<PAGE>


                                  United States
                       Securities and Exchange Commission

                             Washington, D.C. 20549
                                    Form 10-K

 Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act 
                                     of 1934
                   For the fiscal year ended December 31, 1998
                        Commission File Number 000-22523

                          UNION NATIONAL BANCORP, INC.

<TABLE>
<CAPTION>
         <S>                                                  <C>
         Maryland                                             52-1862338
         (State or other jurisdiction of                      (I.R.S. Employer
         incorporation or organization)                       identification number)

         117 East Main Street, Westminster, MD 21157          (410) 848-7200
         (Address of principal executive offices)             (Telephone number)
</TABLE>

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
filing requirements for the past 90 days.

                                 YES {X} NO { }

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy of information
statement incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K { }

         As of February 14, 1999, Union National Bancorp had 1,853,748 shares of
common stock outstanding, par value $.01.

Documents Incorporated by Reference

         Portions of the Union National Bancorp. Inc. 1998 Annual Stockholders
Report for the year ended December 31, 1998 , Parts I,II, IV
         Portions of Union National Bancorp Inc. Proxy Statement dated March 20,
1999, Part III






<PAGE>


PART I

ITEM 1. BUSINESS

General

         Union National Bancorp, Inc. was incorporated under the law of the
State of Maryland on January 19, 1994, and is a one-bank holding company
headquartered in Westminster, Maryland.

         Union National Bancorp is primarily engaged in commercial and retail
banking services and in business related to banking services through its
subsidiary, The Union National Bank of Westminster. Union National Bank was
founded in Westminster in 1816 under the name of Bank of Westminster, and was
briefly known during the period of 1821 to 1830 as a branch of the Farmers &
Mechanics of Frederick. In 1865, Union National bank became known as "The Union
National Bank of Westminster". Union National Bank is currently in its 183rd
year of operation.

         Union National Bank has nine full service banking offices in Carroll
County, four of which are located in Westminster, one in Finksburg, one in
Hampstead, one in Eldersburg, one in Sykesville, and as of January 15, 1998, one
in Mount Airy. Union National Bank also has one loan production office, which is
located in the same building as Union National Bank's office headquarters in
Westminster, Maryland.


Lending, Deposit and Investment  Activities

         Lending Activities:

         Union National Bank provides a full range of commercial and retail
banking services designed to meet the borrowing and depository needs of small
and medium size businesses and consumers in local areas. Substantially all of
Union National Bank's loans are to customers located within its service area.
Union National Bank has no foreign loans or highly leveraged transaction loans,
as defined by the Federal Reserve Board ("FRB"). All of the loans in Union
National Bancorp's loan portfolio have been originated by Union National Bank.
Union National Bank conducts its lending activities pursuant to the loan
policies adopted by its Board of Directors. These loan policies grant individual
loan officers authority to make secured and unsecured loans in specific dollar
amounts; senior officers or various loan committees must approve large loans.
Union National Bank's management information systems and loan review policies
are designed to monitor lending sufficiently to ensure adherence to Union
National Bank's loan policies.

         The commercial loans offered by Union National Bank include (i)
commercial real estate loans, (ii) working capital and other commercial loans,
(iii) construction loans, (iv) SBA-guaranteed loans, and (v) agricultural loans.
Union National Bank's commercial real estate loans are used to provide permanent
financing for retail and office buildings, multiple-family buildings and
churches. Commercial real estate secured loans are generally written for a
fifteen year term or amortized over a longer period with a balloon payment by
the fifteenth year. Personal guarantees are obtained on nearly all commercial
loans. Credit analyses, loan review and an effective collection process is also
used to minimize any potential losses. Union National Bank employs four
full-time commercial loan officers.

         Consumer loans offered by Union National Bank include (i) residential
real estate loans, (ii) personal unsecured lines of credit (iii) personal
installment loans (including indirect lending through auto sales companies), and
(iv) home equity loans (fixed-rate term and open ended revolving lines of
credit).

         Residential mortgage products include adjustable rate as well as
conventional, fixed-rate loans. Terms vary from a five-year balloon to a 30-year
fully amortized loan. Union National Bank does not purchase loans but is active
in secondary market lending and is also a member of the Federal Home Loan Bank
of Atlanta. Personal unsecured revolving lines of credit with variable interest
rates and principal amounts ranging from $1,000 to $10,000 are offered to
credit-worthy bank customers. The largest segment of Union National Bank's
installment 


<PAGE>

loan portfolio is secured by motor vehicles and are fixed-rate loans. Credit
checks, credit scoring and debt to income ratios of 40% or less are used to
qualify borrowers. Home equity products include both fixed-rate term products
and open-end revolving lines of credit with maximum loan to value ratios of 85%
of current appraisal to 80% of current tax assessment.

         Deposit Activities

         Union National Bank also offers a full range of deposit and personal
banking services insured by the Federal Deposit Insurance Corporation ("FDIC"),
including (i) commercial checking and small business checking products, (ii)
trust and cash management services, (iii) retirement accounts such as Individual
Retirement Accounts ("IRA") and Simplified Employee Pension accounts, retail
deposit services such as certificates of deposit, money market, savings
accounts, checking account products and Automated Teller Machines ("ATM"), Point
of Sale and other electronic services, and (iv) other personal miscellaneous
services such as safe deposit boxes, foreign draft, foreign currency exchanges,
night depository services, travelers checks, merchant credit cards, debit card
services, direct deposit of payroll, U.S. savings bonds, official bank checks
and money orders. Union National Bank now provides 24-hour access to customer
information through its automated voice response system. This system provides
customers with balances, recent transactions, pending transactions, the ability
to transfer funds between accounts, and receive facsimile statements. Union
National Bank offers credit cards and a full range of trust services through one
of its correspondent banking relationships.

         The principal sources of funds for Union National Bank are core
deposits (demand deposits, interest-bearing transaction accounts, money market
accounts, savings accounts and certificates of deposits). Union National Bank
solicits these deposits from individuals, businesses, foundations and government
authorities. Substantially all of Union National Bank's deposits are from the
local market areas surrounding each of its offices.

         Investment Portfolio Activities

         Union National Bank's investment portfolio has several objectives. A
key objective is to provide a balance in Union National Bank's asset mix of
loans and investments that is consistent with its liability structure, and to
assist in management of interest rate risk. The investments augment Union
National Bank's capital position in the risk based capital formula, providing
the necessary liquidity to meet fluctuations in credit demands of the community
and fluctuations in deposit levels. In view of the above objectives, the
portfolio is treated conservatively by management, and only securities that pass
conservative investment criteria are purchased. Union National Bank does not
engage in any derivatives trading. The portfolio will commonly fluctuate between
30% and 40% of Union National Bank's assets. In May of 1998 Union National Bank
formed a Passive Investment Company in Wilmington Delaware, Union National
Delaware Holding Inc. Union National Delaware Holding is administered by
Delaware Trust Capital Management a subsidiary of First Union. As of December
31,1998 63% of the total security portfolio was at Union National Delaware
Holding.

         Additional Activities

         Union National Bank provides its customers with access to investment
products through a third party vendor, Primevest Financial Services, Inc., which
offers annuities and mutual fund products and is based in Minnesota.

         Competition

         Union National Bank operates in a highly competitive environment,
competing for deposits and loans with commercial banks, savings banks, thrift
institutions, credit unions, and finance and mortgage companies. Some of these
competitors possess substantially greater financial resources than those
available to Union National Bank. Also, certain of these institutions have
significantly higher lending limits than Union National Bank, and may provide
various services for their customers, such as trust services, which Union
National Bank does offer directly to its customers.


<PAGE>

         Union National Bank does not maintain data concerning its competitive
position within its market area. Occasionally, limited market share data is
produced by third parties. According to a 1998 publication by the Federal
Deposit Insurance Corp., at June 30, 1998 Union National Bank had 13.19% market
share of deposits held by the Carroll County branches of banks, savings
associations, and credit unions. Only one other institution had larger deposit
market share (26.53%) for their Carroll County branches.

         Financial institutions compete generally on the basis of rate and
service. In its lending business, Union National Bank is subject to increasing
competition from consumer finance companies.

         While Union National Bank will seek to remain competitive with the
interest rate that it charges on loans and offers on deposits, Union National
Bank believes that its success has been and will continue to be due to its
emphasis on its community banking, customer service and relationships. With the
continuing consolidation in the banking industry, particularly in Union National
Bank's markets, smaller profitable banks are gaining opportunities where larger
institutions exit markets that are only marginally profitable for them.
Management of Union National Bank believes it can profitably utilize such
opportunities by establishing a local presence in these areas to provide
community-banking services.

Supervision and Regulation

         GENERAL. Union National Bancorp and Union National Bank are extensively
regulated under federal and state law. Generally, these laws and regulations are
intended to protect depositors, not stockholders. The following is a summary
description of certain provisions of certain laws that affect the regulation of
banks and bank holding companies. The discussion is qualified in its entirety by
reference to applicable laws and regulations. Changes in such laws and
regulations may have a material effect on the business and prospects of the
Union National Bancorp and Union National Bank.

         FEDERAL BANK HOLDING COMPANY REGULATION AND STRUCTURE. Union National
Bancorp is a bank holding company within the meaning of the Bank Holding Company
Act of 1956, as amended, and as such, it is subject to regulation, supervision,
and examination by the Federal Reserve Board. Union National is required to file
annual and quarterly reports with Federal Reserve Board and to provide the
Federal Reserve Board with such additional information as the Federal Reserve
Board may require. The Federal Reserve Board may conduct examinations of Union
National Bancorp and its subsidiaries.

         With certain limited exceptions, Union National Bancorp is required to
obtain prior approval from the Federal reserve Board before acquiring direct or
indirect ownership or control of more than 5% of any voting securities or
substantially all of the assets of a bank or bank holding company, or before
merging or consolidating with another bank holding company. Additionally, with
certain exceptions, any person proposing to acquire control through direct or
indirect ownership of 25% or more of any voting securities of Union National
Bancorp is required to give 60 day written notice of the acquisition to Federal
Reserve Board, which may prohibit the transaction, and to publish notice to the
public.

         Generally, a bank holding company may not engage in any activities
other than banking, managing or controlling its bank and other authorized
subsidiaries, and providing services to these subsidiaries. With prior approval
of the Federal Reserve Board, Union National Bancorp may acquire more than 5% of
the assets or outstanding shares of a company engaging in non-bank activities
determined by the Federal Reserve Board to be closely related to the business of
banking or of managing or controlling banks. The Federal Reserve Board provides
expedited procedures for expansion into approved categories of non-bank
activities.

         Subsidiary banks of a bank holding company are subject to certain
quantitative and qualitative restrictions on extensions of credit to the bank
holding company or its subsidiaries, on investments in their securities and on
the use of their securities as collateral for loans to any borrower. These
regulations and restrictions may limit Union National Bancorp's ability to
obtain funds from Union National Bank for its cash needs, including funds for
the payment of dividends, interest and operating expenses. Further, subject to
certain 


<PAGE>

exceptions, a bank holding company and its subsidiaries are prohibited from
engaging in certain tie-in arrangements in connection with any extension of
credit, lease or sale or property of furnishing of services. For example, Union
National Bank may not generally require a customer to obtain other services from
itself or Union National Bancorp, and may not require that a customer promise
not to obtain other services from a competitor as a condition to and extension
of credit to the customer.

         Under Federal Reserve Board policy, a bank holding company is expected
to act as a source of financial strength to its subsidiary banks and to make
capital injections into a troubled subsidiary bank, and Federal Reserve Board
may charge the bank holding company with engaging in unsafe and unsound
practices for failure to commit resources to a subsidiary bank when required. A
required capital injection may be called for at a time when the holding company
does not have the resources to provide it. In addition, depository institutions
insured by the Federal Deposit Insurance Corp. can be held liable for any losses
incurred by, or reasonably anticipated to be incurred by, the Federal Deposit
Insurance Corp. in connection with the default of, or assistance provided to, a
commonly controlled Federal Deposit Insurance Corp.-insured depository
institution. Accordingly, in the event that any insured subsidiary of Union
National Bancorp causes a loss to Federal Deposit Insurance Corp., other insured
subsidiaries of Union National Bancorp could be required to compensate Federal
Deposit Insurance Corp. by reimbursing it for the estimated amount of such loss.
Such cross guaranty liabilities generally are superior in priority to the
obligations of the depository institution to its stockholders due solely to
their status as stockholders and obligations to other affiliates.

         STATE BANKING HOLDING COMPANY REGULATIONS. As a Maryland bank holding
company, Union National Bancorp is subject to various restrictions on its
activities as set forth in Maryland law, in addition to those restrictions set
forth in federal law. See "Supervision and Regulation-Federal Bank Holding
Company Regulation and Structure." Under Maryland law, a bank holding company
that desires to acquire a bank or bank holding company that has its principal
place of business in Maryland must obtain approval from the Commissioner. Also,
a bank holding company and its Maryland State chartered bank or trust company
cannot directly or indirectly acquire banking or non-banking subsidiaries or
affiliates until the bank or trust company receives the approval of the
Commissioner.

         FEDERAL BANK REGULATION. Union National Bancorp's banking subsidiary is
a federally-chartered national bank regulated by the Office of Comptroller of
the Currency ("OCC"). The Office of Comptroller of the Currency may prohibit the
institution over which it has supervisory authority from engaging in activities
or investments that the agency believes constitutes unsafe or unsound banking
practices. Federal banking regulators have extensive enforcement authority over
the institution they regulate to prohibit or correct activities that violate
law, regulation or a regulatory agreement or which are deemed to constitute
unsafe or unsound practices. Enforcement actions may include the appointment of
a conservator or receiver, the issuance of a cease and desist order, the
termination of deposit insurance, the imposition of civil money penalties on the
institution, its directors, officers, employees and institution-affiliated
parties, and the enforcement of any such mechanisms through restraining orders
or other court actions.

         Union National Bank is subject to certain restrictions on extensions of
credit to executive officers, directors, principal stockholders or any related
interest of such persons which generally require that such credit extensions be
made on substantially the same terms as are available to third persons dealing
with Union National Bank and not involve more than the normal risk of repayment.
Other laws tie maximum amount that may be loaned to any one customer and its
related interests to capital levels.

         Under the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), each federal banking agency is required to prescribe, by regulation,
non-capital safety and soundness standards for institutions under its authority.
The federal banking agencies, including the Office of Comptroller of the
Currency, have adopted standards covering internal controls, information systems
and internal audit systems, loan documentation, credit underwriting, interest
rate exposure, asset growth, compensation, fees and benefits. An institution,
which fails to meet those standards, may be required by the agency to develop a
plan acceptable to the agency, specifying the steps that the institution will
take to meet the standards. Failure to submit or implement such a plan may be
subject to institution to regulatory sanctions. Union National Bancorp, on
behalf of Union National Bank, 


<PAGE>

believes that it meets substantially all standards that have been adopted.
FDICIA also imposed new capital standards on insured depository institutions.
See "Supervision and Regulation-Capital Requirements."

         Before establishing new branch offices, Union National Bank must meet
certain minimum capital stock and surplus requirements and the Bank must obtain
Office of Comptroller of the Currency approval.

         DEPOSIT INSURANCE. As a Federal Deposit Insurance Corp. member
institution, Union National Bank's deposits are insured to a maximum of $100,000
per depositor through the Bank Insurance Fund ("BIF"), administered by the
Federal Deposit Insurance Corp., and each institution is required to pay
semi-annual deposit insurance premium assessments to the Federal Deposit
Insurance Corp.. The BIF assessment rates have a range of zero to 27 cents for
every $100 in assessable deposits. Banks with no premium are subject to an
annual statutory minimum assessment.

         CAPITAL REQUIREMENTS. The federal banking regulators have adopted
certain risk-based capital guidelines to assist in the assessment of the capital
adequacy of a banking organization's operations for both transactions reported
on the balance sheet as assets and transactions, such as letters of credit, and
recourse agreements, which are recorded as off balance sheet items. Under these
guidelines, nominal dollar amounts of asset and credit equivalent amounts of off
balance sheet items are multiplied by one of several risk adjustment
percentages, which range from 0% for assets with low credit risk, such as
certain U.S. Treasury securities, to 100% for assets with relatively high credit
risk, such as business loans. For bank holding companies with less than
$150,000,000 in consolidated assets, the guidelines are applied on a bank-only
basis.

         A banking organization's risk-based capital ratios are obtained by
dividing its qualifying capital by its total risk adjusted assets. The
regulators measure risk-adjusted assets, which include off balance sheet items,
against both total qualifying capital (the sum to Tier 1 capital and limited
amounts of Tier 2 capital) and Tier 1 capital. "Tier 1", or core capital,
include, common equity, perpetual preferred stock (excluding auction rate
issues) and minority interest in equity accounts of consolidated subsidiaries,
less goodwill and other intangibles, subject to certain exceptions. "Tier 2", or
supplementary capital, includes, among other things, limited-life preferred
stock, hybrid capital instruments, mandatory convertible securities, qualifying
subordinated debt, and the allowance for loan and lease losses, subject to
certain limitations and less required deductions. The inclusion of elements of
Tier 2 capital is subject to certain other requirements and limitations of
federal banking agencies. Banks and bank holding companies subject to the risk
based capital guidelines are required to maintain a ratio of Tier 1 capital to
risk-weighted assets of at least 4% and a ratio of total capital to
risk-weighted assets of at least 8%. The appropriate regulatory authority may
set higher capital requirements when particular circumstances warrant. As of
December 31,1998 Union National Bank's ratio of Tier 1 to risk-weighted assets
stood at 12.1% and its ratio of total capital to risk-weighted assets stood at
13.1%. In addition to risk-based capital, banks and bank holding companies are
required to maintain a minimum amount of Tier 1 capital to total assets,
referred to as the leverage capital ratio, of at least 3%. As of December 31,
1998, Union National Bank's leverage capital ratio was 8.2%

         In August, 1995 and May, 1996 the federal banking agencies adopted
final regulations specifying that the agencies will include, in their
evaluations of a bank's capital; adequacy, an assessment of the Union National
Bank's interest rate risk ("IRR") exposure. The standards for measuring the
adequacy and effectiveness of a banking organization's interest rate risk
management included a measurement of board of director and senior management
oversight, and a determination of whether a banking organization's procedures
for comprehensive risk management are appropriate to the circumstances of the
specific banking organization. Union National Bank has internal interest rate
risk models that are used to measure and monitor interest rate risk.
Additionally, the regulatory agencies have been assessing interest rate risk on
an informal basis for several years. For these reasons, Union National Bancorp
does not expect the addition of interest rate risk evaluation to the agencies'
capital guidelines to result in significant changes in capital requirements for
Union National Bank.

         Failure to meet applicable capital guidelines could subject a banking
organization to a variety of enforcement actions, including limitations on its
ability to pay dividends, the issuance by the applicable regulatory authority of
a capital directive to increase capital and, in the case of depository
institutions, the termination of 


<PAGE>

deposit insurance by the Federal Deposit Insurance Corp., as well as to the
measures described under "Federal Deposit Insurance Corporation Improvement Act
of 1991" below, as applicable to undercapitalized institutions. In addition,
future changes in regulations or practices could further reduce the amount of
capital recognized for purposes of capital adequacy. Such a change could affect
the ability of Union National Bank to grow and could restrict the amount of
profits, if any, available for payment of dividends to the Company.

         FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991. In
December, 1991, Congress enacted FDICIA, which substantially revised the bank
regulatory and funding provisions of the Federal Deposit Insurance Act and made
significant revisions to several other federal banking statutes. FDICIA provides
for, among other things, (i) publicly available annual financial condition and
management reports for financial institutions, including audits by independent
accountants, (ii) the establishment of uniform accounting standards by federal
banking agencies, (iii) the establishment of a "prompt corrective action" system
of regulatory supervision intervention, based on capitalization levels, with
more scrutiny and restrictions placed on depository institutions with lower
levels of capital. (iv) additional grounds for the appointment of a conservator
or receiver, and (v) restrictions or prohibitions on accepting brokered
deposits, except for institutions which significantly exceed minimum capital
requirements. FDICIA also provides for increased funding of Federal Deposit
Insurance Corp. insurance funds and the implementation of risk-based premiums.
See "Deposit Insurance."

         A central feature of FDICIA is the requirement that the federal banking
agencies take "prompt corrective action" with respect to depository institutions
that do not meet minimum capital requirements. Pursuant to FDICIA, the federal
bank regulatory authorities have adopted regulations setting forth a six-tiered
system for measuring the capital adequacy of the depository institution that
they supervise. Under these regulations, a depository institution is classified
in one of the following capital categories: "well capitalized," "adequately
capitalized," "undercapitalized," " significantly undercapitalized" and "
critically undercapitalized." Union National Bank is currently classified as
"well-capitalized." An institution may be deemed by regulators to be in a
capitalization category that is lower than is indicated by its actual capital
position if, among other things, it receives an unsatisfactory examination
rating with respect to asset quality, management, earnings or liquidity.

         FDICIA generally prohibits a depository institution from making any
capital distribution (including payment of cash dividend) or paying any
management fees to its holding company if the depository institution would
thereafter be undercapitalized. Undercapitalized depository institutions are
subjected to growth limitations and are required to submit capital restoration
plans. If a depository institution fails to submit an acceptable plan, it is
treated as if it is significantly undercapitalized. Significantly
undercapitalized depository institutions may be subject to a number of other
requirements and restrictions, including orders to sell sufficient voting stock
to become adequately capitalized, requirements to reduce total assets and stop
accepting deposits from correspondent banks. Critically undercapitalized
institutions are subject to the appointment of a receiver or conservator,
generally within 90 days of the date such institution is determined to be
critically undercapitalized.

         FDICIA provides the federal banking agencies with significantly
expanded powers to take enforcement action against institutions that fail to
comply with capital or other standards. Such action may include the termination
of deposit insurance by the Federal Deposit Insurance Corp. or the appointment
of a receiver or conservator for the institution. FDICIA also limits the
circumstances under which Federal Deposit Insurance Corp. is permitted to
provide financial assistance to an insured institution before appointment of a
conservator or receiver.

         INTERSTATE BANKING LEGISLATION. The Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 was enacted into law on September 29, 1994. The
law provides that, among other things, substantially all state law barriers to
the acquisition of banks by out-of-state bank holding companies were eliminated
effective on September 29, 1995. The law also permits interstate branching by
banks effective as of June 1,1997, subject to the ability of the state to
opt-out completely or to set an earlier effective date. Maryland generally
established an earlier effective date of September 29,1995.

         NASDAQ SMALLCAP MARKET REQUIREMENTS. "The Nasdaq Stock Market" or
"Nasdaq" is a highly-regulated electronic securities market comprised of
competing Market Makers whose trading is supported by a 


<PAGE>

communications network linking them to quotation dissemination, trade reporting,
and order execution systems. The Nasdaq Stock Market consists of two distinct
market tiers: the Nasdaq national Market and The SmallCap Market. The Nasdaq
stock market is operated by The Nasdaq Stock Market, Inc., a wholly-owned
subsidiary of the National Association of Securities Dealers, Inc. Companies who
publicly trade stock on the Nasdaq SmallCap market are required to submit
certain financial documents, in conjunction with forms required by regulatory
authorities. All reports and other documents must be provided to Nasdaq on or
before the date they are required to be filed with the Securities Exchange
Commission or another regulatory authority. Any company listing on Nasdaq
SmallCap Market must meet minimum financial qualification and must continue to
meet financial qualifications to maintain it's listing. The Nasdaq Stock Market
also requires listing companies meet certain standards of corporate governance.

         MONETARY POLICY. The earnings of a bank holding company are affected by
the policies of regulatory authorities, including the Federal Reserve Board, in
connection with the Federal Reserve Board's regulation of the money supply.
Various methods employed by the Federal Reserve Board are open market operations
in United States Government securities, changes in the discount rate on member
bank borrowings and changes in reserve requirements against member bank
deposits. These methods are used in varying combinations to influence overall
growth and distribution of bank loans, investments and deposits, and their use
may also affect interest rates charged on loans or paid on deposits. The
monetary policies of the Federal Reserve Board have had a significant effect on
the operating results of commercial banks in the past and are expected to
continue to do so in the future.



Employees

         As of December 31,1998, Union National Bank had the equivalent of 125
full-time employees. A collective bargaining unit represents none of its
employees. Union National Bank considers relations with its employees to be
good.

ITEM 2. PROPERTIES

         Union National bank owns the following properties:

<TABLE>
<CAPTION>
         Offices                                     Location              Additional Services
         -------                                     --------              -------------------

<S>                                         <C>                            <C>    
Corporate Headquarters                      117 East Main Street
                                            Westminster, MD 21157

Loan Operations                             118 East Main Street
                                            Westminster, MD 21157

East Main Street                            111 East Main Street                Drive-Up Window
                                            Westminster, MD 21157

Sykesville                                  7564 Main Street                    Automatic Teller Machine
                                            Sykesville, MD 21784
</TABLE>


         Union National bank leases the following properties:

<TABLE>
<CAPTION>
         Branch                                      Location              Additional Services   
         ------                                      --------              -------------------   

<S>                                         <C>                            <C>
West Main Street                            132 West Main Street                Drive-Up Window
                                            Westminster, MD 21157               Automatic Teller Machine

Finksburg                                   2926 Baltimore, Blvd.               Drive-Up Window
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
<S>                                         <C>                            <C>
                                            Finksburg, MD 21048                 Automatic Teller Machine

140 Village                                 588 Baltimore, Blvd.                Drive-Up Window
                                            140 Village Shopping Center         Automatic Teller Machine
                                            Westminster, MD 21157

Eldersburg                                  5420 Klee Mill Road                 Drive-Up Window
                                            Eldersburg, MD 21784                Automatic Teller Machine

Hampstead                                   1631 North Main Street              Drive-Up Window
                                            Hampstead, MD 21102                 Automatic Teller Machine

Cranberry                                   400 North Center Street
                                            Westminster, MD 21157               Automatic Teller Machine
                                            (within shopping mall)

Mount Airy                                  400 E. Ridgeville Blvd.             Drive-Up Window
                                            Mt. Airy, MD 21771                  Automatic Teller Machine
</TABLE>


<TABLE>
<CAPTION>
         Remote ATM                                  Location          
         ----------                                  --------          

<S>                                         <C>                
Tevis Oil                                   74 West Main Street
Westminster Shell                           Westminster, MD 21157

Eagle Oil                                   8 Sullivan Rd.
Westminster Exxon                           Westminster, MD 21157

Eagle Oil                                   822 South Main St.
Hampstead Exxon                             Hampstead, MD 21074

Tevis Oil                                   1155 South Main St.
Hampstead Shell                             Hampstead, MD 21074

Eagle Oil                                   251 E. Baltimore Ave.
Taneytown Exxon                             Taneytown, MD 21787

Carroll Community College                   1601 Washington Rd.
                                            Westminster, MD 21157

Emmitsburg Exxon                            110 Silo Hill Rd.
                                            Emmitsburg, MD

Cranberry Food Court                        400 North Center Street
                                            Westminster, MD 21157
                                            (within shopping mall)
</TABLE>


ITEM 3. LEGAL PROCEEDINGS

         Union National Bancorp and Union National Bank are subject to various
legal proceedings which are incidental to their business. In the opinion of
management, the liabilities (if any) resulting from such legal proceedings will
not have a material effect on the consolidated financial statements or
consolidated ratios of Union National Bancorp and Union National Bank.

<PAGE>

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

         There were no matters that were submitted to a vote of the security
holders during the fourth quarter of 1998.



PART II


ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDERS
      MATTERS

         Union National Bancorp has been traded publicly on the Nasdaq Small Cap
Market as of April 1998. It is listed under the trading symbol UNNL. The low and
high ranges presented in the table below prior to this date are based on trades
reported through the over the counter bulletin board. Since this date price
information is reflected of actual sale price quoted on the Nasdaq SmallCap
Market. On January 27, 1998, Union National Bancorp's Board of Directors
authorized a two-for-one stock split, effected in the form of a 100% stock
dividend, thereby increasing the number of shares authorized on that date to
1,674,870, and in September 1998 authorized a 10% stock dividend. The following
table reflects stock prices for Union National Bancorp's shares to the extent
such information is available, and dividends declared with respect thereto
during the preceding two years. The number of common shares and per share
amounts have been restated to reflect the stock split and 10% stock dividend.


<TABLE>
<CAPTION>
                            1998                              1997                             1996
              --------------------------------- --------------------------------  --------------------------------
                     Price Range     Dividends         Price Range    Dividends          Price Range    Dividends
              ----------------------            ----------------------            ---------------------
                     Low       High   Declared         Low       High  Declared          Low      High   Declared
------------------------------------------------------------------------------------------------------------------
<S>           <C>            <C>      <C>       <C>            <C>     <C>        <C>           <C>      <C>   
1st Quarter       $16.82     $22.75     $0.091      $14.55     $16.82    $0.068       $12.73    $12.73     $0.064
2nd Quarter        19.09      30.45      0.095       15.00      16.93     0.073        14.09     14.55      0.064
3rd Quarter        25.45      28.18      0.100       15.11      16.82     0.082        13.64     15.34      0.064
4th Quarter        29.00      32.00      0.110       15.11      17.27     0.086        14.55     16.31      0.068
</TABLE>


         As of February 4, 1999, the approximate number of holders of record of
Union National Bancorp's shares was 473. At such date, 1,853,748 shares were
outstanding. Dividends are paid quarterly.

         LIMITS ON DIVIDENDS AND OTHER PAYMENTS. Union National Bancorp's
current ability to pay dividends is largely dependent upon the receipt of
dividends from its banking subsidiary, Union National Bank. Both federal and
state laws impose restrictions on the ability of Union National Bancorp to pay
dividends. Federal Reserve Board has issued a policy statement that provides
that, as a general matter, insured banks and bank holding companies may pay
dividends only out of prior operating earnings. For Maryland state-chartered
bank or trust company, dividends may be paid out of undivided profits or, with
the prior approval of the Commissioner, from surplus in excess of 100% of
required capital stock. If, however, the surplus of a Maryland bank is less than
100% of its required capital stock, cash dividends may not be paid in excess of
90% of net earnings. In addition to these specific restrictions, bank regulatory
agencies, in general, also have the ability to prohibit proposed dividends by a
financial institution which would otherwise be permitted under applicable
regulations of the regulatory body determines that such distribution would
constitute an unsafe or unsound practice.





<PAGE>

ITEM 6. SELECTED FINANCIAL DATA.

         Select Financial Data - Union National Bancorp's 1998 Annual
Stockholders Report, Page 24 incorporated herein by reference.

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

         Union National Bancorp's 1998 Annual Stockholders Report, pages 9
through 23, incorporated herein by reference.

ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.


PRINCIPAL AMOUNTS MATURING IN:

<TABLE>
<CAPTION>
                                                                                                              Fair Value
(IN THOUSANDS)                                  1999        2000       2001       2002       2003 Thereafter    12/31/98
-------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>         <C>        <C>       <C>         <C>       <C>         <C>    
RATE-SENSITIVE ASSETS:
   Fixed interest rate loans                  $4,308      $4,509     $8,520    $14,700     $8,542    $32,805     $70,951
    Average interest rate                      8.35%       9.29%      8.95%      8.70%      8.53%      8.04%
   Variable interest rate loans              $10,982      $8,243     $3,793     $1,466       $977    $64,940     $88,928
    Average interest rate                      8.80%       8.42%      9.61%      9.57%      9.46%      8.55%
   Fixed interest rate securities             $4,271        $977     $6,136     $4,320     $9,564    $71,816     $97,460
    Average interest rate                      4.89%       5.87%      5.75%      4.58%      5.99%      5.68%      
   Variable interest rate securities             $ -        $ -         $ -        $ -        $ -     $7,716      $1,726
    Average interest rate                          -          -           -          -          -       5.91%   
   Other interest-bearing assets                                                                           
                                              $7,716        $ -         $ -        $ -        $ -        $ -      $1,726
    Average interest rate                      4.75%          -           -          -          -          -
</TABLE>

<TABLE>
<CAPTION>
                                                1999        2000       2001       2002       2003 Thereafter
-------------------------------------------------------------------------------------------------------------
RATE-SENSITIVE LIABILITIES:
<S>                                           <C>         <C>        <C>       <C>         <C>       <C>         <C>    
   Noninterest-bearing checking                                                                      $28,247     $28,247
    Average interest rate                          -           -          -          -          -          -
   Savings and interest-bearing checking         $ -         $ -        $ -        $ -        $ -    $81,198     $72,233
    Average interest rate                          -           -          -          -          -      2.11%      
   Time deposits                             $59,340     $40,024    $13,787     $1,967     $1,584       $190    $105,261
    Average interest rate                      5.08%       5.92%      4.67%      5.67%      5.23%      5.30%
   Fixed interest rate borrowings                $ -         $ -        $ -    $10,000        $ -    $10,000     $20,933
    Average interest rate                          -           -          -      5.66%          -      5.51%
   Variable interest rate borrowings         $13,578         $ -        $ -        $ -        $ -        $ -     $13,578
    Average interest rate                      3.93%           -          -          -          -          -
</TABLE>

                                                         

         The above table provides information about Union National Bank's
financial instruments that are sensitive to changes in interest rates. For
loans, securities, and liabilities with contractual maturities, the table
presents principal cash flows and related weighted-average interest rates by
contractual maturities, as well as Union National Bank's historical experience
of the impact of interest rate fluctuations on the prepayment of various
instruments. For core deposits (e.g., interest checking, savings, and money
market deposits) that have no contractual maturity, the table presents principal
cash flows and, as applicable, related weighted-average interest rates based
Union National Bank's historical experience, management's judgment, and
statistical analysis, as applicable, concerning their most likely withdrawal
behaviors.


<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         Financial Statements and related notes - Union National Bancorp's 1998
Annual Stockholders Report, Page 26 through 50, incorporated herein by
reference.

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

         On October 1, 1997. Union National Bancorp engaged the accounting firm
of Keller Bruner & Co., L.L.P. ("Keller Bruner) in place of it's independent
accounting firm, Stegman & Company, P.A. on the recommendation and approval of
the Finance and Control Committee, which action was ratified by the full Board
of Directors, after an extensive review and analysis of proposals submitted by
three accounting firms. Keller Bruner has acted as Union National Bancorp's
independent accounting firm for the years ended December 31, 1998 and 1997.
Stegman & Company, P.A. was not dismissed as a result of any disagreement. The
reports of Stegman & Company, P.A. on the financial statement of Union National
Bancorp for the fiscal year ended December 31, 1996 did not contain any adverse
opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty, auditing scope or accounting principles.

         Union National Bancorp has had no disagreements on accounting and
financial disclosure with Keller Bruner.


PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Proxy Statement, dated March 20, 1999, pages 2 through 4, incorporated
herein by reference.

         Section 16(a) Beneficial Ownership Reporting Compliance, Proxy
Statement, dated March 20, 1999, page 12, incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

         Proxy Statement, dated March 20, 1999, pages 5 through 11, incorporated
herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Proxy Statement, dated March 20, 1999, pages 6 through 7, incorporated
herein by reference

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Proxy Statement, dated March 20, 1999, pages 5, incorporated herein by
reference

PART IV.

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTED OF FORM 8-K

         (A) Documents filed as part of this report:
                  (1), (2)The following financial statements are included on
pages 28 through 46 of the Union National's 1998 Annual report to Stockholders:

<TABLE>
<CAPTION>
<S>                                                                <C>
INDEPENDENT AUDITOR'S REPORT........................................17
CONSOLIDATED BALANCE SHEETS.........................................18
CONSOLIDATED STATEMENTS OF INCOME ..................................19
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S>                                                                <C>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ....................20
CONSOLIDATED STATEMENTS OF CHANGES
   IN STOCKHOLDERS' EQUITY .........................................21
CONSLIDATED STATEMENTS OF CASH FLOWS ......   ......................22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS .........................23-46
</TABLE>


                  (3) Exhibits filed herewith or incorporated by reference
herein as set forth in the following table prepared in accordance with Item 601
of Regulation S-K.

                                  EXHIBIT INDEX

         (3). CHARTER AND BYLAWS
                  (3a.) Articles of Incorporation of Union National Bancorp is
incorporated by reference from Union National Bancorp's Form 10, filed with the
Commission of May 5, 1997, and Form 10/A, filed with the Commission on August
21,1997 (Registration No. 0-22523)
                  (3b.) Bylaws of Union National Bancorp is incorporated by
reference from Union National Bancorp's Form 10, filed with the Commission of
May 5, 1997, and Form 10/A, filed with the Commission on August 21,1997
(Registration No. 0-22523)


         (10) MATERIAL CONTRACTS
                  (10a.) Employment Agreement between the Union National Bank of
Westminster and Virginia W. Smith, President, is incorporated by reference from
Union National Bancorp's Form 10, filed with the Commission of May 5, 1997, and
Form 10/A, filed with the Commission on August 21,1997 (Registration No.
0-22523)
                  (10b.) 1997 Stock Option Plan is incorporated by reference
from Union National Bancorp's Form 10, filed with the Commission of May 5, 1997,
and Form 10/A, filed with the Commission on August 21,1997 (Registration No.
0-22523)
                  (10c.) Leases between The Union National Bank of Westminster
and K. Wayne Lockard, Director, dated October 1, 1997, is incorporated by
reference form Union National's Form 10, filed with the Commission of May 5,
1997, and Form 10/A, file with the Commission on August 21,1997 (Registration
No. 0-22523)
                  (10d.) Amendment to employment agreement between the Union
National Bank of Westminster and Virginia W. Smith, President, is incorporated
by reference from Union National Bancorp's Form 8-K, filed with the Commission
of October 26, 1998
                  (10e.) Key employee retention plan
                               Union National Bank
                           Key Employee Retention Plan

         1. PURPOSE. The purpose of this Key Employee Retention Plan ("Plan") is
to further the interests of Union National Bank ("Bank") by providing incentives
to attract and retain key employees.

         2. ADMINISTRATION. The Plan shall be administered by the Board of
Directors of the Bank or a committee designated by the Board (the
"Administrator"). Subject to the provisions of the Plan and applicable law, the
Board is authorized to interpret the Plan, to adopt, amend and rescind rules and
regulations relating to the Plan, and to make all other determinations necessary
or advisable for the administration of the Plan (except such determinations
which conflict with the authority or power of the Board). No Director or member
of any committee administering the Plan shall vote upon or decide any matter
relating solely to himself/herself (or member of his/her immediate family), or
solely to any of his/her rights or benefits (or rights or benefits of a member
of his/her immediate family) under the Plan.

         3. PLAN PARTICIPATION. The Board shall determine and designate from
time to time those employees of the Bank who shall be eligible to participate in
the Plan (each a "Participant") and the category of separation 



<PAGE>

payments for which each Participant will be eligible. Participation in the Plan
shall not confer upon any Participant any right of continuation of service as an
employee or officer of the Bank or other rights of employment except as
expressly stated herein.

         4. DEFINED TERMS. The following terms used in the plan shall have the
following meanings:

                  (a) "CHANGE IN CONTROL" means the occurrence of any one or
more of the following events: (i) the acquisition of "beneficial ownership" by a
person or entity, including any "group" (as such terms are defined under Section
13(d) of the Securities Exchange Act of 1934), of 50% or more of the outstanding
shares of common stock of the Bank or of its parent company (the "Parent"); (ii)
the sale or other disposition of all or substantially all of the assets of the
Bank or the Parent in one transaction or a series of transactions; (iii) a
merger, consolidation or share exchange involving the Bank or the Parent and any
other person or entity, in which the Bank or the Parent is not the surviving
entity or in which the outstanding shares of capital stock of the Bank or the
parent do not continue to be outstanding; and (iv) any other "business
combination" (as defined in Section 3-601(e) of the Maryland General Corporation
Law) involving the Bank or the parent and any person or entity, whether or not
such person or entity is an "interested stockholder" under that statute.

                  (b)      "QUALIFYING TERMINATION" means:

                           (i) the termination of employment of a Participant by
                           the Bank in anticipation of or within 18 months after
                           a Change in Control, or

                           (ii) the resignation of a Participant within 18
                           months after a Change in Control as a direct result
                           of any of the following action taken by the Bank with
                           respect to a Participant in anticipation of or after
                           a Change in Control:

                           (A) the demotion of a Participant or the reduction of
                           a Participant's regular base salary below the amount
                           in effect immediately prior to the Change in Control;

                           (B) the substantial curtailment of the rights, duties
                           and responsibilities of a Participant as compared to
                           those possessed by the Participant prior to the
                           Change in Control; or

                           (C) the reassignment of a Participant, or relocation
                           of the office or facility to which he/she shall
                           report, to a location that is more than 25 miles from
                           the Participant's place of employment prior to the
                           Change in Control.

                  (c)      A Qualifying Termination shall not include the 
                           following:

                           (i) Termination of the Participant for cause.  
                           "Cause" includes an action or failure to act by the 
                           Participant constituting:

                           (A) fraud, misappropriation or intentional material
                           damage to the property or business of the Bank, the
                           commission of an act of deliberate and material
                           dishonesty, a material breach of the Bank's corporate
                           code of ethics, commission of a crime, or causing the
                           Bank to commit a crime; or

                           (B) continued failure by the participant to
                           satisfactorily perform his/her duties or job
                           functions after written notice to the Participant by
                           the Board of Directors specifying such failure;
                           provided that such "cause" shall have been found by a
                           majority vote of the Board of Directors after notice
                           to the Participant specifying the cause and an
                           opportunity for the Participant to be heard by the
                           Board of Directors; or

<PAGE>

                           (ii) A transfer of employment of the Participant to
                           the parent or a subsidiary of the Parent or of the
                           Bank (collectively, a "Related Entity") in
                           anticipation of or after a Change in Control, in
                           which case the Participant shall continue to be a
                           Participant under the Plan.

         5. PLAN BENEFITS. Subject to the compliance by the Participant with the
conditions specified in Paragraph 6, in the event of a Qualifying Termination of
the Participant, the Participant shall be entitled to the following benefits
("Plan Benefits"):

            (a)  SEPARATION PAYMENTS.  A Participant will be entitled to receive
an amount equal to his/her base salary (at the amount in effect at the time of
the Qualifying Termination) for the applicable number of weeks set forth below.
Separation payments will be paid on the Bank's regular paydays and will be
subject to standard withholdings and deductions. For purposes of determining the
number of full years of service under this Plan, a Participant shall be credited
with all time that he/she was continuously employed by the Bank or any Related
Entity regardless of any transfers of employment among them.

            CATEGORY I. Participants in this category will be entitled to 
      receive separation payments for 78 weeks (18 months) plus one 
      additional week for each full year of service he/she has completed with 
      the Bank, up to a maximum of 130 weeks (30 months). 

            A Participant under CATEGORY I shall be obligated to seek 
      employment. The first 52 weeks (12 months) of the Participants 
      separation payments will be guaranteed and the remaining weeks will be 
      reduced by 50% if the Participant receives or is entitled to receive 
      any amount from other employment, including self-employment, during or 
      in respect of such weeks.

            CATEGORY II. Participants in this category will be entitled to 
      receive separation payments for 52 weeks (12 months) plus one 
      additional week for each full year of service he/she has completed with 
      the Bank, up to a maximum of 104 weeks (24 months). 

            A Participant under CATEGORY II shall be obligated to seek 
      employment. The first 52 weeks (12 months) of the Participants 
      separation payments will be guaranteed and the remaining weeks will be 
      reduced by 50% if the Participant receives or is entitled to receive 
      any amount from other employment, including self-employment, during or 
      in respect of such weeks.

            CATEGORY III. Participants in this category will be entitled to 
      receive separation payments for 26 weeks (6 months) plus one additional 
      week for each full year of service he/she has completed with the Bank, 
      up to a maximum of 78 weeks (18 months). 

            A Participant under CATEGORY III shall be obligated to seek 
      employment. The first 26 weeks (6 months) of the Participants 
      separation payments will be guaranteed and the remaining weeks will be 
      reduced by 50% if the Participant receives or is entitled to receive 
      any amount from other employment, including self-employment, during or 
      in respect of such weeks.

            CATEGORY IV. Participants in this category will be entitled to 
      receive separation payments for 13 weeks (3 months) plus one additional 
      week for each full year of service he/she has completed with the Bank, 
      up to a maximum of 52 weeks (12 months). 

            A Participant under CATEGORY IV shall be obligated to seek 
      employment. The first 26 weeks (6 months) of the Participants 
      separation payments will be guaranteed and the remaining weeks will be 
      reduced by 50% if the Participant receives or is entitled to receive 
      any amount from other employment, including self-employment, during or 
      in respect of such weeks.

            (b) HEALTH INSURANCE. A Participant will be entitled to continue to
receive health insurance benefits from the Bank on the same basis, as if he/she
were actively employed, for a period of six months. Months of continued coverage
hereunder will not be counted towards the number of months of continued coverage
to which the Participant (and any of his/her covered dependents) is entitled
pursuant to COBRA or any similar law.

<PAGE>

            (c) Notwithstanding anything to the contrary, the Plan Benefits
shall be reduced by any other severance type or other benefits which the
Participant receives or is entitled to receive from the Bank or a Related Entity
pursuant to any other plan, a contract, or otherwise.

         6. CONDITIONS TO PLAN BENEFITS. All Plan Benefits provided or to be
provided under this Plan are subject to the continued compliance of the
Participant with the following conditions:

            (a) RELEASE OF CLAIMS. The Participant will release the Bank and its
Related Entities (and their officers, directors, employees and agents) from and
against all claims that he/she may have against them and will convenant not to
bring, and shall not bring, any action in respect of any claim so released.

            (b) NON-COMPETITION. For a period of one year following a Qualifying
Termination, the Participant will not directly or indirectly, either
individually or as owner, partner, agent, employee, consultant or otherwise, for
himself or any other person or entity, solicit, enter into or attempt to
establish any business relationship, competitive with the business of the Bank
or any Related Entity, with any person or entity that was a customer of the Bank
or any Related Entity within 12 months of the date of the Qualifying
Termination.

            (c) CONFIDENTIAL INFORMATION. The Participant will not, either
directly or indirectly, use, disclose or communicate to any person or entity any
trade secret or confidential or proprietary information of the Bank or any
Related Entity. For purposes of this Agreement, "trade secret or confidential or
proprietary information" means any information concerning the Bank or any
Related Entity which he/she learned during his/her employment and which is not
generally known or available to sources outside the Bank and Related Entities;
such information shall include (without limitation) information, whether written
or otherwise, regarding earnings, expenses, plans, strategies, prospective and
executed contracts, and other business arrangements.

            (d) RETURN OF PROPERTY/AMOUNTS OWED. The Participant will promptly
return all property of the Bank and Related Entities. The Participant promptly
will reimburse the Bank and Related Entities for any personal telephone calls,
credit card charges, and other expenses and pay all amounts due to such entity.

            (e) BREACH BY PARTICIPANT. In the event the Participant breaches any
of the conditions set forth in this Section, in addition to any other remedies
it may have, the Bank shall not be required to provide any of the Plan Benefits,
and the Participant shall be obligated to return to the Bank, upon demand, an
amount equal to all Plan Benefits that he/she received under this Plan.

            (f) AGREEMENT. The Participant will, upon request, sign an agreement
satisfactory to the Bank that includes the conditions set forth in this Section
6.

         7. DEATH OF PARTICIPANT. Upon the death of a Participant receiving Plan
Benefits, the beneficiary(ies) of the Participant (whom he/she designated for
purposes of group life insurance benefits) shall be entitled to receive the Plan
Benefits through the end of the month in which the Participant's death occurred.

         8. ADMINISTRATION OF THE PLAN.

            (a) ADMINISTRATOR. The Administrator shall have full power to
administer the Plan. The Plan shall be administered in accordance with its
terms, for the exclusive benefit of Participants. The Administrator shall be
entitled to appoint persons to assist it in administering the Plan, and shall be
entitled to delegate, in writing, its responsibilities to other persons. The
Administrator shall have full discretionary authority to interpret the Plan and
to decide all questions concerning the Plan. Its interpretation shall be binding
on all concerned.

            (b) INDEMNIFICATION. The Bank agrees to indemnify and to defend to
the fullest extent permitted by law any person who performs or has performed
administrative functions for the Administrator against any liabilities and
expenses (including attorneys' fees and amounts paid in settlement of any claims

<PAGE>

approved by the Bank) occasioned by any act or omission in connection with the
Plan which occurred in good faith.

                  (c)      APPEAL OF A DENIED CLAIM.

                           (i)      If a Participant believes that he/she is 
entitled to benefits under the Plan, the Participant may submit a claim to the
administrator within 2 months after the date of the event that he/she believes
is a Qualifying Termination. The Administrator will either grant the claim, deny
it, or extend the time for processing it. Any extension will not be longer than
180 days from the date the claim was submitted.

                           (ii)     If a claim arising under this Plan is wholly
or partially denied, the Administrator shall furnish notice of the decision to
the Participant within 90 days after receipt of the claim. If special
circumstances require an extension of time for processing the claim, written
notice of the extension shall be furnished to the Participant prior to the end
of the initial 90-day period. In no event shall such extension exceed a period
of 90 days from the end of such initial period. The extension notice shall
indicate the special circumstances requiring an extension of time and the date
by which the Administrator expects to render the final decision. The written
notice to the Participant regarding a denied claim for benefits shall include
(A) the specific reason(s) for the denial; (B) specific reference to pertinent
Plan provisions which the denial is based; (C) a description of any additional
material or information necessary for the Participant to perfect the claim and
an explanation of why such material or information is necessary; (D) that the
Participant or his/her duly authorized representative has a reasonable
opportunity to appeal the denial of the claim, including but not limited to:
requesting a review upon written application to the Plan; reviewing pertinent
documents; and submitting issues and comments in writing; and (E) appropriate
information as to the steps to be taken if the Participant wishes to appeal the
denial of the claim.

                           (iii) The Administrator's decision regarding the
appeal shall be made not later than 60 days after the receipt of the appeal,
unless special circumstances require an extension of time, in which case the
Participant shall be notified of the extension and a decision shall be rendered
as soon as possible, but not later than 120 days after receipt of the appeal.
The decision regarding the appeal shall be in writing and shall include specific
reasons for the decision, written in a manner calculated to be understood by the
Participant, as well as specific references to the pertinent Plan provisions on
which the decision is based. The Administrator's decision regarding the appeal
will be final and binding on all concerned.

         9. AMENDMENTS AND TERMINATION. The Board of Directors may amend,
suspend, discontinue or terminate the plan, but no such action shall, without
the consent of each Participant, alter or impair the Plan benefits to be
provided to such Participant under the Plan.

         10.  BINDING EFFECT.

                  (a) This Plan shall inure to the benefit of each Participant.
This Plan shall be binding upon the Bank, its successors and assigns, including
any person or entity that acquires the business or assets of the Bank pursuant
to a Change in Control (a "transferee"); PROVIDED, HOWEVER, that no such
transfer or assignment shall relieve the Bank from its obligations hereunder.

                  (b) All obligations of the Bank under this Plan are subject to
applicable statutes and regulations. The Bank shall use its reasonable best
efforts to obtain all consents and approvals necessary to comply with the
provisions of this Plan.
         Adopted by Union National Bank on January 13, 1998.

         (11)  STATEMENTS RE COMPUTATION OF PER SHARE EARNINGS
                   a. The basic per share earning is calculated by dividing net
                      income for 1998 of $2,637,824, by the number of shares
                      outstanding for 1998 1,853,663. For 1997 by dividing net
                      income for 1997 of $2,400,102, by the number of shares
                      outstanding for 1997 1,834,819.



<PAGE>

                   b. The diluted per share earning is calculated by dividing
                      net income for 1998 of $2,637,824, by the number of shares
                      outstanding for 1998 1,853,356. For 1997 by dividing net
                      income for 1997 of $2,400,102, by the number of shares
                      outstanding for 1997 1,834,819.

         (12)  STATEMENTS RE COMPUTATION OF RATIOS

                  a. The percentage ratio of net income to average total assets
is calculated by dividing net income for 1998 of $2,637,824 , by the average
totals assets for 1998 of 268,614,000. For 1997 by dividing net income of
$2,400,102, by the average totals assets for 1997 of $234,206,000
                  b. The percentage ratio of net income to average shareholders'
equity is calculated by dividing net income for 1998 of $2,637,824, , by the
average shareholders' equity for 1998 of $21,165,000. For 1997 by dividing net
income for 1997 of $2,400,102, , by the average shareholders' equity for 1997 of
$18,884,000.
                  c. The percentage ratio of shareholders' equity to total
assets is calculated by dividing shareholders' equity for 1998 of $22,236,679,
by the total assets for 1998 of $283,913,435. For 1997 by dividing shareholders'
equity for 1997 of $20,064,326, by the total assets for 1997 of $250,780,880. d.
The percentage ratio of cash dividends declared to net income on a per share
basis is calculated by dividing the cash dividend per share for 1998 of $0.40,
by net earnings per share for 1998 of $1.43. For 1997 by dividing the cash
dividend per share for 1997 of $0.31, by net earnings per share for 1998 of
$1.30.


         (13) ANNUAL REPORT TO STOCKHOLDERS

                  Filed herewith


         (16) LETTER RE CHANGE IN CERTIFYING ACCOUNTANTS

                  Is incorporated by reference from Union National Bancorp's 8-K
file with the Commission on October 6, 1997.


         (20) OTHER DOCUMENTS OR STATEMENT TO SECURITY-HOLDERS

                  Press release approved stock action is incorporated by
reference from Union National Bancorp's Form 8-K, filed with the Commission of
October 26, 1998 (Registration No. 0-22523)


         (21)  SUBSIDIARIES OF THE REGISTRANT

                  Is incorporated by reference from Union National Bancorp's
Form 10, filed with the Commission of May 5, 1997, and Form 10/A, filedwith the
Commission on August 21,1997 (Registration No. 0-22523)







         (23) CONSENTS OF EXPERTS & COUNSEL

                  (23a.) Keller Bruner & Co. L.L.P.

The Board of Directors


<PAGE>

Union National Bancorp, Inc.

We consent to incorporation by reference of our report dated January 15 1999
relating to the consolidated balance sheets of Union National Bancorp, Inc. and
its subsidiary as of December 31, 1998 and 1997, and the related consolidated
statements of income, comprehensive income, changes in stockholders' equity and
cash flows for the years then ended, which report appears on page 25 of the 1998
Union National Bancorp, Inc. Annual Report to Stockholders, in this annual
report on Form 10-K, and in the following Registration Statement of Union
National Bancorp, Inc.: Number 333-36767 on Form S-3 and Number 333-58673 on
Form S-8.

/s/ Keller Bruner & Company, L.L.P.
         Frederick Maryland
         March 19,1999

                  (23b.) Stegman & Co.

                         CONSENT OF INDEPENDENT AUDITORS

         We hereby consent to the incorporation by reference of our report dated
January 8, relating to the consolidated statements of income, comprehensive
income, changes in stockholders' equity and cash flows of Union National Bancorp
and Subsidiary for the year ended December 31, 1996, which report appears on
page 25 of the 1998 Union National Bancorp Annual Report, into the Form 10-K.

                                                     /s/ Stegman & Company
Baltimore, Maryland
March 18,1999


         (27) FINANCIAL DATA SCHEDULE

                  Is filed electronically herewith via EDGAR.


Signatures

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

                                    Union National Bancorp, Inc.

Date: March 20, 1999                by: /s/ Virginia W. Smith
                                         President and Chief Executive Officer







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


Date: March 20, 1999                  by: /s/ K. Wayne Lockard
                                           Director & Chairman of the Board





<PAGE>

Date: March 20, 1999                  by: /s/ Donald C. Essich
                                           Director & Vice Chairman

Date: March 20, 1999                  by: /s/ Kenneth B. Wright
                                           Director

Date: March 20, 1999                  by: /s/ Robert T. Scott
                                           Director

Date: March 20, 1999                  by: /s/ Larry A. Van Sant, Sr.
                                           Director

Date: March 20, 1999                  by: /s/ Joseph H. Beaver, Jr.
                                           Director

Date: March 20, 1999                  by: /s/ Wesley D. Blakeslee
                                           Director

Date: March 20, 1999                  by: /s/ Dean H. Griffin
                                           Director

Date: March 20, 1999                  by: /s/ Ethan A. Seidel
                                           Director

Date: March 20, 1999                  by: /s/ Ellen Miller
                                           Director

Date: March 20, 1999                  by: /s/ William R. Klinger
                                           Director

Date: March 20, 1999                  by: /s/ Bernard L. Jones, Sr.
                                           Director

Date: March 20, 1999                  by: /s/ Robert L. Bullock
                                           Director

Date: March 20, 1999                  by: /s/ David L. Brauning
                                           Director

Date: March 20, 1999                  by: /s/ Gabrielle M. Peregoy
                                           Vice President & Controller