<PAGE>
United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the fiscal year ended December 31, 1997
Commission File Number 000-22523
UNION NATIONAL BANCORP, INC.
Maryland 52-0514247
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification number)
117 East Main Street, Westminster, MD 21157 (410) 848-7200
(Address of principal executive offices) (Telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy of information statement
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K [ ]
As of March 17, 1998, Union National Bancorp had 1,674,870 shares of common
stock outstanding, par value $.01.
Documents Incorporated by Reference
Portions of the Union National Bancorp. Inc. 1997 Annual Stockholders
Report for the year ended December 31, 1997 , Parts I,II, IV
Portions of Union National Bancorp Inc. Proxy Statement dated March 24,
1998, Part III
<PAGE>
PART I
ITEM 1. BUSINESS
General
Union National Bancorp, Inc. ("Union National") was incorporated under the
law of the State of Maryland on January 19, 1994, and is a one-bank holding
company headquartered in Westminster, Maryland.
Union National is primarily engaged in commercial and retail banking
services and in business related to banking services through its subsidiary, The
Union National Bank of Westminster ("UNB"). UNB was founded in Westminster in
1816 under the name of Bank of Westminster, and was briefly known during the
period of 1821 to 1830 as a branch of the Farmers & Mechanics of Frederick. In
1865, UNB became known as "The Union National Bank of Westminster". UNB is
currently in its 182nd year of operation.
UNB has nine full service banking offices in Carroll County, four of which
are located in Westminster, one in Finksburg, one in Hampstead, one in
Eldersburg, one in Sykesville, and as of January 15, 1998, one in Mount Airy.
UNB also has one loan production office, which is located in the same building
as Union National's office headquarters in Westminster, Maryland.
Lending, Deposit and Investment Activities
Lending Activities:
UNB provides a full range of commercial and retail banking services
designed to meet the borrowing and depository needs of small and medium size
businesses and consumers in local areas. Substantially all of UNB's loans are to
customers located within its service area. UNB has no foreign loans or highly
leveraged transaction loans, as defined by the Federal Reserve Board ("FRB").
All of the loans in UNB's loan portfolio have been originated by UNB. UNB
conducts its lending activities pursuant to the loan policies adopted by its
Board of Directors. These loan policies grant individual loan officers authority
to make secured and unsecured loans in specific dollar amounts; large loans must
be approved by senior officers or various loan committees. UNB's management
information systems and loan review policies are designed to monitor lending
sufficiently to ensure adherence to UNB's loan policies.
The commercial loans offered by UNB include (i) commercial real estate
loans, (ii) working capital and other commercial loans, (iii) construction
loans, (iv) SBA-guaranteed loans, and (v) agricultural loans. UNB's commercial
real estate loans are used to provide permanent financing for retail and office
buildings, multiple-family buildings and churches. Commercial real estate
secured loans are generally written for a fifteen year term or amortized over a
longer period with a balloon payment by the fifteenth year. Personal guarantees
are obtained on nearly all commercial loans. Credit analyses, loan review and an
effective collection process are also used to minimize any potential losses. UNB
employs four full-time commercial loan officers.
Consumer loans offered by UNB include (i) residential real estate loans,
(ii) personal unsecured lines of credit (iii) personal installment loans
(including indirect lending through auto sales companies), and (iv) home equity
loans (fixed-rate term and open ended revolving lines of credit).
Residential mortgage products include adjustable rate as well as
conventional, fixed-rate loans. Terms vary from a five-year balloon to a 30-year
fully amortized loan. UNB does not purchase loans but is active in secondary
market lending and is also a member of the Federal Home Loan Bank of Atlanta.
Personal unsecured revolving lines of credit with variable interest rates and
principal amounts ranging
<PAGE>
from $1,000 to $10,000 are offered to credit-worthy bank customers. The largest
segment of UNB's installment loan portfolio is secured by motor vehicles and are
fixed-rate loans. Credit checks, credit scoring and debt to income ratios of 40%
or less are used to qualify borrowers. Home equity products include both
fixed-rate term products and open-end revolving lines of credit with maximum
loan to value ratios of 85% of current appraisal to 80% of current tax
assessment.
Deposit Activities
UNB also offers a full range of deposit and personal banking services
insured by the Federal Deposit Insurance Corporation ("FDIC"), including (i)
commercial checking and small business checking products, (ii) trust and cash
management services, (iii) retirement accounts such as Individual Retirement
Accounts ("IRA") and Simplified Employee Pension accounts, retail deposit
services such as certificates of deposit, money market, savings accounts,
checking account products and Automated Teller Machines ("ATM"), Point of Sale
and other electronic services, and (iv) other personal miscellaneous services
such as safe deposit boxes, foreign draft, foreign currency exchanges, night
depository services, travelers checks, merchant credit cards, debit card
services, direct deposit of payroll, U.S. savings bonds, official bank checks
and money orders. UNB now provides 24-hour access to customer information
through its automated voice response system. This system provides customers with
balances, recent transactions, pending transactions, the ability to transfer
funds between accounts, and receive facsimile statements. UNB offers credit
cards and a full range to trust services through one of its correspondent
banking relationships.
The principal sources of funds for UNB are core deposits (demand deposits,
interest-bearing transaction accounts, money market accounts, savings accounts
and certificates of deposits). UNB solicits these deposits from individuals,
businesses, foundations and government authorities. Substantially all of UNB's
deposits are from the local market areas surrounding each of its offices.
Investment Portfolio Activities
UNB's investment portfolio has several objectives. A key objective is to
provide a balance in UNB's asset mix of loans and investments that is consistent
with its liability structure, and to assist in management of interest rate risk.
The investments augment UNB's capital position in the risk based capital
formula, providing the necessary liquidity to meet fluctuations in credit
demands of the community and fluctuations in deposit levels. In view of the
above objectives, the portfolio is treated conservatively by management, and
only securities that pass conservative investment criteria are purchased. UNB
does not engage in any derivatives trading. The portfolio will commonly
fluctuate between 20% and 30% of UNB's assets.
Additional Activities
UNB provides its customers with access to investment products through a
third party vendor, Primevest Financial Services, Inc., which offers annuities
and mutual fund products and is based in Minnesota.
Competition
UNB operates in a highly competitive environment, competing for deposits
and loans with commercial banks, savings banks, thrift institutions, credit
unions, and finance and mortgage companies. Some of these competitors possess
substantially greater financial resources than those available to UNB. Also,
certain of these institutions have significantly higher lending limits than UNB,
and may provide various services for their customers, such as trust services,
which UNB does offer directly to its customers.
UNB does not maintain data concerning its competitive position within its
market area. Occasionally, limited market share data is produced by third
parties. According to a 1997 publication by
<PAGE>
the FDIC, at June 30, 1997 UNB had 12.54% market share of deposits held by the
Carroll County branches of banks, savings associations, and credit unions. Two
other institutions had larger deposit market share (25.75% and 12.64%) for their
Carroll County branches.
Financial institutions compete generally on the basis of rate and service.
In its lending business, UNB is subject to increasing competition from consumer
finance companies.
While UNB will seek to remain competitive with the interest rate that it
charges on loans and offers on deposits, UNB believes that its success has been
and will continue to be due to its emphasis on its community banking, customer
service and relationships. With the continuing consolidation in the banking
industry, particularly in UNB's markets, smaller profitable banks are gaining
opportunities where larger institutions exit markets that are only marginally
profitable for them. Management of Union National believes it can profitably
utilize such opportunities by establishing a local presence in these areas to
provide community banking services.
Supervision and Regulation
General. Union National and UNB are extensively regulated under federal and
state law. Generally, these laws and regulations are intended to protect
depositors, not stockholders. The following is a summary description of certain
provisions of certain laws which affect the regulation of banks and bank holding
companies. The discussion is qualified in its entirety by reference to
applicable laws and regulations. Changes in such laws and regulations may have a
material effect on the business and prospects of the Union National and UNB.
Federal Bank Holding Company Regulation and Structure. Union National is a
bank holding company within the meaning of the Bank Holding Company Act of 1956,
as amended, and as such, it is subject to regulation, supervision, and
examination by the FRB. Union National is required to file annual and quarterly
reports with the FRB and to provide the FRB with such additional information as
the FRB may require. The FRB may conduct examinations of Union National and its
subsidiaries.
With certain limited exceptions, Union National is required to obtain prior
approval from the FRB before acquiring direct or indirect ownership or control
of more than 5% of any voting securities or substantially all of the assets of a
bank or bank holding company, or before merging or consolidating with another
bank holding company. Additionally, with certain exceptions, any person
proposing to acquire control through direct or indirect ownership of 25% or more
of any voting securities of Union National is required to give 60 day written
notice of the acquisition to the FRB, which may prohibit the transaction, and to
publish notice to the public.
Generally, a bank holding company may not engage in any activities other
than banking, managing or controlling its bank and other authorized
subsidiaries, and providing services to these subsidiaries. With prior approval
of the FRB, Union National may acquire more than 5% of the assets or outstanding
shares of a company engaging in non-bank activities determined by the FRB to be
closely related to the business of banking or of managing or controlling banks.
The FRB provides expedited procedures for expansion into approved categories of
non-bank activities.
Subsidiary banks of a bank holding company are subject to certain
quantitative and qualitative restrictions on extensions of credit to the bank
holding company or its subsidiaries, on investments in their securities and on
the use of their securities as collateral for loans to any borrower. These
regulations and restrictions may limit Union National's ability to obtain funds
from UNB for its cash needs, including funds for the payment of dividends,
interest and operating expenses. Further, subject to certain exceptions, a bank
holding company and its subsidiaries are prohibited from engaging in certain
tie-in arrangements in connection with any extension of credit, lease or sale or
property of furnishing of services. For example, UNB may not generally require a
customer to obtain other services from itself or
<PAGE>
Union National, and may not require that a customer promise not to obtain other
services from a competitor as a condition to and extension of credit to the
customer.
Under FRB policy, a bank holding company is expected to act as a source of
financial strength to its subsidiary banks and to make capital injections into a
troubled subsidiary bank, and the FRB may charge the bank holding company with
engaging in unsafe and unsound practices for failure to commit resources to a
subsidiary bank when required. A required capital injection may be called for at
a time when the holding company does not have the resources to provide it. In
addition, depository institutions insured by the FDIC can be held liable for any
losses incurred by, or reasonably anticipated to be incurred by, the FDIC in
connection with the default of, or assistance provided to, a commonly controlled
FDIC-insured depository institution. Accordingly, in the event that any insured
subsidiary of Union National causes a loss to the FDIC, other insured
subsidiaries of Union National could be required to compensate the FDIC by
reimbursing it for the estimated amount of such loss. Such cross guaranty
liabilities generally are superior in priority to the obligations of the
depository institution to its stockholders due solely to their status as
stockholders and obligations to other affiliates.
State Banking Holding Company Regulations. As a Maryland bank holding
company, Union National is subject to various restrictions on its activities as
set forth in Maryland law, in addition to those restrictions set forth in
federal law. See "Supervision and Regulation-Federal Bank Holding Company
Regulation and Structure." Under Maryland law, a bank holding company that
desires to acquire a bank or bank holding company that has its principal place
of business in Maryland must obtain approval from the Commissioner. Also, a bank
holding company and its Maryland state chartered bank or trust company cannot
directly or indirectly acquire banking or non-banking subsidiaries or affiliates
until the bank or trust company receives the approval of the Commissioner.
Federal Bank Regulation. Union National's banking subsidiary is a
federally-chartered national bank regulated by the Office of Comptroller of the
Currency ("OCC"). The OCC may prohibit the institution over which it has
supervisory authority from engaging in activities or investments that the agency
believes constitutes unsafe or unsound banking practices. Federal banking
regulators have extensive enforcement authority over the institution they
regulate to prohibit or correct activities which violate law, regulation or a
regulatory agreement or which are deemed to constitute unsafe or unsound
practices. Enforcement actions may include the appointment of a conservator or
receiver, the issuance of a cease and desist order, the termination of deposit
insurance, the imposition of civil money penalties on the institution, its
directors, officers, employees and institution-affiliated parties, and the
enforcement of any such mechanisms through restraining orders or other court
actions.
UNB is subject to certain restrictions on extensions of credit to executive
officers, directors, principal stockholders or any related interest of such
persons which generally require that such credit extensions be made on
substantially the same terms as are available to third persons dealing with UNB
and not involve more than the normal risk of repayment. Other laws tie maximum
amount which may be loaned to any one customer and its related interests to
capital levels.
Under the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), each federal banking agency is required to prescribe, by regulation,
non-capital safety and soundness standards for institutions under its authority.
The federal banking agencies, including the OCC, have adopted standards covering
internal controls, information systems and internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth,
compensation, fees and benefits. An institution which fails to meet those
standards may be required by the agency to develop a plan acceptable to the
agency, specifying the steps that the institution will take to meet the
standards. Failure to submit or implement such a plan may be subject to
institution to regulatory sanctions. Union National, on behalf of UNB, believes
that it meets substantially all standards which have been adopted. FDICIA also
imposed new capital standards on insured depository institutions. See
"Supervision and Regulation-Capital Requirements."
<PAGE>
Before establishing new branch offices, UNB must meet certain minimum
capital stock and surplus requirements and the Bank must obtain OCC approval.
Deposit Insurance. As a FDIC member institution, UNB's deposits are insured
to a maximum of $100,000 per depositor through the Bank Insurance Fund ("BIF"),
administered by the FDIC, and each institution is required to pay semi-annual
deposit insurance premium assessments to the FDIC. The BIF assessment rates have
a range of zero to 27 cents for every $100 in assessable deposits. Banks with no
premium are subject to an annual statutory minimum assessment.
Capital Requirements. The federal banking regulators have adopted certain
risk-based capital guidelines to assist in the assessment of the capital
adequacy of a banking organization's operations for both transactions reported
on the balance sheet as assets and transactions, such as letters of credit, and
recourse agreements, which are recorded as off balance sheet items. Under these
guidelines, nominal dollar amounts of asset and credit equivalent amounts of off
balance sheet items are multiplied by one of several risk adjustment
percentages, which range from 0% for assets with low credit risk, such as
certain U.S. Treasury securities, to 100% for assets with relatively high credit
risk, such as business loans. For bank holding companies with less than
$150,000,000 in consolidated assets, the guidelines are applied on a bank-only
basis.
A banking organization's risk-based capital ratios are obtained by dividing
its qualifying capital by its total risk adjusted assets. The regulators measure
risk-adjusted assets, which include off balance sheet items, against both total
qualifying capital (the sum to Tier 1 capital and limited amounts of Tier 2
capital) and Tier 1 capital. "Tier 1", or core capital, include, common equity,
perpetual preferred stock (excluding auction rate issues) and minority interest
in equity accounts of consolidated subsidiaries, less goodwill and other
intangibles, subject to certain exceptions. "Tier 2", or supplementary capital,
includes, among other things, limited-life preferred stock, hybrid capital
instruments, mandatory convertible securities, qualifying subordinated debt, and
the allowance for loan and lease losses, subject to certain limitations and less
required deductions. The inclusion of elements of Tier 2 capital is subject to
certain other requirements and limitations of federal banking agencies. Banks
and bank holding companies subject to the risk based capital guidelines are
required to maintain a ratio of Tier 1 capital to risk-weighted assets of at
least 4% and a ratio of total capital to risk-weighted assets of at least 8%.
The appropriate regulatory authority may set higher capital requirements when
particular circumstances warrant. As of December 31,1997, UNB's ratio of Tier 1
to risk-weighted assets stood at 11.58% and its ratio of total capital to
risk-weighted assets stood at 12.64%. In addition to risk-based capital, banks
and bank holding companies are required to maintain a minimum amount of Tier 1
capital to total assets, referred to as the leverage capital ratio, of at least
3%. As of December 31, 1997, UNB's leverage capital ratio was 7.96%
In August, 1995 and May, 1996 the federal banking agencies adopted final
regulations specifying that the agencies will include, in their evaluations of a
bank's capital; adequacy, an assessment of the UNB's interest rate risk ("IRR")
exposure. The standards for measuring the adequacy and effectiveness of a
banking organization's interest rate risk management included a measurement of
board of director and senior management oversight, and a determination of
whether a banking organization's procedures for comprehensive risk management
are appropriate to the circumstances of the specific banking organization. UNB
has internal IRR models that are used to measure and monitor IRR. Additionally,
the regulatory agencies have been assessing IRR on an informal basis for several
years. For these reasons, Union National does not expect the addition of IRR
evaluation to the agencies' capital guidelines to result in significant changes
in capital requirements for UNB.
Failure to meet applicable capital guidelines could subject a banking
organization to a variety of enforcement actions, including limitations on its
ability to pay dividends, the issuance by the applicable regulatory authority of
a capital directive to increase capital and, in the case of depository
institutions, the termination of deposit insurance by the FDIC, as well as to
the measures described under "Federal Deposit Insurance Corporation Improvement
Act of 1991" below, as applicable to undercapitalized institutions. In
<PAGE>
addition, future changes in regulations or practices could further reduce the
amount of capital recognized for purposes of capital adequacy. Such a change
could affect the ability of UNB to grow and could restrict the amount of
profits, if any, available for payment of dividends to the Company.
Federal Deposit Insurance Corporation Improvement Act of 1991. In December,
1991, Congress enacted FDICIA, which substantially revised the bank regulatory
and funding provisions of the Federal Deposit Insurance Act and made significant
revisions to several other federal banking statutes. FDICIA provides for, among
other things, (i) publicly available annual financial condition and management
reports for financial institutions, including audits by independent accountants,
(ii) the establishment of uniform accounting standards by federal banking
agencies, (iii) the establishment of a "prompt corrective action" system of
regulatory supervision intervention, based on capitalization levels, with more
scrutiny and restrictions placed on depository institutions with lower levels of
capital. (iv) additional grounds for the appointment of a conservator or
receiver, and (v) restrictions or prohibitions on accepting brokered deposits,
except for institutions which significantly exceed minimum capital requirements.
FDICIA also provides for increased funding of the FDIC insurance funds and the
implementation of risk-based premiums. See "Deposit Insurance."
A central feature of FDICIA is the requirement that the federal banking
agencies take "prompt corrective action" with respect to depository institutions
that do not meet minimum capital requirements. Pursuant to FDICIA, the federal
bank regulatory authorities have adopted regulations setting forth a six-tiered
system for measuring the capital adequacy of the depository institution that
they supervise. Under these regulations, a depository institution is classified
in one of the following capital categories: "well capitalized," "adequately
capitalized," "undercapitalized," " significantly undercapitalized" and "
critically undercapitalized." UNB is currently classified as "well-capitalized."
An institution may be deemed by regulators to be in a capitalization category
that is lower than is indicated by its actual capital position if, among other
things, it receives an unsatisfactory examination rating with respect to asset
quality, management, earnings or liquidity.
FDICIA generally prohibits a depository institution from making any capital
distribution (including payment of cash dividend) or paying any management fees
to its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized depository institutions are subjected to
growth limitations and are required to submit capital restoration plans. If a
depository institution fails to submit an acceptable plan, it is treated as if
it is significantly undercapitalized. Significantly undercapitalized depository
institutions may be subject to a number of other requirements and restrictions,
including orders to sell sufficient voting stock to become adequately
capitalized, requirements to reduce total assets and stop accepting deposits
from correspondent banks. Critically undercapitalized institutions are subject
to the appointment of a receiver or conservator, generally within 90 days of the
date such institution is determined to be critically undercapitalized.
FDICIA provides the federal banking agencies with significantly expanded
powers to take enforcement action against institutions which fail to comply with
capital or other standards. Such action may include the termination of deposit
insurance by the FDIC or the appointment of a receiver or conservator for the
institution. FDICIA also limits the circumstances under which the FDIC is
permitted to provide financial assistance to an insured institution before
appointment of a conservator or receiver.
Interstate Banking Legislation. The Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 was enacted into law on September 29, 1994. The
law provides that, among other things, substantially all state law barriers to
the acquisition of banks by out-of-state bank holding companies were eliminated
effective on September 29, 1995. The law also permits interstate branching by
banks effective as of June 1,1997, subject to the ability of the state to
opt-out completely or to set an earlier effective date. Maryland generally
established an earlier effective date of September 29,1995.
Monetary Policy. The earnings of a bank holding company are affected by the
policies of regulatory authorities, including the FRB, in connection with the
FRB's regulation of the money supply.
<PAGE>
Various methods employed by the FRB are open market operations in United States
Government securities, changes in the discount rate on member bank borrowings
and changes in reserve requirements against member bank deposits. These methods
are used in varying combinations to influence overall growth and distribution of
bank loans, investments and deposits, and their use may also affect interest
rates charged on loans or paid on deposits. The monetary policies of the FRB
have had a significant effect on the operating results of commercial banks in
the past and are expected to continue to do so in the future.
Employees
As of December 31,1997, UNB had the equivalent of 118 full-time employees.
None of its employees is represented by a collective bargaining unit. UNB
considers relations with its employees to be good.
ITEM 2. PROPERTIES
<TABLE>
Union National owns the following properties:
<CAPTION>
Offices Location
------- --------
<S> <C>
Corporate Headquarters 117 East Main Street
Westminster, MD 21157
Loan Operations 118 East Main Street
Westminster, MD 21157
East Main Street (1) 111 East Main Street
Westminster, MD 21157
Sykesville (2) 7564 Main Street
Sykesville, MD 21784
</TABLE>
<TABLE>
Union National leases the following properties:
<CAPTION>
Branch Location
------ --------
<S> <C> <C>
West Main Street (1,2) 132 West Main Street
Westminster, MD 21157
Finksburg (1,2) 2926 Baltimore, Blvd.
Finksburg, MD 21048
140 Village (1,2) 588 Baltimore, Blvd.
140 Village Shopping Center
Westminster, MD 21157
Eldersburg (1,2) 5420 Klee Mill Road
Eldersburg, MD 21784
Hampstead (1,2) 1631 North Main Street
Hampstead, MD 21102
<PAGE>
Cranberry (2) 400 North Center Street
Westminster, MD 21157
(within shopping mall)
Mount Airy (1,2) 400 E. Ridgville Blvd.
Mt. Airy, MD 21771
</TABLE>
1 Drive-Up Service
2 ATM Service
<TABLE>
<CAPTION>
Remote ATM Location
---------- --------
<S> <C>
Tevis Oil 74 West Main Street
Westminster Shell Westminster, MD 21157
Eagle Oil 8 Sullivan Rd.
Westminster Exxon Westminster, MD 21157
Eagle Oil 822 South Main St.
Hampstead Exxon Hampstead, MD 21074
Tevis Oil 1155 South Main St.
Hampstead Shell Hampstead, MD 21074
Eagle Oil 251 E. Baltimore Ave.
Taneytown Exxon Taneytown, MD 21787
Carroll Community College 1601 Washington Rd.
Westminster, MD 21157
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
Union National and UNB are subject to various legal proceedings which are
incidental to their business. In the opinion of management, the liabilities (if
any) resulting from such legal proceedings will not have a material effect on
the consolidated financial statements or consolidated ratios of Union National
and UNB.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
There were no matters that were submitted to a vote of the security holders
during the fourth quarter of 1997.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDERS
MATTERS
There is no established public trading market for Union National's Shares.
Accordingly, there is no comprehensive record of trades or the price of any such
trades. The low and high ranges presented in
<PAGE>
the table below are based on trades reported through the over the counter
bulletin board. Union National is aware of private trades of large blocks of
stock that took place in December 1997 at $24.00. As private trade they were not
recorded on the bulletin board and after those trades 3600 shares traded through
the bulletin board at an average of $18.50. On January 27, 1998, Union
National's Board of Directors authorized a two-for-one stock split, effected in
the form of a 100% stock dividend, thereby increasing the number of shares
authorized to 1,674,870. The following table reflects stock prices for Union
National's shares to the extent such information is available, and dividends
declared with respect thereto during the preceding two years. The number of
common shares and per share amounts have been restated to reflect the stock
split.
<TABLE>
<CAPTION>
1997 1996
---------------------------------- ----------------------------------
Price Range Price Range
------------------------ ------------------------
Low High Dividends Low High Dividends
--- ---- --------- --- ---- ---------
<C> <C> <C> <C> <C> <C> <C>
1st Quarter......... $16.000 $18.500 $0.075 $14.000 $14.500 $0.070
2nd Quarter......... 16.500 18.625 0.080 15.500 16.000 0.070
3rd Quarter......... 16.625 18.500 0.090 15.000 16.875 0.070
4th Quarter......... 16.625 19.000 0.095 16.000 16.000 0.075
</TABLE>
As of March 15, 1998, the approximate number of holders of record of Union
National's shares was 463. At such date, 1,674,870 Shares were outstanding.
Dividends are paid quarterly.
Limits on Dividends and Other Payments. Union National's current ability to
pay dividends is largely dependent upon the receipt of dividends from its
banking subsidiary, UNB. Both federal and state laws impose restrictions on the
ability of Union National to pay dividends. The FRB has issued a policy
statement which provides that, as a general matter, insured banks and bank
holding companies may pay dividends only out of prior operating earnings. For
Maryland state-chartered bank or trust company, dividends may be paid out of
undivided profits or, with the prior approval of the Commissioner, from surplus
in excess of 100% of required capital stock. If, however, the surplus of a
Maryland bank is less than 100% of its required capital stock, cash dividends
may not be paid in excess of 90% of net earnings. In addition to these specific
restrictions, bank regulatory agencies, in general, also have the ability to
prohibit proposed dividends by a financial institution which would otherwise be
permitted under applicable regulations of the regulatory body determines that
such distribution would constitute an unsafe or unsound practice.
ITEM 6. SELECTED FINANCIAL DATA.
Select Financial Data - Union National's 1997 Annual Stockholders Report,
Page 26, incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS.
In 1997 UNB established a task force to deal with issues concerning the
year 2000 readiness and compliance. The committee has instituted a timetable and
six phases of action plan which encompasses awareness, assessment, renovation &
validation, implementation, compliance and follow-up. Year 2000 issues have had
no impact on the 1997 financial conditions and results of operations.
Union National's 1997 Annual Stockholders Report, pages 13 through 25,
incorporated herein by reference.
<PAGE>
ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
<TABLE>
Principal Amount Maturing in:
<CAPTION>
Fair Value
(In thousands of dollars) 1998 1999-2000 2001-2002 Thereafter Total 12/31/97
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Rate sensitive assets:
Fixed interest rate loans............ $3,661 $13,033 $24,475 $32,089 $73,258 $70,529
Average interest rate........... 8.87% 8.97% 8.73% 8.39% 8.63%
Variable interest rate loans......... $15,090 $12,324 $4,741 $52,935 $85,090 $86,492
Average interest rate........... 9.73% 9.77% 10.60% 9.30% 9.52%
Fixed interest rate securities....... $6,989 $1,945 $20,256 $39,704 $68,895 $68,777
Average interest rate........... 5.64% 5.65% 6.73% 6.47% 6.44%
Variable interest rate securities.... $500 $366 $2,430 $3,296 $3,641
Average interest rate........... 5.89% 5.96% 5.95% 5.94%
Other interest bearing assets........ $6,072 $6,072 $6,072
Average interest rate........... 5.34% 5.34%
</TABLE>
<TABLE>
<CAPTION>
Fair Value
Rate sensitive liabilities: 1998 1999-2000 Thereafter Total 12/31/97
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Non-interest bearing checking........ $26,097 $26,097 $26,097
Average interest rate........... ----- -----
Savings and interest bearing......... $71,319 $71,319 $71,319
checking
Average interest rate........... 2.64% 2.64%
Time deposits........................ $38,855 $46,811 $22,557 $108,223 $111,789
Average interest rate........... 4.96% 5.66% 6.11% 5.52%
Fixed interest rate borrowings....... $10,000 $10,000 $10,159
Average interest rate........... 5.66% 5.66%
Variable interest rate borrowings.... $13,776 $13,776 $13,776
Average interest rate........... 4.55% 4.55%
</TABLE>
The above table provides information about UNB's financial instruments that
are sensitive to changes in interest rates. For loans, securities, and
liabilities with contractual maturities, the table presents principal cash flows
and related weighted-average interest rates by contractual maturities, as well
as UNB's historical experience of the impact of interest rate fluctuations on
the prepayment of various instruments. For core deposits (e.g., interest
checking, savings, and money market deposits) that have no contractual maturity,
the table presents principal cash flows and, as applicable, related
weighted-average interest rates based on UNB's historical experience,
management's judgment, and statisical analysis, as applicable, concerning their
most likely withdrawal behaviors.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Financial Statements and related notes - Union Naltional's 1997 Annual
Stockholders Report, Page 28 through 46, incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
On October 1, 1997. Union National engaged the accounting firm of Keller
Bruner & Co., L.L.C. ("Keller Bruner) in place of it's independent accounting
firm, Stegman & Company, P.A. on the recommendation and approval of the Finance
and Control Committee, which action was ratified by the
<PAGE>
full Board of Directors, after an extensive review and analysis of proposals
submitted by three accounting firms. Keller Bruner has acted as Union National's
independent accounting firm for the year ended December 31, 1997. Stegman &
Company, P.A. was not dismissed as a result of any disagreement. The reports of
Stegman & Company, P.A. on the financial statement of Union National for each of
the two fiscal years in the period ended December 31, 1996 did not contain any
adverse opinion or disclaimer of opinion and were not qualified or modified as
to uncertainty, auditing scope or accounting principles.
Union National has had no disagreements on accounting and financial
disclosure with Keller Bruner.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Proxy Statement, dated March 24, 1998, pages 2 through 4, incorporated
herein by reference.
Section 16(a) Beneficial Ownership Reporting Compliance, Proxy Statement,
dated March 24, 1998, pages 12 through 13, incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Proxy Statement, dated March 24, 1998, pages 5 through 12, incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Proxy Statement, dated March 24, 1998, pages 6 through 7, incorporated
herein by reference
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Proxy Statement, dated March 24, 1998, pages 5 through 6, incorporated
herein by reference
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTED OF FORM 8-K
(a) Documents filed as part of this report:
(1), (2)The following financial statements are included on pages 28
through 46 of the Union National's 1997 Annual report to Stockholders:
<TABLE>
<CAPTION>
<S> <C>
INDEPENDENT AUDITOR'S REPORT .......................... 27
CONSOLIDATED BALANCE SHEET ............................ 28
CONSOLIDATED STATEMENTS OF INCOME ..................... 29
CONSOLIDATED STATEMENTS OF CHANGES .................... 30
IN STOCKHOLDERS' EQUITY
STATEMENTS OF CASH FLOWS .............................. 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ............ 32-46
</TABLE>
<PAGE>
(3) Exhibits filed herewith or incorporated by reference herein as set
forth in the following table prepared in accordance with Item 601 of Regulation
S-K.
EXHIBIT INDEX
(3). Charter and Bylaws
(3a.) Articles of Incorporation of Union National is
incorporated by reference form Union National's Form 10, filed with the
Commission of May 5, 1997, and Form 10/A, file with the Commission on August
21,1997 (Registration No. 0-22523)
(3b.) Bylaws of union national is incorporated by reference
form Union National's Form 10, filed with the Commission of May 5, 1997, and
Form 10/A, file with the Commission on August 21,1997 (Registration No.
0-22523)
(10) Material Contracts
(10a.) Employment Agreement between the Union National Bank of
Westminster and Virginia W. Smith, President, is incorporated by reference form
Union National's Form 10, filed with the Commission of May 5, 1997, and Form
10/A, file with the Commission on August 21,1997 (Registration No. 0-22523)
(10b.) 1997 Stock Option Plan is incorporated by reference
form Union National's Form 10, filed with the Commission of May 5, 1997, and
Form 10/A, file with the Commission on August 21,1997 (Registration No. 0-22523)
(10c.) Leases between The Union National Bank of Westminster
and K. Wayne Lockard, Director, dated October 1, 1997, is incorporated by
reference form Union National's Form 10, filed with the Commission of May 5,
1997, and Form 10/A, file with the Commission on August 21,1997 (Registration
No. 0-22523)
(10b.) Key employee retention plan
Union National Bank
Key Employee Retention Plan
1. Purpose. The purpose of this Key Employee Retention Plan ("Plan")
is to further the interests of Union National Bank ("Bank") by providing
incentives to attract and retain key employees.
2. Administration. The Plan shall be administered by the Board of
Directors of the Bank or a committee designated by the Board (the
"Administrator"). Subject to the provisions of the Plan and applicable law,
the Board is authorized to interpret the Plan, to adopt, amend and rescind
rules and regulations relating to the Plan, and to make all other
determinations necessary or advisable for the administration of the Plan
(except such determinations which conflict with the authority or power of the
Board). No Director or member of any committee administering the Plan shall
vote upon or decide any matter relating solely to himself/herself (or member
of his/her immediate family), or solely to any of his/her rights or benefits
(or rights or benefits of a member of his/her immediate family) under the
Plan.
3. Plan Participation. The Board shall determine and designate from
time to time those employees of the Bank who shall be eligible to participate
in the Plan (each a "Participant") and the category of separation payments
for which each Participant will be eligible. Participation in the Plan shall
not confer upon any Participant any right of continuation of service as an
employee or officer of the Bank or other rights of employment except as
expressly stated herein.
4. Defined Terms. The following terms used in the plan shall have the
following meanings:
<PAGE>
(a) "Change in Control" means the occurrence of any one or
more of the following events: (i) the acquisition of "beneficial ownership"
by a person or entity, including any "group" (as such terms are defined under
Section 13(d) of the Securities Exchange Act of 1934), of 50% or more of the
outstanding shares of common stock of the Bank or of its parent company (the
"Parent"); (ii) the sale or other disposition of all or substantially all of
the assets of the Bank or the Parent in one transaction or a series of
transactions; (iii) a merger, consolidation or share exchange involving the
Bank or the Parent and any other person or entity, in which the Bank or the
Parent is not the surviving entity or in which the outstanding shares of
capital stock of the Bank or the parent do not continue to be outstanding;
and (iv) any other "business combination" (as defined in Section 3-601(e) of
the Maryland General Corporation Law) involving the Bank or the parent and
any person or entity, whether or not such person or entity is an "interested
stockholder" under that statute.
(b) "Qualifying Termination" means:
(i) the termination of employment of a Participant by the
Bank in anticipation of or within 18 months after a Change in Control, or
(ii) the resignation of a Participant within 18 months after
a Change in Control as a direct result of any of the following action taken by
the Bank with respect to a Participant in anticipation of or after a Change in
Control:
(A) the demotion of a Participant or the reduction of a
Participant's regular base salary below the amount in effect
immediately prior to the Change in Control;
(B) the substantial curtailment of the rights, duties and
responsibilities of a Participant as compared to those
possessed by the Participant prior to the Change in Control;
or
(C) the reassignment of a Participant, or relocation of the
office or facility to which he/she shall report, to a
location that is more than 25 miles from the Participant's
place of employment prior to the Change in Control.
(c) A Qualifying Termination shall not include the following:
(i) Termination of the Participant for cause. "Cause"
includes an action or failure to act by the Participant constituting:
(A) fraud, misappropriation or intentional material damage
to the property or business of the Bank, the commission of
an act of deliberate and material dishonesty, a material
breach of the Bank's corporate code of ethics, commission of
a crime, or causing the Bank to commit a crime; or
(B) continued failure by the participant to satisfactorily
perform his/her duties or job functions after written notice
to the Participant by the Board of Directors specifying such
failure; provided that such "cause" shall have been found by
a majority vote of the board of Directors after notice to
the Participant specifying the cause and an opportunity for
the Participant to be heard by the Board of Directors; or
<PAGE>
(ii) A transfer of employment of the Participant to the parent or a
subsidiary of the Parent or of the Bank (collectively, a "Related Entity") in
anticipation of or after a Change in Control, in which case the Participant
shall continue to be a Participant under the Plan.
5. Plan Benefits. Subject to the compliance by the Participant with the
conditions specified in Paragraph 6, in the event of a Qualifying Termination of
the Participant, the Participant shall be entitled to the following benefits
("Plan Benefits"):
(a) Separation Payments. A Participant will be entitled to receive an
amount equal to his/her base salary (at the amount in effect at the time of the
Qualifying Termination) for the applicable number of weeks set forth below.
Separation payments will be paid on the Bank's regular pay days and will be
subject to standard withholdings and deductions. For purposes of determining the
number of full years of service under this Plan, a Participant shall be credited
with all time that he/she was continuously employed by the Bank or any Related
Entity regardless of any transfers of employment among them.
Category I. Participants in this category will be entitled to
receive separation payments for 78 weeks (18 months) plus one
additional week for each full year of service he/she has completed
with the Bank, up to a maximum of 130 weeks (30 months).
A Participant under Category I shall be obligated to seek
employment. The first 52 weeks (12 months) of the Participants
separation payments will be guaranteed and the remaining weeks will be
reduced by 50% if the Participant receives or is entitled to receive
any amount from other employment, including self-employment, during or
in respect of such weeks.
Category II. Participants in this category will be entitled to
receive separation payments for 52 weeks (12 months) plus one
additional week for each full year of service he/she has completed
with the Bank, up to a maximum of 104 weeks (24 months).
A Participant under Category II shall be obligated to seek
employment. The first 52 weeks (12 months) of the Participants
separation payments will be guaranteed and the remaining weeks will be
reduced by 50% if the Participant receives or is entitled to receive
any amount from other employment, including self-employment, during or
in respect of such weeks.
Category III. Participants in this category will be entitled to
receive separation payments for 26 weeks (6 months) plus one
additional week for each full year of service he/she has completed
with the Bank, up to a maximum of 78 weeks (18 months).
A Participant under Category III shall be obligated to seek
employment. The first 26 weeks (6 months) of the Participants
separation payments will be guaranteed and the remaining weeks will be
reduced by 50% if the Participant receives or is entitled to receive
any amount from other employment, including self-employment, during or
in respect of such weeks.
Category IV. Participants in this category will be entitled to
receive separation payments for 13 weeks (3 months) plus one
additional week for each full year of service he/she has completed
with the Bank, up to a maximum of 52 weeks (12 months).
A Participant under Category IV shall be obligated to seek
employment. The first 26 weeks (6 months) of the Participants
separation payments will be guaranteed and the remaining weeks will be
reduced by 50% if the Participant receives or is entitled to receive
any amount from other employment, including self-employment, during or
in respect of such weeks.
(b) Health Insurance. A Participant will be entitled to continue
to receive health insurance benefits from the Bank on the same basis, as if
he/she were actively employed, for a period of six months. Months of
continued coverage hereunder will not be counted towards the number of months
of continued coverage to which the Participant (and any of his/her covered
dependents) is entitled pursuant to COBRA or any similar law.
<PAGE>
(c) Notwithstanding anything to the contrary, the Plan Benefits
shall be reduced by any other severance type or other benefits which the
Participant receives or is entitled to receive from the Bank or a Related
Entity pursuant to any other plan, a contract, or otherwise.
6. Conditions to Plan Benefits. All Plan Benefits provided or to be
provided under this Plan are subject to the continued compliance of the
Participant with the following conditions:
(a) Release of Claims. The Participant will release the Bank and
its Related Entities (and their officers, directors, employees and agents)
from and against all claims that he/she may have against them and will
convenant not to bring, and shall not bring, any action in respect of any
claim so released.
(b) Non-Competition. For a period of one year following a
Qualifying Termination, the Participant will not directly or indirectly,
either individually or as owner, partner, agent, employee, consultant or
otherwise, for himself or any other person or entity, solicit, enter into or
attempt to establish any business relationship, competitive with the business
of the Bank or any Related Entity, with any person or entity that was a
customer of the Bank or any Related Entity within 12 months of the date of
the Qualifying Termination.
(c) Confidential Information. The Participant will not, either
directly or indirectly, use, disclose or communicate to any person or entity
any trade secret or confidential or proprietary information of the Bank or
any Related Entity. For purposes of this Agreement, "trade secret or
confidential or proprietary information" means any information concerning the
Bank or any Related Entity which he/she learned during his/her employment and
which is not generally known or available to sources outside the Bank and
Related Entities; such information shall include (without limitation)
information, whether written or otherwise, regarding earnings, expenses,
plans, strategies, prospective and executed contracts, and other business
arrangements.
(d) Return of Property/Amounts Owed. The Participant will promptly
return all property of the Bank and Related Entities. The Participant promptly
will reimburse the Bank and Related Entities for any personal telephone calls,
credit card charges, and other expenses and pay all amounts due to such entity.
(e) Breach by Participant. In the event the Participant breaches
any of the conditions set forth in this Section, in addition to any other
remedies it may have, the Bank shall not be required to provide any of the
Plan Benefits, and the Participant shall be obligated to return to the Bank,
upon demand, an amount equal to all Plan Benefits that he/she received under
this Plan.
(f) Agreement. The Participant will, upon request, sign an
agreement satisfactory to the Bank which includes the conditions set forth in
this Section 6.
7. Death of Participant. Upon the death of a Participant receiving Plan
Benefits, the beneficiary(ies) of the Participant (whom he/she designated for
purposes of group life insurance benefits) shall be entitled to receive the
Plan Benefits through the end of the month in which the Participant's death
occurred.
8. Administration of the Plan.
(a) Administrator. The Administrator shall have full power to
administer the Plan. The Plan shall be administered in accordance with its
terms, for the exclusive benefit of Participants. The Administrator shall be
entitled to appoint persons to assist it in administering the Plan, and shall
be entitled to delegate, in writing, its responsibilities to other persons.
<PAGE>
The Administrator shall have full discretionary authority to interpret
the Plan and to decide all questions concerning the Plan. Its interpretation
shall be binding on all concerned.
(b) Indemnification. The Bank agrees to indemnify and to defend to the
fullest extent permitted by law any person who performs or has performed
administrative functions for the Administrator against any liabilities and
expenses (including attorneys' fees and amounts paid in settlement of any claims
approved by the Bank) occasioned by any act or omission in connection with the
Plan which occurred in good faith.
(c) Appeal of a Denied Claim.
(i) If a Participant believes that he/she is entitled to
benefits under the Plan, the Participant may submit a claim to the
administrator within 2 months after the date of the event which he/she
believes is a Qualifying Termination. The Administrator will either grant the
claim, deny it, or extend the time for processing it. Any extension will not
be longer than 180 days from the date the claim was submitted.
(ii) If a claim arising under this Plan is wholly or partially
denied, notice of the decision shall be furnished to the Participant within
90 days after receipt of the claim by the Administrator. If special
circumstances require an extension of time for processing the claim, written
notice of the extension shall be furnished to the Participant prior to the
end of the initial 90 day period. In no event shall such extension exceed a
period of 90 days from the end of such initial period. The extension notice
shall indicate the special circumstances requiring an extension of time and
the date by which the Administrator expects to render the final decision. The
written notice to the Participant regarding a denied claim for benefits shall
include (A) the specific reason(s) for the denial; (B) specific reference to
pertinent Plan provisions which the denial is based; (C) a description of any
additional material or information necessary for the Participant to perfect
the claim and an explanation of why such material or information is
necessary; (D) that the Participant or his/her duly authorized representative
has a reasonable opportunity to appeal the denial of the claim, including but
not limited to: requesting a review upon written application to the Plan;
reviewing pertinent documents; and submitting issues and comments in writing;
and (E) appropriate information as to the steps to be taken if the
Participant wishes to appeal the denial of the claim.
(iii) The Administrator's decision regarding the appeal shall
be made not later than 60 days after the receipt of the appeal, unless
special circumstances require an extension of time, in which case the
Participant shall be notified of the extension and a decision shall be
rendered as soon as possible, but not later than 120 days after receipt of
the appeal. The decision regarding the appeal shall be in writing and shall
include specific reasons for the decision, written in a manner calculated to
be understood by the Participant, as well as specific references to the
pertinent Plan provisions on which the decision is based. The Administrator's
decision regarding the appeal will be final and binding on all concerned.
9. Amendments and Termination. The Board of Directors may amend,
suspend, discontinue or terminate the plan, but no such action shall, without
the consent of each Participant, alter or impair the Plan benefits to be
provided to such Participant under the Plan.
10. Binding Effect.
(a) This Plan shall inure to the benefit of each Participant. This
Plan shall be binding upon the Bank, its successors and assigns, including any
person or entity that acquires the business or assets of the Bank pursuant to a
Change in Control (a "transferee"); provided, however, that no such transfer or
assignment shall relieve the Bank from its obligations hereunder.
<PAGE>
(b) All obligations of the Bank under this Plan are subject to
applicable statutes and regulations. The Bank shall use its reasonable best
efforts to obtain all consents and approvals necessary to comply with the
provisions of this Plan.
ADOPTED BY UNION NATIONAL BANK ON January 13, 1998.
(11) Statements re computation of per share earnings
a. The per share earning is calculated by dividing the 1997
and 1996 net income of $2,400,102 and $1,830,028, respectively, by the number of
shares outstanding for 1997 and 1996 of $1,674,870 and $834,000, respectively.
Primary and fully diluted were the same for both 1997 and 1996.
(12) Statements re computation of ratios
a. The percentage ratio of net income to average total
assets is calculated by dividing the 1997 and 1996 net income of $2,400,102
and $1,830,028, respectively, by the average total assets for 1997 and 1996
of $234,206,000 and $221,146,000, respectively.
b. The percentage ratio of net income to average shareholders'
equity is calculated by dividing the 1997 and 1996 net income of $2,400,102 and
$1,830,028, respectively, by the average shareholders' equity for 1997 and 1996
of $18,884,000 and $17,242,000, respectively.
c. The percentage ratio of average shareholders' equity to
average total assets is calculated by dividing the 1997 and 1996 average
shareholders' equity of $18,884,000 and $17,242,000, respectively, by the
average total assets for 1997 and 1996 of $234,206,000 and $221,146,000,
respectively.
d. The percentage ratio of cash dividends declared to net
income is calculated by dividing the 1997 and 1996 cash dividend of $592,120 and
$660,380, respectively, by the net income for 1997 and 1996 of $2,400,102 and
$1,830,028, respectively.
(13) Annual report to stockholders
Filed herewith
(16) Letter re change in certifying accountants
Is incorporated by reference from Union National's 8-K file
with the Commission on October 6, 1997.
(21) Subsidiaries of the Registrant
Is incorporated by reference form Union National's Form 10,
filed with the Commission of May 5, 1997, and Form 10/A, file with the
Commission on August 21,1997 (Registration No. 0-22523)
(23) Consents of Experts & Counsel
(23a.) Keller Bruner & Co.
The Board of Directors
Union national Bancorp, Inc.
We consent to incorporation by reference of our report dated January 14, 1998
relating to the consolidated balance sheet of Union National Bancorp, Inc.
and its subsidiary as of December 31, 1997 and the related consolidated
statements of income, changes in stockholders' equity and cash flows for the
year ended December 31, 1997, which report appears on page 27 of the 1997
Union National Bancorp, Inc. Annual
<PAGE>
Report to Stockholders and its annual report on Form 10-K, in the following
Registration Statement of Union National Bancorp, Inc.: Number 333-36767 on
Form S-1.
/s/ Keller Bruner & Company, L.L.C.
Frederick Maryland
March 23,1998
(23b.) Stegman & Co.
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference of our report dated
January 8,1997 except as to Note 2 which is dated January 16,1998, relating to
the consolidated balance sheet of Union National Bancorp and Subsidiary as of
December 31, 1996 and related consolidated statements of income, stockholders'
equity and cash flows for the year ended December 31, 1996 and 1995, which
report appears in the December 31, 1997 Form 10-K of Union National Bancorp.
/s/ Stegman & Company
Baltimore, Maryland
March 25,1998
(27) Financial data schedule
Is filed electronically herewith via EDGAR.
(b) A Form 8-K was filed on October 6,1997, regarding Item 4 of Form
8-K, Change in Certifying Accountants
(c) See Discussion item 14 (a)(3) above.
Signatures
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, hereunto duly authorized.
Union National Bancorp, Inc.
Date: March 24, 1998 by: /s/ Virginia W. Smith
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: March 24, 1998 by: /s/ K. Wayne Lockard
Director & Chairman of the Board
Date: March 24, 1998 by: /s/ Donald C. Essich
<PAGE>
Director & Vice Chairman
Date: March 24, 1998 by: /s/ Kenneth B. Wright
Director
Date: March 24, 1998 by: /s/ Robert T. Scott
Director
Date: March 24, 1998 by: /s/ Larry A. Van Sant, Sr.
Director
Date: March 24, 1998 by: /s/ Joseph H. Beaver, Jr.
Director
Date: March 24, 1998 by: /s/ Wesley D. Blakeslee
Director
Date: March 24, 1998 by: /s/ Dean H. Griffin
Director
Date: March 24, 1998 by: /s/ Ethan A. Seidel
Director
Date: March 24, 1998 by: /s/ Ellen Willis Miller
Director
Date: March 24, 1998 by: /s/ William R. Klinger
Director
Date: March 24, 1998 by: /s/ Bernard L. Jones, Sr.
Director
Date: March 24, 1998 by: /s/ Robert L. Bullock
Director
Date: March 24, 1998 by: /s/ David L. Brauning
Director
Date: March 24, 1998 by: /s/ Gabrielle M. Peregoy
Vice President & Controller
Exhibit (16) Letter re change in certifying accountants -
Insert annual report here
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNION
NATIONAL BANCORP'S 10-KSB FOR THE YEAR ENDED DECEMBER 31, 1997 AND IS QUALIFIED
IN IT'S ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 7,870,449
<INT-BEARING-DEPOSITS> 25,108
<FED-FUNDS-SOLD> 6,072,396
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 58,770,760
<INVESTMENTS-CARRYING> 13,419,839
<INVESTMENTS-MARKET> 0
<LOANS> 158,347,687
<ALLOWANCE> 1,793,112
<TOTAL-ASSETS> 250,780,881
<DEPOSITS> 205,638,796
<SHORT-TERM> 13,776,373
<LIABILITIES-OTHER> 1,301,385
<LONG-TERM> 10,000,000
0
0
<COMMON> 16,748
<OTHER-SE> 20,047,579
<TOTAL-LIABILITIES-AND-EQUITY> 250,780,881
<INTEREST-LOAN> 13,652,869
<INTEREST-INVEST> 4,098,020
<INTEREST-OTHER> 463,241
<INTEREST-TOTAL> 18,214,131
<INTEREST-DEPOSIT> 7,699,429
<INTEREST-EXPENSE> 8,392,787
<INTEREST-INCOME-NET> 9,821,344
<LOAN-LOSSES> 275,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 7,309,042
<INCOME-PRETAX> 3,564,001
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,400,103
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
<YIELD-ACTUAL> 0
<LOANS-NON> 711,297
<LOANS-PAST> 638,848
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 2,097,904
<ALLOWANCE-OPEN> 1,772,433
<CHARGE-OFFS> 311,377
<RECOVERIES> 57,058
<ALLOWANCE-CLOSE> 1,793,112
<ALLOWANCE-DOMESTIC> 1,793,112
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
