TABLE OF CONTENTS




|                                                                                               |                                                                      |  |  |  |  |  |  | 
|---------------------------------------------------------------------------------------------- | -------------------------------------------------------------------- |  |  |  |  |  |  | 
|Part I  Financial Information                                                                
|Item 1  Financial Statements                                                                 
|                                                                                               | CONSOLIDATED BALANCE SHEETS                                         
|                                                                                               | CONSOLIDATED STATEMENTS OF INCOME                                   
|                                                                                               | CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME                     
|                                                                                               | Condensed Consolidated Statements of Changes in Shareholders Equity
|                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS                               
|                                                                                               | Notes to Consolidated Financial Statements                          
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
|                                                                                               | CONSOLIDATED AVERAGE BALANCE SHEETS                                 
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                            
|PART II  OTHER INFORMATION                                                                   
|                                                                                               | Item 1  Legal Proceedings                                          
|                                                                                               | Item 2  Changes in Securities and Use of Proceeds                  
|                                                                                               | Item 3  Defaults Upon Senior Securities                            
|                                                                                               | Item 4  Submission of Matters to a Vote of Security Holders        
|                                                                                               | Item 5  Other Information                                          
|                                                                                               | Item 6  Exhibits and Reports on Form 8-K                           
|SIGNATURES                                                                                    



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##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

For the quarterly period
ended March 31,
2001

Commission file number 0-13270



|                                                       |  |                                        
|------------------------------------------------------ |  | ---------------------------------------
|UNB CORP.                                             
|                                                      
|(Exact name of Registrant as specified in its charter)
|                                                      
|Ohio                                                   |  | 34-1442295                             
|                                                       |  |                                        
|(State or other jurisdiction of                        |  | (I.R.S. Employer Identification Number)
|                                                      
|                                                      
|                                                      
|                                                      
|incorporation or organization)                        
|                                                      
|220 Market Avenue, South                              
|Canton, Ohio                                           |  | 44702                                  
|                                                       |  |                                        
|(Address of principal executive offices)               |  | (Zip Code)                             

Registrants telephone number, including area code    (330) 454-5821

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 report), and (2) has been subject to such
filing requirements for the past 90 days.

Yes X   No

Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the latest practical date.

|                                 |  |                              
|-------------------------------- |  | -----------------------------
|Common Stock, $1.00 Stated Value |  | Outstanding at April 30, 2001
|                                 |  | 10,462,244 Common Shares     





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##### Table of Contents



UNB CORP.

FORM 10-Q

QUARTER ENDED March 31, 2001

Part I  Financial Information




Item 1  Financial Statements




Interim financial information required by Rule 10-01 of Regulation S-X
        (17 CFR Part 210)
is included in this Form 10Q as referenced below:

|           |  |  |   |  |  |                                                                                       |  |           |       |  |  |  |  | 
|---------- |  |  | - |  |  | ------------------------------------------------------------------------------------- |  | --------- | ----- |  |  |  |  | 
|           |  |  |   |  |  |                                                                                       |  | Page     
|           |  |  |   |  |  |                                                                                       |  | Number(s)
|           |  |  |   |  |  |                                                                                       |  |          
|           |  |  |   |  |  | Consolidated Balance Sheets                                                           |  |           | 1     | 
|          
|          
|          
|          
|           |  |  |   |  |  | Consolidated Statements of Income                                                     |  |           | 2     | 
|          
|          
|          
|          
|           |  |  |   |  |  | Consolidated Statements of Comprehensive Income                                       |  |           | 3     | 
|          
|          
|          
|          
|           |  |  |   |  |  | Condensed Consolidated Statements of Changes in
Shareholders Equity                  |  |           | 4     | 
|          
|          
|          
|          
|           |  |  |   |  |  | Consolidated Statements of Cash Flows                                                 |  |           | 5     | 
|          
|          
|          
|          
|           |  |  |   |  |  | Notes to the Consolidated Financial Statements                                        |  |           | 6-12  | 
|          
|          
|          
|          
|Item 2     |  |  | - |  |  | Managements Discussion and Analysis of Financial
Condition and Results of Operations |  |           | 13-19 | 
|          
|          
|          
|          
|           |  |  |   |  |  | Consolidated Average Balance Sheets                                                   |  |           | 20    | 
|          
|          
|          
|          
|Item 3     |  |  | - |  |  | Quantitative and Qualitative Disclosures About
Market Risk                            |  |           | 21-22 | 
|          
|          
|          
|          
|Part II    |  |  | - |  |  | Other Information                                                                    
|          
|          
|          
|          
|Item 1     |  |  | - |  |  | Legal Proceedings                                                                     |  |           | 23    | 
|          
|          
|          
|          
|Item 2     |  |  | - |  |  | Changes in Securities                                                                 |  |           | 23    | 
|          
|          
|          
|          
|Item 3     |  |  | - |  |  | Defaults Upon Senior Securities                                                       |  |           | 23    | 
|          
|          
|          
|          
|Item 4     |  |  | - |  |  | Submission of Matters to a Vote of Security Holders                                   |  |           | 23    | 
|          
|          
|          
|          
|Item 5     |  |  | - |  |  | Other Information                                                                     |  |           | 23    | 
|          
|          
|          
|          
|Item 6     |  |  | - |  |  | Exhibits and Reports on Form 8-K                                                      |  |           | 24    | 
|          
|          
|          
|          
|Signatures |  |  |   |  |  |                                                                                       |  |           | 24    | 





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##### Table of Contents



UNB CORP.




CONSOLIDATED BALANCE SHEETS

|                                                                |  |                                |                |                                            |         |         |           |      |         |         |           |  |  |  |  | 
|--------------------------------------------------------------- |  | ------------------------------ | -------------- | ------------------------------------------ | ------- | ------- | --------- | ---- | ------- | ------- | --------- |  |  |  |  | 
|(In thousands except per share data)                            |  | March 31,                      |                | December 31,                              
|                                                                |  |                                |                |                                            |         | 2001    |           | 2000
|                                                                |  |                                |                |                                            |         |         |           |     
|ASSETS                                                         
|                                                               
|                                                               
|                                                               
|                                                               
|Cash and cash equivalents                                       |  | $                              | 31,088         |                                            |         | $       | 32,155    |     
|                                                               
|                                                               
|                                                               
|                                                               
|Federal funds sold                                              |  |                                | 9,700          |                                            |         |         | 0         |     
|                                                               
|                                                               
|                                                               
|                                                               
|Interest bearing deposits with banks                            |  |                                | 1,373          |                                            |         |         | 0         |     
|                                                               
|                                                               
|                                                               
|                                                               
|Securities, net (Fair value:                                   
|                                                               
|                                                               
|                                                               
|                                                               
|$48,703 and $52,179, respectively)                              |  |                                | 48,673         |                                            |         |         | 52,170    |     
|                                                               
|                                                               
|                                                               
|                                                               
|Mortgage-backed securities (Fair value:                        
|                                                               
|                                                               
|                                                               
|                                                               
|$76,176 and $78,728, respectively)                              |  |                                | 76,166         |                                            |         |         | 78,721    |     
|                                                               
|                                                               
|                                                               
|                                                               
|Loans originated and held for sale                              |  |                                | 4,046          |                                            |         |         | 3,433     |     
|                                                               
|                                                               
|                                                               
|                                                               
|Loans:                                                         
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |  | Total loans                    |                |                                            | 871,322 |         |           |      | 872,015 |        
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |  | Less allowance for loan losses |                |                                            | (12,808 | )       |           |      | (12,760 | )      
|                                                                |  |                                |                |                                            |         |         |           |     
|                                                                |  |                                | Net loans      |                                            |         | 858,514 |           |      |         | 859,255 |          
|                                                               
|                                                               
|                                                               
|                                                               
|Premises and equipment, net                                     |  |                                | 10,978         |                                            |         |         | 11,026    |     
|                                                               
|                                                               
|                                                               
|                                                               
|Intangible assets                                               |  |                                | 2,237          |                                            |         |         | 2,432     |     
|                                                               
|                                                               
|                                                               
|                                                               
|Accrued interest receivable and other assets                    |  |                                | 14,047         |                                            |         |         | 14,755    |     
|                                                                |  |                                |                |                                            |         |         |           |     
|                                                                |  |                                |                | Total Assets                               |         | $       | 1,056,822 |      |         | $       | 1,053,947 | 
|                                                                |  |                                |                |                                            |         |         |           |     
|LIABILITIES                                                    
|                                                               
|                                                               
|                                                               
|                                                               
|Deposits:                                                      
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |  | Noninterest bearing deposits   |                | $                                          | 98,500  |         |           | $    | 108,351 |        
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |  | Interest bearing deposits      |                |                                            | 724,930 |         |           |      | 719,290 |        
|                                                                |  |                                |                |                                            |         |         |           |     
|                                                                |  |                                | Total deposits |                                            |         | 823,430 |           |      |         | 827,641 |          
|                                                               
|                                                               
|                                                               
|                                                               
|Short-term borrowings                                           |  |                                | 71,251         |                                            |         |         | 81,979    |     
|                                                               
|                                                               
|                                                               
|                                                               
|Other borrowings                                                |  |                                | 75,633         |                                            |         |         | 61,188    |     
|                                                               
|                                                               
|                                                               
|                                                               
|Accrued taxes, expenses and other liabilities                   |  |                                | 8,421          |                                            |         |         | 7,211     |     
|                                                                |  |                                |                |                                            |         |         |           |     
|                                                                |  |                                |                | Total Liabilities                          |         |         | 978,735   |      |         |         | 978,019   | 
|                                                               
|                                                               
|                                                               
|                                                               
|SHAREHOLDERS EQUITY                                           
|                                                               
|                                                               
|                                                               
|                                                               
|Common stock ($1.00 stated value, 50,000,000 shares authorized;
|                                                               
|                                                               
|                                                               
|                                                               
|11,646,266 and 11,646,274 issued, respectively)                 |  |                                | 11,646         |                                            |         |         | 11,646    |     
|                                                               
|                                                               
|                                                               
|                                                               
|Paid-in capital                                                 |  |                                | 28,918         |                                            |         |         | 28,949    |     
|                                                               
|                                                               
|                                                               
|                                                               
|Retained earnings                                               |  |                                | 59,203         |                                            |         |         | 56,233    |     
|                                                               
|                                                               
|                                                               
|                                                               
|Treasury stock, 1,202,398 and 1,209,382 shares at cost          |  |                                | (21,910        | )                                          |         |         | (22,004   | )   
|                                                               
|                                                               
|                                                               
|                                                               
|Accumulated other comprehensive income                          |  |                                | 230            |                                            |         |         | 1,104     |     
|                                                                |  |                                |                |                                            |         |         |           |     
|                                                                |  |                                |                | Total Shareholders Equity                 |         |         | 78,087    |      |         |         | 75,928    | 
|                                                                |  |                                |                |                                            |         |         |           |     
|                                                                |  |                                |                | Total Liabilities and Shareholders Equity |         | $       | 1,056,822 |      |         | $       | 1,053,947 | 
|                                                                |  |                                |                |                                            |         |         |           |     

See Notes to the Consolidated Financial Statements

1



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##### Table of Contents



UNB CORP.




CONSOLIDATED STATEMENTS OF INCOME

|                                                    |                                                                    |                      |                        |            |        |        |       |            |        |        |  |  |  |  | 
|--------------------------------------------------- | ------------------------------------------------------------------ | -------------------- | ---------------------- | ---------- | ------ | ------ | ----- | ---------- | ------ | ------ |  |  |  |  | 
|(In thousands except per share data)                |                                                                    | Three Months Ended  
|                                                    |                                                                    | March 31,           
|                                                    |                                                                    |                      |                        |            |       
|                                                    |                                                                    |                      |                        |            | 2001   |        | 2000 
|                                                    |                                                                    |                      |                        |            |        |        |      
|Interest income:                                   
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Interest and fees on loans:                                       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                    | Taxable              |                        | $          | 18,731 |        |       | $          | 16,696 |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                    | Tax exempt           |                        |            | 60     |        |       |            | 30     |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Interest and dividends on securities & mortgage-backed securities:
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                    | Taxable              |                        |            | 1,865  |        |       |            | 1,993  |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                    | Tax exempt           |                        |            | 48     |        |       |            | 21     |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Interest on bank deposits and federal funds sold                   |                      |                        | 56         |        |        |       | 171        |       
|                                                    |                                                                    |                      |                        |            |        |        |       |           
|                                                    |                                                                    |                      | Total interest income  |            |        | 20,760 |       |            |        | 18,911 | 
|                                                    |                                                                    |                      |                        |            |        |        |       |           
|Interest expense:                                  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Interest on deposits                                               |                      |                        | 8,806      |        |        |       | 8,008      |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Interest on short-term borrowings                                  |                      |                        | 852        |        |        |       | 872        |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Interest on other borrowings                                       |                      |                        | 1,031      |        |        |       | 788        |       
|                                                    |                                                                    |                      |                        |            |        |        |       |           
|                                                    |                                                                    |                      | Total interest expense |            |        | 10,689 |       |            |        | 9,668  | 
|                                                    |                                                                    |                      |                        |            |        |        |       |           
|Net interest income                                 |                                                                    |                      | 10,071                 |            |        |        | 9,243 |           
|                                                   
|                                                   
|                                                   
|                                                   
|Provision for loan losses                           |                                                                    |                      | 343                    |            |        |        | 115   |           
|                                                    |                                                                    |                      |                        |            |        |        |       |           
|Net interest income after provision for loan losses |                                                                    |                      | 9,728                  |            |        |        | 9,128 |           
|                                                   
|                                                   
|                                                   
|                                                   
|Other income:                                      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Service charges on deposits                                        |                      |                        | 705        |        |        |       | 663        |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Trust Department income                                            |                      |                        | 1,249      |        |        |       | 1,325      |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Gains on loans originated for resale and sold                      |                      |                        | 225        |        |        |       | 22         |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Securities gains, net                                              |                      |                        | 1,317      |        |        |       | 674        |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Other operating income                                             |                      |                        | 945        |        |        |       | 746        |       
|                                                    |                                                                    |                      |                        |            |        |        |       |           
|                                                    |                                                                    | Total other income   |                        |            | 4,441  |        |       |            | 3,430  |       
|                                                    |                                                                    |                      |                        |            |        |        |       |           
|Other expenses:                                    
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Salary, wages and benefits                                         |                      |                        | 3,696      |        |        |       | 3,319      |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Occupancy expense                                                  |                      |                        | 455        |        |        |       | 412        |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Equipment expense                                                  |                      |                        | 994        |        |        |       | 1,001      |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Derivative instruments and hedging activity expense                |                      |                        | 221        |        |        |       | 0          |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Other operating expense                                            |                      |                        | 2,233      |        |        |       | 2,194      |       
|                                                    |                                                                    |                      |                        |            |        |        |       |           
|                                                    |                                                                    | Total other expenses |                        |            | 7,599  |        |       |            | 6,926  |       
|                                                    |                                                                    |                      |                        |            |        |        |       |           
|Income before income taxes                          |                                                                    |                      | 6,570                  |            |        |        | 5,632 |           
|                                                   
|                                                   
|                                                   
|                                                   
|Provision for income taxes                          |                                                                    |                      | 2,280                  |            |        |        | 1,937 |           
|                                                    |                                                                    |                      |                        |            |        |        |       |           
|                                                    | Income before accounting method changes                            |                      |                        | 4,290      |        |        |       | 3,695      |       
|                                                   
|                                                   
|                                                   
|                                                   
|Accounting method change  adoption of FAS 133      |                                                                    |                      | 14                     |            |        |        | 0     |           
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Net Income                                                         |                      | $                      | 4,276      |        |        | $     | 3,695      |       
|                                                    |                                                                    |                      |                        |            |        |        |       |           
|Earnings per share:                                
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Basic                                                              |                      | $                      | 0.41       |        |        | $     | 0.35       |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Diluted                                                            |                      | $                      | 0.41       |        |        | $     | 0.34       |       
|                                                    |                                                                    |                      |                        |            |        |        |       |           
|Dividends per share                                 |                                                                    | $                    | 0.13                   |            |        | $      | 0.12  |           
|                                                    |                                                                    |                      |                        |            |        |        |       |           
|Weighted average shares outstanding:               
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Basic                                                              |                      |                        | 10,436,491 |        |        |       | 10,690,865 |       
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Diluted                                                            |                      |                        | 10,536,896 |        |        |       | 10,766,347 |       
|                                                    |                                                                    |                      |                        |            |        |        |       |           

See Notes to the Consolidated Financial Statements

2



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##### Table of Contents



UNB CORP.




CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

|                                       |                                          |                                                                                     |                                         |  |      |      |       |  |      |        |   |  |  |  |  |  |  |  |  |  |  |  | 
|-------------------------------------- | ---------------------------------------- | ----------------------------------------------------------------------------------- | --------------------------------------- |  | ---- | ---- | ----- |  | ---- | ------ | - |  |  |  |  |  |  |  |  |  |  |  | 
|(In thousands)                         |                                          | Three Months Ended                                                                 
|                                       |                                          | March 31,                                                                          
|                                       |                                          |                                                                                     |                                         |  |     
|                                       |                                          |                                                                                     |                                         |  | 2001 |      | 2000 
|                                       |                                          |                                                                                     |                                         |  |      |      |      
|Net Income                             |                                          | $                                                                                   | 4,276                                   |  |      | $    | 3,695
|                                      
|                                      
|                                      
|                                      
|Other comprehensive income, net of tax
|                                      
|                                      
|                                      
|                                      
|                                       | Unrealized gains/(losses) on securities:
|                                      
|                                      
|                                      
|                                      
|                                       |                                          | Unrealized gains/(losses) arising
during the period                                 |                                         |  | (18  | )    |       |  | (984 | )     
|                                      
|                                      
|                                      
|                                      
|                                       |                                          | Less: Reclassified adjustment for
accumulated gains/(losses)
included in net income |                                         |  | 856  |      |       |  | 438 
|                                       |                                          |                                                                                     |                                         |  |      |      |      
|                                       |                                          |                                                                                     | Unrealized gains/(losses) on securities |  |      | (874 | )     |  |      | (1,422 | )
|                                       |                                          |                                                                                     |                                         |  |      |      |      
|Comprehensive income                   |                                          | $                                                                                   | 3,402                                   |  |      | $    | 2,273
|                                       |                                          |                                                                                     |                                         |  |      |      |      

See Notes to the Consolidated Financial Statements

3



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##### Table of Contents



UNB CORP.




Condensed Consolidated Statements of Changes in Shareholders Equity

|                                                                               |  |                    |        |         |  |   |        |   |  |  |  | 
|------------------------------------------------------------------------------ |  | ------------------ | ------ | ------- |  | - | ------ | - |  |  |  | 
|(In thousands except per share data)                                           |  | Three Months Ended
|                                                                               |  |                   
|                                                                               |  | 3/31/01            |        | 3/31/00
|                                                                               |  |                    |        |        
|Balance at beginning of period                                                 |  | $                  | 75,928 |         |  | $ | 70,674 |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Net Income                                                                     |  |                    | 4,276  |         |  |   | 3,695  |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Cash dividends $0.13 and $0.12 per share, respectively                         |  |                    | (1,306 | )       |  |   | (1,281 | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Treasury stock purchases                                                       |  |                    | (40    | )       |  |   | (2,558 | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Treasury stock sold and issued for stock options                               |  |                    | 103    |         |  |   | 0      |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Change in market value on securities available
for sale, net of deferred taxes |  |                    | (874   | )       |  |   | (1,422 | )
|                                                                               |  |                    |        |         |  |   |        |  
|Balance at end of period                                                       |  | $                  | 78,087 |         |  | $ | 69,108 |  
|                                                                               |  |                    |        |         |  |   |        |  

See Notes to the Consolidated Financial Statements

4



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##### Table of Contents



UNB CORP.




CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                               |                                                                            |                                                                              |                                    |         |                    |        |         |         |         |         |   |  |  |  | 
|---------------------------------------------- | -------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | ---------------------------------- | ------- | ------------------ | ------ | ------- | ------- | ------- | ------- | - |  |  |  | 
|                                               |                                                                            |                                                                              |                                    |         | Three months ended
|(In thousands)                                 |                                                                            | March 31,                                                                   
|                                               |                                                                            |                                                                             
|                                               |                                                                            |                                                                              |                                    |         | 2001               |        | 2000   
|                                               |                                                                            |                                                                              |                                    |         |                    |        |        
|Cash flows from operating activities:         
|                                              
|                                              
|                                              
|                                              
|                                               | Net income                                                                 |                                                                              | $                                  | 4,276   |                    |        | $       | 3,695   |        
|                                              
|                                              
|                                              
|                                              
|                                               | Adjustments to reconcile net income to net cash from operating activities:
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                            | Depreciation and amortization                                                |                                    |         | 329                |        |         |         | 378     |        
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                            | Provision for loan losses                                                    |                                    |         | 343                |        |         |         | 115     |        
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                            | Net securities gains                                                         |                                    |         | (1,317             | )      |         |         | (674    | )      
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                            | Net amortization/(accretion) on securities                                   |                                    |         | (74                | )      |         |         | (33     | )      
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                            | Amortization of intangible assets                                            |                                    |         | 195                |        |         |         | 248     |        
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                            | Loans originated for resale                                                  |                                    |         | (17,556            | )      |         |         | (2,237  | )      
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                            | Proceeds from sale of loan originations                                      |                                    |         | 17,168             |        |         |         | 2,055   |        
|                                              
|                                              
|                                              
|                                              
|                                               | Changes in:                                                               
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                            | Interest receivable                                                          |                                    |         | 579                |        |         |         | (305    | )      
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                            | Interest payable                                                             |                                    |         | (226               | )      |         |         | (66     | )      
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                            | Other assets and liabilities, net                                            |                                    |         | 2,038              |        |         |         | 136     |        
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                            | Deferred income                                                              |                                    |         | (2                 | )      |         |         | (2      | )      
|                                               |                                                                            |                                                                              |                                    |         |                    |        |         |        
|                                               |                                                                            |                                                                              | Net cash from operating activities |         |                    | 5,753  |         |         |         | 3,310   |  
|                                               |                                                                            |                                                                              |                                    |         |                    |        |         |        
|Cash flows from investing activities:         
|                                              
|                                              
|                                              
|                                              
|                                               | Net change in interest bearing deposits with banks                         |                                                                              |                                    | (1,373  | )                  |        |         | 449     |        
|                                              
|                                              
|                                              
|                                              
|                                               | Net increase in funds sold                                                 |                                                                              |                                    | (9,700  | )                  |        |         | (10,900 | )      
|                                              
|                                              
|                                              
|                                              
|                                               | Investment and mortgage-backed securities:                                
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                            | Proceeds from sales of securities available for sale                         |                                    |         | 3,638              |        |         |         | 1,038   |        
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                            | Proceeds from maturities of securities held to maturity                      |                                    |         | 375                |        |         |         | 125     |        
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                            | Proceeds from maturities of securities available for sale                    |                                    |         | 29,138             |        |         |         | 26,961  |        
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                            | Purchases of securities held to maturity                                     |                                    |         | 0                  |        |         |         | (878    | )      
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                            | Purchases of securities available for sale                                   |                                    |         | (30,202            | )      |         |         | (19,936 | )      
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                            | Purchases of mortgage-backed securities available for sale                   |                                    |         | (4,000             | )      |         |         | (3,926  | )      
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                            | Principal payments received on mortgage-backed securities held to maturity   |                                    |         | 32                 |        |         |         | 41      |        
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                            | Principal payments received on mortgage-backed securities available for sale |                                    |         | 7,117              |        |         |         | 4,127   |        
|                                              
|                                              
|                                              
|                                              
|                                               | Net (increase)/decrease in loans made to customers                         |                                                                              |                                    | 173     |                    |        |         | (36,220 | )      
|                                              
|                                              
|                                              
|                                              
|                                               | Purchases of premises and equipment, net                                   |                                                                              |                                    | (281    | )                  |        |         | (521    | )      
|                                               |                                                                            |                                                                              |                                    |         |                    |        |         |        
|                                               |                                                                            |                                                                              | Net cash from investing activities |         |                    | (5,083 | )       |         |         | (39,640 | )
|                                               |                                                                            |                                                                              |                                    |         |                    |        |         |        
|Cash flows from financing activities:         
|                                              
|                                              
|                                              
|                                              
|                                               | Net increase/(decrease) in deposits                                        |                                                                              |                                    | (4,211  | )                  |        |         | 28,721  |        
|                                              
|                                              
|                                              
|                                              
|                                               | Cash dividends paid, net of shares issued through dividend reinvestment    |                                                                              |                                    | (1,306  | )                  |        |         | (1,281  | )      
|                                              
|                                              
|                                              
|                                              
|                                               | Purchase of treasury stock                                                 |                                                                              |                                    | (40     | )                  |        |         | (2,558  | )      
|                                              
|                                              
|                                              
|                                              
|                                               | Sales of treasury stock                                                    |                                                                              |                                    | 103     |                    |        |         | 0       |        
|                                              
|                                              
|                                              
|                                              
|                                               | Net increase/(decrease) in short-term borrowings                           |                                                                              |                                    | (10,728 | )                  |        |         | (2,197  | )      
|                                              
|                                              
|                                              
|                                              
|                                               | Proceeds from FHLB advances                                                |                                                                              |                                    | 15,000  |                    |        |         | 1,200   |        
|                                              
|                                              
|                                              
|                                              
|                                               | Repayments of FHLB advances                                                |                                                                              |                                    | (1,045  | )                  |        |         | (5,949  | )      
|                                              
|                                              
|                                              
|                                              
|                                               | Proceeds from bank borrowings                                              |                                                                              |                                    | 504     |                    |        |         | 1,000   |        
|                                              
|                                              
|                                              
|                                              
|                                               | Repayments on capital lease                                                |                                                                              |                                    | (14     | )                  |        |         | (13     | )      
|                                               |                                                                            |                                                                              |                                    |         |                    |        |         |        
|                                               |                                                                            |                                                                              | Net cash from financing activities |         |                    | (1,737 | )       |         |         | 18,923  |  
|                                               |                                                                            |                                                                              |                                    |         |                    |        |         |        
|Net change in cash and cash equivalents        |                                                                            |                                                                              | (1,067                             | )       |                    |        | (17,407 | )      
|                                              
|                                              
|                                              
|                                              
|Cash and cash equivalents at beginning of year |                                                                            |                                                                              | 32,155                             |         |                    |        | 48,354  |        
|                                               |                                                                            |                                                                              |                                    |         |                    |        |         |        
|Cash and cash equivalents at end of period     |                                                                            | $                                                                            | 31,088                             |         |                    | $      | 30,947  |        
|                                               |                                                                            |                                                                              |                                    |         |                    |        |         |        

See the Notes to the Consolidated Financial Statements

5



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##### Table of Contents






UNB CORP.
Notes to Consolidated Financial Statements

Note 1  Summary of Significant Accounting Policies

Unless otherwise indicated, amounts are in thousands, except per share data.

The accompanying consolidated financial statements include the accounts of UNB
Corp. and its wholly owned subsidiaries United National Bank & Trust Co. and
United Banc Financial Services, Inc. All material intercompany accounts and
transactions have been eliminated in consolidation.

These interim financial statements reflect all adjustments of a normal
recurring nature which, in the opinion of management, are necessary to present
fairly the consolidated financial position of UNB Corp. at March 31, 2001, and
its results of operations and cash flows for the periods presented. The
accompanying consolidated financial statements do not purport to contain all
the necessary financial disclosures required by generally accepted accounting
principles that might otherwise be necessary in the circumstances and are not
necessarily indicative of the results to be expected for the full year. The
Annual Report for UNB Corp. for the year ended December 31, 2000, contains
consolidated financial statements and related notes, which should be read in
conjunction with the accompanying consolidated financial statements.

For consolidated financial statement classification and cash flow reporting
purposes, cash and cash equivalents include currency on hand and non-interest
bearing deposits with banks. For the quarters ended March 31, 2001 and March 31,
2000, UNB Corp. paid interest in the amount of $10,917 and $9,735,
respectively. There were no federal income taxes paid for the quarter ended
March 31, 2001. For the quarter ended March 31, 2000, federal income taxes paid
totaled $160.

The Corporation classifies debt and equity securities as held to maturity,
available for sale, or trading. Securities classified as held to maturity are
those management has the positive intent and ability to hold to maturity.
Securities classified as available for sale are those management intends to
sell or that could be sold for liquidity, investment management, or similar
reasons, even if there is not a present intention for such a sale. Trading
securities are purchased principally for sale in the near term and are reported
at fair value with unrealized gains and losses included in earnings. The
Corporation held no trading securities during the periods reported.

Securities held to maturity are stated at cost, adjusted for amortization of
premiums and accretion of discounts. Securities available for sale are carried
at fair value, with unrealized holding gains and losses included in other
comprehensive income. Gains or losses on dispositions are based on net proceeds
and the amortized cost of securities sold, using the specific identification
method.

Management analyzes loans on an individual basis and classifies a loan as
impaired when an analysis of the borrowers operating results and financial
condition indicates that underlying cash flows are not adequate to meet its
debt service requirements. Often this is associated with a delay or shortfall
in payments of 30 days or more. Smaller-balance homogeneous loans are evaluated
for impairment in total and are excluded from reported impaired loans. Such
loans include residential first mortgage loans secured by one-to-four family
residences, residential construction loans and consumer automobile, boat, RV,
and home equity loans. In addition, loans held for sale and leases are excluded
from consideration as impaired.

Impaired loans are fully or partially charged off when in managements opinion
an event or events have occurred which provide reasonable certainty that a loss
is probable. When management determines that a loss is probable, a full or
partial

6



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##### Table of Contents



UNB CORP.Notes to Consolidated Financial Statements(continued)

charge off is recorded for the amount the book value of the impaired loan
exceeds the present value of the cash flows or the fair value of the
collateral, for collateral dependent loans.

Loans considered to be impaired are reduced to the present value of expected
future cash flows or to the fair value of collateral by allocating a portion of
the allowance for loan losses to such loans. Any reduction in carrying value
through impairment or any change in impairment based on cash payments received
or revised cash flow estimates as determined on a quarterly basis would be
applied against the unallocated portion of the allowance for loan losses and
become a specific allocation of the allowance or as an addition to the
provision for loan losses if the unallocated portion of the allowance was
insufficient to cover the impairment.

Basic and diluted earnings per share are computed under the provisions of SFAS
No. 128, Earnings Per Share. Basic earnings per share is net income divided
by the weighted average number of shares outstanding during the period. Diluted
earnings per share includes the dilutive effect of additional common shares
issued under stock options assuming the exercise of stock options less the
treasury shares assumed to be purchased from the proceeds using the average
market price of UNB Corp.s stock for the periods presented.

Certain 2000 amounts may have been reclassified to conform to the 2001
presentation.

Note 2  Securities

The amortized cost and estimated fair value of securities and mortgage-backed
securities, available for sale and held to maturity, as presented on the
consolidated balance sheet at March 31, 2001 and December 31, 2000, follows:

|                                              |                                                          |                                                 |                       |        |                |        |            |     |            |     |       |    |           |      |        |        |         |        |  |  |  |  | 
|--------------------------------------------- | -------------------------------------------------------- | ----------------------------------------------- | --------------------- | ------ | -------------- | ------ | ---------- | --- | ---------- | --- | ----- | -- | --------- | ---- | ------ | ------ | ------- | ------ |  |  |  |  | 
|                                              |                                                          |                                                 |                       |        | March 31, 2001
|                                              |                                                          |                                                 |                       |        |               
|                                              |                                                          |                                                 |                       |        |                |        |            |     | Gross      |     | Gross |    | Estimated
|                                              |                                                          |                                                 |                       |        | Amortized      |        | Unrealized |     | Unrealized |     | Fair 
|                                              |                                                          |                                                 |                       |        | Cost           |        | Gains      |     | Losses     |     | Value
|                                              |                                                          |                                                 |                       |        |                |        |            |     |            |     |      
|Securities available for sale:               
|                                             
|                                             
|                                             
|                                             
|                                              | U.S. Treasury securities                                 |                                                 | $                     | 1,000  |                |        | $          | 1   |            |     | $     |   |           |      | $      | 1,001  |        
|                                             
|                                             
|                                             
|                                             
|                                              | Obligations of U.S. government
agencies and corporations |                                                 |                       | 30,331 |                |        |            | 254 |            |     |       | (1 | )         |      |        | 30,584 |        
|                                             
|                                             
|                                             
|                                             
|Securities held to maturity:                 
|                                             
|                                             
|                                             
|                                             
|                                              | Obligations of state and
political subdivisions          |                                                 |                       | 3,890  |                |        |            | 31  |            |     |       | (1 | )         |      |        | 3,920  |        
|                                              |                                                          |                                                 |                       |        |                |        |            |     |            |     |       |    |           |      |        |       
|                                              |                                                          |                                                 | Total debt securities |        |                | 35,221 |            |     |            | 286 |       |    |           | (2   | )      |        |         | 35,505 | 
|                                             
|                                             
|                                             
|                                             
|Equity securities available for sale          |                                                          |                                                 | 12,427                |        |                |        |           |     |            |     | (240  | )  |           |      | 12,187 |       
|                                             
|                                             
|                                             
|                                             
|Asset-backed securities available
for sale    |                                                          |                                                 | 999                   |        |                |        | 12         |     |            |     |      |    |           |      | 1,011  |       
|                                              |                                                          |                                                 |                       |        |                |        |            |     |            |     |       |    |           |      |        |       
|                                              |                                                          |                                                 | Total securities      |        |                | 48,647 |            |     |            | 298 |       |    |           | (242 | )      |        |         | 48,703 | 
|                                             
|                                             
|                                             
|                                             
|Mortgage-backed securities
available for sale |                                                          |                                                 | 75,439                |        |                |        | 523        |     |            |     | (195  | )  |           |      | 75,767 |       
|                                             
|                                             
|                                             
|                                             
|Mortgage-backed securities
held to maturity   |                                                          |                                                 | 399                   |        |                |        | 10         |     |            |     |      |    |           |      | 409    |       
|                                              |                                                          |                                                 |                       |        |                |        |            |     |            |     |       |    |           |      |        |       
|                                              |                                                          | Total mortgage-backed securities                |                       |        | 75,838         |        |            |     | 533        |     |       |    | (195      | )    |        |        | 76,176  |       
|                                              |                                                          |                                                 |                       |        |                |        |            |     |            |     |       |    |           |      |        |       
|                                              |                                                          | Total securities and mortgage-backed securities |                       | $      | 124,485        |        |            | $   | 831        |     |       | $  | (437      | )    |        | $      | 124,879 |       
|                                              |                                                          |                                                 |                       |        |                |        |            |     |            |     |       |    |           |      |        |       

7



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UNB CORP.Notes to Consolidated Financial Statements(continued)

|                                              |                                                          |                                                 |        |                   |         |            |       |            |       |       |      |           |        |   |        |        |         |  |  |  |  | 
|--------------------------------------------- | -------------------------------------------------------- | ----------------------------------------------- | ------ | ----------------- | ------- | ---------- | ----- | ---------- | ----- | ----- | ---- | --------- | ------ | - | ------ | ------ | ------- |  |  |  |  | 
|                                              |                                                          |                                                 |        | December 31, 2000
|                                              |                                                          |                                                 |        |                  
|                                              |                                                          |                                                 |        |                   |         |            |       | Gross      |       | Gross |      | Estimated
|                                              |                                                          |                                                 |        | Amortized         |         | Unrealized |       | Unrealized |       | Fair 
|                                              |                                                          |                                                 |        | Cost              |         | Gains      |       | Losses     |       | Value
|                                              |                                                          |                                                 |        |                   |         |            |       |            |       |      
|Securities available for sale:               
|                                             
|                                             
|                                             
|                                             
|                                              | U.S. Treasury securities                                 |                                                 | $      | 999               |         |            | $     |           |       |       | $    | (1        | )      |   | $      | 998    |        
|                                             
|                                             
|                                             
|                                             
|                                              | Obligations of U.S. government
agencies and corporations |                                                 |        | 31,473            |         |            |       | 146        |       |       |      | (15       | )      |   |        | 31,604 |        
|                                             
|                                             
|                                             
|                                             
|Securities held to maturity:                 
|                                             
|                                             
|                                             
|                                             
|                                              | Obligations of state and
political subdivisions          |                                                 |        | 4,265             |         |            |       | 10         |       |       |      | (1        | )      |   |        | 4,274  |        
|                                              |                                                          |                                                 |        |                   |         |            |       |            |       |       |      |           |        |   |        |       
|                                              |                                                          | Total debt securities                           |        |                   | 36,737  |            |       |            | 156   |       |      |           | (17    | ) |        |        | 36,876  | 
|                                             
|                                             
|                                             
|                                             
|Equity securities available for sale          |                                                          |                                                 | 12,518 |                   |         |            | 2,518 |            |       |       | (728 | )         |        |   | 14,308 |       
|                                             
|                                             
|                                             
|                                             
|Asset-backed securities available
for sale    |                                                          |                                                 | 999    |                   |         |            |      |            |       |       | (4   | )         |        |   | 995    |       
|                                              |                                                          |                                                 |        |                   |         |            |       |            |       |       |      |           |        |   |        |       
|                                              |                                                          | Total securities                                |        |                   | 50,254  |            |       |            | 2,674 |       |      |           | (749   | ) |        |        | 52,179  | 
|                                             
|                                             
|                                             
|                                             
|Mortgage-backed securities
available for sale |                                                          |                                                 | 78,506 |                   |         |            | 268   |            |       |       | (484 | )         |        |   | 78,290 |       
|                                             
|                                             
|                                             
|                                             
|Mortgage-backed securities
held to maturity   |                                                          |                                                 | 431    |                   |         |            | 7     |            |       |       |     |           |        |   | 438    |       
|                                              |                                                          |                                                 |        |                   |         |            |       |            |       |       |      |           |        |   |        |       
|                                              |                                                          | Total mortgage-backed securities                |        |                   | 78,937  |            |       |            | 275   |       |      |           | (484   | ) |        |        | 78,728  | 
|                                              |                                                          |                                                 |        |                   |         |            |       |            |       |       |      |           |        |   |        |       
|                                              |                                                          | Total securities and mortgage-backed securities |        | $                 | 129,191 |            |       | $          | 2,949 |       |      | $         | (1,233 | ) |        | $      | 130,907 | 
|                                              |                                                          |                                                 |        |                   |         |            |       |            |       |       |      |           |        |   |        |       

During the periods ended March 31, 2001 and 2000, the proceeds from sales of
securities available for sale were $3,638 and $1,038, respectively. Net gains
of $1,317 and $674 were recognized on those sales, respectively. There were
no sales or transfers of securities classified as held to maturity.

The amortized cost and estimated fair value of debt securities at March 31,
2001, by contractual maturity, are shown below. Actual maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.

8



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UNB CORP.Notes to Consolidated Financial Statements(continued)

|                                                                           |                                       |       |        |                |        |       |        |           |        |          |      |      |      |   |  |  |  | 
|-------------------------------------------------------------------------- | ------------------------------------- | ----- | ------ | -------------- | ------ | ----- | ------ | --------- | ------ | -------- | ---- | ---- | ---- | - |  |  |  | 
|                                                                           |                                       |       |        | March 31, 2001
|                                                                           |                                       |       |        |               
|                                                                           |                                       |       |        |                |        |       |        | Estimated |        | Weighted
|                                                                           |                                       |       |        | Amortized      |        | Fair  |        | Average  
|                                                                           |                                       |       |        | Cost           |        | Value |        | Yield    
|                                                                           |                                       |       |        |                |        |       |        |          
|Securities available for sale:                                            
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|U.S. Treasuries                                                           
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Due in one year or less               |       | $      | 1,000          |        |       | $      | 1,001     |        |          |      | 5.40 | %   
|                                                                           |                                       |       |        |                |        |       |        |           |        |          |      |     
|                                                                           |                                       | Total |        |                | 1,000  |       |        |           | 1,001  |          |      |      | 5.40 | %
|                                                                           |                                       |       |        |                |        |       |        |           |        |          |      |     
|U.S. Government agencies and corporations                                 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Due in one year or less               |       |        | 22,510         |        |       |        | 22,619    |        |          |      | 5.63 | %   
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Due after one year through five years |       |        | 7,821          |        |       |        | 7,965     |        |          |      | 6.37 |     
|                                                                           |                                       |       |        |                |        |       |        |           |        |          |      |     
|                                                                           |                                       | Total |        |                | 30,331 |       |        |           | 30,584 |          |      |      | 5.82 | %
|                                                                           |                                       |       |        |                |        |       |        |           |        |          |      |     
|                                                                           |                                       | $     | 31,331 |                |        | $     | 31,585 |           |        |          | 5.81 | %   
|                                                                           |                                       |       |        |                |        |       |        |           |        |          |      |     
|Securities held to maturity:                                              
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Obligations of state and political subdivisions                           
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Due in one year or less               |       | $      | 3,437          |        |       | $      | 3,449     |        |          |      | 4.80 | %   
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Due after one year through five years |       |        | 453            |        |       |        | 471       |        |          |      | 5.13 |     
|                                                                           |                                       |       |        |                |        |       |        |           |        |          |      |     
|                                                                           |                                       | Total |        |                | 3,890  |       |        |           | 3,920  |          |      |      | 4.84 | %
|                                                                           |                                       |       |        |                |        |       |        |           |        |          |      |     
|Asset-backed securities available for sale                                 |                                       | $     | 999    |                |        | $     | 1,011  |           |        |          | 6.85 | %   
|                                                                           |                                       |       |        |                |        |       |        |           |        |          |      |     
|Mortgage-backed and collateralized
mortgage obligations available for sale |                                       | $     | 75,439 |                |        | $     | 75,767 |           |        |          | 6.41 | %   
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Mortgage-backed and collateralized
mortgage obligations held to maturity   |                                       |       | 399    |                |        |       | 409    |           |        |          | 7.82 |     
|                                                                           |                                       |       |        |                |        |       |        |           |        |          |      |     
|                                                                           |                                       | $     | 75,838 |                |        | $     | 76,176 |           |        |          | 6.42 | %   
|                                                                           |                                       |       |        |                |        |       |        |           |        |          |      |     

At March 31, 2001, there were no holdings of securities of any one issuer,
other than the U.S. government and its agencies and corporations, with an
aggregate book value in excess of 10% of shareholders equity. Securities
with a carrying value of approximately $110,631 at March 31, 2001 were
pledged to secure public funds and other obligations.

Note 3  Loans

Total loans as presented on the balance sheet are comprised of the following
classifications:

|                                       |  |                |         |                   |  |   |         |  |  |  |  | 
|-------------------------------------- |  | -------------- | ------- | ----------------- |  | - | ------- |  |  |  |  | 
|                                       |  | March 31, 2001 |         | December 31, 2000
|                                       |  |                |         |                  
|Commercial, financial and agricultural |  | $              | 110,164 |                   |  | $ | 112,263 | 
|                                      
|                                      
|                                      
|                                      
|Commercial real estate                 |  |                | 123,467 |                   |  |   | 121,677 | 
|                                      
|                                      
|                                      
|                                      
|Aircraft                               |  |                | 141,069 |                   |  |   | 138,696 | 
|                                      
|                                      
|                                      
|                                      
|Residential real estate                |  |                | 254,725 |                   |  |   | 260,088 | 
|                                      
|                                      
|                                      
|                                      
|Consumer                               |  |                | 241,897 |                   |  |   | 239,291 | 
|                                       |  |                |         |                   |  |   |         | 
|Total loans                            |  | $              | 871,322 |                   |  | $ | 872,015 | 
|                                       |  |                |         |                   |  |   |         | 

9



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##### Table of Contents



UNB CORP.Notes to Consolidated Financial Statements(continued)

Impaired loans were as follows:

|                                                   |  |                |       |                   |  |   |       |  |  |  |  | 
|-------------------------------------------------- |  | -------------- | ----- | ----------------- |  | - | ----- |  |  |  |  | 
|                                                   |  | March 31, 2001 |       | December 31, 2000
|                                                   |  |                |       |                  
|Loans with no allowance for loan
losses allocated  |  | $              | 1,207 |                   |  | $ | 1,343 | 
|                                                  
|                                                  
|                                                  
|                                                  
|Loans with allowance for loan
losses allocated     |  |                | 3,857 |                   |  |   | 2,516 | 
|                                                  
|                                                  
|                                                  
|                                                  
|Amount of allowance allocated                      |  |                | 1,389 |                   |  |   | 909   | 
|                                                  
|                                                  
|                                                  
|                                                  
|Average of impaired loans,
year-to-date            |  |                | 3,821 |                   |  |   | 3,093 | 
|                                                  
|                                                  
|                                                  
|                                                  
|Interest income recognized during
impairment       |  |                | 54    |                   |  |   | 210   | 
|                                                  
|                                                  
|                                                  
|                                                  
|Cash-basis interest income
recognized year-to-date |  |                | 61    |                   |  |   | 206   | 

At March 31, 2001 and December 31, 2000, loans on non-accrual status and/or
past due 90 days or more approximated $3,033 and $3,141, respectively. The
Other Real Estate Owned balance, net of allowance, was $325 and $394 at March
31, 2001 and December 31, 2000, respectively.

Note 4  Allowance for Loan Losses

A summary of activity in the allowance for loan losses for the three months
ended March 31, 2001 and March 31, 2000, follows:

|                                           |  |      |        |      |  |   |        |   |  |  |  | 
|------------------------------------------ |  | ---- | ------ | ---- |  | - | ------ | - |  |  |  | 
|                                           |  | 2001 |        | 2000
|                                           |  |      |        |     
|Balance  January 1                        |  | $    | 12,760 |      |  | $ | 13,174 |  
|                                          
|                                          
|                                          
|                                          
|Provision charged to operating expense     |  |      | 343    |      |  |   | 115    |  
|                                          
|                                          
|                                          
|                                          
|Loans charged off                          |  |      | (527   | )    |  |   | (734   | )
|                                          
|                                          
|                                          
|                                          
|Recoveries on loans previously
charged off |  |      | 232    |      |  |   | 196    |  
|                                           |  |      |        |      |  |   |        |  
|Balance  March 31                         |  | $    | 12,808 |      |  | $ | 12,751 |  
|                                           |  |      |        |      |  |   |        |  

Note 5  Concentrations of Credit Risk and Financial Instruments With Off-Balance Sheet Risk

The Corporation offers commercial, residential mortgage and consumer credit
products to customers within Stark and its contiguous counties with the
exception of the Aircraft Finance Group which serves a national market. The
Corporation maintains a diversified loan portfolio, with commercial loans and
leases, commercial real estate loans, aircraft loans, residential mortgage
loans and consumer loans comprising 12.6%, 14.2%, 16.2%, 29.2% and 27.8%,
respectively, at March 31, 2001. Within the consumer loan portfolio, indirect
loans accounted for 57.2% of all consumer loans and 15.9% of total loans at
March 31, 2001. The dealer network from which indirect loans were purchased
included 98 relationships thus far in 2001, the largest of which was
responsible for 5.8% of the total indirect dollar volume for the first quarter
of 2001.

Within the commercial real estate portfolio, real estate is mainly held as
collateral while the cash flows of the business are considered the primary
source of repayment on the loans. With all loan types, management attempts to
balance credit risk versus return by employing conservative credit standards
and comprehensive underwriting guidelines in addition to the loan review
function which monitors credits during and after the approval process.

10



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##### Table of Contents



UNB CORP.Notes to Consolidated Financial Statements(continued)

The Corporation is a party to financial instruments with off-balance sheet
risk. These instruments are required in the normal course of business to meet
the financial needs of its customers. The contract or notional amounts of these
instruments are not included in the consolidated financial statements. At March 31,
2001, the contract or notional amounts of these instruments, which
primarily include commitments to extend credit, standby letters of credit and
financial guarantees, and interest rate swaps totaled $263,418.

At March 31, 2001, the Corporation held an interest rate swap agreement with a
notional amount of $12,177. The notional amount of the interest rate swap does
not represent an amount exchanged by the parties and is not a measure of the
Corporations exposure through its use of derivatives. The amounts exchanged
are determined by reference to the notional amount and the other terms of the
interest rate swap. The following table summarizes the terms of the swap in
effect:

|                                        |  |  |               |   |  |  |  | 
|--------------------------------------- |  |  | ------------- | - |  |  |  | 
|Notional amount                         |  |  | $12,177      
|Final expiration                        |  |  | June 18, 2003 |  
|                                       
|                                       
|                                       
|                                       
|Variable rate in effect,
March 31, 2001 |  |  | 4.94          | %
|                                       
|                                       
|                                       
|                                       
|Fixed rate                              |  |  | 5.86          | %
|                                       
|                                       
|                                       
|                                       
|Market value, March 31, 2001            |  |  | ($242         | )

Variable interest payments received are based on the three month LIBOR rate
that is adjusted on a quarterly basis. Net interest received for the three month periods
ended March 31, 2001 and March 31, 2000 was $15 and $20, respectively, all of
which was included in interest income. Under the terms of the contract, future
changes in LIBOR will affect the payments received, the income or expense
generated by the swap and the market value of the swap.

Note 6  Other Borrowings

Other borrowings consist of Federal Home Loan Bank borrowings, two line of
credit borrowing arrangements and a capital lease. The majority of the other
borrowings at March 31, 2001 were comprised of advances from the Federal Home
Loan Bank (FHLB) of Cincinnati. Pursuant to collateral agreements with the
FHLB, advances are secured by FHLB stock and qualifying first mortgage loans.

At March 31, 2001, FHLB advances outstanding were comprised of the following:

|         |  |               |  |        |        |  |  |  |  | 
|-------- |  | ------------- |  | ------ | ------ |  |  |  |  | 
|Maturity |  | Interest Rate |  | Amount
|         |  |               |  |       
|2001     |  | 6.10%-7.32%   |  | $      | 8,480  | 
|        
|        
|        
|        
|2002     |  | 5.95%-7.32%   |  |        | 31,159 | 
|        
|        
|        
|        
|2003     |  | 6.25%-7.32%   |  |        | 1,235  | 
|        
|        
|        
|        
|2004     |  | 6.28%-7.32%   |  |        | 660    | 
|        
|        
|        
|        
|2005     |  | 6.86%-7.32%   |  |        | 5,547  | 
|        
|        
|        
|        
|2006     |  | 5.59%         |  |        | 5,000  | 
|        
|        
|        
|        
|2011     |  | 4.70%         |  |        | 10,000 | 
|         |  |               |  |        |        | 
|Total    |  |               |  | $      | 62,081 | 
|         |  |               |  |        |        | 

Based on the Banks investment in FHLB stock, the maximum dollar amount of
FHLB advance borrowings available to the Bank is $169,684.

The Corporation has maximum borrowing arrangements of $18 million with a
national financial institution consisting of two lines of credit. The total

11



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##### Table of Contents



UNB CORP.Notes to Consolidated Financial Statements(continued)

outstanding balance at March 31, 2001 was $13.5 million. United Banc
Financial Services, Inc. (UBFS) arranged an $8 million line of credit to
fund loan growth. The interest on each draw is variable and is priced off an
index plus a spread. The loan agreement calls for quarterly interest
payments and is secured by a first security agreement on UBFS receivables,
the unconditional guarantee of UNB Corp., and an intercreditor agreement
with United National Bank & Trust Co. The outstanding balance on this
facility consists of the following draws:

|              |  |        |        |  |  |  |  | 
|------------- |  | ------ | ------ |  |  |  |  | 
|Interest Rate |  | Amount
|              |  |       
|7.50%         |  |        | $3,500 | 
|             
|             
|             
|             
|7.44          |  |        | 1,000  | 
|             
|             
|             
|             
|7.44          |  |        | 500    | 
|             
|             
|             
|             
|6.44          |  |        | 1,000  | 
|             
|             
|             
|             
|7.05          |  |        | 500    | 

The Parent Company arranged an unsecured $10 million line of credit for
liquidity purposes and to facilitate additional investment in subsidiaries.
At March 31, 2001, the outstanding balance was $7 million with an interest
rate of 5.9%. The interest is priced off the Federal Funds Rate plus 0.85%
per annum and is paid quarterly.

In 1997, the Bank entered into a capital lease to finance the acquisition of
computer hardware and related software with an original amount of $252. The
lease terms call for sixty monthly payments of approximately $5 with the
last payment due in March, 2002. The balance outstanding at March 31, 2001
was $52.

Note 7  Derivative Instruments and Hedging Activities

Effective January 1, 2001, the Corporation adopted the Financial Accounting
Standards Boards Statement No. 133, Accounting for Derivative Instruments
and Hedging Activities (FAS 133). FAS 133 requires all derivative
instruments be recorded at their fair values. If the derivative instruments
are designated as fair value hedges, changes in the fair value of the hedge
and the hedged item are included in current earnings. Fair value adjustments
related to cash flow hedges are recorded in other comprehensive income and
reclassified to earnings when the hedged transaction is reflected in
earnings. Ineffective portions of hedges are reflected in income currently.

UNB Corp. holds a derivative instrument in the form of an interest rate swap
hedging fixed rate mortgage loans (see Note 5). The interest rate swap was
recorded at fair value on the financial statements of the Corporation at the
adoption of FAS 133. For the quarter ended March 31, 2001, $14, net of taxes,
was recognized in expense for the adoption of FAS 133 on January 1, 2001 and
$221 in expense was recognized for the change in the fair value of the swap
since adoption.

12



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##### Table of Contents



UNB CORP.
Managements Discussion and Analysis of Financial Condition
and Results of Operations (continued)




Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.

INTRODUCTION

The following areas of discussion pertain to the consolidated financial
statements of UNB Corp. at March 31, 2001, compared to December 31, 2000, and
the results of operations for the quarter ending March 31, 2001, compared to
the same period in 2000. It is the intent of this discussion to provide the
reader with a more thorough understanding of the consolidated financial
statements and supporting schedules, and should be read in conjunction with
those consolidated financial statements and schedules.

UNB Corp. is not aware of any trends, events, or uncertainties that might have
a material effect on the soundness of operations; neither is UNB Corp. aware of
any proposed recommendations by regulatory authorities which would have a
similar effect if implemented.

FINANCIAL CONDITION

Total assets at March 31, 2001 were $1,056,822, an increase of $2,875, or 0.3%,
from year-end 2000. Total earning assets at March 31, 2001 of $1,011,280
increased from year-end 2000 by $4,941, or 0.5%. Highly liquid balances,
comprised of cash and cash equivalents, federal funds sold and interest bearing
deposits with banks, increased by $10,006, or 31.1%, from year-end 2000. The
increase in highly liquid balances was mainly the result of a decrease in the
securities portfolio.

SECURITIES

Balances in the securities and mortgage-backed securities portfolio declined
from 2000 year-end balances by $6,052, or 4.6%. The decline within the
securities portfolio is mainly due to a reduction of balances in equity
securities. During the first quarter of 2001, the equity securities in the
Parent Company, which were invested in various bank stocks, were sold and a
majority of the proceeds were reinvested in various equity securities to
provide more diversification within the portfolio. As a result, the Parent
Companys equity portfolio declined by $1,254. Also contributing to the decline
of equity securities was the call of $1 million of FNMA Preferred Stock that
was in the Bank portfolio. The decline in mortgage-backed securities was due to
increased monthly paydowns.

LOANS

For the first quarter of 2001, total loans outstanding remained relatively flat
from year-end 2000. The aircraft lending area experienced growth of $2,373, or
1.7%, from 2000 year-end levels. Growth remained slower in the first quarter
due to current economic conditions and lower interest rates increasing payoffs.
However, growth is expected to increase throughout the remainder of the year
due to lower interest rates increasing demand.

Commercial loan balances decreased by $2,099, or 1.9%, from year-end 2000
levels. The decline was attributed to term loan run-off and weaker commercial
loan demand. Commercial real estate balances increased by $1,790, or 1.5%, from
year-end balances due largely to advances under previously approved
construction commitments and continued growth in real estate commitments.

Residential real estate balances decreased by $5,363, or 2.1%, for the three
months ended March 31, 2001. The decrease was the result of lower market rates
increasing the volume of payoffs and refinancings in the existing portfolio.

13



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##### Table of Contents



UNB CORP.
Managements Discussion and Analysis of Financial Condition
and Results of Operations(continued)

Consumer loans increased by $2,606, or 1.1%, from year-end 2000, with the
majority of the increase, $1,624, within the home equity product, which is
being promoted with lower introductory rates. Direct and indirect installment
lending remained relatively flat from year-end 2000 due to the Bank continuing
to focus on indirect automobile lending and not on longer-term fixed rate loans
such as boat and recreational vehicles. Loan activity has been concentrated in
high-end used automobiles, as leasing and manufacturers financing alternatives
have dominated new automobile financing.

LIABILITIES

Total liabilities remained relatively flat from year-end 2000 levels. Deposits,
the main component of liabilities, decreased by $4,211, or 0.5%, from December 31,
2000. The following table shows deposit composition and change in deposit
mix between the periods ended March 31, 2001 and December 31, 2000:

|                                       |  |                |         |                   |  |   |         |  |  |  |  | 
|-------------------------------------- |  | -------------- | ------- | ----------------- |  | - | ------- |  |  |  |  | 
|                                       |  | March 31, 2001 |         | December 31, 2000
|                                       |  |                |         |                  
|Non-interest bearing deposits          |  | $              | 98,500  |                   |  | $ | 108,351 | 
|                                      
|                                      
|                                      
|                                      
|Interest bearing checking              |  |                | 83,098  |                   |  |   | 79,894  | 
|                                      
|                                      
|                                      
|                                      
|Savings                                |  |                | 270,109 |                   |  |   | 267,486 | 
|                                      
|                                      
|                                      
|                                      
|Certificates of deposit and other time |  |                | 371,723 |                   |  |   | 371,910 | 
|                                       |  |                |         |                   |  |   |         | 
|Total deposits                         |  | $              | 823,430 |                   |  | $ | 827,641 | 
|                                       |  |                |         |                   |  |   |         | 

Non-interest bearing deposits at March 31, 2001 were $9,851, or 9.1% below 2000
year-end levels, while interest bearing checking increased by $3,204, or 4.0%,
from year-end 2000. The reduction in non-interest bearing deposits in the first
quarter was partially regarded as a seasonal trend, the result of artificially
high year-end balances of commercial customers. Certificates of deposit
generated through the branch network increased by $9,778, offsetting the
maturity of $9,921 in brokered certificates. Short-term borrowings, which are
comprised of federal funds purchased and repurchase agreements, declined by
$10,728 from December 31, 2000 due to a reduction of federal funds purchased.
This reduction was partially offset by an increase in repurchase agreements.
Other borrowings increased by $14,445 or 23.6%, primarily due to new Federal
Home Loan Bank advances that were borrowed to take advantage of lower interest
rates.

CAPITAL RESOURCES

Total shareholders equity at March 31, 2001 was $78,087, an increase of
$2,159, or 2.8%, from year-end 2000. The increase in shareholders equity was
the result of year-to-date net income of $4,276, with this increase being
partially offset by a reduction of $1,306 for cash dividends paid and a
decrease of $874 on unrealized gains on available for sale securities, net of
deferred tax. The decrease of unrealized gains on available for sale securities
was mainly due to the sale of equity securities with significant market
appreciation with this reduction partially offset by an increase in the market
values of fixed rate securities due to the lower interest rates.

UNB Corp.s capital ratios at March 31, 2001 and December 31, 2000 along with
the ratios required for the Corporation to be adequately and well capitalized
under regulatory guidelines were as follows:

14



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##### Table of Contents



UNB CORP.
Managements Discussion and Analysis of Financial Condition
and Results of Operations(continued)

|                                       |  |           |       |              |  |                  |      |   |  |                    |            |   |  |  |  | 
|-------------------------------------- |  | --------- | ----- | ------------ |  | ---------------- | ---- | - |  | ------------------ | ---------- | - |  |  |  | 
|                                       |  |           |       |              |  |                  |      |   |  | Minimum regulatory
|                                       |  |           |       |              |  |                  |      |   |  | requirements      
|                                       |  | March 31, |       | December 31, |  | for adequately/ 
|                                       |  | 2001      |       | 2000         |  | well capitalized
|                                       |  |           |       |              |  |                 
|Total capital to risk
weighted assets  |  |           | 10.08 | %            |  |                  | 9.99 | % |  |                    | 8.0%/10.0  | %
|                                      
|                                      
|                                      
|                                      
|Tier 1 capital to
risk weighted assets |  |           | 8.88  | %            |  |                  | 8.64 | % |  |                    | 4.0%/  6.0 | %
|                                      
|                                      
|                                      
|                                      
|Tier 1 capital to
average assets       |  |           | 7.22  | %            |  |                  | 6.97 | % |  |                    | 4.0%/  5.0 | %

All ratios as of March 31, 2001 exceeded the requirements for a well
capitalized financial institution. At December 31, 2000 all ratios exceeded the
requirements for an adequately capitalized financial institution. The ratio of
equity-to-assets at March 31, 2001 was 7.39% versus 7.20% at December 31, 2000.

For the first quarter of 2001 and 2000, cash dividends were $0.13 and $0.12 per
share, respectively. Cash dividends paid for the period ended March 31, 2001
represents 30.5% of year-to-date net income.

RESULTS OF OPERATIONS

UNB Corp.s first quarter 2001 net income was $4,276 or $0.41 per diluted
share, compared with $3,695, or $0.34 per diluted share for the first quarter
of 2000. This represents an increase in earnings of 15.7% and an increase in
diluted earnings per share of 20.6%. Excluding securities gains, first quarter
2001 net income was $3,420 or $0.33 per diluted share, compared with $3,257, or
$0.31 per diluted share for the same period in 2000. This represents an
increase in earnings of 5.0% and an increase in diluted earnings per share of
6.5%. In the first quarter of 2001 and 2000 pre-tax gains of $1,317 and $674,
respectively, were recognized on the sale of equity securities from the Parent
Company portfolio.

Return on average assets and return on average equity for the first quarter of
2001 were 1.66% and 22.33%, respectively, compared with 1.52% and 20.84%,
respectively, for the same period in 2000. Adjusted for the impact of
securities gains, return on average assets was 1.33% for 2001 versus 1.34% for
2000. Return on average equity was 17.86% for 2001 compared to 18.37% for 2000.

NET INTEREST INCOME

Net interest income is the Corporations most significant source of earnings
and is the difference between interest income and related loan fees earned on
interest earning assets and interest expense incurred on interest bearing
liabilities. For this discussion, net interest income is presented on a
fully-taxable equivalent (FTE) basis. Interest on tax exempt securities and
loans is restated on a fully taxable basis using the tax rate of 35% adjusted
for non-deductible interest expense incurred in the acquisition of tax-free
assets.

For the first quarter of 2001, net interest income increased by $844, or 9.1%,
over the same period in 2000. Total interest income increased by 9.9%, while
interest expense increased by 10.6% from the same period in 2000. The increase
in net interest income was the result of growth in average earning assets of
7.5% from the first quarter of 2000 to the first quarter of 2001.

NET INTEREST MARGIN

The net interest margin is net interest income (FTE) divided by average earning
assets. For the three months ended March 31, 2001, the net interest margin was
4.08%, versus 3.99% for the same period in 2000, an increase of 9 basis points.

15



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##### Table of Contents



UNB CORP.
Managements Discussion and Analysis of Financial Condition
and Results of Operations(continued)

Yields on earning assets increased by 24 basis points, while the cost of
interest bearing liabilities increased by 19 basis points. Asset yields were
impacted by an increase in yields on the consumer and aircraft loans. The cost
of interest bearing liabilities was favorably impacted by the 200 basis point
reduction in rates that occurred in the first quarter of 2001. The cost of the
Money Market Access product, which is tied to the three month Treasury rate,
declined 70 basis points and the cost of FHLB advances declined by 12 basis
points. This was partially offset by an increase in the cost of certificate of
deposits due to the rate increases that occurred throughout 2000.

OTHER INCOME

Other income for the first quarter of 2001 was $4,441, an increase of 29.5%
from the first quarter of 2000. Excluding securities gains of $1,317 and $674
taken in 2001 and 2000 respectively, other income for the period ended March 31,
2001 increased from the same period in 2000 by $368, or 13.4%.

Service charges on deposits increased by $42, or 6.3% from the first quarter of
2000 to the first quarter of 2001. The increase was mainly attributed to an
increase in service charges that was effective February 1, 2001. Trust
Department earnings were $1,249, a decrease of $76, or 5.7%, from the same
period in 2000, due to the decline in the stock market since fees are tied to
asset value. Gains on loans sold in the secondary market increased by $203, or
922.7%, from the same period in 2000 due to declining interest rates increasing
the volume of fixed rate mortgage loans available for sale. Other operating
income increased by $199, or 26.7%, from the same period in 2000. Within other
operating income, letter of credit commitment fees increased by $215, while
loan brokerage income on non-conforming mortgage and aircraft loans declined by
$134. The increase in letter of credit commitment fees was mainly attributed to
a fee received on a purchased participation for a commercial letter of credit.
The decline in brokerage income was mainly due to loans that were previously
considered non-conforming now being sold to FNMA and FHLMC as conforming and
due to a decline in aircraft loans sold.

OTHER EXPENSES

Other expenses for the first quarter were $7,599, an increase of $673, or 9.7%,
from the same period in 2000. Salary, wages and benefits increased by $377, or
11.4%, from the same period in 2000. The increase was due to annual merit
increases and increased pension and incentive compensation expense accruals.

Occupancy expense for the three months ended March 31, 2001 increased by $43,
or 10.4% from the same period in 2000. The increase is mainly due to an
increase in rent expense from the opening of two new branches.

Derivative instruments and hedging activity expense of $221 was recognized in
the first quarter 2001, for the change in the fair value of the swap since
adoption of FAS 133 on January 1, 2001.

Other operating expenses for the first quarter of 2001 were $2,233, an increase
of $39, or 1.8%, from the same period in 2000. Categories with increases
include Investor Relations expenses as the Corporation promotes the awareness
of its stock and donation expense. These increases were partially offset by
reductions in Ohio Franchise tax expense and marketing expenses. Marketing
expenses were lower in 2001 since there were increased expenses in 2000 due to
special promotions for the grand opening of two new branches.

The Bank continued in its efforts to resolve the legal proceedings and dispose
of the environmentally contaminated seven and one half acre parcel of real
estate acquired through foreclosure. The property is located in the northwest
quadrant of Stark County. Negotiations for the sale of the property have
resulted in a purchase contract, which allows for the purchase of the property
by the fourth

16



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##### Table of Contents



UNB CORP.
Managements Discussion and Analysis of Financial Condition
and Results of Operations(continued)

quarter of 2001. The Bank has received a certified copy of a No Further Action
from BUSTER. Estimated cleanup costs, should they become the responsibility of
United Bank, are not material to the business or financial condition of the
Bank and have been set up as an allowance against the propertys value on the
Corporations consolidated balance sheet.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan loss is maintained at levels considered sufficient to
absorb probable losses in the loan portfolio. The amount of the provision for
loan losses charged to expense is the amount necessary, in the opinion of
management, to maintain the balance in the allowance for loan losses at an
adequate level. Management reviews the amount of provision for loan losses
charged to earnings based on its evaluation of the loan portfolios credit
quality, the adequacy of the allowance for loan losses under current economic
conditions and current and anticipated loan growth. Due to improved
underwriting, early detection systems and increased collection efforts, the
ratio of net charge-offs to average loans outstanding for December 31, 2000
remained at a very low level of 0.18%.

The provision for loan losses for the first quarter of 2001 was $343, an
increase of $228, or 198.3%, from the same period in 2000. At March 31, 2001,
the allowance for loan losses as a percentage of loans outstanding was 1.47%
compared to 1.46% at December 31, 2000.

Net charge-offs for the period ending March 31, 2001 were 0.03% as compared to
0.07% for the same period in 2000. The decrease was the result of lower
charge-offs of commercial loans. A detailed analysis of the allowance for loan
losses for the three months ended March 31, 2001 and March 31, 2000, follows:

|                                                                                |                         |                                     |                   |   |      |     |        |   |     |     |  |  |  |  | 
|------------------------------------------------------------------------------- | ----------------------- | ----------------------------------- | ----------------- | - | ---- | --- | ------ | - | --- | --- |  |  |  |  | 
|                                                                                |                         |                                     |                   |   | 2001 |     | 2000  
|                                                                                |                         |                                     |                   |   |      |     |       
|Balance at January 1,                                                           |                         | $                                   | 12,760            |   |      | $   | 13,174 |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Charge-Offs (Domestic):
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                         | Commercial, Financial, Agricultural |                   |   | 25   |     |        |   | 234 |    
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                         | Real Estate  Commercial            |                   |   |     |     |        |   |    |    
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                         | Real Estate  Residential           |                   |   |     |     |        |   |    |    
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                         | Aircraft                            |                   |   |     |     |        |   |    |    
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                         | Consumer Loans                      |                   |   | 502  |     |        |   | 500 |    
|                                                                                |                         |                                     |                   |   |      |     |        |  
|                                                                                |                         |                                     | Total Charge-Offs |   |      | 527 |        |   |     | 734 | 
|                                                                                |                         |                                     |                   |   |      |     |        |  
|                                                                                | Recoveries (Domestic): 
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                         | Commercial, Financial, Agricultural |                   |   | 32   |     |        |   | 18  |    
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                         | Real Estate  Commercial            |                   |   |     |     |        |   |    |    
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                         | Real Estate  Residential           |                   |   |     |     |        |   |    |    
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                         | Aircraft                            |                   |   |     |     |        |   |    |    
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                         | Consumer Loans                      |                   |   | 200  |     |        |   | 178 |    
|                                                                                |                         |                                     |                   |   |      |     |        |  
|                                                                                |                         |                                     | Total Recoveries  |   |      | 232 |        |   |     | 196 | 
|                                                                                |                         |                                     |                   |   |      |     |        |  
|Net Charge-Offs                                                                 |                         |                                     | 295               |   |      |     | 538    |  
|                                                                                |                         |                                     |                   |   |      |     |        |  
|Provision for loan losses                                                       |                         |                                     | 343               |   |      |     | 115    |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Balance at March 31,                                                            |                         | $                                   | 12,808            |   |      | $   | 12,751 |  
|                                                                                |                         |                                     |                   |   |      |     |        |  
|Ratio of year-to-date net charge-offs
to year-to-date average loans outstanding |                         |                                     | 0.03              | % |      |     | 0.07   | %
|                                                                                |                         |                                     |                   |   |      |     |        |  
|Allowance as a percentage of total loans                                        |                         |                                     | 1.47              | % |      |     | 1.57   | %
|                                                                                |                         |                                     |                   |   |      |     |        |  

17



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##### Table of Contents



UNB CORP.
Managements Discussion and Analysis of Financial Condition
and Results of Operations(continued)

The allowance for loan losses is allocated among the major loan categories
based on historical loss factors as well as the level and trends in
delinquencies, charge-offs and recoveries. The following table sets forth the
Corporations allocation of the allowance for loan losses as of March 31, 2001
and December 31, 2000:

|                        |       |   |                |        |                   |   |       |        |  |  |  |  | 
|----------------------- | ----- | - | -------------- | ------ | ----------------- | - | ----- | ------ |  |  |  |  | 
|                        |       |   | March 31, 2001 |        | December 31, 2000
|                        |       |   |                |        |                  
|Commercial              |       | $ | 5,336          |        |                   | $ | 5,063 |       
|                       
|                       
|                       
|                       
|Commercial real estate  |       |   | 1,984          |        |                   |   | 2,149 |       
|                       
|                       
|                       
|                       
|Aircraft                |       |   | 2,130          |        |                   |   | 2,761 |       
|                       
|                       
|                       
|                       
|Residential real estate |       |   | 227            |        |                   |   | 230   |       
|                       
|                       
|                       
|                       
|Consumer                |       |   | 2,222          |        |                   |   | 2,284 |       
|                       
|                       
|                       
|                       
|Unallocated             |       |   | 909            |        |                   |   | 273   |       
|                        |       |   |                |        |                   |   |       |       
|                        | Total |   | $              | 12,808 |                   |   | $     | 12,760 | 
|                        |       |   |                |        |                   |   |       |       

ASSET QUALITY

At March 31, 2001, impaired loans were $5,064, an increase of $1,205 from
December 31, 2000. The increase in impaired loans was mainly due to the
downgrading of a commercial loan. Also included in impaired loans, is an
aircraft loan that accounted for 30.1% of the total. A specific reserve for any
collateral deficiency has been allocted to this loan and management does not
anticipate any adverse effect on earnings as a result of the liquidation. The
amount of allowance allocated to impaired loans increased from $909 at December 31,
2000 to $1,389 at March 31, 2001. Nonperforming assets, which include
non-accrual loans, accruing loans past due 90 days or more, restructured loans
and other real estate owned were $3,395 at March 31, 2001 compared to $3,538 at
December 31, 2000, a decrease of $143, or 4.0%. The following table presents
the amounts of nonperforming assets and pertinent ratios as of the dates
indicated:

|                                                                                      |  |           |       |              |  |           |       |   |  |   |       |   |  |  |  | 
|------------------------------------------------------------------------------------- |  | --------- | ----- | ------------ |  | --------- | ----- | - |  | - | ----- | - |  |  |  | 
|                                                                                      |  | March 31, |       | December 31, |  | March 31,
|                                                                                      |  | 2001      |       | 2000         |  | 2000     
|                                                                                      |  |           |       |              |  |          
|Non-accrual loans                                                                     |  | $         | 2,839 |              |  | $         | 2,945 |   |  | $ | 1,613 |  
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Accruing loans past due
90 days or more                                               |  |           | 194   |              |  |           | 196   |   |  |   | 87    |  
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Restructured loans                                                                    |  |           | 37    |              |  |           | 3     |   |  |   | 321   |  
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Other real estate owned                                                               |  |           | 325   |              |  |           | 394   |   |  |   | 455   |  
|                                                                                      |  |           |       |              |  |           |       |   |  |   |       |  
|Total nonperforming assets                                                            |  | $         | 3,395 |              |  | $         | 3,538 |   |  | $ | 2,476 |  
|                                                                                      |  |           |       |              |  |           |       |   |  |   |       |  
|Total nonperforming assets
as a percentage of total
loans and other real
estate owned |  |           | 0.39  | %            |  |           | 0.41  | % |  |   | 0.31  | %

The ratio of nonperforming loans to total loans outstanding at March 31, 2001
of 0.39% is a two basis point improvement from year-end 2000. Also, this ratio
compares favorably to the ratio for the Corporations peers, all bank holding
companies with consolidated assets between $1 billion and $3 billion, which
stands at 0.68% at December 31, 2000, the most current data available.

LIQUIDITY

Management ensures the liquidity position of the Corporation is adequate to
meet the credit needs and cash demands of its borrowers and depositors in a
timely and cost-effective manner. Principal sources of liquidity for the
Corporation are cash

18



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##### Table of Contents



UNB CORP.
Managements Discussion and Analysis of Financial Condition
and Results of Operations(continued)

and cash equivalents, federal funds sold and the cash flows provided by
maturities and amortizations in the loan and securities portfolios. Total cash,
federal funds sold, interest bearing deposits with banks and securities
available for sale of $162,711 represented 15.4% of total assets at March 31,
2001. Of the securities available for sale, $31,585 were held in U.S. Treasury
and Agency securities, 74.8% of which mature within one year. Approximately
$110,631 of total Corporate securities were pledged as collateral to secure
public fund deposits, sweep or term repurchase agreements or other obligations.
The Corporations ability to raise funds in the market place is provided by
the Banks branch network, in addition to the availability of Federal Home Loan
Bank (FHLB) advance borrowings, brokered deposits, Federal funds purchased and
securities sold under agreement to repurchase.

The liquidity needs of the Parent Company, primarily cash dividends, treasury
stock purchases and vendor and tax payments, are met through cash, securities
in the Parent Company, dividends from the Bank and borrowings from a third
party financial institution.

FORWARD LOOKING STATEMENTS

Certain statements contained in this report that are not historical facts are
forward looking statements that are subject to certain risks and uncertainties.
When used herein, the terms anticipates, plans, expects, believes, and
similar expressions as they relate to UNB Corp. or its management are intended
to identify such forward looking statements. UNB Corp.s actual results,
performance or achievements may materially differ from those expressed or
implied in the forward looking statements. Risks and uncertainties that could
cause or contribute to such material differences include, but are not limited
to, general economic conditions, interest rate environment, competitive
conditions in the financial services industry, changes in law, governmental
policies and regulations, and rapidly changing technology affecting financial
services.

19



---



##### Table of Contents



UNB CORP.




CONSOLIDATED AVERAGE BALANCE SHEETS

|                                              |                                |                            |                                            |         |           |           |         |         |         |         |  |  |  |  | 
|--------------------------------------------- | ------------------------------ | -------------------------- | ------------------------------------------ | ------- | --------- | --------- | ------- | ------- | ------- | ------- |  |  |  |  | 
|(In thousands)                                |                                | 1st Qtr                    |                                            | 1st Qtr
|                                              |                                | 2001                       |                                            | 2000   
|                                              |                                |                            |                                            |         |           |           |        
|ASSETS                                       
|                                             
|                                             
|                                             
|                                             
|Cash and cash equivalents                     |                                | $                          | 28,122                                     |         |           | $         | 29,295  |        
|                                             
|                                             
|                                             
|                                             
|Federal funds sold                            |                                |                            | 1,680                                      |         |           |           | 11,690  |        
|                                             
|                                             
|                                             
|                                             
|Interest bearing deposits with banks          |                                |                            | 881                                        |         |           |           | 17      |        
|                                             
|                                             
|                                             
|                                             
|Securities, net                               |                                |                            | 46,476                                     |         |           |           | 47,426  |        
|                                             
|                                             
|                                             
|                                             
|Mortgage-backed securities                    |                                |                            | 77,109                                     |         |           |           | 82,234  |        
|                                             
|                                             
|                                             
|                                             
|Loans originated and held for sale            |                                |                            | 3,388                                      |         |           |           | 265     |        
|                                             
|                                             
|                                             
|                                             
|Loans:                                       
|                                             
|                                             
|                                             
|                                             
|                                              | Total loans                    |                            |                                            | 873,936 |           |           |         | 791,452 |        
|                                             
|                                             
|                                             
|                                             
|                                              | Less allowance for loan losses |                            |                                            | (12,905 | )         |           |         | (13,036 | )      
|                                              |                                |                            |                                            |         |           |           |         |        
|                                              |                                | Net loans                  |                                            |         | 861,031   |           |         |         | 778,416 |        
|                                             
|                                             
|                                             
|                                             
|Premises and equipment, net                   |                                |                            | 11,043                                     |         |           |           | 10,732  |        
|                                             
|                                             
|                                             
|                                             
|Intangible assets                             |                                |                            | 2,332                                      |         |           |           | 3,209   |        
|                                             
|                                             
|                                             
|                                             
|Accrued interest receivable and other assets  |                                |                            | 13,827                                     |         |           |           | 11,645  |        
|                                              |                                |                            |                                            |         |           |           |         |        
|                                              |                                | Total Assets               |                                            | $       | 1,045,889 |           |         | $       | 974,929 |        
|                                              |                                |                            |                                            |         |           |           |         |        
|LIABILITIES                                  
|                                             
|                                             
|                                             
|                                             
|Deposits:                                    
|                                             
|                                             
|                                             
|                                             
|                                              | Noninterest bearing deposits   |                            | $                                          | 98,822  |           |           | $       | 92,476  |        
|                                             
|                                             
|                                             
|                                             
|                                              | Interest bearing deposits      |                            |                                            | 722,511 |           |           |         | 681,403 |        
|                                              |                                |                            |                                            |         |           |           |         |        
|                                              |                                | Total deposits             |                                            |         | 821,333   |           |         |         | 773,879 |        
|                                             
|                                             
|                                             
|                                             
|Short-term borrowings                         |                                |                            | 70,435                                     |         |           |           | 70,435  |        
|                                             
|                                             
|                                             
|                                             
|Other borrowings                              |                                |                            | 68,047                                     |         |           |           | 51,102  |        
|                                             
|                                             
|                                             
|                                             
|Accrued taxes, expenses and other liabilities |                                |                            | 8,403                                      |         |           |           | 8,184   |        
|                                              |                                |                            |                                            |         |           |           |         |        
|                                              |                                | Total Liabilities          |                                            |         | 968,218   |           |         |         | 903,600 |        
|                                             
|                                             
|                                             
|                                             
|SHAREHOLDERS EQUITY                         
|                                             
|                                             
|                                             
|                                             
|Common stock                                  |                                |                            | 11,646                                     |         |           |           | 11,646  |        
|                                             
|                                             
|                                             
|                                             
|Paid-in capital                               |                                |                            | 28,939                                     |         |           |           | 29,008  |        
|                                             
|                                             
|                                             
|                                             
|Retained earnings                             |                                |                            | 58,978                                     |         |           |           | 48,472  |        
|                                             
|                                             
|                                             
|                                             
|Treasury stock                                |                                |                            | (21,998                                    | )       |           |           | (18,751 | )      
|                                             
|                                             
|                                             
|                                             
|Accumulated other comprehensive income        |                                |                            | 106                                        |         |           |           | 954     |        
|                                              |                                |                            |                                            |         |           |           |         |        
|                                              |                                | Total Shareholders Equity |                                            |         | 77,671    |           |         |         | 71,329  |        
|                                              |                                |                            |                                            |         |           |           |         |        
|                                              |                                |                            | Total Liabilities and Shareholders Equity |         | $         | 1,045,889 |         |         | $       | 974,929 | 
|                                              |                                |                            |                                            |         |           |           |         |        

See Notes to the Consolidated Financial Statements

20



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##### Table of Contents



UNB CORP.
Quantitative and Qualitative Disclosures About Market Risk




Item 3. Quantitative and Qualitative Disclosures About Market Risk

MARKET RISK

In the normal course of business, the Corporation is exposed to interest rate
risk caused by the differences in cash flows and repricing characteristics that
occur in various assets and liabilities as a result of changes in interest
rates. The asset and liability management process is designed to measure and
manage that risk to maintain consistent levels of net interest income and net
present value of equity under any interest rate scenario.

The Corporation uses a dynamic computer model to generate earnings simulations,
duration and net present value forecasts and gap analyses, each of which
measures interest rate risk from a different perspective. The model
incorporates a large number of assumptions, including the absolute level of
future interest rates, the slope of the yield curve, various spread
relationships, prepayment speeds, repricing opportunities, cash flow
characteristics of instruments without contractual maturity dates and changes
in the volumes of multiple loan, investment and deposit categories. Management
believes that individually and in the aggregate these assumptions are
reasonable, but the complexity of the simulation modeling process results in a
sophisticated estimate, not a precise calculation of exposure.

One of the most significant assumptions is the assignment of deposit balances
without a stated maturity date to specific time frames. Since these deposits
are subject to withdrawal on demand, and have rates that can be changed at any
time, they could be considered immediately repriceable and assigned to the
shortest maturity, resulting in a significant level of liability sensitivity.
However, actual practice indicates that balances are withdrawn and replaced
over a much longer time frame, and rates are modified less frequently and in
smaller increments than changes which occur in financial market rates. The
Corporation uses a statistical analysis of historical deposit behavior to
derive appropriate distributions of deposit balances over the simulation time
horizon.

The model then applies a predetermined immediate parallel increase or decrease
in the level of interest rates to forecast the impact on both net interest
income and capital one year forward. While this methodology provides a
comprehensive appraisal of interest rate risk, it is not necessarily indicative
of actual or expected financial performance. Changes in interest rates that
affect the entire yield curve equally at a single point in time are not
typical. The residential mortgage prepayment assumptions are based on industry
medians and could differ from the Corporations actual results due to
non-financial prepayment incentives and other local factors. The behavior of
depositors is based on an analysis of historical changes in balances and might
not fully reflect current attitudes toward other investment alternatives.
Moreover, the model does not include any interim changes in strategy the
Corporation might instate in response to shifts in interest rates.

At March 31, 2001, assuming an immediate, parallel 200 basis point shift in
market yields, the Corporations net interest income for the next twelve months
was calculated to increase by approximately 7.77% if rates fell and decrease by
7.89% if rates rose. The net present value of equity is defined as the
difference between the present value of the Corporations assets and
liabilities. In general, the present value of fixed rate financial instruments
declines as market rate increase and increases as rates fall. Using the yield
scenario defined above, the net present value of equity was forecasted to
decline by 1.44% in a rising rate environment and to rise by 1.90% in a falling
rate scenario. The duration of total assets was 45 months, compared to a
duration of total

21



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##### Table of Contents



UNB CORP.
Quantitative and Qualitative Disclosures About Market Risk(continued)

liabilities of 24 months, indicating that liabilities will both reprice faster
than assets and change in value by a smaller amount than the assets over a
similar time frame.

Interest rate risk can be managed by using a variety of techniques, including
selling existing assets or repaying liabilities, pricing loans and deposits to
attract preferred maturities and developing alternative sources of funding or
structuring new products to hedge existing exposures. In addition to these
balance sheet strategies, the Corporation can also use derivative financial
instruments such as interest rate swaps, caps, and floors to minimize the
potential impact of adverse changes in interest rates.

The Corporation has a pay-fixed amortizing interest rate swap executed in 1998
as a hedge against fixed rate mortgages held in the portfolio. The net cash
flows and market value of the swap move inversely with those of the fixed rate
loans in the portfolio, which reduces the Corporations exposure to changing
interest rates. If rates rise, the Corporation receives net cash flows from the
swap which compensates for the opportunity loss of holding an asset with a
below market yield. Alternatively, the increase in the market value of the
swaps would balance the loss on the mortgage loans if the loans were sold. If
rates fall, the net cash flows given up are offset by the increased value of
assets with an above market yield. The gain that would be realized on the sale
of the loans would counteract the loss on the termination of the interest rate
swap. At the end of March, the swap had a net loss of $242 on outstanding
notional principal of $12,177.

22



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##### Table of Contents






UNB CORP.PART II  OTHER INFORMATION




Item 1  Legal Proceedings

The nature of UNB Corp.s business results in a certain amount of litigation.
Accordingly, the Corporation and its subsidiaries are subject to various
pending and threatened lawsuits in which claims for monetary damages are
asserted in the ordinary course of business. While any litigation involves an
element of uncertainty, in the opinion of management, liabilities, if any,
arising from such litigation or threat thereof will not have a material effect
on the Corporation.




Item 2  Changes in Securities and Use of Proceeds

Not applicable.




Item 3  Defaults Upon Senior Securities

Not applicable.




Item 4  Submission of Matters to a Vote of Security Holders

UNB Corp. held its Annual Meeting of Shareholders on April 24, 2001, for the
purpose of electing four directors, to adopt the form and use of the
indemnification agreement for directors and to transact such other business as
would properly come before the meeting. The purpose of the indemnification
agreement for directors, is to insure that UNB Corp. will be able to attract
and retain qualified people to serve as directors. Increases in litigation
risks impair a companys ability to recruit and retain qualified people.
Therefore, UNB Corp. believes it is necessary and desirable to provide
directors with assurance that the burden of liability and litigation expenses
arising out of their services will be indemnified to the full extent permitted
by the Ohio General Corporation Law. The adoption of the indemnification
agreement required the holders of a majority of the voting power, excluding
shares held by the directors, to vote in favor of approval. Results of
shareholder voting on these issues were as follows:

|                            |  |                       |           |          |  |          |           |           |  |  |           |  |  |  |           |  |  |  |  | 
|--------------------------- |  | --------------------- | --------- | -------- |  | -------- | --------- | --------- |  |  | --------- |  |  |  | --------- |  |  |  |  | 
|                            |  | Election of Directors
|                            |  |                      
|                            |  | Roger L.              |           | Nan B.   |  | Edgar W. |           | E. Scott 
|                            |  | DeVille               |           | Johnston |  | Jones    |           | Robertson
|                            |  |                       |           |          |  |          |           |          
|For                         |  |                       | 9,062,299 |          |  |          | 9,067,946 |           |  |  | 8,701,567 |  |  |  | 9,085,524 | 
|                           
|                           
|                           
|                           
|Against                     |  |                       | 66,644    |          |  |          | 60,997    |           |  |  | 427,376   |  |  |  | 43,419    | 
|                           
|                           
|                           
|                           
|Shares not voted by
Brokers |  |                       | 224,358   |          |  |          | 224,358   |           |  |  | 224,358   |  |  |  | 224,358   | 

|                            |  |                                 |           |  |  |  |  | 
|--------------------------- |  | ------------------------------- | --------- |  |  |  |  | 
|                            |  | Proposed use of Indemnification
|                            |  | Agreement for Directors        
|                            |  |                                
|For                         |  |                                 | 8,380,044 | 
|                           
|                           
|                           
|                           
|Against                     |  |                                 | 368,261   | 
|                           
|                           
|                           
|                           
|Abstain                     |  |                                 | 598,885   | 
|                           
|                           
|                           
|                           
|Shares not voted by
brokers |  |                                 | 7,415     | 




Item 5  Other Information

Effective April 1, 2001, United Portfolio Management, Inc. was established as a
wholly owned subsidiary of the Bank. The new subsidiary was established to
provide independent management of the securities portfolio.

23



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##### Table of Contents



UNB CORP.
PART II  OTHER INFORMATION(continued)




Item 6  Exhibits and Reports on Form 8-K

|   |  |                                                                                                            | 
|-- |  | ---------------------------------------------------------------------------------------------------------- | 
|A. |  | Exhibits - No exhibits were filed by the Registrant.                                                      
|  
|B. |  | Reports  Form 8-K  No reports on Form 8-K were filed by the Registrant
during the first quarter of 2001.




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

|                  |  |                                                                               
|----------------- |  | ------------------------------------------------------------------------------
|                  |  | UNB CORP.                                                                     
|                  |  |                                                                               
|                  |  | (Registrant)                                                                  
|                 
|                 
|Date      5/11/01 |  | /s/ James
J. Pennetti                                                         
|                  |  | James J. Pennetti
     (Duly authorized officer and
     Treasurer, UNB Corp.)

24