Investment in Subsidiary          22,021,896      22,281,338
   Other Equity Investment Securities   295,890         395,541
     Investments in Limited
       Partnerships                     823,158         882,161
   Recoverable Federal Income Taxes           0         224,672
                                    ____________   _____________
       Total Assets                 $23,149,052    $ 23,819,189
                                    ============   =============
LIABILITIES
   Limited Partnership Capital Notes$     5,446    $          0
   Deferred Income Taxes                 80,152         122,452
                                    ____________   _____________
       Total Liabilities                 85,598         122,452

STOCKHOLDERS' EQUITY
   Common Stock                         656,734         627,121
   Surplus                            7,249,699       4,793,416
   Retained Earnings                 19,322,781      20,183,938
   Accumulated Other Comprehensive
    Income                           (1,037,597)        241,515
   Less: Treasury Stock              (3,128,163)     (2,149,253)
                                    ____________   _____________
       Total Stockholders' Equity    23,063,454      23,696,737
                                    ____________   _____________
       Total Liabilities and
          Stockholders' Equity     $ 23,149,052    $ 23,819,189
                                    ============   =============
</TABLE>
<TABLE>
                    CONDENSED STATEMENTS OF INCOME
<CAPTION>
                                   Years Ended December 31,
                                  __________________________
                                      1999          1998
                                  _____________   __________
<S>                                    <C>           <C>
INCOME
 Dividends from Subsidiary         $2,075,000    $2,820,000
 Dividends on Other Equity
   Investment Securities               12,118        10,270
 Interest on Deposits in Subsidiary     5,421         5,185
 Management Fees from Subsidiary       40,973        49,273
                                  _____________   __________
      Total Income                  2,133,512     2,884,728

EXPENSES                              151,038       127,722
                                  _____________   __________
 Income before Income Taxes and
   Equity in Undistributed Income
   of Subsidiary                    1,982,474     2,757,006
 PROVISION FOR INCOME TAXES (BENEFIT)(156,363)     (138,087)
                                  _____________   __________
                                    2,138,837     2,895,093
EQUITY in UNDISTRIBUTED INCOME
  of SUBSIDIARY                       945,974      (127,461)
                                  _____________   __________
  NET INCOME                       $3,084,811    $2,767,632
                                  =============   ==========
<CAPTION>
                                   Years Ended December 31,
                                  _________________________
                                      1997
                                  _____________
<S>                                   <C>
INCOME
 Dividends from Subsidiary          $1,100,000
 Dividends on Other Equity
 Investment Securities                   8,882
 Interest on Deposits in Subsidiary      3,647
 Management Fees from Subsidiary        39,690
                                   _____________
      Total Income                   1,152,219

EXPENSES                               140,660
                                   _____________
 Income before Income Taxes and
   Equity in Undistributed Income
   of Subsidiary                     1,011,559
 PROVISION FOR INCOME TAXES (BENEFIT) (141,872)
                                  _____________
                                     1,153,431
EQUITY in UNDISTRIBUTED INCOME
  of SUBSIDIARY                      1,172,056
                                  _____________
  NET INCOME                        $2,325,487
                                  =============

</TABLE>
<PAGE>
<TABLE>
                 CONDENSED STATEMENTS OF CASH FLOWS
<CAPTION>
                                       Years Ended December 31,
                                    _____________________________
                                          1999           1998
                                    ______________  _____________
<S>                                      <C>            <C>
CASH FLOWS from OPERATING ACTIVITIES
   Net Income                         $3,084,811    $2,767,632
   Adjustments to Reconcile Net Income to Net
     Cash Provided by Operating Activities:
      Undistributed Income of
        Subsidiary                      (945,974)      127,461
      Provision for Deferred Income Taxes (4,336)       (4,186)
      Decrease/(Increase) in Other
          Assets                         283,675        (6,524)
      (Decrease)/Increase in Other
          Liabilities                      5,446             0
                                    ______________  _____________
     Net Cash Provided by Operating
        Activities                     2,423,622     2,884,383

CASH FLOWS from INVESTING ACTIVITIES
   Purchases of Available for Sale
    Securities                           (12,009)            0
                                    ______________  _____________
  Net Cash Provided by (Used in)
         Investing Activities            (12,009)            0

CASH FLOWS from FINANCING ACTIVITIES
 Acquisition of Treasury Stock        (1,352,675)   (1,995,379)
 Payments on Long-Term Debt                    0      (190,000)
 Issuance of Common and Treasury Stock   338,190       266,265
 Cash Dividends Paid                  (1,424,497)   (1,044,423)
                                    ______________  _____________
  Net Cash (Used in)
     Financing Activities             (2,438,982)   (2,963,537)
                                    ______________  _____________
      NET INCREASE/(DECREASE) in CASH    (27,369)      (79,154)

CASH - Beginning of Year                  35,477       114,631
                                    ______________  _____________
CASH - End of Year                    $    8,108    $   35,477
                                    ==============  =============
SUPPLEMENTAL SCHEDULE OF NONCASH
 INVESTING ACTIVITIES:
   Retirement of Treasury Stock (17,000
    shares in 1999,13,000
    shares in 1998, and 12,000
    shares in 1997)                  $ 373,765    $   288,035

<CAPTION>
                                       Years Ended December 31,
                                     ____________________________
                                          1997
                                     ______________
 <S>                                      <C>
CASH FLOWS from OPERATING ACTIVITIES
   Net Income                         $2,325,487
   Adjustments to Reconcile Net Income to Net
     Cash Provided by Operating Activities:
      Undistributed Income of
        Subsidiary                    (1,172,056)
      Provision for Deferred Income Taxes (1,556)
      Decrease/(Increase) in Other Assets 78,200
      (Decrease)/Increase in Other Liabilities 0
                                    ______________
     Net Cash Provided by Operating
        Activities                     1,230,075

CASH FLOWS from INVESTING ACTIVITIES
   Purchases of Available for Sale
    Securities                            (5,950)
                                    _______________
  Net Cash Provided by (Used in)
         Investing Activities             (5,950)

CASH FLOWS from FINANCING ACTIVITIES
 Acquisition of Treasury Stock          (306,746)
 Payments on Long-Term Debt             (140,000)
 Issuance of Common and Treasury Stock   198,827
 Cash Dividends Paid                    (876,280)
                                    _______________
  Net Cash (Used in)
     Financing Activities             (1,124,199)
                                    _______________
      NET INCREASE/(DECREASE) in CASH     99,926

CASH - Beginning of Year                  14,705
                                    _______________
CASH - End of Year                    $  114,631
                                    ===============

SUPPLEMENTAL SCHEDULE OF NONCASH
 INVESTING ACTIVITIES:
   Retirement of Treasury Stock (17,000
    shares in 1999,13,000
    shares in 1998,and 12,000 shares in
    1997)                               $227,542
</TABLE>

NOTE 17 - SUBSEQUENT EVENT

  On January 13, 2000, the Board of Directors of Union National
authorized and approved a plan to purchase up to 50,000 shares of
its outstanding common stock in open market or privately
negotiated transactions. The number of shares to be purchased
under the plan represents approximately 2.0% of the outstanding
shares of Union National. The Board of Directors believes that a
redemption or repurchase of this type is in the best interests of
Union National and its stockholders as a method to enhance long-
term shareholder value. Currently, the shares are to be held as
treasury shares (issued, but not outstanding shares).

<PAGE>
                    INDEPENDENT AUDITORS' REPORT

Stockholders and Board of Directors
Union National Financial Corporation and Subsidiary
Mount Joy, Pennsylvania

  We have audited the accompanying consolidated balance sheets of
UNION NATIONAL FINANCIAL CORPORATION and SUBSIDIARY as of
December 31, 1999 and 1998, and the related consolidated
statements of income, changes in stockholders' equity, and cash
flows for each of the three years in the period ended December
31, 1999.  These consolidated financial statements are the
responsibility of management.  Our responsibility is to express
an opinion on these consolidated financial statements based on
our audits.
  We conducted our audits in accordance with generally accepted
auditing standards.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material
misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
consolidated financial statements.  An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.
  In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Union National Financial Corporation and Subsidiary
as of December 31, 1999 and 1998 and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 1999, in conformity with generally
accepted accounting principles.

January 13, 2000
Lancaster, Pennsylvania
                              /s/ Trout, Ebersole & Groff, LLP
                             ____________________________________

                              Trout, Ebersole and Groff, LLP
                              Certified Public Accountants

<TABLE>

            SUMMARY OF QUARTERLY FINANCIAL DATA

The unaudited quarterly results of operations for the years ended
December 31, 1999 and 1998, are as follows:
<CAPTION>
                                             1999
                       __________________________________________
(Dollars in thousands,    March    June    September   December
  except per share data)   31       30        30          31
                         _______   ______   ________    ________
<S>                        <C>      <C>       <C>          <C>
Interest Income          $4,660    $4,749    $4,839      $4,831
Interest Expense          2,139     2,148     2,237       2,287
                         _______   ______   ________    ________
 Net Interest Income      2,521     2,601     2,602       2,544
Provision for Loan Losses    41        57        94          21
                         _______   ______   ________    ________
 Net Interest Income after
 Provision for Loan
  Losses                  2,480     2,544     2,508       2,523
Other Operating Income      335       353       375         415
Other Operating Expenses  1,858     1,905     1,983       1,980
                         _______   ______   ________    ________
Income before Income Taxes  957       992       900         958

Provision for Income Taxes  199       201       127         195
                         _______   ______   ________    ________
   Net Income              $758      $791      $773        $763
                         =======   ======   ========    ========
Net Income per Common Share
 (Basic and Assuming
   Dilution)             $ 0.30    $ 0.31    $ 0.31      $ 0.31
                         =======   ======   ========    ========

<CAPTION>
                                             1998
                       __________________________________________
(In Thousands)            March    June    September   December
                           31       30        30          31
                         _______   ______   ________    ________
<S>                        <C>      <C>       <C>          <C>
Interest Income          $4,356    $4,473    $4,541      $4,693
Interest Expense          2,096     2,150     2,228       2,220
                         _______   ______   ________    ________
 Net Interest Income      2,260     2,323     2,313       2,473
Provision for Loan Losses    99       130        53          43
                         _______   ______   ________    ________
 Net Interest Income after
 Provision for Loan
  Losses                  2,161     2,193     2,260       2,430
Other Operating Income      286       266       295         310
Other Operating Expenses  1,626     1,604     1,663       1,825
                         _______   ______   ________    ________
Income before Income Taxes  821       855       892         915

Provision for Income Taxes  169       178       185         184
                         _______   ______   ________    ________
   Net Income              $652      $677      $707        $731
                         =======   ======   ========    ========
Net Income per Common Share
 (Basic and Assuming
   Dilution)             $ 0.25    $ 0.27    $ 0.28      $ 0.29
                         =======   ======   ========    ========
</TABLE>
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
   The following is management's discussion and analysis of the
significant changes in the results of operations, capital
resources and liquidity presented in its accompanying
consolidated financial statements for Union National Financial
Corporation (Union National), a bank holding company, and its
wholly-owned subsidiary, Union National Community Bank (the
Bank). Union National's consolidated financial condition and
results of operations consist almost entirely of the Bank's
financial condition and results of operations. This discussion
should be read in conjunction with the financial
tables/statistics, financial statements and notes to financial
statements appearing elsewhere in this annual report. Current
performance does not guarantee, assure or may not be indicative
of similar performance in the future.
    We have made forward-looking statements in this document, and
in documents that we incorporate 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 we
use words such as "believes," "expects," "anticipates" or similar
expressions, we are making forward-looking statements.
 Shareholders should note that many factors, some of which are
discussed elsewhere in this document and in the documents that we
incorporate 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 our 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 affecting our
banking, securities, asset management and credit services
businesses; 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.
    Union National undertakes no obligation to publicly revise or
update these forward-looking statements to reflect events or
circumstances that arise after the date of this report. Readers
should carefully review the risk factors described in other
documents that Union National periodically files with the
Securities and Exchange Commission.

Results of Operations

Overview
   Consolidated net income for 1999 was $3,085,000, an increase
of 11.5%, as compared to consolidated net income of $2,768,000
for 1998. Consolidated net income for 1998 increased by 19.1%, as
compared to consolidated net income of $2,325,000 for 1997.
   On a per share basis, net income for 1999 was $1.23, as
compared to $1.09 for 1998 and $.89 for 1997. The earnings per
share information is the same under the basic and assuming
dilution methods.
   Results of operations for 1999 as compared to 1998 were
impacted by the following items:
- Net income increased due to growth of 4.7% in average net loans
and growth of 24.6% in average investment securities, which were
funded primarily by growth in average deposits and by additions
to average borrowings.
- Net income increased due to a 27.6% increase in other operating
income.
- Net income increased due to a slight widening of the spread
between the earnings rates on loans and investments as compared
to the interest rates paid on deposits and long-term debt.
- Net income increased due to a decrease in the provision for
loan losses.
- Net income decreased due to a 15.0% increase in other
operating expenses.
The above items are quantified and discussed in further detail
under their respective sections below.
   Results of operations for 1998 as compared to 1997 were
impacted by the following items:
- Net income increased due to a 15.0% increase in average net
loans, which were funded by growth in deposits and by
additions to average borrowings.
- Net income increased due to a 17.4% increase in other operating
income.
- Net income decreased due to the narrowing of the spread between
the earnings rates on loans and investments as compared to the
interest rates paid on certificates of deposit and long-term
debt.
- Net income decreased due to a 5.8% increase in other operating
expenses.
- Net income increased due to a decrease in the provision for
loan losses.
The above items are quantified and discussed in further detail
under their respective sections below.
   Net income as a percent of total average assets, also known as
return on average assets (ROA), was 1.17% for 1999, compared to
1.15% for 1998 and 1.09% for 1997. Net income as a percent of
average stockholders' equity, also known as return on average
equity (ROE), was 13.29% for 1999, compared to 12.05% for 1998
and 10.17% for 1997. ROE was positively impacted by the
repurchase of 63,198 shares of outstanding common stock in 1999
and 88,513 shares in 1998. See the discussion under the section
on Stockholders' Equity for further details.
   Management currently expects the growth in loans and deposits
for 2000 to be comparable to its historic growth rates. Growth
should be comparable due to specific actions that management has
taken to enhance the Bank's competitive position for loans,
deposits and other financial services in northwestern Lancaster
County, Pennsylvania (the Bank's Market Area). These actions
include the following:
- increased emphasis on business development and continued sales
training for staff;
- further development of both loan and deposit products;
- further development of the Bank's cash management program for
commercial customers;
- promotion of the Bank's consumer and home equity lines of
credit;
- the strategic promotion of the Bank's retail offices in light
of continued consolidation of financial institutions in the
Bank's Market Area;
- economic stability of the Bank's Market Area as discussed
below; and
- continued population and business growth in the Bank's Market
Area.
The funding for loan growth is further discussed under the
section on Liquidity.
   It is anticipated that economic activity in the Bank's Market
Area during 2000 appears favorable due to continued economic
growth and construction activity. The overall effects of past
economic conditions, as well as other factors, can be seen by a
mild lessening of certain borrowers' financial strength.
Management is monitoring these general and specific trends
closely. Their various effects are discussed later under the
section on Loans.

Net Interest Income
   Net interest income is the amount by which interest income on
loans and investments exceeds interest incurred on deposits and
other interest-bearing liabilities. Net interest income is Union
National's primary source of revenue. The amount of net interest
income is affected by changes in interest rates and by changes in

<PAGE>

the volume and mix of interest-sensitive assets and liabilities.
   Net interest income and corresponding yields are presented
in the tables and related discussion on a taxable equivalent
basis. Income from tax-exempt assets, primarily loans to or
securities issued by state and local governments, is adjusted by
an amount equivalent to the federal income taxes that would have
been paid if the income received on these assets was taxable at
the statutory rate of 34% for 1999, 1998 and 1997.
   Net interest income for 1999 increased by $1,044,000, or
10.4%, over 1998. Net interest income for 1998 increased by
$824,000, or 9.0%, over 1997. For 1999, average loan growth of
$7,577,000 and average investment security growth of $15,617,000
were funded primarily by the growth in average deposits of
$18,291,000 and by growth in average borrowings of $2,906,000.
Average earning assets increased in the amount of $21,289,000 in
the aggregate over 1998. The volume growth in earning assets and
interest-bearing liabilities increased net interest income by the
amount of $943,000 in 1999 over 1998, as compared to $1,179,000
in 1998 over 1997.
   The overall interest rate on the average total earning assets
decreased to 7.91% for 1999, as compared to 8.13% for 1998, due
to an overall market decline in interest rates and the
refinancing of higher interest rate loans with lower interest
rates. The overall interest rate on the average interest-bearing
liabilities decreased to 4.07% for 1999, as compared to 4.39% for
1998. This is due to decreases in rates paid on interest-bearing
demand deposits, savings deposits and time deposits of less than
$100,000 and the repricing of adjustable-rate advances from the
Federal Home Loan Bank of Pittsburgh (FHLB) to current market
rates. The net effect of all interest rate fluctuations and
funding changes was to increase net interest income in the amount
of $101,000 for 1999 over 1998, as compared to a decrease of
$355,000 for 1998 from 1997. See Management's discussion below
concerning the anticipated impact of these interest rate
fluctuations to the results of operations for 2000.
   As referenced above, in order to enhance the net interest
income in future periods, Management has entered into
transactions that increase earning assets funded by advances from
the FHLB. The terms and amounts of the transactions, when
combined with the Bank's overall balance sheet structure,
maintain the Bank within its interest rate risk policies. As of
December 31, 1999, the Bank

<TABLE>
Distribution of Assets, Liabilities, and Stockholders' Equity;
Interest Rates and Interest Differential (Taxable Equivalent
Basis)
<CAPTION>
                                             Year Ended
                                          December 31, 1999
                                _________________________________
(In Thousands)                  Average
                                Balance       Interest      Rate
                               _________      ________     ______
<S>                               <C>           <C>         <C>
ASSETS
Interest-Bearing Deposits
 in Other Banks               $      53       $      2      3.77%
Federal Funds Sold                2,253            108      4.79
Investment Securities:
 Taxable                         54,306          3,337      6.14
 Exempt from Federal Taxes       24,772          1,921      7.75
Loans-Net*                      169,667         14,482      8.54
                               _________      ________     ______
 Total Earning Assets           251,051       $ 19,850      7.91%
                                              ========     ======
Allowance for Loan Losses        (1,791)
Other Nonearning Assets          13,815
                               _________
 TOTAL ASSETS                 $ 263,075
                               =========

LIABILITIES and STOCKHOLDERS' EQUITY
Deposits:
 Interest-Bearing Demand      $ 52,084       $   1,127      2.16%
 Savings                        28,258             589      2.08
 Time                          104,224           5,355      5.14
Short-Term Borrowing             2,020             112      5.54
 Long-Term Debt                 29,882           1,627      5.44
                               _________      ________     ______
Total Interest-Bearing
 Liabilities                   216,468         $ 8,810      4.07%
                                              ========     ======
Demand Deposits                 21,904
Other Liabilities                1,485
                              _________
  TOTAL LIABILITIES            239,857
Stockholders' Equity            23,218
                              _________
 TOTAL LIABILITIES and
   STOCKHOLDERS' EQUITY      $ 263,075
                              =========
 Net Interest Income/Yield on
   Average Earning Assets                      $11,040      4.40%
                                              ========     ======
Balances of nonaccrual loans and related income recognized have
been included for computational purposes.  Balances reflect
amortized historical cost for available for sale securities.  The
related average unrealized holding gain or loss on securities is
included in other nonearning assets.  Tax-exempt income included
in loans and securities has been adjusted to a taxable equivalent
basis using an incremental rate of 34%.

* Includes loan fees of $589,000 for the year ended December 31,
1999, $613,000 for 1998, and $572,000 for 1997.

<CAPTION>
                                             Year Ended
                                        December 31, 1998
                                _________________________________
(In Thousands)                  Average
                                Balance       Interest      Rate
                               _________      ________     ______
<S>                               <C>           <C>         <C>
ASSETS
Interest-Bearing Deposits
 in Other Banks               $      51       $      2      3.92%
Federal Funds Sold                4,160            222      5.34
Investment Securities:
 Taxable                         44,540          2,796      6.28
 Exempt from Federal Taxes       18,921          1,508      7.97
Loans-Net*                      162,090         14,163      8.74
                               _________      ________     ______
 Total Earning Assets           229,762       $ 18,691      8.13%
                                              ========     ======
Allowance for Loan Losses        (1,681)
Other Nonearning Assets          13,558
                               _________
 TOTAL ASSETS                 $ 241,639
                               =========

LIABILITIES and STOCKHOLDERS' EQUITY
Deposits:
 Interest-Bearing Demand      $  44,528      $   1,015      2.28%
 Savings                         25,598            601      2.35
 Time                            98,842          5,435      5.50
Short-Term Borrowing                412             23      5.58
Long-Term Debt                   28,584          1,621      5.67
                               _________      ________     ______
Total Interest-Bearing
 Liabilities                    197,964       $  8,695      4.39%
                                              ========     ======
Demand Deposits                  19,211
Other Liabilities                 1,493
                               _________
   TOTAL LIABILITIES            218,668
 Stockholders' Equity            22,971
                               _________
 TOTAL LIABILITIES and
   STOCKHOLDERS' EQUITY       $ 241,639
                               =========
 Net Interest Income/Yield on
   Average Earning Assets                     $ 9,996      4.35%
                                             ========     ======
Balances of nonaccrual loans and related income recognized have
been included for computational purposes.  Balances reflect
amortized historical cost for available for sale securities.  The
related average unrealized holding gain or loss on securities is
included in other nonearning assets.  Tax-exempt income included
in loans and securities has been adjusted to a taxable equivalent
basis using an incremental rate of 34%.

* Includes loan fees of $589,000 for the year ended December 31,
1999, $613,000 for 1998, and $572,000 for 1997.

<CAPTION>
                                             Year Ended
                                          December 31, 1997
                                _________________________________
(In Thousands)                  Average
                                Balance       Interest      Rate
                               _________      ________     ______
<S>                               <C>           <C>         <C>
ASSETS
Interest-Bearing Deposits
 in Other Banks               $      84       $      3      3.57%
Federal Funds Sold                3,480            192      5.52
Investment Securities:
 Taxable                         41,262          2,659      6.44
 Exempt from Federal Taxes       16,289          1,315      8.07
Loans-Net*                      140,925         12,553      8.91
                               _________      ________     ______
 Total Earning Assets           202,040       $ 16,722      8.28%
                                              ========     ======
Allowance for Loan Losses        (1,456)
Other Nonearning Assets          13,402
                               _________
 TOTAL ASSETS                 $ 213,986
                               =========
LIABILITIES and STOCKHOLDERS' EQUITY
Deposits:
 Interest-Bearing Demand      $  38,134       $    852      2.23%
 Savings                         24,184            590      2.44
 Time                            89,992          4,913      5.46
Short-Term Borrowing              1,461             87      5.95
Long-Term Debt                   19,425          1,108      5.70
                               _________      ________     ______
Total Interest-Bearing
 Liabilities                    173,196        $ 7,550      4.36%
                                              ========     ======
Demand Deposits                  16,504
Other Liabilities                 1,427
                               _________
   TOTAL LIABILITIES            191,127
 Stockholders' Equity            22,859
                               _________
 TOTAL LIABILITIES and
   STOCKHOLDERS' EQUITY       $ 213,986
                               =========
 Net Interest Income/Yield on
   Average Earning Assets                      $ 9,172      4.54%
                                              ========     ======
Balances of nonaccrual loans and related income recognized have
been included for computational purposes.  Balances reflect
amortized historical cost for available for sale securities.  The
related average unrealized holding gain or loss on securities is
included in other nonearning assets.  Tax-exempt income included
in loans and securities has been adjusted to a taxable equivalent
basis using an incremental rate of 34%.

* Includes loan fees of $589,000 for the year ended December 31,
1999, $613,000 for 1998, and $572,000 for 1997.
</TABLE>
<PAGE>

had received long-term advances of $27,035,000 and short-term
advances of $8,200,000 from its available credit of $73,689,000
at the FHLB for purposes of funding loan demand and mortgage-
backed security purchases. The total advances have a current
average effective rate of 5.37% with maturities ranging from
January 2000 to September 2008.
     Commencing October 1998, the Federal Reserve Bank began
loosening the monetary supply, causing the prime interest rate
to decrease from 8.50% to 7.75%. The immediate impact of these
short-term interest rate decreases was to decrease interest rates
on loans and deposits that adjust according to short-term rate
indexes and to decrease reinvestment rates on investment
securities and renewing certificates of deposit. However, in June
1999, the Federal Reserve Bank began tightening the monetary
supply and the prime interest rate was increased from 7.75% to
8.50% by November 1999. In addition, subsequent to year-end the
Federal Reserve again increased interest rates, causing the prime
interest rate to increase to 8.75%. With these increases in
interest rates, there also has been an increase in the rates the
Bank must pay to attract and retain deposits and must pay on
maturing or repricing advances from the FHLB.
    As a result of the general increase in interest rates, it is
currently anticipated that for 2000, the Bank's net interest
margin percentage will narrow in comparison to the net interest
margin percentage for 1999. As an offset to the narrowing of the
net interest margin percentage, income from growth in earning
assets during 1999, net of costs of growth in deposits and
borrowings, will increase the net interest margin in 2000. The
netting of these two factors, as reflected in the Bank's current
model and estimates as of December 31, 1999, may result in a net
interest margin for 2000 that is currently expected to range from
comparable to a moderate increase in the net interest margin over
1999. However, currently expected growth in earning assets during
the year 2000 should increase the Bank's net interest margin.
This growth is not reflected in the Bank's model at December 31,
1999. Although the effective interest rate impact of expected
cash flows on investments and of renewing certificates of deposit
can be reasonably estimated at current interest rate levels, the
yield curve during 2000, the options selected by customers and
the future mix of the loan, investment and deposit products in
the Bank's portfolios may significantly change the estimates used
in the simulation models. See discussions on Liquidity and Market
Risk   Interest Rate Risk.

Provision for Loan Losses
    The loan loss provision is an estimated expense charged to
earnings in anticipation of losses attributable to uncollectible
loans. The provision is based on Management's analysis of the
adequacy of the allowance for loan losses. Net charge-offs
amounted to $174,000 for 1999, as compared to $175,000 for 1998
and $168,000 for 1997. Future adjustments to the allowance, and
consequently the provision for loan losses, may be necessary if
economic conditions or loan credit quality differ substantially
from the assumptions used in making Management's evaluation of
the level of the allowance for loan losses as compared to the
balance of outstanding loans. The provision for loan losses was
$214,000 in 1999, $325,000 in 1998 and $390,000 in 1997. The
decrease in the provision for loan losses from 1999 to 1998 is
mainly a result of a decline in the required level of the
allowance for loan losses. See discussion on Loan
Quality/Allowance for Loan Losses.

Other Operating Income
    Other operating income for 1999 was $1,477,000, representing
an increase of $320,000, or 27.6%, over 1998. Contributing to
this

<TABLE>
Rate/Volume Analysis of Changes in Net Interest Income (Taxable
Equivalent Basis)
<CAPTION>
                                          1999 Compared to 1998
                                    _____________________________
                                     Total
(In Thousands)                       Change      Volume     Rate
                                    ________     ________   _____
<S>                                   <C>         <C>        <C>
Interest Income From Interest-
 Bearing Deposits in Other Banks    $     0      $     0   $   0
  Federal Funds Sold                   (114)         (93)    (21)
 Investment Securities:
    Taxable                             541          601     (60)
    Exempt from Federal Taxes           413          455     (42)
  Loans-Net                             319          652    (333)
                                    ________     ________   _____
    Total Earning Assets              1,159        1,615    (456)

Interest Expense On
 Deposits:
  Interest-Bearing Demand               112          165     (53)
  Savings                               (12)          59     (71)
  Time                                  (80)         287    (367)
 Short-Term Borrowing                    89           89       0
 Long-Term Debt                           6           72     (66)
                                    ________     ________   _____
   Total Interest-Bearing
      Liabilities                       115          672    (557)
                                    ________     ________   _____
   Net Interest Income              $ 1,044      $   943   $ 101
                                    ========     ========   =====
Balances of nonaccrual loans and related income recognized have
been included for computational purposes.  The change in interest
due to both volume and rate has been allocated individually to
the change in volume and rate on a proportional basis.
Tax-exempt income included in loans and securities has been
adjusted to a taxable equivalent basis using an incremental rate
of 34%.

<CAPTION>
                                         1998 Compared to 1997
                                    _____________________________
                                     Total
(In Thousands)                       Change      Volume     Rate
                                    ________     ________   _____
<S>                                   <C>         <C>        <C>
Interest Income From Interest-
 Bearing Deposits in Other Banks    $    (1)     $    (1)  $   0
 Federal Funds Sold                      30           36      (6)
 Investment Securities:
    Taxable                             137          207     (70)
    Exempt from Federal Taxes           193          210     (17)
  Loans-Net                           1,610        1,853    (243)
                                    ________     ________   _____
    Total Earning Assets              1,969        2,305    (336)

Interest Expense On
 Deposits:
  Interest-Bearing Demand               163          146      17
  Savings                                11           33     (22)
  Time                                  522          487      35
 Short-Term Borrowing                   (64)         (59)     (5)
 Long-Term Debt                         513          519      (6)
                                    ________     ________   _____
   Total Interest-Bearing
      Liabilities                     1,145        1,126      19
                                   ________     ________   _____
   Net Interest Income              $   824      $ 1,179   $(355)
                                    ========     ========   =====

Balances of nonaccrual loans and related income recognized have
been included for computational purposes.  The change in interest
due to both volume and rate has been allocated individually to
the change in volume and rate on a proportional basis.
Tax-exempt income included in loans and securities has been
adjusted to a taxable equivalent basis using an incremental rate
of 34%.
</TABLE>
<PAGE>
increase were the following items:
- additional earnings in insufficient funds charges in the amount
of $60,000, which were partially a result of an increase in the
Bank's per-item insufficient funds charge effective in June 1998;
- additional earnings in monthly service charges in the amount of
$59,000, which were primarily a result of increases in monthly
service charges on non-interest bearing accounts effective May 1,
1999;
- additional earnings on commissions from the sale of loan
insurance in the amount of $52,000, which was primarily a result
of an increased sales focus and an increase in the Bank's
commission rates;
- increased usage of the Bank's debit cards, resulting in
additional earnings in interchange fee income in the amount of
$45,000;
- additional commission earnings in the amount of $36,000 from
the sales of alternative investment products through the Bank's
continued relationship with T.H.E. Financial Group, Ltd.;
- additional earnings from check sales in the amount of $15,000;
- an increase in income from trust services in the amount of
$23,000; and
- an increase in safe deposit box revenue in the amount of
$11,000 as a result of an increase in fees effective January 1,
1999.
The Bank also currently assesses a surcharge at its automatic
teller machines (ATMs); however, ATM surcharges, or the
elimination thereof, may be subject to future legislation.
     Other operating income for 1998 was $1,157,000, representing
an increase of $171,000, or 17.3%, over 1997. Contributing to
this increase were the following items:
- additional earnings in ATM and card usage fees including ATM
surcharges in the amount of $26,000;
- additional earnings in insufficient funds charges in the amount
of $81,000;
- additional earnings in debit card interchange fee income in the
amount of $39,000; and
- additional commission earnings in the amount of $31,000 from
the sales of alternative investment products through T.H.E.
Financial Group, Ltd.

Other Operating Expenses
    The aggregate of non-interest expenses for 1999 increased by
$1,007,000, or 15.0%, over 1998. This non-interest expense
increase is discussed below as it pertains to the various expense
categories.
    Employee salaries and wages increased by $443,000, or 14.1%,
over 1998. This increase was essentially due to annual merit and
cost-of-living increases, planned staff additions and an
incentive compensation plan based on the Bank's 1999 financial
performance. New staff positions include a senior vice president
to lead retail and commercial banking, a senior vice president to
lead sales and marketing efforts, a community banking group
manager, an accounting officer, a full-time business development
officer, a quality service manager and additional staff for our
new Telephone Banking Center, for the Credit Services Division
and for retail banking, training and support. The majority of
these staff positions were added during the third and fourth
quarters of 1998 and their costs were partially offset by savings
as a result of staff retirements in 1998.
    Related fringe benefits increased by $166,000, or 26.2%, from
the same period in 1998. The increased expense is primarily a
result of increased employee benefit costs as a result of staff
additions. Benefit costs were also increased by $52,000 as a
result of the implementation of the Union National Community Bank
401(k) Profit Sharing Plan, which replaced the previous profit-
sharing plan. This plan was effective January 1, 1999, and allows
employees to contribute a portion of their salaries and wages to
the plan. The Bank may elect to make a discretionary contribution
to the plan and may also match a portion of employee-elected
salary deferrals, subject to a 6% maximum of their salaries and
wages. For 1999, the Bank elected to match 50% of employee-
elected salary deferrals, which do not exceed 6% of their
salaries and wages, and elected to contribute 5% of eligible
salaries as its discretionary contribution.
    Occupancy, furniture and equipment expenses for 1999
increased by $37,000, or 3.9%, over 1998. This was due to an
increase in lease expense, repairs and maintenance costs and
due to minor increases in various other expense categories. The
increase in lease expense is a result of our new Credit Services
Division, which was leased as of September 1, 1998.
    Other operating expenses for 1999 increased by $360,000, or
18.3%, over 1998. Contributing factors to the increase in other
operating expenses as compared to 1998 included the following:
- an increase in advertising expenses in the amount of $81,000 as
a result of expenditures for the development and promotion
of the Bank's new logo, advertising efforts to increase Union
National's brand awareness and increased expenditures for
various sales campaigns;
- an increase in professional and consulting fees of $84,000;
- an increase in MAC fees of $39,000 due to higher transaction
volumes;
- an increase in staff training costs of $27,000;
- an increase in director fees of $25,000; and
- minor increases in various other expense categories.
Expenditures in 1999 for professional fees included fees paid to
an electronic data processing consultant to assist in the
assessment of current system capabilities and alternatives, fees
paid to an independent consultant for loan review services, fees
paid to an independent company to perform internal audit services
and fees paid to a consultant for a review and analysis of
current and potential market areas.
    The aggregate of non-interest expenses for 1998 increased by
$371,000, or 5.8%, over 1997. This non-interest expense increase
is discussed below as it pertains to the various expense
categories.
    Employee salaries and wages increased by $363,000, or 13.0%,
for 1998 over 1997. This increase was essentially due to annual
merit and cost-of-living increases, early retirement payments and
planned new staff positions as discussed above.
    Related fringe benefits decreased by $224,000, or 26.1%, in
1998 from 1997. The decrease is essentially due to a reduction in
the Bank's discretionary contribution to the Bank's profit-
sharing plan.
    Occupancy, furniture and equipment expenses for 1998
decreased by $18,000, or 1.9%, from 1997.
    Other operating expenses for 1998 increased by $250,000, or
14.6%, over the same period in 1997. Contributing factors to the
increase in other operating expenses as compared to the same
period in 1997 included the following:
- an increase in supplies expenses of $57,000;
- an increase in professional and consulting fees in the amount
of $47,000; and
- an increase in ATM transaction and clearing costs in the amount
of $28,000.
The increase in professional and consulting fees included
consulting fees for a sales training program for staff,
consulting fees for an electronic data processing consultant to
perform a comprehensive review of current system capabilities and
alternatives, fees paid to an independent consultant for loan
review services and legal costs for certain loan collection
services in connection with charge-offs and non-performing assets
in 1998.

Income Taxes
    Union National's income tax expense for 1999 was $722,000,
as compared to $715,000 for 1998 and $579,000 for 1997. The
effective tax rate for 1999 was 19.0% as compared to 20.5% in
1998 and 19.9% in 1997. The increase in income tax expense over

<PAGE>
the past three years was primarily due to the increase in
corporate earnings before income taxes. The slight decline in the
effective tax rate from 1998 to 1999 is a result of an increase
in earnings on tax-exempt investments and loans. Currently, the
effective tax rate of Union National for 2000 is expected to
approximate the effective tax rate in 1999.

Initiatives for 2000

    During 2000, the Bank is implementing various initiatives
that should impact the results of operations of Union National.
In January 2000, the Bank added two key staff positions. First,
the Bank added a chief lending officer who will lead our lending
efforts and assist in the overall management of credit quality in
the Bank's loan portfolio. Management believes the addition of
this position should enhance the credit review process for new
loans and should further allow our loan and business development
officers to focus on their sales efforts. The Bank also added
a manager to lead our newly developed Wealth Management Group.
The addition of this position will allow Union National to
diversify and grow our Trust Services with additional investment
and asset management services. These additions to staff are
currently expected to reduce results of operations in 2000 by an
estimated amount of $100,000, net of tax, for salary and related
benefit costs. However, these additions to staff will also enable
Union National to enhance both interest income and fee income in
2000 and beyond.
    The Bank also received regulatory approval to open a
community banking office at 401 Locust Street in Columbia.
Management currently anticipates an opening date in April 2000.
The Bank has entered into an agreement to lease the facilities
for a five-year period with four renewal options that have terms
of five years each. Staffing costs, office costs and other
general expenses are expected to impact results of operations for
the start-up and operation of the office. These operating costs
are currently expected to reduce results of operations for 2000
by an estimated amount of $125,000, net of tax. Management
anticipates that a significant part of these expenses will be
offset by interest and fee income generated from new customer
relationships at this location. The facility will require some
renovations, furnishings and equipment, which are currently
estimated at a cost of $130,000 to be incurred in 2000.
    In an effort to increase brand awareness for Union National
during 2000 there will be sign and other changes at our community
offices. The costs of sign changes are currently estimated at
$139,000, and the addition of these signs is expected to decrease
results of operations by $22,000 in 2000, net of tax, including
the write-off of existing sign assets.
    Union National has been evaluating its technology resources
and alternatives during 1999. A technology plan has been
developed and is expected to be implemented over the next two
years. These plans include a voice-response unit, a marketing
central information file (MCIF) database system, a bank-wide
network and a change in our core data processing system. These
system enhancements will allow Union National to provide
additional services to customers, more effectively market our
existing products and significantly increase operational
efficiencies. The systems implemented during 2000 are currently
expected to have an immaterial impact on the results of
operations. Future systems changes may materially impact the
results of operations in future years.
    Union National also will be developing and promoting several
new products in 2000. These products include a small business
checking account, an unsecured consumer line of credit, a
relationship package account and other additions to our current
product line. Management believes that these new products will
enhance results of operations for 2000.
    See Stockholders' Equity section for further discussion on
the impact of the above items on the capital resources of Union
National in 2000.

Year 2000 Date Change

    The Year 2000 Problem resulted because many computer programs
were written using two digits rather than four to define the
applicable year. In 1997, Union National initiated a company-wide
program to ensure that our date-sensitive information, telephone
and business systems and other certain equipment would properly
recognize the Year 2000 as a result of the century date change on
January 1, 2000 and other identified dates. The program focused
on the hardware, software, embedded chips, third-party vendors
and suppliers, as well as third-party networks that were
associated with the identified systems. The program was
substantially completed during the third quarter of 1999 and our
systems did not experience any significant disruptions as a
result of the century date change. Total nonrecurring Year 2000
related costs for 1999 and 1998, net of income taxes, were
immaterial. Management does not currently expect to incur any
significant additional costs related to Year 2000 compliance.
While there can be no assurance that no legal claims will arise
due to perceived or real Year 2000 issues, Union National does
not expect a material impact on its liquidity, financial position
or results of operations caused by internal Year 2000 issues or
by possible claims asserted by third parties.

Changes in Accounting Standards

    In June 1998, the Financial Accounting Standards Board issued
Statement No. 133 (SFAS No. 133), "Accounting for Derivative
Instruments and Hedging Activities." This Statement establishes
accounting and reporting standards for derivative instruments and
for hedging activities. In addition, the transition provisions of
this Statement allow Union National to reclassify held to
maturity securities to an available for sale classification.
Union National does not expect the provisions of this Statement
to have a material effect on the liquidity, results of operations
or capital resources of Union National when it becomes effective.
The effective date of this pronouncement was delayed until the
first quarter of 2001 through the issuance of SFAS No. 137,
however earlier application is encouraged.
Current Accounting Developments

    During the fourth quarter of 1999, the Financial Accounting
Standards Board issued an Exposure Draft on Business Combinations
and Intangible Assets. Under the proposed Draft, companies would
account for all business combinations using the purchase method;
amortize goodwill over its useful economic life, but in no event
over a period longer than 20 years; present goodwill charges on a
net-of-tax basis as the last component of continuing operations
on the income statement; recognize negative goodwill as an
extraordinary gain; and recognize all reliably measureable
identifiable intangible assets at their fair value, among other
recommendations. The FASB expects to issue a final statement in
the fourth quarter of 2000, applicable to business combinations
and to intangible assets acquired in transactions initiated after
the issuance date of the final statement.

Financial Condition

Investment Securities
    Union National has segregated its investment securities into
two categories: those held to maturity and those available for
sale. Union National possesses both the intent, subject to credit
impairment, and ability to hold each security in its investment

<PAGE>

portfolio to maturity. Union National does recognize that the
investment portfolio serves other functions including an ultimate
source of liquidity and a tool to manage interest rate risk. In
order to acknowledge these functions, Union National has
designated certain specific debt securities as being available
for sale. The designation of these securities as available for
sale gives Union National the ability to liquidate them without
calling into question Union National's intent to hold the
remaining portion of its portfolio to maturity. In addition, all
marketable equity securities are classified as available for
sale. Unrealized holding gains and losses for available for sale
securities are reported as Accumulated Other Comprehensive Income
as a separate component of stockholders' equity, net of tax,
until realized. Securities classified as being held to maturity
will continue to be carried in the financial statements at their
amortized cost. The Bank's mortgage-backed securities are issued
by U.S. Government agencies or corporations.
    The amortized cost of the investment securities increased by
$7,009,000 from the prior year, representing a 9.3% increase. The
increase primarily consisted of purchases of obligations of state
and political subdivisions, corporate debt securities and
mortgage-backed securities, which amounted to an increase in
amortized cost of $10,604,000 from the prior year. The net
increase in the investment securities was funded primarily by
growth in average deposits and average borrowings.
    Fixed-rate mortgage-backed securities, known as
collateralized mortgage obligations (CMOs), had an amortized cost
of $19,593,000 at December 31, 1999, compared to $17,032,000 at
December 31, 1998. These CMOs had a weighted-average yield of
6.42% at December 31, 1999. As of December 31, 1999, the expected
weighted-average life of these CMOs was approximately 7.4 years,
as compared to 4.0 years at December 31, 1998. The weighted-
average life represents expected cash flows of the investment
weighted over time. The increase in the weighted-average life
from 1998 to 1999 resulted from the significant rise in market
interest rates during the second half of 1999. These increased
rates decreased the payment speeds on the underlying mortgage
loans resulting in the reduction of overall investment cash
flows. The weighted-average life of the CMOs at December 31,
1999, increases to approximately 9.5 years if there is an
immediate increase in long-term market interest rates of 2% and
decreases to approximately 2.3 years if there is an immediate
decrease in long-term market interest rates of 2%.
    Due to the generally lower long-term mortgage rates during
the first half of 1999 as compared to 1998, the prepayment speed
on adjustable-rate mortgage securities significantly increased as
homebuyers moved to lower-cost fixed-rate mortgages. Higher
prepayment speeds on investment securities purchased with a
premium will depress the net interest margin as the premium is
amortized more rapidly. The amortized cost of mortgage-backed
securities with adjustable-rate caps of 2% per year amounted to
$6,282,000 at December 31, 1999, and $4,968,000 at December 31,
1998. The amortized cost of mortgage-backed securities with
adjustable-rate caps of 1% per year amounted to $2,817,000 at
December 31, 1999, and $3,775,000 at December 31, 1998. The
amortized cost of floating-rate securities, including adjustable-
rate mortgage-backed securities, amounted to $10,742,000 at
December 31, 1999, and $10,758,000 at December 31, 1998.
     The expected cash flows from the investment securities,
including estimated prepayments and expected call options, is
currently estimated at $11,772,000 for 2000, which represents
approximately 15% of the Bank's investment securities as compared
to nearly 26% as estimated on December 31, 1998, for 1999. This
decline in expected cash flows is mainly a result of the slowdown
in expected cash flows from CMOs. These factors affecting the
Bank's investment securities, as previously discussed, are
included in the Bank's internal management information when
assessing liquidity and interest rate risks. See sections on
Liquidity and Market Risk   Interest Rate Risk for further
discussions on these risks.
    Management periodically assesses the strategy of selling
adjustable-rate mortgage-backed securities, CMOs and other
available for sale securities. Investment security purchases and
sales are affected in order to enhance the Bank's net interest
margin, while managing liquidity and interest rate risk within
specified limits. Based on the current interest rate environment,
Management will be evaluating its available for sale portfolio
for possible opportunities to increase its earnings for year 2000
and future years through potential investment security sales.
Management currently expects that net investment gains or
losses realized in 2000 will be immaterial.
    Union National did not hold any subinvestment grade security
or a security that had a market value decline below cost that is
other than temporary at December 31, 1999. In addition, there are
no significant concentrations of investments (greater than 10% of
stockholders' equity) in any individual security issuer.
    At December 31, 1999, the total unrealized holding loss for
securities classified as available for sale was $1,572,000, and
the total unrealized holding loss for securities classified as
held to maturity was $1,092,000. In comparison, at December 31,
1998, the total unrealized holding gain for securities classified
as available for sale was $366,000 and the total unrealized
holding gain for securities classified as held to maturity was
$445,000. The unrealized holding gain (loss) on the available for
sale securities, net of income tax effect, amounted to a decrease
in stockholders' equity of $1,038,000 at December 31, 1999, and
an increase of $242,000 at December 31, 1998. Except as discussed
under the Net Interest Income section with regards to the impact
of interest rate changes on the results of operations, Management
believes that the effects of any unrealized losses in the
available for sale investment portfolio on future earnings,
liquidity and capital resources to be immaterial.

The following shows the summary of investment securities held by
Union National:
<TABLE>
<CAPTION>
  (In Thousands)            Carrying Value at December 31,
                 ________________________________________________
                            1999                     1998
                 _______________________    _____________________
                   Available    Held to     Available    Held to
                   for Sale     Maturity     for Sale    Maturity
                 ____________   ________    __________   ________
<S>                  <C>          <C>          <C>          <C>
U. S. Treasury
 Securities         $ 2,001    $     0      $  3,560    $      0
Obligations of
 Other U.S.
 Government Agencies 11,013          0        14,220           0
Obligations of State
 and Political
 Subdivisions             0     25,452             0      21,806
Corporate Securities  5,592      3,260         1,958       2,273
Mortgage-Backed
 Securities          30,110          0        28,982           0
Equity Securities     3,398          0         2,956           0
                 ____________   ________    __________   ________
 Total              $52,114    $28,712      $ 51,676     $24,079
                 ============   ========    ==========   ========

<CAPTION>

    (In Thousands)            Carrying Value at December 31,

                ________________________________________________
                            1997
                ________________________
                  Available     Held to
                   for Sale     Maturity
                ____________   _________
<S>                  <C>          <C>
U. S. Treasury
 Securities          $ 4,018    $     0
Obligations of
 Other U.S.
 Government Agencies  18,397          0
Obligations of State
 and Political
 Subdivisions              0     17,361
Corporate Securities       0      1,509
Mortgage-Backed
 Securities           20,808          0
Equity Securities      2,644          0
                ____________   _________
  Total             $ 45,867    $18,870
                ============   =========

</TABLE>
<PAGE>
The following table illustrates the maturities of investment
securities and the weighted-average yields based upon amortized
costs as of December 31, 1999. Yields are shown on a taxable
equivalent basis, assuming a 34% federal income tax rate.
<TABLE>
<CAPTION>
                          Within     1 - 5     5 - 10     Over
    (In Thousands)        1 Year     Years      Years   10 Years
                         ________   _______   _______   _________
<S>                        <C>       <C>       <C>        <C>
Available for Sale Securities:
U.S. Treasury Securities:
  Estimated Market Value  $ 2,001   $     0    $     0   $     0
  Amortized Cost            2,006         0          0         0
  Yield                      5.57%

Obligations of Other U.S.
 Government Agencies:
  Estimated Market Value        0     4,151      6,862         0
  Amortized Cost                0     4,217      7,295         0
  Yield                                5.63%      5.78%
Mortgage-Backed Securities
 by Contractual Maturity:*
  Estimated Market Value        0         0      1,443    28,667
  Amortized Cost                0         0      1,499    29,750
  Yield                                           5.42%     6.49%

Corporate Securities:
  Estimated Market Value        0     3,650          0     1,942
 Amortized Cost                 0     3,700          0     1,999
  Yield                                6.43%                6.02%
Equity Securities:
  Estimated Market Value
  Amortized Cost
  Yield

Held to Maturity Securities:
Obligations of State and
 Political Subdivisions:
  Estimated Market Value        0       972      2,963    20,502
  Amortized Cost                0       974      3,010    21,468
  Yield                                7.00%      7.17%     7.71%

Corporate Securities:
  Estimated Market Value      499       246        938     1,500
 Amortized Cost               501       253      1,006     1,500
 Yield                       6.03%     5.36%      6.46%     9.25%
Total Securities:
  Estimated Market Value
  Amortized Cost
  Yield

*It is anticipated that these mortgage-backed securities will
be repaid prior to their contractual maturity dates. The
weighted-average yield for mortgage-backed securities is impacted
for normal amortization and estimated prepayments based on
current market interest rates.

<CAPTION>

    (In Thousands)           Total
                            ______
<S>                          <C>
Available for Sale Securities:
U.S. Treasury Securities:
  Estimated Market Value  $ 2,001
  Amortized Cost            2,006
  Yield                      5.57%

Obligations of Other U.S.
 Government Agencies:
  Estimated Market Value   11,013
  Amortized Cost           11,512
  Yield                      5.73%

Mortgage-Backed Securities
 by Contractual Maturity:*
  Estimated Market Value   30,110
  Amortized Cost           31,249
  Yield                      6.44%

Corporate Securities:
  Estimated Market Value    5,592
  Amortized Cost            5,699
  Yield                      6.29%

Equity Securities:
  Estimated Market Value    3,398
  Amortized Cost            3,221
  Yield                      6.78%

Held to Maturity Securities:
Obligations of State and
 Political Subdivisions:
  Estimated Market Value   24,437
  Amortized Cost           25,452
  Yield                      7.62%

Corporate Securities:
  Estimated Market Value    3,183
  Amortized Cost            3,260
  Yield                      7.59%
                            ______
Total Securities:
  Estimated Market Value  $79,734
  Amortized Cost           82,399
  Yield                      6.73%
                            ======

*It is anticipated that these mortgage-backed securities will
be repaid prior to their contractual maturity dates. The
weighted-average yield for mortgage-backed securities is impacted
for normal amortization and estimated prepayments based on
current market interest rates.

</TABLE>

Loans
    Total net loans were $174,854,000 at December 31, 1999,
representing an $11,058,000, or 6.8%, increase over net loans of
$163,796,000 at December 31, 1998. As shown in the following
table, the increase in loans resulted primarily from continued
demand for residential and commercial mortgage loans. The growth
in residential mortgage loans included growth in lines of credit
secured by residential real estate. At December 31, 1999, there
were no loan concentrations over 10% of loans outstanding to any
one category or borrower. However, loans secured by real estate
constitute 86% of the Bank's loan portfolio; consequently, the
quality of these loans is affected by the region's economy and
real estate market. Total net loans with variable-rate pricing
amounted to $53,743,000 at December 31, 1999, and $50,853,000 at
December 31, 1998. See section on Market Risk   Interest Rate
Risk.
    Other than as described herein, Management does not believe
there are any trends, events or uncertainties which are
reasonably expected to have a material adverse impact on future
results of operations, liquidity or capital resources. Further,
based on known information, Management believes that the effects
of current and past economic conditions and other unfavorable
business conditions may result in the inability of loans
amounting to $2,092,000 to comply with their respective repayment
terms. This represents a decrease from the amount of $2,526,000
at December 31, 1998. The decrease is primarily a result of
several loans that were transferred to nonaccrual status during
1999. In aggregate, these loans are well-secured, essentially
with real estate, equipment and vehicles. Management currently
believes that potential losses on these loans have already been
provided for in the Allowance for Loan Losses. These loans are
not considered impaired as defined by current generally accepted
accounting principles. The borrowers are of special mention since
they have shown a decline in financial strength and payment
quality.  Management has increased its monitoring of the
borrowers' financial strength. In addition, Management expects
that a portion of these loans will be classified as nonperforming
in 2000.  The nonperforming loans table, appearing in the section
entitled Nonperforming Assets, does not include the
aforementioned loans.
<PAGE>
<TABLE>
Loans are composed of the following:
<CAPTION>
                                           December 31,
                              __________________________________
      (In Thousands)             1999        1998       1997
                              __________   _________   __________
<S>                              <C>         <C>         <C>
Real Estate-Mortgage:
  First and Second Residential $103,264    $ 99,984   $ 93,495
  Commercial and Industrial      34,332      29,968     23,777
  Construction and Land
   Development                    5,943       6,586      9,630
  Agricultural                    6,355       5,727      4,598
Commercial and Industrial         7,571       6,042      6,035
Consumer                          8,725       9,311      9,320
Agricultural                      2,073       2,550      2,213
Other                             6,653       3,698      3,720
                              __________   _________   __________
   Total Loans                  174,916     163,866    152,788
Less: Unearned Income               (62)        (70)       (89)
                              __________   _________   __________
   Net Loans                   $174,854    $163,796   $152,699
                              ==========   =========   ==========
<CAPTION>
                                           December 31,
                             ____________________________________
      (In Thousands)             1996        1995
                              __________   _________
<S>                               <C>         <C>
Real Estate-Mortgage:
  First and Second Residential $ 82,169    $ 75,430
  Commercial and Industrial      21,948      21,098
  Construction and Land
   Development                    4,035       4,198
  Agricultural                    4,368       3,602
Commercial and Industrial         5,235       4,725
Consumer                          8,794       7,853
Agricultural                      1,609       1,609
Other                             2,299       2,003
                              __________   _________
   Total Loans                  130,457     120,518
Less: Unearned Income               (66)       (101)
                              __________   _________
   Net Loans                   $130,391    $120,417
                              ==========   =========
</TABLE>

The loan maturities and interest sensitivity of total loans,
excluding residential real estate mortgages and consumer loans at
December 31, 1998, are as follows:
<TABLE>
<CAPTION>
                                      Years to Maturity*
                            ____________________________________
                            Within    1 - 5     Over
    (In Thousands)          1 Year    Years    5 Years   Total
                            _______ _________ ________ _________
<S>                           <C>       <C>     <C>      <C>
Commercial,
  Agricultural and Other    $ 9,168  $ 7,397  $40,419  $56,984
Construction and Land
   Development                4,493      660      790    5,943
                            _______ _________ ________ _________
   Total                    $13,661  $ 8,057  $41,209  $62,927
                            ======= ========= ======== =========
Fixed Interest Rates        $ 4,054  $ 6,283  $15,846  $26,183
Floating or Adjustable
   Interest Rates             9,607    1,774   25,363   36,744
                            _______ _________ ________ _________
   Total                    $13,661  $ 8,057  $41,209  $62,927
                            ======= ========= ======== =========
*Due to interest rate levels, economic conditions, and other
relevant factors, it is anticipated that there will be loans that
are repaid prior to their contractual maturity dates.

</TABLE>
Nonperforming Assets
     Nonperforming loans consist of nonaccruing loans and loans
90 days or more past due. Nonaccruing loans are comprised of
loans that are no longer accruing interest income because of
apparent financial difficulties of the borrower. Interest on
nonaccruing loans is recorded when received only after past due
principal is brought current and deemed collectible in full. If
nonaccrual loans had been current and in accordance with their
original terms, gross interest income of approximately $125,000
and $96,000 would have been recorded on such loans for the years
ended December 31, 1999, and 1998, respectively. Interest income
recognized on such loans approximated $70,000 for the year ended
December 31, 1999, and $27,000 for the year ended December 31,
1998. At December 31, 1999, total nonperforming loans amounted to
$1,475,000, or .8% of total net loans, as compared to $974,000 at
December 31, 1998. The increase in nonperforming loans is
primarily a result of two commercial loans that are in nonaccrual
status at December 31, 1999. These loans are both mostly secured
by real estate. Historically, the percent of nonperforming loans
to total net loans as of December 31, for the previous five-year
period, was an average of .7%. There are no troubled debt
restructurings.
     At December 31, 1999, the recorded investment in loans that
are considered to be impaired under generally accepted accounting
principles was $1,041,000 as compared to $70,000 at December 31,
1998. These amounts are included in the nonaccrual loans
reflected below. The measure of impairment is based on the fair
value of the collateral, since foreclosure is probable. The
related allowance for loan losses amounted to $82,000 at December
31, 1999, and $22,000 at December 31, 1998. The average recorded
investment in impaired loans was $367,000 during the year ended
December 31, 1999, and $451,000 during the year ended December
31, 1998.

<TABLE>

The following shows the summary of nonperforming loans:
<CAPTION>
                                            December 31,
                                _________________________________
      (In Thousands)               1999        1998      1997
                                _________    ________   _________
<S>                                <C>         <C>        <C>
Nonaccruing Loans               $ 1,343     $   131     $    94
Accrual Loans - 90 days or
  more past due                     132         843         612
                               _________    ________   __________
  Total Nonperforming
    Loans                       $ 1,475     $   974     $   706
                               =========    ========   ==========
  Nonperforming Loans
    as a % of Net Loans              .8%         .6%         .5%
                               =========    ========   ==========
  Allowance for Loan
    Losses as a % of
    Nonperforming Loans             121%        179%        226%
                               =========    ========   ==========
<CAPTION>
                                            December 31,
                              ___________________________________
        (In Thousands)               1996        1995
                             _____________ _____________
<S>                                <C>          <C>
Nonaccruing Loans               $    91     $   203
Accrual Loans - 90 days or
  more past due                     752       1,022
                             _____________ _____________
  Total Nonperforming
    Loans                       $   843     $ 1,225
                               =========    ========
  Nonperforming Loans
    as a % of Net Loans              .6%        1.0%
                               =========    ========
  Allowance for Loan
    Losses as a % of
    Nonperforming Loans             163%        103%
                               =========    ========
</TABLE>
   Other real estate owned includes assets acquired through
foreclosure and loans identified as in-substance foreclosures.  A
loan is classified as in-substance foreclosure when Union
National has taken possession of the collateral regardless of
whether formal foreclosure proceedings have taken place.  Other
real estate owned is valued at the lower of the loan balance at
the time of foreclosure or estimated fair market value, net of
selling costs, and is included in other assets.  Gains and losses
resulting from the sale or write-down of other real estate and
income and expenses related to the operation of other real estate
owned are recorded in
<PAGE>

other expenses. Other real estate owned amounted to $20,000 at
December 31, 1999, and $379,000 at December 31, 1998. The other
real estate owned as of December 31, 1999, represents residential
real estate that was foreclosed on after a borrower defaulted on
their residential mortgage loan. The other real estate expense,
including cost write-downs to fair value, which impacted the
results of operations amounted to $17,000 for the year ended
December 31, 1999, and $26,000 for the year ended December 31,
1998.

Loan Quality/Allowance for Loan Losses
    The allowance for loan losses is maintained at a level
believed adequate by Management to absorb estimated probable loan
losses. Management is responsible for the adequacy of the
allowance for loan losses, which is formally reviewed by
Management on a quarterly basis. The allowance is increased by
provisions charged to operating expense and reduced by net
charge-offs. Management's periodic evaluation of the adequacy of
the allowance is based on Union National's past loan loss
experience, known and inherent risks in the portfolio, adverse
situations that may affect the borrower's ability to repay
(including the timing of future payments), the estimated value of
any underlying collateral, composition of the loan portfolio,
current economic conditions and other relevant factors. While
Management uses available information to make such evaluations,
future adjustments to the allowance may be necessary if economic
conditions differ substantially from the assumptions used in
making the evaluation.  In addition, various regulatory agencies,
as an integral part of their examination process, review the
Bank's allowance for loan losses. Such agencies may require the
Bank to recognize additions to the allowance based on their
judgement of information available to them at the time of their
examination. After Management's assessment, no adjustment to the
allowance for loan losses was necessary as a result of the Office
of Comptroller's most recent examination as of June 30, 1999.
    As of October 1999, a review of selected portions of the
Bank's loan portfolio was completed by an independent consultant.
This review included an evaluation of credit relationships
exceeding $400,000 and all loans on nonaccrual status, past due
90 days or more or on the Bank's internal watchlist. At the
conclusion of the review, the consultant did not recommend that
Management increase the allowance for loan losses. Over the past
year and a half loan reviews have been performed semiannually by
an independent consultant. Prior to that, the Bank had the loan
portfolio formally reviewed by an independent loan review officer
on an ongoing basis. For 2000, it is anticipated that an ongoing
loan review will be performed on selected portions of the loan
portfolio by an independent consultant. In addition, the loan
portfolio is reviewed annually by the external independent
auditors. Senior Management evaluates credit risk on a quarterly
basis, or more frequently, as circumstances dictate. At December
31, 1999, the percent of loans secured by real estate was 86% of
the overall loan portfolio. Union National's policy generally
requires that the borrower provides 20% equity for first mortgage
real estate loans and 20% equity for other loans secured by real
estate.
     The allowance for loan losses increased by $40,000 from the
prior year, which was primarily a result of an increase in loans
outstanding of 6.8%. The ratio of the allowance for loan losses
to net loans was 1.02% at December 31, 1999, as compared to 1.06%
at December 31, 1998. Management believes, based on information
currently available, that the current allowance for loan losses
of $1,783,000 is adequate to meet potential loan losses.
Management expects loan charge-offs, net of recoveries, to be
comparable to the average level of net loan charge-offs for the
previous five-year period.

<TABLE>
Analysis of Allowance for Loan Losses
<CAPTION>
                                      Years Ended December 31,
                                _________________________________
    (In Thousands)                  1999        1998      1997
                                __________   ________   _________
<S>                                 <C>        <C>       <C>
Average Total Loans
  Outstanding
    (Less Unearned Income)      $169,667    $ 162,090   $140,925
                                ==========   ========   =========
Allowance for Loan Losses,
  Beginning of Year             $  1,743    $   1,593   $  1,371
  Loans Charged-Off During Year:
  Real Estate-Mortgage*               72           16          0
  Installment Loans to
    Individuals                       74          186         83
 Commercial, Industrial
    and Agricultural                  77           34        117
                                __________   ________   _________
    Total Charge-Offs                223          236        200
Recoveries of Loans
  Previously Charged-Off:
    Real Estate-Mortgage*              0            0          0
  Installment Loans to
    Individuals                       35           51         13

 Commercial, Industrial
      and Agricultural                14           10         19
                                __________   ________   _________
    Total Recoveries                  49           61         32
                                __________   ________   _________
    Net Loans Charged-Off            174          175        168
Provision for Loan Losses
  Charged to Operations              214          325        390
                                __________   ________   _________
Allowance for Loan Losses,
  End of Year                   $  1,783      $ 1,743    $ 1,593
                                ==========   ========   =========
Ratio of Net Loans
  Charged-Off to Average
  Loans Outstanding                  .10%         .11%       .12%
                                ==========   ========   =========
Ratio of Allowance for
  Loan Losses to Net Loans
  at End of Year                    1.02%        1.06%      1.04%
                                ==========   ========   =========

* During this five-year period, there were no charge-offs or
recoveries of real estate construction loans.

<CAPTION>

                                      Years Ended December 31,
                                _________________________________

    (In Thousands)                    1996      1995
                                __________   ________
<S>                                 <C>         <C>
Average Total Loans
  Outstanding
    (Less Unearned Income)        $124,483  $115,026
                                ==========   ========
Allowance for Loan Losses,
  Beginning of Year                $ 1,265   $ 1,182
Loans Charged-Off During Year:
  Real Estate-Mortgage*                  0         0
  Installment Loans to
    Individuals                         47        57
 Commercial, Industrial
    and Agricultural                    18        50
                                __________   ________
    Total Charge-Offs                   65       107
Recoveries of Loans
  Previously Charged-Off:
    Real Estate-Mortgage*                0         0
    Installment Loans to
      Individuals                       11         7
    Commercial, Industrial
      and Agricultural                  10        24
                                __________   ________
    Total Recoveries                    21        31
                                __________   ________
    Net Loans Charged-Off               44        76
Provision for Loan Losses
  Charged to Operations                150       159
                                __________   ________
Allowance for Loan Losses,
  End of Year                     $  1,371   $ 1,265
                                ==========   ========
Ratio of Net Loans
  Charged-Off to Average
  Loans Outstanding                    .04%      .07%
                                ==========   ========
Ratio of Allowance for
  Loan Losses to Net Loans
  at End of Year                      1.05%     1.05%
                                ==========   ========

* During this five-year period, there were no charge-offs or
recoveries of real estate construction loans.

</TABLE>
<PAGE>

    With the services of the independent loan review consultant
and other consultants in 1999, Management has reassessed its
allocation of the allowance for loan losses. The allowance for
loan losses is evaluated based on an assessment of the losses
inherent in the loan portfolio. This assessment results in an
allowance consisting of two components, allocated and
unallocated. The allocated component of the allowance for loan
losses reflects expected losses resulting from the analysis of
individual loans, developed through specific credit allocations
for individual loans and historical loss experience for each loan
category. The determination of the unallocated portion of the
allowance inherently involves a higher degree of uncertainty and
considers current risk factors that may not have yet manifested
themselves in Union National's historical loss factors used to
determine the allocated component of the allowance, and it
recognizes that knowledge of the portfolio may be incomplete.
    The following sets forth an allocation of the allowance for
loan losses by category. As discussed above, 1999 shows an
unallocated portion of the allowance for loan losses. The
specific allocation in any particular category may be reallocated
in the future to reflect current conditions. Accordingly,
Management considers the entire allowance to be available to
absorb losses in any category.
<TABLE>
<CAPTION>
                                     December 31, 1999
                       ________________________________________
                              Amount          Percent of Loans
                          (In Thousands)      in each Category
                        _________________     ___________________
<S>                            <C>                   <C>
Commercial, Industrial
  and Agricultural           $    857                 36%
Real Estate-
  Residential Mortgages           460                 59
Installment Loans to
  Individuals                     142                  5
Unallocated                       324
                             ____________            _____

                             $  1,783                100%
                             ============            =====
<CAPTION>
                                     December 31, 1998
                         ________________________________________
                              Amount          Percent of Loans
                          (In Thousands)      in each Category
                        _________________     ___________________
<S>                            <C>                   <C>
Commercial, Industrial
  and Agricultural           $    705                 33%
Real Estate-
  Residential Mortgages           543                 61
Installment Loans to
  Individuals                     495                  6
Unallocated                         0
                             ____________            _____
                             $  1,743                100%
                             ============            =====
</TABLE>
Liquidity
    Union National's objective is to maintain adequate liquidity
to fund needs at a reasonable cost and to provide contingency
plans to meet unanticipated funding needs or a loss of funding
sources, while minimizing interest rate risk. Adequate liquidity
provides resources for credit needs of borrowers, for depositor
withdrawals and for funding Corporate operations. Sources of
liquidity are as follows:
- maturing investment securities, which include overnight
investments in federal funds sold;
- overnight correspondent bank borrowing on various credit lines;
- payments on loans and mortgage-backed securities; and
- a growing core deposit base.
Management believes that its core deposits are fairly stable even
in periods of changing interest rates. Liquidity management is
governed by policies and measured on a quarterly basis. These
measurements indicate that liquidity generally remains stable and
that liquidity consistently exceeds the Bank's minimum defined
level. There are no known trends, or any known demands,
commitments, events or uncertainties that will result in, or that
are reasonably likely to result in, liquidity increasing or
decreasing in any material way.
    Membership in the FHLB provides the Bank with additional
liquidity alternatives such as short- or long-term funding on
fixed- or variable-rate terms. As of December 31, 1999, the Bank
had received long-term advances of $27,035,000 and short-term
advances of $8,200,000 from its available credit of $73,689,000
at the FHLB for purposes of funding loan demand and mortgage-
backed security purchases. Total outstanding borrowings of
$35,235,000 at December 31, 1999, had a weighted-average rate of
5.37% and total borrowings of $30,624,000 at December 31, 1998,
had a weighted-average rate of 5.46%. As of December 31, 1999,
advances of $9,500,000 are due in 2000 and advances of
$15,000,000 are convertible in 2000. The FHLB's convertible
fixed-rate advances allow the FHLB the periodic option to convert
to a LIBOR adjustable-rate advance. Upon the FHLB's conversion,
the Bank has the option to repay the respective advances in full.
Subsequent to December 31, 1999, the FHLB converted $10,000,000
of advances at a weighted-average rate of 5.65%. These advances
were replaced with new convertible advances at a weighted-average
rate of 5.85%. Based on current market interest rates, the
remaining convertible advance of $5,000,000, which has a current
rate of 4.70%, is expected to convert in September 2000. See
section on Market Risk   Interest Rate Risk for further analysis
of these advances.

Market Risk   Interest Rate Risk
    As a financial institution, Union National's primary
component of market risk is interest rate volatility.
Fluctuations in interest rates will ultimately impact the level
of income and expense recorded on a large portion of the Bank's
assets and liabilities. Virtually all of Union National's
interest-sensitive assets and liabilities are held by the Bank,
and therefore, interest rate risk management procedures are
performed by the Bank. The nature of the Bank's current
operations is such that the Bank is not subject to foreign
currency exchange or commodity price risk. Union National does
not own any trading assets. Union National has not entered into
any hedging transactions such as interest rate floors, caps and
swaps.
    The objectives of interest rate risk management are to
maintain or increase net interest income over a broad range of
market interest rate movements. The Asset and Liability
Management Committee is responsible for managing interest rate
risk using policies approved by the Bank's Board of Directors.
The Bank manages interest rate risk by changing the mix or
repricing characteristics of its investment securities portfolio
and borrowings from the FHLB and by the promotion or development
of specific loan and deposit products. The Bank retains an
outside consulting group to assist in monitoring its interest
rate risk using income simulation models on a quarterly basis.
The simulation model measures the sensitivity of future net
interest income to hypothetical changes in market interest rates.
    In addition, the Bank utilizes an interest rate-sensitivity
report called a "GAP" report, which illustrates the time
intervals of cash flows or the next repricing date of interest-
earning assets and interest-bearing liabilities. The Bank's GAP
reports reflect a consistent negative rate-sensitivity position
throughout the first year, in that rate-sensitive liabilities
exceed rate-sensitive assets. The following analysis reflects
cumulative rate-sensitive assets of $90,752,000 as compared to
cumulative rate-sensitive liabilities of $124,354,000 as of the
one-year time frame. The Bank's cumulative interest-sensitivity
gap for the one-year time frame is a negative 12.5% of total
assets at December 31, 1999, as compared to a policy range of
plus 15% to negative 15%, and as

<PAGE>

compared to a negative 2.8% at December 31, 1998 (adjusted to
be comparable for revised assumptions at December 31, 1999). The
interest rate-sensitivity analysis for the Bank with investment
securities at amortized cost at December 31, 1999, is as follows:
<TABLE>
Interest Rate Sensitivity
<CAPTION>
                          1 - 90    91 - 365    1 - 3    3 - 5
  (In Thousands)           Days       Days      Years    Years
                         ________   ________  ________  ________
<S>                         <C>       <C>        <C>      <C>
   ASSETS
Earning Assets:
 Mortgage-Backed Securities:
  Variable                $ 2,397 $  7,743    $  602   $      0
  Fixed                       773    1,342     1,285      4,798
 Investment Securities      4,110    5,721    13,353      4,109
 Net Loans:
  Variable                 24,552   12,334    10,472      6,385
  Fixed                     8,833   22,947    37,259     22,041
                          ________  ________  ________  ________
 TOTAL                   $ 40,665 $ 50,087  $ 62,971    $37,333
                          ========  ========  ========  ========
  LIABILITIES
Deposits:
Interest-Bearing Demand  $    666  $     0  $      0    $     0
Money Market               20,506        0         0          0
Savings                       101      743         0          0
Time                       27,437   54,382    22,170      3,662
FHLB Advances and
 Other Borrowings          13,002    7,517       809      3,347
                          ________  ________  ________  ________
TOTAL                    $ 61,712 $ 62,642  $ 22,979   $  7,009
                          ========  ========  ========  =======
Cumulative Interest-
 Sensitivity Gap         $(21,047)$(33,602) $  6,390  $  36,714
                          ========  ========  ========  =======
Cumulative Interest-
 Sensitivity Gap as a Percent
 of Total Assets             (7.8%)  (12.5%)     2.4%      13.7%
                          ========  ========  ========  =======
<CAPTION>
                          Over 5
  (In Thousands)           Years     Total
                         ________  ________
<S>                         <C>       <C>
   ASSETS
Earning Assets:
 Mortgage-Backed Securities:
  Variable                $     0   $10,742
  Fixed                    12,309    20,507
 Investment Securities     23,738    51,031
 Net Loans:
  Variable                      0    53,743
  Fixed                    30,031   121,111
                          ________  ________
  TOTAL                   $66,078  $257,134
                          ========  ========
     LIABILITIES
Deposits:
Interest-Bearing Demand  $ 31,429  $ 32,095
Money Market                    0    20,506
Savings                    26,204    27,048
Time                            0   107,651
FHLB Advances and
 Other Borrowings          11,460    36,135
                          ________  ________
 TOTAL                   $ 69,093  $223,435
                          ========  ========
 Cumulative Interest-
 Sensitivity Gap         $ 33,699
                          ========
   Cumulative Interest-
 Sensitivity Gap as a Percent
 of Total Assets              12.5%
                           ========
</TABLE>

  The amount of assets and liabilities shown, which reprice or
mature during a particular period, were determined based on the
earlier of when it reprices or when it is to be repaid for each
asset or liability. Callable investment securities are reflected
based on the security's anticipated call date, where the call on
the security is likely when compared to the current interest rate
yield curve. Also, loans and mortgage-backed securities are
reflected based on contractual amortization or contractual
interest rate adjustments and on estimates for prepayments and
refinancings based on current market interest rates. Interest-
bearing demand and savings deposits have always been considered a
stable source of funds, and although the rates are subject to
change, rates on these accounts historically have not changed as
quickly or as often as other loan and deposit rates. Based on a
historical analysis during periods of rising interest rates, a
portion of these deposits will invest in higher yielding
instruments. This portion is determined to be sensitive to
interest rate fluctuations in the earliest periods. Management
believes that the remaining balances of these deposits are not
repriceable based on current industry practice.  Management
currently does not expect to fluctuate the interest rates on
these deposit balances in any significant amount that would
materially affect its GAP or income simulation models.
    Certain shortcomings are inherent in the method of analysis
presented in the foregoing schedule. For example, although
certain assets and liabilities may have similar maturities or
periods to repricing, they may react in different degrees to
changes in market interest rates. Interest rates on certain types
of assets and liabilities may fluctuate in advance of or lag
behind changes in market interest rates. Additionally, certain
repriceable assets, such as adjustable-rate securities or loans,
have features, like annual and lifetime rate caps or floors, that
restrict changes in interest rates both on a short-term basis and
over the life of the asset. Further, a change in market interest
rates from the interest rate scenarios that existed on December
31, 1999, would likely cause assumptions, such as estimated
prepayment speeds, refinancings, imbedded options and early
withdrawals, to significantly change the GAP results above.
    In an effort to assess market risk, the Bank utilizes a
simulation model to determine the effect of gradual increases or
decreases in market interest rates on net interest income and net
income. The aforementioned assumptions are revised based on
defined scenarios of assumed speed and direction changes of
market interest rates. These assumptions are inherently uncertain
due to the timing, magnitude and frequency of rate changes and
changes in market conditions, as well as management strategies,
among other factors. Because it is difficult to accurately
quantify into assumptions the reaction of depositors and
borrowers to market interest rate changes, the actual net
interest income and net income results may differ from simulated
results. While assumptions are developed based upon current
economic and local market conditions, Management cannot make any
assurances as to the predictive nature of these assumptions.
    The simulation model assumes a hypothetical gradual shift in
market interest rates over a twelve-month period. This is based
on a review of historical changes in market interest rates and
the level and curve of current interest rates. The simulated
results represent the hypothetical effects to the Bank's net
interest income and net income. Projections for loan and deposit
growth were ignored in the simulation model. The simulation model
includes all of the Bank's earning assets and interest-bearing
liabilities and assumes a parallel and prorated shift in interest
rates over a twelve-month period. The percentage declines in the
table below are measured as percentage changes from the values of
simulated net interest income in the current rate scenario and
the impact of those changes on the prior year's net income. As a
result of the simulation model, the following reflects the Bank's
net interest income and net income sensitivity analysis as of
December 31, 1999 and 1998:

<PAGE>

<TABLE>
<CAPTION>
Sensitivity Analysis             Percent Decrease in Categories
                              ___________________________________
                              Market      Current       Market
                              Interest     Market      Interest
                               Rate       Interest       Rate
                             Decline 2%     Rates     Increase 2%
                             __________   _________   ___________
<S>                             <C>          <C>          <C>
Net Interest Income:
 Policy Limit                   <10%          -          <10%
Hypothetical Percent Decrease
  from Current Rate Scenario:
   As of December 31, 1999       <1%          -           <3%
   As of December 31, 1998       <3%          -            -
Net Income:
Hypothetical Percent Decrease
  from Prior Year's Net Income:
   As of December 31, 1999       <1%          -            <5%
   As of December 31, 1998       <6%          -            -
</TABLE>
   The preceding schedule indicates that as of December 31, 1999,
a hypothetical 2% decline in prevailing market interest rates
would cause the Bank's net interest income to decline less than
1% from the current rate scenario and after adjusting for income
taxes a 2% decline in rates would cause less than a 1% impact to
the net income in comparison to the prior year. As of December
31, 1999, a 2% rise in prevailing market interest rates would
cause the Bank's net interest income to decline less than 3% from
the current rate scenario and after adjusting for income taxes a
2% decline in rates would cause less than a 5% impact to the net
income in comparison to the prior year. The computations do not
contemplate any actions Management or the Asset Liability
Management Committee could undertake in response to changes in
market conditions or market interest rates.
    The Bank managed its interest rate risk position in 1999 by
the following:
- paying higher rates on various term certificates in order to
manage the average remaining term on certificates of deposit;
- marketing its variable-rate home equity line of credit (these
outstanding loans increased by $1,036,000 for the period);
- additions to or by repositioning of its investment security
portfolio into floating-rate, short- or long-term securities;
- increasing its extensions of adjustable- and floating-rate
loans for new or refinanced commercial and agricultural loans
(these outstanding loans increased by $2,944,000 for the period);
- managing and expanding the Bank's core deposit base
including deposits obtained in the Bank's commercial cash
management programs; and
- additions to or restructuring of adjustable- and fixed-rate
advances from the FHLB, including convertible advances.
The above strategies and actions impact interest rate risk and
are all included in the Bank's quarterly simulation models in
order to determine future asset and liability management
strategies. See related discussions in the section on Net
Interest Income.
<TABLE>
Deposits

The average amounts of deposits are summarized below:

<CAPTION>
                                      Years Ended December 31,
                                 ________________________________
   (In Thousands)                   1999       1998        1997
                                 __________   ________    _______
<S>                                  <C>        <C>         <C>
Demand Deposits                  $  21,904   $ 19,211    $16,504
Interest-Bearing Demand Deposits    52,084     44,528     38,134
Savings Deposits                    28,258     25,598     24,184
Time Deposits                      104,224     98,842     89,992
                                 __________   ________    _______
   Total                         $ 206,470   $188,179   $168,814
                                 ==========   ========    =======
</TABLE>
<TABLE>
The following is a breakdown of maturities of time deposits of
$100,000 or more:
<CAPTION>
                                              December 31,
                                   ______________________________
   (In Thousands)                      1999       1998      1997
                                  _________   ________   _______
<S>                                    <C>        <C>        <C>
Three months or less               $12,463    $ 8,388    $ 8,261
Over three months through six months 2,626      1,570        942
Over six months through twelve months5,530      2,076      4,030
Over twelve months                   3,266      4,316      3,124
                                   _________   ________   _______
   Total                           $23,885    $16,350    $16,357
                                   =========   ========   =======
</TABLE>
Stockholders' Equity
    Union National maintains capital ratios that are well above
the minimum total capital levels required by federal regulatory
authorities including the risk-based capital guidelines. The
average stockholders' equity to average assets ratio, which
measures the adequacy of capital, was 8.83% for 1999, as compared
to 9.51% for 1998. The decrease in this capital ratio is
primarily a result of 8.9% growth in average assets for the year,
a decline in the market value of available for sale securities
and open market treasury stock purchases in the amounts of
$1,353,000 in 1999 and $1,995,000 in 1998. Average stockholders'
equity grew by 1.1% from 1998 to 1999, as compared to 0.5% from
1997 to 1998. The dividend payout ratio, which represents the
percentage of earnings returned to the stockholders in the form
of cash dividends, was 46.1% for 1999 and 37.7% for 1998.
    Items that could have a material impact on capital resources
of Union National for 2000 include plans to open a community
banking office at 401 Locust Street in Columbia, plans to change
signs at our community banking offices and a contract in the
amount of $200,000 for the purchase of real estate. The contract
for the purchase of real estate is for land that is expected to
be used for the expansion of an existing community banking
office. The contract is subject to certain contingencies that
Management currently expects to be met. There are no other
material commitments for capital expenditures as of December 31,
1999. There are no known trends or uncertainties, including
regulatory matters,
<PAGE>
that are expected to have a material impact on the capital
resources of Union National for 2000, except as discussed below
concerning Union National's common stock repurchase plan. In
addition, see discussion on Regulatory Activity.
    On January 13, 2000, the Board of Directors of Union National
authorized and approved a plan to purchase up to 50,000 shares of
its outstanding common stock in open market or privately
negotiated transactions. The total number of shares to be
purchased under the plan represents approximately 2.0% of the
outstanding shares of Union National as of December 31, 1999. The
Board of Directors believes that a redemption or repurchase of
this type is in the best interests of Union National and its
stockholders as a method to enhance long-term shareholder value.
Currently, the shares are to be held as treasury shares (issued,
but not outstanding shares).
    The Bank has risk-based capital ratios exceeding the
regulatory requirement. The risk-based capital guidelines require
banks to maintain a minimum risk-based capital ratio of 8.0% at
December 31, 1999, as compared to the Bank's current risk-based
capital ratio of 13.88%. The total risk-based capital ratio is
computed by dividing stockholders' equity plus the allowance for
loan losses by risk-adjusted assets. Risk-adjusted assets are
determined by assigning credit risk-weighing factors from 0% to
100% to various categories of assets and off-balance-sheet
financial instruments.
    Banking regulations also require the Bank to maintain certain
minimum capital levels in relation to Bank assets. Failure to
meet minimum capital requirements could result in prompt
corrective action by the federal banking agencies. As of December
31, 1999 and 1998, the Bank was categorized as well-capitalized
under the regulatory framework for prompt corrective action.
There are no conditions or events since that year end that
Management believes have changed the Bank's category. The Bank
maintains the following leverage and risk-based capital ratios:
    Union National is subject to restrictions on the payment of
divi-

<TABLE>
<CAPTION>
      (In Thousands)                 December 31,  December 31,
                                        1999          1998
                                     ____________   ___________
<S>                                      <C>           <C>
Tier I - Total Stockholders' Equity   $ 23,176      $ 22,231
Tier II - Allowance for Loan Losses      1,783         1,743
                                     ____________   ___________
   Total Qualifying Capital           $ 24,959      $ 23,974
                                     ============   ===========
Risk-adjusted On-balance-sheet Assets $168,830      $155,280
Risk-adjusted Off-balance-sheet Exposure10,958         9,276
                                     ____________   ___________
   Total Risk-adjusted Assets         $179,788      $164,556
                                     ============   ===========
Actual Capital Ratio:
 Tier I Capital to Average Total Assets   8.70%         8.84%
 Minimum Required                         4.00          4.00
 To Be Well-Capitalized Under Prompt
  Corrective Action Provisions            5.00          5.00
Risk-based Capital Ratios:
 Tier I Capital Ratio - Actual           12.89%        13.51%
 Minimum Required                         4.00          4.00
 To Be Well-Capitalized under Prompt
  Corrective Action Provisions            6.00          6.00
 Total Capital Ratio - Actual            13.88%        14.57%
 Minimum Required                         8.00          8.00
 To Be Well-Capitalized under Prompt
  Corrective Action Provisions           10.00         10.00
Total Risk-Based Capital in Excess of the
  Minimum Regulatory Requirement      $ 10,576      $ 10,810
                                     ============   ===========
</TABLE>
dends to its stockholders pursuant to the Pennsylvania Business
Corporation Law of 1988, as amended (the "BCL"). The BCL operates
generally to preclude dividend payments if the effect thereof
would render Union National insolvent, or result in negative net
worth, as defined. As a practical matter, Union National's
payment of dividends is contingent upon its ability to obtain
funding in the form of dividends from the Bank. Payment of
dividends to Union National by the Bank is subject to the
restrictions set forth in the National Bank Act. Generally, the
National Bank Act would permit the Bank to declare dividends
in 2000 of approximately $819,000, plus an amount equal to
the net profits of the Bank in 2000 up to the date of any such
dividend declaration.
    Union National maintains a Dividend Reinvestment and Stock
Purchase Plan (the Plan). Stockholders of common stock may
participate in the Plan, which provides that additional shares of
common stock may be purchased with reinvested dividends and
optional cash payments within specified limits at prevailing
market prices. At December 31, 1999, the enrollment in the Plan
was 18% of the shares outstanding. The Plan is currently
estimated to increase capital in the amount of $340,000 in 2000,
but this will be offset by the shares purchased under Union
National's common stock repurchase plan.
     No shares of common stock are reserved for issuance in the
event of conversions or the exercise of warrants, options or
other rights, except as follows:
- 131,072 shares which are reserved for issuance under Union
National's 1988 and 1997 Stock Incentive Plans;
- 105,000 shares which are reserved for issuance under Union
National's 1997 Employee Stock Purchase Plan;
- 63,000 shares which are reserved for issuance under Union
National's 1999 Independent Directors' Stock Option Plan; and
- 165,375 shares which are reserved for issuance under Union
National's Dividend Reinvestment and Stock Purchase Plan.
As of December 31, 1999, options to purchase 43,771 shares have
been granted under Union National's Stock Incentive Plans.  There
were 5,071 options granted in 1997 with an exercise price of
$22.16, there were 12,600 options granted in 1998 with an
exercise price of $18.81 and there were 26,100 options granted in
1999 with an exercise price of $20.39. No options have been
exercised as of December 31, 1999, under these plans. As of
December 31, 1999, options to purchase 57,750 shares have been
granted under Union National's 1997 Employee Stock Purchase Plan.
There were 15,750 options granted in 1997 and 21,000 options
granted in 1998 and 1999. The exercise price for such options as
of December 31, 1999, was $15.12. As of December 31, 1999, 2,043
options have been
<PAGE>
exercised under this plan. As of December 31, 1999, 40,344 shares
have been issued under Union National's Dividend Reinvestment and
Stock Purchase Plan.

Regulatory Activity

    From time to time, various types of federal and state
legislation have been proposed that could result in additional
regulation of, and restrictions on, the business of Union
National and the Bank.  On November 12, 1999, President Clinton
signed into law the Gramm-Leach-Bliley Act of 1999, which is also
known as the Financial Services Modernization Act. The act
repeals some Depression-era banking laws and will permit banks,
insurance companies and securities firms to engage in each
others' businesses after complying with certain conditions and
regulations which are yet to be finalized. The act grants to
community banks the power to enter new financial markets as a
matter of right that larger institutions have managed to do on an
ad hoc basis. At this time, Union National is continuing to
assess the impact of and opportunities available in the Act, but
has no immediate plans to pursue these additional business
activities.
    Union National does not believe that the Financial Services
Modernization Act will have an immediate positive or negative
material effect on its operations. However, the act may have the
result of increasing the amount of competition that Union
National faces from larger financial service companies, many of
whom have substantially more financial resources, which may now
offer banking services in addition to insurance and brokerage
services.
    As a consequence of the extensive regulation of commercial
banking activities in the United States, Union National's and the
Bank's business is particularly susceptible to being affected by
federal legislation and regulations that may increase the cost of
doing business. Except as discussed above, Management is not
aware of any other current specific recommendations by regulatory
authorities or proposed legislation, which if they were
implemented, would have a material adverse effect upon the
liquidity, capital resources or results of operations. However,
the general cost of compliance with numerous and multiple federal
and state laws and regulations does have, and in the future may
have, a negative impact on Union National's results of
operations.
    Further, the business of Union National is affected by the
state of the financial services industry in general. As a result
of legal and industry changes, Management predicts that the
industry will continue to experience an increase in
consolidations and mergers as the financial services industry
strives for greater cost efficiencies and market share.
Management believes that such consolidations and mergers may
enhance its competitive position as a community bank.
    The Bank is routinely examined by the OCC and no material
adverse impact is anticipated on current or future operations and
financial position as a result of this process. The last
Community Reinvestment Act performance evaluation by the OCC
resulted in a "satisfactory" rating of the Bank's record of
meeting the credit needs of its entire community.