FIRST UNITED BANCSHARES INC /AR/, DEF 14A, 1996-04-18

FIRST UNITED BANCSHARES INC /AR/
DEF 14A, 1996-04-18
STATE COMMERCIAL BANKS

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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12

FIRST UNITED BANCSHARES, INC.
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(Name of Registrant as Specified in its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):

- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------
(5) Total fee paid:

- --------------------------------------------------------------------------------

/ / Fee paid previously with preliminary materials.

/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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<PAGE> 2

FIRST UNITED BANCSHARES, INC.
EL DORADO, ARKANSAS 71730

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 28, 1996

To The Stockholders of First United Bancshares, Inc.:

Notice is hereby given that the Annual Meeting of the Stockholders of First
United Bancshares, Inc. ("the Company") will be held in the First National
Building, El Dorado, Arkansas, on Tuesday, May 28, 1996, at 2:00 p.m. Central
Daylight Time, for the following purposes:

(1) To elect the board of directors who will serve until the next annual
meeting of stockholders;

(2) To ratify the appointment of Arthur Andersen LLP as the independent
auditors of the Company until the next annual meeting of stockholders;

(3) To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.

Only stockholders of record as of the close of business on March 20, 1996
will be entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof. The Company's stock transfer books will not be closed.
Stockholders are cordially invited to attend the Annual Meeting in person.

By Order of the Board of Directors

/s/ ROBERT G. DUDLEY
ROBERT G. DUDLEY
Secretary

El Dorado, Arkansas
April 22, 1996

YOUR VOTE IS IMPORTANT

YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR
SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE
PRESENCE OF A QUORUM MAY BE ASSURED. THE GIVING OF SUCH PROXY DOES NOT AFFECT
YOUR RIGHT TO REVOKE IT LATER OR VOTE YOUR SHARES IN PERSON IN THE EVENT YOU
SHOULD ATTEND THE ANNUAL MEETING. THE PROMPT RETURN OF YOUR SIGNED PROXY,
REGARDLESS OF THE NUMBER OF SHARES YOU HOLD, WILL AID THE COMPANY IN REDUCING
THE EXPENSE OF ADDITIONAL PROXY SOLICITATION.
<PAGE> 3

INDEX

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SOLICITATION OF PROXY................................................................. 1
REVOCATION OF PROXY................................................................... 1
VOTING RIGHTS OF THE COMPANY'S SECURITIES
General............................................................................. 1
Cumulative Voting for Election of Directors......................................... 1
Method of Voting.................................................................... 2
Outstanding Voting Securities and Principal Holders Thereof......................... 2
ELECTION OF DIRECTORS
General............................................................................. 3
Vote Required For Election.......................................................... 3
Nominees for Directors.............................................................. 3
Director Nomination and Qualification............................................... 6
Meetings and Committees of the Board................................................ 6
Compensation of Directors........................................................... 7
Compliance with Section 16(a) of the Securities and Exchange Act of 1934............ 7
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS................................... 7
EXECUTIVE COMPENSATION
Report of Compensation, ESOP and Benefits Committee
Compensation Policy.............................................................. 8
Measures of Performance.......................................................... 8
1995 Executive Compensation...................................................... 8
Compensation of Chief Executive Officer.......................................... 9
Stock Performance................................................................... 10
Compensation of Management.......................................................... 10
Security Ownership of Executive Officers............................................ 13
Option Grants in 1995............................................................... 14
Option Exercises in 1995 and 1995 Year-End Option Values............................ 15
Severance Agreement................................................................. 15
TRANSACTIONS WITH MANAGEMENT AND OTHERS............................................... 15
ANNUAL REPORT......................................................................... 17
OTHER MATTERS......................................................................... 17
STOCKHOLDER PROPOSALS................................................................. 17
</TABLE>

i
<PAGE> 4

FIRST UNITED BANCSHARES, INC.
MAIN AND WASHINGTON STREETS
EL DORADO, ARKANSAS 71730

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 28, 1996

SOLICITATION OF PROXIES

Each holder of record of Common Stock of First United Bancshares, Inc.
("the Company") as of the close of business on March 20, 1996 ("Record Date"),
is entitled to vote at the Annual Meeting of Stockholders to be held in the
First National Bank Building, Main and Washington Streets, El Dorado, Arkansas
on Tuesday, May 28, 1996 at 2:00 p.m., and any adjournment thereof (the
"Meeting"). A proxy card is enclosed for use at such Meeting if you are unable
to attend in person. The persons named therein as proxies were selected by the
Board of Directors of the Company and the proxy is solicited on behalf of the
Board of Directors of the Company.

This Proxy Statement and the accompanying Proxy Card are first being mailed
to stockholders on or about April 22, 1996. Such solicitation is being made by
mail and may also be made in person or by telephone or telegraph by officers,
directors or regular employees of the Company who will not be specially
compensated for such additional solicitation, if necessary. All expenses
incurred in such solicitation, including the reimbursement of certain
fiduciaries for expenses incurred by them in forwarding the proxy solicitation
materials to the beneficial owners of the Company's Common Stock held of record
by such fiduciaries, will be borne by the Company.

REVOCATION OF PROXY

The Company encourages the personal attendance of stockholders at the
Meeting, and the giving of the Proxy does not preclude the right to vote in
person should the person giving the Proxy so desire. THE PERSON GIVING THE PROXY
HAS THE POWER TO REVOKE THE SAME BEFORE THE PROXY IS EXERCISED BY GIVING WRITTEN
NOTICE OF REVOCATION PRIOR TO THE ANNUAL STOCKHOLDERS MEETING TO ROBERT G.
DUDLEY, SECRETARY, AT FIRST UNITED BANCSHARES, INC., MAIN AND WASHINGTON
STREETS, EL DORADO, ARKANSAS 71730. FURTHERMORE, A PROXY WILL BE SUSPENDED IF
THE STOCKHOLDER WHO EXECUTED IT IS PRESENT AT THE MEETING AND ELECTS TO VOTE IN
PERSON.

VOTING RIGHTS OF THE COMPANY'S SECURITIES

GENERAL

The Common Stock of the Company is its only class of voting securities. At
the Meeting, each Stockholder will be entitled to one vote, in person or by
proxy, for each share of Common Stock owned of record as of the close of
business on March 20, 1996. On the Record Date, there were outstanding and
entitled to vote 5,158,722 shares of Common Stock. The stock transfer books of
the Company will not be closed.

CUMULATIVE VOTING FOR ELECTION OF DIRECTORS

With respect to the election of directors, every Stockholder of the Company
has cumulative voting rights. Such rights provide that every Stockholder
entitled to vote at such election should have the right to vote, in person or by
proxy, the number of shares owned by him for as many persons as there are
directors to be elected, or to cumulate his votes by giving one nominee as many
votes as the number of such directors multiplied by the number of his shares
shall equal, or by distributing such votes on the same principle among
<PAGE> 5

any number of such nominees as the Stockholder may desire. IF A STOCKHOLDER
DESIRES TO EXERCISE HIS CUMULATIVE VOTING RIGHTS, THAT STOCKHOLDER OR HIS DULY
APPOINTED REPRESENTATIVE MUST ATTEND THE MEETING AND VOTE IN PERSON.

METHOD OF VOTING

The enclosed Proxy Card provides a method for Stockholders to withhold
authority to vote for any one or more of the nominees while granting authority
to the proxies to vote for the remaining nominees. The names of all nominees are
listed on the Proxy Card. If you wish to grant the proxies authority to vote for
all nominees, check the box marked "FOR" above the names of the nominees. If you
wish to withhold authority to vote for all nominees, check the box marked
"WITHHOLD AUTHORITY" above the names of the nominees. If you wish your shares to
be voted for some nominees and not for one or more of the nominees, indicate the
name(s) of the nominee(s) for whom you are withholding the authority to vote by
drawing a line through such name(s). The Board of Directors anticipates that
this method of electing directors will make the voting process more meaningful
to the Stockholders of the Company.

The enclosed Proxy Card also provides a method for Stockholders to abstain
from voting on each matter. By abstaining, shares will not be voted for or
against such particular matter but will be counted for quorum purposes. If you
wish to abstain from voting on any matter, check the box marked "ABSTAIN". While
there may be instances in which a Stockholder will wish to abstain, the Board of
Directors encourages all Stockholders to vote their shares in their best
judgment and to participate in the voting process to the fullest extent
possible.

OUTSTANDING VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

At the close of business on March 20, 1996, the record date for the
Meeting, the Company had issued and outstanding 5,158,772 shares of $1.00 Par
Value, Common Stock. Listed in the following table are those Stockholders known
to the Company's management, as of March 20, 1996, who own beneficially 5% or
more of the Company's Common Stock.

<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS
- --------------------------------- --------------------------------------- ---------- ----------------
<S> <C> <C> <C>
Common Stock, Par Value $1.00.... Warren A. Stephens Trust; the W.R. 795,843(1) 15.43%
Stephens, Jr. Revocable Trust; the W.R.
Stephens, Jr. Trust; the W.R. Stephens
Trust; the Elizabeth Ann Stephens
Campbell Revocable Trust; Jackson T.
Stephens; and Stephens Group, Inc.(1)
111 Center Street, Suite 2400
Little Rock, Arkansas 72201
</TABLE>

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NOTE:

(1) All shares, except as described below, are held in trust and administered by
the Bank of New York. The trust was created and the shares deposited therein
upon the consummation of the merger by and between the Company and InvestArk
Bankshares, Inc. on June 14, 1994. The shares are voted, by the trustee, in
proportion to the percentage of shares of the Company's Common Stock voted
for or against any proposal brought before the Stockholders of the Company.
However, any abstention from voting the Company's Common Stock is not
counted in computing the above described percentage. The W. R. Stephens
Trust beneficially owns 207,884 shares of the Company's Common Stock,
included in the above total, which is voted separately by its trustee and
equals 3.95% of the issued and outstanding shares of the Company's Common
Stock. Also, the W. R. Stephens, Jr. Trust beneficially owns 2,100 shares of
the Company's Common Stock, included in the above total, which is voted
separately by its own trustee, and equals .04% of the issued and outstanding
shares of the Company's Common Stock.

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<PAGE> 6

ELECTION OF DIRECTORS

GENERAL

At the Meeting, eighteen (18) directors, which shall constitute the entire
Board of Directors of the Company for the ensuing year, will be elected to hold
office until the next Annual Meeting of Stockholders or until their successors
have been duly elected and qualified. Should any of the nominees listed below
become unavailable for election for any reason, presently unknown, or be unable
to serve, the persons named as proxies in the enclosed Proxy Card will vote for
the election of such other person or persons as the Board of Directors may
recommend.

If the enclosed Proxy Card is duly executed, dated and received in time for
the Meeting, it will be voted in accordance with the instructions of the
stockholder(s). IF NO INSTRUCTIONS ARE INDICATED, THEN IT IS THE INTENTION OF
THE PERSONS NAMED AS PROXIES TO VOTE THE SHARES REPRESENTED THEREBY TO ELECT THE
EIGHTEEN PERSONS NOMINATED FOR ELECTION AS DIRECTORS OF THE COMPANY.

VOTE REQUIRED FOR ELECTION

THE ELECTION OF EACH DIRECTOR WILL REQUIRE THE AFFIRMATIVE VOTE OF THE
HOLDERS OF A MAJORITY OF THE ISSUED AND OUTSTANDING SHARES OF COMMON STOCK OF
THE COMPANY REPRESENTED, EITHER IN PERSON OR BY PROXY, AT THE ANNUAL MEETING.

NOMINEES FOR DIRECTORS

The following table represents certain information with respect to each
nominee for director of the Company, naming them, and certain information as to
all nominees for director of the Company as a group, without naming them, and
beneficial ownership of the Company's Common Stock for all nominees for director
and executive officers as a group as of February 1, 1996.

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<PAGE> 7

<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
NAME AND BUSINESS DIRECTOR BENEFICIAL OF
EXPERIENCE AGE SINCE(1) OWNERSHIP(2) CLASS
- ------------------------------------------------------ --- -------- ------------ -------
<S> <C> <C> <C> <C>
Michael F. Mahony(8).................................. 51 1981 38,114(9)(10) .74%
Partner of Mahony & Yocum,
Attorneys at Law
Richard H. Mason...................................... 58 1983 1,054 .02%
President of Gibraltar Energy Company,
principally engaged in Oil and Gas
Exploration and Production
Jack W. McNutt........................................ 61 1990 8,000 .16%
Retired Director, President and Chief
Executive Officer of Murphy Oil Corporation,
principally engaged in Oil and Gas
Exploration and Production
William E. Morgan..................................... 69 1987 11,428(4) .22%
President of Warnock Furniture, Inc.,
principally engaged in Furniture and
Appliance Retailing
R. Madison Murphy(5).................................. 38 1989 54,593(11) 1.11%
Chairman of the Board of Murphy Oil
Corporation, principally engaged in
Oil and Gas Exploration and Production
Robert C. Nolan(5).................................... 54 1982 177,772(10)(12) 3.45%
Managing Partner of Munoco Company,
principally engaged in Oil and Gas
Exploration and Production
Paula M. O'Connor..................................... 80 1983 38,195(13) .74%
Investments
Katherine Patton Ozment............................... 72 1987 129,000(14) 2.50%
Investments
Cal Partee, Jr.(3).................................... 51 1983 13,124 .25%
Partner of Partee Flooring Mill,
Oil and Timber Investments, principally
engaged in Oil and Lumber Production
Chesley Pruet......................................... 81 1983 46,572(15) .81%
President and Chief Executive Officer of
Chesley Pruet Drilling Co., principally
engaged in Contract Drilling of Oil and
Gas Wells
John D. Trimble, Jr................................... 64 1983 28,972 .56%
Managing Partner of Trimble Properties,
principally engaged in Oil and Other
Investments
Ralph C. Weiser....................................... 71 1986 38,544 .75%
Partner of Weiser-Brown Operating Company,
principally engaged in Oil and Gas
Exploration and Production
</TABLE>

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<PAGE> 8

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NOTES:

(1) All nominees have served as directors of the Company during their current
term since May 23, 1995.

(2) All shares of Common Stock are beneficially owned with investment and
voting power, unless otherwise stated.

(3) E. Larry Burrow is the brother-in-law of Cal Partee, Jr.

(4) Share totals exclude 126,034 shares owned of record by First Land &
Investment Company. Messrs. Burrow and Morgan are directors and
stockholders of First Land & Investment Company along with seven other
directors of First Land & Investment Company, including Robert G. Dudley
who serves as Secretary of the Company and President of First National Bank
of El Dorado. Messrs. Burrow, Morgan and Dudley expressly disclaim
beneficial ownership of such shares.

(5) Claiborne P. Deming, R. Madison Murphy and Robert C. Nolan are first
cousins of each other.

(6) Claiborne P. Deming owned of record 124,998 shares; of such shares 25,724
were held by Mr. Deming as sole trustee of trusts for the benefit of his
children who all live in his household and in which he disclaims any
beneficial interest.

(7) Share total excludes 33,516 shares owned of record by Highland Industrial
Park, Inc. Roy E. Ledbetter, who is an officer of Highland Industrial Park,
Inc., expressly disclaims beneficial interest in such shares.

(8) Michael F. Mahony is the brother of Emon A. Mahony, Jr. who is a director
of The City National Bank, Ft. Smith, Arkansas.

(9) Michael F. Mahony and his wife owned either indirectly or of record 12,144
shares; 4,000 shares were held by Mr. Mahony as trustee for the benefit of
his children, in which Mr. Mahony disclaims any beneficial interest; 21,970
shares were owned by Mr. Mahony as executor of the Estate of Mabel F.
Mahony, and in which Mr. Mahony has a one-third beneficial interest

(10) Share totals exclude 214,632 shares owned of record by First Land & Timber
Corporation. Messrs. Mahony, Nolan and Yocum are directors and stockholders
of First Land & Timber Corporation along with five other directors of First
Land & Timber Corporation, including Robert G. Dudley who serves as
Secretary of the Company and President of First National Bank of El Dorado.
Messrs. Mahony, Nolan, Yocum and Dudley expressly disclaim beneficial
ownership of such shares.

(11) R. Madison Murphy and his wife owned either indirectly or of record 54,593
shares; of such shares 6,525 shares were held by R. Madison Murphy as
trustee of trusts for the benefit of minor children; 690 shares were held
by Mr. Murphy as trustee of trusts for the benefit of his minor nieces and
nephews; 2,205 shares were held by others as trustees of trusts for the
benefit of Mr. Murphy's minor children; 2,885 shares are owned of record by
Mr. Murphy's wife; beneficial interest in all of such shares is expressly
disclaimed by Mr. Murphy. Additionally, Mr. Murphy beneficially owns 4,380
shares by virtue of a residuary interest in a trust of which he is not a
trustee.

(12) Robert C. Nolan owned of record 44,148 shares; Mr. Nolan as Trustee (with
shared voting and investment power) controlled 133,574 shares; 14,256
shares of the indicated total are owned by Mr. Nolan's adult children and
his minor grandson, beneficial interest in which is expressly disclaimed by
Mr. Nolan.

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<PAGE> 9

(13) Paula M. O'Connor owned of record 1,056 shares; 37,139 shares were owned of
record by Mrs. O'Connor, as trustee.

(14) Katherine Patton Ozment owned of record 408 shares; 128,592 shares that
Mrs. Ozment has the right to vote were owned by her adult children and
their children.

(15) Chesley Pruet owned of record 41,772 shares; 888 shares were owned of
record by Mr. Pruet's wife; 3,912 shares were owned by Paula Pruet James
and Ann Pruet Calhoon, Mr. Pruet's adult daughters, d/b/a Paula & Ann
Company, in which Mr. Pruet has investment and voting power.

(16) Dr. David M. Yocum, Jr. owned 21,034 shares; of such shares 3,056 shares
were held by Dr. Yocum and his wife as joint trustees for the benefit of
their son; 1,226 shares were owned of record by Dr. Yocum's wife; 6,392
shares were owned of record by Alice-Sidney Oil Company.

DIRECTOR NOMINATION AND QUALIFICATION

The Company's Bylaws currently provide that the Board of Directors may
annually designate a standing nominating committee ("Nominating Committee").
Names of all proposed nominees for election at the next annual meeting of
Stockholders are referred to the Nominating Committee for its consideration. The
Nominating Committee makes such inquiry into the qualification of proposed
nominees as it deems appropriate and annually reports its findings to the Board
of Directors concerning the qualifications of proposed nominees and submits its
recommended slate of nominees. In making such recommendations, the Nominating
Committee does not discriminate based upon the sex, race or religion of any
proposed nominee. If approved by the Board of Directors, the Nominating
Committee's recommended slate of nominees becomes the Board of Directors'
recommended slate of nominees. It is the policy of the Nominating Committee to
consider nominees recommended by Stockholders. The procedure to be followed by
any stockholder who desires to recommend a nominee for consideration by the
Nominating Committee is the same as that procedure disclosed under the caption
"Stockholders Proposals" on page 18 of this Proxy Statement.

MEETINGS AND COMMITTEES OF THE BOARD

During fiscal year 1995, the Company's Board of Directors held twelve (12)
meetings. With the exception of Director Claiborne P. Deming, each incumbent
director attended 75% or more of the meetings of the Board or meetings of the
committees of the Board held during the periods in which they served as members
of the Company's Board of Directors.

Executive Committee. The Board of Directors has a standing Executive
Committee which is authorized to exercise all authority of the Board of
Directors in the intervals between the meetings of the Board of Directors with
respect to the business affairs of the Company. The members of the Executive
Committee are Directors James V. Kelley, Roy E. Ledbetter, Robert C. Nolan, Cal
Partee, Jr., W. C. Partee, John D. Trimble, Jr., and Dr. David M. Yocum, Jr.
During fiscal year 1995, the Executive Committee met twelve (12) times. Each
Director attended 75% or more of the meetings.

Compensation, ESOP and Benefits Committee. The Board of Directors has a
standing Compensation, ESOP and Benefits Committee which formulates policies and
procedures with respect to compensation and benefits. The members of the
Compensation, ESOP and Benefits Committee are Directors E. Larry Burrow,
Claiborne P. Deming, Roy E. Ledbetter, Richard H. Mason and Robert C. Nolan. The
functions of this Committee are (1) to review, approve and recommend to the
Board salaries of all officers of the Company and of its wholly-owned banking
subsidiaries; (2) to review, approve and recommend to the Board annually the
aggregate amount to be expended as annual bonuses to executive officers of the
Company and its wholly-owned banking subsidiaries; and (3) to review, oversee
and approve the employee benefit plans of the Company. During fiscal year 1995,
the Committee met two (2) times. Claiborne P. Deming and Richard H. Mason
attended one (1) meeting.

Audit Committee. The Board of Directors has a standing Audit Committee
which oversees the internal and external audit functions. The members of the
Audit Committee are Directors E. Larry Burrow, Michael F. Mahony, William E.
Morgan, R. Madison Murphy, and John D. Trimble, Jr. The functions of the Audit

6
<PAGE> 10

Committee are (1) to review and examine the internal control, compliance and
accounting operating systems of the Company and its subsidiary banks; (2) to
recommend to the Board any changes in policy deemed necessary as a result of
this review; and (3) to recommend to the Board and Stockholders the appointment
of the Company's external audit firm. During fiscal year 1995, the Committee met
four (4) times.

Nominating Committee. The Board of Directors has a standing Nominating
Committee, the sole function of which is to nominate candidates to the Board of
Directors. The members of the Nominating Committee are Directors William A.
Eckert, Jr., John D. Trimble, Jr., Ralph C. Weiser, and Dr. David M. Yocum, Jr.
During fiscal year 1995, the Nominating Committee met two (2) times. Ralph C.
Weiser and Dr. David M. Yocum, Jr. attended one (1) meeting.

COMPENSATION OF DIRECTORS

All members of the Board of Directors of the Company other than executive
officers are paid a retainer of $300 per month in addition to a fee of $200 per
meeting for all regular and special meetings of the Board which they attend.
Members of the Board serving on Board committees are paid a fee of $75 for each
meeting they attend.

Directors receive no other cash or cash-equivalent forms of remuneration
solely in their capacities as directors of the Company or its subsidiaries.
Officers of the Company and its subsidiaries who also serve on the Company's
Board are not paid a fee for serving in the capacity of director. The total cost
to the Company for such fees during 1995 was $111,400.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

The Company's executive officers, directors and persons who own more than
ten percent (10%) of the Company's Common Stock must file reports of ownership
and changes of ownership in the Company with the Securities and Exchange
Commission and the National Association of Securities Dealers pursuant to
Section 16(a) of the Securities and Exchange Act of 1934 (the "Exchange Act").
Additionally, Item 405 of Regulation S-K under the Act requires the Company to
identify in its proxy statement those individuals for whom one of the above
referenced reports was not filed on a timely basis during the most recent fiscal
year or prior fiscal years. Based exclusively on information provided to the
Company by individual executive officers and directors, the Company believes
that before and during fiscal year 1995, all filing requirements applicable to
executive officers and directors have been made in compliance with Section 16(a)
and the rules promulgated thereunder.

RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

Arthur Andersen LLP, certified public accountants, serve as the Company's
independent auditors for the fiscal year ending December 31, 1996, and the Board
of Directors has directed that such appointment be submitted to the Stockholders
at the Meeting for their ratification and approval thereof. The Company has been
advised by Arthur Andersen LLP that neither it nor any of its partners or
associates has any relationship with the Company other than the usual
relationship that exists between independent public accountants and clients. If
the foregoing appointment is rejected by the Stockholders, the Board of
Directors will appoint an independent auditor to serve for the fiscal year
ending December 31, 1996, whose appointment to serve for any period subsequent
to the 1997 Annual Meeting shall be subject to Stockholders' approval at such
Annual Meeting.

Representatives of Arthur Andersen LLP will be present at the Meeting, will
have an opportunity to make a statement to the Stockholders, if desired, and
will be available to respond to appropriate questions from Stockholders.

In connection with its audit of the books and accounts of the Company for
the fiscal year ended December 31, 1995, Arthur Andersen LLP examined the
Company's annual consolidated financial statements, performed a review of its
consolidated annual and quarterly filings with the Securities Exchange
Commission, and consulted with the Company concerning other accounting and
certain tax matters.

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<PAGE> 11

THE BOARD OF DIRECTORS RECOMMENDS THE RATIFICATION AND APPROVAL OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS.

EXECUTIVE COMPENSATION

REPORT OF THE COMPENSATION, ESOP AND BENEFITS COMMITTEE

In order to enhance disclosure of the Company's policy toward executive
compensation and to comply with the rules of the Securities and Exchange
Commission, the Compensation, ESOP and Benefits Committee ("Committee"), in
their capacity as such Committee, submits the following report addressing the
Company's policy toward executive compensation as it relates to the named
executive officers for fiscal year 1995.

Compensation Policy

The executive compensation policy of the Company is to compensate
executives in a manner where a reasonable relationship exists between the
maximization of corporate earnings and executive pay. The Company's compensation
program creates an incentive to improve overall performance relative to other
financial institutions within the Company's peer group. However, the Company
does not seek to provide executives with incentives to take undue risk and
thereby impair the Company's financial strength. The goal of the Company's
policy is to retain and motivate key employees with bonuses based upon
individual bank performance and initiatives as well as the Company's
performance. The Company's performance is primarily measured by internal goals
and performance levels compared to industry peers. If the Company achieves or
exceeds internal goals and industry performance levels, executive compensation
normally will be higher than in years where such goals and levels are not
achieved. In order to attract and retain highly qualified executives the Company
maintains an Employee Stock Ownership Plan and an Equity Participation Plan
which ensures that such executives will have a long-term stake in the success of
the Company.

Measures of Performance

The Committee measures the Company's performance by examining earnings per
share, return on assets and the level of nonperforming loans and assets. A
further analysis is done by comparing these factors with the Company's internal
goals, prior year's performance and peer group averages. The Company's revenues
in fiscal year 1995 were derived almost exclusively from the commercial banking
industry. Therefore, the Company measured its performance against a peer
industry average index comparing itself and its banks to commercial banks which
most closely resemble the Company's banks in asset size.

Executive Compensation

The Company's executive compensation program for fiscal year 1995 consisted
of (1) annual base salary, adjusted from fiscal year 1994, (2) executive bonus
based on the performance measures described above, (3) contributions to the
Company's Employee Stock Ownership Plan and (4) contributions to whole life
insurance policies for selected executives. The Committee feels that the above
named types of compensation provide an effective incentive for executives.

The Company's management was focused in their pursuit of maximizing
earnings and maintaining a low level of non-performing assets which resulted in
a significantly better 1995 performance. Notwithstanding the performance-based
criterion noted in the preceding paragraph, various other factors are considered
in determining the appropriate level of executive compensation. Other factors
may include cost of living adjustments, as well as the individual's past
performance and potential with the Company.

The Committee has awarded executive compensation based upon the Company's
performance and believes that this correlation results in an enhanced synergy
between corporate goals and the interests of shareholders. As performance goals
are met or exceeded, resulting in increased value to shareholders,

8
<PAGE> 12

executives are rewarded commensurately. The Committee believes that the level of
executive compensation in fiscal year 1995 is reflective of the foregoing
compensation policy and performance goals of the company.

Compensation of Chief Executive Officer

The Company increased Mr. Kelley's base salary to $223,000 in 1995. Mr.
Kelley's salary is considered appropriate by the Committee based upon his years
of experience in this position. Additionally, the Committee considered Mr.
Kelley's salary to be competitive when compared to other financial institutions
within the Company's peer group.

Mr. Kelley was awarded an annual bonus of $82,500 for 1995. The Committee
considered the 37% increase in market value of the Company's Common Stock during
1995 as well as the 8.5% increase in earnings per share, the 12.4% return on
equity and the 1.19% return on assets sufficient to merit the granting of his
bonus.

Respectfully Submitted,

Compensation, ESOP and Benefits
Committee

/s/ ROBERT C. NOLAN, Chairman
-----------------------------------

/s/ E. LARRY BURROW
-----------------------------------

/s/ ROY E. LEDBETTER
-----------------------------------

/s/ RICHARD H. MASON
-----------------------------------

/s/ CLAIBORNE P. DEMING
-----------------------------------

9
<PAGE> 13

STOCK PERFORMANCE

The following graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1993, as amended, or under the Exchange Act,
except to the extent the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts. The graph
compares the yearly percentage change in the cumulative total stockholder return
on the Company's Common Stock during the five fiscal years ended December 31,
1995 with the cumulative total returns on the S&P 500 Index and the Dow Jones
Regional Bank Index. The comparison assumes $100 was invested on December 31,
1990, in the Company's Common Stock and in each of the foregoing indices with
reinvestment of the dividends.

<TABLE>
<CAPTION>
First United S&P 500 Dow Jones
Measurement Period Bancshares, Composite Regional Bank
(Fiscal Year Covered) Inc. Index Index
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 111.09 130.48 173.71
1992 221.03 140.46 236.14
1993 257.21 154.62 250.29
1994 270.25 156.66 249.13
1995 379.36 215.54 374.34
</TABLE>

COMPENSATION OF MANAGEMENT

The Company does not directly compensate the officers and management for
serving in that capacity. Compensation is provided by First National Bank of El
Dorado, El Dorado, Arkansas ("El Dorado"), First National Bank of Magnolia,
Magnolia, Arkansas ("Magnolia"), The Merchants and Planters Bank, N.A., Camden,
Arkansas ("Camden") , The City National Bank, Ft. Smith, Arkansas ("Ft. Smith"),
Commercial Bank at Alma, Alma, Arkansas ("Alma"), First Stuttgart Bank and Trust
Co., Stuttgart, Arkansas ("Stuttgart"), The Bank of North Arkansas, Melbourne,
Arkansas ("Melbourne") and FirstBank, Texarkana, Texas ("Texarkana") the
wholly-owned banking subsidiaries of the Company. However, the Company does
reimburse each such wholly-owned or controlled banking subsidiary for the
Company's officer remuneration, which amount of reimbursement is set by the
Company's Board of Directors. The Company does compensate its directors for
serving in that capacity as discussed below. The following information reflects
compensation, remuneration and transactions with the Company, El Dorado,
Magnolia and Ft. Smith for the period beginning January 1, 1995, and ending
December 31, 1995. The following table sets forth the compensation paid by the
Company, El Dorado, Magnolia and Ft. Smith during the fiscal year 1995 to the
highest paid executive officers of the Company and to all named executive
officers of the Company:

10
<PAGE> 14

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------- -------------------------
OTHER RESTRICTED
FISCAL ANNUAL STOCK SECURITIES ALL OTHER
YEAR ENDED COMPENSATION AWARD(S) UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION DECEMBER 31 SALARY($) BONUS($) (1)(2)($) ($) OPTIONS(#) ($)(3)(4)
- --------------------------- ----------- --------- -------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
James V. Kelley............ 1995 223,000 82,500 3,403 15,872(5) 4,612(6) 8,247
President, Chairman, Chief 1994 200,000 78,750 3,403 16,848(7) 4,832(8) 8,777
Executive Officer and 1993 180,000 70,000 3,403 13,523
Director of the Company
Robert L. Jones............ 1995 142,000 25,000 1,170 8,247
President, Chief Executive 1994 135,000 25,000 1,170 N/A N/A 7,781
Officer and 1993 127,350 25,600 1,170 7,310
Director of Magnolia
Robert G. Dudley........... 1995 102,000 10,000 8,027 6,355
President and Director of 1994 99,000 11,000 8,027 N/A N/A 6,494
El Dorado; 1993 94,500 13,000 8,027 6,134
Secretary of the Company
Jim N. Harwood............. 1995 149,000 32,000 N/A 8,247
President, Chief Executive 1994 135,000 30,000 N/A N/A N/A 7,832
Officer and Director 1993 117,200 11,900 N/A 6,134
of Ft. Smith
</TABLE>

- ---------------

NOTES:

(1) El Dorado provides whole life insurance policies for the benefit of Messrs.
Kelley and Dudley. For the year ended December 31, 1995 the amounts paid by
El Dorado for the policies for Messrs. Kelley and Dudley were, respectively,
$3,403 and $8,027. This compensation is included within the Other Annual
Compensation Column. Magnolia provides a cost of life insurance policy for
Mr Jones. For the year ended December 31, 1995, the amount paid on behalf of
Mr. Jones was $1,170. This compensation is included within the Other Annual
Compensation Column.

(2) Amounts representing certain personal benefits are not included in this
table. The Company and its subsidiaries have a policy of providing country
club services and automobiles to certain officers. The key employees of
these benefits are selected by the respective subsidiaries' Boards of
Directors. In the Company's estimation, the dollar amount of such items for
the personal benefit of each named individual does not exceed ten percent
(10%) of the aggregate compensation for any individual.

(3) The Company contributed cash contributions to an employee stock ownership
plan ("ESOP") during fiscal year 1995 which is included as All Other
Compensation. The Company makes cash contributions to the ESOP for the
purchase of the Company's Common Stock for the benefit of covered employees.
All employees over 20 and one-half years of age who have six months service
with the Company and work 1,000 hours or more per year are covered by the
ESOP. Contributions to the ESOP are discretionary. The Board of Directors
determines the contribution each year up to a maximum of 15% of covered
compensation. Each covered employee is allocated the same percentage of
covered compensation. For the year ended December 31, 1995, the amount of
the Company's contribution allocated to the accounts of Messrs. Kelley,
Jones, Dudley and Harwood were, respectively $8,247, $8,247, $6,355 and
$8,247.

11
<PAGE> 15

(4) Contributions for officers to the Company's pension plan are not included in
the above table since they cannot readily be individually calculated by the
regular actuaries for the plan. However, current compensation covered by the
plan does not differ by more than ten percent (10%) from the covered
compensation set forth in the annual compensation columns of the Summary
Compensation Table for any named executive officer. Covered compensation
covers basic compensation and bonuses or incentive compensation paid to all
plan participants. The following table sets forth the annual life annuity,
payable under the qualified pension plan to participating employees in the
specified remuneration and years of service classification. The benefits
provided by the pension plan are computed on a straight life annuity basis
and are subject to a deduction for social security benefits.

PENSION PLAN TABLE
SCHEDULE OF ESTIMATED ANNUAL RETIREMENT BENEFITS

<TABLE>
<CAPTION>
YEARS OF SERVICE
FINAL AVERAGE ----------------------------------------------------
COMPENSATION 10 15 20 25 30
----------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 20,000.................... $ 2,400 $ 3,600 $ 4,800 $ 6,000 $ 7,200
$ 30,000.................... $ 3,930 $ 5,859 $ 7,860 $ 9,825 $ 11,789
$ 50,000.................... $ 7,719 $ 11,579 $ 15,438 $ 19,298 $ 23,157
$ 80,000.................... $ 13,705 $ 20,588 $ 27,410 $ 34,263 $ 41,115
$100,000.................... $ 17,705 $ 26,558 $ 35,410 $ 44,263 $ 53,115
$150,000.................... $ 27,705 $ 41,558 $ 55,410 $ 69,263 $ 83,115
</TABLE>

The final average compensation is averaged over the highest three (3)
consecutive years of employment. Benefits commence at age 65, the normal
retirement date, and continue for the lifetime of the participant, with 120
payments guaranteed. The estimated credited years of service for Mr.
Kelley, Mr. Jones, Mr. Dudley and Mr. Harwood are 11, 11, 35 and 7,
respectively.

(5) A restricted option for 512 shares of the Company's Common Stock was granted
to the indicated executive officer. Shares of the Company's Common Stock
subject to the restricted option may be acquired at no cost by the executive
officer. Restricted options vest cumulatively over a four year period,
beginning one year following the date of the grant. Vesting occurs 100% four
years after the date of the grant. The closing market price of the Company's
unrestricted Common Stock on the date of the grant was $31.00 resulting in a
dollar value of $15,872.

(6) In 1995, a non-statutory option for 4,612 shares of the Company's Common
Stock was granted to the indicated executive officer. Such grant was made at
95% of the stock's current fair value at date of grant or $28.375 per share.
Non-statutory options vest cumulatively over a four (4) year period,
beginning one year following the date of the grant. Vesting occurs
twenty-five percent (25%) per year up to one hundred percent (100%) vesting
four (4) years after the date of the grant.

(7) A restricted option for 537 shares of the Company's Common Stock was granted
to the indicated executive officer. Shares of the Company's Common Stock
subject to the restricted option may be acquired at no cost by the executive
officer. Restricted options vest cumulatively over a four year period,
beginning one year following the date of the grant. Vesting occurs 100% four
years after the date of the grant. The closing market price of the Company's
unrestricted Common Stock on the date of the grant was $31.375 resulting in
a dollar value of $16,848.

(8) In 1994, a non-statutory option for 4,832 shares of the Company's Common
Stock was granted to the indicated executive officer. Such grant was made at
95% of the stock's current fair value at date of grant or $28.50 per share.
Non-statutory options vest cumulatively over a four (4) year period,
beginning one year following the date of the grant. Vesting occurs
twenty-five percent (25%) per year up to one hundred percent (100%) vesting
four (4) years after the date of the grant.

12
<PAGE> 16

SECURITY OWNERSHIP OF EXECUTIVE OFFICERS

The following table sets forth the nature and extent of ownership of the
Common Stock of the Company by the named executive officers as of February 1,
1996 and other information regarding the named executive officers of the
Company.

<TABLE>
<CAPTION>
OFFICER AMOUNT AND NATURE PERCENT
NAME OF BENEFICIAL OWNER AGE SINCE(1) OF BENEFICIAL OWNERSHIP(2) OF CLASS
---------------------------------------- --- -------- -------------------------- --------
<S> <C> <C> <C> <C>
James V. Kelley......................... 46 1987 5,174(3) *
President, Chairman, Chief Executive
Officer and Director of the Company
Robert L. Jones......................... 60 1991 3,846(4) *
President, Chief Executive Officer and
Director of Magnolia
Robert G. Dudley........................ 63 1985 5,348(5) *
President and Director of El Dorado;
Secretary of the Company
Jim N. Harwood.......................... 56 1993 3,028(6) *
President, Chief Executive Officer and
Director of Ft. Smith
</TABLE>

- ---------------

* Percentage of shares of Common Stock held is less than one percent (1%) of
the issued and outstanding shares of Common Stock of the Company.

NOTES:

(1) The year indicated represents the year in which the officer commenced
service in his present position. Robert G. Dudley has served as Secretary of
the Company since 1983 and as President and Director of El Dorado since
1985. All officers of the Company have served in such capacity, as
disclosed, since May 23, 1995.

(2) All shares listed represent Common Stock held in the company and are owned
of record with beneficial ownership thereof except as described in certain
of the following notes.

(3) James V. Kelley owned of record 200 shares; 4,974 shares were owned of
record by the Company's Employee Stock Ownership Plan in which such shares
Mr. Kelley had a beneficial interest.

(4) Robert L. Jones owned of record 200 shares; 3,646 shares were owned of
record by the Company's Employee Stock Ownership Plan in which such shares
Mr. Jones had a beneficial interest.

(5) Robert G. Dudley owned of record 1,320 shares; 3,728 shares were owned of
record by the Company's Employee Stock Ownership Plan in which Mr. Dudley
had a beneficial interest; 300 shares were owned of record by Mr. Dudley's
wife, beneficial interest in such shares is expressly disclaimed by Mr.
Dudley. See footnotes (4) and (10) on pages 4 and 5 of this Proxy Statement
regarding shares owned of record by First Land & Timber Corporation and
First Land & Investment Company, respectively. Mr. Dudley expressly
disclaims beneficial ownership in such shares.

(6) Jim N. Harwood and his wife owned of record 1,574 shares; 1,454 shares were
owned of record by the Company's Employee Stock Ownership Plan in which
such shares Mr. Harwood had a beneficial interest.

13
<PAGE> 17

OPTION GRANTS IN 1995

The following table shows information concerning stock options granted
during 1995, as noted in the Summary Compensation Table, to the Company's Chief
Executive Officer, which includes hypothetical realizable values for those
options (assuming they were exercised at the end of the ten year term) and the
hypothetical gain to all holders of Common Stock at the end of that ten year
period, in each case assuming the Common Stock had achieved accumulative
appreciation of 5% and 10% per year. None of the below described options were
eligible to be exercised during 1995.

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUES AT
ASSUMED ANNUAL RATES
OF STOCK APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(3)
--------------------------------------------------------------- --------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS 0% 5% 10%
UNDERLYING GRANTED TO EXERCISE MARKET -------- ----------- -----------
OPTIONS EMPLOYEES PRICE PRICE EXPIRATION DOLLAR DOLLAR DOLLAR
NAME GRANTED(#)(2) IN 1994 ($/SHARE) ($/SHARE) DATE GAINS($) GAINS($) GAINS($)
- -------------------------- ------------- ---------- --------- --------- ---------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James V. Kelley........... 4,612(4) 100% $28,375 $ 31.00 01/17/2005 12,107 102,041 239,824
512(4) 100% -0- 31.00 01/17/2005 15,872 25,856 41,152
Dollar Gains of All First
United Stockholders(1)... $100,600,000 $254,710,000
</TABLE>

- ---------------
(1) Total dollar gains are based on the indicated assumed annual rates of
appreciation and calculated on the 5,158,772 shares of Common Stock
outstanding as of December 31, 1995.

(2) There were no SARs granted to the Chief Executive Officer or any other
executive officer in 1995.

(3) The potential realizable values represent future opportunity and have not
been reduced to present value in 1995 dollars. The dollar amounts included
in these columns are the result of calculations at assumed rates set by the
SEC for illustration purposes, and these rates are not intended to be a
forecast of the common stock price and are not necessarily indicative of the
values that may be realized by the named executive officer. The potential
realizable values are based on arbitrarily assumed annualized rates of stock
price appreciation of five percent and ten percent over the full 10-year
term of the options. For example, in order for the individuals named above
who received options with an exercise price of $28.375 per share to realize
the potential values set forth in the five percent and ten percent columns
in the table above, the price per share of First United Common Stock would
have to be approximately $50.50 and $80.375 respectively.

(4) In 1995, the Company granted Mr. Kelley, with regard to services for the
Company, non-statutory options to purchase 4,612 shares of the Company's
Common Stock at an exercise price of $28.375 per share, which options expire
on January 17, 2005. The potential realizable value of such options at
assumed annual rates of stock price appreciation for the option term of 5%
and 10% would be $102,041 and $239,824, respectively.

(5) In 1995, the Company granted Mr. Kelley, with regard to services for the
Company, restricted options to purchase 512 shares of the Company's Common
Stock at no cost. Such options shall not be exercisable prior to the date
five years, or after the date ten years, from the date such option was
granted. The potential realizable value of such options at assumed annual
rates of stock price appreciation for the option term of 5% and 10% would be
$25,856 and $41,152 respectively.

14
<PAGE> 18

OPTION EXERCISES IN 1995 AND 1995 YEAR-END VALUES

The following table shows information concerning stock option exercises in
1995 and the year-end value of unexercised options.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTIONS AT 1995 IN-THE-MONEY OPTIONS
ON VALUE YEAR-END AT 1995 YEAR-END
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE($)
-------------------- ----------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
James V. Kelley..... -0- -0- 1,208/9,285 15,845/151,631
</TABLE>

SEVERANCE AGREEMENT

A 1992 Severance Agreement between the Company, El Dorado and James V.
Kelley provides for severance payments to Mr. Kelley in the event his employment
terminates under certain conditions within two years of a change in control of
the Company, as defined in the Agreement. In the event of a covered termination
Mr. Kelley shall be entitled to receive total cash payments equal to twice his
annual salary plus normal bonuses. Such payments shall be payable in equal
monthly installments for twenty-four months, with an additional amount equal to
the monthly payment times an annual increase in the Urban Consumer Price Index
payable during the second twelve month period. Mr. Kelley would also be entitled
to receive in twenty-four monthly installment cash payments equal to (i) the
amount of any accrued but unvested benefits under any defined benefit or defined
contribution employee benefit plan forfeited as a result of the termination,
(ii) the increase in Mr. Kelley's accrued benefit under any defined benefit plan
during the plan year preceding termination and (iii) the average of
contributions allocated to Mr. Kelley's account under any defined contribution
plan during the two plan years preceding termination. The Company would be
obligated for twenty-four months after termination to provide insurance
coverages for Mr. Kelley and his beneficiaries equivalent to those provided by
the Company and in effect at the time of termination.

TRANSACTIONS WITH MANAGEMENT AND OTHERS

The Company and its subsidiaries have had, and expect to have in the
future, banking transactions in the ordinary course of business with officers of
the Company and El Dorado, Magnolia, Camden, Ft. Smith, Alma, Stuttgart,
Texarkana and Melbourne; directors of the Company and El Dorado, Magnolia,
Camden, Ft. Smith, Alma, Stuttgart, Texarkana and Melbourne; associates of such
persons and principal Stockholders. Loans made to this group, including
companies in which they are principal owners (10% or more ownership interest)
amounted to approximately $14,821,000 as of December 31, 1995, which represents
11.36% of the Company's equity capital. Such transactions have been on similar
terms, including interest rates and collateral on loans, as those prevailing at
the same time for comparable transactions with others not affiliated with the
Company, involved no more than the normal risk of collectibility and did not
include any favorable features.

Storeroom, a limited liability company in which Mr. William A. Eckert, Jr.
is an owner, received a loan from Magnolia in August, 1986, in the principal
amount of $101,372 at an annual interest rate of seven percent (7%). The loan
was renewed in February, 1995 at an initial variable rate of ten and one-quarter
percent (10.25%). The largest amount of outstanding indebtedness during 1995 was
$71,973.04. On December 31, 1995, the outstanding indebtedness was $37,973.04.
The loan was made on similar terms, including interest rates and collateral
requirements, as those prevailing at the same time for comparable transactions
with others not affiliated with the Company, involved no more than the normal
risk of collectibility and did not include any other features favorable to
Storeroom.

Michael F. Mahony is a partner in the law firm of Mahony & Yocum, El
Dorado, Arkansas. The Company retained such law firm as counsel for El Dorado
during fiscal year 1995. Such firm received legal fees from El Dorado based upon
an hourly basis at rates comparable to those prevailing in the market.

William A. Eckert is of counsel with the law firm of Keith, Clegg & Eckert.
Magnolia retained such law firm as counsel during fiscal year 1995. Such firm
received legal fees from Magnolia based upon an hourly basis at rates comparable
to those prevailing in the market.

15
<PAGE> 19

First Land & Timber Corporation ("FLT"), of which Robert G. Dudley serves
as President and director and Michael F. Mahony, Robert C. Nolan and Dr. David
M. Yocum also serve as directors, leases certain real property to El Dorado on
an annual basis composed of the parking lot at the main bank; and ground leases
on real property occupied by the east and west motor bank branch locations.

Paula and Ann Company, a general partnership composed of Paula Pruet James
and Ann Pruet Calhoon, adult daughters of Chesley Pruet, (a director of the
Company) made an unsecured loan to the Company on August 15, 1988 in order to
provide a portion of the funds necessary to acquire First City Corp. (which was
the holding company that owned The City National Bank of Ft. Smith). The loan
was for five million dollars ($5,000,000), at an annual interest rate equal to
three-eighths of one percent (.375%) below the Citibank, N.A. Prime Interest
Rate. Interest was payable in quarterly installments until August 15, 1994, at
which time the full amount of principal and interest was due and payable. The
Company solicited, received and considered alternative loan proposals from no
less than two commercial lending institutions. Upon comparison with other loan
proposals, a disinterested Board of Directors of the Company resolved that the
loan proposal of Paula and Ann Company was in the best interest of, and fair to,
the Company. Mr. Pruet owns no interest, direct or indirect, in Paula and Ann
Company, nor did Mr. Pruet participate in the discussion, consideration or
voting pertaining to this loan. On August 15, 1994, the loan was renewed for the
full principal amount of $5,000,000 for a term of three (3) years at an annual
rate of interest that is equal to 1.20 (120 basis points) above the 30-day LIBOR
Interest Rate. Again, upon comparison with other loan proposals, a disinterested
Board of Directors of the Company resolved that the loan renewal proposal was in
the best interest of, and fair to, the Company. Again, Mr. Pruet did not
participate in the discussion, consideration or voting pertaining to the renewal
of the loan.

John-Clai Company, a general partnership in which Claiborne Deming is a
general partner received a loan from El Dorado on October 29, 1987 in the
principal amount of $544,395 at a variable rate of interest tied to the First
National Bank of El Dorado Base Rate for the purpose of financing a transaction
in which John-Clai Company acquired real estate. The largest amount of
indebtedness outstanding at any time during fiscal year 1995 was $399,395.24 and
as of December 31, 1995 the outstanding indebtedness was $399,395.24. The loan
was made on similar terms, including interest rates and collateral requirements,
as those prevailing at the same time for comparable transactions with others not
affiliated with the Company, involved no more than the normal risk of
collectibility and did not include any other features favorable to John-Clai
Company.

Robert L. Jones, the chief executive officer of Magnolia, received a loan
from Magnolia for the purchase of a residence. The largest amount of
indebtedness outstanding at any time during fiscal year 1995 was $75,234.15 and
as of December 31, 1995, the outstanding indebtedness was $71,532.93. The loan
was made on similar terms, including 8.625% as the rate of interest charged
thereon and being collateralized by a first mortgage lien on Mr. Jones'
residence, as those prevailing at the same time for comparable transactions with
others not affiliated with the Company, involved no more than the normal risk of
collectibility and did not include any other features favorable to Mr. Jones.

R. Madison Murphy, a director of the Company, received a loan from El
Dorado for the purchase of a residence. The largest amount of indebtedness
outstanding at any time during fiscal year 1995 was $146,300.79 and as of
December 31, 1995, the outstanding indebtedness was $91,626. The loan was made
on similar terms, including a variable rate of interest tied to the First
National Bank of El Dorado Base Rate charged thereon and being collateralized by
a first mortgage lien on Mr. Murphy's residence, as those prevailing at the same
time for comparable transactions with others not affiliated with the Company,
involved no more than the normal risk of collectibility and did not include any
other features favorable to Mr. Murphy.

Stephens Inc., a registered broker-dealer owned by the Stephens family
provided brokerage services through three brokerage accounts to the trust
department of Ft. Smith during 1995, earning commissions on activity within
those accounts of approximately $77,779.02. Various Stephens' entities, trusts
and family members hold 15.43% of the Company's Common Stock in trust. See
footnote 1 on page 2 of this Proxy Statement.

On June 21, 1994, Arkansas Oklahoma Gas Co. received a line of credit from
Ft. Smith in the principal amount of $5,000,000 at a variable rate of interest
which is calculated as 0.25% minus the New York Prime

16
<PAGE> 20

Rate (interest adjusted and paid quarterly). The largest amount of indebtedness
in 1995 was $4,700,000 and as of December 31, 1995, the outstanding indebtedness
was $500,000. The W. R. Stephens, Jr. Trust and Elizabeth Ann Stephens Campbell
Revocable Trust each own 33 1/3% of the shares of A.O.G. Corporation, which is a
100% owner of Arkansas Oklahoma Gas Co. See footnote 1 on page 2 of this Proxy
Statement.

ANNUAL REPORT

The Annual Report to Stockholders for the fiscal year ended December 31,
1995, including financial statements and other matters of interest to
Stockholders accompanies this Proxy Statement or has been previously mailed to
you. Stockholders are referred to such Report for financial information about
the activities of the Company, but such report is not incorporated into this
Proxy Statement and is not to be deemed a part of the proxy soliciting material.

THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO ANY PERSON RECEIVING A COPY OF
THIS PROXY STATEMENT, UPON ORAL OR WRITTEN REQUEST, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995, INCLUDING THE
FINANCIAL STATEMENTS AND SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. SUCH A REQUEST SHOULD BE ADDRESSED TO JOHN
E. BURNS, CHIEF FINANCIAL OFFICER, FIRST UNITED BANCSHARES, INC., MAIN AND
WASHINGTON STREETS, EL DORADO, ARKANSAS 71730, TELEPHONE (501) 863-3181.

OTHER MATTERS

So far as is now known to the management of the Company, there is no
business other than that described herein to be presented to the Stockholders
for action at the Meeting. Should other business properly come before the
Meeting, votes may be cast pursuant to proxies with respect to any such business
in the best judgment of the person acting under the proxies.

STOCKHOLDER PROPOSALS

The 1997 Annual Meeting of Stockholders is presently scheduled to be held
May 27, 1997. Any stockholder of the Company who wishes to have a proposal
presented in the Company's Proxy Statement for such Meeting must deliver such
proposal in writing in accordance with Rule 14a-8 promulgated under the Exchange
Act , addressed to Mr. Robert G. Dudley, to the Company at its office at Main
and Washington Streets, El Dorado, Arkansas 71730, not later than December 31,
1996.

SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE URGED TO SIGN,
DATE AND RETURN PROMPTLY THE ENCLOSED PROXY CARD IN THE ENCLOSED ADDRESSED
ENVELOPE WHICH REQUIRES NO ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES.

By Order of the Board of Directors of
FIRST UNITED BANCSHARES, INC.

/s/ ROBERT G. DUDLEY
ROBERT G. DUDLEY
Secretary

17
<PAGE> 21

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FIRST UNITED BANCSHARES, INC.
MAIN AND WASHINGTON STREETS EL DORADO, ARKANSAS 71730

ANNUAL STOCKHOLDERS MEETING, MAY 28, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned stockholder(s) of FIRST UNITED BANCSHARES, INC., hereby
constitutes and appoints ROBERT G. DUDLEY and JAMES V. KELLEY, or either of
them, the true and lawful agent and attorney-in-fact for the undersigned, with
full powers of substitution, and hereby authorizes them to represent and to
vote, as designated below, all of the shares of common stock owned by the
undersigned or registered in the name of the undersigned on March 20, 1996, at
the Annual Meeting of Stockholders to be held on May 28, 1996, at 2:00 p.m., or
at any and all adjournments thereof.

1. Proposal to elect the following nominees as directors of the Company.

/ / FOR / / AGAINST / / ABSTAIN / / WITHHOLD AUTHORITY

E. Larry Burrow, Claiborne P. Deming, William A. Eckert, Jr., James V. Kelley,
Roy E. Ledbetter, Michael F. Mahony, Richard H. Mason, Jack W. McNutt, William
E. Morgan, R. Madison Murphy, Robert C. Nolan, Paula M. O'Connor, Katherine
Patton Ozment, Cal Partee, Jr., Chesley Pruet, John D. Trimble, Jr., Ralph C.
Weiser and Dr. David M. Yocum, Jr.

THE UNDERSIGNED STOCKHOLDER(S) MAY WITHHOLD AUTHORITY TO VOTE FOR ANY SINGLE
NOMINEE BY LINING THROUGH OR OTHERWISE STRIKING OUT THE NAME OF ANY NOMINEE. IF
THIS PROXY IS EXECUTED BY THE UNDERSIGNED STOCKHOLDER(S) AS NOT TO WITHHOLD
AUTHORITY TO VOTE FOR THE ELECTION FOR ANY NOMINEE, THIS SHALL BE DEEMED TO
GRANT SUCH AUTHORITY.

2. Proposal to ratify the appointment of Arthur Andersen LLP as the independent
auditors of the Company.

/ / FOR / / AGAINST / / ABSTAIN

(Continued and to be signed on reverse side)

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<PAGE> 22

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(Continued from other side)

3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting of Stockholders or
any and all adjournments thereof.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
Dated:
--------------------------

--------------------------------
(signature)

--------------------------------
(signature if jointly held)

Please sign exactly as the name
appears on your stock
certificate(s). When shares are
held by joint tenants, both
should sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please sign in full
corporate name and have signed
by the president or other duly
authorized officer. If a
partnership, please sign in
partnership name by the
authorized person.
Please mark, sign, date and return this proxy card promptly, using the enclosed
envelope.

IF YOU PLAN ON ATTENDING THE ANNUAL STOCKHOLDERS MEETING IN PERSON,
PLEASE INDICATE SO BY CHECKING THE FOLLOWING BOX. / /

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