SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. [ ])
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the Appropriate Box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
UNION NATIONAL FINANCIAL CORPORATION
-------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No filing fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
--------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 28, 1998
--------------------------------
TO THE SHAREHOLDERS OF UNION NATIONAL FINANCIAL CORPORATION:
Notice is hereby given that the Annual Meeting of Shareholders of UNION
NATIONAL FINANCIAL CORPORATION (the "Corporation") will be held at 10:00 a.m.,
prevailing time, on Tuesday, April 28, 1998, at The Country Table Restaurant,
740 East Main Street, Mount Joy, Pennsylvania 17552, for the following purposes:
1. To elect four (4) Class B Directors to serve for a three-year term and until
their successors are elected and qualified; and
2. To transact such other business as may properly come before the Annual
Meeting and any adjournment or postponement thereof.
In accordance with the By-Laws of the Corporation and action of the Board
of Directors, only those shareholders of record at the close of business on
March 23, 1998, will be entitled to notice of and to vote at the Annual Meeting
and any adjournment or postponement thereof.
A copy of the Corporation's Annual Report for the fiscal year ended
December 31, 1997, is mailed with this Notice. Copies of the Corporation's
Annual Report for the 1996 fiscal year may be obtained at no cost by contacting
William E. Eby, President, Union National Financial Corporation, P. O. Box 567,
101 East Main Street, Mount Joy, Pennsylvania 17552, telephone: (717) 653-1441.
<PAGE>
You are urged to mark, sign, date and promptly return your Proxy in the
enclosed envelope so that your shares may be voted in accordance with your
wishes and in order that the presence of a quorum may be assured. The prompt
return of your signed Proxy and the voting instruction card (if applicable),
regardless of the number of shares you hold, will aid the Corporation in
reducing the expense of additional proxy solicitation. The giving of such Proxy
does not affect your right to vote in person if you attend the meeting and give
written notice to the Secretary of the Corporation. If you are a participant in
the Corporation's Dividend Reinvestment and Stock Purchase Plan, you will
receive separate voting instructions with respect to your shares held in the
Dividend Reinvestment and Stock Purchase Plan.
By Order of the Board of Directors,
/s/ William E. Eby
--------------------------------
William E. Eby, President
March 30, 1998
<PAGE>
UNION NATIONAL FINANCIAL CORPORATION
PROXY STATEMENT FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON APRIL 28, 1998
GENERAL
Introduction, Date, Time and Place of Annual Meeting
- -----------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of UNION NATIONAL FINANCIAL CORPORATION (the
"Corporation"), a Pennsylvania business corporation, of proxies to be voted at
the Annual Meeting of Shareholders of the Corporation to be held on Tuesday,
April 28, 1998, at 10:00 a.m., prevailing time, at The Country Table Restaurant,
740 East Main Street, Mount Joy, Pennsylvania 17552, and at any adjournment or
postponement of the Annual Meeting.
The principal executive office of the Corporation is located at Union
National Community Bank, formerly, The Union National Mount Joy Bank (the
"Bank"), 101 East Main Street, Mount Joy, Pennsylvania 17552. The telephone
number for the Corporation is (717) 653-1441. All inquiries should be directed
to William E. Eby, President of the Corporation. The Bank is a wholly-owned
subsidiary of the Corporation.
Solicitation and Voting of Proxies
- ----------------------------------
This Proxy Statement and the enclosed form of proxy (the "Proxy") are first
being sent to shareholders of the Corporation on or about March 30, 1998.
Shares represented by proxies on the accompanying Proxy, if properly signed
and returned, will be voted in accordance with the specifications made thereon
by the shareholders. Any Proxy not specifying to the contrary will be voted FOR
the election of the nominees for Class B Director named below. Execution and
return of the enclosed Proxy will not affect a shareholder's right to attend the
Annual Meeting and vote in person, after giving written notice to the Secretary
of the Corporation.
If a shareholder is a participant in the Corporation's Dividend
Reinvestment and Stock Purchase Plan (the "DRIP"), the enclosed Proxy will not
serve as a voting instruction card for the shares held in the DRIP. Instead,
these participants will receive, from the Trust Department of the Bank, as the
administrator of the DRIP, separate voting instruction cards covering the shares
held within the DRIP. These separate voting instruction cards must be signed and
returned or the shares held in the DRIP will not be voted.
The cost of preparing, assembling, printing, mailing and soliciting
proxies, and any additional material which the Corporation may furnish
shareholders in connection with the Annual Meeting, will be borne by the
Corporation. In addition to the use of the mails, certain directors,
- 1 -
<PAGE>
officers and employees of the Corporation may solicit proxies personally, by
telephone, telegraph and telecopier. Arrangements will be made with brokerage
houses and other custodians, nominees and fiduciaries to forward proxy
solicitation material to the beneficial owners of stock held of record by these
persons, and, upon request therefor, the Corporation will reimburse them for
their reasonable forwarding expenses.
Revocability of Proxy
- ---------------------
A shareholder who returns a Proxy (and a voting instruction card, if
applicable) may revoke the Proxy (and the voting instruction card, if
applicable) at any time before it is voted only: (1) by giving written notice of
revocation to Carl R. Hallgren, Secretary of Union National Financial
Corporation, at P.O. Box 567, 101 East Main Street, Mount Joy, Pennsylvania
17552; (2) by executing a later-dated proxy and giving written notice thereof to
the Secretary of the Corporation; or (3) by voting in person after giving
written notice to the Secretary of the Corporation.
Voting Securities, Record Date and Quorum
- ------------------------------------------
At the close of business on March 23, 1998, the Corporation had outstanding
2,412,308 shares of common stock, par value $.25 per share, the only authorized
class of stock (the "Common Stock"). As of March 23, 1998, the Corporation had
99,760 shares of Common Stock held in treasury as issued but not outstanding
shares.
Only holders of Common Stock of record at the close of business on March
23, 1998 will be entitled to notice of and to vote at the Annual Meeting.
Cumulative voting rights do not exist with respect to the election of directors.
On all matters to come before the Annual Meeting, each share of Common Stock is
entitled to one vote.
Under Pennsylvania law and the By-Laws of the Corporation, the presence of
a quorum is required for each matter to be acted upon at the Annual Meeting.
Pursuant to Article 3, Section 3.1, of the By-Laws, the presence, in person or
by proxy, of shareholders entitled to cast at least a majority of the votes that
all shareholders are entitled to cast constitutes a quorum for the transaction
of business at the Annual Meeting. Votes withheld and abstentions will be
counted in determining the presence of a quorum for the particular matter.
Broker non-votes will not be counted in determining the presence of a quorum for
the particular matter as to which the broker withheld authority.
Assuming the presence of a quorum, the four (4) nominees for director
receiving the highest number of votes cast by shareholders entitled to vote for
the election of directors shall be elected. Votes withheld from a nominee and
broker non-votes will not be cast for such nominee. Abstentions and broker
non-votes are not votes cast and therefore do not count either for or against
such election.
- 2 -
<PAGE>
PRINCIPAL BENEFICIAL OWNERS OF THE CORPORATION'S STOCK
Principal Owners
- -----------------
The following table sets forth, as of March 23, 1998, the name and address
of each person who owns of record or who is known by the Board of Directors to
be the beneficial owner of more than 5 percent of the Corporation's outstanding
Common Stock, the number of shares beneficially owned by such person and the
percentage of the Corporation's outstanding Common Stock so owned.
<TABLE>
<CAPTION>
Percent of
Outstanding
Shares Common Stock
Beneficially Beneficially
Name and Address Owned <F1> Owned
---------------- ----------- ------------
<S> <C> <C>
Donegal Securities
Service <F2> 125,101 5.19%
101 East Main Street
Mount Joy, Pennsylvania 17552
<FN>
<F1> See footnote(1) to the "Beneficial Ownership by Officers, Directors and
Nominees" table, below, for the definition of "beneficially owned".
<F2> 125,101 shares of Common Stock beneficially owned by the Bank are held by
Donegal Securities Service (the "Trust Department") in its fiduciary capacity.
The Bank Trust Department, has sole power to vote or to direct the vote of
27,997 shares of the Corporation and sole power to dispose or to direct the
disposition of 27,997 shares of the Corporation and has shared power to vote or
to direct the vote of 97,104 shares of the Corporation and has shared power to
dispose of or to direct the disposition of 97,104 shares of the Corporation. The
Bank's Trust Department intends to cast all shares under its control FOR the
election of the nominees for director named below.
</FN>
</TABLE>
Beneficial Ownership by Officers, Directors and Nominees
- --------------------------------------------------------
The following table sets forth, as of March 23, 1998, the amount and
percentage of the Common Stock of the Corporation beneficially owned by each
director, each nominee and all officers and directors of the Corporation and of
the Bank as a group. This information is provided by the reporting individuals
and the Corporation. Unless otherwise noted in a footnote, all shares are
individually held.
- 3 -
<PAGE>
<TABLE>
<CAPTION>
Name of Individual or Amount and Nature of Percent of
Identity of Group Beneficial Ownership (1)(2) Class(9)
- ------------------------ --------------------------- -----------
<S> <C> <C>
Current Class B Directors
(to serve until 1998) and
Nominees for Class B Director
(to serve until 2001)
Daniel C. Gohn 13,882 (3) -- %
Carl R. Hallgren 17,714 (4) -- %
David G. Heisey 29,302 (5) 1.21%
Daniel H. Raffensperger 7,637 -- %
Class C Directors
(to serve until 1999)
William E. Eby 16,380 (6) -- %
Benjamin W. Piersol, Jr. 1,348 -- %
William D. Linkous 2,100 -- %
Donald H. Wolgemuth 45,129 (7) 1.87%
Class A Directors
(to serve until 2000)
Franklin R. Eichler 28,722 1.19%
E. Ralph Garber 15,225 -- %
Mark D. Gainer 3,045 (8) -- %
All Officers, Directors and 197,773 8.19%
Nominees as a Group (16 persons)
- -------------------
<FN>
<F1> The securities "beneficially owned" by an individual are determined in
accordance with the definitions of "beneficial ownership" set forth in the
General Rules and Regulations of the Securities and Exchange Commission and may
include securities owned by or for the individual's spouse and minor children
and any other relative who has the same home, as well as securities to which the
individual has, or shares, voting or investment power or has the right to
acquire beneficial ownership within 60 days after March 23, 1998. Beneficial
ownership may be disclaimed as to certain of the securities.
<F2> Rounded to the nearest whole share.
<F3> Includes 2,170 shares held individually by Mr. Gohn's spouse.
<F4> Includes 2,080 shares held by Mr. Hallgren's daughter.
<F5> Includes 18,601 shares held individually by Mr. Heisey's spouse. Mr. Heisey
disclaims beneficial ownership as to the shares of Common Stock held by his
spouse. The inclusion of these shares in Mr. Heisey's beneficial ownership is
not an admission that he is the beneficial owner of such securities.
- 4 -
<PAGE>
<F6> Includes 13,800 shares held jointly with Mr. Eby's spouse and an option to
purchase 1,050 shares.
<F7> Includes 1,680 shares held individually by Mr. Wolgemuth's spouse.
<F8> Includes 420 shares held individually by his spouse and an option to
purchase 945 shares.
<F9> Less than 1%, unless otherwise indicated. Percentages assume that all
options exercisable within 60 days of March 23, 1998 are outstanding. Therefore,
on a pro forma basis, 2,417,138 shares would be outstanding.
</FN>
</TABLE>
ELECTION OF DIRECTORS
The By-Laws of the Corporation provide that the Corporation's business be
managed by its Board of Directors. Section 10.2 of the By-Laws provides that the
number of directors that constitute the whole Board of Directors is not less
than seven or more than twenty-five. The By- Laws provide that the Board of
Directors be classified into three classes, each class is elected for a term of
three years. The terms of the respective classes expire in successive years.
Within the foregoing limits, the Board of Directors may from time to time fix
the number of directors and their respective classifications. No person elected
or appointed as a director serves in that capacity after reaching the age of
seventy (70) years. Each director also owns in his or her own right shares of
Common Stock that have a fair market value, in the aggregate, of not less than
Thirty Thousand Dollars ($30,000). The Board of Directors has fixed the number
of Board members at eleven. Pursuant to Section 11.1 of the By-Laws, vacancies
on the Board of Directors, including vacancies resulting from an increase in the
number of directors, are filled by a majority of the remaining members of the
Board of Directors, though less than a quorum, and each person so appointed is a
director until the expiration of the term of office of the class of directors to
which he or she is appointed.
In accordance with Section 10.3 of the By-Laws, at the 1998 Annual Meeting
of Shareholders, four (4) Class B Directors shall be elected to serve for a
three-year term and until their successors are elected and qualified.
Unless otherwise instructed, the Proxyholders will vote the Proxies
received by them for the election of the four (4) Class B nominees named below.
If any nominee should become unavailable for any reason, proxies will be voted
in favor of a substitute nominee as the Board of Directors of the Corporation
shall determine. The Board of Directors has no reason to believe that the
nominees named will be unable to serve if elected.
There is no cumulative voting for the election of directors. Each share of
Common Stock held on the record date entitles the owner thereof to cast one vote
for each nominee. For example, if a shareholder owns ten shares of Common Stock,
he or she may cast up to ten votes for each of the directors in the class to be
elected.
- 5 -
<PAGE>
INFORMATION AS TO NOMINEES AND DIRECTORS
The following table contains certain information with respect to the
nominees for Class B Director and the current Directors of the Corporation:
<TABLE>
<CAPTION>
Principal Occupation
for Past
Age as of Five Years
March 23, and Position held
Name 1998 with Corporation
---- ---------- -------------------
<S> <C> <C>
Current Class B Directors
(to serve until 1998) and
Nominees For Class B Director
(to serve until 2001)
Carl R. Hallgren 60 Attorney-at-Law and Treasurer,
(1)(3)(6)(8)(9) Morgan Hallgren, Crosswell &
(10)(11)(13) Kane, P.C.; Director, Vice
President and Secretary of
Conestoga Financial Corporation
and of Conestoga Title Insurance
Co.; Director and Treasurer,
Seven Hundred North Duke
Abstract, Inc.; Secretary of the
Corporation since 1986; Solicitor
to the Bank since 1979.
David G. Heisey 64 President, David G. Heisey,
(2)(4)(7) Inc.(building contractor);
President, Timber Villa, Inc.;
and President, Timber Villa
Enterprises, Inc.
Daniel C. Gohn 66 Chairman and former President,
(2)(6)(10)(13) D.C. Gohn Associates, Inc.
(engineering corporation)
Daniel H. Raffensperger 63 Chairman and President, The
(4)(6)(10)(12)(13) Continental Press, Inc.
(publishing, printing
corporation).
- 6 -
<PAGE>
Class C Directors
(to serve until 1999)
Donald H. Wolgemuth 62 Partner, Donegal Producers;
(14) President, Orchard View Farms,
Inc. (prior to 1997); Treasurer,
Hill-n-Dale Farm; and Chairman
of the Board of the Corporation
since 1986 and of the Bank
since 1979.
William E. Eby 61 President of the Corporation
(1)(2)(3)(5)(9)(12)(13) since 1986 and of the Bank
since 1984.
William D. Linkous 66 Chairman and President, C.A.
(3)(7)(9) Herr, Inc.(retail hardware
sales).
Benjamin W. Piersol, Jr. 45 Vice President and Co-owner
(4)(8)(9)(11)(13) Sloans Pharmacy, Inc. (Retail
Pharmacy).
Class A Directors
(to serve until 2000)
Franklin R. Eichler 65 President and Director of the
(1)(4)(7)(8)(10)(12) following companies: The Sico
Company (distributor of
petroleum products); Rollman
Supply Company; First Mount Joy
Corporation; and First Florin
Corporation; Director and
Treasurer, Sico Foundation;
Vice Chairman of the
Corporation since 1992; Vice
Chairman of the Bank since
1997.
E. Ralph Garber 68 Owner, Garber Enterprises
(1)(2)(3)(7) (business investment group).
Mark D. Gainer 43 Vice President of the
(1)(2)(3)(5)(9)(13) Corporation since 1986, Sr.
Vice President of the Bank
since 1982 and Chief Operating
Officer of the Bank since 1997.
<CAPTION>
Director Since
Corporation/
Name Bank
<S> <C>
Current Class B Directors
(to serve until 1998) and
Nominees For Class B Director
(to serve until 2001)
Carl R. Hallgren 1986/1971
(1)(3)(6)(8)(9)
(10)(11)(13)
David G. Heisey 1986/1977
(2)(4)(7)
Daniel C. Gohn 1992/1992
(2)(6)(10)(13)
Daniel H. Raffensperger 1992/1992
(4)(6)(10)(12)(13)
Donald H. Wolgemuth 1986/1967
(14)
William E. Eby 1986/1985
(1)(2)(3)(5)(9)(12)(13)
William D. Linkous 1995/1995
(3)(7)(9)
Benjamin W. Piersol, Jr. 1996/1996
(4)(8)(9)(11)(13)
Class A Directors
(to serve until 2000)
Franklin R. Eichler 1986/1983
(1)(4)(7)(8)(10)(12)
E. Ralph Garber 1986/1979
(1)(2)(3)(7)
Mark D. Gainer 1996/1996
(1)(2)(3)(5)(9)(13)
- ---------------
- 7 -
<PAGE>
<FN>
(1) Member of the Bank's Nominating Committee. This committee's function is
to nominate all committee members and officers of the Bank. This committee
met one (1) time in 1997. Mr. William E. Eby is Chairman of this Committee.
(2) Member of the Bank's Property and Building Committee. This committee's
function is to review Bank facilities for needed maintenance and to advise
the Board as to any construction projects for the Bank and its facilities.
This committee met two (2) times in 1997. Mr. David G. Heisey is Chairman
of this committee.
(3) Member of the Bank's Asset/Liability Management Investment Committee. The
functions of this committee are to make recommendations to the Board of
Directors concerning the investment of bank funds, to monitor
asset/liability management policies, to manage earnings, liquidity and
interest rate risk, and to advise the Board of Directors concerning trends
and related risks. This committee met six (6) times in 1997. Mr. Clement M.
Hoober is Chairman of this committee.
(4) Member of the Bank's Human Resources Committee. The Human Resources
Committee's function is to make recommendations to the Board of Directors
concerning the salaries and other benefits of directors, officers and
employees of the Bank. The Human Resources Committee met eight (8) times in
1997. Mr. Franklin R. Eichler is Chairman of this committee.
(5) Member of the Bank's Loan Committee. The function of the Loan Committee is
to advise and make recommendations to the officers and directors of the
Bank concerning the loan functions of the Bank. The Loan Committee met
fifty-two (52) times in 1997. Members of this committee do not receive
additional compensation for serving on this committee. Mr. William E. Eby
is Chairman of this committee.
(6) Member of the Bank's Trust Investment Committee. The Trust Investment
Committee's function is to advise and make recommendations to the Board of
Directors concerning the investment and disposition of all funds held in a
fiduciary capacity by the Bank's Trust Department. This committee met five
(5) times in 1997. Mr. Charles R. Starr is Chairman of this committee.
(7) Member of the Bank's Audit Committee. The Bank's Audit Committee's function
is to make recommendations to the Board of Directors concerning the audit
of the entire Bank's operations. The Audit Committee met eight (8) times in
1997. Mr. Franklin R. Eichler is Chairman of this committee.
(8) Member of the Bank's Employees Profit-Sharing Retirement Trust
Administrative Committee. The function of the Bank's Employees
Profit-Sharing Retirement Trust - Administrative Committee is to make
decisions on the disposition of funds as requested by participants in the
plan who have terminated their employment. This committee met one (1) time
in 1997. Mr. Franklin R. Eichler is Chairman of this committee.
(9) Member of the Corporation's Strategic Planning Committee. This committee's
function is to review, analyze and present recommendations to the Board of
Directors regarding the Corporation's and Bank's Strategic Plan. This
committee met two (2) times in 1997. Mr. William E. Eby is Chairman of this
committee.
(10) Member of the Corporation's Stock Incentive Plan Committee. This committee
is responsible for administration of the Corporation's Stock Incentive
Plan. This committee met four (4) times in 1997. Mr. Carl R. Hallgren is
Chairman of this committee.
(11) Member of the Bank's Compliance Committee. This committee's
responsibilities include monitoring procedures and documents for compliance
with government regulations, evaluating regulatory changes, and monitoring
the compliance functions in anticipation of Federal Examiners. The
Compliance Committee met eleven (11) times in 1997. Mr. Michael L. Maurer,
is Chairman of this committee.
- 8 -
<PAGE>
(12) Member of the Bank's EDP Committee. The function of this committee is to
monitor the EDP (electronic data processing) systems in the Bank's
operations and procedures and make recommendations for system enhancements
to the Board of Directors. This committee met three (3) time in 1997. Mr.
Clement Hoober is Chairman of this committee.
(13) Member of the Bank's Trust Committee. This committee provides general
supervision over all trust accounts held in the Bank's Trust Department
and reviews all new and closed trust accounts. This committee met eighteen
(18) times in 1997. Mr. Donald H. Wolgemuth is Chairman of this committee.
(14) As Chairman of the Board of Directors, Mr. Wolgemuth is authorized to
attend each committee meeting.
</FN>
</TABLE>
During 1997, the Board of Directors of the Bank held twenty-eight (28)
meetings and the Board of Directors of the Corporation held nineteen (19)
meetings. Each of the Directors attended at least 75 percent of the combined
total number of meetings of the Corporation's and Bank's Boards of Directors and
of the committees of which he is a member.
The Corporation does not have a nominating committee. A shareholder who
desires to propose an individual for consideration by the Board of Directors as
a nominee for director should submit a proposal in writing to the Secretary of
the Corporation in accordance with Section 10.1 of the Corporation's By-Laws.
Any shareholder who intends to nominate any candidate for election to the Board
of Directors shall notify the Secretary of the Corporation in writing not less
than sixty (60) days prior to the date of any meeting of shareholders called for
the election of directors.
EXECUTIVE COMPENSATION
Shown below is information concerning the annual compensation for services
in all capacities to the Corporation and the Bank for the fiscal years ended
December 31, 1997, 1996 and 1995 of the chief executive officer, and the other
four most highly compensated executive officers of the Corporation and the Bank,
to the extent such persons' annual salary and bonus exceeded $100,000 for the
1997 fiscal year:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
(a) (b) (c) (d) (e)
Other
Annual
Compen-
Name and Principal Salary Bonus sation
Position Year ($) ($) $
- ------------------ ---- ----------- ----- -------
<S> <C> <C> <C> <C>
William E. Eby 1997 $122,557.60 -- --
President and CEO 1996 $115,938.32 -- --
of the Corporation 1995 $111,384.00 -- --
and the Bank
- --------------
<CAPTION>
Long-Term Compensation
Awards Payouts
------ -------
(f) (g) (h) (i)
Securities
Restricted Underlying All other
Stock Options/ LTIP compen-
Name and Principal Award(s) SARs Payouts sation
Position ($) (#) ($) ($)(1)(2)
- ------------------ -------- ---------- ------- ---------
<S> <C> <C> <C> <C>
William E. Eby -- -- -- 19,426.25
President and CEO -- -- -- 17,678.67
of the Corporation -- -- -- 17,116.32
and the Bank
- --------------
- 9 -
<PAGE>
<FN>
(1) Includes life insurance premiums amounting to $121.80 for each of 1997,
1996 and 1995 (premium cost of $50,000 term life insurance). Also includes
premiums for long-term disability insurance amounting to $327.72 in both
1997 and 1996 and $317.52 in 1995.
(2) Includes contributions to the Employee Profit Sharing Retirement Trust Fund
of $18,976.73, $17,229.15, and $16,677.00 for 1997, 1996 and 1995,
respectively.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Individual Grants
Number of % of Total
Securities Options/SARs Exercise
Underlying Granted to or Base
Options/SARs Employees Price
Name Granted(#) In Fiscal Year Price($/Sh)
- ---- ---------- -------------- -----------
<S> <C> <C> <C>
William E. Eby 1,050 21.74% $23.27
<CAPTION>
Potential Realizable
Value at
Assumed Annual
Rates of Stock Price
Appreciation for
Expiration Option Term
Name Date 5%($) 10%($)
- ---- ---------- ----------------------
<S> <C> <C> <C>
William E. Eby 1/31/07 $13,471.50 $33,180.00
</TABLE>
Pension Plan
The Corporation does not have a retirement or pension plan. The Bank,
however, has a non-contributory Employee Profit Sharing Retirement Trust Fund
(the "Plan") covering substantially all employees. An employee is eligible to
participate in the Plan on the first day of the month following a year of
employment in which he or she has 1,000 "hours of service". A participant must
accumulate 1,000 "hours of service" during the plan year and be employed on the
last day of the plan year to receive an employer contribution. Normal retirement
age is 65 although the Plan provides for early and postponed retirement. A
participant's interest in the Plan vests in 20% increments over a five (5) year
period.
The Bank makes all the payments under the Plan. A separate account is
maintained within the Plan for each participant. A participant's retirement
benefit is based on his or her accumulated vested account balance and is
distributed to the participant upon retirement to purchase an annuity, as a one
lump sum payment, or in equal periodic payments over the participant's life
expectancy. The Bank contributed $374,282.73, $330,720.26, and $318,204.59 to
the Plan during 1997, 1996 and 1995, respectively. The pension expenses for
administration of the Plan were approximately $725 for 1997, $725 for 1996 and
$1,800 for 1995. The accumulated Plan benefits and Plan net assets as of
December 31, 1997, the date of the latest actuarial report, are presented below.
Mr. Eby has 37 years of credited service under the Plan.
Actuarial present value of accumulated plan benefits:
December 31, 1997
-----------------
Vested $ 7,346,795.40
Non-Vested 69,184.60
-----------------
Net Assets Available for Benefits $ 7,415,980.00
=================
- 10 -
<PAGE>
Compensation of Directors
Each outside Director of the Bank received, in 1997, $295 for each Board
Meeting, $135 for each Committee Meeting attended, and a $3,920 annual retainer.
Directors receive no remuneration for attendance at meetings of the Board of
Directors of the Corporation. Mr. Donald H. Wolgemuth, Chairman of the Boards of
Directors of the Corporation and the Bank, and Mr. Franklin R. Eichler, Vice
Chairman of the Corporation and the Bank, received fees of $7,470 and $3,735,
respectively, or $11,205, in the aggregate, for services provided to the
Corporation and to the Bank in 1997 as Chairman and Vice Chairman, respectively.
In the aggregate, the Boards of Directors of the Bank and of the Corporation
received $133,623.85 for all Board of Directors' meetings and committees
meetings attended in 1997, including all fees and retainers paid to such persons
in their capacity as directors.
Directors received no remuneration for attendance at meetings of the Board
of Directors of the Corporation.
Employment Contract
On December 12, 1996, the Corporation, the Bank and Mr. William E. Eby,
President and Chief Executive Officer of the Corporation and of the Bank,
entered into an employment agreement. The agreement delineates Mr. Eby's
position, duties, compensation and benefits. The agreement contains, among other
things, a non-competition provision and a confidentiality provision. The
employment agreement has a term of three (3) years, which term renews
automatically for an additional twelve months at the end of each calendar year,
upon written notification of renewal by the Corporation to Mr. Eby. On January
1, 1998, by mutual agreement of the parties, the term of this agreement was
amended to accommodate Mr. Eby's desire to retire and is now set to expire on
December 31, 1998.
The agreement provides that Mr. Eby will serve as the President and Chief
Executive Officer of the Corporation and of the Bank and as a member of the
Boards of Directors of the Corporation and the Bank. Under the terms of the
agreement, Mr. Eby is entitled to an annual direct salary of $115,938 per year
which may be increased in subsequent years as the Boards of Directors deem
appropriate. In 1997, Mr. Eby was entitled to an annual salary of $122,557.60.
In addition, the Boards of Directors of the Corporation and the Bank may provide
for payment of a periodic bonus to Mr. Eby. Mr. Eby is not entitled to receive
director's fees or other compensation for serving on the Corporation's and the
Bank's Boards of Directors or committees thereof. Mr. Eby is entitled to
receive the customary employee benefits made available to employees of the Bank.
The agreement also provides that if his employment ends due to death,
disability or is terminated by the Corporation or Bank for cause (as defined
therein), then Mr. Eby is entitled to his full annual direct salary through the
date of termination. If Mr. Eby's employment is terminated other than because
of death, disability or for cause (as defined therein), or if Mr. Eby terminates
his employment for good reason other than a change in control (as defined
therein), then he is entitled to his full annual direct salary on the date of
termination. If Mr. Eby terminates his employment for
- 11 -
<PAGE>
good reason following a change in control (as defined therein), then he is
entitled to his full annual direct salary from the date of termination
continuing through the last day of the term of the
agreement.
Board of Directors Report on Executive Compensation
The Board of Directors of the Corporation is responsible for the governance
of the Corporation and its subsidiary, the Bank. In fulfilling its fiduciary
duties, the Board of Directors acts in the best interests of the Corporation's
shareholders, customers and the communities served by the Corporation and the
Bank. To accomplish the strategic goals and objectives of the Corporation, the
Board of Directors engages competent persons who undertake to reach these
objectives with integrity and in a cost-effective manner. The compensation of
these individuals is part of the Board of Directors' fulfilment of its duties
to accomplish the Corporation's strategic mission. The Bank provides
compensation to the employees of the Corporation and the Bank.
The fundamental philosophy of the Corporation's and the Bank's
compensation program is to offer competitive compensation opportunities for all
employees based on the individual's contribution and personal performance. The
compensation program is administered by the Human Resources Committee, comprised
of the four (4) outside directors, listed below. The objectives of the Committee
are to establish a fair compensation policy to govern executive officers' base
salaries and incentive plans to attract and motivate competent, dedicated, and
ambitious managers whose efforts will enhance the products and services of the
Corporation, the results of which in turn, will improve profitability, increase
dividends to our shareholders and increase the appreciation in the market value
of our shares.
Compensation of the Corporation's and Bank's top executives is reviewed and
approved annually by the Board of Directors. The top executives whose
compensation is determined by the committee include the chief executive officer
and the senior vice president. The Human Resources Committee determines the
compensation for all officers of the Corporation and the Bank. As a guideline
for review in determining base salaries, the committee uses information composed
of outside, independent compensation surveys. Various peer groups are provided
for a comparison basis. The peer groups include banks between $200 million to
$300 million of assets, and a regional peer group that includes south central
Pennsylvania banks. These peer groups are different than the peer group used for
the performance chart. The peer group on the performance chart includes bank
holding companies and banks listed on NASDAQ which may not be located in
Pennsylvania. Pennsylvania peer group banks were used with respect to
compensation issues because of common industry issues and competition for the
same executive talent group.
Chief Executive Officer Compensation
The Board of Directors determined that the Chief Executive Officer's 1997
compensation of $122,557.60 (an increase of approximately 5.7% over 1996) was
appropriate based on the committee's subjective determination, after review of
all information deemed relevant, including the Corporation's and Bank's
financial performance.
- 12 -
<PAGE>
Executive Officers
For 1997, the Board of Directors established that the compensation of the
Corporation's and the Bank's executive officers would increase by 3.8% over 1996
compensation. Compensation increases were determined by the committee based on
its subjective analysis of the individual's contribution to the Corporation's
strategic goals and objectives. In determining whether strategic goals have been
achieved, the Board of Directors considers, among numerous factors, the
following: the Corporation's performance as measured by earnings, revenues,
return on assets, return on equity, market share, total assets and
non-performing loans. Although the performance and increases in compensation
were measured in light of these factors, there is no direct correlation between
any specific criterion and the employees' compensation, nor is there any
specific weight provided to any such criteria in the committee's analysis. The
determination by the committee is subjective after review of all information,
including the above, it deems relevant.
In addition to base salary, executive officers of the Corporation and the
Bank may participate in the Corporation's 1988 and 1997 Stock Incentive Plans.
The Stock Incentive Plan Committee governs awards made under such plans. The
first grant of options under the 1997 plan occurred on February 1, 1997. On this
date, the Stock Incentive Plan Committee approved the grant of 4,830 options,
1,050 of which were granted to Mr. Eby.
Total compensation opportunities available to the employees of the Bank are
influenced by general labor market conditions, the specific responsibilities of
the individual, and the individual's contributions to the Bank's success.
Individuals are reviewed annually on a calendar year basis. The Bank strives to
offer compensation that is competitive with that offered by employers of
comparable size in the banking industry. Through these compensation policies,
the Corporation strives to meet its strategic goals and objectives to its
constituencies and to provide compensation that is fair and meaningful to its
employees.
Human Resources Committee Interlocks and Insider Participation
The Human Resources Committee makes recommendations to the Board of
Directors concerning the compensation of employees. The membership of this
committee includes only outside directors.
Human Resources Committee
Franklin R. Eichler David G. Heisey
Benjamin W. Piersol, Jr. Daniel H. Raffensperger
- 13 -
<PAGE>
SHAREHOLDER PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly change in the
cumulative total shareholder return on the Corporation's Common Stock against
the cumulative total return of the S&P 500 Stock Index and the Peer Group Index
for the period of five fiscal years commencing January 1, 1993 and ending
December 31, 1997. The shareholder return shown on the graph below is not
necessarily indicative of future performance.
Comparison of Five Year Cumulative Total Return (1)
[Performance Graph Omitted]
[The following is a description of the Performance Graph in a tabular format:]
Peer Group Total 1200.00 1606.73 1833.48 2125.46 2324.07 3568.53
Peer Group Index 100.00 133.89 152.79 177.12 193.67 297.38
Union National
Financial Corp, Inc. 100.00 134.33 178.79 263.72 320.80 325.55
S&P 500 Total Return 100.00 110.02 111.51 153.26 188.36 251.12
S&P 500 Total Return
Index 100.00 110.02 111.51 153.26 188.36 251.12
(1) The peer group for which the information appears above includes the
following companies: ACNB Corporation, Bryn Mawr Bank Corporation, CNB
Financial Corporation, Drovers Bancshares Corporation, First West Chester
Corporation, Franklin Financial Services Corporation, Hanover Bancorp,
Inc., Heritage Bancorp, Inc., Keystone Heritage Group, Inc., Penn Security
Bank and Trust Company, PennRock Financial Services Corporation and Pioneer
American Holding Company. These companies were selected based on three
criteria: total assets between $150 million and $650 million; market
capitalization greater than $30 million; headquarters located in
Pennsylvania.
- 14 -
<PAGE>
CERTAIN TRANSACTIONS
Except as set forth in the paragraphs immediately below, there have been no
material transactions between the Corporation and the Bank, nor any material
transactions proposed, with any director or executive officer of the Corporation
and the Bank, or any associate of the foregoing persons. The Corporation and the
Bank have engaged in and intend to continue to engage in banking and financial
transactions in the ordinary course of business with directors and officers of
the Corporation and the Bank and their associates on comparable terms and with
similar interest rates as those prevailing from time to time for other customers
of the Corporation and the Bank. Total loans outstanding from the Corporation
and the Bank at December 31, 1997, to the Corporation's and the Bank's
officers and directors as a group and to members of their immediately families
and companies in which they had an ownership interest of 10 percent or more was
$4,878,930 or approximately 21.72 percent of the total equity capital of the
Bank. Such loans were made in the ordinary course of business, were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons, and do
not involve more than the normal risk of collectibility or present other
unfavorable features. The aggregate amount of indebtedness outstanding as of the
latest practicable date, February 28, 1998, to the above described group was
$4,895,255.
The following table sets forth the name and relationship of each director
who was indebted to the Bank in 1997 in an aggregate amount considered by the
management of the Corporation and the Bank to be material, the nature or purpose
of such indebtedness and the weighted average interest rate on such
indebtedness:
<TABLE>
<CAPTION>
Largest Amount
Name of Person or Entity of Indebtedness Nature of
and Relationship in 1997 Indebtedness
---------------- ------- ------------
<S> <C> <C>
David G. Heisey - Director $55,959 (Balance Land Development
Timber Villa Enterprises, as of 2/28/98: Loan Secured by
Inc. $55,959) Real Estate
David G. Heisey - Director $377,912 (Balance Commercial Real
as of 2/28/98: Estate Loan and
$376,966) Personal Line of
Credit Primarily
Secured by Real
Estate
David G. Heisey - Director $1,648,678 Land Development
Timber Villa, Inc. (Balance as of and Construction
2/28/98: Loan Secured by
$1,700,651) Real Estate
David G. Heisey - Director $237,900 (Balance Construction Loan
David G. Heisey, Inc. as of 2/28/98: and Commercial Line
$239,900) of Credit Secured
by Real Estate
<CAPTION>
Weighted
Name of Person or Entity Average
and Relationship Interest Charged
---------------- ----------------
<S> <C>
David G. Heisey - Director 9.75%
Timber Villa Enterprises,
Inc.
David G. Heisey - Director 8.61%
David G. Heisey - Director 9.38%
Timber Villa, Inc.
David G. Heisey - Director 9.97%
David G. Heisey, Inc.
</TABLE>
All of the loans to Mr. Heisey are current as to payments of principal and
interest, and were made in the ordinary course of business on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons.
PRINCIPAL OFFICERS OF THE CORPORATION
The following table sets forth selected information about the principal
officers of the Corporation, each of whom is elected by the Board of Directors
and each of whom holds office at the discretion of the Board of Directors.
Shares are individually held unless otherwise noted. The footnotes to this table
follow the section entitled "Principal Officers of the Bank."
Bank Number of Age as of
Held Employee Shares Bene- March 23,
Name and Position Since Since ficially Owned(1) 1998
- ----------------- ----- ----- ----------------- ----
William E. Eby - 1986 1958 16,380 (2) 61
President
Mark D. Gainer - 1986 1976 3,045 (2) 43
Vice President
Dennis F. Fackler - 1986 1963 1,246 (3) 52
Treasurer
Carl R. Hallgren 1986 (4) 17,714 (2) 60
Secretary
Clement M. Hoober 1991 1988 1,260 (5) 42
Chief Financial
Officer &
Assistant
Treasurer
Charles R. Starr 1991 1970 2,835 (7) 51
Insider Trading
Compliance Officer
- 15 -
<PAGE>
PRINCIPAL OFFICERS OF THE BANK
The following table sets forth selected information about the principal
officers of the Bank, each of whom is elected by the Board of Directors and each
of whom holds office at the discretion of the Board of Directors. Shares are
individually held unless otherwise noted.
<TABLE>
<CAPTION>
Bank
Office and Position Held Employee
Name with the Bank Since Since
- ---- ------------- ----- -----
<S> <C> <C> <C>
William E. Eby President and CEO 1984 1958
Mark D. Gainer Senior Vice 1982 1976
President and COO 1996
Dennis F. Fackler Vice President & 1982 1963
Cashier
Amos F. Lichty Vice President, 1982 1959
Operations
Thomas C. Mayer Vice President, 1988 1988
Human Resources
Clement M. Hoober Vice President, 1992 1988
Controller 1988
Charles R. Starr Vice President, 1982 1970
Trust
<CAPTION>
Number of Age as of
Shares Bene- March 23,
Name ficially Owned (1) 1998
- ---- ------------------ ----
<S> <C> <C>
William E. Eby 16,380 (2) 61
Mark D. Gainer 3,045 (2) 43
Dennis F. Fackler 1,246 (3) 52
Amos F. Lichty 8,295 (6) 56
Thomas C. Mayer 3,653 (8) 53
Clement M. Hoober 1,260 (5) 42
Charles R. Starr 2,835 (7) 51
<FN>
(1) Rounded to the nearest whole share.
(2) Details with respect to beneficial ownership of this individual found in
footnotes to "Beneficial Ownership of Officers and Directors," supra.
(3) Includes 721 shares held jointly by Mr. Fackler and his spouse and an
option to purchase 525 shares.
(4) Mr. Hallgren is not an employee of the Bank.
(5) Includes 525 shares held jointly by Mr. Hoober and his spouse and an option
to purchase 735 shares.
(6) Includes 7,770 shares held jointly by Mr. Lichty and his spouse and an
option to purchase 525 shares.
(7) Includes 2,310 shares held jointly by Mr. Starr and his spouse and an
option to purchase 525 shares.
(8) Includes 3,128 shares held jointly by Mr. Mayer and his spouse and an
option to purchase 525 shares,
</FN>
</TABLE>
- 16 -
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors, executive officers and shareholders owning in excess
of ten percent (10%) of the Corporation's outstanding equity stock to file
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Corporation with the Securities and Exchange
Commission. Based on a review of copies of such reports received by it, and on
the statements of the reporting persons, the Corporation believes that all such
Section 16(a) filing requirements were complied with in a timely fashion.
LEGAL PROCEEDINGS
In the opinion of the management of the Corporation and the Bank, there are
no proceedings pending to which the Corporation or the Bank is a party or to
which their property is subject, which, if determined adversely to the
Corporation and the Bank, would be material in relation to the Corporation's and
the Bank's undivided profits or financial condition. There are no proceedings
pending other than ordinary routine litigation incident to the business of the
Corporation and the Bank. In addition, no material proceedings are pending or
are known to be threatened or contemplated against the Corporation and the Bank
by government authorities.
INDEPENDENT AUDITORS
The Board of Directors has selected Trout, Ebersole & Groff, Certified
Public Accountants, of Lancaster, Pennsylvania as the Corporation's independent
auditors for its 1998 fiscal year. The Corporation has been advised by Trout,
Ebersole & Groff, Certified Public Accountants, that none of its members has any
financial interest in the Corporation. Trout, Ebersole & Groff served as the
Corporation's independent public accountants for the 1997 fiscal year. A
representative from Trout, Ebersole & Groff will not be present at the Annual
Meeting of Shareholders.
ANNUAL REPORT
A copy of the Corporation's Annual Report for its fiscal year ended
December 31, 1997 is enclosed with this Proxy Statement. A representative of the
Corporation will be available to respond to any appropriate questions concerning
the Annual Report presented by shareholders at the Annual Meeting.
- 17 -
<PAGE>
SHAREHOLDER PROPOSALS
Any shareholder who, in accordance with and subject to the provisions of
the proxy rules of the Securities and Exchange Commission, wishes to submit a
proposal for inclusion in the Corporation's Proxy Statement for its 1999 Annual
Meeting of Shareholders must deliver such proposal in writing to the President
of Union National Financial Corporation at its principal executive offices, 101
East Main Street, Mount Joy, Pennsylvania 17552, not later than Monday, November
30, 1998.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented for
consideration other than the matters described in the accompanying Notice of
Annual Meeting of Shareholders, but if any matters are properly presented, it is
the intention of the persons named in the accompanying Proxy to vote on such
matters in accordance with their best judgment.
ADDITIONAL INFORMATION
UPON WRITTEN REQUEST OF ANY SHAREHOLDER, A COPY OF THE CORPORATION'S REPORT
ON FORM 10-K FOR ITS FISCAL YEAR ENDED DECEMBER 31, 1997, INCLUDING THE
FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 13a-1 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, MAY BE OBTAINED, WITHOUT CHARGE, FROM CLEMENT
M. HOOBER, CHIEF FINANCIAL OFFICER, UNION NATIONAL FINANCIAL CORPORATION, P.O.
BOX 567, 101 EAST MAIN STREET, MOUNT JOY, PENNSYLVANIA 17552.
- 18 -
<PAGE>
UNION NATIONAL FINANCIAL CORPORATION
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 28, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Marilyn Geib and Erma
Witmer and each or any of them, proxies of the undersigned, with full power of
substitution, to vote all of the shares of Union National Financial Corporation
(the "Corporation") that the undersigned may be entitled to vote at the Annual
Meeting of Shareholders of the Corporation to be held at The Country Table
Restaurant, 740 East Main Street, Mount Joy, Pennsylvania 17552, on Tuesday,
April 28, 1998, at 10:00 a.m., prevailing time, and at any adjournment or
postponement thereof as follows:
1. ELECTION OF CLASS B DIRECTORS TO SERVE FOR A THREE-YEAR TERM
Daniel C. Gohn, Carl R. Hallgren, David G. Heisey, Daniel H. Raffensperger
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed above (except to vote for all
as marked to the nominees listed
contrary below) above
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
_______________________________________________________________________________
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournment or
postponement thereof.
<PAGE>
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL NOMINEES LISTED ABOVE.
Dated:______________________, 1998
__________________________________
Signature(s) of Shareholders
__________________________________
Signature(s) of Shareholders
Number of Shares Held of
Record on March 23, 1998
________________________
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER AND RETURNED PROMPTLY
TO THE CORPORATION IN THE ENCLOSED ENVELOPE. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE. IF MORE THAN ONE
TRUSTEE, ALL SHOULD SIGN. IF STOCK IS HELD JOINTLY, EACH OWNER SHOULD SIGN.
:81677
<PAGE>
[Union National Community Bank Stationery]
March 30, 1998
Dear Dividend Reinvestment and Stock Purchase Plan Participant:
As a participant in the Union National Financial Corporation Dividend
Reinvestment and Stock Purchase Plan ("Plan"), you are entitled to instruct the
Plan Administrator, Union National Community Bank, Trust Department, to vote the
shares that are held on your behalf in the Plan at the 1998 Annual Meeting of
Shareholders of the Corporation. To instruct the Plan Administrator as to how
you would like these shares voted at the Annual Meeting, please complete the
enclosed Voting Instruction Card/Proxy. At the Annual Meeting, in accordance
with the Plan, the Plan Administrator will vote the shares held in the Plan for
which participants have executed and returned a Voting Instruction Card/Proxy.
Enclosed is a copy of the Corporation's Notice of Annual Meeting and Proxy
Statement in connection with the 1998 Annual Meeting of Shareholders and a copy
of the Corporation's 1997 Annual Report. Also enclosed is a Voting Instruction
Card/Proxy which should be completed and returned to the Plan Administrator in
the enclosed envelope.
If you have any questions, please contact the undersigned.
Sincerely,
/S/ Charles R. Starr
--------------------
Charles R. Starr
Vice President
<PAGE>
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
VOTING INSTRUCTION CARD/PROXY
UNION NATIONAL FINANCIAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 28, 1998
---------------------------------
The undersigned hereby constitutes and appoints Charles R. Starr, Union
National Community Bank, Plan Administrator for the Union National Financial
Corporation Dividend Reinvestment and Stock Purchase Plan (the "Plan"), proxy of
the undersigned, with full power of substitution, to vote all of the shares of
Union National Financial Corporation (the "Corporation") that the Plan holds on
behalf of the undersigned and may be entitled to vote at the Annual Meeting of
Shareholders of the Corporation to be held at The Country Table Restaurant, 740
East Main Street, Mount Joy, Pennsylvania 17552, on Tuesday, April 28, 1998 at
10:00 a.m., prevailing time, and at any adjournment or postponement thereof as
follows:
1. ELECTION OF CLASS B DIRECTORS TO SERVE FOR A THREE-YEAR TERM
Daniel C. Gohn, Carl R. Hallgren, David G. Heisey, Daniel H. Raffensperger
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed above (except to vote for all
as marked to the nominees listed
contrary below) above
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
_______________________________________________________________________________
2. In his discretion, the proxy is authorized to vote upon such other
business as may properly come before the meeting and any adjournment or
postponement thereof.
<PAGE>
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
PARTICIPANT. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES
LISTED ABOVE.
Dated:_______________________________, 1998
____________________________________________
Signature(s) of Shareholders
Dividend Reinvestment and Stock Purchase
Plan Participant
____________________________________________
Signature(s) of Shareholders
Dividend Reinvestment and Stock Purchase
Plan Participant
Number of Shares Held of
Record on March 23, 1998
________________________
THE VOTING INSTRUCTIONS REQUEST PERTAINS TO SHARES OF COMMON STOCK HELD
IN YOUR DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN ACCOUNT BUT NOT REGISTERED
IN YOUR NAME. SUCH SHARES OF COMMON STOCK CAN BE VOTED ONLY BY THE PLAN
ADMINISTRATOR AS THE HOLDER OF RECORD OF THE SHARES.
PLEASE DATE, SIGN AND RETURN YOUR VOTING INSTRUCTION CARD/PROXY TO US
PROMPTLY IN THE RETURN ENVELOPE PROVIDED.
