FIRST UNITED BANCSHARES INC /AR/, 10-K, 1994-03-30

FIRST UNITED BANCSHARES INC /AR/
10-K, 1994-03-30
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(MARK ONE)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)

FOR THE FISCAL YEAR ENDING DECEMBER 31, 1993

OR
( ) TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

FOR THE TRANSITION PERIOD FROM ________ TO ________
COMMISSION FILE NO. 0-11916
FIRST UNITED BANCSHARES, INC.
(Exact name of registrant as specified in its charter)

ARKANSAS 71-0538646
- - - -------------------------------- ----------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

MAIN AND WASHINGTON STREETS, EL DORADO, ARKANSAS 71730
- - - ------------------------------------------------ -------------
(Address of principal executive office) (Zip Code)

Registrant's telephone number, including area code: (501) 863-3181

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

NAME OF EACH EXCHANGE ON
TITLE OF CLASS WHICH REGISTERED
-------------- ------------------------
Common Stock, $1.00 par value NASDAQ-NMS

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 or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Yes (x) No ( )

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 such
filing requirements for the past 90 days. Yes (x) No ( )

As of March 1, 1994, 4,272,276 shares of the Registrant's Common
Stock, $1.00 par value were issued and outstanding, and the approximate
aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $92,905,000.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are incorporated by reference into
the listed Parts and Items of Form 10-K:

Annual Report to Stockholders for the year ending December 31, 1993 to
the extent indicated in the Form 10-K cross reference index - PARTS I, II, and
IV.

Definitive Proxy Statement to Stockholders to be filed with the
Securities and Exchange Commission not later than 120 days after the close of
the Registrant's fiscal year - PART III.

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<PAGE> 2
FIRST UNITED BANCSHARES, INC.
ANNUAL REPORT ON FORM 10-K
December 31, 1993

CROSS REFERENCE SHEET AND INDEX

PART I.
<TABLE>
<CAPTION>
ITEM NO. LOCATION*
- - - -------- --------
<S> <C> <C>
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 41 of the 1993
Annual Report to
Stockholders

Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . Page 42 of the 1993
Annual Report to
Stockholders

Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . Page 41 of the 1993
Annual Report to
Stockholders

Item 4. Submission of Matters to a Vote
of Security Holders . . . . . . . . . . . . . . . . . . . . . Not Applicable
</TABLE>

PART II.
<TABLE>
<S> <C> <C>
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters . . . . . . . . . . . . . . . Pages 13-14 of the
1993 Annual Report
to Stockholders

Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . Page 20 of the 1993
Annual Report to
Stockholders

Item 7. Managements's Discussion and Analysis
of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . Pages 14-19 of the
1993 Annual Report
to Stockholders

Item 8. Financial Statements and Supplementary Data . . . . . . . . . Pages 22-38 of the
1993 Annual Report
to Stockholders

Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . . . . . . Not Applicable
</TABLE>

2
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FIRST UNITED BANCSHARES, INC.
ANNUAL REPORT ON FORM 10-K
December 31, 1993

CROSS REFERENCE SHEET AND INDEX (CONTINUED)

PART III.
<TABLE>
<CAPTION>
ITEM NO. LOCATION*
- - - -------- --------
<S> <C> <C>
Item 10. Directors and Executive Officers of the
Registrant Item . . . . . . . . . . . . . . . . . . . . . . . . . Pages 42-46 of the
1993 Annual Report
to Stockholders
</TABLE>

The remaining information for Item 10 and the information required by
Items 11 through 13 are incorporated by reference to the Registrant's
Definitive Proxy Statement for the 1994 Annual Meeting of Stockholders
filed with the Securities and Exchange Commission.

PART IV.
<TABLE>
<S> <C> <C>
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . Page 5
</TABLE>

*Page number references are to the locations of the listed items contained in
this Annual Report on Form 10-K for the year ended December 31, 1993. The
Registrant's 1993 Annual Report to Stockholders and Definitive Proxy Statement
are referred to above where such information is incorporated by reference into
this Annual Report on Form 10-K from such 1993 Annual Report to Stockholders
and Definitive Proxy Statement.

3
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FIRST UNITED BANCSHARES, INC.
ANNUAL REPORT ON FORM 10-K
December 31, 1993

PART I

ITEM 1. BUSINESS.

The information required in response to this Item is incorporated by
reference from the disclosure contained under the caption "Description of
Business" on page 41 of the Annual Report to Stockholders, which is included as
Exhibit 13 hereto.

ITEM 2. PROPERTIES.

The information required in response to this Item is incorporated by
reference from the disclosure contained under the caption "Properties" on page
42 of the Annual Report to Stockholders, which is included as Exhibit 13
hereto.

ITEM 3. LEGAL PROCEEDINGS.

The information required in response to this Item is incorporated by
reference from the disclosure contained under the caption "Legal Proceedings"
on page 42 of the Annual Report to Stockholders, which is included as Exhibit
13 hereto.

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

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDERS
MATTERS.

The information required in response to this Item is incorporated by
reference from the disclosure contained under the caption "Common Stock and
Dividends" on page 14 of the Annual Report to Stockholders, which is included
as Exhibit 13 hereto.

ITEM 6. SELECTED FINANCIAL DATA.

The information required in response to this Item is incorporated by
reference from the disclosure contained under the caption "Selected Financial
Data" on page 20 of the Annual Report to Stockholders, which is included as
Exhibit 13 hereto.

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

The information required in response to this Item is incorporated by
reference from the disclosure contained under the caption "Financial Analysis"
on pages 4-19 of the Annual Report to Stockholders, which is included as
Exhibit 13 hereto.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The information required in response to this Item is incorporated by
reference from the disclosure contained under the caption "Financial Statements
and Notes" on pages 22-38 of the Annual Report to Stockholders, which is
included as Exhibit 13 hereto.

4
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT.

The information required in response to this Item is incorporated by
reference from the disclosure contained under the caption "Executive Officers
of the Registrant" on page 42 and "Officers and Directors" on pages 43-46 of
the Annual Report to Stockholders, which is included as Exhibit 13 hereto and
is incorporated by reference from the Definitive Proxy Statement which will be
filed with the Securities and Exchange Commission no later than 120 days after
the end of the 1993 fiscal year covered by this Annual Report on 10-K.

ITEM 11. EXECUTIVE COMPENSATION.

The information required in response to this Item is incorporated by
reference from the Definitive Proxy Statement which will be filed with the
Securities and Exchange Commission no later than 120 days after the end of the
1993 fiscal year covered by this Annual Report on 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORT ON FORM 8K.

ITEM 14(a)(1) FINANCIAL STATEMENTS.

The following consolidated financial statements and the report of
independent auditors of First United Bancshares, Inc. and subsidiaries for the
year ended December 31, 1993 as required by Item 8, are:

<TABLE>
<CAPTION>
Page(s) in 1993 Annual
Report to Stockholders
<S> <C>
Reports of Management and Independent Auditors . . . . . . . . . . . . Page 38
Consolidated Statements of Condition as of
December 31, 1993 and 1992 . . . . . . . . . . . . . . . . . . . Page 23
Consolidated Statement of Income
for the three years ended December 31, 1993, 1992 and 1991 . . . . Page 24
Consolidated Statements of Changes in Capital Accounts
for the three years ended December 31, 1993, 1992 and 1991 . . . Page 25
Consolidated Statements of Cash Flows
for the three years ended December 31, 1993, 1992 and 1991 . . . Page 26
Notes to Consolidated Financial Statements-December 31, 1993 . . . . . Pages 28-37
</TABLE>

5
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ITEM 14(a)(2) FINANCIAL STATEMENT SCHEDULES.

Not applicable.

ITEM 14(a)(3) FINANCIAL STATEMENT SCHEDULES.

The Exhibits required by Item 601 of Regulation S-K which are required to
be filed in response to this Item 14(a)(3) are submitted as a separate section
of this Annual Report on Form 10-K under the caption "Exhibit Index".

ITEM 14(b) REPORTS ON FORM 8-K.

First United Bancshares, Inc. filed a Current Report on Form 8-K dated on
September 8, 1993, describing under Item 5 that First United Bancshares, Inc.
had entered into an Agreement and Plan of Reorganization with Commerce
Financial Corporation, whereby First United Bancshares, Inc. would acquire
ownership of Commercial Bank at Alma, Arkansas.

First United Bancshares, Inc. filed a Current Report on Form 8-K dated
December 10, 1993, describing under Item 5 that First United Bancshares, Inc.
had consummated an Agreement and Plan of Reorganization with Commerce Financial
Corporation, whereby First United Bancshares, Inc. acquired ownership of
Commercial Bank at Alma, Arkansas.

ITEM 14(c) EXHIBITS.

The exhibits required by Item 601 of Regulation S-K which are required to
be filed in response to this Item 14(c) are submitted as a separate section of
this Annual Report on Form 10-K under the caption "Exhibit Index".

ITEM 14(d) FINANCIAL STATEMENT SCHEDULES.

Not applicable.

6
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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, thereunto duly authorized, on the 21st day of
March, 1994.

FIRST UNITED BANCSHARES, INC.

By:/s/ JOHN E. BURNS
-------------------------------
John E. Burns, Chief Financial
Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby authorizes James V.
Kelley and/or John E. Burns, to file one or more amendments to this Annual
Report on Form 10-K, which amendments may make such changes to the Annual
Report on Form 10-K as he deems appropriate, and each such person hereby
appoints James V. Kelley and/or John E. Burns as his lawful attorney-in-fact to
execute in the name and on behalf of each such person individually, and in each
capacity stated below, any such amendments to the Annual Report on Form 10-K.

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.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ JAMES V. KELLEY
-----------------------
James V. Kelley Chairman of the Board, President, March 21, 1994
Chief Executive Officer

/s/ JOHN E. BURNS
--------------------------
John E. Burns Vice President, Chief Financial March 21, 1994
Officer, Principle Accounting Officer

/s/ E. LARRY BURROW
---------------------
E. Larry Burrow Director March 21, 1994

/s/ CLAIBORNE P. DEMING
-----------------------
Claiborne P. Deming Director March 21, 1994
</TABLE>

7
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<TABLE>
<S> <C> <C>
/s/ GRADY E. DUPRIEST
--------------------------
Grady E. DuPriest
Director March 21, 1994

/s/ WILLIAM A. ECKERT, JR
-------------------------
William A. Eckert, Jr.
Director March 21, 1994

/s/ ROY E. LEDBETTER
----------------------------
Roy E. Ledbetter
Director March 21, 1994

/s/ MICHAEL F. MAHONY
-------------------------
Michael F. Mahony
Director March 21, 1994

/s/ RICHARD H. MASON
---------------------------
Richard H. Mason
Director March 21, 1994

/s/ JACK W. MCNUTT
----------------------------
Jack W. McNutt
Director March 21, 1994

/s/ WILLIAM E. MORGAN
-------------------------
William E. Morgan
Director March 21, 1994

/s/ R. MADISON MURPHY
-------------------------
R. Madison Murphy
Director March 21, 1994

/s/ ROBERT C. NOLAN
-----------------------------
Robert C. Nolan
Director March 21, 1994

/s/ PAULA M. O'CONNOR
--------------------------
Paula M. O'Connor
Director March 21, 1994

/s/ KATHERINE P. OZMENT
------------------------
Katherine P. Ozment
Director March 21, 1994

/s/ CAL PARTEE, JR.
---------------------------------
Cal Partee, Jr.
Director March 21, 1994
</TABLE>

8
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<TABLE>
<S> <C> <C>
-----------------------------------
Chesley Pruet Director March 21, 1994

-----------------------------------
John D. Trimble, Jr. Director March 21, 1994

/s/ RALPH C. WEISER
------------------------------
Ralph C. Weiser Director March 21, 1994

/s/ DAVID M. YOCUM, JR.
---------------------------
David M. Yocum, Jr. Director March 21, 1994
</TABLE>

9
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FIRST UNITED BANCSHARES, INC.
ANNUAL REPORT ON FORM 10-K
December 31, 1993

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<S> <C>
2(a) Agreement and Plan of Reorganization
dated September 3, 1993 between First
United Bancshares, Inc. and Commerce
Financial Corporation

2(b) Agreement and Plan of Reorganization
dated December 17, 1993 between First
United Bancshares, Inc. and InvestArk
Bancshares, Inc.

3(a) Articles of Incorporation of First
United Bancshares, Inc. (filed as
Exhibit 3.1 to the Annual Report on
Form 10-K for the year ended December
31, 1992) incorporated by reference
herein.

3(b) By-Laws of First United Bancshares,
Inc. (filed as Exhibit 3.2 to the
Annual Report on Form 10-K for the
year ended December 31, 1992)
incorporated by reference herein.

10 Severance Agreement between First
United Bancshares, Inc. and James V.
Kelley (filed as Exhibit 10.1 to the
Annual Report on Form 10-K for the
year ended December 31, 1992)
incorporated by reference herein.

11 Statement of Computation of Per Share
Earnings (see page 24 of the
Consolidated Financial Statements of
First United Bancshares, Inc.
contained in the 1993 Annual Report to
Stockholders which is included herein
as Exhibit 13).

13 First United Bancshares, Inc. 1993
Annual Report to Stockholders.

21 Subsidiaries of First United
Bancshares, Inc.

24 Power of Attorney (see signature
page).
</TABLE>

<PAGE> 1
EXHIBIT 2(a)

AGREEMENT AND PLAN OF REORGANIZATION

AMONG

FIRST UNITED BANCSHARES, INC.,

COMMERCE FINANCIAL CORPORATION,

JOHN P. BALLENTINE

AND

COMMERCE FINANCIAL CORPORATION

EMPLOYEE STOCK OWNERSHIP TRUST
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION PAGE
- - - ------- ----
<S> <C>
ARTICLE I

The Merger

SECTION 1.01. The Merger...................................... 2
SECTION 1.02. Effective Time of the Merger.................... 2
SECTION 1.03. Closing......................................... 3
SECTION 1.04. Repayment of CFC Indebtedness................... 3

ARTICLE II

Effect of the Merger on CFC Common Stock

SECTION 2.01. Effect on Common Stock.......................... 4
SECTION 2.02. Approval By CFC Shareholders.................... 7

ARTICLE III

Representations and Warranties of CFC, Ballentine and ESOT

SECTION 3.01. Organization, Standing and Power of
CFC and CCC..................................... 8
SECTION 3.02. Ownership, Organization, Standing and
Power of Bank................................... 8
SECTION 3.03. Capital Structure............................... 10
SECTION 3.04. Authority....................................... 11
SECTION 3.05. CFC Financial Statements........................ 13
SECTION 3.06. CFC Reports..................................... 15
SECTION 3.07. Information Supplied............................ 16
SECTION 3.08. Authorizations; Compliance with Applicable
Laws............................................ 16
</TABLE>

<PAGE> 3
<TABLE>
<CAPTION>
SECTION PAGE
- - - ------- ----
<S> <C> <C>
SECTION 3.09. Litigation and Claims.......................... 19
SECTION 3.10. Taxes.......................................... 20
SECTION 3.11. Certain Agreements............................. 21
SECTION 3.12. Benefit Plans.................................. 22
SECTION 3.13. Insurance...................................... 26
SECTION 3.14. Conduct of CFC to Date......................... 26
SECTION 3.15. Material Adverse Change........................ 29
SECTION 3.16. Properties, Leases and Other Agreements........ 29
SECTION 3.17. No Untrue Statements........................... 30
SECTION 3.18. Existence and Enforceability of Loans.......... 30
SECTION 3.19. Not in Default................................. 32
SECTION 3.20. Trust Validity; Authority...................... 33
SECTION 3.21. Best Knowledge................................. 33

ARTICLE IV

Representations and Warranties of United

SECTION 4.01. Organiztion, Standing and Power................ 34
SECTION 4.02. Authority...................................... 35

ARTICLE V

Covenants of CFC, Ballentine and ESOT

SECTION 5.01. Affirmative Covenants.......................... 36
SECTION 5.02. Negative Covenants............................. 37
SECTION 5.03. Access and Information......................... 42
SECTION 5.04. Update Disclosure; Breaches.................... 43
SECTION 5.05. Vote of CFC Shareholders....................... 43
SECTION 5.06. Correction of Deficiencies..................... 44
</TABLE>

<PAGE> 4
<TABLE>
<CAPTION>
SECTION PAGE
- - - ------- ----
ARTICLE VI

Additional Agreements
<S> <C> <C>
SECTION 6.01. Shareholders Meeting.......................... 44
SECTION 6.02. Legal Conditions to Merger.................... 44
SECTION 6.03. Reports....................................... 45
SECTION 6.04. Brokers or Finders............................ 46
SECTION 6.05. Reasonable Efforts............................ 46
SECTION 6.06. Governmental and Other Third Party
Approvals.................................... 47

ARTICLE VII

Conditions Precedent

SECTION 7.01. Conditions to Each Party's Obligation
to Effect the Merger.......................... 48
SECTION 7.02. Conditions to Obligations of United........... 49
SECTION 7.03. Conditions to Obligations of CFC,
Ballentine and ESOT........................... 53

ARTICLE VIII

Termination and Amendment

SECTION 8.01. Termination.................................. 55
SECTION 8.02. Effect of Termination........................ 57
SECTION 8.03. Amendment.................................... 57
SECTION 8.04. Extension; Waiver............................ 58

ARTICLE IX

General Provision

SECTION 9.01. Notices...................................... 58
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
SECTION PAGE
- - - ------- ----
<S> <C> <C>
SECTION 9.02. Interpretation................................. 59
SECTION 9.03. Counterparts................................... 60
SECTION 9.04. Entire Agreement............................... 60
SECTION 9.05. Governing Law.................................. 60
SECTION 9.06. Publicity...................................... 60
SECTION 9.07. Assignment..................................... 61
SECTION 9.08. Knowledge of the Parties...................... 61
SECTION 9.09. Expenses....................................... 61
SECTION 9.10. Survival of Representations
and Warranties............................... 62

</TABLE>

EXHIBIT A Plan of Merger
EXHIBIT 2.01 (d) Benefits Under ESI and DDI Plans
EXHIBIT 3.12 Benefit Plans
EXHIBIT 7.02(e) Agreement to Cancel Stock Options
EXHIBIT 7.02 (f) Management Services and Noncompetition
Agreement
EXHIBIT 7.02(i) Agreement to Termination of ESI and
DDI Plans
EXHIBIT 7.02(j) Agreement to Terminate Shareholders
Agreement
<PAGE> 6
INDEX OF DEFINED TERMS

Section

ABCA . . . . . . . . . . . . . . . . . 1.01

Agreement. . . . . . . . . . . . . . . Page 1

Articles of Merger . . . . . . . . . . 1.02

ASBD . . . . . . . . . . . . . . . . . 3.06

Bank . . . . . . . . . . . . . . . . . Page 1

Benefit Plans . . . . . . . . . . . . 3.12(a)

BHC Act. . . . . . . . . . . . . . . . 3.01

CCC . . . . . . . . . . . . . . . . . Page 1

CFC . . . . . . . . . . . . . . . . . Page 1

CFC Benefit Plans. . . . . . . . . . . 3.12(a)

CFC Common Stock . . . . . . . . . . . Page 1

CFC Financial Statements . . . . . . . 3.05(a)

CFC Permits . . . . . . . . . . . . . 3.08

CFC Property . . . . . . . . . . . . . 3.08

CFC Reports. . . . . . . . . . . . . . 3.06

Closing . . . . . . . . . . . . . . . 1.03

Closing Date . . . . . . . . . . . . . 1.03

Code . . . . . . . . . . . . . . . . . 3.12(a)

Commissioner . . . . . . . . . . . . . 1.03

Competing Transaction. . . . . . . . . 5.02(f)

DDI Agreements . . . . . . . . . . . . 2.01(d)

DDI Participants . . . . . . . . . . . 2.01(d)

Effective Time . . . . . . . . . . . . 1.02

Environmental Laws . . . . . . . . . . 3.08

<PAGE> 7

ERISA . . . . . . . . . . . . . . . . 3.12(a)

ESI Agreements . . . . . . . . . . . . 2.01(d)

ESI Participants . . . . . . . . . . . 2.01(d)

ESOP . . . . . . . . . . . . . . . . . 2.01(f)

ESOT . . . . . . . . . . . . . . . . . Page 1

Exchange Act . . . . . . . . . . . . . 3.04

FDIC . . . . . . . . . . . . . . . . . 3.02

Federal Reserve Board . . . . . . . . 1.03

Governmental Entity . . . . . . . . . 3.04

Injunction . . . . . . . . . . . . . . 7.01(d)

IRS . . . . . . . . . . . . . . . . . 3.10

Laws . . . . . . . . . . . . . . . . . 3.08

Merger . . . . . . . . . . . . . . . . Page 1

Merger Agreements. . . . . . . . . . . Page 2

OCC . . . . . . . . . . . . . . . . . 1.03

Plan of Merger . . . . . . . . . . . . Page 1

Purchase Price . . . . . . . . . . . . 2.01(a)

Tax . . . . . . . . . . . . . . . . . 3.10

Toxic Substances . . . . . . . . . . . 3.08

United . . . . . . . . . . . . . . . . Page 1

Violation. . . . . . . . . . . . . . . 3.04

Voting Debt. . . . . . . . . . . . . . 3.03

<PAGE> 8

AGREEMENT AND PLAN OF REORGANIZATION

This Agreement and Plan of Reorganization ("Agreement") is made as of
September 3, 1993, by and between First United Bancshares, Inc. ("United"),
Commerce Financial Corporation ("CFC"), John P. Ballentine ("Ballentine") and
Commerce Financial Corporation Employee Stock Ownership Trust ("ESOT").

WHEREAS, Ballentine and ESOT own a controlling interest in CFC and CFC
owns one hundred percent (100%) of the issued and outstanding shares of capital
stock of Commercial Bank at Alma, Alma, Arkansas ("Bank") and Bank owns one
hundred percent (100%) of the issued and outstanding shares of capital stock of
Commercial Capital Corporation ("CCC"); and

WHEREAS, United desires to acquire one hundred percent (100%) of the
common stock of CFC (the "CFC Common Stock"), and Ballentine and ESOT wish to
sell the CFC Common Stock they own upon the terms and conditions hereinafter
set forth through the merger of CFC with and into United (the "Merger")
pursuant to a Plan of Merger in substantially the form attached hereto as
Exhibit A (the "Plan of Merger"); and

WHEREAS, the respective Boards of Directors of United and CFC believe that
such proposed Merger and the exchange of the Purchase Price (as defined in
Section 2.01(a) hereof) for the CFC Common Stock, pursuant and subject to the
terms of this Agreement and the Plan of Merger (the "Merger Agreements"), is
desirable and in the best short-term and long-term interests of their
respective corporations and shareholders; and

WHEREAS, United, CFC, Ballentine and ESOT desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger;

NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties hereto agree as
follows:

ARTICLE I

The Merger

1.01. The Merger. Subject to the terms and conditions of this Agreement,
United, CFC, Ballentine and ESOT agree to effect the Merger of CFC with and
into United in accordance with the Arkansas Business Corporation Act (the
"ABCA").

1.02. Effective Time of the Merger. Subject to the provisions of the Merger
Agreements, articles of merger (the

1
<PAGE> 9
"Articles of Merger") shall be duly prepared and executed by United and CFC and
thereafter delivered to the Secretary of State of Arkansas for filing, as
provided in the ABCA, as soon as practicable on or after the Closing Date (as
defined in Section 1.03). The Merger shall become effective upon the filing of
the Articles of Merger with the Secretary of State of Arkansas or at such time
within two business days thereafter as is provided in the Articles of Merger
(the "Effective Time").

1.03. Closing. The closing of the Merger (the "Closing") will take place
at the offices of United at a time and on a date (the "Closing Date") to be
specified by the parties as soon as reasonably practicable after the later to
occur of (i) approval of the Merger by the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") and the expiration of any waiting
period, and (ii) approval by other regulatory agencies and third parties,
including the Office of the Comptroller of the Currency ("OCC") and the
Arkansas State Bank Commissioner ("Commissioner"), and the expiration of all
waiting periods. This Agreement and the obligations of all parties hereunder to
close the transactions provided for herein shall terminate if the Closing does
not occur on or before December 31, 1993 unless extended by United and CFC.

1.04. Repayment of CFC Indebtedness. At the Closing, United shall pay off
in full the outstanding principal balance and all accrued and unpaid interest
owing by CFC to First National Bank of Ft. Smith, Ft. Smith, Arkansas, under
that certain term promissory note originally dated December 29, 1986 and
amended December 27, 1986, in the original principal amount of $1,900,000.00
executed by CFC pursuant to that certain term loan agreement of even date
therewith between CFC and said lender.

ARTICLE II

Effect of the Merger on CFC Common Stock

2.01. Effect on Common Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any of the CFC
Common Stock:

(a) Conversion of CFC Common Stock. One hundred percent of the
issued and outstanding shares (excluding treasury shares) of CFC Common Stock
shall be converted into the right to receive the amount of $70.59 per share
("Purchase Price").

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<PAGE> 10
except the right to receive the Purchase Price therefor upon the surrender of
such certificate in accordance with the Plan of Merger.

(c) CFC Stock Options. CFC and Ballentine hereby agree that none
of the outstanding options to purchase CFC common stock held by Ballentine
shall be exercised between the date of this Agreement and the Closing Date.
Upon the Closing, all of said options shall be cancelled and Ballentine shall
be due no consideration therefor. At Closing, United shall pay all others who
own unexercised options to purchase common stock of CFC $19.30 per optioned
share, upon agreement by the holders thereof, to surrender all rights pursuant
to such options in exchange for such payments. Between the date hereof and the
Closing Date neither CFC, Bank nor CCC will (i) grant any stock options or (ii)
issue any new or treasury stock except pursuant the lawful exercise of stock
options to purchase common stock of CFC outstanding as of the date hereof.

(d) Termination of ESI and DDI Agreements. United shall have no
liability to employees or directors of CFC or Bank for benefits of such
employees or directors of CFC or Bank under the Executive Supplemental Income
Agreements ("ESI Agreements") or Directors' Deferred Income Agreements ("DDI
Agreements") entered into between Bank and certain officers of Bank ("ESI
Participants") and the Bank and certain directors of Bank ("DDI Participants")
as more specifically specified in the information provided to United pursuant to
Section 3.12(d). As soon as practicable after the date hereof and effective on
or prior to September 30, 1993, CFC and Bank shall take all action necessary
and appropriate to terminate the ESI Agreements and the DDI Agreements and
distribute accrued benefits. Such action shall specifically include, without
limitation, entering into written agreements, in a form and for amounts
satisfactory to United, with the ESI Participants and the DDI Participants in
which all ESI Participants and DDI Participants agree (1) to terminate death
benefits on or prior to September 30, 1993; (2) that ESI Participants and DDI
Participants have no right to any insurance policy indirectly funding benefits;
(3) to the present value as of the termination date of the ESI Participants'
and DDI Participants' benefits due on termination of the ESI Agreements and the
DDI Agreements, which amount shall not be more than the individual and
aggregate amounts shown on Exhibit 2.01(d); (4) to accept payment of such
present value amounts as full consideration for all benefits due under the ESI
Agreements and the DDI Agreements; and (5) to release CFC and Bank from any
further liability under the ESI Agreements and the DDI Agreements.

(e) Liquidation of CCC. CFC will cause Bank to liquidate CCC
prior to the Closing Date.

(f) Termination and Distribution of CFC ESOP. United shall have
no liability to employees of CFC

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<PAGE> 11
or Bank for benefits of such employees of CFC or Bank under the Commerce
Financial Corporation Employees Stock Ownership Plan (adopted January 1,
1992)("ESOP"). As soon as practicable after the date hereof and effective as of
the Closing, CFC, Ballentine and ESOT shall take all action necessary and
appropriate to terminate the ESOP and the ESOT and distribute account balances,
including amending the ESOP to allow single distribution on termination of the
ESOP and directing appropriate action of CFC's board of directors and the ESOP
Board of Trustees, Administration Committee, and the plan administrator of such
plan to terminate the ESOP and the ESOT in accordance with Section 21 of the
ESOP, as amended, and paragraph K of the ESOT and applicable law and make a
timely final distribution of plan assets to each plan beneficiary in a single
distribution in accordance with the plan, as amended.

2.02. Approval By CFC Shareholders. Consummation of the Merger shall be
contingent upon its approval by the legally required vote of the shares of CFC
Common Stock at a shareholders meeting duly called for the purpose of voting on
the Merger. Ballentine and ESOT shall vote in favor of the Merger and CFC and
Ballentine and ESOT shall use their best efforts to cause other shareholders to
vote in favor of the Merger; provided, ESOT shall be obligated to vote in favor
of the Merger only those shares as to which participants in the ESOP to whom
such shares have been allocated direct the Trustees of the ESOT to vote such
shares in favor of the Merger.

ARTICLE III
Representations and Warranties
of CFC, Ballentine and ESOT

CFC, Ballentine and ESOT hereby represent and warrant to the best of their
knowledge (as defined in Section 3.21) to United the following, provided that
the representation and warranty of ESOT shall apply to Section 3.20 only:

3.01. Organization, Standing and Power of CFC and CCC. CFC and CCC are
corporations duly organized, validly existing and in good standing under the
laws of the State of Arkansas and have all requisite corporate power and
authority to own, lease and operate their properties and to carry on their
businesses as now being conducted, except where the failure to have such power
or authority would not have a material adverse effect on the business,
operations or financial condition of CFC, CCC or Bank. Neither CFC nor CCC is
qualified to do business in any other state or foreign jurisdiction, and their
ownership or leasing of property or the conduct of their businesses do not
require either of them to be so qualified. CFC is registered as a bank holding
company with the Federal Reserve Board under the Bank Holding Company Act of
1956, as amended (the "BHC Act"). CFC and CCC have delivered to United true,
accurate and complete copies of their currently effective Articles of
Incorporation and Bylaws, including all amendments thereto.

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<PAGE> 12
3.02. Ownership, Organization, Standing and Power of Bank. CFC directly
and beneficially owns all of the shares of the outstanding capital stock of
Bank. Bank directly and beneficially owns all of the shares of the outstanding
capital stock of CCC. Bank and CCC are CFC's only subsidiaries. No equity
securities of Bank or CCC are or may become required to be issued by reason of
any option, warrant, call, right or agreement of any character whatsoever;
there are outstanding no securities or rights convertible into or exchangeable
for shares of any capital stock of Bank or CCC; and there are no other
contracts, commitments, understandings or arrangements by which either Bank or
CCC is bound to issue additional shares of its capital stock or options,
warrants, calls, rights or agreements to purchase or acquire any additional
shares of its capital stock. All of the shares of capital stock of Bank owned
by CFC and all of the shares of capital stock of CCC owned by Bank are fully
paid and nonassessable and are owned free and clear of any claim, lien,
encumbrance or agreement with respect thereto, other than a lien on the capital
stock of Bank given to secure the promissory note described in Section 1.04.
Bank is a banking association duly organized, validly existing and in good
standing under the laws of Arkansas, and has the corporate power and authority
to own or lease its properties and assets and to carry on its business as it is
now being conducted, except where the failure to have such power or authority
would not have a material adverse effect on the business, operations or
financial condition of Bank, CFC or CCC. The deposits of Bank are insured by
the Federal Deposit Insurance Corporation ("FDIC") to the extent provided by
law. Bank has delivered to United true, accurate and complete copies of the
currently effective Articles of Incorporation and Bylaws of Bank, including all
amendments thereto. Except for securities held in its capacity as fiduciary,
Bank does not own beneficially, directly or indirectly, any class of equity
securities, partnership interests or similar interests of any corporation (other
than CCC), bank, partnership, limited partnership, business trust, association
or similar organization.

As of the date hereof, the authorized capital stock of Bank consists of
8,000 shares of common stock, $25.00 par value, of which 8,000 shares are
outstanding and are owned by CFC. Bank has been chartered as a banking
institution for more than 10 years.

3.03. Capital Structure. As of the date hereof, the authorized capital
stock of CFC consists of 104,000 shares of common stock, $1.00 par value. As of
the date hereof, 51,610 shares of CFC Common Stock are outstanding, of which
amount 6,103.728 shares of CFC common stock are held by CFC in its treasury. As
of the date hereof, the authorized capital stock of CCC consists of 1,000
shares of common stock, $1.00 par value, all of which are issued and
outstanding. Neither CFC, Bank nor CCC has issued and has outstanding bonds,
debentures, notes or other indebtedness having the right to vote (or convertible
into securities having the right to vote) on any matters on which shareholders
may vote

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<PAGE> 13
("Voting Debt"). All outstanding shares of CFC Common Stock are validly issued,
fully paid, nonassessable, and not subject to preemptive rights, and those
owned by Ballentine and ESOT are free and clear of any claim, lien, encumbrance
or agreement with respect thereto, except for a certain Shareholders Agreement
dated September 9, 1986, as amended, a copy of which has been provided to
United. As of the date of this Agreement there are no options, warrants, calls,
rights, or agreements of any character whatsoever to which CFC, Bank or CCC is
a party or by which CFC, Bank or CCC is obligated to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
any voting debt securities or by which CFC, Bank or CCC is obligated to grant,
extend or enter into any such option, warrant, call, right or agreement.
Immediately before and after the Effective Time, there will be no option,
warrant, call, right or agreement obligating CFC, Bank or CCC to issue, deliver
or sell, or cause to be issued, delivered or sold, any shares of capital stock
or obligating CFC, Bank or CCC to grant, extend or enter into any such option,
warrant, call, right or agreement. Notwithstanding the foregoing, as of the
date hereof Ballentine has an option to purchase 2,275 shares of CFC common
stock and other employees of CFC and Bank have options to purchase 5,692 shares
of CFC common stock.

3.04. Authority. CFC has all requisite corporate power and authority to
enter into this Agreement and the Plan of Merger and, subject only to approval
of this Agreement and the Plan of Merger by the shareholders of CFC and of
applicable regulatory authorities, to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the Plan
of Merger and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the part
of CFC, subject to such approval of this Agreement and the Plan of Merger by
the shareholders of CFC. This Agreement and the Plan of Merger Agreement have
been duly executed and delivered by CFC, and each constitutes a valid and
binding obligation of CFC enforceable in accordance with its terms, except as
the enforceability of the Agreement may be subject to or limited by bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar laws
relating to or affecting the rights of creditors. The execution and delivery of
this Agreement and the Plan of Merger do not, and the consummation of the
transactions contemplated hereby and thereby will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit under, or the
creation of a lien, pledge, security interest or other encumbrance on assets
(any such conflict, violation, default, right of termination, cancellation or
acceleration loss or creation, a "Violation"), pursuant to any provision of (a)
the Articles of Incorporation or Bylaws of CFC, Bank or CCC or (b) any loan or
credit agreement,

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<PAGE> 14

note, mortgage, indenture, lease, or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to CFC, Bank or CCC or their
respective properties or assets. Other than in connection or in compliance
with the provisions of the ABCA, the Securities and Exchange Act of 1934, as
amended, and the rules and regulations thereunder (the "Exchange Act"), and
consents, authorizations, approvals, notices or exemptions required under the
BHC Act, the National Bank Act, Arkansas banking laws, and from other
regulatory agencies, no consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign (a "Governmental Entity"), is required by or with respect to CFC, Bank
or CCC in connection with the execution and delivery of this Agreement and the
Plan of Merger by CFC or the consummation by CFC of the transactions
contemplated hereby and thereby.

3.05. CFC Financial Statements. (a) The (i) consolidated balance sheets of
Bank as of December 31, 1992 and the related consolidated statements of income,
consolidated statements of cash flows and consolidated statements of
shareholders equity for the periods ended December 31, 1992 certified by Beall
& Company, (ii) consolidated balance sheets of Bank as of December 31, 1991 and
the related consolidated statements of income, consolidated statements of cash
flows and consolidated statements of shareholders equity for the periods ended
December 31, 1991 certified by Baird, Kurtz & Dobson, (iii) the unaudited
compilations of the consolidated balance sheets of CFC as of December 31, 1992
and 1991 and the related consolidated statements of income, consolidated
statements of cash flows and consolidated statements of shareholders equity for
the periods ended December 31, 1992 and 1991, and (iv) the internally prepared
financial statements dated July 30, 1993 ("CFC Financial Statements"), copies
of which have been furnished by CFC to United, have been prepared in accordance
with generally accepted accounting principles and practices on a consistent
basis, and present fairly the consolidated financial condition of Bank and of
CFC, as the case may be, at the dates, and the consolidated results of
operations and cash flows for the periods, stated therein. Neither CFC, Bank
nor CCC has any liability of any nature, whether direct, indirect, accrued,
absolute, contingent or otherwise, which is material to CFC, Bank or CCC,
except as provided for or disclosed in the CFC Financial Statements and except
for such of the following liabilities as are incurred in the ordinary course of
business:

(i) deposit liabilities and interest payable thereon,

(ii) federal funds purchased and securities sold under
repurchase agreements and interest payable thereon,

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<PAGE> 15
(iii) other short term borrowings,

(iv) contingent liability upon negotiable instruments
endorsed for the purpose of collection,

(v) taxes,

(vi) accounts payable of the operating business,

(vii) salaries and benefits payable,

(viii) unearned income and premiums,

(ix) abandoned and garnished accounts, and

(x) letters of credit and similar commitments.

(b) Without limitation of the foregoing, the
allowance for loan losses included in the CFC Financial Statements was adequate
as of the date thereof and is presently adequate to absorb potential losses in
the loan portfolios of CFC, Bank and CCC. There are no known facts which
should cause the amount of such allowance for loan losses to be increased.

3.06. CFC Reports. CFC, Bank and CCC have filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that were and are required to be filed with (i) the
Federal Reserve Board, (ii) the FDIC, (iii) the Arkansas State Bank Department
(the "ASBD") and (iv) any other applicable securities, banking or regulatory
authorities (all such reports and statements are collectively referred to
herein as the "CFC Reports"). As of their respective dates, the CFC Reports
complied in all material respects with all of the statutes, rules and
regulations enforced or promulgated by the regulatory authority with which they
were filed and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading.

3.07. Information Supplied. None of the information supplied or to
be supplied by CFC for inclusion or incorporation by reference in any document
to be filed with the Securities and Exchange Commission, the Federal Reserve
Board, or any regulatory agency in connection with the transactions
contemplated hereby, will contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. CFC has disclosed to United all financial and other
information reasonably necessary to enable United to make informed judgments
concerning the state of the financial and other conditions and affairs of CFC,
Bank and CCC.

3.08. Authorizations; Compliance with Applicable Laws. CFC, Bank
and CCC hold all authorizations, permits,

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<PAGE> 16
licenses, variances, exemptions, orders and approvals of all Governmental
Entities which are material to the operations of the businesses of CFC, Bank or
CCC (the "CFC Permits"), including appropriate authorizations from the ASBD.
CFC, Bank and CCC are in compliance with the terms of the CFC Permits, except
where the failure so to comply would not have a material adverse effect on CFC,
Bank or CCC. The businesses of CFC, Bank and CCC are not being conducted in
violation of any federal, state or local law, statute, ordinance or regulation
of any Governmental Entity (collectively "Laws"), including, without
limitation, Regulation O of the Federal Reserve Board, except for possible
violations which individually or in the aggregate do not and, insofar as
reasonably can be foreseen, in the future will not, have a material adverse
effect on CFC, Bank or CCC. As of the date hereof, no investigation or review
by any Government Entity with respect to CFC, Bank or CCC is pending or
threatened, nor has any Governmental Entity indicated an intention to conduct
the same. Without limiting the foregoing, there have been no acts or omissions
occurring on or with respect to real estate currently or previously owned,
leased or otherwise used by CFC, Bank or CCC, or in which CFC, Bank or CCC has
or had an investment or security interest (by mortgage, deed of trust, or
otherwise), including, without limitation, properties under foreclosure,
properties held by CFC, Bank or CCC in its capacity as a trustee, or properties
in which any venture capital or similar unit of CFC, Bank or CCC has or had an
interest (the "CFC Property"), which constitute or result, or may have
constitued or resulted, in the creation of any federal, state or common law
nuisance (whether or not the nuisance condition is, or was, foreseen or
unforeseen) or which do not comply or have not complied with federal, state or
local environmental laws including, without limitation, the Clean Water Act,
the Clean Air Act, the Resource Conservation and Recovery Act, the Toxic
Substances Control Act and the Comprehensive Environmental, Response,
Compensation and Liability Act, as amended, and their state and local law
counterparts, all rules and regulations promulgated thereunder and all other
legal requirements associated with the ownership and use of the CFC Property
(collectively, "Environmental Laws"), and as a result of which acts or
omissions CFC, Bank or CCC is subject to or reasonably likely to incur a
material liability or suffer a material diminution in value of any interest.
Neither CFC, Bank nor CCC is subject to or reasonably likely to incur a
material liability or suffer a material diminution in value of any interest as
a result of its ownership, lease, operation, or use of any CFC Property or as a
result of its investment or security interest (as described above) in any CFC
Property (a) that is contaminated by or contains any hazardous waste, toxic
substances or related materials, including without limitation asbestos, PCBs,
pesticides, herbicides, petroleum products, substances defined as "hazardous
substances" or "toxic substances" in the Environmental Laws, and any other
substances or waste that is hazardous to human health or the environment
(collectively, "Toxic Substances"), or (b) on

9
<PAGE> 17
which any Toxic Substance has been stored, disposed of, placed, or used in the
construction thereof. As of the date of this Agreement, no claim, action, suit
or proceeding is pending against CFC, Bank or CCC relating to the CFC Property
before any court or other governmental authority or arbitration tribunal
relating to Toxic Substances, pollution or the environment, and there is no
outstanding judgment, order, writ, injunction, decree, or award against or
affecting CFC, Bank or CCC with respect thereto.

3.09. Litigation and Claims. Except as disclosed in this Agreement
(a) neither CFC, Bank nor CCC is subject to any continuing order of, or written
agreement or memorandum of understanding with, or continuing material
investigation by, any federal or state banking or insurance authority or other
Governmental Entity, or any judgment, order, writ, injunction, decree or award
of any Governmental Entity or arbitrator, including, without limitation,
cease-and-desist or other orders of any bank regulatory authority, (b) there is
no claim of any kind, action, suit, litigation, proceeding, arbitration,
investigation, or controversy affecting CFC, Bank or CCC pending or threatened,
which will have or can reasonably be expected to have a material adverse effect
on CFC, Bank or CCC and (c) there are no uncured material violations, or
violations with respect to which material refunds or restitutions may be
required, cited in any compliance report to CFC, Bank or CCC as a result of the
examination by any bank regulatory authority.

3.10. Taxes. CFC, Bank and CCC have filed all tax returns required
to be filed by them and have paid or have set up an adequate reserve for the
payment of, all taxes required to be paid as shown on such returns, and the
most recent CFC Financial Statements reflect an adequate reserve for all taxes
payable by CFC, Bank and CCC accrued through the date of such financial
statements. As of the date hereof, (a) the most recent tax year through which
the United States Internal Revenue Service ("IRS") has completed its
examination of CFC, Bank and CCC is December 31, 1988, (b) there is no
examination pending by the IRS with respect to CFC, Bank or CCC, (c) neither
CFC, Bank nor CCC has executed or filed with the IRS any agreement which is
still in effect extending the period for assessment and collection of any
federal tax, and (d) there are no existing material disputes as to federal,
state, or local taxes due from CFC, Bank or CCC. There are no material liens
for taxes upon the assets of CFC, Bank or CCC, except for statutory liens for
taxes not yet delinquent. Neither CFC, Bank nor CCC is a party to any action
or proceeding by any governmental authority for assessment and collection of
taxes, and no claim for assessment and collection of taxes has been asserted
against any of them. For the purpose of this Agreement, the term "tax"
(including, with correlative meaning, the terms "taxes" and "taxable") shall
include all federal, state, and local income, profits, franchise, gross
receipts, payroll, sales, employment, use, personal and real property,
withholding, excise and other taxes, duties or assessments of any nature
whatsoever,

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<PAGE> 18
together with all interest, penalties and additions imposed with respect to
such amounts. CFC, Bank and CCC have withheld from their employees and timely
paid to the appropriate governmental agency proper and accurate amounts for all
periods through the date hereof in material compliance with all tax withholding
provisions of applicable federal, state, and local laws (including without
limitation income, social security and employment tax withholding for all types
of compensation).

3.11. Certain Agreements. Neither CFC, Bank nor CCC is a party to
any (i) consulting agreement not terminable on 60 days' or less notice or
employment agreement or other agreement providing any term of employment,
compensation guarantee, or severance or supplemental retirement benefit, (ii)
union, guild or collective bargaining agreement, (iii) agreement or plan, any
of the benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of the transactions contemplated by
this Agreement, (iv) any stock option plan, stock appreciation rights plan,
restricted stock plan, stock purchase plan or similar plan granting rights to
acquire stock in CFC, Bank or CCC except as specifically disclosed in Section
2.01(d) and (e) and Section 3.03 of this Agreement, or (v) contract containing
covenants which limit the ability of CFC, Bank or CCC to compete in any line of
business or with any person or which involve any restriction of the
geographical area in which, or method by which, CFC, Bank or CCC may carry on
its business (other than as may be required by law or applicable regulatory
authorities).

3.12. Benefit Plans. (a) Exhibit 3.12 hereto lists (i) each
employee bonus, incentive, deferred compensation, stock purchase, stock
appreciation right, stock option and severance pay plan, (ii) each pension,
profit sharing, stock bonus, thrift, savings and employee stock ownership plan,
and (iii) every other employee benefit plan (within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")
(collectively "Benefit Plans"), which CFC, Bank or CCC maintains or to which
CFC, Bank or CCC contributes on behalf of current or former employees. All of
the plans and programs listed in Exhibit 3.12 (collectively, "CFC Benefit
Plans") comply in all material respects with all applicable requirements of
ERISA and all other applicable federal and state laws, including without
limitation the reporting and disclosure requirements of Part 1 of Title I of
ERISA. With respect to the CFC Benefit Plans, individually and in the
aggregate, no event has occurred, and there exists no condition or set of
circumstances, in connection with which CFC, Bank or CCC could be subject to
any liability that is reasonably likely to have a material adverse effect upon
CFC, Bank or CCC (except liability for benefits claims and funding obligations
payable in the ordinary course) under ERISA, the Code or any other applicable
law. Each of the CFC Benefit Plans that

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<PAGE> 19
is intended to be a pension, profit sharing, stock bonus, thrift,
savings or employee stock ownership plan that is qualified under Section 401(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), has been
determined by the IRS to qualify under Section 401(a) of the Code, or an
application for the determination of such qualification will be made to the IRS
under Section 401(b) of the Code and the regulations thereunder, and there
exist no circumstances that would materially adversely affect the qualified
status of any such CFC Benefit Plan under that section. Each CFC Benefit Plan
that is a defined benefit pension plan has assets with an aggregate value that
exceeds the actuarially present value of its liability for accrued benefits as
determined on the basis of the actuarial assumptions used for the most recent
actuarial valuation of such Plan, no such Plan has incurred an accumulated
funding deficiency within the meaning of Section 412(a) of the Code, and no
such Plan is a "multi-employer plan" within the meaning of Section 3(37) of
ERISA. There is no pending or threatened litigation, governmental proceeding
or investigation against or relating to any CFC Benefit Plan, and there is no
reasonable basis for any material proceedings, claims, actions or proceedings
against any Plan. No "reportable event" (as defined in Section 4043(b) of
ERISA) (other than a "reportable event" for which the 30-day notice requirement
has been waived by the Pension Benefit Guaranty Corporation) has occurred with
respect to any CFC Benefit Plan, and no CFC Benefit Plan has engaged in a
"prohibited transaction" (as defined in Section 406 of ERISA and Section
4975(c) of the Code) since the date on which said sections became applicable to
such Plan which could reasonably result in a material liability.

(b) CFC has delivered to United copies of (i) each CFC Benefit
Plan, (ii) the most recent summary plan descriptions of each CFC Benefit Plan,
(iii) each trust agreement, insurance policy or other instrument relating to
the funding of any CFC Benefit Plan, (iv) the most recent Annual Reports (Form
5500 series) and accompanying schedules filed with the IRS or United States
Department of Labor with respect to each CFC Benefit Plan, (v) the most recent
determination letter issued by the IRS with respect to each CFC Benefit Plan
that is intended to qualify under Section 401 of the Code, (vi) the most recent
available financial statements for each CFC Benefit Plan that has assets, (vii)
the most recent actuarial report for any CFC Benefit Plan that is a defined
benefit pension plan, and if any such Plan was amended subsequent to the date
of such report, information about the financial effects of such amendment and
(viii) the most recent audited financial statements for each CFC Benefit Plan
for which audited financial statements are required by ERISA.

(c) CFC has delivered to United with respect to the ESOP the
most recent schedules which accurately and fairly show the Capital
Accumulations and Account Balances for each and every Participant and

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<PAGE> 20
Beneficiary of the ESOP, the ESOT has assets sufficient to satisfy all account
balances and benefit liabilities, and CFC has the authority under the ESOP and
the ESOT to terminate the ESOP and the ESOT, to amend the ESOP to allow for
single distributions of Capital Accumulations and Account Balances on
termination of the ESOP, and shall have authority to distribute the Capital
Accumulations and Account Balances in single distributions on termination of
the ESOP.

(d) CFC has delivered to United with respect to the ESI
Agreements and the DDI Agreements the most recent schedules which accurately
and fairly show the individual and aggregate present value as of September 30,
1993, of the ESI Participants' benefits and the DDI Participants' benefits for
each and every Participant and Beneficiary of all ESI Agreements and all DDI
Agreements. Such amounts are not more than the individual and aggregate
amounts shown on Exhibit 2.01(d). CFC and Bank have the authority to terminate
the ESI Agreements and the DDI Agreements, the Bank is the owner of all
policies of insurance indirectly funding the benefits and has the right to
cancel such policies, and CFC and Bank have authority to distribute the ESI
Participants' benefits and the DDI Participants' benefits in single
distributions on or after termination of the ESI Agreements and the DDI
Agreements.

3.13. Insurance. CFC has delivered to United correct and complete
summaries of all material policies of insurance of CFC, Bank and CCC currently
in effect. Neither CFC, Bank nor CCC has any liability for unpaid
premiums or premium adjustments not properly reflected on the CFC Financial
Statements.

3.14. Conduct of CFC to Date. Except as contemplated by this Agreement
and the Plan of Merger, from and after December 31, 1992 through the date of
this Agreement: (a) CFC, Bank and CCC have carried on their respective
businesses in the ordinary and usual course consistent with past practices, (b)
CFC, Bank and CCC have not issued or sold any capital stock or issued or sold
any corporate debt securities which would be classified as long term debt on
the balance sheet of CFC, Bank or CCC, (c) CFC, Bank and CCC have not
granted any option for the purchase of capital stock (except as referred to in
Section 3.03), effected any stock split, or otherwise changed their
capitalization, (d) CFC has not declared, set aside, or paid any cash or stock
dividend or other distribution in respect to its capital stock except for usual
quarterly cash dividends, no greater than amounts paid in the fourth quarter of
1992, (e) neither CFC, Bank nor CCC has incurred any material obligation or
liability (absolute or contingent), except normal trade or business obligations
or liabilities incurred in the ordinary course of business, or mortgaged,
pledged, or subjected to lien, claim, security interest, charge, encumbrance or
restriction any of its assets or properties, (f) neither CFC, Bank nor CCC has
discharged or satisfied any material lien, mortgage, pledge, claim, security
interest, charges, encumbrance, or restriction or paid any

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<PAGE> 21
material obligation or liability (absolute or contingent), other than
in the ordinary course of business, (g) neither CFC, Bank nor CCC has sold,
assigned , transferred, leased, exchanged, or otherwise disposed of any of its
properties or assets other than for a fair consideration in the ordinary course
of business, (h) neither CFC, Bank nor CCC has increased the rate of
compensation of, or paid any bonus to, any of its directors, officers, or other
employees, except merit or promotion increases (including bonuses paid in
January, 1993) in accordance with existing policy; entered into any new, or
amended or supplemented any existing, employment, management, consulting,
deferred compensation, severance, or other similar contract; adopted, entered
into, terminated, amended or modified any CFC Benefit Plan in respect of any of
present or former directors, officers or other employees; or agreed to do any
of the foregoing, (i) neither CFC, Bank nor CCC has suffered any material
damage, destruction, or loss, whether as the result of flood, fire, explosion,
earthquake, accident, casualty, labor trouble, requisition or taking of
property by any government or any agency of any government, windstorm, embargo,
riot, act of God, or other similar or dissimilar casualty or event or
otherwise, whether or not covered by insurance, (j) neither CFC, Bank nor CCC
has canceled or compromised any debt to an extent exceeding $25,000.00 owed to
CFC, Bank or CCC or claim to an extent exceeding $25,000.00 asserted by CFC,
Bank or CCC, (k) neither CFC, Bank nor CCC has entered into any transaction,
contract, or commitment outside the ordinary course of its business, (1)
neither CFC, Bank nor CCC has entered, or agreed to enter, into any agreement
or arrangement granting any preferential right to purchase any of its material
assets, properties or rights or requiring the consent of any party to the
transfer and assignment of any such material assets, properties or rights, (m)
there has not been any change in the method of accounting or accounting
practices of CFC, Bank and CCC, and (n) CFC, Bank and CCC have kept all records
in accordance with all regulatory and statutory requirements and in accordance
with industry standards specified by the American Bankers Association, and have
retained such records for the periods required by statute, regulation or
American Bankers Association industry standards.

3.15. Material Adverse Change. Since December 31, 1992, there has been no
material adverse change in the financial condition, results of operations or
business of CFC, Bank and CCC.

3.16. Properties, Leases and Other Agreements. Except (i) as may be
reflected in the CFC Financial Statements, (ii) for any lien for current
taxes not yet delinquent, (iii) for pledges to secure deposits and (iv) for
such other liens, security interests, claims, charges, options or other
encumbrances and imperfections of title which do not materially affect the
value or interfere with or impair the present and continued use of personal or
real property reflected in the CFC Financial Statements or acquired since the
date of such Statements, CFC, Bank and CCC have good title, free and clear

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<PAGE> 22
of any liens, security interests, claims, charges, options or other
encumbrances to all of the personal and real property reflected in the CFC
Financial Statements, and all personal and real property acquired since the
date of such CFC Financial Statements, except such personal and real property
as has been disposed of in the ordinary course of business. Substantially all
of the buildings and equipment in regular use by CFC, Bank and CCC have been
reasonably maintained and are in good and serviceable condition, reasonable
wear and tear excepted. All leases material to CFC, Bank and CCC pursuant to
which CFC, Bank or CCC, as lessee, leases real or personal property are valid
and effective in accordance with their respective terms and there is not, under
any of such leases, any material existing default by CFC, Bank or CCC, or, to
the best knowledge of CFC and Ballentine, any other party thereto, or any event
which with notice or lapse of time or both would constitute such a material
default. No options to renew said leases have lapsed and the terms of the
leases govern the rights of the respective landlords of CFC, Bank and CCC.

3.17. No Untrue Statements. No representation or warranty hereunder or
information contained in any financial statement or any other document
delivered to United pursuant to this Agreement contains any untrue statement of
a material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading.

3.18. Existence and Enforceability of Loans. With respect to all loans to
borrowers which are payable to CFC, Bank or CCC either directly or as a
participant and except for such imperfections as do not have a net adverse
effect on the business, operations or financial condition of either CFC, Bank
or CCC in excess of $25,000.00:

(a) All loans were made for good, valuable and adequate
consideration in the normal and ordinary course of business, and the notes
and other evidences of indebtedness and any loan agreements or security
documents executed in connection therewith are true and genuine and
constitute the valid and legally binding obligations of the borrowers to
whom the loans were made and are legally enforceable against such
borrowers in accordance with their terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium, and similar debtor relief laws
from time to time in effect, as well as general principles of equity
applied by a court of proper jurisdiction;

(b) The amounts represented to United as the balances owing on the
loans are the correct amounts actually and unconditionally owing, are
undisputed, and are not subject to any offsets, credits, deductions or
counterclaims;

(c) The collateral securing each loan as referenced in a loan
officer worksheet, loan summary report or similar interoffice loan
documentation is in fact the collateral held by CFC, Bank or CCC to secure
each loan;

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<PAGE> 23
(d) CFC, Bank or CCC has possession of all loan document files and
credit files for all loans held by them containing promissory notes and
other relevant evidences of indebtedness with original signatures of their
borrowers and guarantors;

(e) CFC, Bank and CCC hold validly perfected liens or security
interests in the collateral granted to them to secure all loans as
referenced in the loan officer worksheets, loan summary reports or similar
interoffice loan documentation and the loan or credit files contain the
original security agreements, mortgages, or other lien creation and
perfection documents unless originals of such documents are filed of
public record;

(f) Each lien or security interest of CFC, Bank or CCC in the
collateral held for each loan is properly perfected in the priority
intended to be held by CFC, Bank or CCC and described in the loan officer
worksheets, loan summary reports or similar interoffice loan documentation
contained in the loan document or credit files;

(g) CFC, Bank and CCC are in possession of all collateral that the
loan document files or credit files indicate they have in their
possession;

(h) All guaranties granted to CFC, Bank and CCC to insure payment of
loans constitute the valid and legally binding obligations of the
guarantors and are enforceable in accordance with their terms;

(i) With respect to any loans in which CFC, Bank and CCC have sold
participation interests to another bank or other financial institution,
none of the buyers of such participation interests are in default under
any participation agreements.

3.19. Not in Default. Neither CFC, Bank nor CCC is in default under any
material agreement, ordinance, resolution, decree, bond, note, indenture, order
or judgment to which it is a party, by which it is bound, or to which its
properties or assets are subject.

3.20. Trust Validity; Authority. The ESOT has been duly created under the
laws of the State of Arkansas and is a validly existing trust. The undersigned
trustees executing this Agreement on behalf of said trust have been duly
appointed, constitute all of the presently acting Trustees of the ESOT and have
all requisite power and authority to execute and deliver this Agreement and to
perform this Agreement in accordance with its terms.

3.21. Best Knowledge. For purposes of the representations and warranties
set forth in this Article III, "the best of their knowledge" means CFC's and
Ballentine's knowledge obtained (i) in the ordinary course of business through

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<PAGE> 24
involvement in the business of CFC, Bank and CCC, and (ii) after reasonable
inquiry and investigation, having reasonable grounds to believe and believing
that the representations and warranties contained herein are true and that
there was, in light of the representations and warranties made, no omission
to state a material fact required to be stated therein or necessary to make
statements therein not false or misleading. The reasonable inquiry and
investigation shall include having made due inquiry of Mary Beth Freeman, Vice
President and Cashier of Bank, Rex Woods, Vice President of Bank, and William
N. Brasher, III, Executive Vice President of Bank and Secretary of CFC, who
shall have affirmed in writing to CFC, Ballentine and United at Closing that
they have read the representations and warranties contained herein; that to the
best of their knowledge, having made reasonable investigation, the
representations and warranties are true and correct in all material respects;
and that they are not aware of any material fact concerning the business or
financial condition of CFC, Bank or CCC which is not disclosed and which would,
in light of the representations and warranties made, make any such
representations and warranties contained herein false or misleading in any
material respect. Ballentine shall make the same affirmation in writing to
Untied at Closing.

ARTICLE IV

Representations and Warranties of United

United hereby represents and warrants to CFC, Ballentine and ESOT as
follows:

4.01. Organization, Standing and Power. United is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Arkansas and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted,
except where the failure to have such power or authority would not have a
material adverse effect on the business, operations or financial condition of
United and its subsidiaries. United is registered as a bank holding company
with the Federal Reserve Board under the BHC Act.

4.02. Authority. Subject only to the approval of this Agreement and the
Plan of Merger by the board of directors of United, United has all requisite
corporate power and authority to enter into this Agreement and the Plan of
Merger and to consummate the transactions contemplated hereby and thereby. Upon
approval by the United board of directors, the execution and delivery of this
Agreement and the Plan of Merger and the consummation of the transactions
contemplated hereby and thereby will have been duly authorized by all necessary
corporate action on the part of United. Subject to the foregoing, this
Agreement and the Plan of Merger have been duly executed and delivered by
United, and each will constitute a valid and binding obligation of United
enforceable in accordance with its terms, except as the enforceability of the
Agreement may be subject to or limited by bankruptcy, insolvency,
reorganization, arrangement, moratorium or

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<PAGE> 25
other similar laws relating to or affecting the rights of creditors. The
execution and delivery of this Agreement and the Plan of Merger do not, and the
consummation of the transactions contemplated hereby and thereby will not,
result in any Violation pursuant to any provision of the Articles of
Incorporation or Bylaws of United or any of its subsidiaries or result in any
Violation of any loan or credit agreement, note, mortgage, indenture, lease, or
other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to United or any of its subsidiaries or their respective properties
or assets. Other than in connection or in compliance with the provisions of
the ABCA, the Exchange Act, and consents, authorizations, approvals, notices or
exemptions required under the BHC Act, the National Bank Act, Arkansas banking
laws, and from other regulatory authorities, no consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to United in connection with the
execution and delivery of this Agreement and the Plan of Merger by United or
the consummation by United of the transactions contemplated hereby and thereby,
the failure to obtain which would have a material adverse effect on United or
any United subsidiary.

ARTICLE V

Covenants of CFC, Ballentine and ESOT

5.01. Affirmative Covenants. CFC, Ballentine and ESOT hereby
covenant and agree with United that prior to the Effective Time, unless the
prior written consent of United shall have been obtained, and except as
otherwise contemplated herein, CFC and ESOT will and Ballentine and CFC will
cause Bank and CCC to:

(a) operate their businesses only in the usual, regular and
ordinary course consistent with past practices;

(b) use reasonable efforts to preserve intact their business
organization and assets, maintain their rights and franchises, retain the
services of their officers and key employees (except that they shall have the
right to lawfully terminate the employment of any officer or key employee if
such termination is in accordance with CFC's existing employment procedures)
and maintain their relationships with customers;

(c) use reasonable efforts to maintain and keep their
properties in as good repair and condition as at present, except for
depreciation due to ordinary wear and tear;

(d) use reasonable efforts to keep in full force and effect
insurance and bonds comparable in amount and scope of coverage to that now
maintained; provided, however, that CFC shall not be required to purchase
insurance policies for directors' and officers' liabilities;

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<PAGE> 26
(e) perform in all material respects all obligations required
to be performed by them under all material contracts, leases, and documents
relating to or affecting their assets, properties, and business; and

(f) comply with and perform in all material respects all
obligations and duties imposed upon them by all Laws.

5.02. Negative Covenants. Except as specifically contemplated by
this Agreement, from the date hereof until the Effective Time, CFC shall not
do, and Ballentine and CFC will cause Bank and CCC not to do, without the prior
written consent of United, any of the following:

(a) incur any material liabilities or material obligations,
whether directly or by way of guaranty, including any obligation for borrowed
money whether or not evidenced by a note, bond, debenture or similar
instrument, except in the ordinary course of business consistent with past
practice;

(b) (i) grant any general increase in compensation to their
employees as a class, or to their officers or directors, except in accordance
with past practice or as required by law, or increases which are not material,
or the payment of year-end bonuses in accordance with past practice, (ii)
effect any change in retirement benefits to any class of employees or officers
(unless any such change shall be required by applicable law) which would
increase its retirement benefit liabilities, (iii) adopt, enter into, amend or
modify any CFC Benefit Plan except as provided herein, or (iv) enter into or
amend any employment, severance or similar agreements or arrangements with any
directors or officers, other than as is consistent with the normal severance
policy of CFC in effect on the date hereof;

(c) declare or pay any dividend on, or make any other
distribution in respect of, their outstanding shares of capital stock, except
dividends by Bank or CCC;

(d) (i) redeem, purchase or otherwise acquire any shares of
their capital stock or any securities or obligations convertible into or
exchangeable for any shares of their capital stock, or any options, warrants,
conversion or other rights to acquire any shares of their capital stock or any
such securities or obligations; (ii) merge with or into or consolidate with any
other corporation or bank, or effect any reorganization or recapitalization;
(iii) purchase or otherwise acquire any substantial portion of the assets or
any class of stock, of any corporation, bank or other business; (iv) liquidate,
sell, dispose of, or encumber any assets or acquire any assets, other than in
the ordinary course of business consistent with past practice; or (v) split,
combine or reclassify any of their capital or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of their capital stock;

(e) issue, deliver, award, grant or sell, or authorize or
propose the issuance, delivery, award, grant or

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<PAGE> 27
sale of, any shares of their capital stock of any class (including shares held
in treasury), any Voting Debt or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, Voting Debt or
convertible securities;

(f) initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to facilitate,
any inquiries or the making of any proposal which constitutes, or may
reasonably be expected to lead to, any Competing Transaction (as such term is
defined below), or negotiate with any person in furtherance of such inquiries
or to obtain a Competing Transaction, or agree to or endorse any Competing
Transaction, or authorize any of their officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by CFC, Bank or CCC to take any such action and, upon
learning of such action by any representative, shall take appropriate steps to
terminate such action, CFC shall promptly notify United orally and in writing
of all of the relevant details relating to all inquiries and proposals which it
may receive relating to any of such matters; for purposes of this Agreement,
"Competing Transaction" shall mean any of the following involving CFC, Bank or
CCC; any merger, consolidation, share exchange or other business combination; a
sale, lease, exchange, mortgage, pledge, transfer or other disposition of a
substantial portion of assets; a sale of shares of capital stock (or securities
convertible or exchangeable into or otherwise evidencing, or any agreement or
instrument evidencing, the right to acquire capital stock);

(g) propose or adopt any amendments to their corporate
charters or bylaws;

(h) authorize, recommend, propose or announce an intention to
authorize, recommend or propose, or enter into an agreement in principle with
respect to any acquisition of a material amount of assets or securities or any
release or relinquishment of any material contract rights not in the ordinary
course of business;

(i) except in their fiduciary capacities, purchase any shares
of United common stock;

(j) change any method of accounting in effect at December 31,
1992, or change any method of reporting income or deductions for federal
income tax purposes from those employed in the preparation of the federal
income tax returns for the taxable year ending December 31, 1992, except as may
be required by law or generally accepted accounting principles;

(k) take action which would or is reasonably likely to (i)
adversely affect the ability of either of United or CFC to obtain any necessary
approvals of governmental authorities required for the transactions
contemplated hereby; (ii) adversely affect CFC's ability to perform its
covenants and agreements under this Agreement; or (iii) result in any of the
conditions to the Merger set forth in Article VIII not being satisfied;

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<PAGE> 28
(l) change the lending, investment, liability management and
other material policies concerning the business of CFC, Bank or CCC, unless
required by Law or order or unless such change does not cause a material
adverse effect on CFC, Bank or CCC;

(m) agree in writing or otherwise to do any of the foregoing;

(n) make any single loan or series of loans to one
borrower or related series of borrowers in an aggregate amount greater than
$250,000.00; or

(o) sell or otherwise dispose of securities owned as
investments except at maturity dates or in accordance with past practices for
securities held for sale or trading or in accordance with Generally Accepted
Accounting Principles for securities classified as "held to maturity".

5.03. Access and Information. Upon reasonable notice, CFC shall (and
shall cause Bank and CCC to) afford to United's officers, employees,
accountants, counsel and other representatives, access, during normal business
hours during the period prior to the Effective Time, to all its properties,
books, contracts, commitments and records. During such period, CFC shall (and
shall cause Bank and CCC to) furnish promptly to United (i) a copy of each CFC
Report filed or received by it during such period pursuant to the requirements
of the BHC Act and any other federal or state banking laws promptly after such
documents are available, (ii) the monthly financial statements of CFC, Bank and
CCC (as prepared in accordance with normal accounting procedures) promptly
after such financial statements are available, (iii) a summary of any action
taken by the Boards of Directors, or any committee thereof, of CFC, Bank and
CCC, and (iv) all other information concerning its business, properties and
personnel as United may reasonably request. Unless otherwise required by law,
the parties will hold any information which is nonpublic in confidence until
such time as such information otherwise becomes publicly available through no
wrongful act of either party, and in the event of termination of this Agreement
for any reason each party shall promptly return all nonpublic documents
obtained from any other party, and any copies made of such documents, to such
other party or destroy such documents and copies.

5.04. Update Disclosure; Breaches.

From and after the date hereof until the Effective Time, CFC shall
provide to United prompt notice of any matters which have occurred from and
after the date hereof which are material to the financial condition or
operations of CFC, Bank or CCC or which have a material bearing on any matter
dealt with herein.

CFC shall, in the event it becomes aware of any existing, impending, or
threatened occurrence of any event or condition which would cause or constitute
a material breach (or would have caused or constituted a breach had such event

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occurred or been known prior to the date hereof) of any of CFC's and
Ballentine's and ESOT's warranties, representations or agreements contained or
referred to herein, give prompt written notice thereof to United and use its
best efforts to prevent or promptly remedy the same.

5.05. Vote of CFC Shareholders. Ballentine and ESOT hereby agree to
vote all shares of the CFC Common Stock owned by each in favor of the Merger at
the CFC shareholders meeting called to vote on the Merger, and further agree to
take such other action or cast such other votes as shareholders of CFC as are
reasonably deemed necessary or desirable by United to facilitate consummation
of the transactions contemplated herein; provided, ESOT shall be obligated to
vote in favor of the Merger only those shares as to which participants in the
ESOP to whom such shares have been allocated direct the Trustees of the ESOT to
vote such shares in favor of the Merger.

5.06. Correction of Deficiencies. Prior to the Closing Date CFC shall,
and shall cause Bank and CCC to, correct all deficiencies, exceptions and
systemic problems described in Bank's most recent FDIC compliance examination
as of April 14, 1993.

ARTICLE VI

Additional Agreements

6.01. Shareholder Meetings. CFC shall call a meeting of its shareholders
to be held as promptly as practicable for the purpose of voting upon the Merger
Agreements.

6.02. Legal Conditions to Merger. Each of CFC and United will take all
reasonable actions necessary to comply promptly with all legal requirements it
may have with respect to the Merger (including furnishing all information
required by the Federal Reserve Board or in connection with approvals of or
filings with any other Governmental Entity) and will promptly cooperate with
and furnish information to each other in connection with any such requirements
imposed upon any of them or any of their subsidiaries in connection with the
Merger. Each of CFC and United will, respectively, cause their subsidiaries to,
take in a prompt manner all reasonable actions necessary to obtain (and will
cooperate with each other in obtaining) any agreement, consent, authorization,
order or approval of, or any exemption by, any Governmental Entity or other
public or private third party, required to be obtained or made by United, CFC
or any of their subsidiaries in connection with the Merger or the taking of any
action contemplated thereby or by this Agreement and the Plan of Merger.

6.03. Reports.

(a) Prior to the Effective Time, CFC shall prepare and file as and
when required all CFC Reports.

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(b) CFC shall prepare such CFC Reports such that (i) they comply in
all material respects with all of the statutes, rules and regulations enforced
or promulgated by the regulatory authority with which they are filed and do not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (ii) with respect to any CFC Reports containing financial
information of the type included in the CFC Financial Statements, the financial
information (A) is prepared in accordance with generally accepted accounting
principles and practices as utilized in the CFC Financial Statements, applied
on a consistent basis (except as stated therein or in the notes thereto) (B)
presents fairly the consolidated financial condition of CFC, at the dates, and
the consolidated results of operations and cash flows for the periods, stated
therein and (C) in the case of interim fiscal periods, reflects all
adjustments, consisting only of normal recurring items necessary for a fair
presentation, subject to year-end audit adjustments.

6.04. Brokers or Finders. Each of United, CFC, Ballentine and ESOT
represents, as to itself or himself, as the case may be, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement.

6.05. Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including cooperating fully with the other parties. In case at any time after
the Effective Time any further action is reasonably necessary or desirable to
carry out the purposes of this Agreement or to vest United with full title to
all properties, assets, rights, approvals, immunities and franchises of either
of CFC, Bank or CCC, the proper officers and directors of each party to this
Agreement shall take all such necessary action.

6.06. Governmental and Other Third Party Approvals. CFC and United shall
each use their reasonable best efforts to obtain all governmental and other
third party approvals, authorizations and consents that may be necessary or
reasonably required of them in order to effect the transactions contemplated by
this Agreement. CFC and United agree to make all filings and applications for
such approvals and reviews as soon as practicable, to prosecute the same with
reasonable diligence and to notify each other when such approvals,
authorizations and consents have been received. CFC and United will provide
each other with copies of all regulatory notices and filings made in connection
with the

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transactions contemplated by this Agreement prior to filing. United and CFC
will each provide to the other, within two (2) days of receipt, copies of any
correspondence received from any regulatory agency relating to such filings,
and shall use its best efforts to keep the other party advised of the progress
of obtaining all regulatory and third party approvals required for the
consummation of all transactions contemplated by this Agreement.

ARTICLE VII

Conditions Precedent

7.01. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction prior to the Closing Date of the following conditions:

(a) Shareholder Approval. The Merger Agreements shall have been
approved and adopted by the legally required vote of the holders of the
outstanding shares of CFC.

(b) Federal Reserve Board. The Merger Agreements and the
transactions contemplated hereby shall have been approved by the Federal
Reserve Board and the Commissioner without any condition not satisfactory to
United, all conditions required to be satisfied prior to the Effective Time
imposed by the terms of such approvals shall have been satisfied and all
waiting periods relating to such approvals shall have expired.

(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be in effect.

(e) No Proceeding or Litigation. No material action, suit or
proceeding before any court or any governmental or regulatory authority shall
have been commenced against United, CFC or any affiliate, associate, officer or
director of either of them, seeking to restrain, enjoin, prevent, change or
rescind the transactions contemplated hereby or questioning the validity or
legality of any such transactions.

(f) Closing Date. The Closing Date shall occur on or before
December 31, 1993 unless extended as provided in Section 1.03.

(g) Consents Under Agreements. United, CFC and their subsidiaries
shall have obtained the consent or approval of each person whose consent or
approval shall be required in connection with the transactions contemplated
hereby under any loan or credit agreement, note, mortgage, indenture, lease or
other agreement or instrument.

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7.02. Conditions to Obligations of United. The obligation of United to
effect the Merger is subject to the satisfaction of the following conditions
unless waived in writing by United:

(a) Representations and Warranties. Each of the representations
and warranties of CFC and Ballentine set forth in this Agreement shall be true
and correct in all material respects (except that where any statement in a
representation or warranty expressly includes a standard of materiality, such
statement shall be true and correct in all respects) as of the date of this
Agreement and (except to the extent such representations and warranties speak
as of an earlier date) as of the Closing Date as though made on and as of the
Closing Date, except for changes expressly contemplated by this Agreement, and
United shall have received the certificates specified in Section 3.21.

(b) Performance of Obligations of CFC. CFC, Ballentine and ESOT
shall have performed in all material respects each of the obligations required
to be performed by it and them under this Agreement and the Plan of Merger at
or prior to the Closing Date, and United shall have received a certificate
signed on behalf of CFC by the chief executive officer and by the chief
financial officer of CFC to such effect.

(c) Opinion of Counsel. CFC shall have delivered to United an
opinion of its counsel, Shaw, Ledbetter, Hornberger, Cogbill & Arnold, dated as
of the Closing Date and in form and substance satisfactory to counsel for
United, to the aggregate effect that: (i) CFC has been duly incorporated and
organized and is a corporation validly existing in good standing under the laws
of Arkansas with full corporate power and authority to enter into this
Agreement and the Plan of Merger and to consummate the transactions
contemplated thereby; (ii) all corporate proceedings and other actions on the
part of CFC necessary to be taken in connection with the Merger and (except for
the filing of the Articles of Merger) necessary to make same effective have
been duly and validly taken; (iii) this Agreement and the Plan of Merger have
been duly and validly authorized, executed and delivered on behalf of CFC and
constitute (subject to standard exceptions to enforceability arising from the
bankruptcy laws and rules of equity) valid and binding agreements of CFC; and
(iv) the execution of the Articles of Merger by CFC has been duly and validly
authorized.

(d) No Material Adverse Change. There shall have been no material
adverse change since December 31, 1992 in the financial condition, results of
operations or business of CFC or Bank. Material adverse change shall include
commencement or making of any investigation, lawsuit or claim which, if decided
adversely to CFC, Bank or CCC, would have a material adverse effect on CFC or
Bank.

(e) CFC Stock Options. All holders of options to purchase common
stock of CFC that are unexercised as of the Closing Date shall have entered
into the Agreement To Cancel Stock Options attached hereto as

25
<PAGE> 33
Exhibit 7.02(e) whereby said holders agree to terminate all rights under such
options in exchange for payment of $19.30 per share subject to option.

(f) Management Services and Noncompetition Agreement. Ballentine
shall have entered into the Management Services and Noncompetition Agreement
attached hereto as Exhibit 7.02(f), said agreement to be effective as of the
Closing Date.

(g) Correction of Deficiencies. CFC, Bank and CCC shall have
corrected all deficiencies, exceptions and systemic problems described in
Bank's most recent FDIC compliance examination as of April 14, 1993.

(h) Termination of ESOP. CFC and ESOT shall have amended the ESOP
to permit single distributions of account balances on termination of the ESOP.

(i) Termination of ESI and DDI. CFC and Bank shall have entered
into valid, enforceable, written agreements substantially in the form attached
hereto as Exhibit 7.02(i) and for amounts satisfactory to United, with every
ESI Participant and every DDI Participant termination death benefits on or
prior to September 30, 1993, agreeing to the present value as of said
termination date of the ESI Participants' benefits and the DDI Participants'
benefits due on termination of the ESI Agreements and the DDI Agreements. Such
amounts individually and in the aggregate are not more than the payouts shown
on Exhibit 2.01(d). The ESI Participants and the DDI Participants shall have
agreed to accept payments of such amounts as full consideration for termination
of the ESI Agreements and the DDI Agreements, and Bank shall have paid said
amounts.

(j) Shareholders Agreement. All parties to that certain
Shareholders Agreement dated September 9, 1986, as amended, shall have entered
into the Agreement To Terminate Shareholders Agreement attached hereto as
Exhibit 7.02(j) whereby each such party waives and terminates all rights under
said Shareholders Agreement.

(k) Approval By Beneficiaries of ESOP. The beneficiaries of the
ESOP shall have affirmatively voted their interests in favor of the Merger.

(l) Environmental Audits. Phase I environmental audits of the CFC
Property shall have been conducted and shall, to United's satisfaction, reflect
no significant problems under Environmental Laws.

7.03 Conditions to Obligations of CFC Ballentine and ESOT. The
obligations of CFC, Ballentine and ESOT to effect the Merger is subject to the
satisfaction of the following conditions unless waived by CFC, Ballentine and
ESOT:

26
<PAGE> 34
warranty expressly includes a standard of materiality, such statement shall be
true and correct in all respects) as of the date of this Agreement and (except
to the extent such representations and warranties speak as of an earlier date)
as of the Closing Date as though made on and as of the Closing Date, except for
changes expressly contemplated by this Agreement, and CFC, Ballentine and ESOT
shall have received a certificate signed on behalf of United by the chief
executive officer and by the chief financial officer of United to such effect.

(b) Performance of Obligations of United. United shall have
performed in all material respects each of the obligations required to be
performed by it under this Agreement and the Plan of Merger at or prior to the
Closing Date, and CFC shall have received a certificate signed on behalf of
United by the chief executive officer and by the chief financial officer of
United to such effect.

(c) Opinion of Counsel. United shall have delivered to CFC an
opinion of its counsel, Ivester, Skinner & Camp, P.A., dated as of the Closing
Date and in form and substance satisfactory to counsel for CFC, to the
aggregate effect that: (i) United is a corporation validly existing under the
laws Arkansas with full corporate power and authority to enter into this
Agreement and the Plan of Merger and to consummate the transactions
contemplated thereby; (ii) all corporate proceedings and other actions on the
part of United necessary to be taken in connection with the Merger and (except
for the filing of the Articles of Merger) necessary to make same effective have
been duly and validly taken; (iii) this Agreement has been duly and validly
authorized, executed and delivered on behalf of United and constitutes (subject
to standard exceptions to enforceability arising from the bankruptcy laws and
rules of equity) a valid and binding agreement of United; and (iv) the
execution of the Articles of Merger by United has been duly and validly
authorized.

(d) Approval by Arkansas Securities Commissioner. CFC shall have
filed with the Arkansas Securities Commissioner a proof of exemption under the
Arkansas Securities Act perfecting an exemption from registration of the sale
or transfer of the CFC common stock to United, such proof of exemption shall
not have been disallowed and five full business days since the date of the
filing shall have elapsed.

ARTICLE VIII
Termination and Amendment

8.01 Termination. This Agreement and the Plan of Merger may be terminated
at any time prior to the Effective Time:

(a) by mutual consent of the Board of Directors of United and the
Board of Directors of CFC;

(b) by either United or CFC (A) if there has been a breach in any
material respect (except that where

27
<PAGE> 35
any statement in a representation or warranty expressly includes a standard of
materiality, such statement shall have been breached in any respect) of any
representation, warranty, covenant or agreement on the part of CFC, Ballentine
or ESOT, on the one hand, or United on the other hand, respectively, set forth
in this Agreement, or (B) if any representation or warranty of CFC, Ballentine
or ESOT, on the one hand, or United on the other hand, respectively, shall be
discovered to have become untrue in any material respect (except that where any
statement in a representation or warranty expressly includes a standard of
materiality, such statement shall have become untrue in any respect), in either
case which breach or other condition has not been cured within 10 business days
following receipt by the nonterminating party of notice of such breach or other
condition;

(c) by either United or CFC if any permanent Injunction preventing
the consummation of the Merger shall have become final and nonappealable;

(d) by either United or CFC if the Merger shall not have been
consummated on or before December 31, 1993, for a reason other than the failure
of the terminating party to comply with its obligations under this Agreement;

(e) by either United or CFC if the Federal Reserve Board has denied
approval of the Merger and neither United nor CFC has, within 30 days after the
entry of the Federal Reserve Board's order denying such approval, filed a
petition seeking review of such order as provided by Section 9 of the BHC Act;

(f) by United or CFC if any condition precedent to the terminating
party's obligation to effect the Merger has not been satisfied and such
condition cannot reasonably be expected to be satisfied prior to the date
specified in Subsection 8.01(d).

8.02. Effect of Termination. In the event of termination of this
Agreement by either CFC or United as provided in Section 8.01, this Agreement
and the Plan of Merger shall

28
<PAGE> 36
forthwith become void and there shall be no liability or obligation on the part
of Ballentine, ESOT, United, CFC or their respective officers or directors,
except to the extent that such termination results from the willful breach by a
party hereto of any of its representations, warranties, covenants or agreements
set forth in this Agreement.

8.03. Amendment. Subject to the next following sentence, this Agreement
and the Plan of Merger may be amended by the parties hereto by action taken or
authorized by Ballentine, ESOT and the respective Boards of Directors of
United and CFC at any time prior to the Closing Date. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.

8.04. Extension; Waiver. At any time prior to the Effective Time,
United, on the one hand, and CFC, on the other hand, by action taken or
authorized by their respective Boards of Directors, may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties of the other contained herein or in any document
delivered by the other pursuant hereto, and (iii) waive compliance by the other
with any of the agreements or conditions contained herein. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in a written instrument signed on behalf of such party.

ARTICLE IX
General Provisions

9.01. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally (with receipt
confirmed) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):

(a) if to United, to

First United Bancshares, Inc.
Attention: John E. Burns
P. O. Box 751
El Dorado, Arkansas 71731

with a copy to:

Hermann Ivester, Esq.
Ivester, Skinner & Camp, P.A.
111 Center Street, Suite 1200
Little Rock, Arkansas 72201

(b) if to CFC, to:

Commercial Bank at Alma

29
<PAGE> 37
Attn: John P. Ballentine
P. O. Box 2199
Alma Arkansas 72921-2199

with a copy to:

James A. Arnold, II, Esq.
Shaw, Ledbetter, Hornberger,
Cogbill & Arnold
South 7th and Parker Streets
Fort Smith, Arkansas 72901

Commercial Bank at Alma
Attn: John P. Ballentine
P.O. Box 2199
Alma, Arkansas 72921-2199

with a copy to:

Douglas O. Smith, Jr., Esq.
Warner & Smith
214 North 6th Street
Fort Smith, Arkansas 72901

9.02. Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation." The phrase "made available" in
this Agreement shall mean that the information referred to has been made
available if requested by the party to whom such information is to be made
available.

9.03. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each
of the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

9.04. Entire Agreement. This Agreement (including the documents and the
instruments referred to herein, including the Plan of Merger) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.

9.05. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Arkansas.

30
<PAGE> 38
9.06. Publicity. The parties hereto agree that they will consult with
each other concerning any proposed press release or public announcement
pertaining to the Merger and will use their best efforts to agree upon the text
of such press release or public announcement prior to the publication of such
press release or the making of such public announcement.

9.07. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.

9.08. Knowledge of the Parties. Wherever in this Agreement any
representation or warranty is made upon the knowledge of a party hereto that is
not an individual, such knowledge shall include the actual knowledge, after due
inquiry, of any executive officer of such party or an executive officer of any
Subsidiary thereof.

9.09. Expenses. Except as otherwise provided herein, all Expenses
incurred by United and CFC in connection with or related to the authorization,
preparation and execution of this Agreement, the Plan of Merger, and all other
matters related to the closing of the transactions contemplated hereby,
including, without limitation of the generality of the foregoing, all fees and
expenses of agents, representatives, counsel and accountants employed by either
such party or its affiliates, shall be borne solely and entirely by the party
which has incurred the same.

9.10 Survival of Representations and Warranties. Except as hereinafter
provided, the representations and warranties contained in this Agreement and
all other terms and conditions hereof shall not merge in the closing documents
and shall survive Closing but shall expire on the second anniversary of the
Closing Date, except (i) as to any matter as to which notice of a breach is
submitted in writing to the other party prior to such second anniversary date,
and (ii) as to any matter which is based upon willful fraud by a party with
respect to which the representations and warranties set forth in this Agreement
shall expire only upon expiration of the applicable statute of limitations.

IN WITNESS WHEREOF, United, CFC, Ballentine and ESOT have signed or have
caused this Agreement to be signed by respective officers thereunto duly
authorized, all as of the date first written above.

FIRST UNITED BANCSHARES, INC.

By: /s/ JAMES V. KELLEY
--------------------
James V. Kelley
Chairman, President and

31
<PAGE> 39
Attest: Chief Executive Officer

/s/ ROBERT G. DUDLEY
- - - --------------------------------------
Robert G. Dudley, Secretary
COMMERCE FINANCIAL CORPORATION

By: /s/ JOHN P. BALLENTINE
------------------------------
Attest: John P. Ballentine
Chairman, President and
Chief Executive Officer

/s/ WILLIAM N. BRASHER, III
- - - --------------------------------------
William N. Brasher, III
Secretary

/s/ JOHN P. BALLENTINE
- - - --------------------------------------
John P. Ballentine

EMPLOYEE STOCK OWNERSHIP TRUST

By /s/ MARY BETH FREEMAN
------------------------------------
Mary Beth Freeman, Trustee

By /s/ REX WOODS
------------------------------------
Rex Woods, Trustee

By /s/ WILLIAM N. BRASHER, III
------------------------------------
William N. Brasher, III, Trustee

32
<PAGE> 40
EXHIBIT A
PLAN OF MERGER

This Plan of Merger, dated as of September 3, 1993 ("Plan of Merger"),
by and between First United Bancshares, Inc., an Arkansas corporation
("United"), and Commerce Financial Corporation, an Arkansas corporation
("CFC").

WHEREAS, CFC is a corporation with authorized capital stock consisting
of 100,000 shares of common stock, $1.00 par value of which 51,610 shares of
common stock, including 6,103.728 treasury shares, ("CFC Common Stock") are
validly issued and outstanding on the date hereof;

WHEREAS, United is a corporation with authorized capital stock of
12,000,000 shares of common stock, $1.00 par value, of which 4,272,276 shares
are validly issued and outstanding on the date hereof;

WHEREAS, United is a corporation duly organized and existing under the
laws of Arkansas;

WHEREAS, concurrently with the execution and delivery of this Plan of
Merger, United and CFC have entered into an Agreement and Plan of
Reorganization (the "Agreement" and, together with this Plan of Merger, the
"Merger Agreements") that contemplates the merger of CFC with and into United
(the "Merger") upon the terms and conditions provided in this Plan of Merger
and the Agreement and pursuant to the Arkansas Business corporation Act (the
"ABCA");

WHEREAS, the Boards of Directors of United and CFC deem it fair and
equitable to, and in the best short-term and long-term interests of, their
respective corporations and shareholders that CFC be merged with and into
United and United being the surviving corporation, and each such Board of
Directors has approved this Plan of Merger, has authorized its execution and
delivery, and CFC has directed that this Plan of Merger and the Merger be
submitted to its shareholders for approval; and

WHEREAS, the board of Directors of United has authorized the
execution and deliver of this plan of merger.

NOW, THEREFORE, in consideration of the premises and the agreements
herein contained, the parties hereto adopt and agree to the following
agreements, terms and conditions relating to the Merger and the mode of
carrying the same into effect:

ARTICLE I

The Merger

1.01. The Merger. Subject to the terms and conditions of the Merger
Agreements, CFC will be merged with and into United, which will continue as the
surviving corporation, in accordance with and with the effect provided in the
ABCA.

<PAGE> 41
1.02. Effective Time of the Merger. Subject to the provisions of the
Merger Agreement, articles of merger, (the "Articles of Merger") shall be duly
prepared and executed by United and CFC and thereafter delivered to the
Secretary of State of the State of Arkansas for filing, as provided in the
ABCA, as soon as practicable on or after the Closing Date (as defined in the
Agreement). The Merger shall become effective upon the filing of the Articles
of Merger with the Secretary of the State of Arkansas or at such time within
two business days thereafter as is provided in the Articles of Merger (the
"Effective Time").

1.03. Effects of the Merger. (a) At the Effective Time, (i) the
separate existence of CFC shall cease and CFC shall be merged with and into
United (United and CFC are sometimes referred to herein as the "Constituent
Corporations" and United is sometimes referred to herein as the "Surviving
Corporation"), (ii) the Articles of Incorporation of United in effect as of the
Effective Time (the "Articles") shall be the Articles of Incorporation of the
Surviving Corporation, and (iii) the Bylaws of United in effect as of the
Effective Time (the "Bylaws") shall be the Bylaws of the Surviving Corporation.

(b) At and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises of a public as well
as of a private nature, and be subject to all the restrictions, disabilities
and duties of each of the Constituent Corporations; and all and singular
rights, privileges, powers and franchises of each of the Constituent
Corporations, and all property, real, personal and mixed and all debts due to
either of the Constituent Corporations on whatever account, as well as for
stock subscriptions and all other things in action or belonging to each of the
Constituent Corporations, shall be vested in the surviving Corporation; and all
property, rights, privileges, powers and franchises, and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of the Constituent Corporations, and the title to any
real estate vested by deed or otherwise, in either of the Constituent
Corporations, shall not revert or be in any way impaired; but all rights of
creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired, and all debts, liabilities and
duties of the Constituent Corporations shall thenceforth attach to the
Surviving Corporation, and may be enforced against it to the same extent as if
said debts and liabilities had been incurred by it. Any action or proceeding,
whether civil, criminal or administrative, pending by or against either
Constituent Corporation shall be prosecuted as if the Merger had not taken
place, and the Surviving Corporation may be substituted as a party in such
action or proceeding in place of any Constituent Corporation.

ARTICLE II

Effect of the Merger on Common Stock

of the Constituent Corporations;

2
<PAGE> 42

Exchange of Certificates

2.01. Conversion of CFC Common Stock. As of the Effective Time, by
virtue of the Merger and without any action on the art of the holder of any
shares of CFC Common Stock, but subject to the rights of dissenting
shareholders of CFC:

(a) Conversion of CFC Common Stock. The issued and outstanding
shares of CFC Common Stock shall be converted in accordance with the Agreement
into the right to receive a cash payment as provided in Section 2.01 of the
Agreement.

(b) Cancellation of Shares. All shares of CFC Common Stock issued
and outstanding immediately prior to the Effective Time shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any such shares shall
cease to have any rights with respect thereto, except the right to receive the
cash to be paid in consideration therefor upon the surrender of such
certificate in accordance with the Plan of Merger.

2.02. Exchange of Certificates. (a) Exchange Agent. As of the
Effective Time, United shall deposit with the Trust Department of First
National Bank of El Dorado, El Dorado, Arkansas or such other bank or trust
company designated by United (the "Exchange Agent") for the benefit of the
holders of shares of CFC Common Stock, for exchange in accordance with this
Article II through the Exchange Agent, an amount of cash (the "Exchange Fund")
to be paid pursuant to Section 2.01 in exchange for shares of CFC Common Stock
outstanding immediately prior to the Effective Time.

(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of CFC Common Stock (the "Certificates") whose
shares were converted into the right to receive a cash payment pursuant to
Section 2.01, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as United may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for the cash payment due. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by United, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in

3
<PAGE> 43
exchange therefor the amount of cash specified in Section 2.01 of the
Agreement, and the Certificate so surrendered shall forthwith be canceled.
Until surrendered as contemplated by this Section 2.02, each Certificate shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the amount of cash specified in Section 2.01 of the
Agreement.

(c) Distributions with Respect to Unexchanged Shares. No cash
payment of any kind shall be paid to the holder of any unsurrendered
Certificate until the holder of record of such Certificate shall surrender such
Certificate.

(d) No Further Ownership Rights in CFC Common Stock. The cash paid
upon the surrender of shares of CFC Common Stock in accordance with the terms
hereof including any cash shall be deemed to have been paid in full
satisfaction of all rights pertaining to such shares of CFC Common Stock, and
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of CFC Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and payment shall be made as provided in this Plan of
Merger.

(e) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the shareholders of CFC for six months after the
Effective Time shall be delivered to United, upon demand, and any shareholders
of CFC who have not theretofore complied with this Section 2.02 shall
thereafter look only to United for payment of the cash due for their stock.

(f) No Liability. Neither United nor CFC shall be liable to any
holder of shares of CFC Common Stock for cash from the Exchange Fund delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar law.

ARTICLE III

Conditions; Termination; Amendment

3.01. Conditions to the Merger. Consummation of the Merger is
conditional upon the fulfillment or waiver of the conditions precedent set
forth in Article VII of the Agreement.

3.02. Termination. This Plan of Merger may be terminated and the
Merger abandoned by mutual consent of the respective Boards of Directors of CFC
and United at any time prior to the Effective Time. If the Agreement is
terminated in accordance with Article IX thereof, then this Plan of Merger will
terminate simultaneously and the Merger will be abandoned without further
action by CFC or United.

4
<PAGE> 44
3.03. Amendment. Subject to the next following sentence, this Plan
of Merger may be amended by the parties hereto by action taken or authorized by
their respective Boards of Directors at any time before the Closing Date. This
Plan of Merger may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.

3.04. Extension; Waiver. At any time prior to the Closing Date,
United and CFC, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other party hereto
and (ii) waive compliance by the other with any of the agreements or conditions
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument on
behalf of such party.

ARTICLE IV

General Provisions

4.01. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally (with receipt
confirmed) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):

(a) if to United, to

First United Bancshares, Inc.
Attention: John E. Burns
P. O. Box 751
El Dorado, Arkansas 71731

with a copy to:

Hermann Ivester, Esq.
Ivester, Skinner & Camp, P.A.
111 Center Street, Suite 1200
Little Rock, Arkansas 72201

(b) if to CFC, to

Commercial Bank at Alma
Attn: John P. Ballentine
P. O. Box 2199
Alma, Arkansas 72921-2199

with a copy to:

James A. Arnold, II, Esq.
Shaw, Ledbetter, Hornberger,
Cogbill & Arnold
South 7th and Parker Streets
Fort Smith, Arkansas 72901

5
<PAGE> 45
4.02. Interpretation. When a reference is made in this Plan of
Merger to Sections, such reference shall be to a Section of this Plan of Merger
unless otherwise indicated. The headings contained in this Plan of Merger are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Plan of Merger.

4.03. Counterparts. This Plan of Merger may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.

4.04. Governing Law. This Plan of Merger shall be governed and
construed in accordance with the laws of the State of Arkansas.

IN WITNESS WHEREOF, CFC and United have caused this Plan of Merger to
be signed by their respective officers thereunto duly authorized, all as of the
date first written above.

FIRST UNITED BANCSHARES, INC.

By: /s/ JAMES V. KELLEY
---------------------------
James V. Kelley
Chairman, President and
Chief Executive Officer
Attest:

/s/ ROBERT G. DUDLEY
- - - ---------------------------
Robert G. Dudley, Secretary
COMMERCE FINANCIAL CORPORATION

By: /s/ JOHN P. BALLENTINE
---------------------------
John P. Ballentine
Chairman, President and
Chief Executive Officer
Attest:

/s/ WILLIAM N. BRASHER, III
- - - ---------------------------
William N. Brasher, III
Secretary

6
<PAGE> 46
EXHIBIT 2.01 (d)

EXECUTIVE SUPPLEMENTAL INCOME PLAN
PAYOUTS AS OF 9-30-93

<TABLE>
<CAPTION>
PARTICIPANT AGE SERVICE YEARS PAYOUT
- - - ----------- --- ------- ----- ------
<S> <C> <C> <C> <C>
BALLENTINE 60 7 10 $ 91720

BRASHER 42 14 23 $ 3323

FREEMAN 28 5 36 $ 1061

JONES 60 25 5 $ 93941

WOODS 32 9 32 $ 1201

HOUCK 61 27 4 $ 13142

COLLINS 44 13 20 $ 828

STEPHENS 34 13 30 $ 399

GRAY 48 22 17 $ 738

OLIVER 53 19 12 $ 1076
-------
$207429
</TABLE>

<TABLE>
<CAPTION>
PARTICIPANT PAYOUT
- - - ----------- ------
<S> <C>
ARNOLD $ 20763

BALLENTINE $ 10269

BLASCHKE $ 13154

BRASHER $ 24715

GRIFFIN $ 9793

KNIGHT $ 5423

WINBORN $ 21926
-------
$114043
</TABLE>

<PAGE> 1

Exhibit 2 (b)

AGREEMENT AND PLAN OF REORGANIZATION

This Agreement and Plan of Reorganization ("Agreement") is made as of
December 17, 1993 by and between First United Bancshares, Inc. ("United") and
InvestArk Bankshares, Inc. ("InvestArk").

WHEREAS, InvestArk owns ninety nine and seven tenths percent (99.7%)
of the issued and outstanding shares of capital stock of The Bank of North
Arkansas, Melbourne, Arkansas ("North Arkansas") and one hundred percent (100%)
of the issued and outstanding shares of capital stock of First Stuttgart Bank &
Trust Company, Stuttgart, Arkansas ("First Bank"); and

WHEREAS, United desires to acquire one hundred percent (100%) of the
capital stock of InvestArk (the "InvestArk Common Stock") upon the terms and
conditions hereinafter set forth through the merger of InvestArk with and into
United (the "Merger") pursuant to a Plan of Merger in substantially the form
attached hereto as Exhibit A (the "Plan of Merger"); and

WHEREAS, the respective Boards of Directors of United and InvestArk
believe that such proposed Merger and the exchange of shares of United Stock
(as defined in Section 2.01(a) hereof) for the InvestArk Common Stock, pursuant
and subject to the terms of this Agreement and the Plan of Merger (the "Merger
Agreements"), is desirable and in the best short-term and long-term interests
of their respective corporations and shareholders; and

WHEREAS, United and InvestArk desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
various conditions to the Merger;

NOW, THEREFORE, in consideration of the promises and the
representations, warranties and agreements herein contained, the parties hereto
agree as follows:

<PAGE> 2

ARTICLE I

The Merger

1.01. The Merger. Subject to the terms and conditions of this
Agreement, United and InvestArk agree to effect the Merger of InvestArk with
and into United in accordance with the Arkansas Business Corporation Act (the
"ABCA").

1.02. Effective Time of the Merger. Subject to the provisions of the
Merger Agreements, articles of merger (the "Articles of Merger") shall be duly
prepared and executed by United and InvestArk and thereafter delivered to the
Secretary of State of Arkansas for filing, as provided in the ABCA, as soon as
practicable on or after the Closing Date (as defined in Section 1.03). The
Merger shall become effective upon the filing of the Articles of Merger with
the Secretary of State of Arkansas or at such time within two business days
thereafter as is provided in the Articles of Merger (the "Effective Time").

1.03. Closing. The closing of the Merger (the "Closing") will take
place at the offices of United at a time and on a date (the "Closing Date") to
be specified in writing by the parties as soon as reasonably practicable after
the later to occur of all regulatory and other approvals and the expiration of
all waiting periods.

ARTICLE II

Effect of the Merger

2.01. Effect on Common Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
InvestArk Common Stock, but subject to the rights of dissenting shareholders of
InvestArk:

<PAGE> 3

(a) Conversion of InvestArk Common Stock. One hundred
percent of the issued and outstanding shares of InvestArk Common Stock shall be
converted into the right to receive an aggregate amount of fully paid and
nonassessable shares of voting common stock, $1.00 par value, of United
determined by dividing $26,125,000.00 by the United Average Price as defined
below. Notwithstanding the foregoing, the number of shares of United common
stock to be issued shall not be less than 885,593 and shall not be greater than
985,849. The number of shares of common stock of United so determined shall be
referred to as the United Stock. The United Average Price shall be the average
sales price per share of United common stock for all trades occurring during
the period of 10 trading days on which one or more trades actually takes place
and which ends immediately prior to the second trading day preceding the
Closing Date. Each owner of InvestArk Common Stock shall be entitled to
receive a pro rata portion of the United Stock based upon each owner's pro rata
ownership of the total of outstanding shares of InvestArk Common Stock at the
Effective Time. Fractional shares of United Stock shall not be issued. Any
InvestArk shareholder entitled to receive a fractional share shall receive a
cash payment in lieu thereof equal to the value of the fractional share based
on the United Average Price.

(b) Cancellation of Shares. All shares of InvestArk
Common Stock issued and outstanding immediately prior to the Effective Time
shall no longer be outstanding and shall automatically be cancelled and retired
and shall cease to exist, and each holder of a certificate representing any
such shares shall cease to have any rights with respect thereto, except the
right to receive a pro rata number of shares of United Stock to be issued in
consideration therefor upon the surrender of such certificate in accordance
with the Plan of Merger.

<PAGE> 4
dividend or subdivide, split up, reclassify or combine its shares of United
common stock or make a distribution on United common stock of any security,
appropriate adjustment or adjustments will be made in the conversion rate set
forth in subsection (a).

(d) Registration. The United Stock shall when issued be
subject to and covered by an effective registration statement as filed under
the Securities Act of 1933 (the "Securities Act") and such issuance shall
comply with any applicable state "Blue Sky" laws.

(e) Termination of 401(k) Plan and Pension Plan. United
shall have no liability to employees or directors of InvestArk, North Arkansas
or First Bank for benefits of such employees or directors of InvestArk, North
Arkansas or First Bank under the North Arkansas 401(k) plan or the First Bank
pension plan. On or before the Closing Date, InvestArk shall and shall cause
North Arkansas and First Bank to take all action necessary and appropriate to
provide for termination of said plans and distribution of accrued benefits as
of June 30, 1994. Such action shall specifically include, without limitation,
entering into written agreements, in a form and for amounts satisfactory to
United, with all participants in and beneficiaries of said plans in which each
plan participant and beneficiary agrees (1) to accept such distribution in full
satisfaction of all benefits due and rights under said plans; (2) that the
participant's or beneficiary's distribution is equal to the present value of
said participant's or beneficiary's benefits due or rights under the plans, and
(4) to release InvestArk, North Arkansas and First Bank from any further
liability or obligation under said 401(k) or pension plan.

2.02 Approval By Shareholders. Consummation of the Merger shall be
contingent upon its approval by the legally required votes of the shares of
InvestArk Common Stock and United common stock at shareholders meetings duly
called for the purpose of voting on the Merger. In the

<PAGE> 5
event the number of shares owned by InvestArk shareholders exercising
dissenters' rights would or could, in the written opinion of United's outside
accountants, reasonably be expected to cause the cash consideration paid by
United to dissenters to jeopardize United's ability to account for the Merger
as a pooling of interests then United shall have the right to terminate this
Agreement. The Boards of Directors of InvestArk and United shall recommend
approval of the Merger to their respective shareholders, unless such
recommendation is inconsistent with their fiduciary duties to the shareholders.

ARTICLE III

Representations and Warranties

of InvestArk

InvestArk hereby represents and warrants to United the following:

3.01. Organization, Standing and Power of InvestArk. InvestArk is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Arkansas and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to have such power or
authority would not have a material adverse effect on the business, operations
or financial condition of InvestArk or any InvestArk Subsidiary (as hereinafter
defined). InvestArk is not qualified to do business in any other state or
foreign jurisdiction, and its ownership or leasing of property or the conduct
of its business does not require it to be so qualified, except where such
failure to be so qualified would not have a material adverse effect on the
business, operations or financial condition of InvestArk or any InvestArk
Subsidiary. InvestArk is registered as a bank

<PAGE> 6
holding company with the Federal Reserve Board under the Bank Holding Company
Act of 1956, as amended (the "BHC Act"). InvestArk has delivered to United
true, accurate and complete copies of its currently effective Articles of
Incorporation and Bylaws, including all amendments thereto.

3.02. Ownership, Organization, Standing and Power of InvestArk
Subsidiaries. InvestArk directly and beneficially owns all of the shares of
the outstanding capital stock of First Bank and 99.7% of the outstanding
capital stock of North Arkansas. North Arkansas and First Bank are hereinafter
called collectively the "InvestArk Subsidiaries" or individually an "InvestArk
Subsidiary". North Arkansas and First Bank are InvestArk's only subsidiaries.
No equity securities of North Arkansas or First Bank are or may become required
to be issued by reason of any option, warrant, call, right or agreement of any
character whatsoever; there are outstanding no securities or rights convertible
into or exchangeable for shares of any capital stock of North Arkansas or First
Bank; and there are no other contracts, commitments, understandings or
arrangements by which either North Arkansas or First Bank is bound to issue
additional shares of its capital stock or options, warrants, calls, rights or
agreements to purchase or acquire any additional shares of its capital stock.
All of the shares of capital stock of North Arkansas and First Bank owned by
InvestArk are fully paid and nonassessable and are owned free and clear of any
claim, lien, encumbrance or agreement with respect thereto. North Arkansas and
First Bank are banking associations duly organized, validly existing and in
good standing under the laws of Arkansas, and have the corporate power and
authority to own or lease their properties and assets and to carry on their
businesses as they are now being conducted, except where the failure to have
such power or authority would not have a material adverse effect on the
business, operations or financial condition of North Arkansas, or First Bank.
The deposits of North Arkansas and First Bank are insured by the Federal
Deposit Insurance

<PAGE> 7
Corporation ("FDIC") to the extent provided by law. InvestArk has delivered to
United true, accurate and complete copies of the currently effective Articles
of Incorporation and Bylaws of North Arkansas and First Bank, including all
amendments thereto. Except for $406,000.00 in capital stock of the Federal
Home Loan Bank of Dallas owned by First Bank and except for securities held in
their capacities as fiduciaries, North Arkansas and First Bank do not own
beneficially, directly or indirectly, any class of equity securities,
partnership interests or similar interests of any corporation, bank,
partnership, limited partnership, business trust, association or similar
organization. The authorized capital stock of North Arkansas consists of
100,000 shares of common stock, $25.00 par value, of which 80,000 shares are
outstanding. Of the outstanding shares, 79,762 are owned by InvestArk and 238
are owned by others. The authorized capital stock of First Bank consists of
110,000 shares of common stock, $10.00 par value, of which 110,000 shares are
outstanding and are owned by InvestArk. North Arkansas and First Bank or their
predecessor banks have been chartered as banking institutions for more than 10
years.

3.03. Capital Structure of InvestArk. The authorized capital stock of
InvestArk consists of 5,000,000 shares of common stock, $10.00 par value, of
which 219,626 shares are outstanding, including 3,162 shares held by InvestArk
in its treasury. Neither InvestArk, North Arkansas nor First Bank has issued
and has outstanding bonds, debentures, notes or other indebtedness having the
right to vote (or convertible into securities having the right to vote) on any
matters on which shareholders may vote ("Voting Debt"). All outstanding shares
of InvestArk Common Stock are validly issued, fully paid, nonassessable, and
not subject to preemptive rights. There are no options, warrants, calls,
rights, or agreements of any character whatsoever to which InvestArk, North
Arkansas or First Bank is a party or by which InvestArk, North Arkansas or
First Bank is obligated

<PAGE> 8
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or any voting debt securities or by which InvestArk,
North Arkansas or First Bank is obligated to grant, extend or enter into any
such option, warrant, call, right or agreement. Immediately before and after
the Effective Time there will be no option, warrant, call, right or agreement
obligating InvestArk, North Arkansas or First Bank to issue, deliver or sell,
or cause to be issued, delivered or sold, any shares of capital stock or
obligating InvestArk, North Arkansas or First Bank to grant, extend or enter
into any such option, warrant, call, right or agreement.

3.04. Authority. InvestArk has all requisite corporate power and
authority to enter into this Agreement and the Plan of Merger and, subject only
to approval of this Agreement and the Plan of Merger by the shareholders of
InvestArk and of applicable regulatory authorities, to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Plan of Merger and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of InvestArk's board of directors This Agreement
and the Plan of Merger have been duly executed and delivered by InvestArk, and,
subject to such shareholder approval, each constitutes a valid and binding
obligation of InvestArk enforceable in accordance with its terms, except as the
enforceability of the Agreement may be subject to or limited by bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar laws
relating to or affecting the rights of creditors and by general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law). The execution and delivery of this Agreement and the Plan
of Merger do not, and the consummation of the transactions contemplated hereby
and thereby will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of

<PAGE> 9
termination, cancellation or acceleration of any obligation or the loss of a
material benefit under, or the creation of a lien, pledge, security interest or
other encumbrance on assets (any such conflict, violation, default, right of
termination, cancellation or acceleration loss or creation, a "Violation"),
pursuant to any provision of (a) the Articles of Incorporation or Bylaws of
InvestArk, North Arkansas or First Bank or (b) any loan or credit agreement,
note, mortgage, indenture, lease, or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to InvestArk, North Arkansas or First
Bank or their respective properties or assets, except where such violation
would not have a material adverse effect on the business, operations or
financial condition of InvestArk or any InvestArk Subsidiary. Other than in
connection or in compliance with the provisions of the ABCA, the Securities Act
and the regulations thereunder, the Securities and Exchange Act of 1934, as
amended, and the rules and regulations thereunder (the "Exchange Act"), the
securities or blue sky laws of the various states, and consents,
authorizations, approvals, notices or exemptions required under the BHC Act,
the National Bank Act, Arkansas banking laws, and from other regulatory
agencies, no consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign (a
"Governmental Entity"), is required by or with respect to InvestArk, North
Arkansas or First Bank in connection with the execution and delivery of this
Agreement and the Plan of Merger by InvestArk or the consummation by InvestArk
of the transactions contemplated hereby and thereby.

3.05. InvestArk Financial Statements. (a) The (i) consolidated
balance sheets of InvestArk as of December 31, 1992 and the related
consolidated statements of income, consolidated statements

<PAGE> 10
of cash flows and consolidated statements of shareholders equity for the twelve
months ended December 31, 1992 certified by Martin and Company, (ii)
consolidated balance sheets of InvestArk as of December 31, 1991 and the
related consolidated statements of income, consolidated statements of cash
flows and consolidated statements of shareholders equity for the twelve months
ended December 31, 1991 certified by Martin and Company, (iii) the unaudited
compilations of the consolidated balance sheets of InvestArk as of September
30, 1993 and the related consolidated statements of income, consolidated
statements of cash flows and consolidated statements of shareholders equity for
the nine months ended September 30, 1993, and (iv) the internally prepared and
unaudited financial statements for North Arkansas and First Bank dated July 30,
1993, (items (i) - (iv) being called collectively the "InvestArk Financial
Statements"), copies of which have been furnished by InvestArk to United, have
been prepared in accordance with generally accepted accounting principles and
practices applied on a consistent basis throughout the periods involved (except
as otherwise noted therein and except for year-end adjustments of the unaudited
financial statements of a non-material nature), and except as reflected in
Section 5.05, present fairly the consolidated financial condition of InvestArk,
at the dates, and the consolidated results of operations and cash flows for the
periods, stated therein. Neither InvestArk, North Arkansas nor First Bank has
any liability of any nature, whether direct, indirect, accrued, absolute,
contingent or otherwise, which is material to InvestArk, North Arkansas or
First Bank, except as provided for or disclosed in the InvestArk Financial
Statements and except for such of the following liabilities as are incurred in
the ordinary course of business:

(i) deposit liabilities and interest payable thereon,

(ii) federal funds purchased and securities sold under
repurchase agreements and

<PAGE> 11
interest payable thereon,

(iii) other short term borrowings,

(iv) contingent liability upon negotiable instruments
endorsed for the purpose of collection,

(v) taxes,

(vi) accounts payable of the operating business,

(vii) salaries and benefits payable,

(viii) unearned income and premiums,

(ix) abandoned and garnished accounts, and

(x) letters of credit and similar commitments.

(b) Without limitation of the foregoing,
InvestArk has no reserve allowance for self-insured health and dental benefit
claims and knows of no facts which should cause it to create such a reserve.

3.06. InvestArk Reports. InvestArk, North Arkansas and First Bank
have filed all reports, registrations and statements, together with any
amendments required to be made with respect thereto, that were and are required
to be filed with (i) the Federal Reserve Board, (ii) the FDIC, (iii) the
Arkansas State Bank Department (the "ASBD") and (iv) any other applicable
securities, banking or regulatory authorities (all such reports and statements
are collectively referred to herein as the "InvestArk Reports"), except where
such failure to file would not have a material adverse effect on the business
operations or financial condition of InvestArk or any InvestArk Subsidiary. The
InvestArk Reports complied in all material respects with all of the statutes,
rules and regulations enforced or promulgated by the regulatory authority with
which they were filed and did not contain

<PAGE> 12
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

3.07. Information Supplied. None of the information supplied or to be
supplied by InvestArk for inclusion or incorporation by reference in any
document to be filed with the Securities and Exchange Commission, the Federal
Reserve Board, or any regulatory agency in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. InvestArk has made available to United all
financial and other information InvestArk reasonably believes necessary to
enable United to make informed judgments concerning the state of the financial
and other conditions and affairs of InvestArk, North Arkansas and First Bank.

3.08. Authorizations; Compliance with Applicable Laws. InvestArk,
North Arkansas and First Bank hold all authorizations, permits, licenses,
variances, exemptions, orders and approvals of all Governmental Entities which
are material to the operations of the businesses of InvestArk, North Arkansas
or First Bank (the "InvestArk Permits"), including appropriate authorizations
from the ASBD. InvestArk, North Arkansas and First Bank are in compliance with
the terms of the InvestArk Permits, except where the failure so to comply would
not have a material adverse effect on InvestArk, North Arkansas or First Bank.
The businesses of InvestArk, North Arkansas and First Bank are not being
conducted in violation of any federal, state or local law, statute, ordinance
or regulation of any Governmental Entity (collectively "Laws"), including,
without limitation, Regulation O of the Federal Reserve Board, except for
possible violations which individually or in

<PAGE> 13
the aggregate do not and, insofar as reasonably can be foreseen, in the future
will not, have a material adverse effect on InvestArk, North Arkansas or First
Bank. Except for the inquiry by the Federal Reserve Board ("FRB") under
Sections 23A and 23B of the Federal Reserve Act as disclosed in Exhibit 3.08,
no investigation or review by any Governmental Entity with respect to
InvestArk, North Arkansas or First Bank is pending or, to the best of their
knowledge, threatened, nor has any Governmental Entity indicated an intention
to conduct the same. Without limiting the foregoing, there have been no acts
or omissions occurring on or with respect to real estate currently or
previously owned, leased or otherwise used in the ordinary course of business
by InvestArk, North Arkansas or First Bank, or to the best of their knowledge
in which InvestArk, North Arkansas or First Bank has or had an investment or
security interest (by mortgage, deed of trust, or otherwise), including,
without limitation, properties under foreclosure, properties held by InvestArk,
North Arkansas or First Bank in its capacity as a trustee, or properties in
which any venture capital or similar unit of InvestArk, North Arkansas or First
Bank has or had an interest (the "InvestArk Property"), which constitute or
result, or may have constituted or resulted, in the creation of any federal,
state or common law nuisance (whether or not the nuisance condition is, or was,
foreseen or unforeseen) or which do not comply or have not complied with
federal, state or local environmental laws including, without limitation, the
Clean Water Act, the Clean Air Act, the Resource Conservation and Recovery Act,
the Toxic Substances Control Act and the Comprehensive Environmental, Response,
Compensation and Liability Act, as amended, and their state and local law
counterparts, all rules and regulations promulgated thereunder and all other
legal requirements associated with the ownership and use of the InvestArk
Property (collectively, "Environmental Laws"), and as a result of which acts or
omissions InvestArk, North Arkansas or First Bank is

<PAGE> 14
subject to or reasonably likely to incur a material liability or suffer a
diminution in value of any interest exceeding $100,000.00. Neither InvestArk,
North Arkansas nor First Bank is subject to or reasonably likely to incur a
material liability or suffer a diminution in value of any interest exceeding
$100,000.00 as a result of its ownership, lease, operation, or use of any
InvestArk Property or as a result of its investment or security interest (as
described above) in any InvestArk Property (a) that is contaminated by or
contains any hazardous waste, toxic substances or related materials, including
without limitation asbestos, PCBs, pesticides, herbicides, petroleum products,
substances defined as "hazardous substances" or "toxic substances" in the
Environmental Laws, and any other substances or waste that is hazardous to
human health or the environment (collectively, "Toxic Substances"), or (b) on
which any Toxic Substance has been stored, disposed of, placed, or used in the
construction thereof. No claim, action, suit or proceeding is pending against
InvestArk, North Arkansas or First Bank relating to the InvestArk Property
before any court or other governmental authority or arbitration tribunal
relating to Toxic Substances, pollution or the environment, and there is no
outstanding judgment, order, writ, injunction, decree, or award against or
affecting InvestArk, North Arkansas or First Bank with respect thereto.

3.09. Litigation and Claims. Except as disclosed in Exhibit 3.08 and
3.09 (a) neither InvestArk, North Arkansas nor First Bank is subject to any
continuing order of, or written agreement or memorandum of understanding with,
or continuing material investigation by, any federal or state banking or
insurance authority or other Governmental Entity, or any judgment, order, writ,
injunction, decree or award of any Governmental Entity or arbitrator,
including, without limitation, cease-and-desist or other orders of any bank
regulatory authority, (b) there is no claim of any kind, action, suit,
litigation, proceeding, arbitration, investigation, or controversy affecting
InvestArk,

<PAGE> 15
North Arkansas or First Bank pending or, to the best of their knowledge,
threatened, which will have or can reasonably be expected to have a material
adverse effect on InvestArk, North Arkansas or First Bank and (c) there are no
uncured material violations, or violations with respect to which material
refunds or restitutions may be required, cited in any compliance report to
InvestArk, North Arkansas or First Bank as a result of the examination by any
bank regulatory authority.

3.10. Taxes. InvestArk, North Arkansas and First Bank have filed all
tax returns required to be filed by them and have paid or have set up an
adequate reserve for the payment of, all taxes required to be paid as shown on
such returns, and the most recent InvestArk Financial Statements reflect an
adequate reserve for all taxes payable by InvestArk, North Arkansas and First
Bank accrued through the date of such financial statements. There has been no
examination by the United States Internal Revenue Service ("IRS") of InvestArk,
North Arkansas or First Bank for over seven years. There is no examination
pending by the IRS with respect to InvestArk, North Arkansas or First Bank,
neither InvestArk, North Arkansas nor First Bank has executed or filed with the
IRS any agreement which is still in effect extending the period for assessment
and collection of any federal tax, and there are no existing material disputes
as to federal, state, or local taxes due from InvestArk, North Arkansas or
First Bank. There are no material liens for taxes upon the assets of
InvestArk, North Arkansas or First Bank, except for statutory liens for taxes
not yet delinquent. Neither InvestArk, North Arkansas nor First Bank is a
party to any action or proceeding by any governmental authority for assessment
and collection of taxes, and no claim for assessment and collection of taxes
has been asserted against any of them. For the purpose of this Agreement, the
term "tax" (including, with correlative meaning, the terms "taxes" and
"taxable") shall include all federal, state, and local income, profits,
franchise, gross receipts, payroll, sales, employment, use,

<PAGE> 16
personal and real property, withholding, excise and other taxes, duties or
assessments of any nature whatsoever, together with all interest, penalties and
additions imposed with respect to such amounts. InvestArk, North Arkansas and
First Bank have withheld from their employees and timely paid to the
appropriate governmental agency proper and accurate amounts for all periods
through the date hereof in material compliance with all tax withholding
provisions of applicable federal, state, and local laws (including without
limitation income, social security and employment tax withholding for all types
of compensation).

3.11. Certain Agreements. Except as disclosed in Exhibit 3.11,
neither InvestArk, North Arkansas nor First Bank is a party to any (i)
consulting, professional services , employment or other agreement not
terminable at will providing any term of employment, compensation, guarantee,
or severance or supplemental retirement benefit, (ii) union, guild or
collective bargaining agreement, (iii) agreement or plan, any of the benefits
of which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on
the basis of the transactions contemplated by this Agreement, (iv) any stock
option plan, stock appreciation rights plan, restricted stock plan, stock
purchase plan or similar plan granting rights to acquire stock in InvestArk,
North Arkansas or First Bank, or (v) contract containing covenants which limit
the ability of InvestArk, North Arkansas or First Bank to compete in any line
of business or with any person or which involve any restriction of the
geographical area in which, or method by which, InvestArk, North Arkansas or
First Bank may carry on its business (other than as may be required by law or
applicable regulatory authorities). InvestArk, North Arkansas and First Bank
shall terminate all existing consulting, professional services and employment
contracts, other than at will

<PAGE> 17
employment contracts, and those agreements set forth in Exhibit 3.11, by no
later than the Closing Date.

3.12. Benefit Plans. (a) Exhibit 3.12 hereto lists (i) each employee
bonus, incentive, deferred compensation, stock purchase, stock appreciation
right, stock option and severance pay plan, (ii) each pension, profit sharing,
stock bonus, thrift, savings and employee stock ownership plan, and (iii) every
other employee benefit plan (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") (collectively
"Benefit Plans"), which InvestArk, North Arkansas or First Bank maintains or to
which InvestArk, North Arkansas or First Bank contributes on behalf of current
or former employees. All of the plans and programs listed in Exhibit 3.12
(collectively, "InvestArk Benefit Plans") comply in all material respects with
all applicable requirements of ERISA and all other applicable federal and state
laws, including without limitation the reporting and disclosure requirements of
Part 1 of Title I of ERISA. With respect to the InvestArk Benefit Plans,
individually and in the aggregate, no event has occurred, and there exists no
condition or set of circumstances, in connection with which InvestArk, North
Arkansas or First Bank could be subject to any liability that is reasonably
likely to have a material adverse effect upon InvestArk, North Arkansas or
First Bank (except liability for benefits claims and funding obligations
payable in the ordinary course) under ERISA, the Code or any other applicable
law. Each of the InvestArk Benefit Plans that is intended to be a pension,
profit sharing, stock bonus, thrift, savings or employee stock ownership plan
that is qualified under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), has been determined by the IRS to qualify under Section
401(a) of the Code, or an application for the determination of such
qualification will be made to the IRS under Section 401(b) of the Code and the
regulations

<PAGE> 18
thereunder, and there exist no circumstances that would materially adversely
affect the qualified status of any such InvestArk Benefit Plan under that
section. Each InvestArk Benefit Plan that is a defined benefit pension plan
has assets with an aggregate value that exceeds the actuarially present value
of its liability for accrued benefits as determined on the basis of the
actuarial assumptions used for the most recent actuarial valuation of such
Plan, no such Plan has incurred an accumulated funding deficiency within the
meaning of Section 412(a) of the Code, and no such Plan is a "multi-employer
plan" within the meaning of Section 3(37) of ERISA. There is no pending or, to
the best of InvestArk's knowledge, threatened litigation, governmental
proceeding or investigation against or relating to any InvestArk Benefit Plan,
and there is no reasonable basis for any material proceedings, claims, actions
or proceedings against any Plan. No "reportable event" (as defined in Section
4043(b) of ERISA) (other than a "reportable event" for which the 30-day notice
requirement has been waived by the Pension Benefit Guaranty Corporation) has
occurred with respect to any InvestArk Benefit Plan, and no InvestArk Benefit
Plan has engaged in a "prohibited transaction" (as defined in Section 406 of
ERISA and Section 4975(c) of the Code) since the date on which said sections
became applicable to such Plan which could reasonably result in a material
liability.

(b) InvestArk has delivered to United copies of (i) each
InvestArk Benefit Plan, (ii) the most recent summary plan descriptions of each
InvestArk Benefit Plan, (iii) each trust agreement, insurance policy or other
instrument relating to the funding of any InvestArk Benefit Plan, (iv) the most
recent Annual Reports (Form 5500 series) and accompanying schedules filed with
the IRS or United States Department of Labor with respect to each InvestArk
Benefit Plan, (v) the most recent determination letter issued by the IRS with
respect to each InvestArk Benefit Plan that is intended to qualify under
Section 401 of the Code, (vi) the most recent available financial

<PAGE> 19
statements for each InvestArk Benefit Plan that has assets, (vii) the most
recent actuarial report for any InvestArk Benefit Plan that is a defined
benefit pension plan, and if any such Plan was amended subsequent to the date
of such report, information about the financial effects of such amendment and
(viii) the most recent audited financial statements for each InvestArk Benefit
Plan for which audited financial statements are required by ERISA.

3.13. Insurance. InvestArk has delivered to United correct and
complete copies of all material policies of insurance of InvestArk, North
Arkansas and First Bank currently in effect, including, but not limited to,
directors and officers liability policies and blanket bond policies. Neither
InvestArk, North Arkansas nor First Bank has any liability for unpaid premiums
or premium adjustments not properly reflected on the InvestArk Financial
Statements.

3.14. Conduct of InvestArk to Date. Except as contemplated by this
Agreement and the Plan of Merger, from and after December 31, 1992 through the
date of this Agreement: (a) other than the conversion of First Bank to a state
bank, InvestArk, North Arkansas and First Bank have carried on their respective
businesses in the ordinary and usual course consistent with past practices, (b)
InvestArk, North Arkansas and First Bank have not issued or sold any capital
stock or issued or sold any corporate debt securities which would be classified
as long term debt on the balance sheet of InvestArk, North Arkansas or First
Bank, (c) InvestArk, North Arkansas and First Bank have not granted any option
for the purchase of capital stock (except as referred to in Section 3.03),
effected any stock split, or otherwise changed their capitalization, (d)
InvestArk has not declared, set aside, or paid any cash or stock dividend or
other distribution in respect to its capital stock except for usual quarterly
cash dividends of 20 cents per share for the first and second quarters of 1993
and 25 cents per share for the third quarter of 1993; the dividend declared but
not yet paid for the fourth quarter

<PAGE> 20
shall be 50 cents per share, (e) neither InvestArk, North Arkansas nor First
Bank has incurred any material obligation or liability (absolute or
contingent), except normal trade or business obligations or liabilities
incurred in the ordinary course of business, except as set forth on Exhibit
3.11 or in conjunction with this Agreement, or mortgaged, pledged, or subjected
to lien, claim, security interest, charge, encumbrance or restriction any of
its assets or properties, (f) neither InvestArk, North Arkansas nor First Bank
has discharged or satisfied any material lien, mortgage, pledge, claim,
security interest, charges, encumbrance, or restriction or paid any material
obligation or liability (absolute or contingent), other than in the ordinary
course of business, (g) neither InvestArk, North Arkansas nor First Bank has
since September 30, 1993, sold, assigned, transferred, leased, exchanged, or
otherwise disposed of any of its properties or assets other than for a fair
consideration in the ordinary course of business, (h) except as set forth in
Exhibit 3.14(h), neither InvestArk, North Arkansas nor First Bank has increased
the rate of compensation of, or paid any bonus to, any of its directors,
officers, or other employees, except merit or promotion increases (including
bonuses paid in January, 1993) in accordance with existing policy; entered into
any new, or amended or supplemented any existing, employment, management,
consulting, deferred compensation, severance, or other similar contract;
adopted, entered into, terminated, amended or modified any InvestArk Benefit
Plan in respect of any of present or former directors, officers or other
employees; or agreed to do any of the foregoing, (i) neither InvestArk, North
Arkansas nor First Bank has suffered any material damage, destruction, or loss,
whether as the result of flood, fire, explosion, earthquake, accident,
casualty, labor trouble, requisition or taking of property by any government or
any agency of any government, windstorm, embargo, riot, act of God, or other
similar or dissimilar casualty or event or otherwise, whether or not covered by
insurance, (j) neither

<PAGE> 21
InvestArk, North Arkansas nor First Bank has cancelled or compromised any debt
to an extent exceeding $50,000.00 owed to InvestArk, North Arkansas or First
Bank or claim to an extent exceeding $50,000.00 asserted by InvestArk, North
Arkansas or First Bank, (k) neither InvestArk, North Arkansas nor First Bank
has entered into any transaction, contract, or commitment outside the ordinary
course of its business, other than the conversion of First Bank from a national
banking association to a state chartered bank, (1) neither InvestArk, North
Arkansas nor First Bank has entered, or agreed to enter, into any agreement or
arrangement granting any preferential right to purchase any of its material
assets, properties or rights or requiring the consent of any party to the
transfer and assignment of any such material assets, properties or rights, (m)
there has not been any change in the method of accounting or accounting
practices of InvestArk, North Arkansas and First Bank, and (n) InvestArk, North
Arkansas and First Bank have kept all records substantially in accordance with
all regulatory and statutory requirements and substantially in accordance with
industry standards specified by the American Bankers Association, and have
retained such records for the periods required by statute, regulation or
American Bankers Association industry standards.

3.15. Material Adverse Change. Since December 31, 1992, there has
been no material adverse change in the financial condition, results of
operations or business of InvestArk, North Arkansas or First Bank.

3.16. Properties, Leases and Other Agreements. Except (i) with
respect to debts reflected in the InvestArk Financial Statements, (ii) for any
lien for current taxes not yet delinquent, (iii) for pledges to secure deposits
and (iv) for such other liens, security interests, claims, charges, options or
other encumbrances and imperfections of title which do not materially affect
the value or interfere with or impair the present and continued use of personal
or real property reflected in the InvestArk

<PAGE> 22
Financial Statements or acquired since the date of such Statements, InvestArk,
North Arkansas and First Bank have good title, free and clear of any liens,
security interests, claims, charges, options or other encumbrances to all of
the personal and real property reflected in the InvestArk Financial Statements,
and all personal and real property acquired since the date of such InvestArk
Financial Statements, except such personal and real property as has been
disposed of in the ordinary course of business. Substantially all of the
buildings and equipment in regular use by InvestArk, North Arkansas and First
Bank have been reasonably maintained and are in good and serviceable condition,
reasonable wear and tear excepted. All leases material to InvestArk, North
Arkansas and First Bank pursuant to which InvestArk, North Arkansas or First
Bank, as lessee, leases real or personal property are valid and effective in
accordance with their respective terms and there is not, under any of such
leases, any material existing default by InvestArk, North Arkansas or First
Bank, or any other party thereto, or any event which with notice or lapse of
time or both would constitute such a material default. No options to renew
said leases have lapsed and the terms of the leases govern the rights of the
respective landlords of InvestArk, North Arkansas and First Bank.

3.17. Accounting. Neither InvestArk nor any of its affiliates will
take any action that would, in the reasonable opinion of United, prevent the
Merger from qualifying for pooling of interests accounting treatment.

3.18. No Untrue Statements. No representation or warranty hereunder
or information contained in any financial statement or any other document
delivered to United pursuant to this Agreement contains any untrue statement of
a material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading.

3.19. Proper Documentation. With respect to all loans to borrowers
which are payable to

<PAGE> 23
InvestArk, North Arkansas or First Bank either directly or as a participant and
except for such imperfections in documentation which when considered as a whole
would not have a net adverse effect on the business, operations or financial
condition of either InvestArk, North Arkansas or First Bank in excess of
$100,000.00:

(a) All loans were made for good, valuable and adequate
consideration in the normal and ordinary course of business, and the notes and
other evidences of indebtedness and any loan agreements or security documents
executed in connection therewith are true and genuine and constitute the valid
and legally binding obligations of the borrowers to whom the loans were made
and are legally enforceable against such borrowers in accordance with their
terms subject to applicable bankruptcy, insolvency, reorganization, moratorium,
and similar debtor relief laws from time to time in effect, as well as general
principles of equity applied by a court of proper jurisdiction (regardless of
whether such enforceability is considered in a proceeding in equity or at law);

(b) The amounts represented to United as the balances
owing on the loans are the correct amounts actually and unconditionally owing,
are undisputed, and are not subject to any offsets, credits, deductions or
counterclaims;

(c) The collateral securing each loan as referenced in a
loan officer worksheet, loan summary report or similar interoffice loan
documentation is in fact the collateral held by InvestArk, North Arkansas or
First Bank to secure each loan;

(d) InvestArk, North Arkansas or First Bank has
possession of all loan document files and credit files for all loans held by
them containing promissory notes and other

<PAGE> 24
relevant evidences of indebtedness with original signatures of their borrowers
and guarantors;

(e) InvestArk, North Arkansas and First Bank hold validly
perfected liens or security interests in the collateral granted to them to
secure all loans as referenced in the loan officer worksheets, loan summary
reports or similar interoffice loan documentation and the loan or credit files
contain the original security agreements, mortgages, or other lien creation and
perfection documents unless originals of such documents are filed of public
record;

(f) Each lien or security interest of InvestArk, North
Arkansas or First Bank in the collateral held for each loan is properly
perfected in the priority described as being held by InvestArk, North Arkansas
or First Bank in the loan officer worksheets, loan summary reports or similar
interoffice loan documentation contained in the loan document or credit files;

(g) InvestArk, North Arkansas and First Bank are in
possession of all collateral that the loan document files or credit files
indicate they have in their possession;

(h) All guaranties granted to InvestArk, North Arkansas
and First Bank to insure payment of loans constitute the valid and legally
binding obligations of the guarantors and are enforceable in accordance with
their terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, and similar debtor relief laws from time to time in effect, as well
as general principles of equity applied by a court of proper jurisdiction
(regardless of whether such enforceability is considered in a proceeding in
equity or at law);

(i) With respect to any loans in which InvestArk, North
Arkansas and First Bank

<PAGE> 25
have sold participation interests to another bank or other
financial institution, none of the buyers of such participation
interests are in default under any participation agreements.

3.20. Not in Default. Neither InvestArk, North Arkansas nor First
Bank is in default under any material agreement, ordinance, resolution, decree,
bond, note, indenture, order or judgment to which it is a party, by which it is
bound, or to which its properties or assets are subject.

ARTICLE IV

Representations and Warranties of United

United hereby represents and warrants to InvestArk and Sellers as
follows:

4.02. Authority. Subject to the approval of this Agreement and the
Plan of Merger by the shareholders of United and of applicable regulatory
authorities, United has all requisite corporate power and authority to enter
into this Agreement and the Plan of Merger and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Plan of Merger and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of United's board of directors. This Agreement and the Plan of
Merger have been duly executed and delivered by United, and,

<PAGE> 26
subject to such shareholder and regulatory approval, each constitutes a valid
and binding obligation of United enforceable in accordance with its terms,
except as the enforceability of the Agreement may be subject to or limited by
bankruptcy, insolvency, reorganization, arrangement, moratorium or other
similar laws relating to or affecting the rights of creditors. The execution
and delivery of this Agreement and the Plan of Merger do not, and the
consummation of the transactions contemplated hereby and thereby will not,
result in any Violation pursuant to any provision of the Articles of
Incorporation or Bylaws of United or any of its subsidiaries or result in any
Violation of any loan or credit agreement, note, mortgage, indenture, lease, or
other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to United or any of its subsidiaries or their respective properties
or assets. Other than in connection or in compliance with the provisions of
the ABCA, the Securities Act, the Exchange Act, the securities or blue sky laws
of the various states, and consents, authorizations, approvals, notices or
exemptions required under the BHC Act, the National Bank Act, Arkansas banking
laws, and from other regulatory authorities, no consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to United in connection with the
execution and delivery of this Agreement and the Plan of Merger by United or
the consummation by United of the transactions contemplated hereby and thereby,
the failure to obtain which would have a material adverse effect on United or
any United subsidiary.

4.03. Capital Structure of United. The authorized capital stock of
United consists of 12,000,000 shares of common stock, $1.00 par value, of which
4,272,276 shares are outstanding. United has no issued and outstanding bonds,
debentures, notes or other indebtedness having the right

<PAGE> 27
to vote (or convertible into securities having the right to vote) on any
matters on which shareholders may vote. All outstanding shares of United
common stock are validly issued, fully paid, nonassessable, and not subject to
preemptive rights. There are no options, warrants, calls, rights, or
agreements of any character whatsoever to which United is a party or by which
United is obligated to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock or any voting debt securities or by
which United is obligated to grant, extend or enter into any such option,
warrant, call, right or agreement. Immediately before and after the Effective
Time there will be no option, warrant, call, right or agreement obligating
United to issue, deliver or sell, or cause to be issued, delivered or sold, any
shares of capital stock or obligating United to grant, extend or enter into any
such option, warrant, call, right or agreement.

4.04. United Financial Statements. (a) The (i) consolidated balance
sheets of United as of September 30, 1993 and the related consolidated
statements of income, consolidated statements of cash flows and consolidated
statements of shareholders equity for the nine months ended September 30, 1993
and (ii) consolidated balance sheets of United as of December 31, 1991 and
December 31, 1992 and the related consolidated statements of income,
consolidated statements of cash flows and consolidated statements of
shareholders equity for the twelve months ended December 31, 1991 and December
31, 1992, respectively, certified by Arthur Andersen & Company, (items (i) and
(ii) being called collectively the "United Financial Statements" copies of
which have been furnished by United to InvestArk, have been prepared in
accordance with generally accepted accounting principles and practices applied
on a consistent basis throughout the periods involved (except as other side
noted therein and except for year end adjustments of a non-material nature),
and present fairly the consolidated financial condition of United, at the
dates, and the consolidated results of operations

<PAGE> 28
and cash flows for the periods, stated therein. Neither United nor any United
subsidiary has any liability of any nature, whether direct, indirect, accrued,
absolute, contingent or otherwise, which is material to United, except as
provided for or disclosed in the United Financial Statements and except for
such of the following liabilities as are incurred in the ordinary course of
business:

(i) deposit liabilities and interest payable thereon,

(ii) federal funds purchased and securities sold under
repurchase agreements and interest payable thereon,

(iii) other short term borrowings,

(iv) contingent liability upon negotiable instruments
endorsed for the purpose of collection,

(v) taxes,

(vi) accounts payable of the operating business,

(vii) salaries and benefits payable,

(viii) unearned income and premiums,

(ix) abandoned and garnished accounts, and

(x) letters of credit and similar commitments.

4.05. United Reports. United and its subsidiaries have filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that were and are required to be filed with (i)
the FRB, (ii) the Office of the Comptroller of the Currency,, (iii) the FDIC,
(iv) the Arkansas State Bank Department (the "ASBD") and (v) any other
applicable securities, banking or regulatory authorities (all such reports and
statements are collectively referred to herein as the "United Reports") except
where such failure to file would not have a material

<PAGE> 29
adverse effect on the business operations or financial condition of United. The
United Reports complied in all material respects with all of the statutes,
rules and regulations enforced or promulgated by the regulatory authority with
which they were filed and did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.

4.06. Authorizations; Compliance with Applicable Laws. United and its
subsidiaries hold all authorizations, permits, licenses, variances, exemptions,
orders and approvals of all Governmental Entities which are material to the
operations of the businesses of United and its subsidiaries (the "United
Permits").United and its subsidiaries are in compliance with the terms of the
United Permits, except where the failure to comply would not have a material
adverse effect on United. The businesses of United and its subsidiaries are
not being conducted in violation of any federal, state or local law, statute,
ordinance or regulation of any Governmental Entity (collectively "Laws"),
including, without limitation, Regulation O of the FRB, except for possible
violations which individually or in the aggregate do not and, insofar as
reasonably can be foreseen, in the future will not, have a material adverse
effect on United. No investigation or review by any Governmental Entity with
respect to United or its subsidiaries is pending or threatened, nor has any
Governmental Entity indicated an intention to conduct the same. Without
limiting the foregoing, there have been no acts or omissions occurring on or
with respect to real estate currently or previously owned, leased or otherwise
used by United or any United subsidiary or in which United or any United
subsidiary has or had an investment or security interest (by mortgage, deed of
trust, or otherwise), including, without limitation, properties under
foreclosure, properties held by United

<PAGE> 30
or a United subsidiary in its capacity as a trustee, or properties in which any
venture capital or similar unit of United or a United subsidiary has or had an
interest (the "United Property"), which constitute or result, or may have
constituted or resulted, in the creation of any federal, state or common law
nuisance (whether or not the nuisance condition is, or was, foreseen or
unforeseen) or which do not comply or have not complied with federal, state or
local Environmental Laws, and as a result of which acts or omissions United or
a United subsidiary is subject to or reasonably likely to incur a material
liability or suffer a diminution in value of any interest exceeding
$100,000.00. Neither United nor any United subsidiary is subject to or
reasonably likely to incur a material liability or suffer a diminution in
value of any interest exceeding $100,000.00 as a result of its ownership,
lease, operation, or use of any United Property or as a result of its
investment or security interest (as described above) in any United Property (a)
that is contaminated by or contains any hazardous waste, toxic substances or
related materials, including without limitation asbestos, PCBs, pesticides,
herbicides, petroleum products, substances defined as "hazardous substances" or
"toxic substances" in the Environmental Laws, and any other substances or waste
that is hazardous to human health or the environment (collectively, "Toxic
Substances"), or (b) on which any Toxic Substance has been stored, disposed of,
placed, or used in the construction thereof. No claim, action, suit or
proceeding is pending against United or any United subsidiary relating to the
United Property before any court or other governmental authority or arbitration
tribunal relating to Toxic Substances, pollution or the environment, and there
is no outstanding judgment, order, writ, injunction, decree, or award against
or affecting United or any United subsidiary with respect thereto.

4.07. Litigation and Claims. Except as disclosed in this Agreement
(a) neither United nor

30
<PAGE> 31
any United subsidiary is subject to any continuing order of, or written
agreement or memorandum of understanding with, or continuing material
investigation by, any federal or state banking or insurance authority or other
Governmental Entity, or any judgment, order, writ, injunction, decree or award
of any Governmental Entity or arbitrator, including, without limitation,
cease-and-desist or other orders of any bank regulatory authority, (b) there is
no claim of any kind, action, suit, litigation, proceeding, arbitration,
investigation, or controversy affecting United or any United subsidiary pending
or threatened, which will have or can reasonably be expected to have a material
adverse effect on United and (c) there are no uncured material violations, or
violations with respect to which material refunds or restitutions may be
required, cited in any compliance report to United or any United subsidiary as
a result of the examination by any bank regulatory authority.

4.08. Material Adverse Change. Since September 30, 1993, there has
been no material adverse change in the financial condition, results of
operations or business of United.

4.09. Not in Default. Neither United nor any United subsidiary is in
default under any material agreement, ordinance, resolution, decree, bond,
note, indenture, order or judgment to which it is a party, by which it is
bound, or to which its properties or assets are subject.

ARTICLE V

Covenants of InvestArk

5.01. Affirmative Covenants. InvestArk hereby covenants and agrees
with United that prior to the Effective Time, unless the prior written consent
of United shall have been obtained, and except as otherwise contemplated
herein, InvestArk will and InvestArk will cause North Arkansas and First Bank
to:

(a) operate their businesses only in the usual, regular and
ordinary course

31
<PAGE> 32
consistent with past practices;

(b) use reasonable efforts to preserve intact their
business organization and assets, maintain their rights and franchises, retain
the services of their officers and key employees (except that they shall have
the right to lawfully terminate the employment of any officer or key employee if
such termination is in accordance with InvestArk's existing employment
procedures) and maintain their relationships with customers;

(c) use reasonable efforts to maintain and keep their
properties in as good repair and condition as at present, except for
depreciation due to ordinary wear and tear;

(d) use reasonable efforts to keep in full force and
effect insurance and bonds comparable in amount and scope of coverage
to that now maintained; provided, however, that InvestArk shall not be required
to purchase insurance policies for directors' and officers'
liabilities;

(e) perform in all material respects all obligations
required to be performed by them under all material contracts, leases, and
documents relating to or affecting their assets, properties, and business;

(f) comply with and perform in all material respects all
obligations and duties imposed upon them by all Laws; and

(g) give United notice of all boards of directors
meetings, allow United to have a non-voting representative at each such
meeting except to the extent that InvestArk's legal counsel advises the
directors that permitting United's presence would constitute a breach
of their fiduciary duties, and provide United with all written materials and
communications provided to the directors in connection with such
meetings.

5.02. Negative Covenants. Except as specifically contemplated by
this Agreement, from

32
<PAGE> 33
the date hereof until the earlier of the termination of the Agreement
or the Effective Time, InvestArk shall not do, and InvestArk will cause North
Arkansas and First Bank not to do, without the prior written consent of United,
any of the following:

(a) incur any material liabilities or material
obligations, whether directly or by way of guaranty, including any obligation
for borrowed money whether or not evidenced by a note, bond, debenture or
similar instrument, except in the ordinary course of business consistent with
past practice;

(b) (i) except as disclosed in Exhibit 3.14(h), grant
any bonuses or increase in compensation to their employees, officers or
directors, (ii) effect any change in retirement or any other benefits to any
class of employees or officers (unless any such change shall be required by
this Agreement or applicable law) which would increase their retirement
benefit liabilities, (iii) adopt, enter into, amend or modify any InvestArk
Benefit Plan except as provided herein, (iv) terminate the employment or
services of any director or officer, (vi) hire any officer or elect any new
director, or (vii) fix the 1994 rate of compensation for Lloyd Jones, Cole
Martin or Robert Koch;

(c) declare or pay any dividend on, or make any other
distribution in respect of, their outstanding shares of capital stock, except
dividends consistent with past dividend rates; provided, however, that
InvestArk shall not declare or pay any dividends on its common stock in excess
of $1.05 per share paid and $1.15 per share declared in the fiscal year ending
December 31, 1993, and $0.25 per share for the first quarter of 1994, the
50 cents per share dividend declared in the fourth quarter of 1994 being
payable on January 4, 1994;

(d) (i) redeem, purchase or otherwise acquire any shares
of their capital stock or any securities or obligations convertible into or
exchangeable for any shares of their capital stock,

33
<PAGE> 34
or any options, warrants, conversion or other rights to acquire any shares of
their capital stock or any such securities or obligations; (ii) merge with or
into or consolidate with any other corporation or bank, or effect any
reorganization or recapitalization; (iii) purchase or otherwise acquire any
substantial portion of the assets or any class of stock, of any corporation,
bank or other business; (iv) liquidate, sell, dispose of, or encumber any
assets or acquire any assets, other than in the ordinary course of business
consistent with past practice; or (v) split, combine or reclassify any of
their capital or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of their
capital stock;

(e) issue, deliver, award, grant or sell, or authorize or
propose the issuance, delivery, award, grant or sale of, any shares of their
capital stock of any class (including shares held in treasury), any Voting
Debt or any securities convertible into, or any rights, warrants or options
to acquire, any such shares, Voting Debt or convertible securities;

(f) except as may be required by applicable law,
initiate, solicit or encourage (including by way of furnishing information or
assistance), or take any other action to facilitate, any inquiries or the
making of any proposal which constitutes, or may reasonably be expected to
lead to, any Competing Transaction (as such term is defined below), or
negotiate with any person in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or endorse any Competing Transaction, or
authorize any of their officers, directors or employees or any investment
banker, financial advisor, attorney, accountant or other representative
retained by InvestArk, North Arkansas or First Bank to take any such action
and, upon learning of such action by any representative, shall take
appropriate steps to terminate such action, InvestArk shall promptly notify
United orally and in writing of all of the relevant details relating to all
inquiries and proposals which

34
<PAGE> 35
it may receive relating to any of such matters; for purposes of this Agreement,
"Competing Transaction" shall mean any of the following involving
InvestArk, North Arkansas or First Bank; any merger, consolidation, share
exchange or other business combination; a sale, lease, exchange, mortgage,
pledge, transfer or other disposition of a substantial portion of assets; a
sale of shares of capital stock (or securities convertible or exchangeable
into or otherwise evidencing, or any agreement or instrument evidencing, the
right to acquire capital stock);

(g) propose or adopt any amendments to their corporate
charters or bylaws;

(h) authorize, recommend, propose or announce an
intention to authorize, recommend or propose, or enter into an agreement
in principle with respect to any acquisition of a material amount of assets or
securities or any release or relinquishment of any material contract rights
not in the ordinary course of business;

(i) except in their fiduciary capacities, purchase any
shares of United common stock;

(j) change any method of accounting in effect at December
31, 1992, or change any method of reporting income or deductions for federal
income tax purposes from those employed in the preparation of the federal
income tax returns for the taxable year ending December 31, 1992, except as
may be required by law or generally accepted accounting principles;

(k) take action which would or is reasonably likely to
(i) adversely affect the ability of either of United or InvestArk to obtain
any necessary approvals of governmental authorities required for the
transactions contemplated hereby; (ii) adversely affect InvestArk's ability to
perform its covenants and agreements under this Agreement; or (iii) result in
any of the conditions to the Merger set forth in Article VIII not being
satisfied;

35
<PAGE> 36
(l) change the lending, investment, asset/liability
management and other material policies concerning the business of InvestArk,
North Arkansas or First Bank, unless required by Law or order or unless such
change does not cause a material adverse effect on InvestArk, North Arkansas
or First Bank;

(m) agree in writing or otherwise to do any of the
foregoing;

(n) make any single new loan or series of loans not in
accordance with existing loan policies to one borrower or related series of
borrowers in an aggregate amount greater than $250,000.00;

(p) sell or dispose of any real estate or other assets
having a value in excess of $100,000.00.

5.03. Access and Information. Upon reasonable notice, InvestArk
shall (and shall cause North Arkansas and First Bank to) afford to United's
officers, employees, accountants, counsel and other representatives, access,
during normal business hours during the period prior to the Effective Time, to
all its properties, books, contracts, commitments and records. During such
period, InvestArk shall (and shall cause North Arkansas and First Bank to)
furnish promptly to United (i) a copy of each InvestArk Report filed or
received by it during such period pursuant to the requirements of the BHC Act
and any other federal or state banking laws promptly after such documents are
available, (ii) the monthly financial statements of InvestArk, North Arkansas
and First Bank (as prepared in accordance with generally accepted accounting
principles) promptly after

36
<PAGE> 37
such financial statements are available, (iii) a summary of any action
taken by the Boards of Directors, or any committee thereof, of InvestArk, North
Arkansas and First Bank, and (iv) all other information concerning its
business, properties and personnel as United may reasonably request. Unless
otherwise required by law, each party will hold any information obtained from
the other in connection with the transaction which is nonpublic in confidence
until such time as such information otherwise becomes publicly available
through no wrongful act of the party holding nonpublic information of the other
party, and in the event of termination of this Agreement for any reason each
party shall promptly return all nonpublic documents obtained from the other
party, and any copies made of such documents, to such other party or destroy
such documents and copies.

5.04. Update Disclosure; Breaches.

From and after the date hereof until the earlier of the termination of
this Agreement or the Effective Time, InvestArk and United shall provide to the
other party prompt notice of any matters which have occurred from and after the
date hereof which are material to the financial condition or operations of the
disclosing party or which have a material bearing on any matter dealt with
herein.

InvestArk and United shall, in the event either becomes aware of any
existing, impending, or threatened occurrence of any event or condition which
would cause or constitute a material breach (or would have caused or
constituted a breach had such event occurred or been known prior to the date
hereof) of any of the warranties, representations or agreements contained or
referred to herein, give prompt written notice thereof to the other party and
the responsible party shall use its best efforts to prevent or promptly remedy
the same.

5.05 Reserve. InvestArk shall cause North Arkansas by December 31,
1993 to make an addition to its allowance for loan losses in the amount of
$140,000.00 and InvestArk shall cause

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First Bank by December 31, 1993 to make an addition to its allowance
for loan losses in the amount of $450,000.00 and to establish a reserve against
other real estate owned in the amount of $100,000.00. It is expressly
provided, however, that InvestArk, North Arkansas and First Bank shall have no
obligation to make the foregoing additions to reserves unless, after using
their best efforts to obtain such approval and consent, InvestArk, North
Arkansas and First Bank shall have obtained written approval and consent of the
Arkansas State Bank Commissioner to make the additions.

ARTICLE VI

Additional Agreements

6.01. Shareholders Meetings. InvestArk and United shall call meetings
of their shareholders to be held as promptly as practicable for the purpose of
voting upon the Merger Agreements.

6.02. Legal Conditions to Merger. Each of InvestArk and United will
take all reasonable actions necessary to comply promptly with all legal
requirements it may have with respect to the Merger (including furnishing all
information required by the Federal Reserve Board or in connection with
approvals of or filings with any other Governmental Entity) and will promptly
cooperate with and furnish information to each other in connection with any
such requirements imposed upon any of them or any of their subsidiaries in
connection with the Merger. Each of InvestArk and United will, respectively,
cause their subsidiaries to, take in a prompt manner all reasonable actions
necessary to obtain (and will cooperate with each other in obtaining) any
agreement, consent, authorization, order or approval of, or any exemption by,
any Governmental Entity or other public or private third party, required to be
obtained or made by United, InvestArk or any of their subsidiaries in
connection with the Merger or the taking of any action contemplated thereby or
by

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this Agreement and the Plan of Merger.

6.03. Reports.

(a) Prior to the Effective Time, InvestArk shall prepare
and file as and when required all InvestArk Reports.

(b) InvestArk shall prepare such InvestArk Reports such
that (i) they comply in all material respects with all of the statutes, rules
and regulations enforced or promulgated by the regulatory authority with which
they are filed and do not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (ii) with respect to any InvestArk
Reports containing financial information of the type included in the InvestArk
Financial Statements, the financial information (A) is prepared in accordance
with generally accepted accounting principles and practices as utilized in the
InvestArk Financial Statements, applied on a consistent basis (except as stated
therein or in the notes thereto) (B) presents fairly the consolidated financial
condition of InvestArk, at the dates, and the consolidated results of
operations and cash flows for the periods, stated therein and (C) in the case
of interim fiscal periods, reflects all adjustments, consisting only of normal
recurring items necessary for a fair presentation, subject to year-end audit
adjustments.

6.04. Brokers or Finders. Each of United and InvestArk represents,
as to itself, that no agent, broker, investment banker, financial advisor or
other firm or person is or will be entitled to any broker's or finder's fee or
any other commission or similar fee in connection with any of the transactions
contemplated by this Agreement; provided, however, InvestArk may pay Stephens
Inc. a reasonable financial advisory fee for services rendered in connection
with the transactions

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<PAGE> 40
contemplated by this Agreement not to exceed $100,000.00 plus
out-of-pocket expenses, such payment to be subject to receipt of any necessary
regulatory approval.

6.05. Reasonable Efforts. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including cooperating fully with the other parties. In case at any time after
the Effective Time any further action is reasonably necessary or desirable to
carry out the purposes of this Agreement or to vest United with full title to
all properties, assets, rights, approvals, immunities and franchises of either
of InvestArk, North Arkansas or First Bank, the proper officers and directors
of each party to this Agreement shall take all such necessary action.

6.06. Governmental and Other Third Party Approvals. InvestArk and
United shall each use their reasonable best efforts to obtain all governmental
and other third party approvals, authorizations and consents that may be
necessary or reasonably required of them in order to effect the transactions
contemplated by this Agreement. InvestArk and United agree to make all filings
and applications for such approvals and reviews as soon as practicable, to
prosecute the same with reasonable diligence and to notify each other when such
approvals, authorizations and consents have been received. InvestArk and United
will provide each other with copies of all regulatory notices and filings made
in connection with the transactions contemplated by this Agreement prior to
filing. United and InvestArk will each provide to the other copies of any
correspondence received from any regulatory agency relating to such filings,
and shall use its best efforts to keep the other party advised of the progress
of obtaining all regulatory and third party approvals required for the

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<PAGE> 41
consummation of all transactions contemplated by this Agreement.

ARTICLE VII

Conditions Precedent

7.01. Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction prior to the Closing Date of the following conditions:

(a) Shareholder Approval. The Merger Agreements shall
have been approved and adopted by the legally required votes of the holders of
the outstanding shares of InvestArk and United common stock at shareholders
meetings duly called for the purpose of voting on the Merger.

(b) Federal Reserve Board. The Merger Agreements and the
transactions contemplated hereby shall have been approved by the Federal
Reserve Board without any condition not acceptable to United, all conditions
required to be satisfied prior to the Effective Time imposed by the terms of
such approvals shall have been satisfied and all waiting periods relating to
such approvals shall have expired.

(c) Arkansas State Bank Commissioner. The Arkansas State
Bank Commissioner shall have approved the transfer of ownership of North
Arkansas and First Bank to United without any condition not acceptable to
United.

(d) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other order issued
by any court of competent jurisdiction or other legal restraint or prohibition
(an "Injunction") preventing the consummation of the Merger shall be in effect.

(e) No Proceeding or Litigation. No material action,
suit or proceeding before

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<PAGE> 42
any court or any governmental or regulatory authority shall have been
commenced against United, InvestArk or any affiliate, associate, officer or
director of either of them, seeking to restrain, enjoin, prevent, change or
rescind the transactions contemplated hereby or questioning the validity or
legality of any such transactions.

(f) Closing Date. The Closing Date shall occur on or
before May 31, 1994 unless extended by InvestArk and United.

(g) Consents Under Agreements. United, InvestArk and
their subsidiaries shall have obtained the consent or approval of each person
whose consent or approval shall be required in connection with the
transactions contemplated hereby under any loan or credit agreement, note,
mortgage, indenture, lease or other agreement or instrument.

(h) Securities Laws. A registration statement for the
United Stock shall have become effective under the Securities Act and shall
not be the subject of any stop order or proceedings seeking a stop order.
United shall have obtained all securities or "blue sky" permits and other
authorizations necessary under state securities laws for United to issue the
United Stock and consummate the Merger.

7.02. Conditions to Obligations of United. The obligation of United
to effect the Merger is subject to the satisfaction of the following conditions
unless waived in writing by United:

(a) Representations and Warranties. Each of the
representations and warranties of InvestArk set forth in this Agreement shall
be true and correct in all material respects (except that where any statement
in a representation or warranty expressly includes a standard of materiality,
such statement shall be true and correct in all respects) as of the date of
this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date

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<PAGE> 43
as though made on and as of the Closing Date, except for changes expressly
contemplated by this Agreement.

(b) Performance of Obligations of InvestArk. InvestArk
shall have performed in all material respects each of the obligations required
to be performed by it under this Agreement and the Plan of Merger at or prior
to the Closing Date, and United shall have received a certificate signed on
behalf of InvestArk by the chief executive officer and by the chief financial
officer of InvestArk to such effect.

(c) Opinion of Counsel. InvestArk shall have delivered
to United an opinion of its counsel, Shults, Ray and Kurrus, dated as of the
Closing Date and in form and substance satisfactory to counsel for United, to
the aggregate effect that: (i) InvestArk has been duly incorporated and
organized and is a corporation validly existing in good standing under the
laws of Arkansas with full corporate power and authority to enter into this
Agreement and the Plan of Merger and to consummate the transactions
contemplated thereby; (ii) all corporate proceedings and other actions on the
part of InvestArk necessary to be taken in connection with the Merger and
(except for the filing of the Articles of Merger) necessary to make same
effective have been duly and validly taken; (iii) this Agreement and the Plan
of Merger have been duly and validly authorized, executed and delivered on
behalf of InvestArk and constitute (subject to standard exceptions to
enforceability arising from the bankruptcy laws and rules of equity) valid and
binding agreements of InvestArk; and (iv) the execution of the Articles of
Merger by InvestArk has been duly and validly authorized.

(d) No Material Adverse Change. There shall have been no
material adverse change since December 31, 1992 in the financial condition,
results of operations or business of

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<PAGE> 44
InvestArk, North Arkansas or First Bank. Material adverse change shall
include commencement or making of any investigation, lawsuit or claim which, if
decided adversely to InvestArk, North Arkansas or First Bank, would have a
material adverse effect on InvestArk, First Bank or North Arkansas.

(e) Environmental Audits. Phase I environmental audits of the
InvestArk Property shall have been conducted at United's expense and shall, to
United's satisfaction, reflect no material problems under Environmental Laws.

(f) Pooling Opinion. United shall have received an opinion from
Arthur Andersen & Co. to the effect that the Merger qualifies for
pooling-of-interests accounting treatment under applicable accounting
principles and that it will be so treated by the SEC if consummated in
accordance with the Merger Agreements.

(g) FRB Inquiry. Neither United nor InvestArk shall have received
notice from the FRB and/or the Federal Reserve Bank of St. Louis of actual or
proposed regulatory action with respect to the inquiry disclosed in Exhibit
3.08 that could reasonably be expected to have an adverse effect on InvestArk,
United and/or the InvestArk Subsidiaries.

(h) Amendment of Articles of Incorporation. InvestArk shall have
perfected an amendment to its articles of incorporation to provide that it
shall be governed by the Arkansas Business Corporation Act of 1987.

(i) Affiliates. Each person who receives a portion of the United
Stock and who might reasonably be considered to be an affiliate of InvestArk,
as defined in paragraph (a) of Rule 144 of the Rules of the Securities and
Exchange Commission under the Securities Act, shall have executed and delivered
at Closing a letter substantially in the form set forth in Exhibit 7.02(i).

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7.03 Conditions to Obligations of InvestArk The obligation of
InvestArk to effect the Merger is subject to the satisfaction of the following
conditions unless waived by InvestArk:

(a) Representations and Warranties. Each of the
representations and warranties of United set forth in this Agreement shall be
true and correct in all material respects (except that where any statement in a
representation or warranty expressly includes a standard of materiality, such
statement shall be true and correct in all respects) as of the date of this
Agreement and (except to the extent such representations and warranties speak
as of an earlier date) as of the Closing Date as though made on and as of the
Closing Date, except for changes expressly contemplated by this Agreement, and
InvestArk shall have received a certificate signed on behalf of United by the
chief executive officer and by the chief financial officer of United to such
effect.

(b) Performance of Obligations of United. United shall
have performed in all material respects each of the obligations required to
be performed by it under this Agreement and the Plan of Merger at or prior to
the Closing Date, and InvestArk shall have received a certificate signed on
behalf of United by the chief executive officer and by the chief financial
officer of United to such effect.

(c) Opinion of Counsel. United shall have delivered to
InvestArk an opinion of its counsel, Ivester, Skinner & Camp, P.A., dated as
of the Closing Date and in form and substance satisfactory to counsel for
InvestArk, to the aggregate effect that: (i) United is a corporation validly
existing under the laws Arkansas with full corporate power and authority to
enter into this Agreement and the Plan of Merger and to consummate the
transactions contemplated thereby; (ii) all corporate proceedings and other
actions on the part of United necessary to be taken in connection with the
Merger and (except for the filing of the Articles of Merger) necessary to
make same

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effective have been duly and validly taken; (iii) this Agreement has been
duly and validly authorized, executed and delivered on behalf of United and
constitutes (subject to standard exceptions to enforceability arising from
the bankruptcy laws and rules of equity) a valid and binding agreement of
United; and (iv) the execution of the Articles of Merger by United has been
duly and validly authorized.

(d) No Material Adverse Change. There shall have been no
material adverse change since September 30, 1993 in the financial condition,
results of operations or business of United.

ARTICLE VIII

Termination and Amendment

8.01 Termination. This Agreement and the Plan of Merger may be
terminated at any time prior to the Effective Time:

(a) by mutual consent of the Board of Directors of United
and the Board of Directors of InvestArk;

(b) by either United or InvestArk (A) if there has been a
breach in any material respect (except that where any statement in a
representation or warranty expressly includes a standard of materiality, such
statement shall have been breached in any respect) of any representation,
warranty, covenant or agreement on the part of InvestArk, on the one hand, or
United on the other hand, respectively, set forth in this Agreement, or (B)
if any representation or warranty of InvestArk on the one hand, or United on
the other hand, respectively, shall be discovered to have become untrue in any
material respect (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement shall have

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become untrue in any respect), in either case which breach or other
condition has not been cured within 10 business days following receipt by the
nonterminating party of notice of such breach or other condition from the
terminating party;

(c) by either United or InvestArk if any permanent
Injunction preventing the consummation of the Merger shall have become final
and nonappealable;

(d) by either United or InvestArk if the Merger shall not
have been consummated on or before May 31, 1994, for a reason other than the
failure of the terminating party to comply with its obligations under this
Agreement;

(e) by either United or InvestArk if the Federal Reserve
Board has denied approval of the Merger and neither United nor InvestArk has,
within 30 days after the entry of the Federal Reserve Board's order denying
such approval, filed a petition seeking review of such order as provided by
Section 9 of the BHC Act;

(f) by United or InvestArk if any condition precedent to
the terminating party's obligation to effect the Merger has not been satisfied
and such condition cannot reasonably be expected to be satisfied prior to the
date specified in Subsection 8.01(d);

(g) by InvestArk if the United Average Price is less than
$22.00 and the scheduled Closing Date is more than 120 days after the date of
this Agreement; or

(h) by United if the United Average Price is $35.00 or
more and the scheduled Closing Date is more than 120 days after the date of
this Agreement; provided, however, that United may not terminate under this
subsection (h) if United has (i) agreed or announced its intention to be
acquired by a third party or merge into a third party that is the surviving
corporation, or (ii) received an unsolicited offer or proposal to engage in
such a transaction;

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(i) by United if, by no later than December 31, 1993 (i)
North Arkansas shall not have made an addition to its allowance for loan
losses in the amount of $140,000.00 and (ii) First Bank shall not have made an
addition to its allowance for loan losses in the amount of $450,000.00 and
shall have established a reserve against other real estate owned in the amount
of $100,000.00; provided, however, that United shall exercise any right to
terminate under this subsection by no later than January 31, 1994.

8.02. Effect of Termination. In the event of termination of this
Agreement by either InvestArk or United as provided in Section 8.01, this
Agreement and the Plan of Merger shall forthwith become void and there shall be
no liability or obligation on the part of InvestArk, United, or their
respective officers or directors, except to the extent that such termination
results from the willful breach by a party hereto of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.

8.03. Amendment. Subject to the next following sentence, this
Agreement and the Plan of Merger may be amended by the parties hereto by action
taken or authorized by the respective Boards of Directors of United and
InvestArk at any time prior to the Closing Date. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.

8.04. Extension; Waiver. At any time prior to the Effective Time,
United, on the one hand, and InvestArk, on the other hand, by action taken or
authorized by their respective Boards of Directors, may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties of the other contained herein or in any document
delivered by the other pursuant hereto, and (iii) waive compliance by the other
with any of the agreements or conditions contained

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herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on
behalf of such party.

ARTICLE IX

General Provisions

9.01. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally (with receipt
confirmed) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):

(a) if to United, to

First United Bancshares, Inc.
Attention: John E. Burns
P. O. Box 751
El Dorado, Arkansas 71731

with a copy to:

Hermann Ivester, Esq.
Ivester, Skinner & Camp, P.A.
111 Center Street, Suite 1200
Little Rock, Arkansas 72201

(b) if to InvestArk, to:

Mr. Harry C. Erwin
Chairman and Chief Executive Officer
InvestArk Bankshares, Inc.
P. O. Box 908
Stuttgart, AR 72160-0908

with a copy to:

H. Baker Kurrus, Esq.
Shults, Ray & Kurrus
200 West Capitol, Suite 1600

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<PAGE> 50
Little Rock, AR 72201-3637

9.04. Entire Agreement. This Agreement (including the documents and
the instruments referred to herein, including the Plan of Merger) constitutes
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof.

9.05. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Arkansas.

9.06. Publicity. The parties hereto agree that they will consult
with each other concerning any proposed press release or public announcement
pertaining to the Merger and will use their best

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efforts to agree upon the text of such press release or public announcement
prior to the publication of such press release or the making of such public
announcement. However, the determination by United as to when and whether it
will make a public statement and the contents of any such public statement
shall be final and binding.

9.09. Expenses. Except as otherwise provided herein, all Expenses
incurred by United and InvestArk in connection with or related to the
authorization, preparation and execution of this Agreement, the Plan of Merger,
and all other matters related to the closing of the transactions contemplated
hereby, including, without limitation of the generality of the foregoing, all
fees and expenses of agents, representatives, counsel and accountants employed
by either such party or its affiliates, shall be borne solely and entirely by
the party which has incurred the same.

9.10 Non-Survival of Representations and Warranties. None of the
representations, warranties and covenants contained in this Agreement shall
survive the Closing or, following Closing, be the basis for any action by any
party; all terms and conditions hereof shall merge in the

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closing documents and shall not survive Closing.

IN WITNESS WHEREOF, InvestArk and United have caused this Agreement to
be signed by their respective officers thereunto duly authorized, all as of the
date first written above.

FIRST UNITED BANCSHARES, INC.

By: /s/ JAMES V. KELLEY
James V. Kelley
Chairman, President and
Attest: Chief Executive Officer

/s/ ROBERT G. DUDLEY
Robert G. Dudley, Secretary

INVESTARK BANKSHARES, INC.

By: /s/ HARRY C. ERWIN
Attest: Harry C. Erwin
Chairman, President and
Chief Executive Officer

/s/ JOHN STEPHENS
Secretary

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EXHIBIT A
PLAN OF MERGER

This Plan of Merger, dated as of December 17, 1993 ("Plan of Merger"), by
and between First United Bancshares, Inc., an Arkansas corporation ("United"),
and InvestArk Bankshares, Inc., an Arkansas corporation ("InvestArk").

WHEREAS, InvestArk is a corporation with authorized capital stock
consisting of 5,000,000 shares of common stock, $10.00 par value of which
219,122 shares of common stock, including 3,766 treasury shares, ("InvestArk
Common Stock") are validly issued and outstanding on the date hereof;

WHEREAS, United is a corporation with authorized capital stock of
12,000,000 shares of common stock, $1.00 par value, of which 4,272,276 shares
are validly issued and outstanding on the date hereof;

WHEREAS, United is a corporation duly organized and existing under the
laws of Arkansas;

WHEREAS, concurrently with the execution and delivery of this Plan of
Merger, United and InvestArk have entered into an Agreement and Plan of
Reorganization (the "Agreement" and, together with this Plan of Merger, the
"Merger Agreements") that contemplates the merger of InvestArk with and into
United (the "Merger") upon the terms and conditions provided in this Plan of
Merger and the Agreement and pursuant to the Arkansas Business corporation Act
(the "ABCA");

WHEREAS, the Boards of Directors of United and InvestArk deem it fair and
equitable to, and in the best short-term and long-term interests of, their
respective corporations and shareholders that InvestArk be merged with and into
United with United being the surviving corporation, and each such Board of
Directors has approved this Plan of Merger, has authorized its execution and
delivery, and has directed that this Plan of Merger and the Merger be submitted
to InvestArk and United shareholders for approval.

NOW, THEREFORE, in consideration of the promises and the agreements
herein contained, the parties hereto adopt and agree to the following
agreements, terms and conditions relating to the Merger and the mode of
carrying the same into effect:

ARTICLE I

The Merger

1.01. The Merger. Subject to the terms and conditions of the Merger
Agreements, InvestArk will be merged with and into United, which will continue
as the surviving corporation, in accordance with and with the effect provided
in the ABCA.
<PAGE> 54
1.02. Effective Time of the Merger. Subject to the provisions of the
Merger Agreements, articles of merger (the "Articles of Merger") shall be duly
prepared and executed by United and InvestArk and thereafter delivered to the
Secretary of State of the State of Arkansas for filing, as provided inthe ABCA,
as soon as practicable on or after the Closing Date (as defined in the
Agreement). The Merger shall become effective upon the filing of the Articles
of Merger with the Secretary of the State of Arkansas or at such time within
two business days thereafter as is provided in the Articles of Merger (the
"Effective Time").

1.03. Effects of the Merger. (a) At the Effective Time, (i) the separate
existence of InvestArk shall cease and InvestArk shall be merged with and into
United (United and InvestArk are sometimes referred to herein as the
"Constituent Corporations" and United is sometimes referred to herein as the
"Surviving Corporation"), (ii) the Articles of Incorporation of United in
effect as of the Effective Time (the "Articles") shall be the Articles of
Incorporation of the Surviving Corporation, and (iii) the Bylaws of United in
effect as of the Effective Time (the "Bylaws") shall be the Bylaws of the
Surviving Corporation.

(b) At and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises of a public as well
as of a private nature, and be subject to all the restrictions, disabilities
and duties of each of the Constituent Corporations; and all and singular
rights, privileges, powers and franchises of each of the Constituent
Corporations, and all property, real, personal and mixed and all debts due to
either of the ConstituentCorporations on whatever account, as well as for stock
subscriptions and all other things in action or belonging to each of the
Constituent Corporations, shall be vested in the Surviving Corporation; and all
property, rights, privileges, powers and franchises, and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of the Constituent Corporations, and the title to any
real estate vested by deed or otherwise, in either of the Constituent
Corporations, shall not revert or be in any way impaired; but all rights of
creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired, and all debts, liabilities and
duties of the Constituent Corporations shall thenceforth attach to the
Surviving Corporation, and may be enforced against it to the same extent as if
said debts and liabilities had been incurred by it. Any action or proceeding,
whether civil, criminal or administrative, pending by or against either
Constituent Corporation shall be prosecuted

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as if the Merger had not taken place, and the Surviving Corporation may be
substituted as a party in such action or proceeding in place of any Constituent
Corporation.

ARTICLE II

Effect of the Merger on the Common Stock
of the Constituent Corporations;
Exchange of Certificates

2.01. Conversion of InvestArk Common Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of InvestArk Common Stock, but subject to the rights of dissenting
shareholders of InvestArk:

(a) Conversion of InvestArk Common Stock. The issued and outstanding
shares of InvestArk Common Stock shall be converted in accordance with the
Agreement into the right to receive the consideration provided in Section 2.01
of the Agreement.

(b) Cancellation of Shares. All shares of InvestArk Common Stock issued
and outstanding immediately prior to the Effective Time shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any such shares shall
cease to have any rights with respect thereto, except the right to receive a
pro rata amount of the consideration provided therefor upon the surrender of
such certificate in accordance with the Plan of Merger.

2.02. Exchange of Certificates. (a) Exchange Agent. As of the Effective
Time, United shall deposit with the Trust Department of First National Bank of
El Dorado, El Dorado,Arkansas or such other bank or trust company designated by
United (the "Exchange Agent") for the benefit of the holders of shares of
InvestArk Common Stock, for exchange in accordance with this Article II through
the Exchange Agent, the number of shares of United common stock and cash (the
"Exchange Fund") to be paid pursuant to Section 2.01 in exchange for shares of
InvestArk Common Stock outstanding immediately prior to the Effective Time.

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<PAGE> 56
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in such form
and have such other provisions as United may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the United common stock and cash payment due. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by United, together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing the number of whole shares of
United common stock and cash which such holder has the right to receive
pursuant to Section 2.01 of the Agreement, and the Certificate so surrendered
shall forthwith be cancelled. Until surrendered as contemplated by this
Section 2.02, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the
consideration specified in Section 2.01 of the Agreement.

(c) Distributions with Respect to Unexchanged Shares. No delivery of
United common stock or cash payment of any kind shall be made to the holder of
any unsurrendered Certificate until the holder of record of such Certificate
shall surrender such Certificate.

(d) No Further Ownership Rights in InvestArk Common Stock. The
consideration paid upon the surrender of shares of InvestArk Common Stock in
accordance with the terms hereof including any cash shall be deemed to have
been paid in full satisfaction of all rights pertaining to such shares of
InvestArk Common Stock, and there shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the shares of
InvestArk Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be cancelled and payment
shall be made as provided in this Plan of Merger.

(e) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the shareholders of InvestArk for six months
after the Effective Time shall be delivered to United, upon demand, and any
shareholders of InvestArk who have not theretofore complied with this Section
2.02 shall thereafter look only to United for payment of the United common
stock and cash due for their InvestArk stock.

4
<PAGE> 57
(f) No Liability. Neither United nor InvestArk shall be liable to
any holder of shares of InvestArk Common Stock for shares of United common
stock or cash from the Exchange Fund delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.

ARTICLE III

Conditions; Termination; Amendment

3.01. Conditions to the Merger. Consummation of the Merger is
conditional upon the fulfillment or waiver of the conditions precedent set
forth in Article VII of the Agreement.

3.02. Termination. This Plan of Merger may be terminated and the Merger
abandoned by mutual consent of the respective Boards of Directors of InvestArk
and United at any time prior to the Effective Time. If the Agreement is
terminated in accordance with Article IX thereof, then this Plan of Merger will
terminate simultaneously and the Merger will be abandoned without further
action by InvestArk or United.

3.03. Amendment. Subject to the next following sentence, this Plan of
Merger may be amended by the parties hereto by action taken or authorized by
their respective Boards of Directors at any time before the Closing Date. This
Plan of Merger may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.

3.04. Extension; Waiver. At any time prior to the Closing Date, United
and InvestArk, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other party hereto
and (ii) waive compliance by the other with any of the agreements or conditions
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument on
behalf of such party.

ARTICLE IV

General Provisions

4.01. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally (with receipt
confirmed) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):

(a) if to United, to

First United Bancshares, Inc.
Attention: John E. Burns

5
<PAGE> 58
P. O. Box 751
El Dorado, Arkansas 71731

with a copy to:

Hermann Ivester, Esq.
Ivester, Skinner & Camp, P.A.
111 Center Street, Suite 1200
Little Rock, Arkansas 72201

(b) if to InvestArk, to

Mr. Harry C. Erwin
Chairman and Chief Executive Officer
InvestArk Bankshares, Inc.
P.O. Box 908
Stuttgart, Arkansas 72160-0908

with a copy to:

H. Baker Kurrus, Esq.
Shultz, Ray & Kurrus
Worthen Bank Building
200 West Capitol Avenue, Suite 1600
Little Rock, Arkansas 72203

4.02. Interpretation. When a reference is made in this Plan of Merger to
Sections, such reference shall be to a Section of this Plan of Merger unless
otherwise indicated. The headings contained in this Plan of Merger are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Plan of Merger.

4.03. Counterparts. This Plan of Merger may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when twoor more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

4.04. Governing Law. This Plan of Merger shall be governed and construed
in accordance with the laws of the State of Arkansas.

IN WITNESS WHEREOF, InvestArk and United have caused this Plan of Merger
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.

FIRST UNITED BANKSHARES, INC.

By: /s/ James V. Kelley
-------------------------------

James V. Kelley
Chairman, President and
Chief Executive Officer

6
<PAGE> 59
Attest:

/s/ Robert G. Dudley
- - - --------------------------

Robert G.Dudley, Secretary

INVESTARK BANKSHARES, INC.

By: /s/ Henry C. Erwin
-------------------------------

Henry C. Erwin
Chairman, President and
Chief Executive Officer

/s/ John Stephens
- - - -------------------------

Secretary

7
<PAGE> 60
EXHIBIT 3.08

RESERVE BOARD INQUIRY

The Federal Reserve Board has inquired about certain transactions by
and among InvestArk, First Bank, North Arkansas and Stephens Inc. The Federal
Reserve Board has questioned these transactions under Sections 23A and 23B of
the Federal Reserve Act. The boards of directors of First Stuttgart Bank &
Trust Company and Bank of North Arkansas have received full reports of these
transactions and have provided to The Federal Reserve Board the L.information
requested by such Board.
<PAGE> 61
EXHIBIT 3.09

LITIGATION AND CLAIMS

The following matters are disclosed pursuant to Section 3.09:

1. Claim by Charles C. Miller, Estate of Annie Smith and/or assigns and
distributees, and Gwen Lee for payment pursuant to a stock purchase agreement
dated December 27, 1984. All other similarly situated claimants have accepted
the sum of $23.40 per share in payment of the obligations set forth in such
agreement. The amount payable under the stock purchase agreement to the three
claimants is calculated by InvestArk to be $30,771.00.

2. Griffith Farming v. First National Bank in Stuttgart; Circuit Court
of Monroe County, Arkansas; No. CIV-89-3.
<PAGE> 62
EXHIBIT 3.11

1. Agreement with Erwin & Co. for preparation of 1993 tax returns for
InvestArk, First Bank, and North Arkansas.

2. Agreement with Martin and Company for preparation of 1993 audits
return for InvestArk, First Bank, and North Arkansas.

3. Supplemental retirement contract dated January 5, 1991, between Lloyd
Jones and North Arkansas.

4. Engagement letter between Stephens Inc. and InvestArk, and the
related indemnity agreement.

5. Leases, maintenance agreements, service contracts and other similar
agreements on miscellaneous fixtures, equipment, software and other property
entered into in the ordinary course of business, such as vault maintenance
contracts, elevator maintenance contracts, cleaning service contracts, software
licenses and maintenance agreements and the like.

6. Agreement regarding life insurance with Cole Martin.
<PAGE> 63
EXHIBIT 3.12

1. Profit Sharing Plan at Bank of North Arkansas.,as.

2. Defined Contribution Qualified Pension Plan at First Bank.

3. Self-Insured Health Care Plan (contract expires 8/1/94).

4. Miscellaneous life and accident policies (expiration last day of each
month).
<PAGE> 64
EXHIBIT 3.14(h)

COMPENSATION INCREASES

There are no bonuses or increases in compensation for employees of North
Arkansas or First Bank other than those bonuses and increases in compensation
which have been authorized in the books and records of the companies and which
have been accrued and budgeted. For First Bank, bonuses totaling $103,765.44
have been authorized. For North Arkansas, bonuses totaling $30,000 have been
authorized. The weighted average percentage salary increase for North Arkansas
employees from 1993 to 1994, exclusive of compensation for Lloyd Jones, is
approximately 3.7%. The 1994 compensation for Lloyd Jones has not been fixed.

The 1994 compensation for Cole Martin and Robert M. Koch have not been
determined.
<PAGE> 65
Exhibit 7.02(i)

First United Bancshares, Inc.
Main and Washington Streets
El Dorado, Arkansas 71730

Gentlemen:

I may presently be considered to be an "affiliate", as defined in
paragraph (a) of Rule 144 of the Rules and Regulations of the Securities and
Exchange Commission ("SEC") under the Securities Act of 1933, as amended (the
"Act"), of InvestArk Bankshares, Inc. an Arkansas Corporation ("InvestArk").
Pursuant to the merger (the "Merger") of InvestArk with and into First United
Bancshares, Inc. ("First United"), I will acquire ________shares of the common
stock, par value $1 per share ("Common Stock"), of First United. I represent
and warrant that I (i) am acquiring said shares (as the same may be increased,
decreased or are changed in accordance with the Agreement and Plan of Merger
dated December 17, 1993, relating to the Merger, the ("Shares") for my own
account (or in the capacity indicated hereon) and with no present intention of
dividing my participation with others or otherwise making a distribution of the
Shares and (ii) shall not make any sale, transfer or other disposition of the
Shares in violation of the Act or the General Rules and Regulations promulgated
thereunder by the SEC.

I have been advised that the issuance of the Shares to me pursuant to the
Merger has been registered under the Act in the Registration Statement on SEC
Form 5-4, as amended, Registration No. _______ ("Registration Statement") as
filed with the SEC, receipt of a copy of which Registration Statement is hereby
acknowledged. However, I have also been advised that any public offering or
sale by me of any of the Shares will, under current law, require either (i) the
further registration (by amendment of such Form S-4 or otherwise) under the Act
of the Shares to be sold or (ii) compliance with Rule 145 promulgated under the
Act or (iii) the availability of another exemption from such registration.

I agree not to sell, transfer or dispose of the Shares ounless (i) there
is in effect a registration statement under the Act covering such sale,
transfer, or other disposition, or (ii), such sale, transfer or disposition
complies with Rule 145 or is otherwise exempt from registration. Further, I
will furnish to First United such documentation incident to such sale, transfer
or other disposition as First United shall reasonably request evidencing the
availability of any exemption from registration being claimed. Such
documentation shall be provided to First United prior to any such sale,
transfer or other disposition in order that First United, or its counsel, may
have a reasonable opportunity to review the documentation and form an opinion
as to the validity of any such exemption.

I agree that notwithstanding any provision herein or contained in the
Agreement and Plan of Reorganization that I will not sell, transfer, or
otherwise dispose of the Shares, unless United has made public disclosure of
financial results reflecting 30 days' of post-Merger combined operations of
InvestArk and First United within the meaning of Section 201.01 of the SEC's
Codification of Financial Reporting Policies. In addition, I hereby represent
and warrant to First United that I have not made any sales of InvestArk or
United common stock during the 30-day period immediately preceding the date
hereof and I further agree not to engage in any such sales prior to the merger,
nor have I pledged or will I pledge any United or InvestArk common stock to
secure any obligation during such period.

I represent and warrant to First United that:

1. I have carefully read this letter and discussed its requirements and
other applicable limitations upon the sale, transfer or other disposition of
the Shares, to the extent I felt necessary, with my counsel or counsel for
InvestArk.

2. I have been informed by First United that any distribution by me of
the Shares has not been registered under the Act and that the Shares must be
held by me indefinitely until (i) such distribution of the Shares has been
registered under the Act, (ii) a sale of the Shares is made in
<PAGE> 66
conformity with the volume and other limitations of Rule 145 promulgated by the
SEC under the Act, or (iii) some other exemption from registration is available
with respect to any such proposed sale, transfer or other disposition of the
Shares.

3. I have been informed by First United that it is required file periodic
reports with the SEC and the NASDAQ and that certain sales of the Shares by me
may not be required to be registered under the Act by virtue of Rule 145
promulgated by the SEC under the Act, provided that such sales are made in
accordance with all of the terms and conditions of such Rule, including among
other things the following:

(a) The amount of First United Common Stock sold by me pursuant to Rule
145 during any period of three months cannot exceed the quantity limit of (i)
one percent of the total outstanding First United Common Stock or (ii) the
average reported weekly trading volume on NASDAQ during the four week period
immediately preceding receipt of the order by the broker to execute the
transaction, whichever of (i) or (ii) is greater. In computing the quantity
limit it is necessary to count sales not only by me but also by certain
immediate family members and other related persons and others with whom I may
act in concert.

(b) Sales must be made in brokers' transactions as defined by the SEC Rule
144 (certain provisions of which are incorporated by reference into Rule 145).

(c) No sales may be made under the Rule unless First United has filed all
SEC reports required to be filed by First: United.

(d) The broker must be given information showing compliance with Rule 145.

4. I understand that First United is under no obligation to oregister
(except to the extent as expressed in that Certain Shareholders Agreement,
dated December l7, 1993) the sale, transfer or other disposition of the Shares
by me or on my behalf or to take any other action necessary in order to make
compliance with an exemption from registration available.

5. I have been informed by First United that if I propose to sell any of
these Shares pursuant to Rule 145, and if such sale would be permitted under
the terms of this letter, First United will, upon my written request, supply me
with the following:

(a) A statement as to whether First United has complied with the
provisions of Rule 145 regarding filing of SEC reports as a condition to sales
made pursuant to that Rule;

(b) A confirmation as to the number of shares of First United Common
Stock outstanding as shown by the most recent report or statement published by
it; and

The information and documents described or referred to above were
furnished to me before my right to acquire the Shares became fixed.

Very truly yours,

<PAGE> 1
EXHIBIT 13

FIRST UNITED BANCSHARES, INC.

1994 ANNUAL REPORT TO STOCKHOLDERS

AND FORM 10-K
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Financial Highlights 1
Letter to the Stockholders 2
Financial Analysis 4-19
Selected Financial Data 20
Quarterly Results of Operations 21
Financial Statements and Notes 22-37
Report of Independent Public Accountants 38
Form 10-K 39-42
Officers and Directors of First United and its Subsidiaries 43-46
Corporate Information 47
</TABLE>

<PAGE> 3
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
=================================================================================================================
FIRST UNITED BANCSHARES, INC. %
(Dollars in Thousands Except Per Share Data) 1993 1992 Change
- - - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME DATA
Income Before Cumulative Effect of a Change in
Accounting Principle $ 11,937 $ 10,443 14%
Net Income 14,459 10,443 38%
Net Interest Income 35,553 34,691 2%
- - - -----------------------------------------------------------------------------------------------------------------
PER COMMON SHARE DATA
Income Before Cumulative Effect of a
Change in Accounting Principle $ 2.79 $ 2.44 14%
Net Income 3.38 2.44 39%
Book Value(End of Period) 21.36 18.64 15%
Tangible Book Value(End of Period) 20.35 17.82 14%
Market Value(End of Period) 29.50 26.00 13%
Cash Dividends .66 .60 10%
- - - -----------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA (YEAR END)
Total Securities(1) $ 425,535 $ 427,090 0%
Loans(2) 414,810 363,655 14%
Earning Assets(2) 873,014 833,865 5%
Total Assets 938,694 895,527 5%
Deposits 806,449 772,995 4%
Shareholders' Equity 91,257 79,618 15%
- - - -----------------------------------------------------------------------------------------------------------------
KEY RATIOS
Return on Average Assets 1.27% 1.20%
Return on Average Equity 13.92% 13.78%
Net Interest Margin(FTE) 4.42% 4.41%
Allowance for Loan Losses to Loans(2) 2.04% 1.90%
Equity to Assets 9.72% 8.89%
Leverage Ratio 9.31% 8.58%
Primary Capital Ratio 10.53% 9.59%
=================================================================================================================
</TABLE>

(1) Includes investment and held for sale securities.

(2) Net of unearned income.

<PAGE> 4
LETTER TO THE STOCKHOLDERS

To Our Stockholders and Friends:

1993 saw significant positive developments in our company, further
strengthening its position for future growth and success.

Our profits on continuing operations, bolstered by an unusually high
interest spread, increased by 14% to $11.9 million. This equates to a 1.27%
return on assets and 13.92% return on equity.

Additionally, a one time gain of $2.5 million was recorded due to a change
in accounting principles for deferred income tax. This brought total income to
$14.4 million.

Encouraged by our results and confident of the future, the Board of
Directors again raised the dividend rate on our common stock by 13.3% to $.68
per share annually.

Loan demand, which has been soft in the last few years, began to strengthen
in 1993. Consumer borrowing for homes, autos and other items contributed to an
increase in loan totals to $415.4 million, an amount equal to 51% of deposits.

Asset quality remains very good with non-performing assets totalling only
$3.6 million at year-end. Our reserve for loan losses (2.04% of total loans)
and reserves to non-performing loans (3.15 times) continue to be higher than in
past years.

Total equity capital to assets was 9.72% and Tier 1 capital was 18.83%. Both
of these ratios indicate our commitment to safety and soundness and our ability
to fund the growth of assets with existing capital.

Expansion plans and actions begun in 1993 will continue through 1994.

On December 1, 1993, we completed the acquisition of Commercial Bank at
Alma, a welcome addition to our western Arkansas franchise.

On October 21, 1993, we announced our intention to merge with InvestArk
Bankshares, Inc., a $185 million bank holding company with offices in
Stuttgart, Melbourne, Horseshoe Bend and Calico Rock. It is our belief that
this transaction will be completed in early 1994.

Additionally, due to a scheduled change in Arkansas branch banking law, the
City National Bank of Fort Smith has made application to open full-service
offices in Van Buren and Greenwood, two thriving communities in western
Arkansas.

Year-end assets were $938.7 million, but with our announced expansion plans
we should exceed the one billion dollar mark early in 1994.

Over the last couple of years, we have spoken to you about our "future worth
banking on." Those sentiments are still at work as each director and each
employee continue their efforts on behalf of this company.

James V. Kelley

<PAGE> 5
FIRST UNITED'S LOAN POLICY PERMITS FUNDS OBTAINED
LOCALLY TO BE RE-CHANNELED INTO THE COMMUNITIES IT
SERVES, PROMOTING ECONOMIC GROWTH.

<PAGE> 6
FINANCIAL ANALYSIS

OVERVIEW

The following financial review and analysis is intended to highlight the
significant factors affecting First United Bancshares, Inc. (First United)
Consolidated Statements of Condition and Statements of Income presented in this
Annual Report. This discussion is designed to provide readers with a more
comprehensive review of the operating results and financial position than would
be obtained from an examination of the financial statements alone. Reference
should be made to those statements and the selected financial data presented
elsewhere in this Annual Report for an understanding of the following review
and analysis.

In May, 1993, First United increased its quarterly cash dividend by 13% as a
result of higher sustainable earnings. The current annual dividend rate is
$.68 per share versus $.60 prior to the increase.

On November 30, 1993, First United acquired Commercial Bank at Alma in Alma,
Arkansas for a purchase price of $5.5 million. The consolidated assets of Alma
were approximately $44.4 million at the date of acquisition.

On December 17, 1993, First United and InvestArk Bankshares, Inc.
(InvestArk) entered into an agreement pursuant to which First United proposes
to acquire all of the issued and outstanding stock of InvestArk through the
issuance to InvestArk's stockholders of up to 985,849 shares of First United
common stock. The agreement requires that the merger be accounted for as a
pooling of interests.

The common stock quoted market price increased by approximately 13% during
1993, going from $26.00 per share at January 1, 1993 to $29.50 at December 31,
1993.

Operations for 1993 resulted in net income before the cumulative effect of a
change in accounting principle of $11.9 million or $2.79 per share compared to
$10.4 million or $2.44 per share in 1992 and $7.5 million or $1.77 per share in
1991. During 1993, First United implemented, as required, the new standard on
accounting for income taxes. Net income after the effect of this change in
accounting principle was $14.5 million or $3.38 per share for the year. As
shown in Table 1, the most significant changes in per share net income occurred
in net interest income and income tax expense. A more detailed discussion of
the components of net income is given throughout this Financial Analysis.

TABLE 1: CHANGES IN PER SHARE INCOME

<TABLE>
<CAPTION>
December 31,
- - - ---------------------------------------------------------------------------------------------------------------
1993 1992 1991
- - - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prior year income $2.44 $1.77 $1.74
Increase(decrease)
attributable to:
Net interest income .20 1.11 .71
Provision for loan losses .28 .19 (.27)
Non-interest income (.08) .13 .07
Non-interest expense .14 (.37) (.37)
Income taxes (.19) (.39) (.11)
Cumulative Effect of Accounting
Change .59 -0- -0-
- - - ---------------------------------------------------------------------------------------------------------------
Current year income $3.38 $2.44 $1.77
- - - ---------------------------------------------------------------------------------------------------------------
</TABLE>

Net income before the cumulative effect of the change in accounting
principle as a percentage of total average assets (ROA) was 1.27% in 1993
versus 1.20% in 1992 and .90% in 1991. The return on shareholder's equity (ROE)
before the cumulative effect of the change in accounting principle was 13.92%
in 1993 versus 13.78% in 1992 and 10.96% in 1991. These measures compare
favorably with banks of similar size nationwide.

Total assets at December 31, 1993 were $938.7 million, 5% higher than 1992
when total assets were $895.5 million. The increase in total assets at December
31, 1993 from December 31, 1992 was primarily the result of the acquisition of
Commercial Bank at Alma.

The book value of First United's common stock increased 15% to $21.36 per
share in 1993 from $18.64 per share in 1992. Cash dividends were $.66 per
share in 1993 and $.60 per share in 1992 and $.50 per share in 1990.

<PAGE> 7
EARNINGS ANALYSIS

NET INTEREST INCOME

Net interest income, the principal source of earnings, is the difference
between the income generated by earning assets and the total interest cost of
the funds obtained to carry them. Net interest income, as it is referred to in
this discussion, is on a fully tax-equivalent basis, which adjusts for the
tax-exempt status of income earned on certain municipal loans and investments.
The reported interest income for these tax-free assets is increased by the
amount of income tax savings less the nondeductible portion of interest expense
incurred to acquire the tax-free assets.

On a tax-equivalent basis, net interest income for the year ended December
31, 1993 was $36.8 million, an increase of 3% over the year-end 1992 total of
$35.8 million. Net interest income for the year ended December 31, 1991 was
$31.3 million. The 3% increase in net interest income for 1993 was primarily
the result of a lower interest rate environment which, combined with First
United's negative GAP position, allowed for improved margins.

TABLE 2: ANALYSIS OF NET INTEREST MARGIN
<TABLE>
<CAPTION>
December 31,
- - - ---------------------------------------------------------------------------------------------------------------
1993 1992 1991
- - - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Yield on earning assets 7.28% 7.94% 9.26%
Break-even yield 2.86% 3.53% 5.14%
Net interest margin 4.42% 4.41% 4.12%
Net interest spread 3.84% 3.73% 3.22%
- - - ---------------------------------------------------------------------------------------------------------------
</TABLE>

The net interest spread increased in 1993 when compared with the previous
two years, from 3.73% and 3.22%, respectively, in 1992 and 1991 to 3.84% in
1993. First United's negative GAP position, as well as a lower cost of funds,
has contributed to the increase in net interest margin and spread.

Earning assets increased 5%, from $833.9 million at December 31, 1992 to
$873.0 million at year-end 1993. Total securities decreased $1.5 million and
total short-term investments decreased $10.4 million while loans increased
$51.2 million. As a percentage of earning assets, loans increased from 44% to
48%, total securities decreased from 11% to 10% and short-term investments
decreased from 5% to 4%. The mix of earning assets reflected a shift from
short-term investments and securities to loans. The increase in the level of
earning assets and the change in mix can be attributed to the 1993 acquisition
of Commercial Bank at Alma.

Interest-bearing deposits increased $29.7 million during 1993. Total
interest-bearing deposits were $682.6 million at December 31, 1993 compared
with $652.9 million at year-end 1992. Non-interest-bearing demand increased
$3.8 million or 3% during 1993.

NON-INTEREST INCOME

Securities gains totalled $.05 million in 1993 compared to $.39 million in
1992 and $.25 million in 1991. During 1992, First United realized security
gains primarily from the sale of fixed-rate Mortgage-Backed Securities. These
securities were sold and reinvested in similar securities with adjustable
rates. The carrying value of securities sold during 1993 was approximately $1.0
million as compared to $15.4 million and $30.0 million in 1992 and 1991,
respectively.

Total non-interest income, excluding security gains, was $5.1 million for
1993 compared with $5.1 million for 1992 and $4.7 million for 1991. The
increase in 1992 over 1991 levels was primarily the result of increases in City
National Bank's mortgage loan servicing fees which are included in the category
of other operating income.

PROVISION FOR LOAN LOSSES

The provision for possible loan losses is the amount charged to current
period earnings. In order to ensure that the provisions maintain the allowance
at an adequate level, First United considers factors such as watch list
trends, the collateral adequacy of loans on the watch list, economic
conditions, net charge-offs and the size of the loan portfolio in determining
the current period provision.

5
<PAGE> 8

The provision for loan losses totalled $1.2 million in 1993 versus $2.4
million in 1992 and $3.2 million in 1991. Net loan losses of $1.8 million in
1992 were primarily the result of commercial credits at First National Bank of
El Dorado (El Dorado) and First National Bank of Magnolia (Magnolia) and
commercial real estate credits at Ft. Smith which were deemed uncollectible.
Net loan losses in 1991 were primarily the result of commercial credits at
Magnolia. During 1992 and 1991, First United made significant provisions in
order to maintain adequate levels of protection against possible loan losses.

NON-INTEREST EXPENSE

Non-interest expense decreased 3% or $.06 million in 1993 over 1992 levels,
and increased 8% in 1992 over 1991 levels. The decrease in 1993 was primarily
in other operating expenses.

Pension and employee benefits increased 15% during 1992 when compared with
the same period in 1991, primarily as a result of higher net periodic pension
costs related to the defined benefit pension plan. The 9% increase in other
operating expenses was attributable primarily to increased FDIC insurance costs
and write-down of other real estate owned. Additional information concerning
other real estate can be found in Note 1 in the Notes to the Consolidated
Financial Statements.

INCOME TAXES

Federal income taxes as a percentage of pre-tax income was 31.4% in 1993,
30.8% in 1992 and 28.3% in 1991. The trend of increasingly higher effective tax
rates in each of the years 1993 and 1992 results from lower levels of
tax-exempt income relative to increases in pre-tax income. Additional
information regarding income taxes can be found in Note 9 in the Notes to the
Consolidated Financial Statements.

BALANCE SHEET ANALYSIS

LOANS AND CREDIT RISK MANAGEMENT

A sound credit policy combined with periodic and independent credit reviews
are the key factors for First United's credit risk management program. All
subsidiary banks operate under written loan policies that help maintain a
consistent lending function and provide sound credit decisions. Credit
decisions continue to be based on the borrower's cash flow position and the
value of the underlying collateral, as well as other relevant factors. Each
bank is responsible for evaluating its loans to identify those credits
beginning to show signs of deterioration so that prompt corrective action may
be taken. In addition, First United has an internal audit and loan review staff
that operates independently of the subsidiary banks. This review team performs
periodic examinations of each bank's loans and related documentation. Results
of these examinations are reviewed with the Chairman and Chief Executive
Officer of First United, the management and board of the respective subsidiary
banks, and the First United Audit Committee.

TABLE 3: LOAN PORTFOLIO

<TABLE>
<CAPTION>
December 31,
- - - ----------------------------------------------------------------------------------------------------------------
(Dollars in Thousands) 1993 1992 1991 1990 1989
- - - ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial, Financial and
Agricultural $108,979 $91,415 $103,164 $112,163 $118,108
Real Estate 236,362 215,249 210,349 210,607 194,143
Consumer Loans 66,970 53,297 53,824 48,743 57,333
Loans for Purchasing or
Carrying Securities 2,655 3,035 2,799 2,721 2,367
Financing Leases 421 1,037 12 2,656 2,491
-------- -------- -------- -------- --------
Total Loans $415,387 $364,033 $370,148 $376,890 $374,442
======== ======== ======== ======== ========
Non-Performing Assets $ 3,589 $ 6,791 $ 9,469 $ 10,875 $ 11,617
======== ======== ======== ======== ========
</TABLE>

<PAGE> 9
THE COMMON STOCK QUOTED MARKET PRICE
INCREASED BY APPROXIMATELY 13% DURING 1993.

<PAGE> 10
Construction loans outstanding at December 31, 1993 are not material in
amount. However, to the extent loans are made to finance construction, those
amounts are included in Table 3 as Real Estate Loans.

A primary measure of loan quality is the percentage of the loan portfolio
that moves from an earning category to one of non-performing and thus becomes
a burden to earnings performance. Non-performing loans totalling $2.7 million
represent 0.6% of year-end loans compared to 1.2% at December 31, 1992.

Non-accrual loans are those where management has considerable doubt about
the borrower's ability to repay on the terms originally contracted. In
addition to discontinuing the accrual of interest, interest previously recorded
in the current period as earned that has not been collected is reversed.
Non-accrual loans at December 31, 1993 totalled $2.2 million compared with $2.1
million at year ended 1992. It is the policy of First United to place loans on
non-accrual status when interest and/or principal payments for such loans
become 90 days or more past due. However, there are instances when loans 90
days or more past due continue to accrue interest because management considers
that such loans are in the process of collection. First United's non-accrual
policy had the effect of reducing interest income on non-performing loans in
1993 by approximately $169,000. The amount of interest income on such non-
performing loans included in net income for 1993 was not material.

Certain loans are renegotiated to provide a reduction or deferral of
interest or principal because of deterioration in the financial condition of
the respective borrowers. Once a loan is placed in this category, it remains
there until the terms are not more favorable than those of other customers.

Other real estate (ORE) that has been acquired through foreclosure has a
carrying value of $0.9 million at year ended 1993. This compares with $2.6
million and $4.0 million at year ended 1992 and 1991, respectively.

First United has no foreign credits in its loan portfolio. The intent of
management is to deploy its funds in its primary trade area where management is
familiar with its customers. This policy of First United permits funds obtained
locally to be re-channeled into the communities First United serves, promoting
economic growth.

Although First United maintains sound credit policies, certain credits
unexpectedly deteriorate and are charged off as a loss. The reserve for
possible loan losses is maintained to absorb potential losses, and the
management of First United views the reserve as a source of financial strength.
The reserve is increased by regular provisions which are based on the current
level of net loan and lease size and character of the loan and lease portfolio,
historical charge-off experience, current national and local economic
conditions and the evaluation of specific loans.

TABLE 4: LOAN MATURITIES
<TABLE>
<CAPTION>
- - - ----------------------------------------------------------------------------------------------------------------
(Dollars in Thousands) December 31, 1993
- - - ----------------------------------------------------------------------------------------------------------------
1 Year Over 1 Over
or Less through 5 years 5 years Total
------- ---------------- ------- -------
<S> <C> <C> <C> <C>
Commercial, Financial &
Agricultural $66,585 $35,793 $6,600 $108,978
======= ======= ====== ========

Variable Rate $30,620
Pre-determined Rate $78,358
</TABLE>

<PAGE> 11
TABLE 5: SUMMARY OF LOAN LOSS EXPERIENCE
<TABLE>
<CAPTION>
December 31,
- - - ---------------------------------------------------------------------------------------------------------------
(Dollars in Thousands) 1993 1992 1991 1990 1989
- - - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance of Allowance for Loan
Losses at Beginning of Period $6,899 $6,315 $6,133 $6,068 $6,033
------ ------ ------ ------ ------

Allowance Applicable to Loans of
Acquired Bank 520 -0- -0- -0- -0-
------ ------ ------ ------ ------

Loans Charged-Off:
Commercial, Financial and
Agricultural 476 1,784 2,168 1,762 3,593
Real Estate 131 816 924 710 79
Consumer 496 329 960 365 1,407
Other 276 -0- -0- -0- -0-
------ ------ ------ ------ ------

Total Loans Charged-Off 1,379 2,929 4,052 2,837 5,079
------ ------ ------ ------ ------

Recoveries of Loans Previously
Charged-Off:
Commercial, Financial and
Agricultural 381 467 354 323 947
Real Estate 659 424 368 169 22
Consumer 183 200 262 288 308
------ ------ ------ ------ ------

Total Recoveries 1,223 1,091 984 780 1,277
------ ------ ------ ------ ------

Net Loans Charged-Off 156 1,838 3,068 2,057 3,802
------ ------ ------ ------ ------

Provision to Allowance 1,215 2,422 3,250 2,122 3,837
------ ------ ------ ------ ------

Balance at End of Period $8,478 $6,899 $6,315 $6,133 $6,068
====== ====== ====== ====== ======

Ratio of Net Charge-Offs to Loans
Outstanding .04% .50% .83% .55% 1.02%
- - - ---------------------------------------------------------------------------------------------------------------
</TABLE>

The amount of the provision for possible loan losses is based upon the
current level of loans and leases, watch list trends, economic trends,
collateral value of watch list loans and net charge-offs on a historical basis.
First United continues to revise and enhance its credit policies as well as its
formal loan review program, and is committed to reducing the level of
non-performing assets.

Allowance for possible loan losses as a percentage of non-performing loans
was approximately 315%, 165% and 116% at December 31, 1993, 1992 and 1991
respectively.

All non-performing assets of First United as of December 31, 1993 were
previously classified as substandard, doubtful or loss by First United or its
regulators. At December 31, 1993, First United's management has no loans about
which serious doubts exist as to collectibility other than those disclosed in
Table 7.

9
<PAGE> 12
TABLE 6: ALLOCATION OF RESERVE BY CATEGORY
<TABLE>
<CAPTION>
December 31,
- - - ------------------------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989
- - - ------------------------------------------------------------------------------------------------------------------------------------
% Loans in % Loans in % Loans in % Loans in % Loans in
(Dollars in each each each each each
Thousands) Amount Category Amount Category Amount Category Amount Category Amount Category
- - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial and
Financial $4,370 27% $2,168 26% $2,560 29% $3,320 31% $4,166 33%
Real Estate 666 57% 1,838 59% 1,164 57% 734 56% 370 52%
Consumer 1,028 16% 487 15% 1,071 14% 1,012 13% 878 15%
Unallocated 2,414 -0- 2,406 -0- 1,520 -0- 1,067 -0- 654 -0-
- - - ------------------------------------------------------------------------------------------------------------------------------------
Total $8,478 100% $6,899 100% $6,315 100% $6,133 100% $6,068 100%
- - - ------------------------------------------------------------------------------------------------------------------------------------
Allowance as a
Percentage of
Total Loans 2.04% 1.90% 1.71% 1.63% 1.62%
- - - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

TABLE 7: RISK ELEMENTS

<TABLE>
<CAPTION>
December 31,
-------------------------------------------------------------
(Dollars in Thousands) 1993 1992 1991 1990 1989
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Non-Performing Loans:
Non-Accrual Loans:
Commercial & Financial $ 1,571 $ 1,294 $ 3,669 $ 4,822 $ 5,451
Real Estate 520 708 1,034 414 687
Consumer 68 59 87 73 24
------- ------- ------- ------- -------
Total Non-Accrual Loans 2,159 2,061 4,790 5,309 6,162
------- ------- ------- ------- -------
Past Due 90 Days or More and Still
Accruing:
Commercial 64 13 254 428 548
Real Estate 28 535 146 202 338
Consumer 219 156 231 193 126
------- ------- ------- ------- -------
Total Past Due 90 Days
or More and Still
Accruing 311 704 631 823 1,012
------- ------- ------- ------- -------
Renegotiated Loans 223 1,414 16 -0- -0-
------- ------- ------- ------- -------
Total Non-Performing Loans 2,693 4,179 5,437 6,132 7,174
Other Real Estate 896 2,612 4,032 4,743 4,443
------- ------- ------- ------- -------
Total Non-Performing Assets $ 3,589 $ 6,791 $ 9,469 $10,875 $11,617
------- ------- ------- ------- -------
Non-Performing Loans
as a % of Outstanding Loans .66% 1.15% 1.47% 1.63% 1.92%
Non-Performing Assets
as a % of Equity Capital 3.93% 8.53% 13.20% 16.40% 19.04%
------- ------- ------- ------- -------
</TABLE>

10
<PAGE> 13
INVESTMENT SECURITIES

TABLE 8: INVESTMENT SECURITIES CARRYING VALUE

<TABLE>
<CAPTION>
(Dollars in Thousands) December 31,
----------------------------------------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
U.S. Treasury Securities and
Other U.S. Government
Agencies $174,045 $151,750 $204,529
Obligations of States and
Political Subdivisions 46,242 36,073 34,436
Mortgage-Backed Securities 120,128 141,158 121,447
Other Securities 1,652 2,316 2,897
-------- -------- --------
$342,067 $331,297 $363,309
======== ======== ========
</TABLE>

First United's goal in managing the investment securities portfolio is to
maximize the long-term total return on invested funds. Investment securities
are purchased with the intent and ability to hold them to maturity and are,
therefore, carried at amortized cost.

Total investment securities were $342.1 million at December 31, 1993, a
modest increase of 3% from the previous year.

Significant changes in the mix of First United's investment portfolio have
occurred over the past three years. As a percentage of total year-end
investment securities, tax-exempt securities were 14% in 1993 compared to 11%
in 1992. This increase results from tax-exempt securities held by Commercial
Bank at Alma at the time of its acquisition. Furthermore, First United found
issuances of tax-exempt securities with tax-equivalent yields more attractive
than their taxable counterparts. See notes 3 and 4 of the Notes to the
Consolidated Financial Statements for additional information on Held for Sale
and Investment Securities.

11
<PAGE> 14
TABLE 9: INVESTMENT SECURITIES MATURITY AND WEIGHTED AVERAGE YIELDS

<TABLE>
<CAPTION>
Maturing
---------------------------------------------------------------------------------------------------------------
After One But After Five But Mortgage-
Within One Year Within Five Years Within Ten Years After Ten Years Backed Securities

(Dollars
in Thousands) Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury
Securities and
Other U.S.
Government
Agencies $25,158 6.97% $124,672 5.58% $20,388 5.83% $ 3,827 6.52% -0- -0-
State & Political
Subdivisions 2,834 8.76% 14,976 7.04% 18,921 6.51% 9,511 7.03% -0- -0-
Mortgage-Backed
Securities -0- -0- -0- -0- -0- -0- -0- -0- 120,128 6.44%
Other -0- -0- 10 5.50% -0- -0- 1,642 2.47% -0- -0-
------- ----- -------- ---- ------- ---- ------ ---- -------- ----

Total $27,992 7.15% $139,658 5.74% $39,309 6.16% $14,980 6.40% $120,128 6.44%
======= ==== ======== ==== ======= ==== ======= ==== ======== ====
</TABLE>

SECURITIES HELD FOR SALE

Securities to be held for indefinite periods of time and not intended to
be held until maturity are classified as held for sale and carried at the lower
of aggregate cost or fair value. Securities held for sale include securities
that management intends to use as part of its asset/liability strategy and that
may be sold in response to changes in interest rates or economic factors.

At December 31, 1993, $69.6 million of U.S. Treasury Securities and $13.9
million of fixed-rate Mortgage-Backed Securities were classified as held for
sale. The Mortgage-Backed Securities have an average life of 2.8 years while
the U.S. Treasury Securities have maturities ranging from 15 days to 4.8 years.
The U.S. Treasury Securities and Mortgage-Backed Securities have weighted
average yields of approximately 5.48% and 6.59%, respectively.

TABLE 10: AVERAGE DEPOSITS

<TABLE>
<CAPTION>
Year Ended December 31,
1993 1992 1991
------------------- ------------------- ------------------
Amount Rate Amount Rate Amount Rate
<S> <C> <C> <C> <C> <C> <C>
Non-interest-bearing
Demand Deposits $108,350 0.0% $102,144 0.0% $ 98,177 0.0%
Savings Deposits and
Interest-bearing
Deposits 276,464 2.7% 247,171 3.2% 215,318 4.7%
Time Deposits of $100
or more 108,377 3.8% 115,588 4.6% 128,531 6.7%
Other Time Deposits 271,882 4.0% 282,362 4.9% 273,057 6.8%
------- ------- -------

Total $765,073 $747,265 $715,083
======== ======== ========
</TABLE>

12
<PAGE> 15
FIRST UNITED BANCSHARES, INC. STRIVES
TO MAINTAIN A BALANCE BETWEEN THE
RETENTION OF EARNINGS FOR A SUPPORT OF
GROWTH AND EXPANSION AND A FAIR CASH
RETURN FOR ITS STOCKHOLDERS.

13
<PAGE> 16

TABLE 11: MATURITIES OF TIME DEPOSITS OF $100,000 AND OVER

<TABLE>
<CAPTION>
(Dollars in Thousands) December 31, 1993
-----------------
<S> <C>
Three Months or Less $ 63,350
Over 3 Through 6 Months 28,917
Over 6 Through 12 Months 12,470
Over 12 Months 18,064
--------

Total $122,801
========
</TABLE>

TABLE 12: AVERAGE SHORT-TERM BORROWINGS

<TABLE>
<CAPTION>
December 31,
------------------------------------------------
(Dollars in Thousands) 1992 1992 1991
------- ------- -------
<S> <C> <C> <C>
Balance at December 31 $27,109 $26,262 $17,625
Daily Average Amount Outstanding 29,433 26,775 19,312
Maximum Month-End Balance 27,109 33,955 22,717
Daily Average Interest Rate 2.55% 3.10% 4.62%
Weighted Average Interest Rate on
Balance at December 31 2.81% 2.29% 3.33%
</TABLE>

14
<PAGE> 17
CAPITAL ADEQUACY AND RESOURCES

CAPITAL AND LIQUIDITY

The adequacy of bank capital in the banking industry has received
considerable attention in the past few years and continues to be a concern to
regulators and depositors.

First United is well capitalized with a primary capital to asset ratio of
10.53% at December 31, 1993 compared with 9.59% in 1992 and 9.13% in 1991.
First United's stockholders' equity for the year ended December 31, 1993
totalled $91.3 million compared with $79.6 million in 1992 and $71.7 million in
1991. Retention of earnings will continue to be emphasized in order to provide
a strong capital base to support future growth.

In today's environment, liquidity for a banking organization is
essentially a function of its ability to renew and acquire new purchased
liabilities. First United is aided significantly in this respect by its strong
capital position and its continuing high rate of internal capital generation.
Additional liquidity is derived from the short maturity of First United's
investment portfolio, its relatively low level of problem loans and its
substantial local customer base at each member bank.

TABLE 13: CAPITAL RATIOS
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Equity Capital to Assets 9.72% 8.89% 8.45%
Primary Capital to Assets 10.53% 9.59% 9.13%
Leverage Ratio 9.31% 8.58% 8.04%
Tier 1 Capital 18.83% 18.45% 16.03%
Risk-Based Capital 19.53% 20.11% 17.28%
Dividend Payout Ratio* 23.62% 24.54% 28.31%
</TABLE>

* Based upon net income before the cumulative effect of the change in
accounting principle.

TABLE 14: REGULATORY COMPARISON OF CAPITAL RATIOS

<TABLE>
<CAPTION>
Regulatory
December 31, 1993 First United Requirements
------------ ------------
<S> <C> <C>
Total Capital/Total Assets 10.53% 6.00%
Primary Capital/Total Assets 10.53% 5.50%
Total Risk-Based Capital 19.53% 8.00%
Tier 1 Capital 18.83% 4.00%
Leverage Ratio 9.31% 3.00%
</TABLE>

<PAGE> 18
COMMON STOCK AND DIVIDENDS

First United anticipates continuing its policy of regular cash dividends,
although there is no assurance as to future dividends because they are
dependent on future earnings, capital requirements and the financial condition
of First United. First United strives to maintain a balance between the
retention of earnings for a support of growth and expansion and a fair cash
return for its stockholders. National banking law limits the amount of
dividends which banks can pay without obtaining prior approval from bank
regulatory authorities.

On July 27, 1992, the Board of Directors of First United declared a
2-for-1 stock split effected in the form of a 100% stock dividend. The
dividend of approximately 2.1 million shares was distributed on September 8,
1992.

During the first quarter of 1992, First United increased its annual cash
dividend from $.50 per share to $.60 per share and during the second quarter of
1993, First United increased its annual dividend to $.68 per share. These
increases result from higher sustainable earnings.

First United Common Stock is traded on the NASDAQ-NMS Over-the-Counter
Market under the symbol "UNTD."

All Over-the-Counter Market quotations are interdealer quotations without
retail mark-up, mark-down or commission, and may not represent actual
transactions. Additionally, this table lists dividends paid by First United to
its shareholders for the period of January 1, 1992, to December 31, 1993.

On March 1, 1994, the Company had approximately 820 shareholders of record.

TABLE 15: COMMON STOCK MARKET PRICE AND DIVIDENDS PER SHARE
<TABLE>
<CAPTION>
1993 High Low Div. Paid
- - - -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
First quarter $26 $23 $.15
Second quarter 26 1/4 23 .17
Third quarter 29 1/2 26 .17
Fourth quarter 29 1/2 26 1/2 .17
</TABLE>

<TABLE>
<CAPTION>
1992 High Low Div. Paid
- - - -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
First quarter $14 3/4 $13 3/8 $.15
Second quarter 19 3/8 14 1/4 .15
Third quarter 19 17 .15
Fourth quarter 26 17 .15
- - - -------------------------------------------------------------------------------------------------------------
</TABLE>

ASSET - LIABILITY MANAGEMENT

CHANGING INTEREST RATES

First United, like most financial institutions, provides for the relative
stability in profits and the control in interest rate risk through
asset-liability management. An important element of asset-liability management
is the analysis and examination of the extent to which such assets and
liabilities are "interest rate sensitive" and by monitoring an institution's
interest rate sensitivity "gap". An asset or liability is said to be interest
rate sensitive within a specific time period if it will mature or reprice
within that time period. The interest rate sensitivity gap is defined as the
difference between the amount of interest- earning assets expected to mature or
reprice within a time period and the amount of interest-bearing liabilities
expected to mature or reprice within that same time period. A gap is considered
negative when the amount of interest rate sensitive liabilities maturing within
a specific time frame exceeds the amount of interest rate sensitive assets
maturing within that same time frame. During a period of falling interest
rates, a negative gap tends to result in an increase in net interest income.
Whereas in a rising interest rate environment, an institution with a negative
gap could experience the opposite results. At December 31, 1993, First United's
interest-bearing liabilities maturing or repricing within one year exceeded the
interest-bearing assets maturing or repricing within the same time period.

First United continually monitors its asset-liability position in order to
maximize profits and minimize interest rate risk. Additionally, First United
can reduce the impact that changing interest rates have on earnings and adapt
to changes in the economic environment by closely monitoring its Statement of
Condition. An interest rate sensitive balance sheet as of December 31, 1993 is
presented in Table 16.

<PAGE> 19
TABLE 16: INTEREST RATE SENSITIVE BALANCE SHEET

<TABLE>
<CAPTION>
By Repricing Dates At December 31, 1993
- - - ------------------------------------------------------------------------------------------------------------------------------
(Dollars in 0-30 31-90 91-180 181-365 1-5 Over
Thousands) Days Days Days Days Years 5 Years Total
- - - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Total Securities $ 54,204 $27,349 $23,020 $55,488 $209,544 $55,930 $425,535
Loans and Leases,
Net of Unearned
Income 118,760 32,610 45,713 72,760 113,922 31,044 414,809
Short-Term
Investments 32,670 -0- -0- -0- -0- -0- 32,670
-------- ------- ------- -------- -------- ------- --------
Total Rate Sensitive
Assets $205,634 $59,959 $68,733 $128,248 $323,466 $86,974 $873,014
-------- ------- ------- -------- -------- ------- --------
SOURCES OF FUNDS
Savings and Interest-
bearing Demand
Deposits 286,867 -0- -0- -0- -0- -0- 286,867
Time Deposits 79,573 98,151 102,190 54,092 61,677 8 395,691
Short-Term
Borrowings 26,989 120 -0- -0- -0- -0- 27,109
Long-Term Debt -0- -0- -0- 6,107 1,107 -0- 7,214
-------- ------- ------- -------- -------- ------- --------

Total Rate Sensitive
Liabilities $393,429 $98,271 $102,190 $60,199 $ 62,784 $ 8 $716,881
-------- ------- -------- -------- -------- ------- --------

Interest Rate
Sensitivity Gap (187,795) (38,312) (33,457) 68,049 260,682 86,966 156,133
Cumulative Interest
Rate Sensitivity Gap (187,795) (226,107) (259,564) (191,515) 69,167 156,133
Cumulative Interest
Rate Sensitivity Gap
as a Percent of Total
Assets (20%) (24%) (28%) (20%) 7% 17%
</TABLE>

INFLATION

Inflation also impacts the banking industry, but the problem with
inflation for banking institutions differs substantially from those incurred by
non-financial institutions. In industries with a high proportion of property
and equipment, there is a greater potential for earnings to be inflated by
understated depreciation charges, as well as the potential for significant
understatement of the current values of those assets. In industries with high
levels of inventories, reported earnings may reflect significant increases in
inventory values. Neither of these factors is important in the banking industry
since bank assets are primarily monetary assets which move in concert with
inflation; however, interest rates earned and paid by banks do not necessarily
move in the same directions or magnitude as general inflation. Because First
United has a significant investment in long-term securities and fixed-rate
loans, earnings on these assets will not keep up with yields available on
alternative investments during periods of rising inflation. Furthermore, First
United's liabilities are more sensitive to changes in interest rates than its
assets are, so in this respect, inflation has a negative impact on earnings.

<PAGE> 20
REGULATORY AND ACCOUNTING ISSUES

REGULATORY ISSUES

Pursuant to the Interest Rate Control Amendment to the Constitution of the
State of Arkansas, "consumer loans and credit sales" have a maximum limitation
of 17% per annum and all "general loans" have a maximum limitation of 5% over
the Federal Reserve Discount Rate in effect at the time the loan was made. The
Arkansas Supreme Court has determined that "consumer loans and credit sales"
are "general loans" and are subject to the limitation of 5% over the Federal
Reserve Discount Rate as well as a maximum limitation of 17% per annum. As a
general rule, First United's subsidiary banks are required to comply with the
Arkansas usury laws on loans made within the State of Arkansas.

On December 19, 1991, The Federal Deposit Insurance Corporation
Improvement Act of 1991 was signed into law. The Act contains broad legislation
which includes not only recapitalization of the bank insurance fund (BIF) but
also includes supervisory and examination reforms. The Act imposes strict
statutory rules for a bank's senior management, outside directors, independent
auditors, examiners and regulators to ensure that a bank's finances, management
and legal compliance are thoroughly analyzed.

ACCOUNTING STANDARDS

On January 1, 1993, First United adopted Statement of Financial Accounting
Standards (SFAS) No. 109 "Accounting for Income Taxes." The adoption of SFAS
No. 109 changed First United's method of accounting for income taxes to the
liability method. The cumulative effect of adopting SFAS No. 109 on First
United's financial statements was to increase net income by $2.5 million or
$.59 per share.

During 1993 the Financial Accounting Standards Board (FASB) issued SFAS
No. 114 "Accounting by Creditors for Impairment of a Loan" which becomes
effective beginning in 1995. This statement defines the measurement
requirements for loans that are impaired or deemed to be troubled debt
restructurings. Management believes that the effect of this statement upon
adoption will not be material.

Also during 1993 the FASB issued SFAS No. 115 "Accounting for Certain
Investments in Debt and Equity Securities," which First United will adopt on
January 1, 1994. This statement addresses the accounting and reporting for
investments in debt and certain equity securities. Debt securities not
classified as trading account securities or investment securities expected to
be held to maturity and all equity securities will be classified as
available-for-sale securities and reported at fair value, with net unrealized
gains and losses reported, net of tax, as a separate component of stockholders'
equity. Upon adoption of this statement on January 1, 1994, First United will
classify all of its securities held for sale and certain of its investment
securities as available-for-sale. At December 31, 1993, the carrying values and
fair values of securities expected to be classified as available- for-sale are
approximately $298,000,000 and $303,000,000, respectively, which would result
in reflecting an unrecognized gain, net of tax, of approximately $3,200,000 as
a separate component of the capital accounts.

<PAGE> 21
TABLE 17: SUMMARY OF AVERAGE BALANCE SHEETS, INTEREST RATES AND CHANGES IN NET
INTEREST INCOME (FTE) 1
<TABLE>
<CAPTION>
1993
- - - ------------------------------------------------------------------------------------------------------------------------------

Average
(Dollars in Thousands) Balance Interest Rate
- - - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
INTEREST-EARNING ASSETS:
Loans (net of unearned income) $375,315 $31,332 8.35%
Investment Securities:
Taxable Securities 393,065 24,769 6.30%
Non-taxable Securities 35,653 3,655 10.25%
Money-Market Assets:
Federal Funds Sold and Securities Purchased Under
Agreements to Resell and Other Short-Term
Investments 29,567 936 3.17%
- - - ------------------------------------------------------------------------------------------------------------------------------
Total Interest-Earning Assets 833,600 60,692 7.28%
- - - ------------------------------------------------------------------------------------------------------------------------------
NON-INTEREST-EARNING ASSETS:
Cash and Due From Banks 44,781
Premises and Equipment, Net 9,585
Other Assets 15,421
Less Allowance for Loan Losses (7,615)
- - - ------------------------------------------------------------------------------------------------------------------------------
Total $895,772
==============================================================================================================================
LIABILITIES
INTEREST-BEARING LIABILITIES
Savings and Interest-bearing Deposits $276,464 $ 7,560 2.73%
Time Deposits of $100 or More 108,377 4,115 3.80%
Other Time Deposits 271,882 10,892 4.01%
Federal Funds Purchased and Securities Sold Under
Agreements to Repurchase 29,433 750 2.55%
Notes Payable 7,894 543 6.88%
- - - ------------------------------------------------------------------------------------------------------------------------------
Total Interest-bearing Liabilities 694,050 23,860 3.44%
- - - ------------------------------------------------------------------------------------------------------------------------------
NON-INTEREST-BEARING LIABILITIES:
Demand Deposits 108,350
Other Liabilities 6,101
Shareholders' Equity 87,271
- - - ------------------------------------------------------------------------------------------------------------------------------
Total $895,772
==============================================================================================================================
Net Interest-Earnings $36,832
==============================================================================================================================
Net Yield on Interest-Earning
Assets 4.42%
==============================================================================================================================
</TABLE>

<TABLE>
<CAPTION>
1992
- - - -----------------------------------------------------------------------------------------------------------------------

Average
(Dollars in Thousands) Balance Interest Rate
- - - -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
INTEREST-EARNING ASSETS:
Loans (net of unearned income) $359,029 $32,404 9.03%
Investment Securities:
Taxable Securities 391,843 27,870 7.11%
Non-taxable Securities 34,631 3,306 9.55%
Money-Market Assets:
Federal Funds Sold and Securities Purchased Under
Agreements to Resell and Other Short-Term
Investments 27,019 925 3.42%
- - - -----------------------------------------------------------------------------------------------------------------------
Total Interest-Earning Assets 812,522 64,505 7.94%
- - - -----------------------------------------------------------------------------------------------------------------------
NON-INTEREST-EARNING ASSETS:
Cash and Due From Banks 40,411
Premises and Equipment, Net 8,969
Other Assets 12,490
Less Allowance for Loan Losses (6,692)
- - - -----------------------------------------------------------------------------------------------------------------------
Total $867,700
=======================================================================================================================
LIABILITIES
INTEREST-BEARING LIABILITIES
Savings and Interest-bearing Deposits $247,171 $ 7,891 3.19%
Time Deposits of $100 or More 115,588 5,317 4.60%
Other Time Deposits 282,362 13,824 4.90%
Federal Funds Purchased and Securities Sold Under
Agreements to Repurchase 26,775 830 3.10%
Notes Payable 9,005 828 9.19%
- - - -----------------------------------------------------------------------------------------------------------------------
Total Interest-bearing Liabilities 680,901 28,690 4.21%
- - - -----------------------------------------------------------------------------------------------------------------------
NON-INTEREST-BEARING LIABILITIES:
Demand Deposits 102,144
Other Liabilities 9,631
Shareholders' Equity 75,024
- - - -----------------------------------------------------------------------------------------------------------------------
Total $867,700
=======================================================================================================================
Net Interest-Earnings $35,815
=======================================================================================================================
Net Yield on Interest-Earning
Assets 4.41%
=======================================================================================================================
</TABLE>

<TABLE>
<CAPTION>
1993 Compared to 1992
- - - ----------------------------------------------------------------------------------------------------------------
Total Due To Due to
Increase Change in Change in
(Dollars in Thousands) (Decrease) Volume Rate
- - - ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS $(1,072) $1,471 $(2,543)
INTEREST-EARNING ASSETS:
Loans (net of unearned income) (3,101) 87 (3,188)
Investment Securities: 349 98 251
Taxable Securities
Non-taxable Securities
Money-Market Assets:
Federal Funds Sold and Securities Purchased Under
Agreements to Resell and Other Short-Term
Investments 11 87 (76)
- - - ----------------------------------------------------------------------------------------------------------------
Total Interest-Earning Assets (3,813) 1,743 (5,556)
- - - ----------------------------------------------------------------------------------------------------------------
NON-INTEREST-EARNING ASSETS:
Cash and Due From Banks
Premises and Equipment, Net
Other Assets
Less Allowance for Loan Losses
- - - ----------------------------------------------------------------------------------------------------------------
Total
================================================================================================================
LIABILITIES
INTEREST-BEARING LIABILITIES
Savings and Interest-bearing Deposits (331) 934 (1,265)
Time Deposits of $100 or More (1,202) (332) (870)
Other Time Deposits (2,932) (514) (2,418)
Federal Funds Purchased and Securities Sold Under
Agreements to Repurchase (80) 82 (162)
Notes Payable (285) (102) (183)
- - - ----------------------------------------------------------------------------------------------------------------
Total Interest-bearing Liabilities (4,830) 68 (4,898)
- - - ----------------------------------------------------------------------------------------------------------------
NON-INTEREST-BEARING LIABILITIES:
Demand Deposits
Other Liabilities
Shareholders' Equity
- - - ----------------------------------------------------------------------------------------------------------------
Total
================================================================================================================
Net Interest-Earnings $ 1,017 $1,675 $ (658)
================================================================================================================
Net Yield on Interest-Earning
Assets
================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
1991
- - - -------------------------------------------------------------------------------------------------------------------------

Average
(Dollars in Thousands) Balance Interest Rate
- - - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS $372,046 $38,455 10.34%
INTEREST-EARNING ASSETS:
Loans (net of unearned income) 318,277 26,414 8.30%
Investment Securities: 36,813 3,654 9.93%
Taxable Securities
Non-taxable Securities
Money-Market Assets:
Federal Funds Sold and Securities Purchased Under
Agreements to Resell and Other Short-Term
Investments 31,976 1,795 5.61%
- - - -------------------------------------------------------------------------------------------------------------------------
Total Interest-Earning Assets 759,112 70,318 9.26%
- - - -------------------------------------------------------------------------------------------------------------------------
NON-INTEREST-EARNING ASSETS:
Cash and Due From Banks 46,110
Premises and Equipment, Net 9,191
Other Assets 30,400
Less Allowance for Loan Losses (6,293)
- - - -------------------------------------------------------------------------------------------------------------------------
Total $838,520
=========================================================================================================================
LIABILITIES
INTEREST-BEARING LIABILITIES
Savings and Interest-bearing Deposits $215,318 $10,111 4.70%
Time Deposits of $100 or More 128,531 8,597 6.69%
Other Time Deposits 273,057 18,348 6.72%
Federal Funds Purchased and Securities Sold Under
Agreements to Repurchase 19,312 1,023 5.30%
Notes Payable 10,114 964 9.53%
- - - -------------------------------------------------------------------------------------------------------------------------
Total Interest-bearing Liabilities 646,332 39,043 6.04%
- - - -------------------------------------------------------------------------------------------------------------------------
NON-INTEREST-BEARING LIABILITIES:
Demand Deposits 98,177
Other Liabilities 24,672
Shareholders' Equity 69,339
- - - -------------------------------------------------------------------------------------------------------------------------
Total $838,520
=========================================================================================================================
Net Interest-Earnings $31,275
=========================================================================================================================
Net Yield on Interest-Earning
Assets 4.12%
=========================================================================================================================
</TABLE>

<TABLE>
<CAPTION>
1992 Compared to 1991
- - - ------------------------------------------------------------------------------------------------------------------------
Total Due To Due To
Increase Change in Change in
(Dollars in Thousands) (Decrease) Volume Rate
- - - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS $(6,051) $ (1,345) $(4,706)
INTEREST-EARNING ASSETS:
Loans (net of unearned income) 1,456 6,105 (4,649)
Investment Securities: (348) (217) (131)
Taxable Securities
Non-taxable Securities
Money-Market Assets:
Federal Funds Sold and Securities Purchased Under
Agreements to Resell and Other Short-Term
Investments (870) (278) (592)
- - - ------------------------------------------------------------------------------------------------------------------------
Total Interest-Earning Assets (5,813) 4,265 $(10,078)
- - - ------------------------------------------------------------------------------------------------------------------------
NON-INTEREST-EARNING ASSETS:
Cash and Due From Banks
Premises and Equipment, Net
Other Assets
Less Allowance for Loan Losses
- - - ------------------------------------------------------------------------------------------------------------------------
Total
========================================================================================================================
LIABILITIES
INTEREST-BEARING LIABILITIES
Savings and Interest-bearing Deposits (2,220) 1,496 (3,716)
Time Deposits of $100 or More (3,280) (866) (2,414)
Other Time Deposits (4,524) 625 (5,149)
Federal Funds Purchased and Securities Sold Under
Agreements to Repurchase (193) 395 (588)
Notes Payable (136) (106) (30)
- - - ------------------------------------------------------------------------------------------------------------------------
Total Interest-bearing Liabilities (10,353) 1,544 (11,897)
- - - ------------------------------------------------------------------------------------------------------------------------
NON-INTEREST-BEARING LIABILITIES:
Demand Deposits
Other Liabilities
Shareholders' Equity
- - - ------------------------------------------------------------------------------------------------------------------------
Total
========================================================================================================================
Net Interest-Earnings $ 4,540 $ 2,721 $ 1,819
========================================================================================================================
Net Yield on Interest-Earning
Assets
========================================================================================================================
</TABLE>

(1) Marginal Tax Rate of 35% in 1993 and 34% in 1992 and 1991

19
<PAGE> 22
SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------
(In Thousands, Except Per Share Data)
1993 1992 1991 1990 1989
------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATING DATA
Total Interest Income $ 59,413 $ 63,381 $ 68,796 $ 68,213 $ 65,903
Net Interest Income 35,553 34,691 29,933 26,913 24,825
Provision for Possible
Loan Losses 1,215 2,422 3,250 2,122 3,837
Income Before
Cumulative Effect of a
Change In Accounting
Principle 11,937 10,443 7,546 7,438 6,201
Net Income 14,459 10,443 7,546 7,438 6,201

PER SHARE DATA
Income Before
Cumulative Effect of a
Change in Accounting
Principle $ 2.79 $ 2.44 $ 1.77 $ 1.74 $ 1.45
Net Income 3.38 2.44 1.77 1.74 1.45
Cash Dividends Paid .66 .60 .50 .50 .50

SELECTED BALANCE SHEET
ITEMS
Year Ended Balances
Total Assets $938,694 $895,527 $848,582 $797,242 $765,338
Total Securities(1) 425,535 427,090 373,824 294,366 261,600
Net Loans(2) 414,810 363,655 369,726 376,544 374,136
Total Deposits 806,449 772,995 743,631 689,713 660,851
Notes Payable 7,214 8,321 9,429 10,536 11,643
Capital Accounts 91,257 79,618 71,737 66,327 61,025
</TABLE>

(1) Includes investment and held for sale securities.

(2) Net of unearned discount.

20
<PAGE> 23
QUARTERLY RESULTS OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>
Quarter Ended
(In Thousands, Except Per Share Data)
March 31 June 30 Sept. 30 Dec. 31
-------- ------- -------- -------
1993
<S> <C> <C> <C> <C>
Interest Income $14,881 $14,785 $14,833 $14,914
Interest Expense 6,007 6,014 5,881 5,958
Net Interest Income 8,874 8,771 8,952 8,956
Provision for Possible Loan Losses 465 405 245 100
Other Income 1,258 1,322 1,257 1,317
Other Expense 4,948 5,278 5,575 6,283
Income Tax Expense 1,503 1,292 1,522 1,154
Change in Accounting Principle 2,522 -- -- --
------- ------- ------- -------
Net Income $ 5,738 $3,118 $ 2,867 $2,736
======= ======= ======= =======

Earnings Per Share $1.34 $0.73 $0.67 $0.64
======= ======= ======= =======

1992
Interest Income $16,370 $16,198 $15,743 $15,070
Interest Expense 7,896 7,569 6,807 6,418
Net Interest Income 8,474 8,629 8,936 8,652
Provision for Possible Loan Losses 682 700 485 555
Other Income 1,484 1,246 1,176 1,609
Other Expense 5,613 5,421 5,676 5,984
Income Tax Expense 1,143 1,171 1,188 1,145
------- ------- ------- -------
Net Income $ 2,520 $ 2,583 $ 2,763 $ 2,577
------- ------- ------- -------
Earnings Per Share $ 0.59 $ 0.60 $ 0.65 $ 0.60
======== ======= ======= =======

</TABLE>

21
<PAGE> 24

FINANCIAL STATEMENTS AND NOTES

22
<PAGE> 25
CONSOLIDATED STATEMENTS OF CONDITION

<TABLE>
<CAPTION>
First United Bancshares, Inc.
December 31,
---------------------------------
1993 1992
------------ ------------
<S> <C> <C>
ASSETS
Cash and Due from Banks . . . . . . . . . . . . . . . . . . . . $ 45,012,954 $ 43,734,306
------------ ------------

Short-Term Investments:
Federal Funds Sold and Securities
Purchased Under Agreements to Resell . . . . . . . . . . . 27,765,000 36,290,000
Other Short-Term Investments . . . . . . . . . . . . . . . . 4,905,483 6,828,734
------------ ------------
Total Short-Term Investments . . . . . . . . . . . . . . . 32,670,483 43,118,734
------------ ------------

Securities Held For Sale (Estimated Fair
Value of $84,450,000 and $97,293,000 at
December 31, 1993 and 1992, respectively) . . . . . . . . . . . 83,467,753 95,793,644
------------ ------------

Investment Securities (Estimated Fair Value
of $349,164,000 and $337,763,000 at
December 31, 1993 and 1992, respectively.) . . . . . . . . . 342,067,031 331,296,701
------------ ------------
Total Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 415,386,789 364,032,805
Unearned Discount . . . . . . . . . . . . . . . . . . . . . . (577,497) (377,739)
Allowance for Possible Loan Losses . . . . . . . . . . . . . (8,478,102) (6,898,828)
------------ ------------

Net Loans . . . . . . . . . . . . . . . . . . . . . . . . . 406,331,190 356,756,238
------------ ------------
Premises and Equipment . . . . . . . . . . . . . . . . . . . . 11,182,290 9,417,291
------------ ------------
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,308,303 3,010,162
------------ ------------
Other Real Estate . . . . . . . . . . . . . . . . . . . . . . . 896,463 2,612,303
------------ ------------
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . 12,757,288 9,787,932
------------ ------------

Total Assets . . . . . . . . . . . . . . . . . . . . . . . $938,693,755 $895,527,311
============ ============

LIABILITIES
Deposits:
Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . $123,890,533 $120,058,622
Savings and Interest-bearing Demand . . . . . . . . . . . . . 286,867,333 271,445,916
Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . 395,690,675 381,490,434
------------ ------------
Total Deposits . . . . . . . . . . . . . . . . . . . . . . 806,448,541 772,994,972

Federal Funds Purchased and Securities Sold
Under Agreements to Repurchase . . . . . . . . . . . . . . . 27,108,906 26,262,086
Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . 6,665,382 8,331,223
Notes Payable:
Unaffiliated Bank . . . . . . . . . . . . . . . . . . . . . . 2,214,290 3,321,432
Affiliated Company . . . . . . . . . . . . . . . . . . . . . 5,000,000 5,000,000
------------ ------------

Total Liabilities . . . . . . . . . . . . . . . . . . . . . 847,437,119 815,909,713
------------ ------------

Commitments and Contingencies

CAPITAL ACCOUNTS
Preferred Stock(Par value of $1.00; 500,000
shares authorized in 1993 and 1992; none
outstanding) . . . . . . . . . . . . . . . . . . . . . . . . -0- -0-
Common Stock(Par value of $1.00; 12,000,000
shares authorized; 4,272,276 shares
outstanding in 1993 and 1992) . . . . . . . . . . . . . . . . 4,272,276 4,272,276
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,125,348 11,125,348
Undivided Profits . . . . . . . . . . . . . . . . . . . . . . . 75,859,012 64,219,974
------------ ------------

Total Capital Accounts . . . . . . . . . . . . . . . . . . 91,256,636 79,617,598
------------ ------------
Total Liabilities and Capital
Accounts . . . . . . . . . . . . . . . . . . . . . . . . $938,693,755 $895,527,311
============ ============
</TABLE>

The accompanying notes are an integral part of these financial statements.

23
<PAGE> 26
CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
First United Bancshares, Inc.
Year Ended December 31,
--------------------------------------------------------------
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans . . . . . . . . . . . . $ 31,332,378 $ 32,404,112 $ 38,354,726
Interest on Securities: . . . . . . . . . . . . . .
Taxable Securities 24,769,078 27,870,101 26,414,088
Nontaxable Securities . . . . . . . . . . . . . . 2,375,569 2,182,050 2,412,123
Interest on Federal Funds Sold and
Securities Purchased Under
Agreements to Resell . . . . . . . . . . . . . . 731,397 921,915 1,769,333
Interest on Deposits in Banks . . . . . . . . . . . 204,771 2,838 25,760
------------ ------------ ------------

TOTAL INTEREST INCOME 59,413,193 63,381,016 68,976,030
------------ ------------ ------------

INTEREST EXPENSE
Interest on Deposits . . . . . . . . . . . . . . . 22,566,701 27,031,946 37,055,935
Interest on Federal Funds Purchased
and Securities Sold Under
Agreements to Repurchase . . . . . . . . . . . . 750,370 830,152 1,023,224
Interest on Notes Payable . . . . . . . . . . . . . 542,631 828,222 963,777
------------ ------------ ------------

TOTAL INTEREST EXPENSE 23,859,702 28,690,320 39,042,936
------------ ------------ ------------

NET INTEREST INCOME . . . . . . . . . . . . . . 35,553,491 34,690,696 29,933,094
Provision for Loan Losses . . . . . . . . . . . . . (1,215,000) (2,422,000) (3,249,600)
------------ ------------ ------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES . . . . . . . . . . . 34,338,491 32,268,696 26,683,494
------------ ------------ ------------

OTHER INCOME
Service Charges on Deposit Accounts . . . . . . . . 2,931,729 2,831,036 2,668,527
Trust Department Income . . . . . . . . . . . . . . 999,591 918,773 886,137
Security Gains . . . . . . . . . . . . . . . . . . 54,435 385,888 254,188
Other Operating Income . . . . . . . . . . . . . . 1,168,246 1,378,988 1,136,711
------------ ------------ ------------

TOTAL OTHER INCOME 5,154,001 5,514,685 4,945,563
------------ ------------ ------------

OTHER EXPENSE
Salaries . . . . . . . . . . . . . . . . . . . . . 8,166,793 7,769,596 7,566,370
Pension and Other Employee Benefits . . . . . . . . 2,453,560 2,611,241 2,278,786
Net Occupancy Expense . . . . . . . . . . . . . . . 1,788,222 1,881,438 1,772,714
Equipment Expense . . . . . . . . . . . . . . . . . 813,790 604,920 623,518
Data Processing Expense . . . . . . . . . . . . . . 1,573,100 1,859,970 1,569,808
Other Operating Expenses . . . . . . . . . . . . . 7,289,431 7,966,045 7,284,594
------------ ------------ ------------
TOTAL OTHER EXPENSE . . . . . . . . . . . . . . 22,084,896 22,693,210 21,095,790
------------ ------------ ------------

INCOME BEFORE INCOME TAX
EXPENSE . . . . . . . . . . . . . . . . . . . . . . 17,407,596 15,090,171 10,533,267
INCOME TAX EXPENSE . . . . . . . . . . . . . . . . 5,470,851 4,646,700 2,986,591
------------ ------------ ------------
INCOME BEFORE CUMULATIVE
EFFECT OF A CHANGE IN
ACCOUNTING PRINCIPLE . . . . . . . . . . . . . . . 11,936,745 10,443,471 7,546,676
CUMULATIVE EFFECT OF A CHANGE
IN ACCOUNTING PRINCIPLE . . . . . . . . . . . . . . 2,521,995 -0- -0-
------------ ------------ ------------
NET INCOME . . . . . . . . . . . . . . . . . . . . $ 14,458,740 $ 10,443,471 $ 7,546,676
------------ ------------ ------------

EARNINGS PER SHARE, based on
4,272,276 shares outstanding
Income Before Cumulative Effect of a
Change in Accounting Principle . . . . . . . . . . $ 2.79 $ 2.44 $ 1.77
Cumulative Effect of a Change in
Accounting Principle . . . . . . . . . . . . . .59 -0- -0-
------------ ------------ ------------
Earnings Per Share . . . . . . . . . . . . . . . $ 3.38 $ 2.44 $ 1.77
------------ ------------ ------------

CASH DIVIDENDS PER SHARE, based
on 4,272,276 shares outstanding . . . . . . . . . . $ .66 $ .60 $ .50
------------ ------------ ------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

24
<PAGE> 27
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL ACCOUNTS

<TABLE>
<CAPTION>
First United Bancshares, Inc.
Common
Common Stock Stock Undivided
Shares Amount Surplus Profits
------------ ------------ ----------- -------

<S> <C> <C> <C> <C>
Balance, December 31, 1990 4,272,276 $ 4,272,276 $11,125,348 $50,929,331
Net Income -0- -0- -0- 7,546,676
Cash Dividends -0- -0- -0- (2,136,138)
--------- ----------- ----------- -----------
Balance, December 31, 1991 4,272,276 4,272,276 11,125,348 56,339,869
Net Income -0- -0- -0- 10,443,471
Cash Dividends -0- -0- -0- (2,563,366)
--------- ----------- ----------- -----------
Balance, December 31, 1992 4,272,276 4,272,276 11,125,348 64,219,974
Net Income -0- -0- -0- 14,458,740
Cash Dividends -0- -0- -0- (2,819,702)
--------- ----------- ----------- -----------
Balance, December 31, 1993 4,272,276 $ 4,272,276 $11,125,348 $75,859,012
========= =========== =========== ===========
</TABLE>

25
<PAGE> 28
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
First United Bancshares, Inc.
Year Ended December 31,
----------------------------------------------------------
1993 1992 1991
------------- ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Income . . . . . . . . . . . . . . . . . . . . . . . $ 14,458,740 $ 10,443,471 $ 7,546,676

Adjustments to Reconcile Net Income to
Net Cash Provided by Operating
Activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . 907,739 738,595 782,676
Amortization of Goodwill . . . . . . . . . . . . . . . 345,012 345,012 327,636
Provision for Possible Loan Losses . . . . . . . . . . 1,215,000 2,422,000 3,249,600
Utilization of Tax Credit Carryforward
of Acquired Subsidiary Bank . . . . . . . . . . . . . -0- 440,000 -0-
Provision for Deferred Taxes . . . . . . . . . . . . . 55,217 (647,702) (1,199,241)
Change in Accounting Principle . . . . . . . . . . . . (2,521,995) -0- -0-
Gain on Sales of Securities . . . . . . . . . . . . . (54,435) (385,888) (254,188)
Accretion of Bond
Discount, Net . . . . . . . . . . . . . . . . . . . . (2,144,119) (1,660,166) (1,780,587)
(Increase) Decrease in Other Assets . . . . . . . . . . (32,134) 1,987,841 875,860
Increase (Decrease) in Other
Liabilities . . . . . . . . . . . . . . . . . . . . . (1,935,877) 1,223,276 (2,198,759)
------------ ------------ -----------

Net Cash Provided by Operating
Activities . . . . . . . . . . . . . . . . . . . . . . 10,293,148 14,906,439 7,349,673
------------ ------------ ------------

CASH FLOWS FROM INVESTING
ACTIVITIES
Proceeds From Maturities of Securities . . . . . . . . 108,701,291 99,432,695 102,870,954
Proceeds From Sales of Securities . . . . . . . . . . . 1,000,000 15,421,497 30,044,687
Purchase of Securities . . . . . . . . . . . . . . . . (93,203,131) (176,589,471) (199,823,707)
Decrease in Interest-bearing Deposits in
Other Banks . . . . . . . . . . . . . . . . . . . . . . . -0- -0- 1,195,852
Decrease in Federal Funds, Net . . . . . . . . . . . . 13,181,820 1,222,505 15,666,027
(Increase) Decrease in Other Short-
Term Investments . . . . . . . . . . . . . . . . . . 1,923,251 16,150,325 (15,748,840)
(Increase) Decrease in Loans . . . . . . . . . . . . . (24,132,992) 5,651,751 4,461,761
Capital Additions . . . . . . . . . . . . . . . . . . . (1,240,559) (1,225,787) (362,616)
Purchase of Deposits . . . . . . . . . . . . . . . . . -0- 20,696,343 -0-
Purchase of Subsidiary Bank . . . . . . . . . . . . . . (4,521,307) -0- -0-
------------ ------------ ------------
Net Cash Provided by (Used in) Investing
Activities . . . . . . . . . . . . . . . . . . . . . . . 1,708,373 (19,240,142) (61,695,882)
------------ ------------ ------------

CASH FLOWS FROM FINANCING
ACTIVITIES
Increase (Decrease) in Demand, Savings
and Interest-bearing Demand
Deposits . . . . . . . . . . . . . . . . . . . . . . (3,600,795) 38,006,470 22,105,330
Increase (Decrease) in Time Deposits . . . . . . . . . (3,195,234) (29,339,187) 31,813,157
Payment on Notes Payable . . . . . . . . . . . . . . . (1,107,142) (1,107,142) (1,107,142)
Dividends Paid . . . . . . . . . . . . . . . . . . . . (2,819,702) (2,563,366) (2,136,138)
------------ ------------ ------------

Net Cash Provided by (Used in) Financing
Activities . . . . . . . . . . . . . . . . . . . . . . (10,722,873) 4,996,775 50,675,207
------------ ------------ ------------

Net Increase (Decrease) in Cash and
Cash Equivalents . . . . . . . . . . . . . . . . . . . 1,278,648 663,072 (3,671,002)

Cash and Cash Equivalents, Beginning . . . . . . . . . . 43,734,306 43,071,234 46,742,236
------------ ------------ ------------

Cash and Cash Equivalents, Ending . . . . . . . . . . . . $ 45,012,954 $ 43,734,306 $ 43,071,234
------------ ------------ ------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

26
<PAGE> 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

First United Bancshares, Inc.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting principles and reporting policies followed by First United
Bancshares, Inc. and its wholly-owned subsidiaries (the "Company") conform with
generally accepted accounting principles and with general practices within the
financial services industry. The following is a description of the more
significant of these policies:

PRINCIPLES OF CONSOLIDATION:

The consolidated financial statements include the accounts of First United
Bancshares, Inc. and its wholly-owned subsidiaries, First National Bank of El
Dorado, First National Bank of Magnolia, Merchants and Planters Bank, N.A. of
Camden, City National Bank of Fort Smith, and Commercial Bank at Alma. All
significant intercompany accounts have been eliminated.

FAIR VALUES OF FINANCIAL INSTRUMENTS:

Disclosure of the fair value for all financial instruments as well as the
methodology and significant assumptions used in estimating fair values have
been incorporated throughout the Notes to the Consolidated Financial
Statements. In cases where quoted market prices are not available, fair values
are based on estimates using present value techniques. Those techniques are
significantly affected by the assumptions used, including the discount rate and
estimates of future cash flows. In that regard, the derived fair value
estimates for those assets or liabilities cannot be substantiated by comparison
to independent markets and, in many cases, could not be realized in immediate
settlement of the instrument. All nonfinancial instruments, by definition, have
been excluded from these disclosure requirements. Accordingly, the aggregate
fair value amounts presented do not represent the underlying value of the
Company and may not be indicative of amounts that might ultimately be realized
upon disposition or settlement of those assets and liabilities.

Pursuant to the Interest Rate Control Amendment to the Constitution of the
State of Arkansas, all "general loans" have a maximum financing limitation of
5% over the Federal Reserve Discount Rate. As of December 31, 1993, the
maximum financing limitation is 8%. This law limits the Company's flexibility
in pricing loans according to credit and rate risk through the use of a greater
spread in financing rates. Accordingly, the difference between the carrying
amount and estimated fair value of the Company's loans is not as great as would
be the case without such a law.

CASH AND SHORT-TERM INVESTMENTS:

The carrying amounts for cash and due from banks and short-term
investments (federal funds sold and securities purchased under agreements to
resell and other short-term investments) approximate fair value because of the
short maturity of those financial instruments.

SECURITIES HELD FOR SALE AND INVESTMENT SECURITIES:

Management determines the appropriate classification of securities at the
time of purchase. Held for sale securities are held for indefinite periods of
time and are carried at the lower of cost or fair value. Securities held for
sale include securities that Management intends to use as part of its
asset-liability management strategy and that may be sold in response to changes
in interest rates or other economic factors. The amortized costs of the
specific securities sold are used to compute gains and losses on the sale of
securities. Adjustments to market and realized gains or losses upon sale of the
securities held for sale are classified as securities gains (losses). When
Management has the intent and ability at the time of purchase to hold
securities until maturity, these securities are classified as investment
securities and carried at amortized cost.

Fair values for securities held for sale and investment securities are
based on quoted market prices, where available. If quoted market prices are not
available, fair values are based on quoted market prices of comparable
instruments.

The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 115 "Accounting for Certain
Investments in Debt and Equity Securities," which the Company will adopt on
January 1, 1994. This statement addresses the accounting and reporting for
investments in debt and certain equity securities. Debt securities not
classified as trading account securities or investment securities expected to
be held to maturity and all equity securities will be classified as
available-for-sale securities and reported at fair value, with net unrealized
gains and losses reported, net of tax, as a separate component of stockholders'
equity. Upon adoption of this statement on January 1, 1994, the Company will
classify all of its securities held for sale and certain of its investment
securities as available-for-sale. At December 31, 1993, the carrying values and
fair values of securities expected to be classified as available-for-sale are
approximately $298,000,000 and $303,000,000, respectively, which would result
in reflecting an unrecognized gain, net of tax, of approximately $3,200,000 as
a separate component of capital accounts.

27
<PAGE> 30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

LOANS:

Loans are stated at the amount of unpaid principal, reduced by unearned
income and an allowance for loan losses. Unearned income on a portion of
installment loans is recognized as income over the terms of the loans by a
method which approximates the interest method. Interest on other loans is
calculated by using the simple interest method on daily balances of the
principal amount outstanding.

The allowance for loan losses is established through a provision for loan
losses charged to expense. Loans are charged against the allowance for loan
losses when Management believes that the collectibility of the principal is
unlikely. The allowance is an amount that Management believes will be adequate
to absorb possible losses on existing loans that may become uncollectible,
based on evaluations of the collectibility of loans and prior loan loss
experience. The evaluations take into consideration such factors as changes in
the nature and volume of the loan portfolio, overall portfolio quality, review
of specific problem loans and current economic conditions that may affect the
borrower's ability to pay. Accrual of interest is discontinued on a loan when
Management believes, after considering economic and business conditions and
collection efforts, that the borrower's financial condition is such that
collection of principal or interest is doubtful.

The fair value of loans, as disclosed in Note 6, is estimated for
portfolios of loans with similar financial characteristics. For variable-rate
loans that reprice frequently and with no significant change in credit risk,
fair values are based on carrying values. The fair values for certain mortgage
loans, such as one-to-four family residential properties, and other types of
loans are estimated by discounting the future cash flows using the current
rates at which similar loans would be made to borrowers with similar credit
ratings and for the same remaining maturities. Fair values for non-performing
loans are estimated using the current carrying value less any specific reserve
for which the Company has provided.

The FASB has issued SFAS No. 114 "Accounting by Creditors for Impairment
of a Loan" which becomes effective beginning in 1995. This statement defines
the measurement requirements for loans that are impaired or deemed to be
troubled debt restructurings. Management believes that the effect of this
statement upon adoption will not be material.

PREMISES AND EQUIPMENT:

Premises and equipment are stated at cost less accumulated depreciation.
Depreciation expense is computed over the estimated useful lives of assets
utilizing several depreciation methods as disclosed in Note 7. Maintenance,
repairs, and minor improvements are charged to operating expenses. Gains or
losses on dispositions are reflected currently in the Statement of Income.

GOODWILL:

Goodwill represents the excess of the purchase price over the fair market
value of net assets acquired in business combinations accounted for under the
purchase method. The Company amortizes goodwill over fifteen years using the
straight-line method. Accumulated amortization of goodwill was $1,808,000 and
$1,454,000 at December 31, 1993 and 1992, respectively.

OTHER REAL ESTATE:

Other real estate owned represents properties that have been acquired in
satisfaction of debt. Other real estate is valued at the lower of its fair
value or the recorded investment in the related loan upon foreclosure. If at a
later date it is determined that the recorded investment cannot be recovered,
the loss is recognized by a charge to income. When the property is in a
condition for use or sale at the time of the foreclosure, any subsequent
holding costs are included in expense as incurred. Legal fees and other direct
costs incurred by the Company in foreclosure are expensed when they are
incurred. Payments received for the rental or lease of property held in other
real estate are recognized as income in the period in which the payment is
received. The net costs of operating other real estate (including provisions
for real estate losses and gains and losses on sales of real estate) were
approximately $3,000, $1,059,000, and $1,271,000 for the years ended December
31, 1993, 1992 and 1991, respectively.

DEPOSITS:

The fair value of deposits with no stated maturity, such as
non-interest-bearing demand deposits, interest-bearing demand deposits and
savings accounts are, by definition, equal to the amount payable on demand at
the reporting date, commonly referred to as the carrying value. Fair value of
certificates of deposit are based upon the discounted value of contractual cash
flows. The discount rate is estimated using the rates currently offered for
deposits of similar remaining maturities. See Note 8 for a detail of carrying
values and fair values for all deposit liabilities.

28
<PAGE> 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SHORT-TERM LIABILITIES:

The carrying amounts for federal funds purchased, securities sold under
agreements to repurchase and other liabilities approximate their fair values.

INCOME TAXES:

The Company and its subsidiaries file consolidated State and Federal
income tax returns. The Company adopted SFAS No. 109 "Accounting for Income
Taxes" effective January 1, 1993. The adoption of SFAS No. 109 changed the
Company's method of accounting for income taxes to the liability method. The
cumulative effect of adopting SFAS No. 109 on the Company's financial
statements was to increase net income in the amount of $2,522,000 or $0.59 per
share.

EMPLOYEE BENEFIT PLANS:

The Company has a non-contributory pension plan covering all eligible
officers and employees. As disclosed in Note 11, the provision charged to
operating expenses includes current costs as well as amortization of past
service cost.

The Company has an Employee Stock Ownership Plan for substantially all of
its employees. Contributions to the Plan during any one year are determined by
the Company and limited to 15 percent of the payroll for the participants.
During 1993, 1992 and 1991, the Company's expenses totalled approximately
$362,000, $388,000, and $437,000, respectively.

During 1992, the FASB issued a new standard on accounting for
postemployment benefits. This new standard requires that the expected cost of
these benefits must be charged to expense during the years that the employees
render service. This new accounting standard will not have a material effect on
the Company.

STATEMENT OF CASH FLOWS:

For purposes of the Statement of Cash Flows, the Company considers all
currency on hand as well as all due from bank balances to be cash equivalents.

STOCK SPLIT:

On July 27, 1992, the Board of Directors of the Company declared a 2-for-1
stock split effected in the form of a 100% stock dividend. The dividend of
2,136,138 shares was distributed on September 8, 1992. Unless otherwise
indicated, all per share data, numbers of common shares and the statements of
changes in capital accounts have been adjusted to reflect this stock split.

RECLASSIFICATIONS:

Certain reclassifications have been made to the 1992 and 1991 financial
statements to conform to the 1993 method of presentation.

2. ACQUISITIONS

On December 17, 1993, the Company and InvestArk Bankshares, Inc.
(InvestArk) entered into an agreement pursuant to which the Company proposes to
acquire all of the issued and outstanding stock of InvestArk through the
issuance to InvestArk's stockholders of up to 985,849 shares of the Company's
common stock. The agreement requires that the merger be accounted for as a
pooling of interests. InvestArk has total assets of approximately $185,000,000.
For the year ended December 31, 1993, InvestArk had net interest income and net
income of approximately $7,500,000 and $1,300,000, respectively.

On November 30, 1993, the Company acquired all of the outstanding stock of
Commerce Financial Corporation and its wholly-owned subsidiary, Commercial Bank
at Alma ("Alma"), for $5,467,000. The consolidated assets of Alma were
approximately $45,000,000 at the date of acquisition. The transaction was
accounted for as a purchase, and, accordingly, the excess of the purchase price
over the fair market value of the net assets acquired was allocated to
Goodwill. The results of operations for Alma are included in the consolidated
statements of income from the date of acquisition. Unaudited pro forma results
of operations of the Company assuming that the acquisition of Alma had been
completed at the beginning of 1992 do not differ materially from the Company's
actual results.

On March 27, 1992, Merchants and Planters Bank, N.A., of Camden acquired
substantially all of the deposits of the former Camden, Arkansas branch of Home
Federal Savings of Kansas City from the Resolution Trust Corporation for
approximately $170,000 in cash. Merchants and Planters received cash and
acquired deposits of $20,696,000.

29
<PAGE> 32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. SECURITIES HELD FOR SALE

The carrying values and estimated fair values of securities held for sale
at December 31, 1993 and 1992, consisted of the following:
<TABLE>
<CAPTION>
Gross Gross
Carrying Unrealized Unrealized Estimated
Value Gains Losses Fair Value
------- ---------- -------- ----------
<S> <C> <C> <C> <C>
1993

U.S. Treasury Securities and
Other U.S. Government
Agencies $69,582,000 $1,297,000 $ 515,000 $70,364,000
Mortgage-Backed Securities 13,886,000 273,000 73,000 14,086,000
------------- ---------- ------------ ----------
$83,468,000 $1,570,000 $ 588,000 $84,450,000
============= ========== ============ ===========

1992

U.S. Treasury Securities and
Other U.S. Government
Agencies $85,970,000 $1,235,000 $ 59,000 $87,146,000
Mortgage-Backed Securities 9,824,000 361,000 38,000 10,147,000
----------- ---------- ------------ -----------
$95,794,000 $1,596,000 $ 97,000 $97,293,000
============= ========== ============ ===========
</TABLE>

U.S. Treasury Securities have maturities ranging from 15 days to 4.8
years. Mortgage-Backed Securities have an average life of approximately 2.8
years. Gross gains realized from the sale of securities held for sale were
immaterial in 1993.

4. INVESTMENT SECURITIES

The carrying values and estimated fair values of investments in debt
securities as of December 31, 1993 and 1992, are as follows:

<TABLE>
<CAPTION>
Gross Gross
Carrying Unrealized Unrealized Estimated
Value Gains Losses Fair Value
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1993

U.S. Treasury Securities
and Other U.S. Government
Agencies $ 174,045,000 $ 3,173,000 $ 373,000 $176,845,000
Obligations of States and
Political Subdivisions 46,242,000 2,684,000 148,000 48,778,000
Mortgage-Backed Securities 120,128,000 2,148,000 387,000 121,889,000
Other 1,652,000 -0- -0- 1,652,000
------------- ----------- ---------- -------------
$ 342,067,000 $ 8,005,000 $ 908,000 $349,164,000
============= =========== ========== ============

1992

U.S. Treasury Securities
and Other U.S.
Government Agencies $ 151,750,000 $ 2,850,000 $ 299,000 $154,301,000
Obligations of States and
Political Subdivisions 36,073,000 1,615,000 199,000 37,489,000
Mortgage-Backed Securities 141,158,000 2,622,000 156,000 143,624,000
Other 2,316,000 33,000 -0- 2,349,000
------------- ----------- --------- ------------
$ 331,297,000 $ 7,120,000 $ 654,000 $337,763,000
============= =========== ========== ============
</TABLE>

30
<PAGE> 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The carrying value and estimated fair value of debt securities at December
31, 1993, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
Estimated
Carrying Value Fair Value
-------------- -----------
<S> <C> <C>
Due in One Year or Less $27,992,000 $ 27,618,000
Due After One Year Through Five Years 139,658,000 142,612,000
Due After Five Years Through Ten Years 39,309,000 41,750,000
Due After Ten Years 14,980,000 15,295,000

Mortgage-Backed Securities 120,128,000 121,889,000
------------ -----------
$342,067,000 $349,164,000
============ ===========-
</TABLE>

Proceeds from sales of investments in debt securities and related gains
and losses during 1993 were not material.

Securities with a carrying value of $132,708,000 at December 31, 1993,
were pledged to secure public deposits and for other purposes required by law.

As discussed in Note 1, effective January 1, 1994, the Company will adopt
SFAS No. 115 and reclassify a portion of its investment securities portfolio as
available-for-sale.

5. ALLOWANCE FOR POSSIBLE LOAN LOSSES

The changes in the allowance for possible loan losses during 1993, 1992,
1991, were as follows:

<TABLE>
<CAPTION>
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Balance at Beginning of Year $6,899,000 $ 6,315,000 $ 6,133,000
Allowance Applicable to Loans of
Acquired Bank 520,000 -0- -0-
Provision Charged Against Income 1,215,000 2,422,000 3,250,000
Recoveries on Loans Charged-Off 1,223,000 1,091,000 984,000
Loans Charged-Off (1,379,000) (2,929,000) (4,052,000)
---------- ------------ ------------
Balance at End of Year $8,478,000 $ 6,899,000 $ 6,315,000
========== ============ ============
</TABLE>

6. LOANS

Loans consist of the following categories:

<TABLE>
<CAPTION>
TYPE 1993 1992
------------ ------------
<S> <C> <C>
Real Estate Loans Collateralized by -
Residential Properties, Primarily Single
Family Residences $121,888,000 $107,455,000
Commercial Properties 114,474,000 107,794,000
Commercial and Industrial Loans, Other Than
Real Estate and Energy-Related 92,465,000 72,251,000
Energy-Related Loans 16,514,000 19,164,000
Consumer Loans 66,970,000 53,297,000
Loans for Purchasing or Carrying
Securities 2,655,000 3,035,000
Financing Leases 421,000 1,037,000
------------ ------------
$415,387,000 $364,033,000
============ ============
</TABLE>

The estimated fair value of these loans was $416,615,000 and $371,810,000
at December 31, 1993 and 1992, respectively.

In the normal course of business, officers and directors of the Company
and their related interests maintain certain loan relationships with the
Company's subsidiary banks. At December 31, 1993 and 1992, officers, directors,
and related parties had loans of approximately $12,833,000 and $11,564,000,
respectively. During the year ended December 31, 1993, loans made to these
parties totalled $13,446,000 and repayments totalled $7,117,000. Loans to
related parties at December 31, 1992 included loans of $5,060,000 to directors
who retired during 1993.

31
<PAGE> 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company is a party to financial instruments with off-balance sheet
risk in the normal course of business to meet the financing needs of its
customers. These financial instruments include standby letters of credit and
commitments to extend credit. Those instruments involve, to varying degrees,
elements of credit and interest rate risk in excess of the amount recognized in
the Statement of Condition.

Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected
to expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Company evaluates each
customer's creditworthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by the Company upon extension of credit, is based
on Management's credit evaluation of the counterparty. The extent of
collateral varies for each commitment but may include accounts receivable,
inventory, property, plant and equipment, and income-producing commercial
properties.

Standby letters of credit are commitments issued by the Company to
guarantee the performance of a customer to a third party. Those guarantees are
primarily issued to support public and private borrowing arrangements,
including commercial paper, bond financing, and similar transactions. Most
guarantees expire in 1994. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending loan facilities to
customers. The Company holds collateral supporting those commitments for which
collateral is deemed necessary. The extent of collateral held for those
commitments at December 31, 1993, varies from 0 percent to 100 percent; the
average amount collateralized is 50 percent.

Financial instruments whose amounts represent credit risk as of December
31, 1993, and 1992, are as follows:

<TABLE>
<CAPTION>
1993 1992
----------- -----------
<S> <C> <C>
Commitments to Extend Credit $43,700,000 $40,196,000
Standby Letters of Credit 6,365,000 4,092,000
</TABLE>

The fair value of loan commitments and letters of credit would approximate
the fees currently collected on such instruments which are deemed immaterial.

A summary of non-performing assets as of December 31, 1993 and 1992, is as
follows:

<TABLE>
<CAPTION>
1993 1992
---------- ----------
<S> <C> <C>
Non-Accrual Loans $2,159,000 $2,061,000
Past Due Loans (90 Days or more and
still accruing) 311,000 704,000
Renegotiated Loans 223,000 1,414,000
---------- ----------
2,693,000 4,179,000
Other Real Estate 896,000 2,612,000
---------- ----------
Total Non-Performing Assets $3,589,000 $6,791,000
========== ==========
</TABLE>

The Company's non-accrual policy had the effect of reducing interest and
fees on loans in 1993 and 1992 by approximately $169,000 and $299,000,
respectively. Substantially all payments on non-accrual loans were applied to
principal.

7. PREMISES AND EQUIPMENT

Premises and equipment consist of the following:

<TABLE>
<CAPTION>
Principal
Depreciation Estimated
Method Useful Life 1993 1992
------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Land $ 3,290,000 $ 2,690,000
Buildings and Leasehold
Improvements Straight-line 5-40 years 13,563,000 12,254,000
Furniture, Fixtures and Declining Balance
Equipment 3-10 years 6,811,000 6,207,000
----------- -----------
23,664,000 21,151,000
Less: Accumulated
Depreciation (12,482,000) (11,734,000)
------------ -----------
$11,182,000 $ 9,417,000
=========== ===========
</TABLE>

32
<PAGE> 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Depreciation included in other expense, net occupancy expense and
equipment expense was $924,000 in 1993, $739,000 in 1992, and $783,000 in 1991.

First National Bank of El Dorado leases telephone equipment and land on
which two branches and the main bank's employee parking lot are located from
First Land & Timber Corporation, a company with common officers and directors
of the Company. Rentals paid to First Land & Timber Corporation on these leases
were approximately $20,000 for each of the years ended December 31, 1993, 1992
and 1991.

8. DEPOSITS

At December 31, 1993 and 1992, deposits consisted of the following:

<TABLE>
<CAPTION>
1993 Carrying Estimated
Value Fair Value
------------ ------------
<S> <C> <C>
Non-interest-bearing Demand
Deposits $123,891,000 $123,891,000
Savings and Interest-bearing
Demand Deposits 286,867,000 286,867,000
Certificates of Deposit 395,691,000 397,431,000
------------ ------------
$806,449,000 $808,189,000
============ ============

</TABLE>

<TABLE>
<Captain>
1992 Carrying Estimated
Value Fair Value
-------------- -------------
<S> <C> <C>
Non-interest-bearing Demand
Deposits $120,059,000 $120,059,000
Savings and Interest-bearing
Demand Deposits 271,446,000 271,446,000
Certificates of Deposit 381,490,000 383,038,000
------------ ------------
$772,995,000 $774,543,000
============ ============
</TABLE>

As disclosed in Note 1, SFAS No. 107 defines fair value of demand deposits
as the amount payable upon demand and prohibits adjusting fair value for any
value derived from retaining these deposits for an expected future period in
time. That component, commonly referred to as a core deposit intangible, is
not considered in the above fair value amounts.

9. INCOME TAXES

Income tax expense is composed of the following:

<TABLE>
<CAPTION>
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Currently Payable $ 5,499,000 $ 5,295,000 $ 3,611,000
Deferred:
Effects of Temporary
Differences (28,000) (648,000) (1,199,000)
Alternative Minimum Tax
Effect -0- -0- 575,000
------------ ------------ ------------
$ 5,471,000 $ 4,647,000 $ 2,987,000
============ ============ ============
</TABLE>

The income tax provision included $19,000, $131,000 and $86,000 for the
years ended December 31, 1993, 1992 and 1991, respectively, resulting from
securities transactions.

The effective income tax rates in the accompanying statements of income
are less than the statutory income tax rate because of the following:

<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Statutory Federal Income Tax Rate 35.0% 34.0% 34.0%
Less:
Non-Taxable Interest Income (4.0) (5.4) (7.8)
State Income Taxes 1.3 0.1 1.0
Other Items, Net (0.9) 2.1 1.1
----- ---- ----
Effective Income Tax Rate 31.4% 30.8% 28.3%
==== ==== ====
</TABLE>

33
<PAGE> 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accumulated deferred income taxes as of December 31, 1992, included in
other liabilities, were $71,000. At December 31, 1993, temporary differences
between the financial statement carrying amounts and the tax bases of assets
and liabilities give rise to the following net deferred tax asset, which is
included in other assets.

<TABLE>
<S> <C>
Accelerated Depreciation $ (871,000)
Provision for Possible Loan Losses 2,967,000
Effects of Pension and Benefit
Plans (273,000)
Difference in Tax and Book Basis
of Securities (109,000)
621,000
Write-down of Other Real Estate 60,000
-----------
Other $ 2,395,000
===========
</TABLE>

The Company has evaluated the need for a valuation allowance and, based on
the weight of available evidence, has determined that it is more likely than
not that all deferred tax assets will eventually be realized.

10. NOTES PAYABLE

In connection with the August, 1988 acquisition of City National Bank of
Fort Smith, the Company issued a $7,750,000 note payable to an unaffiliated
bank and a $5,000,000 promissory note to a company that is affiliated with a
director of the Company.

A summary of notes payable as of December 31, 1993 and 1992 is as follows:

<TABLE>
<CAPTION>
1993 1992
----------- ----------
<S> <C> <C>
Installment Note Payable to Unaffiliated
Bank, Interest at 7.9%, Principal Payments of
$1,107,000 Due Annually $2,214,000 $3,321,000
Promissory Note Bearing Interest at 0.375%
Below Prime (5.625% at December 31, 1993 and
1992), Principal Due 1994 5,000,000 5,000,000
----------- ----------
$7,214,000 $8,321,000
=========== ==========
</TABLE>

The estimated fair value of these notes payable approximated their
carrying value at December 31, 1993 and 1992. The installment note payable to
an unaffiliated bank is secured by the outstanding stock of City National Bank
of Fort Smith. The promissory note is an unsecured obligation of the Company.
These borrowings contain financial covenants relating to the issuance of
additional debt and maintenance of minimum tangible net worth.

The notes payable require principal repayments of $6,107,000 and
$1,107,000 in 1994 and 1995, respectively.

11. PENSION PLAN

The Company has a non-contributory pension plan (the "Plan") which covers
substantially all of its employees. Operating expenses of the Plan are paid by
the Company and no contributions are required of participants. The annual
contribution to the Plan by the Company ($848,000 in 1993, $458,000 in 1992 and
$450,000 in 1991) is determined by various actuarial factors. The Plan
contains provisions for early retirements, disability and death benefits.

34
<PAGE> 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Actuarial Present Value of Benefit
Obligation at December 31: 1993 1992
----------- -----------
<S> <C> <C>
Accumulated Benefit Obligation $(10,287,000) $(10,037,000)
Effect of Projected Future
Compensation Levels (440,000) (1,375,000)
------------ ------------
Projected Benefit Obligation for
Service Rendered to Date (10,727,000) (11,412,000)
Plan Assets at Fair Value, Primarily
Stock and U.S. Securities 11,434,000 10,657,000
------------ ------------
Plan Assets Greater (Less) than Projected
Benefit Obligation 707,000 (755,000)
Unrecognized Net Loss From Past
Experience Different From That
Assumed 1,308,000 1,225,000
Unrecognized Net Obligations (891,000) 411,000
------------ ------------
Prepaid Pension Cost $ 1,124,000 $ 881,000
============ ============
</TABLE>

<TABLE>
<CAPTION>
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Net Periodic Pension Costs:
Service Cost $ 524,000 $ 480,000 $ 470,000
Interest Cost on Projected
Benefit Obligation 860,000 826,000 736,000
Actual Return on Assets (702,000) (1,112,000) (1,118,000)
Net Amortization and
Deferral (77,000) 352,000 345,000
----------- ----------- -----------
$ 605,000 $ 546,000 $ 433,000
=========== =========== ============

Significant Assumptions:
Weighted Average
Discount Rate 7.5% 7.5% 8.0%
Estimated Future Pay
Increases 4.0% 4.0% 4.0%
Expected Return on Assets 7.5% 7.5% 7.5%
</TABLE>

12. COMMITMENTS AND CONTINGENCIES

The Company has been named as a defendant in certain lawsuits which are
currently pending. In the opinion of Management, after consulting with legal
counsel, any liability incurred in connection with the ultimate outcome of
these suits will not have a material adverse effect on the Company.

The Company has a facilities management contract with a data processing
firm to provide computer equipment and the needed personnel for systems
support. Payments related to this contract, which expires in 1998, are expensed
when paid. Future annual minimum payments related to this contract are
$1,134,000 in each of the years 1994 through 1997 and $945,000 in 1998.

Certain branch facilities and warehouse space are leased under various
operating lease agreements. These leases require approximate minimum rentals
as follows: 1994-$124,000; 1995-$108,000; 1996-$107,000; 1997-$96,000;
1998-$105,802; and thereafter- $150,691.

13. RESTRICTIONS

National banking regulations require all national banks to obtain approval
of the Comptroller of the Currency if dividends declared in any year exceed the
profits of that year combined with the net retained profits of the preceding
two years. During 1994, the Company's subsidiary banks will have available for
payment of dividends, without regulatory approval, approximately $15,356,000 of
undistributed earnings plus the net income earned in 1994.

At December 31, 1993, the Company was required to maintain reserve
balances in cash and due from accounts of approximately $8,263,000.

35
<PAGE> 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

National banking regulations also require that national banks pay
insurance premiums to the Federal Deposit Insurance Corporation (the "FDIC") in
exchange for the FDIC insuring the deposits of the Company's customers.
Insurance premiums paid to the FDIC for the years ended December 31, 1993, 1992
and 1991, were approximately $1,726,000, $1,679,000 and $1,142,000,
respectively, and those premiums were included in other operating expenses on
the Company`s Consolidated Statements of Income.

14. SUPPLEMENTARY DATA FOR CASH FLOWS

Income taxes paid by the Company during the years ended December 31, 1993,
1992 and 1991, amounted to $6,837,000, $3,778,000 and $2,999,000, respectively.
Interest paid on notes payable during the years ended December 31, 1993, 1992
and 1991, was $510,000, $828,000 and $964,000, respectively.

In connection with the November, 1993 acquisition of Alma, the Company
acquired assets and assumed liabilities as follows:

<TABLE>
<S> <C>
Fair Value of AssetsAcquired $44,436,000
Goodwill 1,622,000
Liabilities Assumed (40,591,000)
------------
Cash Paid 5,467,000
Cash Acquired (946,000)
------------
Net Payment for Purchase $ 4,521,000
============
</TABLE>

15. CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY

The financial position of First United Bancshares, Inc. (parent company
only), its results of operations and cash flows are summarized as follows:

<TABLE>
<CAPTION>
December 31,
--------------------------------------
(Dollars in Thousands) 1993 1992
------- -------
<S> <C> <C>
CONDENSED FINANCIAL POSITION:

Assets:
Cash $ 5,250 $ 5,009
Investment in Subsidiary Banks 95,582 85,301
Other Assets 1,056 563
-------- --------
Total Assets $101,888 $ 90,873
======== ========

Liabilities and Capital Accounts:
Notes Payable $ 7,214 $ 8,321
Other Liabilities 3,417 2,935
-------- --------
Total Liabilities 10,631 11,256
-------- --------

Common Stock 4,272 4,272
Surplus 11,125 11,125
Undivided Profits 75,860 64,220
-------- --------
Total Capital 91,257 79,617
-------- --------

Total Liabilities and Capital $101,888 $ 90,873
======== ========
</TABLE>

36
<PAGE> 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------
(Dollars in Thousands) 1993 1992 1991
------- -------- --------
<S> <C> <C> <C>
CONDENSED OPERATING RESULTS:

Dividend Income From Subsidiary Banks $ 10,881 $ 4,665 $ 5,964
Management Fees 1,517 1,351 1,248
Internal Audit Fees 228 220 215
-------- -------- --------
12,626 6,236 7,427
-------- -------- --------

Interest Expense 510 828 964
Other Expense 2,310 2,355 1,981
-------- -------- --------
2,820 3,183 2,945
-------- -------- --------
Income Before Tax Benefit and
Equity in Undistributed Income of
Subsidiary Banks 9,806 3,053 4,482
Income Tax Benefit 293 458 344
-------- -------- --------
Income Before Equity in Undistributed
Income of Subsidiary Banks and
Cumulative Effect of a Change in
Accounting Principle 10,099 3,511 4,826
Cumulative Effect of a Change in
Accounting Principle 279 -0- -0-
-------- -------- --------
Income Before Equity in Undistributed
Income of Subsidiary Banks 9,820 3,511 4,826
Equity in Undistributed Income of
Subsidiary Banks 4,639 6,932 2,720
-------- -------- --------

Net Income $ 14,459 $ 10,443 $ 7,546
======== ======== ========

CONDENSED STATEMENTS OF CASH FLOWS:

Cash Flows From Operating Activities:
Net Income $ 14,459 $ 10,443 7,546
Depreciation 8 5 2
Undistributed Earnings (4,639) (6,932) (2,720)
Utilization of Tax Credit -0- 440 -0-
Carryforwards (501) 53 (15)
(Increase) Decrease in Other Assets 301 270 895
-------- -------- --------
Increase in Other Liabilities 9,628 4,279 5,708
-------- -------- --------

Cash Flows From Investing Activities: (5,461) -0- -0-
-------- -------- --------
Purchase of Subsidiary Bank

Cash Flows From Financing Activities: (1,107) (1,108) (1,107)
Principal Repayments on Notes Payable (2,819) (2,563) (2,136)
--------- -------- --------
Payment of Dividends (3,926) (3,671) (3,243)
--------- -------- --------
241 608 2,465
Net Increase in Cash 5,009 4,401 1,936
-------- -------- --------
Cash at Beginning of Year $ 5,250 $ 5,009 $ 4,401
======== ======== ========
Cash at End of Year

Supplementary Data for Cash Flows:
$ 6,837 $ 3,778 $ 2,999
Taxes Paid 510 828 964
Interest Paid on Notes Payable
</TABLE>

37
<PAGE> 40
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of First United Bancshares, Inc.:

We have audited the accompanying consolidated statements of condition of
First United Bancshares, Inc. (an Arkansas corporation) and subsidiaries as of
December 31, 1993 and 1992, and the related consolidated statements of income,
changes in capital accounts and cash flows for each of the years in the
three-year period ended December 31, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of First United Bancshares,
Inc. and subsidiaries as of December 31, 1993 and 1992, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1993, in conformity with generally accepted
accounting principles.

As explained in Note 1 to the consolidated financial statements, effective
January 1, 1993, First United Bancshares, Inc. changed its method of
accounting for income taxes.

Arthur Andersen & Co.

New Orleans, Louisiana,
January 18, 1994.

REPORT OF MANAGEMENT ON FINANCIAL STATEMENTS

The management of First United Bancshares, Inc. (First United) is
responsible for the integrity and objectivity of the financial statements and
other financial information contained in this Annual Report. The financial
statements have been prepared in conformity with generally accepted accounting
principles. Financial information throughout this Annual Report is consistent
with that in the financial statements.

First United maintains a system of internal accounting controls which is
believed to provide, in all material respects, reasonable assurance that assets
are safeguarded against loss from unauthorized use or disposition; transactions
are properly authorized and recorded; and the financial records are reliable
for preparing financial statements and maintaining accountability for assets.
All systems of internal accounting controls are based on management's judgement
that the cost of controls should not exceed the benefits to be achieved.
Management believes First United's system provides the appropriate balance
between costs of controls and the related benefits.

In order to monitor compliance with this system of controls, First United
maintains an internal audit program. Internal audit reports are issued to
appropriate officers, and significant audit exceptions, if any, are reviewed
with management and the Audit Committee of the Board of Directors.

The financial statements in this Annual Report have been examined by First
United's independent public accountants, Arthur Andersen & Co., for the purpose
of determining that the financial statements are presented fairly. Their
examination included a study of the evaluation of First United's system of
internal controls for the purpose of setting the scope of their auditing
procedures.

38
<PAGE> 41
===============================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
(MARK ONE)

(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]

FOR THE FISCAL YEAR ENDING DECEMBER 31, 1993

OR
( ) TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NO. 0-11916

FIRST UNITED BANCSHARES, INC.
(Exact name of registrant as specified in its charter)

ARKANSAS 71-0538646
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

MAIN AT WASHINGTON STREETS,
EL DORADO, ARKANSAS 71730
(Address of principal executive office) (Zip Code)

Registrant's telephone number, including area code: (501) 863-3181

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

NAME OF EACH EXCHANGE ON
TITLE OF CLASS WHICH REGISTERED
-------------- ------------------------
Common Stock, $1.00 par value NASDAQ-NMS

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 or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Yes [x] No [ ]

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 such
filing requirements for the past 90 days. Yes [x] No [ ]

As of March 1, 1994, 4,272,276 shares of the Company's Common Stock, $1.00
par value were issued and outstanding, and the approximate aggregate market
value of the voting stock held by non-affiliates of the registrant was
approximately $92,905,000.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are incorporated by reference into the
listed Parts and Items of Form 10-K:

Annual Report to Shareholders for the year ending December 31, 1993 to the
extent indicated in the Form 10-K cross reference index - PARTS I, II, and IV.

Definitive Proxy Statement to Shareholders to be filed with the Securities
and Exchange Commission not later than 120 days after the close of the
Registrant's fiscal year - PART III.

================================================================================

39
<PAGE> 42

CROSS REFERENCE INDEX

<TABLE>
<CAPTION>
PART I. PAGE
--------- ----
<S> <C>
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 41
Item 4. Not Applicable

PART II.
---------

Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-14

Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . 20

Item 7. Managements's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . .
4-19
Item 8. Financial Statements and Supplementary Data . . . . . . . . .

Item 9. Not Applicable
23-38

PART III.

Item 10. Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . 42-43
</TABLE>

The remaining information for Item 10 and the information required
by Items 11 through 13 are incorporated by reference to the
Registrant's Definitive Proxy Statement for the 1994 Annual Meeting
of Stockholders filed with the Securities and Exchange Commission.

PART IV.

Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K . . . . . . . . . . . . . . . . . . .
(a) 1. Financial Statements - See Item 8
2. Financial Statement Schedules - All schedules are omitted,
since they are either not applicable or the required
information is shown in the financial statements or the notes
thereto.
3. Exhibits - Exhibits have been filed separately with the
Commission in conjunction with this form 10-K. Stockholders may
obtain copies from the registrant upon written request.

(b) Reports on Form 8-K - The Company filed Form 8-K's on September
8, 1993 and December 10, 1993 related to the acquisition of Commerce
Financial Corporation. Such Form 8-K's have been previously filed
with the Commission and Stockholders may obtain copies from the
Registrant upon written request.

40
<PAGE> 43
DESCRIPTION OF BUSINESS

First United Bancshares, Inc. (First United) is a multi-bank holding
company incorporated in 1980 for the purpose of holding all of the outstanding
stock of The First National Bank of El Dorado (FNBE). Between 1981 and 1993,
First United acquired four other banks in different cities within Arkansas.
The banks acquired were the First National Bank of Magnolia (FNBM), Merchants
and Planters Bank, N.A., of Camden (MPBC), City National Bank of Fort Smith
(CNBFS) and Commercial Bank at Alma (CBA). Each of the banks are wholly-owned
by First United.

On March 27, 1992, MPBC acquired $20.7 million in deposits from the failed
Camden, Arkansas Branch of Home Federal Savings of Kansas City, Missouri.

The banks offer customary services of banks of similar size and similar
markets, including interest-bearing and non-interest bearing deposit accounts,
commercial, real estate and personal loans, trust services, correspondent
banking services and safe deposit box activities. For further discussion of
First United operations, see pages 4 through 19 of the Annual Report, which is
incorporated by reference to Item 7 in the Form 10-K.

COMPETITION

The banking business is highly competitive. The banking subsidiaries of
First United compete actively with national and state banks, savings and loan
associations, securities dealers, mortgage bankers, finance companies and
insurance companies.

REGULATION

First United is a registered bank holding company pursuant to the Bank
Holding Company Act of 1956, as amended (the "Act"), and as such, is subject to
regulation and examination by the Federal Reserve Board and is required to file
with the Federal Reserve Board annual reports and other information regarding
the business operations of itself and its subsidiaries. The Act provides that
a bank holding company may be required to obtain Federal Reserve Board approval
for the acquisition of more than 5% of the voting securities or substantially
all of the assets of any bank or bank holding company, unless it already owns a
majority of the voting securities of such bank. The Act prohibits First United
from engaging in any business other than banking or bank-related activities
specifically allowed by the Federal Reserve Board. The Act also prohibits
First United and its subsidiaries from engaging in certain tie-in arrangements
in connection with the extension of credit, the lease or sale of property or
the provision of any services. Under Title VI of the Financial Institutions,
Reform, Recovery and Enforcement Act of 1989, the Act has been amended to
authorize bank holding companies to acquire savings and thrift institutions
without tandem operations restrictions.

First United's five banking subsidiaries ("the Banks") are subject to a
variety of regulations concerning the maintenance of reserves against deposits,
limitations on the rates that can be charged on loans or paid on deposits,
branching, restrictions on the nature and amounts of loans and investments that
can be made and limits on daylight overdrafts. All of the Banks are regulated
by the Federal Deposit Insurance Corporation. In addition, as national banking
associations, FNBE, FNBM, MPBC, and CNBFS are subject to the regulation and
supervision of the Comptroller of the Currency, while CBA is subject to the
regulation of the Arkansas State Bank Department. Each of the Banks is a
member of the Federal Reserve System and is subject to regulation by the
Federal Reserve Board.

The Banks are limited in the amount of dividends they may declare. Prior
approval must be obtained from the appropriate regulatory authorities before
dividends can be paid by the Banks to First United if the amount of adjusted
capital, surplus and retained earnings is below defined regulatory limits. See
Note 13 of Notes to the Consolidated Financial Statements, which is
incorporated by reference into Item 8 of this Annual Report on Form 10-K. The
Banks are also restricted from extending credit or making loans to or
investments in First United and certain other affiliates as defined in the
Federal Reserve Act. Furthermore, loans and extensions of credit are subject
to certain other collateral requirements.

LEGAL PROCEEDINGS

First United and its subsidiaries have been named as defendants in various
legal actions arising from normal business activities in which damages of
various amounts are claimed. The amount, if any, of ultimate liability with
respect to such matters cannot be determined. However, after consulting with
legal counsel, management believes any such liability will not have a material
effect on First United's consolidated financial condition.

41
<PAGE> 44
PROPERTIES

First United does not own or lease any property. Minimal office space is
required for First United's officers and employees and such space is provided
without charge by FNBE.

EMPLOYEES

At December 31, 1993, First United had approximately 373 full-time
equivalent employees and considers its relationship with its employees to be
good.

EXECUTIVE OFFICERS OF THE REGISTRANT

James V. Kelley, 44 - Chairman, President and Chief Executive
Officer of First United since 1987;
Chairman and Chief Executive Officer of
FNBE since 1985.

Robert G. Dudley, 61 - Secretary of First United since 1983;
President of FNBE since 1985.

Robert L. Jones, 58 - Assistant Secretary of First United since
1992; President and Chief Executive Officer
of FNBM since 1991; President and Chief
Executive Officer of MPBC from 1984 to
1991.

James R. Jordan, 49 - President and Chief Executive Officer of
MPBC since 1991; Executive Vice President
of MPBC from 1986 to 1991.

Jim N. Harwood, 54 - President and Chief Executive Officer of
CNBFS since 1993; Executive Vice President
of CNBFS from 1983 to 1993.

42
<PAGE> 45
OFFICERS AND DIRECTORS
<TABLE>
<S> <C>
FIRST UNITED BANCSHARES, INC. Roy E. Ledbetter
President & Chief Executive Officer,
OFFICERS Highland Industrial Park, Inc.

James V. Kelley Jack W. Mcnutt
Chairman of the Board, President & Chief Executive Officer,
President & Chief Executive Officer Murphy Oil Corporatoin

John E. Burns, CPA Michael F. Mahony
Vice President & Chief Financial Officer Attorney

Robert G. Dudley Richard H. Mason
Secretary President,
Gibraltar Energy Company
Robert L. Jones
Assistant Secretary W. E. Morgan, Jr.
President,
AUDIT Warnock Furniture, Inc.

Jim Barnes R. Madison Murphy
Vice President & Auditor Executive Vice President and Chief Financial Officer
Murphy Oil Corporation
John Page
Assistant Auditor Robert C. Nolan 2
Managing Partner,
LOAN REVIEW Munoco Company

Richard E. Ulmer Paula M. O'Connor
Vice President & Loan Review Officer Investments

Robert C. Wiley Katherine P. Ozment
Assistant Vice President & Loan Review Officer Investments

DIRECTORS Cal Partee, Jr.
Oil Investments
Larry Burrow
Plant Manager, W. C. Partee
Partee Flooring Mill Owner, Partee Flooring Mill
and Chairman of the Board,
Claiborne P. Deming First National Bank of Magnolia
Executive Vice President and Chief Operating Officer,
Murphy Oil Corporation Chesley Pruet
Oil Investments
Grady E. DuPriest
Geologiest John D. Trimble, Jr. 1
Managing Partner,
W. A. Eckert 3 Trimble Proprties
Attorney
Ralph C. Weiser
James V. Kelley Managing Partner,
Chairman of the Board, President & Weiser-Brown Oil Company
Chief Executive Officer
First United Bancshares, Inc. Dr. David M. Yocum, Jr.
1 Chairman, Audit Committee Managing Partner,
2 Chairman, Compensation, ESOP and Benefits Committee Alice-Sidney Oil Company
3 Chairman, Nominating Committee
</TABLE>

43
<PAGE> 46
OFFICERS AND DIRECTORS

<TABLE>
<S> <C> <C>
Debbie Arnold CITY NATIONAL BANK OF REAL ESTATE SERVICES
Assistant Vice President/Marketing FORT SMITH DIVISION
Officer
OFFICERS Cleve McDonald, CPA
Peggy Fincher Senior Vice President
Assistant Vice President, Manager, Jim Harwood, CPA
New Accounts Department President & Chief Executive Sue Clemmons
Officer Vice President
Sue Hanson
Assistant Vice President, Manager, ACCOUNTING DIVISION Georgia Smith
Accounting Department Loan Servicing Officer
Betty Scarborough, CPA
Linda Nichols Senior Vice President, Controller, Glenda Musset
Assistant Vice President/ Cashier & Corporate Secretary Mortgage Loan Office
Personnel Officer
Helen Fox
Maxine Roberson Accounting Officer RETAIL BANKING &
Assistant Vice President SPECIAL SERVICES GROUP
& Operations Officer LENDING SERVICES GROUP
Connie Stevenson
Patty Clary Michael H. Fisher Senior Vice President
Customer Service Officer Senior Vice President
BRANCH SERVICES DIVISION
Martha Hoyle COMMERCIAL DIVISION
Branch Officer Verna Efund
Jackie Garrett Assistant Vice President
Billie Ross Vice President & Branch Administrator
Administrative Officer
Jim Miller Paula Butler
TRUST AND INVESTMENTS Vice President Manager,
City National East
Homer F. Greer, Jr. Larry Smith
Senior Vice President & Trust Officer Vice President Larry Munoz
Manager,
Joan Pauley James Wiggins City National South
Trust Operations Officer Vice President
Susan Martin
DIRECTORS SPECIAL ASSETS DIVISION Manager,
City National Central Mall
W. C. Partee George Beattie
Larry Burrow Vice President STAFF SERVICES DIVISION
Cameron Dodson
Grady E. DuPriest Pam Hall John Lloyd
W. A. Eckert Special Assets Officer Vice President, Purchasing
Tommy Fallin, Jr.
Robert L. Jones CONSUMER DIVISION Saundra Lockhart
James V. Kelley Vice President, Marketing
W. E. Morgan, Jr. David Berger
Cal Partee, Jr. Vice President Joyce Wilson
David F. Rankin Vice President, Personnel &
B. F. Smart Stella Dooly Special Services
Alvin Souter Assistant Vice President
George R. Stuart LaVerna King
W. Partee Tuberville LOAN ADMINISTRATION Operations Officer &
Ralph C. Weiser DIVISION Customer Service Manager
Winston O. Wilson
Joe D. Woodward
</TABLE>

44
<PAGE> 47
<TABLE>
<CAPTION>
DIRECTORS LOAN ADMINISTRATION TRUST AND INVESTMENT
DIVISION
<S> <C> <C>
Winston O. Wilson Jeryl Q. Looper
Joe D. Woodward Carolyn Blyuthe Senior Vice President
Loan Administration Officer

Ralph Harmon COMMERCIAL BANK
Assistant Vice President MERCHANTS & PLANTERS AT ALMA
& Trust Officer BANK, N.A., OF CAMDEN
OFFICERS
OTHER DEPARTMENTS OFFICERS
John P. Ballentine
Gerry Crawford James R. Jordan Chairman, President and
Wire Transfer President & Chief Executive Officer Chief Executive Officer

Merrilee Ferrie LENDING William N. "Dockey" Brasher III
Corporate Funds Management Executive Vice President
& Resource Services Bob Hankins
Senior Vice President LENDING
INVEST* CENTER
Jack M. Sheppard, Jr. Rex A. Woods
Juanita Huckelbury Vice President Vice President
INVEST* Manager
Bonnie Lewis Becky A. Stephens
DIRECTORS Vice President Assistant Vice President

Thomas J. Barr ADMINISTRATIVE AND Nellie Oliver
Morris G. Boren CUSTOMER SERVICE Credit Officer
Carolyn Branch
George C. Fisher David Faucett ADMINISTRATIVE AND
Jim Harwood Senior Vice President, Cashier CUSTOMER SERVICE
George R. Jacobs
James V. Kelley Dot Weaver Mary Beth Jesson
A. Samuel Koenig, III Vice President, Vice President
Emon A. Mahony, Jr.
Charles Shuffield Sue Santifer Helen S. Jones
Bobby Stephens Vice President & Vice President
George Warmack Secretary to the Board
Robert B. Westphal Reba Collins
Angel Dancy Assistant Cashier
ADVISORY DIRECTORS Branch Manager
Jo N. Gray
Edward E. Bedwell Tessa Wilson Assistant Cashier
Franklin Hawkins Branch Manager
J. L. Swink Barbara Houck
Nell Mantooth Assistant Vice President
* INVEST - INVEST Financial Branch Manager
Corporation - Member NASD, DIRECTORS
SIPC - A full service financial Syble Overton
company providing investment Branch Manager James A. Arnold II
products John P. Ballentine
DIRECTORS Leonard L. Blaschke
William N. "Dockey" Brasher III
Eugene Bramblett John A. Griffin
E. E. Falwell Jim Harwood, CPA
James R. Jordan Hilda Knight
</TABLE>

45
<PAGE> 48
James V. Kelley Paul L. Winborn
Roy E. Ledbetter
Jim Neeley
Joe M. Rogers
Thomas E. Watts

46
<PAGE> 49
CORPORATE INFORMATION

ANNUAL MEETING

The annual meeting of Stockholders will convene on Tuesday, Mayu 24, 1994, at
2:00 p.m. (CDT) in the Directors Room of the First National Bank, Main and
Washington Streets, El Doado, Arkansas

CORPORATE HEADQUARTERS

Main and Washington Streets
El Dorado, Arkansas 71730

COMMON STOCK

NASDAQ Symbol: UNTD
Listed: NASDAQ System National Market List

INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen & Co.
New Orleans, Louisiana

FINANCIAL AND GENERAL INFORMATION

First United's Annual Report to the Securities and Exchange Commission on Form
10-K is incorporated in this report. Additional copies and other financial
reports or information are available without charge upon request by writing:
John E. Burns, First United Bancshares, Inc., P. O. Box 751, El Dorado,
Arkansas 71731-0751.

Stockholders seeking any information concerning their shares or dividends
should contact the transfer agent, First National Bank of El Dorado, as
follows: ATTN: Corporate Trust, P. O. Box 751, El Dorado, Arkansas 71731-0751,
Telephone (501) 863-3181, Extension 237.

47
<PAGE> 50
APPENDIX

TO THE
1993 ANNUAL REPORT TO STOCKHOLDERS

This Appendix is provided in accordance with Regulation S-T, Item 304.
Graphic and Image Material. It shall list all such graphic and image
information in the First United Bancshares, Inc. ("First United") 1993 Annual
Report to Stockholders ("Report") and is intended to provide a fair and
accurate narrative description of such information.

1. The Cover Page of the Report is titled "First United Bancshares, Inc.
1993 Annual Report to Stockholders and Form 10-K."

2. Page 2 of the Report contains a graphic image which reads "With our
announced expansion plans we should exceed the one billion dollar mark early in
1994."

3. Page 4 of the Report contains a graph titled "Earnings Per Share"
which discloses First United's earnings per share (in dollars) of $1.45 , $1.74
, $1.77, $2.44 and $2.79 for the years ended December 31,1989, 1990, 1991, 1992
and 1993, respectively.

4. Page 4 of the Report contains a graph titled "Book Value-Market Value
at Year End" which discloses the book value of a share of First United common
stock to be $14.28, $15.53, $16.79, $18.63 and $21.36 for the years ended
December 31, 1989, 1990, 1991, 1992 and 1993, respectively. The graph also
discloses the market value of a share of First United common stock to be
$13.63, $12.75, $13.50, $26.00 and $29.50 for the years ended December 31,
1989, 1990, 1991, 1992 and 1993, respectively.

5. Page 5 of the Report contains a graph titled "Interest Margin
Analysis" which discloses the "Bread-Even Yield", "Net Interest Margin" and
"Net Interest Spread". The Break-Even Yield" is disclosed as 6.04%, 5.86%,
5.14%, 3.53%, and 2.86%, the Net Interest Margin" is disclosed as 4.10%,
4.10%, 4.12%, 4.41% and 4.42%, and the "Net Interest Spread" is disclosed as
3.03%, 3.03%, 3.22%, 3.73% and 3.84%, for the years ended December 31, 1989,
1990, 1991, 1992 and 1993, respectively.

6. Page 6 of the Report contains a graph titled "Loan Loss Provision"
which discloses the dollar amount (in millions) that has been allocated to the
loan loss reserve account, which is disclosed as $3,837, $2,122, $3,250, $2,422
and $1,215 for the years ended December 31, 1989, 1990, 1991, 1992 and 1993,
respectively.

7. Page 8 of the Report contains a graph titled "Non-Performing Assets
and Allowance for Loan Losses" which discloses (in thousands) the
"Non-Performing Assets" as $11,617, $10,875, $9,469, $6,791 and $3,589, the
"Non-Performing Loans" as $7,174, $6,132, $5,437, $4,179 and $2,693, and the
"Allowance for Loan Losses" as $6,068, $6,133, $6,315, $6,899 and $8,478, for
the years ended December 31, 1989, 1990, 1991, 1992 and 1993, respectively.

8. Page 11 of the Report contains a graph titled "Deposit Composition
During 1993" which discloses the make-up of the deposits as 36.14% of "Savings
and Interest-Bearing Demand" deposits, 35.54% of "Other Time Deposits", 14.16%
of "Non-Interest Bearing Demand" deposits and 14.16% of "Time Deposits of
$100,000 or More".

9. Page 13 of the Report contains a graph titled "Shareholders Equity at
Year-End" which discloses the shareholders equity (in millions) as approximaely
$61, $66, $72, $80 and $91 for the years ended December 31, 1989, 1990, 1991,
1992 and 1993, respectively.

10. Page 14 of the Report contains a graph titled "1993 Risked Based
Capital Ratios" which discloses "Tier 1 Capital" and "Total Risk-Based Capital"
of First United as 18.83% and 19.53%, respectively, and the regulatory
requirements of "Tier 1 Capital" and "Total Risked-Based Capital" as 4.0% and
8.0%, respectively.

<PAGE> 1

Exhibit 21

FIRST UNITED BANCHSARES, INC.
Subsidiaries

<TABLE>
<CAPTION>
Name Jurisdiction of Incorporation
- - - ---- -----------------------------
<S> <C>
The First National Bank United States
of El Dorado, El Dorado
Arkansas

City National Bank United States
of Fort Smith, Fort Smith
Arkansas

First National Bank United States
of Magnolia, Magnolia
Arkansas

Merchants and Planters Bank United States
N.A., Camden, Arkansas

Commercial Bank at Alma Arkansas
Alma, Arkansas
</TABLE>