FIRST UNITED BANCSHARES INC /AR/, S-4, 1998-01-21

FIRST UNITED BANCSHARES INC /AR/
S-4, 1998-01-21
STATE COMMERCIAL BANKS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 21, 1998

REGISTRATION NUMBER
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
FIRST UNITED BANCSHARES, INC.
(Exact name of registrant as specified in its charter)

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ARKANSAS 6022 71-0538646
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code) Identification No.)
</TABLE>

MAIN AND WASHINGTON STREETS
EL DORADO, ARKANSAS 71730
(870) 863-3181

(Address, including ZIP Code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------
JOHN E. BURNS
MAIN AND WASHINGTON STREETS
EL DORADO, ARKANSAS 71730
(870) 863-3181
(Name, address, including ZIP Code, and telephone number, including area code,
of agent for service)
---------------------
Copies to:

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<C> <C> <C>
STAN D. SMITH AND LISA M. BUCHANAN
MITCHELL, WILLIAMS, SELIG, GATES & JONES, WALKER, WAECHTER, POITEVENT,
WOODYARD, P.L.L.C. CARRERE & DENEGRE, L.L.P.
320 WEST CAPITOL AVENUE, SUITE 1000 201 ST. CHARLES AVENUE, SUITE 5100
LITTLE ROCK, ARKANSAS 72201 NEW ORLEANS, LOUISIANA 70170-5100
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At the
Effective Time of the Merger, as defined in the Agreement and Plan of
Reorganization dated December 9, 1997 by and between Registrant and First
Republic Bancshares, Inc., attached as Annex I to the Joint Prospectus/Proxy
Statement.

If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
- ---------------------

If this form is a post-effective amendment filed pursuant to Rule 462(b)
under the Securities Act, check the following box and list the Securities Acct
registration number of the earlier effective registration statement for the same
offering. [ ]
- ---------------------
CALCULATION OF REGISTRATION FEE

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==============================================================================================================================
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM OFFERING AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT PRICE REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock...................... 800,000(1) N/A $8,971,000(2) $2,647.00(2)
==============================================================================================================================
</TABLE>

(1) Represents the maximum number of shares of common stock, par value $1.00 per
share, of First United Bancshares, Inc. ("First United"), expected to be
issued in exchange for the shares of common stock, par value $10.00 per
share, of First Republic Bancshares, Inc. ("Republic"), upon consummation of
the merger of Republic with and into First United.

(2) Estimated solely for purposes of calculated the registration fee. The
registration fee has been computed pursuant to Rule 457(f)(2) under the
Securities Act of 1933, as amended, based on the book value ($8,971,000) of
38,536 shares of Republic common stock outstanding on December 31, 1997.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2

FIRST UNITED BANCSHARES, INC.

CROSS REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS OF INFORMATION
REQUIRED BY ITEM 501(b) OF REGULATION S-K

A. INFORMATION ABOUT THE TRANSACTION

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REGISTRATION STATEMENT ITEM AND HEADING LOCATION IN PROSPECTUS AND PROXY STATEMENT
------------------------------------------- -------------------------------------------
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1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus... Facing Page of Registration Statement;
Cross Reference Sheet, Cover Page of Proxy
Statement
2. Inside Front and Outside Back Cover Pages
of Prospectus............................ Available Information; Incorporation of
Certain Documents by Reference; Table of
Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information............ Summary; Financial Information
4. Terms of the Transaction................... The Republic Merger
5. Pro Forma Financial Information............ Summary -- Selected Financial Data;
Financial Information
6. Material Contacts with the Company Being
Acquired................................. The Republic Merger -- Background of the
Republic Merger
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters....................... Not Applicable
8. Interests of Named Experts and Counsel..... Legal Matters and Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.............................. Not Applicable

B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3
Registrants.............................. First United Bancshares, Inc.
11. Incorporation of Certain Information by
Reference................................ Incorporation of Certain Documents by
Reference
12. Information with Respect to S-2 or S-3
Registrants.............................. Not Applicable
13. Incorporation of Certain Information by
Reference................................ Not Applicable
14. Information with Respect to Registrants
Other than S-3 or S-2 Registrants........ Not Applicable

C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3
Companies................................ Not Applicable
16. Information with Respect to S-2 or S-3
Companies................................ Not Applicable
</TABLE>
<PAGE> 3
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REGISTRATION STATEMENT ITEM AND HEADING LOCATION IN PROSPECTUS AND PROXY STATEMENT
------------------------------------------- -------------------------------------------
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17. Information with Respect to Companies Other
than S-3 or S-2 Companies
(1) Description of Business................ First Republic Bancshares,
Inc. -- Description of Business
(2) Market Price of and Dividends on the
Registrant's Common Equity............ Summary -- Comparative Per Share Data;
First Republic Bancshares, Inc. -- Market
Prices and Dividends of Republic Stock
(3) Selected Financial Data................ Summary -- Selected Financial Data
(4) Supplementary Financial Information.... Not Applicable
(5) Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ First Republic Bancshares,
Inc. -- Management Discussion and Analysis
(6) Changes In and Disagreements with
Accountants on Accounting and
Financial Disclosure.................. Not Applicable
(7) Financial Statements................... Financial Information
(8) Quarterly Financial Information........ Financial Information
(9) Financial Statement Schedules.......... Not Applicable

D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations Are to be Solicited
(1) Date, Time and Place of Information.... Cover Page of Proxy
(2) Revocability of Proxy.................. The Republic Special Meeting -- Voting;
Solicitation of Proxies; The First United
Meeting -- Voting; Solicitation of
Proxies
(3) Dissenters' Rights of Appraisal........ The Republic Merger -- Right of Dissent
under the LBCL; Right of Dissent under the
Arkansas Business Corporation Act of 1987
(4) Persons Making the Solicitation........ The Republic Special Meeting -- Voting;
Solicitation of Proxies; The First United
Meeting -- Voting; Solicitation of
Proxies
(5) Interest of Affiliates of the
Registrant in the Proposed
Transaction; Voting Securities and
Principal Holders..................... First Republic Bancshares, Inc. -- Security
Ownership Principal Stockholders of
Republic; The Republic
Merger -- Background of the Merger
(6) Vote Required for Approval............. The Republic Special Meeting -- Quorum Vote
Required; The First United Special
Meeting -- Vote Required
</TABLE>
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REGISTRATION STATEMENT ITEM AND HEADING LOCATION IN PROSPECTUS AND PROXY STATEMENT
------------------------------------------- -------------------------------------------
<C> <S> <C>
(7) (i) Directors and Executive Officers... Incorporation of Certain Documents by
Reference
(ii) Executive Compensation........... Incorporation of Certain Documents by
Reference
(iii) Certain Relationships and
Related Transactions............. Incorporation of Certain Documents by
Reference
19. Information if Proxies, Consents or
Authorizations Are Not to be Solicited or
in an Exchange Offer..................... Not Applicable
</TABLE>
<PAGE> 5

FIRST UNITED BANCSHARES, INC.

To the Stockholders of
First United Bancshares, Inc.

Enclosed is a Notice of Special Meeting of Stockholders of First United
Bancshares, Inc. ("First United") which will be held at the main office of First
National Bank of El Dorado at Main and Washington Streets, El Dorado, Arkansas
on , 1998 at 2:00 P.M.

At a Special Meeting, Stockholders of First United will consider and vote
upon a proposal to approve an Agreement and Plan of Reorganization (the
"Republic Agreement") dated as of December 9, 1997, pursuant to which First
Republic Bancshares, Inc. ("Republic") will be merged ("Republic Merger") with
and into First United. The Republic Agreement between First United and Republic
provides that the stockholders of Republic common stock will receive total
consideration consisting of eight hundred thousand (800,000) shares of fully
paid and nonassessable shares of Common Stock, $1.00 par value of First United.
Each issued and outstanding share of Republic common stock, other than shares of
Republic common stock held by dissenting stockholders (including (i) 38,536
issued shares of Republic common stock currently outstanding, (ii) shares of
Republic common stock issued to persons entitled to receive performance shares
at the time of Closing (1,246 shares), and (iii) shares of Republic common stock
issuable to holders of all outstanding subordinated debentures of Republic
("Republic Debentures") who are entitled to receive Republic common stock
pursuant to conversion rights at the conversion ratio stated in the Republic
Debentures (9,449.1165 shares)) will be converted into the right to receive
16.2499 shares of First United Common Stock. Fractional shares of First United
Common Stock will not be issued. Any Republic stockholder 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 average sales price per share of First
United Common Stock common stock for all trades occurring during the period of
ten (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.

Republic is a bank holding company which is primarily engaged in the
business of banking through its wholly-owned bank subsidiaries, with bank
offices in Richland, Ouachita and Lincoln Parishes, Louisiana, which provide a
full range of banking services to its customers.

The Board of Directors believes that the proposed merger upon the terms and
conditions set forth in the accompanying Joint Proxy Statement is in the best
interests of our stockholders and therefore recommends that you vote in favor of
the merger. Additional information regarding the proposed merger, Republic and
the rights of dissenting stockholders is set forth in the enclosed Joint Proxy
Statement and I urge you to read this material carefully.

You are cordially invited to attend the meeting in person. Whether or not
you plan to attend the Special Meeting, please sign, date and return as soon as
possible the enclosed proxy in the enclosed self-addressed and stamped envelope.
If you attend the meeting, you may vote in person if you wish, even though you
previously returned your proxy.

Very truly yours,

James V. Kelley
Chairman of the Board
<PAGE> 6

FIRST UNITED BANCSHARES, INC.

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
, 1998

NOTICE is hereby given that a Special Meeting of Stockholders of First
United Bancshares, Inc. ("First United") has been called by the Board of
Directors and will be held at the main office of First National Bank of El
Dorado at Main and Washington Streets, El Dorado, Arkansas on , 1998
at 2:00 p.m. for the following purposes:

1. To consider and vote upon an Agreement and Plan of Reorganization
dated as of December 9, 1997, and Plan of Merger, which provides (a) for
the merger of First Republic Bancshares, Inc. ("Republic") with and into
First United ("Republic Merger"), (b) that the separate existence of
Republic will cease, and (c) that First Republic Bank, the wholly-owned
subsidiary of Republic, will become a wholly-owned subsidiary of First
United upon the consummation of the Republic Merger.

2. To transact such other business as may properly come before the
meeting or any adjournment thereof.

All stockholders of record at the close of business on , 1998
are entitled to vote at the meeting. Proposal 1 above requires the affirmative
vote of two-thirds of shares entitled to vote for approval.

Whether or not you plan to attend, please sign the enclosed Proxy and
return it at once in the stamped return envelope in order to insure that your
shares will be represented at the meeting. If you attend in person, the proxy
can be disregarded, if you wish, and you may vote your own shares.

By Order of the Board of Directors

, Secretary

Dated: , 1998
<PAGE> 7

FIRST REPUBLIC BANCSHARES, INC.

To the Stockholders of
First Republic Bancshares, Inc.

Enclosed is a Notice of Special Meeting of Stockholders of First Republic
Bancshares, Inc. ("Republic") which will be held at 107 Glenda Street, Rayville,
Louisiana 71269 on , 1998 at .M.

At the Special Meeting, Stockholders of Republic will consider and vote
upon a proposal to approve an Agreement and Plan of Reorganization (the
"Republic Agreement"), dated as of December 9, 1997, pursuant to which Republic
will merge (the "Republic Merger") with and into First United Bancshares, Inc.
("First United"). The Republic Agreement between First United and Republic
provides that the stockholders of Republic will receive total consideration
consisting of eight hundred thousand (800,000) shares of fully paid and
nonassessable shares of Common Stock, $1.00 par value of First United. Each
issued and outstanding share of Republic common stock, other than shares of
Republic common stock held by dissenting stockholders (including shares of
Republic common stock expected to be issued to persons entitled to receive
performance shares at the time of Closing, and shares of Republic common stock
issuable to holders of all outstanding subordinated debentures of Republic
("Republic Debentures") who are entitled to receive Republic common stock
pursuant to conversion rights at the conversion ratio stated in the Republic
Debentures) will be converted into the right to receive 16.2499 shares of First
United Common Stock. Fractional shares of First United Common will not be
issued. Any Republic stockholder 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 average sales price per share of First United Common Stock
for all trades occurring during the period of ten (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.

First United is a bank holding company that is engaged in the business of
banking through its ten (10) wholly-owned bank subsidiaries and its trust
company subsidiary, with bank offices in Union, Sebastian, Columbia, Ouachita,
Izard, Arkansas, Prairie, Monroe, Lonoke and Crawford Counties in Arkansas,
Caddo Parish in Louisiana, and in Bowie and Nacogdoches Counties in Texas, that
provide a full range of banking services to its customers.

The affirmative vote of at least two-thirds of the shares of common stock
of Republic present in person or by proxy at the Special Meeting is required to
approve the Republic Agreement.

The Board of Directors believes that the proposed Republic Merger upon the
terms and conditions set forth in the accompanying Joint Proxy Statement is in
the best interests of our stockholders and therefore recommends that you vote in
favor of the Republic Merger. Additional information regarding the proposed
Republic Merger, First United and the rights of dissenting stockholders is set
forth in the enclosed Joint Proxy Statement and I urge you to read this material
carefully.

Very truly yours,

George W. Bolton, Jr.
Chairman
<PAGE> 8

FIRST REPUBLIC BANCSHARES, INC.

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
, 1998

To the Stockholders of
First Republic Bancshares, Inc.

NOTICE is hereby given that a Special Meeting of Stockholders of First
Republic Bancshares, Inc. has been called by the Board of Directors and will be
held at 107 Glenda Street, Rayville, Louisiana 71269 on , 1998 at
.m. for the following purposes:

1. To consider and vote upon an Agreement and Plan of Reorganization
dated as of December 9, 1997, and Plan of Merger (the "Republic
Agreement"), pursuant to which (a) First Republic Bancshares, Inc.
("Republic") will merge ("Republic Merger") with and into First United
Bancshares, Inc. of El Dorado, Arkansas ("First United") and the separate
existence of Republic will cease, (b) First Republic Bank, the wholly-owned
subsidiary of Republic, will become a wholly-owned subsidiary of First
United, and (c) upon consummation of the Republic Merger, each outstanding
share of Republic common stock (including shares issuable to persons
entitled to receive performance shares and holders of Republic Debentures)
will be converted into the right to receive 16.2499 shares of First United
Common Stock.

2. To transact such other business as may properly come before the
meeting or any adjournment thereof.

All stockholders of record at the close of business on , 1998
are entitled to vote at the meeting. The affirmative vote of at least two-thirds
of the outstanding shares of Common Stock of Republic present in person or by
proxy at the Special Meeting is required to approve the Republic Agreement.

DISSENTING STOCKHOLDERS WHO COMPLY WITH THE PROCEDURAL REQUIREMENTS OF THE
LOUISIANA BUSINESS CORPORATION LAW WILL BE ENTITLED TO RECEIVE PAYMENT OF THE
FAIR CASH VALUE OF THEIR SHARES IF THE REPUBLIC MERGER IS EFFECTED UPON APPROVAL
BY LESS THAN 80% OF THE TOTAL VOTING POWER OF REPUBLIC.

By Order of the Board of Directors

Henry A. Logue
Secretary

Dated: , 1998
<PAGE> 9

FIRST UNITED BANCSHARES, INC.
AND
FIRST REPUBLIC BANCSHARES, INC.
JOINT PROXY STATEMENT
---------------------

FIRST UNITED BANCSHARES, INC.
PROSPECTUS

800,000 SHARES OF COMMON STOCK
PAR VALUE $1.00

This Joint Proxy Statement and Prospectus ("Proxy Statement") is being
furnished to the stockholders of First Republic Bancshares, Inc. ("Republic")
and the stockholders of First United Bancshares, Inc. ("First United" or the
"Company") in connection with the solicitation of proxies by the Boards of
Directors of Republic and First United, respectively, for use at a special
meeting of stockholders of Republic to be held on , 1998,
including any adjournments or postponements of the meeting, and for use at a
special meeting of shareholders of First United to be held on ,
1998, including any adjournments or postponements of the meeting. At the
Republic and First United meetings, or any adjournments or postponements
thereof, the stockholders of Republic and First United will be asked to consider
and vote upon a proposal to authorize and approve the transactions contemplated
by the Agreement and Plan of Reorganization between First United and Republic
dated December 9, 1997 (the "Republic Agreement"). Pursuant to the Republic
Agreement and the Plan of Merger ("Republic Plan of Merger") which is attached
as Exhibit A to the Republic Agreement, Republic would merge ("Republic Merger")
with and into First United, in exchange for the issuance to the stockholders of
Republic of an aggregate of 800,000 shares of First United common stock, par
value $1.00 ("First United Common Stock"), in an exchange ratio of 16.2499
shares of First United Common Stock for each share of Republic common stock
expected to be outstanding on the effective date of the Republic Merger
(including shares issuable to persons entitled to receive performance shares and
holders of Republic Debentures).

First United has filed a Registration Statement on Form S-4 with the U.S.
Securities and Exchange Commission ("Commission") pursuant to the Securities Act
of 1933, as amended (the "Securities Act") covering the 800,000 shares of First
United Common Stock that may be issued to stockholders of Republic in exchange
for their stock in Republic upon consummation of the Republic Merger .
Consequently, this Proxy Statement also serves as a Prospectus of First United
under the Securities Act for the issuance of shares of First United Common Stock
to stockholders of Republic.

This Proxy Statement and the accompanying forms of proxy are first being
mailed to stockholders of Republic and stockholders of First United on or about
, 1998. On , 1998, the closing price on the
National Association of Securities Dealers Automatic Quotation System of a share
of First United Common Stock was $ .

THE ABOVE MATTERS ARE DISCUSSED IN DETAIL IN THIS PROXY STATEMENT.
STOCKHOLDERS ARE STRONGLY URGED TO READ AND CONSIDER CAREFULLY THIS
PROXY STATEMENT IN ITS ENTIRETY.
---------------------
THE SECURITIES TO BE ISSUED IN THE PROPOSED TRANSACTION HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------

THE DATE OF THIS PROXY STATEMENT IS , 1998.
<PAGE> 10

NO PERSON IS AUTHORIZED BY FIRST UNITED OR REPUBLIC TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATION, OTHER THAN THOSE CONTAINED IN THIS PROXY
STATEMENT, IN CONNECTION WITH THE SOLICITATION AND THE OFFERING MADE BY THIS
PROXY STATEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROXY STATEMENT DOES
NOT CONSTITUTE THE SOLICITATION OF A PROXY OR AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO PURCHASE, ANY SECURITIES IN ANY JURISDICTION IN
WHICH SUCH SOLICITATION OR OFFERING MAY NOT LAWFULLY BE MADE.

NEITHER THE DELIVERY OF THIS PROXY STATEMENT NOR ANY DISTRIBUTION OF
SECURITIES MADE HEREUNDER SHALL IMPLY THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF FIRST UNITED OR REPUBLIC SINCE
THE DATE HEREOF.

AVAILABLE INFORMATION

First United is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), and, in accordance therewith,
files proxy statements, reports and other information with the Commission. This
filed material can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices in Chicago (500 West
Madison, Citicorp Center, 14th Floor, Chicago, Illinois 60661-2511) and in New
York (7 World Trade Center, Suite 1300, New York, New York 10048) and copies of
such material can be obtained by mail from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Commission maintains an Internet web site that contains reports, proxy and
information statements and other information regarding issuers who file
electronically with the Commission. The address of that site is
http://www.sec.gov. First United's Common Stock is traded on the National
Association of Securities Dealers Automated Quotation National Market System and
the Company's Exchange Act reports and other information can be inspected and
copied at the National Association of Securities Dealers, 1735 "K" Street, N.W.,
Washington, D.C. 20006.

First United has filed with the Commission a Registration Statement on Form
S-4 (together with any amendments thereto, the "Registration Statement") under
the Securities Act with respect to a maximum 800,000 shares of First United
Common Stock to be issued upon consummation of the transactions contemplated by
the Republic Agreement. This Proxy Statement does not contain all the
information set forth in the Registration Statement and the exhibits thereto,
certain portions of which have been omitted as permitted by rules and
regulations of the Commission. Copies of the Registration Statement are
available from the Commission, upon payment of prescribed rates. For further
information, reference is made to the Registration Statement and the exhibits
filed therewith. Statements contained in this Proxy Statement or any document
incorporated by reference in this Proxy Statement relating to the contents of
any contract or other document referred to herein or therein are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement or such other
document, each such statement being qualified in all respects by such reference.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON
REQUEST FROM MR. JOHN E. BURNS, VICE PRESIDENT AND CHIEF FINANCIAL OFFICER,
FIRST UNITED BANCSHARES, INC., MAIN AND WASHINGTON STREETS, EL DORADO, ARKANSAS
71730, (870) 863-3181. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUEST, ALTHOUGH NOT REQUIRED, SHOULD BE MADE, BY CERTIFIED MAIL, ON OR BEFORE
, 1998.

ii
<PAGE> 11

The following documents of First United, which have been filed with the
Commission under the Exchange Act, are incorporated by reference into this Proxy
Statement:

1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, filed with the Commission on March 31, 1997.

2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30, 1997, and September 30, 1997.

3. The Company's Current Reports on Form 8-K, filed with the
Commission on September 16, 1997, October 3, 1997 and October 7, 1997.

4. The description of the Company's Common Stock contained in the
Company's Registration Statement filed with the Commission and any
amendment or report filed for the purpose of updating such description.

Each document filed subsequent to the date of this Proxy Statement pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the holding of
the Special Meeting of the Stockholders of Republic, shall be deemed to be
incorporated by reference in this Proxy Statement and shall be part hereof from
the date of filing of such document. Any statement contained in a document
incorporated or deemed to be incorporated in this Proxy Statement shall be
deemed to be modified or superseded for purposes of this Proxy Statement to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference modifies or
supersedes such document.

All information contained in this Proxy Statement relating to First United
has been supplied by First United and all information relating to Republic has
been supplied by Republic.

iii
<PAGE> 12

TABLE OF CONTENTS

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PAGE
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SUMMARY
First United.............................................. 1
Republic.................................................. 1
The Republic Merger....................................... 2
The First United Special Meeting.......................... 2
The Republic Special Meeting.............................. 2
Background and Reasons for the Republic Merger............ 2
Interest of Certain Persons in the Republic Merger........ 3
Fairness Opinion.......................................... 3
Board Recommendations..................................... 3
Dissenters' Rights........................................ 3
Regulatory Approvals and Other Conditions to the Republic
Merger................................................. 3
Material Differences Between Rights of Republic and First
United Security Holders................................ 3
Certain Federal Income Tax Consequences................... 4
Accounting Treatment...................................... 4
Market Prices and Dividends............................... 4
Comparative Per Share Data................................ 5
Proformas of Combined Company............................. 6
Selected Financial Data................................... 6
THE REPUBLIC SPECIAL MEETING
Date, Time and Place...................................... 8
Purpose of Meeting........................................ 8
Shares Outstanding and Entitled to Vote; Record Date...... 8
Vote Required............................................. 8
Voting; Solicitation of Proxies........................... 8
THE FIRST UNITED SPECIAL MEETING
Date, Time and Place...................................... 10
Purpose of Meeting........................................ 10
Shares Outstanding and Entitled to Vote; Record Date...... 10
Quorum; Vote Required..................................... 10
Voting; Solicitation of Proxies........................... 10
THE REPUBLIC MERGER
General; Exchange Ratio................................... 11
Background of the Republic Merger......................... 11
Reasons for the Republic Merger........................... 12
Board Requirements........................................ 12
Interest of Certain Persons in the Republic Merger........ 12
Opinion of Republic's Financial Advisors.................. 12
Regulatory Approvals and Other Conditions to the Republic
Merger................................................. 16
Amendment, Waiver and Termination......................... 16
Effective Date............................................ 16
Conduct of Business Prior to Effective Date............... 16
Interests of Certain Persons in the Republic Merger....... 17
Exchange of Republic Stock Certificates................... 18
Resale of First United Common Stock: Restrictions on
Transfer............................................... 19
Employee Benefits after the Republic Merger............... 19
Expenses of the Republic Merger........................... 19
Federal Income Tax Consequences........................... 20
Accounting Treatment...................................... 21
</TABLE>

iv
<PAGE> 13
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Right of Dissent Under the 1987 Act....................... 21
Right of Dissent Under the LBCL........................... 22
Comparison Rights of Holders of Republic Common Stock and
First United Common
Stock.................................................. 23
FINANCIAL INFORMATION
Pro Forma Combining Balance Sheet......................... 26
Pro Forma Combining Statements of Income.................. 27
Notes to Pro Forma Combining Financial Statements......... 28
FIRST UNITED BANCSHARES, INC.
General................................................... 33
Pending Acquisition....................................... 33
Regulation................................................ 33
Offices................................................... 35
Employees................................................. 35
Description of First United Common Stock.................. 35
FIRST REPUBLIC BANCSHARES, INC.
Description of Business................................... 36
Competition............................................... 36
Litigation................................................ 36
Offices................................................... 36
Employees................................................. 36
Management Discussion and Analysis........................ 36
Security Ownership of Principal Stockholders of
Republic............................................... 47
Directors and Executive Officers.......................... 47
Market Price and Dividends of Republic Stock.............. 48
LEGAL MATTERS AND EXPERTS
Legal Opinions............................................ 49
Experts................................................... 49
General................................................... 49
INDEX TO REPUBLIC FINANCIAL STATEMENTS...................... F-1
ANNEXES
I -- Republic Agreement and Plan of Reorganization, including
Plan of Merger attached as Exhibit A thereto............. A-I-1
II -- Arkansas Business Corporation Act of 1987 sec.4-27-1301
et. seq.................................................. A-II-1
III -- Louisiana Business Corporation Law Section 131 -- Rights
of Dissenting Stockholders............................... A-III-1
IV -- Fairness Opinion of Republic's Financial Advisor......... A-III-1
</TABLE>

v
<PAGE> 14

SUMMARY

The following is a summary of certain information contained elsewhere in
this Proxy Statement. Reference is made to, and this summary is qualified in its
entirety by, the more detailed information contained elsewhere in this Proxy
Statement, in the attached Annexes and in the documents incorporated by
reference. Stockholders are urged to read carefully this Proxy Statement and the
attached Annexes in their entirety.

FIRST UNITED

First United Bancshares, Inc. ("First United") is a multi-bank holding
company located in El Dorado, Arkansas with ten (10) wholly-owned subsidiary
banks and a trust company operating in over thirty communities throughout the
States of Arkansas, Louisiana and Texas. First United's subsidiaries consist of
First National Bank of El Dorado, El Dorado, Arkansas; First National Bank of
Magnolia, Magnolia, Arkansas; City National Bank of Fort Smith, Fort Smith,
Arkansas; Merchants and Planters Bank, N.A., Camden, Arkansas; Commercial Bank
at Alma, Alma, Arkansas; The Bank of North Arkansas, Melbourne, Arkansas; First
United Bank, Stuttgart, Arkansas; City Bank & Trust of Shreveport, Shreveport,
Louisiana; FirstBank, Texarkana, Texas; Fredonia State Bank, Nacogdoches, Texas,
and First United Trust Company, N.A., El Dorado, Arkansas (collectively called
the "Subsidiary Banks"). First United had consolidated assets of $1,842,287,000
and stockholders' equity of $184,950,000 as of September 30, 1997.

Effective September 3, 1997, First United acquired by merger Fredonia
Bancshares, Inc. ("Fredonia") and in connection therewith issued 1,605,683
shares of common stock for all of Fredonia's outstanding common stock (the
"Fredonia Merger"). The Fredonia Merger was accounted for as a
pooling-of-interests. First United's financial statements for periods prior to
the Fredonia Merger have been restated to include the results of Fredonia for
all periods presented.

On December 31, 1997, First United acquired by merger City Bank & Trust of
Shreveport ("City Bank") and in connection therewith issued 424,880 shares of
common stock for all of City Bank's common stock (the "City Bank Merger").

On May 20, 1996, the Board of Directors of First United declared a 3-for-2
stock split effected in the form of a 50% stock dividend. The dividend was
distributed on June 28, 1996 to holders of record as of June 7, 1996. Unless
otherwise indicated, all per share data, numbers of common shares and capital
accounts contained herein have been restated to reflect this stock split.

First United's Common Stock is traded on the National Association of
Securities Dealers Automated Quotation National Market System Over-the-Counter
Market (NASDAQ-NMS) under the symbol "UNTD". First United's principal executive
offices are located at Main and Washington Streets, El Dorado, Arkansas, 71730,
and its telephone number is (870) 863-3181.

REPUBLIC

Republic is a Louisiana bank holding company which owns 100% of First
Republic Bank, Rayville, Louisiana ("Republic Bank"). Republic Bank owns 91.12%
and 90.0%, respectively, of the outstanding capital stock of First Republic
Agricultural Credit Corporation ("FRAC") and Eagle Premium Assistance
Corporation ("EPAC"). Republic Bank, FRAC and EPAC are hereinafter called
collectively the "Republic Subsidiaries" or individually a "Republic
Subsidiary". Republic Bank, FRAC and EPAC are Republic's only subsidiaries.
Republic had consolidated assets of approximately $148.9 million and
stockholders' equity of approximately $10.53 million as of September 30, 1997.
Republic was chartered in 1952 and has six (6) banking offices in Monroe,
Rayville, Ruston, and West Monroe, Louisiana.

There is no public market for shares of Republic's outstanding common
stock. Republic's principal executive offices are located at 107 Glenda Street,
Rayville, Louisiana 71269. Its telephone number is (318) 728-4424.
1
<PAGE> 15

THE REPUBLIC MERGER

On December 9, 1997, First United and Republic entered into a definitive
agreement pursuant to which Republic will merge with and into First United, and
all of the outstanding Republic common stock will be converted into an aggregate
of 800,000 shares of First United Common Stock resulting in an exchange ratio of
16.2499 shares of First United Common Stock for each one share of Republic
common stock outstanding as of the effective date of the Republic Merger
(including shares issuable to persons entitled to receive performance shares and
holders of Republic Debentures). The Republic Merger will be accounted for as a
pooling-of-interests. See "The Republic Merger -- General; Exchange Ratio."

THE FIRST UNITED SPECIAL MEETING

The proposal to approve the Republic Merger by the stockholders of First
United will be considered at a Special Meeting to be held at the First National
Bank Building, El Dorado, Arkansas, on , 1998 at 2:00 p.m. Central
Time. The affirmative vote of the holders of two-thirds of the outstanding
shares of First United Common Stock is required for approval of the Republic
Merger. See "The First United Special Meeting."

The First United Board has fixed the close of business on ,
1998 as the record date for determining shareholders entitled to notice of and
to vote and the First United Special Meeting. Only those holders of shares of
First United Common Stock on the record date will be entitled to notice and to
vote at the First United Special Meeting. Each share of First United Common
Stock will be entitled to one vote. Shareholders of record who execute proxies
retain the right to revoke them at any time prior to being voted at the First
United Special Meeting. See "The First United Special Meeting."

THE REPUBLIC SPECIAL MEETING

The proposal to approve the Republic Merger by the stockholders of Republic
will be considered at a Special Meeting to be held at 107 Glenda Street,
Rayville, Louisiana 71269 on , 1998, at .m. Central Time. The
affirmative vote of two-thirds of the shares of Republic common stock present in
person or by proxy at the Special Meeting is required for the approval of the
Republic Merger. See "The Republic Special Meeting."

The Republic Board has fixed the close of business on , 1998 as
the record date for determining shareholders entitled to notice of and to vote
and the Republic Special Meeting. Only those holders of shares of Republic
common stock on the record date will be entitled to notice and to vote at the
Republic Special Meeting. Each share of Republic common stock will be entitled
to one vote. Shareholders of record who execute proxies retain the right to
revoke them at any time prior to being voted at the Republic Special Meeting.
See "The Republic Special Meeting."

BACKGROUND AND REASONS FOR THE REPUBLIC MERGER

In August 1996 Republic's Board was presented with a strategic plan
providing for First Republic Bank's growth and in May of 1997 approved the
hiring of Brown, Burke, Capital Partners, Inc. to assist First Republic Bank
with the process. The Republic Board ultimately determined that a merger bid
submitted by First United was in the best interest of Republic shareholders and
in October 1997, Republic and First United entered into a non-binding letter of
intent which ultimately resulted in Republic and First United signing the
Republic Agreement.

Management of First United believes that by expanding its markets, it will
increase the range and competitiveness of its banking services to persons
residing in the Louisiana market areas currently serviced by Republic while
increasing the earning power of First United.

In reaching its decision to approve the Republic Agreement, Republic's
Board consulted with its financial advisors and counsel, as well as with
Republic's management, and considered a number of factors, including, among
other things; First United's wide range of banking products and services and its
dividend payment history; First United was the most attractive choice as a long
term affiliation partner of Republic; and the
2
<PAGE> 16

expectation that the Republic Merger will generally be a tax-free transaction to
Republic and its stockholders. See "The Republic Merger -- Background of the
Republic Merger" and "-- Reasons for the Republic Merger."

INTERESTS OF CERTAIN PERSONS IN THE REPUBLIC MERGER

Certain members of Republic's management and Board of Directors have
interests in the Republic Merger in addition to their interests as stockholders
of Republic generally. Those interests relate to, among other things, the
Republic Debentures, Republic Director's Plan, Republic Performance Share Plan,
and Employment Agreement of Henry L. Logue. See "The Republic
Merger -- Interests of Certain Persons in the Republic Merger."

FAIRNESS OPINION

The Board of Directors of Republic has received the opinion of Brown,
Burke, Capital Partners, Inc. stating in such financial advisor's opinion that
the consideration to be paid in the Republic Merger is fair to the Republic
Stockholders from a financial point of view. A copy of the opinion, which sets
forth the assumptions made, matters considered and limits on the review
undertaken, is attached as Annex IV to this Proxy Statement. See "The Republic
Merger -- Opinion of Financial Advisor."

BOARD RECOMMENDATIONS

THE BOARDS OF DIRECTORS OF FIRST UNITED AND REPUBLIC RECOMMEND THAT FIRST
UNITED AND REPUBLIC STOCKHOLDERS VOTE IN FAVOR OF THE APPROVAL OF THE REPUBLIC
AGREEMENT.

DISSENTERS' RIGHTS

Holders of First United Common Stock are entitled to dissenters' rights
with respect to the Republic Merger and may exercise their right of dissent
under the Arkansas Business Corporation Act of 1987. See "The Republic
Merger -- Right of Dissent under the 1987 Act." Under certain conditions and by
complying with the specific procedures required by Louisiana law, holders of
Republic common stock may exercise their right to dissent under the Louisiana
Business Corporation Law, in which case they may be entitled to receive in cash
the fair value of their shares. See "The Republic Merger -- Right of Dissent
under the LBCL."

REGULATORY APPROVALS AND OTHER CONDITIONS TO THE REPUBLIC MERGER

The Republic Merger is subject to prior approval by the appropriate banking
regulatory authorities. An application has been filed for approval of the
Republic Merger with the Board of Governors of the Federal Reserve System
("Board"). In conjunction with the Board application, the Republic Merger is
also subject to review by the Department of Justice as to its competitive
effect. Additionally, an application has been filed with the Louisiana Office of
Financial Institutions for approval of the Republic Merger. The obligations of
First United and Republic to effect the Republic Merger are also subject to a
number of other conditions including, among other things, the receipt of First
United stockholder and Republic stockholder approvals and receipt of an opinion
with respect to the tax effects of the Republic Merger. See "The Republic
Merger -- Regulatory Approvals and Other Conditions to the Republic Merger."

MATERIAL DIFFERENCES BETWEEN RIGHTS OF REPUBLIC AND FIRST UNITED SECURITY
HOLDERS

Upon consummation of the Republic Merger, holders of Republic common stock,
whose rights are presently governed by Louisiana law and Republic's Articles of
Incorporation and Bylaws, will become stockholders of First United, an Arkansas
corporation. Accordingly, their rights will be governed by Arkansas law and by
the Articles of Incorporation and Bylaws of First United. Certain differences
arise from the differences between Louisiana and Arkansas corporate law, between
the Articles of Incorporation and Bylaws of Republic and the Articles of
Incorporation and Bylaws of First United, including, among other things,
approval requirements for certain mergers and consolidations, director voting,
shareholder action by written
3
<PAGE> 17

consent and dissenter's rights. See "The Republic Merger -- Comparison of Rights
of Holders of Republic Common Stock and First United Common Stock."

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

It is intended that for federal income tax purposes the Republic Merger
will be treated as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and, accordingly, for
federal income tax purposes, no gain or loss will be recognized by either First
United or Republic as a result of the Republic Merger. It is also intended that
Republic Stockholders will not recognize gain or loss upon receipt of First
United Common Stock in exchange for Republic common stock. Republic expects to
receive an opinion of counsel, dated as of the effective date of the Republic
Merger, to the effect that no gain or loss will be recognized by the Republic
Stockholders upon the receipt of First United Common Stock in exchange for
Republic common stock in connection with the Republic Merger. The parties to
these transactions will not request a ruling from the Internal Revenue Service
concerning the taxability of this transaction. See "The Republic
Merger -- Certain Federal Income Tax Consequences."

ACCOUNTING TREATMENT

First United intends to treat the Republic Merger as a pooling of interests
for accounting purposes. Consummation of the Republic Merger is conditioned upon
the receipt of the opinion of Arthur Andersen LLP that the Republic Merger will
qualify for the pooling of interests accounting treatment. See "The Republic
Merger -- Accounting Treatment."

MARKET PRICES AND DIVIDENDS

First United Common Stock is traded over-the-counter in the NASDAQ National
Market System. The table below shows the high and low closing sales prices for
First United Common Stock as reported on NASDAQ adjusted for stock splits and
the dividends paid for the periods indicated.

<TABLE>
<CAPTION>
1996 HIGH LOW DIV. PAID
---- ------- ------- ---------
<S> <C> <C> <C>
First quarter............................................ $28.50 $26.50 $.15
Second quarter........................................... 28 26.50 .17
Third quarter............................................ 28 26.75 .17
Fourth quarter........................................... 33 27 .17
</TABLE>

<TABLE>
<CAPTION>
1997 HIGH LOW DIV. PAID
---- ------- ------- ---------
<S> <C> <C> <C>
First quarter............................................ $40.625 $32.625 $.17
Second quarter........................................... 42.75 38 .20
Third quarter............................................ 49 39.25 .20
Fourth quarter........................................... 42.625 37.75 .20
</TABLE>

On October 17, 1997, immediately prior to the public announcement of the
agreement in principle between First United and Republic as to the proposed
merger transaction, the closing sales price for First United Common Stock was
$40.00. On January , 1998, the closing sales price for First United Common
Stock was $ .

Upon issuance of the 800,000 shares of common stock of First United to
Republic stockholders, First United will have a total of shares of common
stock issued and outstanding. Present First United stockholders will own
. % of such shares, and Republic stockholders will own . % of
such shares.

4
<PAGE> 18

available to management, sales were effected during the last two fiscal years at
$130.00 per share, but there can be no assurance that such trades were effected
on an arm's-length basis.

For each of fiscal 1995, 1996 and 1997, Republic paid annual dividends of
$9.75, $9.75 and $13.67 per share, respectively.

COMPARATIVE PER SHARE DATA

The following table sets forth for the periods indicated selected
historical per share data of First United and Republic and the corresponding pro
forma and pro forma equivalent per share amounts giving effect to the proposed
Republic Merger. The data presented are based upon the consolidated financial
statements and related notes of First United which are incorporated by reference
in this Proxy Statement, and the consolidated financial statements and related
notes of Republic and the pro forma combining balance sheet and income
statements, including the notes thereto, appearing elsewhere herein. This
information should be read in conjunction with such historical and pro forma
financial statements and related notes thereto. The assumptions used in the
preparation of this table appear elsewhere in this Proxy Statement. See
"Financial Information." These data are not necessarily indicative of the
results of the future operations of the combined organization or the actual
results that would have occurred if the Republic Merger had been consummated
prior to the periods indicated.

<TABLE>
<CAPTION>
FIRST UNITED/
FIRST REPUBLIC REPUBLIC
UNITED REPUBLIC PRO FORMA PRO FORMA
HISTORICAL(1)(2) HISTORICAL COMBINED EQUIVALENT(3)
---------------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
Book value per common share:
December 31, 1996......................... $17.55 $239.17 $ 17.08 $277.73
September 30, 1997........................ 18.77 275.18 18.34 298.10
Cash dividends per common share:
Year ended December 31, 1994.............. 0.46 9.00 0.46 7.44
Year ended December 31, 1995.............. 0.52 9.75 0.52 8.40
Year ended December 31, 1996.............. 0.58 9.75 0.58 9.50
Nine months ended September 30, 1997...... 0.57 -- 0.57 9.26
Shares outstanding:
December 31, 1994......................... 9,338 38 10,138
December 31, 1995......................... 9,338 38 10,138
December 31, 1996......................... 9,846 38 10,646
September 30, 1997........................ 9,852 38 10,652
</TABLE>

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

(1) On May 20, 1996, the Board of Directors of First United declared a 3-for-2
stock split effected in the form of a 50% stock dividend. The dividend was
distributed on June 28, 1996 to holders of record as of June 7, 1996. All
per share data have been restated to reflect this stock split.

(2) Effective September 3, 1997, First United acquired by merger Fredonia
Bancshares, Inc. of Nacogdoches, Texas.

(3) The Republic pro forma equivalents represent the respective First
United/Republic pro forma combined earnings, dividends and book value per
common share multiplied by the applicable exchange ratio of 16.2499 shares
of First United Common Stock for each share of Republic common stock so that
the First United/Republic pro forma equivalent amounts are equated to the
respective values for one share of Republic common stock.

5
<PAGE> 19

PROFORMAS OF COMBINED COMPANY

The pro forma combined financial statements and its constituent parts of
First United and Republic as of and for the periods indicated reflect assets,
shareholders' equity, net interest income and income from continuing operations
as follows (dollars in thousands):

<TABLE>
<CAPTION>
% %
FIRST PRO FORMA PRO FORMA PRO FORMA
UNITED COMBINED REPUBLIC COMBINED COMBINED
--------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Assets
September 30, 1997................ 1,842,287 92.52% 148,962 7.48% 1,991,249
Shareholders' Equity
September 30, 1997................ 184,950 94.61% 10,536 5.39% 195,486
Net Interest Income
Year ended December 31, 1996...... 65,582 90.95% 6,525 9.05% 72,107
Nine months ended September 30,
1997........................... 52,859 90.72% 5,410 9.28% 58,269
Income from continuing operations:
Year ended December 31, 1996...... 22,372 94.29% 1,354 5.71% 23,726
Nine months ended September 30,
1997........................... 17,558 93.04% 1,313 6.96% 18,871
</TABLE>

SELECTED FINANCIAL DATA

The table on the following page presents selected historical financial data
of First United and Republic and selected unaudited pro forma financial data
after giving effect to the Republic Merger as a pooling of interests for
accounting purposes, assuming the Republic Merger had occurred at the beginning
of the earliest period presented, but without giving effect to costs associated
with the consummation of the Republic Merger, which currently are estimated to
total $200,000. The First United historical data for each of the years in the
five-year period ended December 31, 1996 are based on the historical financial
statements of First United as audited by Arthur Andersen LLP, independent public
accountants. The Republic historical data for each of the years in the five-year
period ended December 31, 1996 is derived from the historical financial
statements of Republic as audited by Frazer, Minchew, Robinson, Gardner and
Langston, CPAs, independent auditors. The selected financial data for First
United for the nine month periods ended September 30, 1996 and 1997, and for
Republic for the nine month periods ended September 30, 1996 and 1997 have been
obtained from unaudited financial statements and, in the opinion of the
respective management of First United and Republic, include all adjustments
necessary to present fairly the data for such periods. The pro forma data is not
necessarily indicative of the results of operations or the financial condition
that would have been reported had the Republic Merger been in effect during
those periods, or as of those dates, or that may be reported in the future. Pro
forma combined per share data of First United and Republic give effect to the
exchange of each share of Republic common stock for 16.2499 shares of First
United Common Stock.

These data should be read in conjunction with the consolidated financial
statements of each of First United, Republic, and the related notes thereto,
incorporated by reference herein and in conjunction with the unaudited pro forma
financial information, including the notes thereto, appearing elsewhere in this
Proxy Statement. See "Incorporation of Certain Documents by Reference" and
"Financial Information."

6
<PAGE> 20

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------------------------- -----------------------
1992 1993 1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
FIRST UNITED(1)
Operating Data (in thousands):
Total interest income............. $ 89,862 $ 83,930 $ 86,614 $ 108,079 $ 123,947 $ 92,482 $ 98,194
Net interest income............... 49,127 50,017 50,478 57,510 65,582 49,115 52,859
Provision for possible loan
losses.......................... 3,011 1,815 334 574 725 305 1,435
Income from continuing
operations...................... 15,303 16,187 16,711 18,376 22,372 17,081 17,558
Per Share Data:
Income from continuing
operations...................... $ 1.64 1.74 1.79 1.97 $ 2.27 $ 1.73 $ 1.78
Cash dividends paid............... 0.33 0.41 0.46 0.52 0.58 0.46 0.57
Selected Balance Sheet Items (in
thousands):
Total assets...................... $1,259,887 $1,334,383 $1,339,440 $1,572,682 $1,772,992 $1,758,273 $1,842,287
Total securities.................. 588,428 615,282 598,129 647,502 731,802 700,968 730,999
Net loans......................... 519,898 580,685 598,171 741,080 831,600 825,301 918,054
Total deposits.................... 1,105,212 1,163,703 1,168,815 1,340,492 1,514,038 1,508,896 1,565,185
Long-term debt.................... 8,821 7,723 13,892 16,832 22,426 23,827 22,250
Capital accounts.................. 108,643 123,876 125,466 150,163 172,794 165,986 184,950
First Republic -- HISTORICAL
Operating Data (in thousands):
Total interest income............. $ 5,907 $ 5,652 $ 7,295 $ 10,317 $ 12,133 $ 9,236 $ 9,844
Net interest income............... 3,227 3,349 4,512 5,884 6,525 5,092 5,410
Provision for possible loan
losses.......................... 150 250 185 379 517 496 322
Income from continuing
operations...................... 1,408 1,207 901 1,327 1,354 838 1,313
Per Share Data:
Income from continuing
operations...................... $ 38.03 $ 32.54 $ 23.95 $ 35.13 $ 35.57 $ 22.03 $ 34.29
Cash dividends paid............... 8.00 9.00 9.00 9.75 9.75 -- --
Selected Balance Sheet Items (in
thousands):
Total assets...................... $ 82,619 $ 84,946 $ 99,280 $ 123,557 $ 144,517 136,970 $ 148,962
Total securities.................. 32,546 29,843 22,872 23,870 35,768 30,214 26,981
Net loans......................... 32,477 41,319 57,877 78,407 89,001 93,488 103,811
Total deposits.................... 70,417 72,348 83,267 103,980 125,943 116,613 124,934
Long-term debt.................... 5,739 5,142 8,400 9,807 7,994 9,170 11,690
Capital accounts.................. 5,651 6,559 6,542 8,233 9,157 9,210 10,536
PRO FORMA -- COMBINED
Operating Data (in thousands):
Total interest income............. $ 95,769 $ 89,582 $ 93,909 $ 118,396 $ 136,080 $ 101,718 $ 108,038
Net interest income............... 52,354 53,366 54,990 63,394 72,107 54,207 58,269
Provision for possible loan
losses.......................... 3,161 2,065 519 953 1,242 801 1,757
Income from continuing
operations...................... 16,711 17,394 17,612 19,703 23,726 17,919 18,871
Per Share Data:
Income from continuing
operations...................... $ 1.65 $ 1.71 $ 1.74 $ 1.94 $ 2.23 $ 1.68 $ 1.77
Cash dividends paid............... 0.33 0.41 0.46 0.52 0.58 0.46 0.57
Selected Balance Sheet Items (in
thousands):
Total assets...................... $1,342,506 $1,419,329 $1,438,720 $1,696,239 $1,917,509 $1,895,243 $1,991,249
Total securities.................. 620,974 645,125 621,001 671,372 767,570 731,182 757,980
Net loans......................... 552,375 622,004 656,048 819,487 920,601 918,789 1,021,865
Total deposits.................... 1,175,629 1,236,051 1,252,082 1,444,472 1,639,981 1,625,509 1,690,119
Long-term debt.................... 14,560 12,865 21,292 26,639 30,420 32,997 33,940
Capital accounts.................. 114,294 130,435 132,008 158,396 181,951 175,196 195,486
</TABLE>

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

(1) Restated to reflect the September 3, 1997 pooling-of-interests with Fredonia
Bancshares, Inc.

7
<PAGE> 21

THE REPUBLIC SPECIAL MEETING

DATE, TIME AND PLACE

The Republic Special Meeting will be held on , 1998, commencing
at .m. Central Time, at the offices of Republic at 107 Glenda Street, Rayville,
Louisiana.

PURPOSE OF MEETING

The purpose of the Republic Special Meeting is to consider and vote upon
the adoption of the Republic Agreement pursuant to which (a) Republic will merge
with and into First United and the separate existence of Republic will cease,
(b) First Republic Bank, the wholly-owned subsidiary of Republic, will become a
wholly-owned subsidiary of First United, and (c) upon consummation of the
Republic Merger, each outstanding share of Republic common stock (including
shares issuable to persons entitled to receive performance shares and holders of
Republic Debentures) will be converted into the right to receive 16.2499 shares
of First United Common Stock. See "The Republic Merger."

SHARES OUTSTANDING AND ENTITLED TO VOTE; RECORD DATE

The close of business on , 1998 has been fixed by the Board of
Directors of Republic as the record date ("Republic Record Date") for the
determination of holders of Republic common stock entitled to notice of and to
vote at the Republic Special Meeting. At the close of business on the Republic
Record Date, there were shares of Republic common stock outstanding
held by stockholders of record. Holders of record of Republic common
stock on the record date are entitled to one vote per share.

QUORUM; VOTE REQUIRED

The presence, in person or by proxy, of a majority of the total voting
power of Republic common stock is necessary to constitute a quorum at the
Republic Special Meeting. The affirmative vote of two-thirds of all the shares
of Republic common stock present in person or by proxy at the Republic Special
Meeting is required to approve the Republic Merger. If an executed proxy is
returned and the stockholder has specifically abstained from voting on any
matter, the shares represented by such proxy will be considered present at the
Republic Special Meeting for purposes of determining a quorum and with respect
to the proposal. If an executed proxy is returned by a broker holding shares in
street name which indicates that the broker does not have discretionary
authority as to certain shares to vote on one or more matters (a "broker
non-vote"), such shares will be considered present at the Republic Special
Meeting for purposes of determining a quorum but will not be considered as
present with respect to the proposal. Therefore, because approval of the
Republic Agreement requires a vote of two-thirds of the voting power present at
the Republic Special Meeting, abstentions will have the effect of a vote against
the Republic Agreement but a broker non-vote will have no effect on the outcome
of the vote. An abstention will also cause a stockholder otherwise entitled to
dissenters rights to forfeit any claim to such rights.

As of the Republic Record Date, directors and executive officers of
Republic and their affiliates own % of the outstanding stock of Republic.

VOTING; SOLICITATION OF PROXIES

Proxies for use at the Republic Special Meeting accompany this Proxy
Statement and are solicited on behalf of the Board of Directors of Republic. A
holder of Republic common stock may use his proxy if he is unable to attend the
Republic Special Meeting in person or wishes to have his shares voted by proxy
even if he does attend the meeting. The proxy may be revoked in writing by the
person giving it at any time before it is exercised by notice of such revocation
to the secretary of Republic, or by submitting a proxy having a later date, or
by such person appearing at the Republic meeting and electing to vote in person.
All proxies validly submitted and not revoked will be voted in the manner
specified therein. If no specification is made, the proxies will be voted in
favor of the Republic Merger.

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Republic will bear the cost of solicitation of proxies from its
stockholders. In addition to using the mails, proxies may be solicited by
personal interview. Officers and other employees of Republic acting on
Republic's behalf, may solicit proxies personally, and will not receive any
additional fee, compensation or other remuneration for such services.

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THE FIRST UNITED SPECIAL MEETING

DATE, TIME AND PLACE

The First United Special Meeting will be held on , 1998,
commencing at 2:00 p.m. Central Time, at the main office of First National Bank
of El Dorado at Main and Washington Streets, El Dorado, Arkansas.

PURPOSE OF MEETING

The purpose of the First United Special Meeting is to consider and vote
upon the adoption of the Republic Agreement between First United and Republic
which provides that Republic will be merged with and into First United, the
separate existence of Republic will cease and First Republic Bank will become a
wholly-owned subsidiary of First United upon consummation of the Republic
Merger. See "The Republic Merger."

SHARES OUTSTANDING AND ENTITLED TO VOTE; RECORD DATE

The close of business on ,1998 has been fixed by the Board of
Directors of First United as the record date ("First United Record Date") for
the determination of holders of First United Common Stock entitled to notice of
and to vote at the First United Special Meeting. At the close of business on the
First United Record Date, there were 10,276,772 shares of First United Common
Stock outstanding held by shareholders of record. Stockholders of
record of First United on the record date are entitled to one vote per share,
and are entitled to dissenters' rights. See the Republic Merger -- Right of
Dissent under the 1987 Act."

VOTE REQUIRED

The affirmative vote of two-thirds of all the shares of First United Common
Stock outstanding on the First United Record Date is required to adopt the
Republic Agreement. An abstention or failure to return a properly executed proxy
will have the same effect as a vote against the Republic Agreement, as will a
broker submitting a proxy without exercising discretionary authority with
respect to approval of the Republic Merger.

As of the First United Record Date, directors, executive officers and their
affiliates owned approximately % of the outstanding common stock of First
United.

VOTING; SOLICITATION OF PROXIES

Proxies for use at the First United Special Meeting accompany copies of
this Proxy Statement delivered to record holders of First United common stock
and such proxies are solicited on behalf of the Board of Directors of First
United. A holder of First United common stock may use his proxy if he is unable
to attend the First United Special Meeting in person or wishes to have his
shares voted by proxy even if he does attend the meeting. The proxy may be
revoked in writing by the person giving it at any time before it is exercised by
notice of such revocation to the secretary of First United, or by submitting a
proxy having a later date, or by such person appearing at the First United
meeting and electing to vote in person. All proxies validly submitted and not
revoked will be voted in the manner specified therein. If no specification is
made, the proxies will be voted in favor of the Merger.

First United will bear the cost of solicitation of proxies from its
stockholders. In addition to using the mails, proxies may be solicited by
personal interview. Officers and other employees of First United acting on First
United's behalf, may solicit proxies personally.

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THE REPUBLIC MERGER

The following description of certain features of the Republic Agreement is
qualified in its entirety by the full text of the Republic Agreement, which is
incorporated herein by reference and attached hereto as Annex I.

GENERAL; EXCHANGE RATIO

Under the terms of the Republic Agreement Republic will be merged with and
into First United, the separate existence of Republic will cease and First
Republic Bank will become a wholly-owned subsidiary of First United upon
consummation of the Republic Merger. The Republic Agreement provides that the
persons holding common stock of Republic, having rights to receive performance
shares of common stock of Republic, and holding outstanding subordinated
debentures of Republic (collectively the "Republic Stockholders") will receive
total consideration consisting of eight hundred thousand (800,000) shares of
fully paid and nonassessable shares of First United Common Stock. Each issued
and outstanding share of Republic common stock, other than shares of Republic
common stock held by dissenting stockholders (including (i) 38,536 shares of
Republic common stock currently outstanding, (ii) shares of Republic common
stock issuable to persons entitled to receive performance shares at the time of
Closing (1,246 shares), and (iii) shares of Republic common stock issuable to
holders of all outstanding subordinated debentures of Republic ("Republic
Debentures") who are entitled to receive Republic common stock pursuant to
conversion rights at the conversion ratio stated in the Republic Debentures
(9,449.1165 shares)) will be converted into the right to receive 16.2499 shares
of First United Common Stock. Fractional shares of First United Common Stock
will not be issued. Any Republic Stockholder entitled to receive a fractional
share will receive a cash payment in lieu thereof equal to the value of the
fractional share based on the average sales price per share of First United
Common Stock common stock for all trades occurring during the period of ten (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.

BACKGROUND OF REPUBLIC MERGER

In August 1996 Henry A. Logue, President & Chief Executive Officer of First
Republic Bank, presented the Board with a strategic plan providing for First
Republic Bank's growth in the markets that it served to a level of $300 million
in order to remain competitive. The options presented were: 1) remaining
independent and issuing debentures for additional capital; 2) remaining
independent and borrowing at the holding company level to enhance bank capital;
3) seeking a possible merger partner to add capital and liquidity to its stock.
In December 1996 Mr. Logue discussed with the Board the bank's expansion plans
and associated capital needs, and in April 1997, the Board instructed Mr. Logue
to investigate options concerning the future of First Republic Bank, including a
recapitalization, strategic planning to remain independent, and the merger of
First Republic Bank with another institution.

In May 1997, Mr. Logue presented the Board with information regarding
investment banking groups that could assist First Republic Bank with this
process, and the Board approved the hiring of the firm of Brown, Burke Capital
Partners, Inc. of Atlanta, Georgia ("BBCP").

In June 1997, BBCP gave a presentation to the Board concerning the
different scenarios associated with remaining independent or merging with a
larger regional bank. After discussion, the Board decided to pursue the
marketing of First Republic Bank through BBCP. In August, 1997, discussions were
held with a number of financial institutions and offering packages were sent to
nine of these financial institutions. In response, four non-binding offers were
received.

In September 1997, the Board met to discuss the bids received for Republic.
In addition to the range of bids discussion, further discussion was held
regarding remaining independent, including projected per share earnings. After
the presentation, BBCP was authorized to contact the highest bidders to schedule
due diligence.

In October 1997, after considerable examination, analysis and discussion,
the Board determined that the offer submitted by First United was the best offer
for the shareholders of Republic and unanimously resolved to enter into a
non-binding letter of intent with First United providing for the negotiation of
a definitive

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agreement to merge Republic with First United. The decision of the Board to
enter into the Republic Agreement with First United was based on a careful
analysis of various factors after extensive negotiations with First United and
consultation with the Board's financial, legal and other advisors. While an
attractive and comparable bid was received from another regional bank, it was
the opinion of the Board that the First United offer was the best for the
stockholders of Republic and the Employees of First Republic Bank.

REASONS FOR THE REPUBLIC MERGER

First United. The acquisition of Republic will expand First United's
current markets. The banking subsidiaries of Republic are located in Rayville,
Ruston, Monroe, and West Monroe, Louisiana. Currently, there are no banking
offices in the First United system located in Rayville, Ruston, Monroe, or West
Monroe, Louisiana. Thus, the acquisition of Republic expands First United's
market into new areas.

Republic. In reaching its decision to approve the Republic Merger and
Republic Agreement, Republic's Board consulted with its financial advisors and
counsel, as well as with Republic's management, and considered a number of
factors, including, without limitation, the following:

a. The Republic Board's familiarity with and review of Republic's
business, operations, earnings and financial condition and future capital
requirements;

b. The Republic Board's belief that the terms of the Republic
Agreement are attractive in that the Republic Agreement allows Republic
stockholders to become stockholders in First United, an institution whose
stock is traded over the NASDAQ Stock Market, and the recent earnings and
stock performance of First United;

c. First United's wide range of banking products and services and its
dividend payment history;

d. The Republic Board's belief, based upon analysis of the anticipated
financial effects of the Republic Merger, that upon consummation of the
Republic Merger, First United and its banking subsidiaries would be well
capitalized institutions, the financial positions of which will be well in
excess of all applicable regulatory capital requirements;

e. The current and prospective economic and regulatory environment and
competitive constraints facing the banking industry and financial
institutions in Republic's market area;

f. The Republic Board's belief that, in light of the reasons discussed
above, First United was the most attractive choice as a long term
affiliation partner of Republic; and

g. The expectation that the Republic Merger will generally be a
tax-free transaction to Republic and its stockholders.

Republic's Board did not assign any specific or relative weight to any of
the factors discussed above in their considerations.

BOARD RECOMMENDATIONS

BASED ON THE FOREGOING THE BOARDS OF DIRECTORS OF FIRST UNITED AND REPUBLIC
HAVE UNANIMOUSLY APPROVED THE REPUBLIC AGREEMENT, BELIEVE THAT THE REPUBLIC
MERGER IS IN THE BEST INTEREST OF FIRST UNITED'S AND REPUBLIC'S SHAREHOLDERS,
AND UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS OF FIRST UNITED AND REPUBLIC
VOTE "FOR" APPROVAL OF THE REPUBLIC AGREEMENT.

OPINION OF REPUBLIC'S FINANCIAL ADVISOR

First Republic has retained Brown, Burke Capital Partners, Inc. ("BBCP") to
act as its financial advisor in connection with the Merger. Representatives of
BBCP participated in numerous meetings of the First
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<PAGE> 26

Republic Board including those held on September 3, 1997 and October 6, 1997. At
a meeting held on December 2, 1997, the First Republic Board approved the form
of Republic Agreement with First United. At the October 6 meeting, subject to
First United's letter of intent ("LOI") to purchase Republic, BBCP rendered its
oral opinion to the effect that, as of such date, conversion of each share of
First Republic common stock and convertible debt into the right to receive a
number of shares of First United Common Stock equal to the Exchange Ratio and
the additional terms to be provided by the Republic Agreement (the "Per Share
Purchase Price and Terms") were fair to the stockholders and convertible debt
holders of Republic from a financial point of view. BBCP has also rendered a
written opinion to the First Republic Board that, on October 6, 1997, and on the
date of this Prospectus/Proxy Statement, based on the information set forth
therein, the Per Share Purchase Price and Terms were fair, from a financial
point of view, to the Republic Stockholders.

THE FULL TEXT OF BBCP'S WRITTEN OPINION IS ATTACHED AS ANNEX IV TO THIS
PROSPECTUS/PROXY STATEMENT AND IS INCORPORATED HEREIN BY REFERENCE. THE
DESCRIPTION OF THE OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO ANNEX IV. REPUBLIC STOCKHOLDERS ARE URGED TO READ THE OPINION IN
ITS ENTIRETY FOR A DESCRIPTION OF THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE,
MATTERS CONSIDERED, AND QUALIFICATIONS AND LIMITATIONS ON THE REVIEW UNDERTAKEN
BY BBCP IN CONNECTION THEREWITH.

BBCP's opinion is directed to the Republic Board only and is directed only
to the Per Share Purchase Price and Terms and does not constitute a
recommendation to any Republic stockholder regarding how such stockholder should
vote at the Republic Special Meeting.

In arriving at its written opinion, BBCP, among other things: (i) analyzed
certain audited and unaudited financial statements and other information of
Republic and First United; (ii) reviewed and discussed with appropriate
management personnel of Republic and First United the past and current business
activities and financial results and the business and financial outlook of
Republic and First United; (iii) reviewed the historical price and trading
activity of the common stock of First United; (iv) compared certain financial
and stock market data relating to First United with similar data of other
publicly held banking institutions considered to be potential alternative
affiliation candidates to First United for Republic; (v) performed an analysis
comparing the pro forma consequences of the Republic Merger to Republic
stockholders with respect to fully diluted earnings per share, tangible book
value per share and dividends per share represented by the First United Common
Stock they will receive in the Republic Merger to those same measures
represented by the Republic common stock they currently hold; (vi) reviewed the
prices paid in certain comparable acquisition transactions of community banking
institutions and the multiples of earnings and book value and the level of
deposit base premium received by the selling institutions; (vii) reviewed the
Republic Agreement and certain related documents; (viii) considered the
financial implications of certain other strategic alternatives available to
Republic; and (ix) performed such other analyses as BBCP deemed appropriate.

In conducting its analysis and arriving at its opinion, BBCP assumed and
relied upon, without independent verification, the accuracy and completeness of
the information it reviewed for the purposes of the opinion. BBCP also relied
upon the management of Republic with respect to the reasonableness and
achievability of the financial forecast (and the assumptions and bases
underlying such forecast) provided to it. Republic instructed BBCP that, for the
purposes of its opinion, BBCP should assume that such forecast will be realized
in the amounts and in the time periods currently estimated by the management of
Republic. BBCP also assumed, with Republic's consent, that the aggregate
allowances for loan losses for each of Republic and First United are adequate to
cover such losses. BBCP is not an expert in the evaluation of allowances for
loan losses and has not reviewed any individual credit files. BBCP did not make,
nor was it furnished with, independent valuations or appraisals of the assets or
liabilities of either Republic or First United or any of their subsidiaries.
BBCP did not, and was not asked to, express any opinion about what the value of
First United Common Stock actually will be when issued to the holders of
Republic common stock pursuant to the Republic Merger or the price at which
First United Common Stock will trade subsequent to the Republic Merger.
Moreover, Republic has informed BBCP, and BBCP has assumed, that the Republic
Merger will be recorded utilizing pooling of interests accounting under
generally accepted accounting principles.

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<PAGE> 27

No limitations were imposed by Republic or the Republic Board on the scope
of BBCP's investigation or the procedures to be followed by BBCP in rendering
its opinion. As part of its procedures, BBCP solicited major regional bank
holding companies for their indications of acquisition interest in Republic. The
opinion is necessarily based on economic, market and other conditions as in
effect on, and the information made available to BBCP as of, the date of its
analysis.

In arriving at the fairness, from a financial point of view, of the
consideration to be received by the stockholders and convertible debt holders of
Republic, BBCP developed an opinion of the value of Republic common stock should
the institution remain independent and analyzed such value in light of the
premium represented by the Per Share Purchase Price and Terms. In connection
with rendering its opinion to the Republic Board, BBCP also reviewed a variety
of generally recognized valuation methodologies and merger analyses and
performed those which it believed were most appropriate for developing its
opinion of fairness, from a financial point of view.

The preparation of a fairness opinion involves various determinations of
the most appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances, and, therefore,
such an opinion is not readily susceptible to summary description. In arriving
at its fairness opinion, BBCP did not attribute any particular weight to any
analysis or factor considered by it, but rather made qualitative judgments about
the significance and relevancy of each analysis and factor. None of the analyses
performed by BBCP was assigned a greater significance by BBCP than any other.
Accordingly, BBCP believes that its analyses must be considered as a whole and
that a review of selected portions of such analyses and the factors considered
therein, without considering all analyses and factors, could create a misleading
or incomplete view of the processes underlying its opinion and any conclusions
reached therein. In its analyses, BBCP made numerous assumptions with respect to
industry performance, general business and economic conditions, and other
matters, many of which are beyond Republic's and First United's control. Any
estimates contained in BBCP's analyses are not necessarily indicative of actual
values or predictive of future results or values that may be significantly more
or less favorable than such estimates. Estimates of values of companies do not
purport to be appraisals or necessarily reflect the prices at which companies or
their securities actually may be sold. In addition, as described above, BBCP's
opinion and presentations to the Republic Board were only a few of many factors
taken into consideration by the Republic Board in making its determination to
approve the Republic Agreement.

The following is a brief summary of analyses performed by BBCP in
connection with its opinion delivered to the Republic Board on October 6, 1997:

Summary of Proposal. BBCP reviewed the terms of the proposed transaction as
reflected in the LOI, including the calculation of the Exchange Ratio. BBCP
stated that based on the recent price of First United Common Stock of $39.875,
an Exchange Ratio of 16.2499 shares of First United Common Stock per share of
Republic common stock and common stock equivalents would provide Republic
stockholders and convertible debt holders a per share value of $647.96 (the "Per
Share Purchase Price") or a total deal value of $31.9 million.

Indicated Value of Republic as an Independent Bank. BBCP undertook an
analysis addressing the range of potential values which would be implied if
Republic were to remain an independent bank. BBCP computed this range of values
based on a discounted cash flow analysis, relying on projections extrapolated
from Republic's 1997 budget and its historical performance. In this analysis
methodology, BBCP assumed stockholders received, in addition to the projected
dividend stream, a terminal valuation at December 31, 2001 based upon a 13.0
times multiple of earnings for such year. In addition, BBCP assumed that all
common stock equivalents were converted to common stock. These amounts were
discounted at rates ranging from 10% to 14% and indicated net present values to
Republic stockholders between $24.9 million and $29.6 million.

Per Share Merger Consequences Analysis. Based upon an Exchange Ratio of
16.2499 shares of First United Common Stock for each share of Republic common
stock and common stock equivalents and using the earnings estimates for Republic
prepared by Republic management and earnings estimates for First United prepared
by independent securities analysts, BBCP compared the estimated 1998 and 1999
fully diluted earnings per share of Republic common stock on a stand-alone basis
to the equivalent pro forma fully
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<PAGE> 28

diluted earnings per share of First United Common Stock which would be received
in the Republic Merger. BBCP concluded that the Republic Merger would result in
an earnings increase of 1.8% in 1998 and 9.6% in 1999 for Republic stockholders
in the combined company.

BBCP also analyzed the impact of the Republic Merger on the amount of fully
diluted tangible book value represented by a share of Republic common stock.
BBCP concluded that the Republic Merger would result in an increase of 26.2% in
fully diluted tangible book value on an equivalent per share basis,
respectively, for Republic stockholders projected as of 12/31/97.

Finally, BBCP compared the amount of dividends expected to be paid on a
share of Republic common stock before the Republic Merger to the level expected
to be paid on a pro forma basis reflecting the Republic Merger. BBCP concluded
that the Republic Merger would result in an increase of 33.3% in dividends per
share for Republic stockholders.

Analysis of Selected Other Bank Mergers Involving Southeastern Community
Banks. BBCP reviewed thirty-nine mergers involving southeastern community banks
and bank holding companies announced between January, 1996, and September, 1997
in which the selling institution was located in the Southeast or Southwest, had
assets between $100 million and $200 million and return of average assets was
greater than 1.00%. BBCP noted in particular the prices paid in these mergers as
a multiple of earnings and book values and the transaction premiums paid in
excess of tangible book value as a percentage of core deposits. BBCP also
reviewed other data in connection with each of these mergers, including the
amount of total assets and the capital level of the acquired institutions and
the return on equity and the return on assets of the acquired institutions. BBCP
then compared this data to that of First Republic and to the value to be
received by Republic stockholders in the Republic Merger.

This comparison yielded a range of transaction values as multiples of
latest twelve-months earnings per share of a low of 8.5 times and a high of 23.0
times and a median value of 16.4 times. The Republic multiple of trailing
earnings was 20.7 times. The calculations yielded a range of transaction values
as multiples of book value per share of a low of 1.26 times to a high of 3.53
times and a median value of 2.30 times. The Republic multiple of book value was
2.90 times. Finally, the calculations yielded a range of deposit base premiums
paid from a low of 4.4% to a high of 28.9%, with a median value of 14.8%. The
equivalent premium on Republic deposits represented by the Per Share Purchase
Price and Terms was 21.2%.

No company or transaction used in the above analyses as a comparison is
identical to Republic, First United, or the Republic Merger. Accordingly, an
analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the companies and other factors that could affect the public
trading value of the companies to which they are being compared. Mathematical
analysis (such as determining the average or median) is not, in itself, a
meaningful method of using comparable company data.

In connection with its opinion dated the date of this Prospectus/Proxy
Statement, BBCP confirmed the appropriateness of its reliance on the analyses
used to render its October 6, 1997 opinion by performing procedures to update
certain of such analyses and by reviewing the assumptions on which such analyses
were based and the factors considered in connection therewith.

BBCP is continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, private placements, and
valuations for estate, tax, corporate and other purposes. Republic has paid BBCP
a fee of $25,000 in connection with its engagement. An additional fee of 1% of
the aggregate market value of the consideration received by Republic
stockholders plus 3% of the aggregate market value of the consideration received
by Republic stockholders, convertible debt holders and the holders of rights to
receive certain shares of Republic in excess of a Base Valuation of $36 million
will be payable to BBCP upon consummation of the Republic Merger. Based upon an
assumed Market Price and value of a share of First United Common Stock at the
Effective Time of the Republic Merger of $41.25 (the closing price of First
United Common Stock on January 16, 1998) there would be no additional fee. No
compensation payable to BBCP is contingent on the conclusions reached in the
opinion of BBCP. Republic has also agreed

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to reimburse BBCP for reasonable out-of-pocket-expenses and to indemnify BBCP
and certain related persons against certain liabilities relating to or arising
out of its engagement.

REGULATORY APPROVAL AND OTHER CONDITIONS TO THE REPUBLIC MERGER

The Department of Justice has fifteen (15) calendar days after approval by
the Board in which to challenge the proposed Republic Merger on anti-trust
considerations. The approval letter or Order from the Board, therefore will
provide that the Republic Merger may not be consummated until fifteen (15)
calendar days after the effective date of such letter or Order. The letter or
Order will also provide that the transaction must be consummated no later than
ninety (90) calendar days from that effective date unless the period is extended
for good cause by the Board upon request by First United.

The Republic Agreement also requires that certain conditions occur or be
waived prior to the closing date, including (a) approval of the Republic
Agreement by Republic and First United stockholders; (b) receipt by Republic of
an opinion from Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P.
that the Republic Merger will qualify as a tax-free reorganization; (c) receipt
by Republic of letters from Brown, Burke, Capital Partners, Inc. dated the date
of the mailing of this Proxy Statement and the date of the Republic Special
Meeting, confirming such financial advisor's prior opinion to the Board of
Directors of Republic that the consideration to be paid in the merger is fair to
the Republic shareholders from a financial point of view; (d) receipt by First
United of an opinion from Arthur Andersen LLP that the Republic Merger will
qualify for pooling of interests treatment under the applicable accounting
principles; (e) each person having a right to performance shares and each holder
of a Republic Debenture having entered into a written agreement accepting
consideration in the form of First United Common Stock in satisfaction of such
rights as set forth in the Republic Agreement and each holder of a Republic
Debenture share have surrendered such debenture at closing for cancellation, and
(f) satisfaction of other customary conditions to closing a merger transaction.

AMENDMENT, WAIVER AND TERMINATION

Prior to the effective date of the Republic Merger, any condition of the
Republic Agreement, except those required by law, may be waived by the party
benefitted by the condition. In addition, either party may terminate the
Republic Agreement, if the Republic Merger is not closed on or before June 30,
1998 provided that the failure to close is not caused by a breach of the
Republic Agreement by the party seeking to terminate it.

EFFECTIVE DATE

The effective date of the Republic Merger will be the date the Articles of
Merger are filed with the Arkansas Secretary of State, or the date so stated in
the Articles of Merger. The Republic Agreement provides that a closing date will
be set by mutual agreement to occur within a reasonable time following the date
on which the last of all regulatory and other approvals necessary to consummate
the Republic Merger have been received and all necessary time periods imposed by
regulatory authorities have elapsed.

CONDUCT OF BUSINESS PRIOR TO EFFECTIVE DATE

Republic has agreed, for the period prior to the consummation of the
Republic Merger, to operate its businesses only in the usual, regular and
ordinary course. In addition, Republic will use reasonable efforts to maintain
and keep its properties in as good repair and condition as at present, except
for ordinary wear and tear and to perform all obligations required under all
material contracts, leases, and documents relating to or
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<PAGE> 30

affecting their respective assets prior to the consummation of the Republic
Merger. Republic has further agreed that, prior to consummation of the Republic
Merger, it will not incur any material liabilities or obligations, except in the
ordinary course of business, or take any action which would or is reasonably
likely to adversely affect the ability of either First United or Republic to
obtain any necessary approvals, adversely affect the ability of First United or
Republic to perform their covenants and agreements under the Republic Agreement,
or result in any of the conditions to the Republic Merger not being satisfied.
Republic has further agreed that, unless it has received an opinion of counsel
that such action is necessary to comply with its fiduciary obligations, it shall
not initiate, solicit or encourage any inquiry or proposal which constitutes a
competing transaction.

INTERESTS OF CERTAIN PERSONS IN THE REPUBLIC MERGER

Certain members of Republic's management and its Board of Directors may be
deemed to have certain interests in the Republic Merger in addition to their
interests as stockholders of Republic generally. Republic's Board of Directors
was aware of these interests and considered them, among other matters, in
approving the Republic Agreement and the Republic Merger.

Subordinated Debentures. Approximately 61 shareholders and other persons,
including all Republic directors, are holders of Republic's 6.65% subordinated
debentures due December 31, 2006 ("Republic Debentures"). The Republic
Debentures were offered to all shareholders of Republic who were residents of
Louisiana in 1994 to provide Republic with additional capital. Under their
terms, the Republic Debentures are convertible into shares of Republic common
stock at the option of the holder on December 31, 2000 at the rate of one share
of Republic common stock for every $105.83 principal amount of debenture. The
Republic Debentures provide that upon a change of control, such as the Republic
Merger, the Republic Debentures do not become immediately convertible, but will
thereafter be convertible into the same amount of securities as are distributed
to holders of common stock in connection with the change of control. As a
condition to its agreement to enter into the Republic Agreement, however, First
United has required that all holders of Republic Debentures surrender their
Republic Debentures for conversion in the Republic Merger as if such Republic
Debentures were converted to shares of Republic common stock at the conversion
ratio described above immediately prior to the effective date of the Republic
Merger. It is a condition to First United's obligation to effect the Republic
Merger pursuant to the Republic Agreement that all holders of the Republic
Debentures accept such consideration in full satisfaction of all rights under
the Republic Debentures.

Director's Retirement Plan. Since 1995 the members of the Board of First
Republic Bank have participated in a retirement plan providing generally for the
payment of $500, $1,000 and $1,500 per month for a period of ten years following
retirement to former directors who have served as directors for 10, 15 and 20
years, respectively. As a condition to its agreement to enter into the Republic
Agreement, First United has required Republic to terminate this plan and pay
directors all amounts owed to date under the plan. In addition, individuals who
have not been directors for 10 years will be paid the amounts they would have
received upon plan termination had they served as a director for 10 years. The
aggregate of all such amounts is $906,632.

Performance Share Plan. Mr. Logue, President and Chief Executive Officer,
and Mr. William Crawford, Executive Vice President, of First Republic Bank are
the beneficiaries of a performance share plan adopted by the Board of Republic
in July 1993, pursuant to which Messrs. Logue and Crawford were entitled to
receive 187 and 62 shares of Republic common stock in each of the 10 years
thereafter in which Republic achieved a 10% increase in capital and paid a 5%
dividend on the book value of its stock when payment was justified. At the
effective time of the Republic Merger, Messrs. Logue and Crawford will have been
issued 1,142 and 379 shares under the plan and would be entitled to earn 1,246
additional shares over the next 5 years. Pursuant to the performance share plan,
upon a change of control the vesting of remaining shares thereunder will be
accelerated. Accordingly, the 1,246 shares remaining unissued under the plan
will be converted into shares of First United Common Stock on the same terms and
conditions as if issued and outstanding on the effective date of the Republic
Merger.

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Employment Agreement. Republic is a party to an employment agreement with
Mr. Logue dated March 12, 1996, which provides for a payment of 2.99 times Mr.
Logue's average annual compensation, not to exceed $500,000 upon a change of
control. The Republic Merger will constitute a change of control under this
agreement, and pursuant thereto Mr. Logue will receive $500,000 in a single
payment following the effective time of the Republic Merger.

EXCHANGE OF REPUBLIC STOCK CERTIFICATES

First United Trust Company, N.A. ("Exchange Agent") is the transfer agent
for First United Common Stock and will serve as Exchange Agent to effect the
exchange of stock certificates in connection with the Republic Merger and the
issuance of stock certificates of First United Common Stock to persons entitled
to receive performance shares at the time of closing and holders of Republic
Debentures which are required to surrender such debentures at closing for
cancellation. Stock certificates and cash in lieu of fractional shares will be
issued by the Exchange Agent to persons entitled to receive performance shares
and holders of Republic Debentures without any additional action on the part of
such persons after closing. As soon as practicable after the effective time of
the Republic Merger, the Exchange Agent will send a notice and letter of
transmittal to each Republic stockholder of record at such date advising such
stockholder of the effectiveness of the Republic Merger and the procedure for
surrendering to the Exchange Agent outstanding certificates formerly evidencing
Republic common stock in exchange for new certificates of First United Common
Stock and cash in lieu of fractional shares. Promptly following receipt of such
notice and transmittal form, holders of Republic common stock certificates
should surrender their certificates in accordance with the specified procedures.
Upon surrender, each Republic common stock certificate will be canceled.

Until surrendered, each outstanding certificate which, prior to the
effective time of the Republic Merger, represented outstanding shares of
Republic common stock (other than dissenting shares or shares owned or held by
Republic or its subsidiaries (excluding those shares in a 401(k) plan or held in
a fiduciary capacity)) will be deemed for all corporate purposes to evidence the
right to receive that number of shares of First United Common Stock into which
such shares of Republic common stock have been converted and the right to
receive cash in lieu of fractional shares. Until such outstanding certificates
representing Republic are so surrendered, no dividend payable to holders of
First United Common Stock as of any record date subsequent to the effective time
of the Republic Merger will be paid to the holders of such certificates.
However, upon surrender of such certificates, there will be paid to the record
holder of the certificates of First United Common Stock issued in exchange
therefor the amount of dividends that have become payable with respect to such
shares of First United Common Stock along with the amount of cash, if any,
payable to the holder in lieu of fractional shares. No interest will be paid
with respect to such dividends or cash in lieu of fractional shares to be
received in the Republic Merger. After the effective time of the Republic
Merger, there will be no further registration of transfers on the records of
Republic of outstanding certificates formerly representing shares of Republic
common stock and, if a certificate formerly representing such shares is
presented to First United, it shall be forwarded to the Exchange Agent for
cancellation and exchange for certificates representing shares of First United
Common Stock as herein provided.

If any new certificate for shares of First United Common Stock is to be
issued in a name other than the name in which the surrendered certificate is
registered, it will be a condition of the issuance that the certificate so
surrendered is properly endorsed and otherwise in proper form for transfer and
that the person requesting the issuance of such certificate either pay to the
Exchange Agent any transfer or other taxes required by reason of the issuance of
the new certificate in a name other than the registered holder of the
certificate surrendered, or reestablish to the satisfaction of the Exchange
Agent that such tax has been paid or is not owed. In the event any certificate
of Republic common stock has been lost, stolen or destroyed, the Exchange Agent
will issue, in exchange for such lost, stolen or destroyed certificate, upon the
making of an affidavit of that fact by the holder thereof, the merger
consideration; provided, however, that First United may in its discretion and as
a condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate to deliver a bond in such sum as it may direct
as indemnity against any claim that may be made against First United, Republic,
the Exchange Agent or any other party.

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<PAGE> 32

HOLDERS OF REPUBLIC COMMON STOCK SHOULD NOT SURRENDER THEIR CERTIFICATES
UNTIL THEY RECEIVE WRITTEN INSTRUCTIONS FROM THE EXCHANGE AGENT.

RESALE OF FIRST UNITED COMMON STOCK; RESTRICTIONS ON TRANSFER

The First United Common Stock issued pursuant to the Republic Merger will
be freely transferable under the Securities Act of 1933 (the "Securities Act"),
except for shares issued to any Republic stockholder who may be deemed to be an
"affiliate" of Republic or First United for purposes of Rule 145 under the
Securities Act. In general, affiliates of Republic include its executive
officers and directors and any person who controls, is controlled by or is under
common control with Republic. Affiliates of Republic will not be able to resell
the First United Common Stock received by them in the Republic Merger unless the
First United Common Stock is registered for resale under the Securities Act, is
sold in compliance with Rule 145 under the Securities Act or is sold in
compliance with another exemption from the registration requirements of the
Securities Act.

Pursuant to Rule 145 under the Securities Act, the sale of First United
Common Stock held by former affiliates of Republic will be subject to the
following restrictions. Such persons may sell First United Common Stock under
Rule 145 only if (i) First United has filed all reports required to be filed by
it under Section 13 or 15(d) of the Exchange Act during the preceding twelve
months, (ii) such First United Common Stock is sold in a "broker's transaction,"
which is defined in Rule 144 under the Securities Act as a sale in which (a) the
seller does not solicit or arrange for orders to buy the securities, (b) the
seller does not make any payment other than to a broker, (c) the broker does no
more than execute the order and receive a normal commission and (d) the broker
does not solicit customer orders to buy the securities, and (iii) such sale and
all other sales made by such person within the preceding three months do not
exceed the greater of (x) 1% of the outstanding shares of First United Common
Stock or (y) the average weekly trading volume of First United Common Stock on
the Nasdaq National Market during the four-week period preceding the sale.

Each affiliate of Republic is expected to receive less than 1% of the
outstanding First United Common Stock upon consummation of the Republic Merger.
Any affiliate of Republic who is not an affiliate of First United after the
Republic Merger may sell First United Common Stock without restriction following
the first anniversary of the Effective Date. No person who may be deemed to be
an "affiliate" of Republic prior to the Republic Merger is expected to be an
"affiliate" of First United upon consummation of the Republic Merger.

It is a condition to consummation of the Republic Merger that each
stockholder of Republic who is a director, executive officer or 5% shareholder
of Republic will have entered into an agreement with First United providing that
such person will not transfer any First United Common Stock received in the
Republic Merger except in compliance with the Securities Act and will not sell
or otherwise transfer such Common Stock (or any interest therein) until
financial results of First United and its subsidiaries (including Republic) for
at least 30 days of combined operations are published.

EMPLOYEE BENEFITS AFTER THE REPUBLIC MERGER

From and after the effective time of the Republic Merger, First United
will, subject to compliance with applicable legal and regulatory requirements,
provide coverage for all employees of Republic or any Republic subsidiary under
all First United employee benefit plans for which they are eligible, as soon as
practicable after the effective time of the Republic Merger. All prior years of
service with Republic or any Republic subsidiary of such employees will be
counted for eligibility purposes under all First United qualified employee
pension benefit and welfare benefit plans and will be counted for both
eligibility and vesting purposes under the First United 401(k) Profit Sharing
Plan and Trust.

EXPENSES OF THE MERGER

First United and Republic will bear their own expenses incident to
preparing for, entering into, and carrying out the Agreements and the
consummation of the Republic Merger, except that First United will pay all
expenses incident to the preparation of this Proxy Statement and its printing
and distribution and for the

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<PAGE> 33

filing of necessary applications for approval of the Republic Merger with the
Board and state regulatory agencies.

FEDERAL INCOME TAX CONSEQUENCES

The following is a discussion of certain material federal income tax
considerations in connection with the Republic Merger and of the tax opinion of
Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., special tax
counsel to Republic. This discussion does not address all aspects of federal
income taxation that may be relevant to particular stockholders of Republic and
Republic Debenture holders and may not be applicable to stockholders and holders
of Republic Debentures who are not citizens or residents of the United States,
or who may acquire First United Common Stock pursuant to the exercise or
termination of employee stock options or otherwise as compensation, nor does the
discussion address the effect of any applicable foreign, state, local or other
tax laws. This discussion assumes that the Republic stockholders and holders of
Republic Debentures hold their Republic common stock and Republic Debentures as
capital assets within the meaning of Section 1221 of the Internal Revenue Code
of 1986, as amended (the "Code"). EACH REPUBLIC STOCKHOLDER AND REPUBLIC
DEBENTURE HOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE PARTICULAR
TAX CONSEQUENCES TO HIM OR HER OF THE REPUBLIC MERGER, INCLUDING THE
APPLICABILITY AND EFFECT OF FOREIGN, STATE, LOCAL AND OTHER TAX LAWS.

The Republic Merger will qualify as a tax-free corporate reorganization for
federal income tax purposes under Section 368(a)(1)(A) of the Code, if it
satisfies the specific requirements of the Code, the regulations promulgated
thereunder, and pertinent judicial decisions. The most important of these
requirements are (i) the transaction must qualify as a merger under applicable
state or federal law and (ii) the stockholders of Republic must maintain a
"continuity of interest" in the surviving corporation after the Republic Merger.
For ruling purposes, the Internal Revenue Service takes the position that this
"continuity of interest" test will be satisfied if the former Republic
stockholders receive, in the Republic Merger, a number of shares of common stock
of First United having a value, as of the Effective Date (as defined herein),
equal to at least fifty percent (50%) of the value of all the outstanding stock
of Republic as of such date, and acquire such stock without a present intent to
sell, transfer or otherwise dispose of such stock in a manner that would cause
the fifty percent (50%) continuity of interest threshold to be violated. In
general, this requires the stockholders of Republic to collectively surrender at
least 50% of their Republic common stock in exchange for First United Common
Stock in the Republic Merger, without a present intent to sell, transfer or
otherwise dispose of such stock in violation of the fifty percent (50%)
continuity of interest requirement.

The Republic Merger has been structured in a manner to qualify as a
statutory merger under the law of the State of Arkansas. In addition, it is
expected that the stockholders of Republic will collectively exchange a
sufficient number of shares of Republic common stock for First United Common
Stock so that the 50% "continuity of interest" test initially should be
satisfied in connection with the Merger.

Accordingly, assuming these tests are satisfied, and provided other
specific requirements contained in the Code, the regulations promulgated
thereunder, and pertinent judicial decisions are met, the transaction should
qualify as a tax-free corporate reorganization for federal income tax purposes
pursuant to the provisions of Section 368(a)(1)(A) of the Code.

If the Republic Merger qualifies as a tax-free corporate reorganization,
the material federal income tax consequences of the Republic Merger will be as
follows: (i) no material gain or loss will be recognized by Republic or First
United as a result of the Republic Merger; (ii) no gain or loss will be
recognized by the stockholders of Republic or holders of Republic Debentures
upon the receipt of First United Common Stock received solely in exchange for
their shares of Republic common stock in connection with the Merger; (iii) the
tax basis of the shares of First United Common Stock received by the
stockholders of Republic and holders of Republic Debentures in the Republic
Merger will, in each instance, be the same as the basis of the shares of
Republic common stock and Republic Debentures surrendered in exchange therefor;
(iv) the holding period of the shares of First United Common Stock received by
the stockholders of Republic in the Republic Merger will, in each instance,
include the holding period of the shares of Republic common stock and Republic

20
<PAGE> 34

Debentures exchanged therefor, provided that the shares of Republic common stock
and Republic Debentures were held as capital assets on the date of the Republic
Merger; and (v) the payment of cash to stockholders of Republic and Republic
Debenture holders in lieu of fractional shares of First United Common Stock will
be a taxable transaction and will be treated as if the fractional shares were
distributed as part of the exchange and then redeemed by First United for cash,
and any such cash payments will be treated as having been received by the
stockholder as a distribution in redemption of the fractional share interest,
subject to the provisions of Section 302 of the Code.

Stockholders of Republic who exercise dissenters' rights and receive cash
for their shares of Republic common stock will have engaged in a taxable
transaction and will be treated as having received such cash as a distribution
in redemption of such stockholders' Republic common stock, subject to the
conditions and limitations of Section 302 of the Code.

If the Republic Merger does not qualify as a tax-free corporate
reorganization for federal income tax purposes, it will constitute a taxable
transaction to the stockholders of Republic and holders of Republic Debentures.
In such circumstances, gain or loss will be recognized by the stockholders of
Republic and Republic Debenture holders to the extent of the difference between
the fair market value, on the Effective Date, of the shares of First United
Common Stock received in connection with the Republic Merger, and the adjusted
basis of the shares of Republic common stock and Republic Debentures surrendered
in the transaction. The fair market value of the First United Common Stock on
the Effective Date may be determined on the basis of the average high and low
selling prices of such stock on the day of the transaction. If the transaction
is taxable, the holding period for the shares of First United Common Stock to be
received by the stockholders of Republic will commence on the day following the
date of the transaction.

Because the tax consequences to any particular stockholder may be affected
by matters not pertaining to the Republic Merger, it is recommended that each
stockholder of Republic and Republic Debenture holder consult his or her own
personal tax advisor concerning the specific income tax consequences of the
Republic Merger, including the applicability and effect of foreign, state, local
and other tax laws.

ACCOUNTING TREATMENT

First United intends to treat the Republic Merger as a pooling-of-interests
for accounting purposes. Consequently, in accordance with generally accepted
accounting principles, First United anticipates that it will restate its 1998
and prior consolidated financial statements to include the assets, liabilities,
stockholders' equity and results of operations of Republic as reflected in its
consolidated financial statements, subject to appropriate adjustments, if any,
to conform accounting principles of the two companies.

RIGHT OF DISSENT UNDER THE 1987 ACT

HOLDERS OF FIRST UNITED COMMON STOCK SHALL BE ENTITLED TO DISSENTER'S
RIGHTS PURSUANT TO ARK. CODE ANN. SEC.4-27-1301 ET. SEQ. OF THE 1987 ACT WITH
RESPECT TO THE REPUBLIC MERGER.

The following summary does not purport to be a complete statement of the
method of compliance with the 1987 Act and is qualified by reference to those
statutory sections which are attached hereto as Annex II.

A holder of First United Common Stock who wishes to perfect his dissenter's
rights in the event that the Republic Merger is adopted must:

(a) File with the corporation, prior to or at the meeting of
stockholders at which the vote on the Republic Agreement is to be
made, written objection to the Agreement; and

(b) Not have voted in favor of the Republic Agreement.

Any written notice of objection to the Republic Agreement pursuant to
clause (a) of the immediately preceding paragraph should be mailed or delivered
by a Republic stockholder to Republic National Bancshares of Hope, Inc., 200
South Elm Street, Hope, Arkansas, 71801, Attention: Dennis Ramsey,

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<PAGE> 35

Secretary, or by a stockholder of First United, to First United Bancshares,
Inc., Main and Washington Streets, El Dorado, Arkansas, 71730, Attention: John
Burns, Vice President and Chief Financial Officer. Because the written objection
must be delivered prior to or at the time of the stockholder votes on the
Republic Merger, it is recommended, although not required, that a stockholder
using the mail should use certified or registered mail, return receipt
requested, to confirm that he has made timely delivery.

If the Republic Merger is adopted at the special stockholders meeting, the
corporation must send to the dissenting stockholder, no later than ten (10) days
after the corporate action was taken, a dissenter's notice which will inform the
stockholder where a demand for payment must be sent, where the stockholder's
share certificates must be deposited and provide a form for demanding payment.
The dissenter's notice will also notify the stockholder of a time period of not
fewer than thirty (30) nor more than sixty (60) days within which the
stockholder must deliver the payment demand form and stock certificates to the
corporation.

As soon as the Republic Merger is consummated, or upon receipt of a payment
demand by the dissenting stockholder, First United must pay the dissenting
stockholder the amount First United estimates to be the fair value of the
shares, plus accrued interest and deliver to the dissenting stockholder the
corporation's balance sheet as of the most recent fiscal year, an income
statement for that year, a statement of changes in stockholder equity for that
year, and the latest available interim financial statement. At this time, First
United shall also deliver to the dissenting stockholder a statement of the
corporation's estimate of fair value of the shares, an explanation of how
interest was calculated, a statement of the dissenter's right to demand a higher
value for his shares and a copy of the appropriate statutory provisions
governing the dissenters rights procedure.

Within thirty (30) days after the dissenting stockholder has received
payment in the amount the corporation estimates to be the fair value of the
shares, the dissenting stockholder must notify the corporation, in writing, of
his own estimate of fair value. If the dissenting stockholder does not notify
the corporation within this thirty (30) day period, he waives his right to
demand a higher payment.

If the demand for payment, as referenced in the immediately preceding
paragraph remains unsettled for sixty (60) days from the date the corporation
receives the dissenting stockholder's demand for payment, the corporation must
commence a proceeding and file a petition in Pulaski County Circuit Court to
determine the fair value of the shares and the amount of accrued interest to be
paid.

RIGHT OF DISSENT UNDER THE LBCL

HOLDERS OF REPUBLIC COMMON STOCK MAY BE ENTITLED TO EXERCISE DISSENTER'S
RIGHTS UNDER THE LBCL.

Unless the Republic Agreement is approved by the holders of at least (80%)
of the total voting power of Republic, Section 131 of the Louisiana Business
Corporation Law (L.B.C.L. Section 12:131) allows a stockholder of Republic who
objects to the Republic Agreement and who complies with the provisions of that
section to dissent from that Republic Agreement and to have paid to him in cash
the fair cash value of his shares of Republic common stock as of the day before
the Special Meeting, as determined by agreement between the stockholder and
Republic or by the State District Court for the Parish of Richland if the
stockholder and Republic are unable to agree upon the fair cash value.

To exercise the right of dissent, a stockholder (i) must file with Republic
a written objection to the Republic Agreement prior to or at the Special Meeting
AND (ii) must also vote his shares (in person or by Proxy) against the Republic
Agreement at the Special Meeting. Neither a vote against the Republic Agreement
nor a specification in a Proxy to vote against the Republic Agreement will in
and of itself constitute the necessary written objection to the Republic
Agreement. Moreover, by voting in favor of, or abstaining from voting on, the
Republic Agreement, or by returning the enclosed Proxy without instructing the
Proxy holders to vote against the Republic Agreement, a stockholder waives his
rights under Section 131.

If the Republic Agreement is approved by less than 80% of the total number
of shares of Republic common stock outstanding, then promptly after the
consummation date of the Republic Merger, written notice of the consummation of
the Republic Merger will be given by registered mail to each former
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<PAGE> 36

stockholder of Republic who filed a written objection to the Republic Agreement
and voted against it. Within 20 days after the mailing of such notice, the
stockholder must file with Republic a written demand for payment for his shares
at their fair cash value as of the day before the Special Meeting and must state
the amount demanded and a post office address to which Republic may reply. He
must also deposit the certificate(s) formerly representing his shares of
Republic common stock in escrow with a bank or trust company located in Richland
Parish, Louisiana. With the above-mentioned demand, the stockholder must also
deliver to Republic the written acknowledgment of such bank or trust company
that it holds the certificate(s), duly endorsed and transferred to Republic,
upon the sole condition that the certificate(s) will be delivered to Republic
upon payment of the value of the shares in accordance with Section 131.

Unless the stockholder objects to and votes against the Republic Agreement,
demands payment, deposits his certificates and delivers the required
acknowledgment in accordance with the procedures and within the time period set
forth above, the stockholder will conclusively be presumed to have acquiesced to
the Republic Merger and will forfeit any right to seek payment pursuant to
Section 131.

If Republic does not agree to the amount demanded by the stockholder, or
does not agree that payment is due, it will, within 20 days after receipt of
such demand and acknowledgment, notify such stockholder in writing of either (i)
the value if will pay or (ii) its belief that no payment is due. If the
stockholder does not agree to accept the offered amount, or disagrees with
Republic's assertion that no payment is due, he must, within 60 days after
receipt of such notice, file suit against Republic in the Civil District Court
for the Parish of Richland for a judicial determination of the fair cash value
of the shares. Any stockholder entitled to file such suit may, within such 60
day period but not thereafter, intervene as a plaintiff in any suit filed
against Republic by another former stockholder of Republic for a judicial
determination of the fair cash value of such other stockholder's shares. If a
stockholder fails to bring or to intervene in such a suit within the applicable
60 day period, he will be deemed to have consented to accept Republic's
statement that no payment is due or, if Republic does not contend that no
payment is due, to accept the amount specified by Republic in its notice of
disagreement.

If upon the filing of any such suit or intervention, Republic deposits with
the court the amount, if any, which it specified in its notice of disagreement,
and if in that notice Republic offered to pay such amount to the stockholder on
demand, then the costs of the suit or intervention will be taxed against the
stockholder if the amount finally awarded to him, exclusive of interest and
costs, is equal to or less than the amount so deposited; otherwise, the costs
will be taxed against Republic.

Upon filing a demand for the value of his shares, a stockholder ceases to
have any rights of a stockholder except the rights created by Section 131. The
stockholder's demand may be withdrawn voluntarily at any time before Republic
gives its notice of disagreement, but thereafter only with the written consent
of Republic. If his demand is properly withdrawn, or if the stockholder
otherwise loses his dissenters' rights, he will be restored to his rights as a
stockholder as of the time of the filing of his demand for fair cash value.

Dissenting stockholders of Republic should send any communications
regarding their rights to George W. Bolton, Jr., Chairman, First Republic
Bancshares, Inc., 107 Glenda Street, Rayville, Louisiana 71264. All such
communications should be signed by or on behalf of the dissenting stockholder in
the form in which his shares are registered on the books of Republic.

THE FOREGOING SUMMARY OF SECTION 131 OF THE LBCL IS NECESSARILY INCOMPLETE
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO EXCERPTS FROM THAT SECTION SET
FORTH HEREIN AS ANNEX III.

COMPARISON OF RIGHTS OF HOLDERS OF REPUBLIC COMMON STOCK AND FIRST UNITED COMMON
STOCK

THE FOLLOWING IS A SUMMARY OF MATERIAL DIFFERENCES BETWEEN THE RIGHTS OF
HOLDERS OF FIRST REPUBLIC COMMON STOCK AND THE RIGHTS OF HOLDERS OF FIRST UNITED
COMMON STOCK AND DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE RIGHTS OF
FIRST REPUBLIC STOCKHOLDERS UNDER THE LAWS OF LOUISIANA AND THE ARTICLES OF
INCORPORATION AND BYLAWS OF FIRST REPUBLIC AS COMPARED WITH THE RIGHTS OF FIRST
UNITED STOCKHOLDERS UNDER THE LAWS OF ARKANSAS AND THE ARTICLES OF INCORPORATION
AND BYLAWS OF FIRST UNITED. THE IDENTIFICATION OF SPECIFIC DIFFERENCES IS NOT
MEANT TO INDICATE THAT OTHER EQUAL OR MORE SIGNIFICANT DIFFERENCES DO NOT EXIST
AND

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<PAGE> 37

IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE LOUISIANA BUSINESS CORPORATION
LAW ("LBCL"), THE ARKANSAS BUSINESS CORPORATION ACT OF 1987 ("1987 ACT"), AND
THE GOVERNING CORPORATE INSTRUMENTS OF FIRST REPUBLIC AND FIRST UNITED, TO WHICH
STOCKHOLDERS ARE REFERRED.

Republic is a corporation organized and existing under the laws of the
State of Louisiana including the LBCL. First United is a corporation organized
and existing under the laws of the State of Arkansas, including the 1987 Act.
Holders of Republic common stock have the rights, privileges and duties provided
by the LBCL, while the holders of First United Common Stock have the rights,
privileges and duties provided by the 1987 Act.

Shareholder Action by Written Consent. Under the LBCL, shareholders may
take action if a written consent setting forth the action taken is signed by all
of the shareholders of the corporation having voting power on the question,
without the necessity of a shareholder meeting. Under the 1987 Act, shareholders
may take such action, without the necessity of a meeting, if the written consent
is signed by a simple majority of all shares entitled to vote on the matter.
Arkansas law requires unanimous written consent only for actions to increase the
capital stock or bond indebtedness of the corporation.

Dissenter's Rights. The LBCL provides that in instances where a corporation
has, by the vote of its shareholders, authorized a sale, lease, or exchange of
all of its assets or has become a party to a merger or consolidation, a
shareholder who voted against such action shall have the right to dissent;
namely, the right to receive "fair value" in exchange for its shares. However,
dissenting shareholders generally have no such rights where the action shall
have been approved by eighty percent (80%) or more of the total voting power.
See "The Republic Merger -- Right of Dissent Under the LBCL".

The 1987 Act provides for dissenters' rights in such instances regardless
of the percentage of the total voting power approving the action. Arkansas law
also provides for dissenters' rights where an amendment of the articles of
incorporation materially and adversely affects rights in respect of a
dissenter's shares, such as the abolition or alteration of a preferential right
of the shares or of a preemptive right of the holder of shares. See "The
Republic Merger -- Right of Dissent Under the 1987 Act".

Director Voting. The holders of First United Common Stock are entitled to
cumulative voting for directors. The articles of incorporation of First Republic
prohibit cumulative voting for directors. Pursuant to First United's By-Laws,
the number of directors of the corporation may not be less than three nor more
than twenty-five. The Republic By-Laws require that the number of directors may
not be less than one.

Super-Majority Voting Requirements. First United's Articles of
Incorporation contain a paragraph that may have the effect of operating as an
anti-takeover provision. Paragraph SEVENTH contains a super-majority voting
requirement of two-thirds ( 2/3) of all shares issued and outstanding that are
entitled to vote for approval of (1) effect any transaction pursuant to which a
purchaser would acquire control of the corporation, whether by merger,
consolidation, purchase of stock or otherwise, (2) effect a merger or share
exchange with another entity pursuant to which the corporation would issue
shares of common stock in an amount greater than twenty percent (20%) of the
number of shares of common stock issued and outstanding immediately prior to
consummation of the transaction, (3) effect a merger or share exchange with
another entity pursuant to which the corporation would issue shares of common
stock in an amount that would cause the total number of shares issued during any
consecutive twelve month period in connection with such transactions to exceed
twenty percent (20%) of the number of shares of common stock issued and
outstanding immediately prior to consummation of the transaction, (4) a
transaction to sell, exchange, lease or otherwise dispose of all, or
substantially all, of the corporation's assets and property except where
accomplished in the usual and regular course of business, (5) a transaction
effecting a dissolution or liquidation of the corporation, or (6) any amendment
of the Articles of Incorporation.

The Republic Articles of Incorporation do not contain a like provision and
require only a simple majority of votes actually cast, except as otherwise
provided by law. The LBCL requires a vote of two-thirds of the voting power
present for most of these actions.

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<PAGE> 38

FINANCIAL INFORMATION

The following unaudited Pro Forma Combining Balance Sheet as of September
30, 1997, and Unaudited Pro Forma Combining Income Statements for the nine
months ended September 30, 1997 and 1996 and for the years ended December 31,
1996, 1995, and 1994 illustrate the effect of the proposed merger as if the
Republic Merger had occurred at the beginning of the earliest period presented.

These Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of First United and the
supplemental post-pooled financial statement of First United which are
incorporated by reference herein and Republic which are included herein.

The Pro Forma Combining Financial Statements are presented for comparative
purposes only and are not intended to be indicative of actual results had the
transactions occurred as of the dates indicated above nor do they purport to
indicate which may be attained in the future.

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<PAGE> 39

PRO FORMA COMBINING BALANCE SHEET

ASSETS

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1997
----------------------------------------------------
PRO FORMA PRO FORMA
FIRST UNITED FIRST ADJUSTMENT(1) COMBINED
------------ -------- ------------- ----------
<S> <C> <C> <C> <C>
Cash and due from banks...................... $ 76,577 $ 4,446 $ -- $ 81,023
Short-term investments....................... 45,563 7,771 -- 53,334
Securities available-for-sale................ 485,684 26,981 -- 512,665
Investment securities........................ 245,315 -- -- 245,315
Trading account securities................... -- 225 -- 225
Net Loans.................................... 918,054 103,811 -- 1,021,865
Premises and equipment....................... 33,608 3,089 -- 36,697
Goodwill..................................... 10,882 359 -- 11,241
Other real estate owned...................... 834 62 -- 896
Other assets................................. 25,770 2,218 -- 27,988
---------- -------- ----- ----------
Total Assets....................... $1,842,287 $148,962 $ -- $1,991,249
========== ======== ===== ==========

LIABILITIES AND CAPITAL
Total deposits............................... $1,565,185 $124,934 $ -- $1,690,119
Federal funds purchased and securities sold
under agreements to repurchase............. 55,734 -- -- 55,734
Other liabilities............................ 14,168 1,802 -- 15,970
Notes payable................................ 22,250 11,690 -- 33,940
---------- -------- ----- ----------
Total Liabilities.................. 1,657,337 138,426 -- 1,795,763
---------- -------- ----- ----------
Capital Accounts:
Preferred stock............................ -- -- -- --
Common stock............................... 9,852 398 800 10,652
(398)
Surplus...................................... 22,295 1,496 (800) 23,277
286
Undivided profits............................ 151,852 8,645 -- 160,497
Less: Treasury stock......................... -- (112) 112 --
Unrealized gains (losses) of securities
available-for-sale......................... 951 109 -- 1,060
---------- -------- ----- ----------
Total Capital Accounts............. 184,950 10,536 -- 195,486
---------- -------- ----- ----------
Total Liabilities and Capital
Accounts......................... $1,842,287 $148,962 $ -- $1,991,249
========== ======== ===== ==========
</TABLE>

26
<PAGE> 40

PRO FORMA COMBINING INCOME STATEMENT

<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
----------------------------------------------
PRO FORMA
FIRST UNITED FIRST REPUBLIC COMBINED
------------- --------------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest income......................................... $98,194 $9,844 $108,038
Interest expense........................................ 45,335 4,434 49,769
------- ------ --------
Net interest income..................................... 52,859 5,410 58,269
Provision for loan losses............................... 1,435 322 1,757
------- ------ --------
Net interest income after provision for loan losses..... 51,424 5,088 56,512
------- ------ --------
Other income
Service charges on deposit accounts................... 5,217 728 5,945
Trust department income............................... 1,792 -- 1,792
Security gains (losses)............................... 1 47 48
Other operating income................................ 3,385 243 3,628
------- ------ --------
Total other income............................ 10,395 1,018 11,413
------- ------ --------
Other expense
Salaries.............................................. 15,023 2,093 17,116
Pension and other employee benefits................... 4,911 -- 4,911
Net occupancy expense................................. 3,142 664 3,806
Equipment expense..................................... 2,282 -- 2,282
Data processing expense............................... 2,238 -- 2,238
Other operating expenses.............................. 9,305 1,303 10,608
------- ------ --------
Total other expense........................... 36,901 4,060 40,961
------- ------ --------
Income before income taxes.............................. 24,918 2,046 26,964
Income tax expense...................................... 7,360 733 8,093
------- ------ --------
Income from continuing operations....................... $17,558 $1,313 $ 18,871
======= ====== ========
Earnings per share...................................... $ 1.78 $34.29 $ 1.77
======= ====== ========
Weighted average shares outstanding..................... 9,852 38 10,652
======= ====== ========
</TABLE>

27
<PAGE> 41

PRO FORMA COMBINING INCOME STATEMENT

<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
----------------------------------------------
PRO FORMA
FIRST UNITED FIRST REPUBLIC COMBINED
------------- --------------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest income......................................... $92,482 $9,236 $101,718
Interest expense........................................ 43,367 4,144 47,511
------- ------ --------
Net interest income..................................... 49,115 5,092 54,207
Provision for loan losses............................... 305 496 801
------- ------ --------
Net interest income after provision for loan losses..... 48,810 4,596 53,406
------- ------ --------
Other income
Service charges on deposit accounts................... 5,191 583 5,774
Trust department income............................... 1,384 -- 1,384
Security gains (losses)............................... 12 46 58
Other operating income................................ 2,508 247 2,755
------- ------ --------
Total other income............................ 9,095 876 9,971
------- ------ --------
Other expense
Salaries.............................................. 13,619 2,025 15,644
Pension and other employee benefits................... 4,583 -- 4,583
Net occupancy expense................................. 2,975 602 3,577
Equipment expense..................................... 2,129 -- 2,129
Data processing expense............................... 1,451 -- 1,451
Other operating expenses.............................. 9,332 1,431 10,763
------- ------ --------
Total other expense........................... 34,089 4,058 38,147
------- ------ --------
Income before income taxes.............................. 23,816 1,414 25,230
Income tax expense...................................... 6,735 576 7,311
------- ------ --------
Income from continuing operations....................... $17,081 $ 838 $ 17,919
======= ====== ========
Earnings per share...................................... $ 1.73 $22.03 $ 1.68
======= ====== ========
Weighted average shares outstanding..................... 9,846 38 10,646
======= ====== ========
</TABLE>

28
<PAGE> 42

PRO FORMA COMBINING INCOME STATEMENT

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
-------------------------------------------
PRO FORMA
FIRST UNITED FIRST REPUBLIC COMBINED
------------ -------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest income.......................................... $123,947 $12,133 $136,080
Interest expense......................................... 58,365 5,608 63,973
-------- ------- --------
Net interest income...................................... 65,582 6,525 72,107
Provision for loan losses................................ 725 517 1,242
-------- ------- --------
Net interest income after provision for loan losses...... 64,857 6,009 70,866
-------- ------- --------
Other income
Service charges on deposit accounts.................... 6,609 1,289 7,898
Trust department income................................ 2,180 -- 2,180
Security gains (losses)................................ 122 89 211
Other operating income................................. 3,365 228 3,593
-------- ------- --------
Total other income............................. 12,276 1,606 13,882
-------- ------- --------
Other expense
Salaries............................................... 17,302 2,782 20,084
Pension and other employee benefits.................... 5,882 -- 5,882
Net occupancy expense.................................. 4,162 876 5,038
Equipment expense...................................... 2,852 -- 2,852
Data processing expense................................ 2,331 -- 2,331
Other operating expenses............................... 13,142 1,906 15,048
-------- ------- --------
Total other expense............................ 45,671 5,564 51,235
-------- ------- --------
Income before income taxes............................... 31,462 2,051 33,513
Income tax expense....................................... 9,090 697 9,787
-------- ------- --------
Income from continuing operations........................ $ 22,372 $ 1,354 $ 23,726
======== ======= ========
Earnings per share....................................... $ 2.27 $ 35.57 $ 2.23
======== ======= ========
Weighted average shares outstanding...................... 9,846 38 10,646
======== ======= ========
</TABLE>

29
<PAGE> 43

PRO FORMA COMBINING INCOME STATEMENT

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1995
-------------------------------------------
PRO FORMA
FIRST UNITED FIRST REPUBLIC COMBINED
------------ -------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest income.......................................... $108,079 $10,317 $118,396
Interest expense......................................... 50,569 4,433 55,002
-------- ------- --------
Net interest income...................................... 57,510 5,884 63,394
Provision for loan losses................................ 574 379 953
-------- ------- --------
Net interest income after provision for loan losses...... 56,936 5,505 62,441
-------- ------- --------
Other income
Service charges on deposit accounts.................... 5,876 1,308 7,184
Trust department income................................ 1,799 -- 1,799
Security gains (losses)................................ (355) 7 (348)
Other operating income................................. 2,311 165 2,476
-------- ------- --------
Total other income............................. 9,631 1,480 11,111
-------- ------- --------
Other expense
Salaries............................................... 15,228 2,581 17,809
Pension and other employee benefits.................... 4,919 -- 4,919
Net occupancy expense.................................. 3,350 636 3,986
Equipment expense...................................... 1,953 -- 1,953
Data processing expense................................ 1,715 -- 1,715
Other operating expenses............................... 12,793 1,827 14,620
-------- ------- --------
Total other expense............................ 39,958 5,044 45,002
-------- ------- --------
Income before income taxes............................... 26,609 1,941 28,550
Income tax expense....................................... 8,233 614 8,847
-------- ------- --------
Income from continuing operations........................ $ 18,376 $ 1,327 $ 19,703
======== ======= ========
Earnings per share....................................... $ 1.97 $ 35.13 $ 1.94
======== ======= ========
Weighted average shares outstanding...................... 9,338 38 10,138
======== ======= ========
</TABLE>

30
<PAGE> 44

PRO FORMA COMBINING INCOME STATEMENT

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1994
-------------------------------------------
PRO FORMA
FIRST UNITED FIRST REPUBLIC COMBINED
------------ -------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest income....................................... $86,614 $7,295 $93,909
Interest expense...................................... 36,136 2,783 38,919
------- ------ -------
Net interest income................................... 50,478 4,512 54,990
Provision for loan losses............................. 334 185 519
------- ------ -------
Net interest income after provision for loan losses... 50,144 4,327 54,471
------- ------ -------
Other income
Service charges on deposit accounts................. 4,661 1,095 5,756
Trust department income............................. 1,379 -- 1,379
Security gains (losses)............................. 5 (11) (6)
Other operating income.............................. 1,815 179 1,994
------- ------ -------
Total other income.......................... 7,860 1,263 9,123
------- ------ -------
Other expense
Salaries............................................ 13,268 2,177 15,445
Pension and other employee benefits................. 4,271 -- 4,271
Net occupancy expense............................... 2,823 624 3,447
Equipment expense................................... 1,504 -- 1,504
Data processing expense............................. 1,526 -- 1,526
Other operating expenses............................ 10,882 1,516 12,398
------- ------ -------
Total other expense......................... 34,274 4,317 38,591
------- ------ -------
Income before income taxes............................ 23,730 1,273 25,003
Income tax expense.................................... 7,019 372 7,391
------- ------ -------
Income from continuing operations..................... $16,711 $ 901 $17,612
======= ====== =======
Earnings per share.................................... $ 1.79 $23.95 $ 1.74
======= ====== =======
Weighted average shares outstanding................... 9,338 38 10,138
======= ====== =======
</TABLE>

31
<PAGE> 45

NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS

(1) The First United amounts have been restated to reflect the September 3, 1997
pooling-of-interests with Fredonia Bancshares, Inc.

(2) The adjustments to the Pro Forma Combining Financial Statements do not
include direct expenses related to the Republic Merger, which will be
recorded at the time of the Republic Merger. The pro forma data are not
necessarily indicative of the operating results or financial position that
would have occurred had the Republic Merger been consummated at the dates
indicated, nor necessarily indicative of future operating results of
financial position.

(3) Pro forma per share are based on the number of shares of First United Common
Stock that would have been outstanding had the Republic occurred at the
beginning of the earliest period presented.

32
<PAGE> 46

FIRST UNITED BANCSHARES, INC.

GENERAL

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, El Dorado, Arkansas. Between 1981 and 1997, First United acquired twelve
other banks in different cities within Arkansas, Louisiana and Texas. The banks
acquired were the First National Bank of Magnolia, Magnolia, Arkansas; Merchants
and Planters Bank, N.A. of Camden, Camden, Arkansas; City National Bank of Fort
Smith, Fort Smith, Arkansas; Commercial Bank at Alma, Alma, Arkansas; The Bank
of North Arkansas, Melbourne, Arkansas; First United Bank, Stuttgart, Arkansas;
FirstBank, Texarkana, Texas; Citizens Bank & Trust, Carlisle, Arkansas; Hazen
First State Bank, Hazen, Arkansas, First Bank of Arkansas, Brinkley, Arkansas;
City Bank & Trust of Shreveport, Shreveport, Louisiana; and Fredonia State Bank,
Nacogdoches, Texas. On May 16, 1997, the Carlisle, Hazen and Brinkley banks were
merged with and into First United Bank. Each of the banks are wholly-owned by
First United, and, furthermore, are banks organized under the laws of the United
States, Arkansas, Texas, or Louisiana and are regulated by the Office of the
Comptroller of the Currency, the Federal Reserve System, the Arkansas Bank
Department, the Texas Department of Banking, or the Louisiana Office of
Financial Institutions. As of September 30, 1997, First United, on a
consolidated basis, had a total of $931,545,000 of loans outstanding, an
allowance for loan losses of $13,491,000, total deposits of $1,565,185,000 and
total stockholders' equity of $184,950,000. In 1996 First United Trust Company
was chartered as a wholly-owned subsidiary of First United to handle and expand
trust business formerly done by First United's subsidiary banks.

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.

The banking business is highly competitive. The subsidiary banks of First
United compete actively with national and state banks, savings and loan
associations, securities dealers, mortgage bankers, finance companies and
insurance companies.

PENDING ACQUISITION

The Citizens National Bancshares, Inc. On September 15, 1997 First United
entered into an Agreement and Plan of Reorganization with The Citizens National
Bancshares, Inc., a bank holding company headquartered in Hope, Arkansas
("Citizens") that calls for First United to acquire for shares of First United's
Common Stock all of the issued and outstanding shares of Citizens and its two
wholly-owned bank subsidiaries, Citizens National Bank of Hope, Hope, Arkansas
("CNB"), and Peoples Bank & Loan Company, Lewisville, Arkansas ("Peoples"). At
June 30, 1997 Citizens had consolidated assets of approximately $267.5 million
and shareholders' equity of approximately $27.7 million. Upon consummation of
the transaction CNB and Peoples would become wholly-owned subsidiaries of First
United. The total number of shares of First United Common Stock to be issued in
the transaction would be 1,570,000 shares, which represents less than 16 percent
of the total number of shares of First United outstanding as of the date hereof.
The Citizens acquisition, which is subject to the parties entering into a
definitive agreement and to shareholder and regulatory approvals, is expected to
be completed in the first quarter of 1998. There can be no assurance that the
transaction will be consummated. Consummation of the Republic Merger is not
conditioned upon consummation of the Citizens acquisition.

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

33
<PAGE> 47

of 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 or bank holding
company. 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 of sale of property or the provision of any services.

As a registered bank holding company, First United is subject to the
Federal Reserve Board's position that a bank holding company should serve as a
"source of strength" for its bank subsidiaries. In an early appreciation of the
doctrine the Federal Reserve Board announced that failure to assist a troubled
bank subsidiary when its holding company was in a position to do so was an
unsafe and unsound practice and the Federal Reserve Board claimed the authority
to order a bank holding company to capitalize its subsidiary banks.

In 1991, Congress modified the source of strength doctrine by creating a
system of prompt corrective actions under which the federal banking agencies are
required to take certain actions to resolve the problems of depository
institutions based on their level of capitalization. In a bank holding company
organization, an undercapitalized insured depository institution must submit a
capital restoration plan to the appropriate agency which may not accept the plan
unless the company controlling the institution has guaranteed that the
institution will comply with the plan until the institution has been adequately
capitalized on average during each of four consecutive calendar quarters. The
aggregate liability to the guaranteeing companies is the lesser of an amount
equal to 5 percent of the institution's total assets at the time the institution
became undercapitalized, or the amount which is necessary to bring the
institution into compliance with applicable capital standards.

For a significantly undercapitalized institution, the appropriate agency
must prohibit a bank holding company from making any capital distribution
without prior Federal Reserve Board approval. The agency also may require a bank
holding company to divest or liquidate the institution.

First United and its subsidiaries are subject to various federal banking
laws including the Financial Institutions, Reform, Recovery and Enforcement Act
of 1989 ("FIRREA") which, among other things, made substantive changes to the
deposit insurance system. As a part of the reorganization of the deposit
insurance funds, the deposit premiums for insurance of Bank Insurance Fund
members were significantly increased. FIRREA also authorized bank holding
companies to acquire savings and thrift institutions without tandem operation
restrictions. Furthermore, FIRREA expanded the authority of regulatory agencies
to assess severe penalties ranging from $5,000 per day to $1,000,000 per day, on
persons or institutions that the agency finds in violation of a broad range of
activities.

First United and its subsidiaries are also subject to the provisions of the
Federal Deposit Insurance Corporation Improvement Act of 1991, which provided
for industry-wide standards in such areas as real estate lending, further
restrictions on brokered deposits and insider lending, establishment of a
risk-based deposit insurance system, enhanced examinations and audits of banking
institutions, the adoption of a Truth-in-Savings Act, various merger-and-
acquisitions related provisions, and the implementation of legislation on
foreign bank operations in the United States.

The provisions of the Community Reinvestment Act of 1977, as amended, are
applicable to the subsidiaries of First United. Federal Regulators are required
to consider performance under the Community Reinvestment Act before approving an
application to establish a branch or acquire another financial institution. The
Federal Reserve Board has promulgated regulations governing compliance with the
Community Reinvestment Act in Regulation BB. Recent regulatory and statutory
developments show that compliance with the Community Reinvestment Act is subject
to strict scrutiny and is often grounds for denial of an application to federal
regulators. First United's subsidiary banks are all rated "satisfactory" for CRA
purposes.

On January 19, 1989, the Federal Reserve Board issued final guidelines to
implement risk-based capital requirements for bank holding companies. The
guidelines establish a systematic analytical framework that makes regulatory
capital requirements more sensitive to differences in risk profiles among
banking organizations, takes off-balance sheet exposures into account in
assessing capital adequacy, and minimizes

34
<PAGE> 48

disincentives to holding liquid, low-risk assets. The guidelines provided for
phasing in risk-based capital standards through the end of 1992, at which time
the standards became fully effective. First United's year end 1996 Tier 1 ratio
of 16.61% and Total capital ratio of 9.75% exceeds the current minimum
regulatory requirements of 4.00% and 6.00% respectively.

The table below illustrates all of the capital requirements applicable to
First United and its subsidiaries.

REGULATORY COMPARISON OF CAPITAL RATIOS(1)

<TABLE>
<CAPTION>
REGULATORY
SEPTEMBER 30, 1997 FIRST UNITED REQUIREMENTS
------------------ ------------ ------------
<S> <C> <C>
Total Capital/Total Assets.................................. 10.69% 6.00%
Primary Capital/Total Assets................................ 10.69% 5.50%
Total Risk-Based Capital.................................... 17.78% 8.00%
Tier 1 Capital.............................................. 16.53% 4.00%
Leverage Ratio.............................................. 9.44% 3.00%
</TABLE>

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

(1) Excludes unrealized gains and losses on securities available-for-sale.

First United's Subsidiary 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

The Subsidiary 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 Subsidiary Banks to First United
if the amount of adjusted capital, surplus and retained earnings is below
defined regulatory limits. As of December 31, 1996 First United's Subsidiary
Banks had available for payment of dividends without regulatory approval,
approximately $16,508,000 of undistributed earnings plus the net income earned
in 1997. The Subsidiary Banks are also restricted from extending credit or
making loans to or investments in First United and certain other affiliates as
defined in the Act. Furthermore, loans and extensions of credit are subject to
certain other collateral requirements.

OFFICES

First United's executive offices are located in the offices of First
National Bank of El Dorado at Main and Washington Streets, El Dorado, Arkansas
71730.

EMPLOYEES

As of December 31, 1997, First United and its Subsidiary Banks had
approximately 814 full-time equivalent employees.

DESCRIPTION OF FIRST UNITED COMMON STOCK

The following summary of the terms of First United Common Stock does not
purport to be complete and is qualified in its entirety by reference to the 1987
Act and First United's Articles of Incorporation. First United's Articles of
Incorporation authorizes the issuance of 24,000,000 shares of Common Stock,
$1.00 par value. As of , 1998 there were 10,276,772 fully paid and
non-assessable shares of First United Common Stock issued and outstanding.

Each share of First United Common Stock is entitled to one vote on all
matters to be voted on by stockholders, including the right to cumulate votes
for the election of the Board of Directors, and to dividends when and if
declared from time to time by the Board of Directors. There is no right of
preemption associated with the First United Common Stock. Upon liquidation,
each share would be entitled to share pro rata in all of the assets of First
United available for distribution to the holders of Common Stock. The transfer
agent for

35
<PAGE> 49

First United Common Stock is First United Trust Company, N.A., El Dorado,
Arkansas. First United Common Stock is traded on NASDAQ-National Market System
over-the-counter under the symbol of "UNTD."

FIRST REPUBLIC BANCSHARES, INC.

DESCRIPTION OF BUSINESS

Republic is a bank holding company which owns 100% of the common stock of
First Republic Bank, Rayville, Louisiana. Republic Bank owns 91.12% and 90.00%,
respectively, of the outstanding capital stock of First Republic Agricultural
Credit Corporation ("FRAC") and Eagle Premium Assistance Corporation ("EPAC").
Republic Bank, FRAC and EPAC are hereinafter called collectively the "Republic
Subsidiaries" or individually a "Republic Subsidiary". Republic Bank, FRAC and
EPAC are Republic's only subsidiaries. Republic may engage, directly or through
its subsidiaries, in those activities closely related to banking which are
specifically permitted under the Bank Holding Company Act of 1956, as amended.
The subsidiaries grant commercial, installment and real estate loans to
customers principally in North Central, Louisiana. As of September 30, 1997, on
a consolidated basis Republic had a total of $104,925,000 of loans outstanding,
an allowance for loan losses of $1,031,000, total deposits of $124,934,000 and
total stockholders' equity of $10,536,000.

COMPETITION

The banking subsidiary of Republic competes actively with national and
state banks, savings and loan associations, securities dealers, mortgage
bankers, finance companies and insurance companies.

LITIGATION

There is no material pending litigation in which Republic or its
subsidiaries is a party.

OFFICES

Republic's executive offices are located at 107 Glenda Street, Rayville,
Louisiana 71269. First Republic Bank has three (3) branch locations in Monroe,
Louisiana, and one (1) branch location in each of Rayville, Ruston, and West
Monroe, Louisiana.

EMPLOYEES

As of December 31, 1997, Republic and its subsidiaries had 86 employees, 71
of whom are full time, and 15 of whom are part time.

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following discussion and analysis highlights the significant factors
affecting Republic's consolidated financial statements. For a more complete
understanding of the following discussion, reference should be made to
Republic's consolidated financial statements and related notes thereto presented
elsewhere in this Proxy Statement.

BALANCE SHEET ANALYSIS

Financial Condition. The total assets of Republic increased by $20,960,000
or 16.96% between December 31, 1996 and 1995. The increase was due primarily to
growth in the loan portfolio. At September 30, 1997 assets were $148,962,000
compared to the December 31, 1996 level of $144,517,000. Republic receives a
major portion of its income from earning assets which consists of interest
bearing deposits with other banks, federal funds sold, investment securities and
loans. See Tables 1 and 2 for an analysis of the average balances of
interest-earning assets and interest-bearing liabilities for the years ended
December 31, 1996 and 1995.

36
<PAGE> 50

Republic's loan portfolio represents the largest component of the earning
asset base and has the largest impact on income from earning assets. A portion
of the markets in which Republic operates are dependent upon the agribusiness
economic sector. Due to the seasonal nature of agricultural production, the
volume of loans and investment securities fluctuate relative to the agribusiness
cycle.

Inherent in Republic's loan portfolio is credit risk. Republic maintains an
allowance for loan losses which is evaluated for adequacy by management.
Management's methodology, to determine the adequacy of the allowance, considers
reviews of individual loans, recent loan loss experience, current economic
conditions and the risk characteristics of the various categories of loans. See
Tables 5 through 9 for detailed information concerning the loan portfolio and
the allowance for loan losses.

Investment securities are the second largest component of the earning asset
base. The average volume of investment securities has remained relatively stable
during the nine months ended September 30, 1997 and the years ended December 31,
1996 and 1995. See Tables 3 and 4 for details concerning the composition and
maturity ranges of the investment portfolio.

Deposits, the primary source of funding earning assets, increased by
$21,963,000 or 21.11% between December 31, 1995 and December 31, 1996 and
decreased by $1,009,000 or .08% between December 31, 1996 and September 30,
1997. The majority of the increase in deposits for the indicated periods has
occurred in the certificate of deposits category reflecting the increase in
market interest rates for such deposits. See Table 10 for a maturity analysis of
certificates of deposits in excess of $100,000 as of December 31, 1996.

Liquidity and Interest Rate Sensitivity Management. Liquidity is the
ability of an institution to fund the needs of its borrowers, depositors and
creditors. Based on the maturity structure and anticipated loan and deposit
funding requirements, Republic anticipates that its liquidity requirements will
be met in the foreseeable future. Republic's management is of the opinion that
the traditional funding sources of maturing loans and investment securities,
federal funds, the base of core deposits, the borrowing lines of credit will be
adequate to provide liquidity needs. See Tables 4, 6 and 10 for additional
information on certain investment, loan and time deposit maturities.

Capital. The Federal Reserve Board requires banks to maintain capital based
on "risk-adjusted" assets so that categories of assets with potentially higher
risk will require more capital backing than assets with lower risk. In addition,
banks are required to maintain capital to support, on a risk-adjusted basis,
certain off-balance sheet activities such as loan commitments.

At September 30, 1997, Republic's Tier 1 capital and total capital as a
percentage of total risk-adjusted assets exceeded the required minimum levels.
See Table 12 for additional information concerning the Republic's capital
ratios.

EARNINGS ANALYSIS

Net income for the first nine months of 1997 was approximately $1,313,000,
an increase of $475,000 or 56.68% over the same period in 1996. The increase was
due primarily to a $318,000 or 6.25% increase in net interest income and a
$142,000 or 16.27% increase in other operating income. For the years ended
December 31, 1996, 1995, and 1994, net income was approximately $1,354,000,
$1,327,000, and $901,000, respectively. The annualized return on average assets
and return on average equity for the first nine months of 1997 was 1.21% and
17.98%, respectively, compared to .85% and 12.21% for the first nine months of
1996. For the years ended December 31, 1996, 1995, and 1994 the return on
average assets was 1.02%, 1.21%, and 1.01%, respectively, while the return on
average equity was 15.86%, 18.20%, and 14.19%, respectively.

The primary components of total income and expense which affect net income
are net interest income, provision for loan losses, non-interest income,
non-interest expense and the provision for income taxes. Significant factors
affecting these categories are presented below.

Net Interest Income. Net interest income for the first nine months of 1997
was $5,410,000, a 6.25% increase over the same period in 1996. The primary
reason for the increase was an increase of approximately 15.17% in the volume on
average loans during the period. Interest on loans for the nine months ended

37
<PAGE> 51

September 30, 1997 increased by $423,000 or 5.43% compared to the corresponding
period of 1996. As a percentage of total assets at September 30, 1997, loans
totaled 70.44% while investment securities were 18.11%.

For the years ended December 31, 1996, 1995, and 1994, net interest income
was $6,525,000, $5,884,000 and $4,512,000, respectively. The increase during
1996 compared to 1995 was due primarily to the increase in the volume of
interest earning assets. See Tables 1 and 2 for more detailed information
regarding rate and volume factors which affected net interest income during the
three-year period ended December 31, 1996.

Provision for Loan Losses. For the first nine months of 1997 Republic
provided $322,000 for loan losses compared to $496,000 for the comparable period
in 1996. The provision for loan losses was $517,000, $379,000 and $185,000 for
the years ended December 31, 1996, 1995 and 1994, respectively.

Net charge-offs on loans were $609,000 in 1996, $350,000 in 1995 and
$66,000 in 1994. For the nine months ended September 30, 1997, net charge-offs
totaled $350,000. The allowance for loan losses was $1,031,000 or .98% of loans
at September 30, 1997, compared to $1,059,000 or 1.18% at December 31, 1996, and
$1,151,000 or 1.45% at December 31, 1995. See Tables 7, 8 and 9 for more
information regarding loan quality and the allowance for loan losses.

Non-Interest Income. Total non-interest income for the nine months ended
September 30, 1997 and 1996, was $1,018,000 and $876,000, respectively. Total
non-interest income for the year ended December 31, 1996 was $1,606,000, as
compared to $1,480,000 for 1995 and $1,263,000 in 1994.

Non-Interest Expense. Total non-interest expense for the nine months ended
September 30, 1997 and 1996 was $4,045,000 and $4,036,000, respectively.

Total non-interest expense for the year ended December 31, 1996 was
$5,538,000 as compared to $5,027,000 for 1995 and $4,289,000 in 1994.

Provision for Income Taxes. Income tax expense for the nine months ended
September 30, 1997 and 1996 was $733,000 and $576,000, respectively, or
effective tax rates of 35.56% and 40.11%, respectively. Income tax expense for
the years ended December 31, 1996, 1995 and 1994 was $697,000, $614,000 and
$372,000, respectively. Effective tax rates were 33.57%, 31.35%, and 28.59% for
1996, 1995, 1994, respectively. Note 5 of Notes to the Consolidated Financial
Statements provides further details of the applicable income tax expense for
1996, 1995 and 1994.

ACCOUNTING STANDARDS

In June 1996, the Financial Accounting Standards Board issued SFAS No. 125,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities." SFAS No. 125 provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishment of liabilities
based on consistent application of a "financial-components approach" that
focuses on control. The impact of SFAS No. 125 will not be material to
Republic's financial condition or results of operations.

38
<PAGE> 52

STATISTICAL DISCLOSURES

FIRST REPUBLIC BANCSHARES, INC.

STATISTICAL DISCLOSURES

TABLE 1 -- COMPARATIVE AVERAGE BALANCES YIELDS AND RATES
(DOLLARS IN THOUSANDS)

The table below shows the average balances of the assets and liabilities of
First Republic Bancshares, Inc., the interest income expense associated with
those assets and liabilities, and the computed yield or rate based upon the
interest income or expense for each of the last two years.

<TABLE>
<CAPTION>
1996 1995
---------------------------- ----------------------------
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
-------- -------- ------ -------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
ASSETS

Interest-earning assets:
Loans............................... $ 90,447 $10,166 11.24% $ 73,524 $ 8,717 11.86%
Investment securities
Taxable.......................... 24,688 1,510 6.12 18,413 1,155 6.27
Tax-exempt....................... 1,532 79 5.16 3,245 153 4.71
Federal funds sold.................. 4,532 238 5.25 2,911 172 5.91
Interest bearing deposits........... 1,581 84 5.31 703 38 5.41
Other............................... 1,112 56 5.04 992 82 8.27
-------- ------- -------- -------
Total interest-earning
assets.................... $123,892 $12,133 9.79% $ 99,788 $10,317 10.34%
------- -------
Non-interest-earning assets:
Cash and due from banks............. 4,526 3,918
Other assets........................ 6,552 5,181
Allowance for credit losses......... (1,025) (1,060)
-------- --------
Total....................... $133,945 $107,827
======== ========

LIABILITIES

Interest-bearing liabilities
Demand deposits..................... $ 11,594 $ 331 2.85% $ 11,727 $ 326 2.78%
Savings deposits.................... 4,822 131 2.72 4,547 123 2.71
Time deposits....................... 82,217 4,577 5.57 60,736 3,336 5.49
Other borrowed funds................ 5,137 327 6.37 6,804 455 6.69
FHLB advances....................... 4,014 242 6.03 3,266 193 5.91
Other............................... 0 0 0.00 0 0 0.00
-------- ------- -------- -------
Total interest-bearing
liabilities............... $107,784 $ 5,608 5.20% $ 87,080 $ 4,433 5.09%
-------- ------- -------- -------
Non-interest-bearing liabilities
Demand deposits..................... $ 15,306 $ 11,873
Other............................... 2,066 1,219
-------- --------
Total non-interest-bearing
liabilities............... $ 17,372 $ 13,092
-------- --------
Stockholders' equity.................. $ 8,789 $ 7,655
-------- --------
Total....................... $133,945 $107,827
======== ========
Net interest earnings................. $ 6,525 $ 5,884
======= =======
Net yield on interest-earning
assets.............................. 5.27% 5.90%
</TABLE>

Non-accruing loans have been included in the average balances and interest
collected prior to these loans having been placed on non-accrual has been
included in interest income.

39
<PAGE> 53

FIRST REPUBLIC BANCSHARES, INC.

TABLE 2 -- VOLUME AND YIELD/RATE VARIANCE ANALYSIS
(DOLLARS IN THOUSANDS)

The table below shows the change from year to year for each component of
the net interest margin separated into the amount generated by volume changes
and the amount generated by changes in the yield or rate.

<TABLE>
<CAPTION>
1996 COMPARED TO 1995 1995 COMPARED TO 1994
CHANGE DUE TO: CHANGE DUE TO:
-------------------------- --------------------------
YIELD/ YIELD/
VOLUME RATE NET VOLUME RATE NET
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
INTEREST EARNED ON:
Loans.............................. $2,006 $ (557) $1,449 $1,929 $ 762 $2,691
Investment securities
Taxable......................... 394 (39) 355 (93) 378 285
Tax-exempt...................... (81) 7 (74) (130) (6) (136)
Federal funds sold................. 96 (30) 66 64 48 112
Interest bearing deposits.......... 47 (1) 46 5 11 16
Other.............................. 10 (36) (26) 8 46 54
------ ------ ------ ------ ------ ------
Total interest-earning
assets................... $2,472 $ (656) $1,816 $1,783 $1,239 $3,022
====== ====== ====== ====== ====== ======
INTEREST PAID ON:
Interest-bearing demand deposits... $ (4) $ 9 $ 5 $ 22 $ 2 $ 24
Savings deposits................... 7 1 8 (3) 0 (3)
Time deposits...................... 1,180 61 1,241 489 1,028 1,517
Other borrowed funds............... (111) (17) (128) 29 92 121
FHLB advances...................... 44 5 49 (20) 11 (9)
Other.............................. 0 0 0 0 0 0
------ ------ ------ ------ ------ ------
Total interest-bearing
liabilities.............. $1,116 $ 59 $1,175 $ 517 $1,133 $1,650
====== ====== ====== ====== ====== ======
</TABLE>

The change in interest due to both volume and yield/rate has been allocated
to change due to volume and change due to yield/rate in proportion to the
absolute value of the change of each. The balances of non-accrual loans and
related income recognized have been included for purposes of these computations.

40
<PAGE> 54

FIRST REPUBLIC BANCSHARES, INC.

TABLE 3 -- INVESTMENT PORTFOLIO
(DOLLARS IN THOUSANDS)

The table below indicates carrying values of investment securities by type
at year-end for each of the last two years.

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1995
------- -------
<S> <C> <C>
HELD-TO-MATURITY
U.S. Treasury & U.S. Government Agency Obligations.......... $ 0 $ 0
Obligations of states and political subdivisions............ 0 0
Mortgage-backed securities and collateralized mortgage
obligations............................................... 0 0
Other securities............................................ 0 0
------- -------
Total held-to-maturity investment securities...... $ 0 $ 0
======= =======
AVAILABLE-FOR-SALE
U.S. Treasury & U.S. Government Agency Obligations.......... $23,820 $ 9,027
Obligations of states and political subdivisions............ 1,207 2,357
Mortgage-backed securities and collateralized mortgage
obligations............................................... 9,594 11,407
Other securities............................................ 1,147 1,079
------- -------
Total available-for-sale investment securities.... $35,768 $23,870
======= =======
</TABLE>

Management has elected to classify all securities purchased as
available-for-sale, therefore, no securities are classified as held-to-maturity.

41
<PAGE> 55

FIRST REPUBLIC BANCSHARES, INC.

TABLE 4 -- MATURITY DISTRIBUTIONS AND YIELDS OF INVESTMENT PORTFOLIO
(DOLLARS IN THOUSANDS)

The following table details the maturities of investment securities at
December 31, 1996 and the weighted average yield for each range of maturities.

<TABLE>
<CAPTION>
MATURING
--------------------------------------------------------------------------------------
AFTER ONE AFTER FIVE AFTER
WITHIN BUT WITHIN BUT WITHIN TEN
ONE YEAR YIELD FIVE YEARS YIELD TEN YEARS YIELD TOTAL YEARS YIELD
-------- ----- ---------- ----- ---------- ----- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HELD-TO-MATURITY
U.S. Treasury and U.S. Government
Agencies........................ $ 0 0% $ 0 0% $ 0 0% $ 0 0% $ 0
Obligations of states and
political subdivisions.......... 0 0% 0 0% 0 0% 0 0% 0
Mortgage-backed securities and
collateralized mortgage......... 0 0% 0 0% 0 0% 0 0% 0
Other securities.................. 0 0 0 0 0
------- ------- ------ ------- -------
Total held-to-maturity
investment securities... $ 0 $ 0 $ 0 $ 0 $ 0
======= ======= ====== ======= =======
AVAILABLE-FOR-SALE
U.S. Treasury and U.S. Government
Agencies........................ $10,005 5.33% $12,815 6.27% $1,000 7.00% $ 0 0.00% $23,820
Obligations of states and
political subdivisions.......... 0 0.00% 94 6.01% 331 4.68% 782 5.32% 1,207
Mortgage-backed securities and
collateralized mortgage......... 0 0.00% 2,256 6.54% 1,459 6.72% 5,879 6.77% 9,594
Other securities.................. 0 0.00% 0 0.00% 0 0.00% 1,147 4.86% 1,147
------- ------- ------ ------- -------
Total available-for-sale
investment securities... $10,005 $15,165 $2,790 $ 7,808 $35,768
======= ======= ====== ======= =======
</TABLE>

42
<PAGE> 56

FIRST REPUBLIC BANCSHARES, INC.

TABLE 5 -- COMPOSITION OF THE LOAN PORTFOLIO
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1996 1995
------- -------
<S> <C> <C>
LOANS HELD FOR INVESTMENT
Commercial and real estate.................................. $77,990 $67,389
Installment................................................. 10,992 11,761
Credit cards................................................ 0 0
Overdrafts.................................................. 26 63
Student loans............................................... 0 0
------- -------
Total loans held for investment................... $89,008 $79,213
======= =======
LOANS HELD FOR SALE
Commercial and real estate.................................. $ 1,118 $ 428
======= =======
</TABLE>

TABLE 6 -- LOAN MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATES
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
MATURING
--------------------------------------------
WITHIN ONE TO AFTER
ONE YEAR FIVE YEARS FIVE YEARS TOTAL
-------- ---------- ---------- -------
<S> <C> <C> <C> <C>
Commercial and Real Estate............................. $36,760 $29,492 $11,738 $77,990
Consumer............................................... 4,589 6,332 97 11,018
------- ------- ------- -------
Total Loans.................................. $41,349 $35,824 $11,835 $89,008
======= ======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
MATURING
-----------------
ONE TO AFTER
FIVE FIVE
YEARS YEARS
------- -------
<S> <C> <C>
Above loans are due after one year which have:
Predetermined interest rates.............................. $28,568 $ 6,098
Floating interest rates................................... 7,256 5,737
------- -------
$35,824 $11,835
======= =======
</TABLE>

43
<PAGE> 57

FIRST REPUBLIC BANCSHARES, INC.

TABLE 7 -- NON-PERFORMING LOANS AND PAST DUE LOANS
(DOLLARS IN THOUSANDS)

The table below shows Republic's non-performing loans and past due loans at
the end of each of the last two years.

<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1996 1995
------ ------
<S> <C> <C>
Loans accounted for on a non-accrual basis.................. $ 724 $1,342
Restructured loans.......................................... 405 450
------ ------
Non-performing loans...................................... $1,129 $1,792
====== ======
Accruing loans past 90 days or more......................... $ 923 $ 275
====== ======
</TABLE>

If the above loans for December 31, 1996 and 1995 were not placed on
non-accrual, interest income would have increased by $54,000 and $72,000,
respectively.

At December 31, 1996, Republic had concentrations exceeding 10% of total
loans to finance agricultural related activities. The total amount of these
loans amounted to $15,358,000 at December 31, 1996.

44
<PAGE> 58

FIRST REPUBLIC BANCSHARES, INC.

TABLE 8 -- ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
(DOLLARS IN THOUSANDS)

The table below summarizes Republic's loan loss experience for each of the
last two years.

<TABLE>
<CAPTION>
DECEMBER 31,
1995
--------------------
1996 1995
------- -------
<S> <C> <C>
Amount of loan loss reserve at beginning of period.......... $ 1,151 $ 1,122
------- -------
Loans charged off:
Commercial and real estate................................ $ 437 $ 297
Consumer.................................................. 347 109
------- -------
Total charge-offs................................. $ 784 $ 406
------- -------
Recoveries of loans previously charged off:
Commercial and real estate................................ $ 102 $ 24
Consumer.................................................. 73 32
------- -------
Total recoveries.................................. $ 175 $ 56
------- -------
Net charge-offs............................................. $ 609 $ 350
------- -------
Additions to the allowance charged to operating
expense(1)................................................ $ 517 $ 379
------- -------
Amount of loan loss reserve at end of period................ $ 1,059 $ 1,151
======= =======
Percentage of net charge-offs during period to average loans
outstanding during the period............................. 0.67% 0.48%
======= =======
Average outstanding loans (From Table 1).................... $90,447 $73,524
======= =======
</TABLE>

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

(1) The amount charged to operations and the related balance in the allowance
for loan losses is based upon periodic evaluations of the loan portfolio by
management. These evaluations consider several factors including, but not
limited to, general economic conditions, loan portfolio composition, prior
loan loss experience, and management's review of individual loans.

45
<PAGE> 59

FIRST REPUBLIC BANCSHARES, INC.

TABLE 9 -- ALLOCATION OF THE ALLOWANCE FOR LOANS LOSSES
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------
% LOANS % LOANS
IN EACH IN EACH
1996 CATEGORY 1995 CATEGORY
------ -------- ------ --------
<S> <C> <C> <C> <C>
Commercial and real estate............................ $ 609 87.62% $ 473 85.07%
Consumer.............................................. 102 12.38% 168 14.93%
Unallocated........................................... 348 510
------ ------
$1,059 $1,151
====== ======
</TABLE>

TABLE 10 -- TIME DEPOSITS OF $100,000 OR MORE
(DOLLARS IN THOUSANDS)

The table below shows maturities on outstanding time deposits of $100,000
or more at December 31, 1996:

<TABLE>
<S> <C>
3 months or less............................................ $ 7,228
Over 3 months through 6 months.............................. 6,420
Over 6 months through 12 months............................. 4,746
Over 12 months.............................................. 2,744
-------
$21,138
=======
</TABLE>

TABLE 11 -- RETURN ON EQUITY AND ASSETS

The following table shows consolidated operating and equity ratios of
Republic for each of the last two years.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------
1996 1995
----- -----
<S> <C> <C>
Return on assets............................................ 0.95% 1.09%
Return on equity............................................ 14.79% 16.12%
Dividend payout ratio....................................... 27.62% 27.88%
Equity to assets ratio...................................... 6.34% 6.66%
</TABLE>

TABLE 12 -- COMPARISON OF CAPITAL RATIOS WITH REGULATORY REQUIREMENTS

REGULATORY COMPARISON OF CAPITAL RATIOS(1)

<TABLE>
<CAPTION>
FIRST REPUBLIC REGULATORY
SEPTEMBER 30, 1997 BANCSHARES, INC REQUIREMENTS
- ------------------ ---------------- ------------
<S> <C> <C>
Total Capital/Total Assets.................................. 7.83% 6.00%
Primary Capital/Total Assets................................ 7.83% 5.50%
Total Risk-Based Capital.................................... 10.97% 8.00%
Tier 1 Capital.............................................. 9.99% 4.00%
Leverage Ratio.............................................. 7.13% 4.00%
</TABLE>

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

(1) Excludes unrealized gains and losses on securities available for sale.

46
<PAGE> 60

SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS OF REPUBLIC

All persons who as of the Republic Record Date owned of record or
beneficially more than five (5%) of the Republic common stock and the number of
shares owned beneficially by each of them are reflected in the following table:

<TABLE>
<CAPTION>
SHARES OF REPUBLIC
COMMON STOCK OWNED
BENEFICIALLY AS OF
NAME AND ADDRESS OF , 1998
BENEFICIAL OWNER AND PERCENT OF CLASS
------------------- --------------------
<S> <C> <C>
C. S. Aycock, Jr............................................ 8,864(1) 23.00%
P. O. Box 269
Rayville, LA 71260
Dallas Thomason............................................. 6,079(2) 15.77%
P. O. Box 56
Rayville, LA 71269
G. W. Bolton, Jr............................................ 2,418 6.27%
P. O. Box 857
Rayville, LA 71269
David Dallas Thomason....................................... 2,153(3) 5.59%
312 Speed
Monroe, LA 71201
</TABLE>

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

(1) These shares include 8,764 shares owned of record by S & S Aycock Limited
Partnership.

(2) These shares include 2,213 shares owned of record by the Elbert Dallas
Thomason and Sarah Aycock Thomason Irrevocable Inter Vivos Trust and 1,084
shares owned of record by Dallas Thomason & Sons Cotton, Inc.

(3) These shares include 2,053 shares of record owned by the David Dallas Thomas
Irrevocable Intervivos Trust.

DIRECTORS AND EXECUTIVE OFFICERS

The Board of Directors of Republic will be dissolved and positions held by
executive officers of Republic will no longer exist upon the consummation of the
Republic Merger. At this time none of the directors or

47
<PAGE> 61

executive officers of Republic are expected to be on the Board of Directors of
First United after consummation of the Republic Merger. The directors and
executive officers of Republic are set forth below:

DIRECTORS AND EXECUTIVE OFFICERS OF REPUBLIC

<TABLE>
<CAPTION>
SHARES OF REPUBLIC
COMMON STOCK OWNED
BENEFICIALLY AS OF
EXECUTIVE OFFICER POSITION , 1998 AND
NAME AND DIRECTORSHIP PERCENT OF CLASS
---- ----------------------------------- --------------------------
<S> <C> <C> <C>
George W. Bolton, Jr.................... Director and Chairman of the Board,
President of Republic 2,418 6.27%
C. S. Aycock, Jr........................ Director 8,864 23.00%
Dallas Thomason......................... Director 6,079 15.77%
John Hoychick, Jr....................... Director 199 *
Guy C. Pardue........................... Director 1,757 4.56%
Terry B. Ware........................... Director 1,902 4.94%
Henry A. Logue.......................... President & CEO of First Republic
Bank, Director 1,200 3.11%
O. G. Morris............................ Director 167 *
Francis V. Jordan, II................... Director 741 *
David Thomason.......................... Director 2,153 5.59%
William M. Crawford..................... Executive Vice President of First
Republic Bank 517 *
Timmie R. Thames........................ Executive Vice President of First
Republic Bank 0
J. Bill Tubre........................... President, Western Division, First
Republic Bank 0
All Directors and Executive Officers as
a group (13 persons).................. 25,997 67.46%
</TABLE>

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

* Percentage of shares of Republic common stock held is less than one percent
(1%) of the issued and outstanding shares of Republic.

MARKET PRICES AND DIVIDENDS OF REPUBLIC STOCK

Republic has one class of common stock issued and outstanding. As of
December 31, 1997, Republic had 1,000,000 shares of authorized common stock,
$10.00 par value, of which 38,287 shares were outstanding and 1,495 shares were
held in treasury. Currently, there are approximately stockholders of
record of the common stock of Republic.

Republic common stock is not traded on any exchange, and there is no
established public trading market for the stock. There are no bid or asked
prices available for Republic common stock. There is, however, very limited and
sporadic trading of Republic common stock in its local area. Based on the
limited information available to management, sales were effected during the last
two fiscal years at $130.00 per share, but there can be no assurance that such
trades were effected on an arm's length basis.

For each of fiscal 1995, 1996 and 1997, Republic paid annual dividends of
$9.75, $9.75 and $13.67 per share, respectively.

48
<PAGE> 62

LEGAL MATTERS AND EXPERTS

LEGAL OPINIONS

The legality of the First United Common Stock to be issued after the
Republic Merger has been consummated by and between First United and Republic
will be passed upon for First United by Mitchell, Williams, Selig, Gates &
Woodyard, P.L.L.C., 320 West Capitol Avenue, Suite 1000, Little Rock, Arkansas
72201. Certain tax matters relating to the Republic Merger will be passed upon
by Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., 201 St.
Charles Avenue, Suite 5100, New Orleans, Louisiana 70170-5100.

EXPERTS

The consolidated financial statements of First United and the supplemental
post-pooled financial statements of First United as of December 31, 1996 and
1995 and for each of the years in the three-year period ended December 31, 1996
incorporated by reference in this Proxy Statement have been audited by Arthur
Andersen LLP, independent public accountants as set forth in their reports. The
financial statements referred to above have been incorporated by reference
herein in reliance upon the authority of said firm as an expert in accounting
and auditing in giving said reports.

The consolidated financial statements of First Republic Bancshares, Inc. as
of December 31, 1995 and 1996 and for each of the years in the three year period
ended December 31, 1996 included in this Registration Statement have been
included herein in reliance upon the report of Frazer, Minchew, Robinson,
Gardner and Langston, CPAs, independent certified public accountants, given upon
their authority as experts in accounting and auditing.

GENERAL

As of the date of this Proxy Statement, the board of directors of First
United or Republic does not intend to present, and has not been informed that
another person intends to present, any matter for action at the special meeting
of stockholders other than as discussed in this Proxy Statement. If any other
matters properly come before the meeting, it is intended that the holders of the
proxies will act in accordance with their best judgment.

49
<PAGE> 63

INDEX TO REPUBLIC CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INDEPENDENT AUDITORS' REPORT ON THE
CONSOLIDATED FINANCIAL STATEMENTS......................... F-2

CONSOLIDATED FINANCIAL STATEMENTS -- DECEMBER 31, 1996 AND
1995

Consolidated balance sheets -- December 31, 1996 and
1995................................................... F-3
Consolidated statements of income -- years ended December
31, 1996, 1995 and 1994................................ F-4
Consolidated statements of changes in stockholders'
equity -- years ended December 31, 1996, 1995 and
1994................................................... F-6
Consolidated statements of cash flows -- years ended
December 31, 1996, 1995 and 1994....................... F-7
Notes to consolidated financial statements................ F-8

ACCOUNTANTS' COMPILATION REPORT............................. F-22

CONSOLIDATED COMPILED FINANCIAL STATEMENTS -- SEPTEMBER 30,
1997 AND 1996

Consolidated balance sheets -- September 30, 1997
(Unaudited) and December 31, 1996...................... F-23
Consolidated statements of income -- for the nine months
ended September 30, 1997 and 1996 (Unaudited).......... F-24
Consolidated statements of changes in stockholders' equity
for the nine months ended September 30, 1997
(Unaudited)............................................ F-25
Consolidated statements of cash flows -- for the nine
months ended September 30, 1997 and 1996 (Unaudited)... F-26
</TABLE>

F-1
<PAGE> 64

INDEPENDENT AUDITORS' REPORT

To the Board of Directors
First Republic Bancshares, Inc.
and Subsidiaries
Rayville, Louisiana

We have audited the accompanying consolidated balance sheets of First
Republic Bancshares, Inc. and Subsidiaries as of December 31, 1996 and 1995, and
the related consolidated statements of income, changes in stockholders' equity,
and cash flows for each of the years in the three-year period ended December 31,
1996. 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. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
First Republic Bancshares, Inc. and its Subsidiaries as of December 31, 1996 and
1995, and the consolidated results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 1996, in
conformity with generally accepted accounting principles.

February 14, 1997

F-2
<PAGE> 65

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
(DOLLARS IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
CASH AND DUE FROM BANKS..................................... $ 8,370 $ 7,001
-------- --------
INTEREST-BEARING DEPOSITS IN BANKS.......................... $ 2,074 $ 1,140
-------- --------
INVESTMENT SECURITIES (Note 2)
Available for sale........................................ $ 35,768 $ 23,870
-------- --------
FEDERAL FUNDS SOLD.......................................... $ 3,250 $ 7,125
-------- --------
TRADING ACCOUNT SECURITIES.................................. $ 0 $ 0
-------- --------
LOANS AND DISCOUNTS (Notes 4 & 9)
Loans held for investment................................. $ 89,008 $ 79,213
Loans held for sale....................................... 1,118 428
Less: Unearned interest................................. (66) (73)
Unearned fees...................................... (10)
Allowance for credit losses (Note 10).............. (1,059) (1,151)
-------- --------
$ 89,001 $ 78,407
-------- --------
BANK PREMISES AND EQUIPMENT -- NET (Note 3)................. $ 3,337 $ 3,318
-------- --------
OTHER ASSETS
Accrued interest
Loans................................................... $ 1,256 $ 1,430
Investments............................................. 355 230
Deferred income taxes (Note 5)............................ 46 61
Other real estate......................................... 83 136
Other assets.............................................. 595 427
Goodwill -- net (Note 17)................................. 382 412
-------- --------
$ 2,717 $ 2,696
-------- --------
TOTAL ASSETS........................................ $144,517 $123,557
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS (Note 12)
Demand.................................................... $ 20,658 $ 15,410
NOW accounts.............................................. 14,928 12,140
Savings................................................... 4,933 4,835
Time certificates -- $100,000 and over.................... 21,138 20,270
Other time deposits....................................... 64,286 51,325
-------- --------
$125,943 $103,980
-------- --------
OTHER LIABILITIES
Accrued interest
Time deposits........................................... $ 688 $ 698
Other borrowed funds.................................... 40 48
Other liabilities......................................... 46 159
Dividends payable......................................... 383 381
Other borrowed funds (Note 11)............................ 6,994 8,807
Subordinated debentures payable (Note 18)................. 1,000 1,000
-------- --------
$ 9,151 $ 11,093
-------- --------
MINORITY INTEREST........................................... $ 266 $ 251
-------- --------
COMMITMENTS AND CONTINGENT LIABILITIES (Notes 8 & 14)
STOCKHOLDERS' EQUITY
Capital stock -- 1,000,000 shares authorized; 39,782
shares issued; 38,287 shares 1996, 38,038 shares 1995
outstanding; $10 par value (Note 16).................... $ 398 $ 398
Surplus................................................... 1,496 1,496
Retained earnings......................................... 7,332 6,352
Net unrealized gain on securities available for
sale -- net of tax of $22 in 1995 and $61 in 1995....... 43 118
-------- --------
$ 9,269 $ 8,364
Less: Treasury stock 1,495 shares 1996, 1,744 shares
1995 -- at cost......................................... (112) (131)
-------- --------
$ 9,157 $ 8,233
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.......... $144,517 $123,557
======== ========
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of this
statement.

F-3
<PAGE> 66

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1996 1995 1994
------- ------- ------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans................................ $10,166 $ 8,717 $6,026
Interest on investment securities
U.S. Government Obligations............................ 898 344 119
Mortgaged backed securities............................ 612 775 751
State and municipal securities......................... 79 153 289
Interest on federal funds sold............................ 238 172 60
Interest on deposits in banks............................. 84 38 22
Other interest and dividend income........................ 56 118 28
------- ------- ------
Total Interest Income............................. $12,133 $10,317 $7,295
------- ------- ------
INTEREST EXPENSE
Interest on deposits...................................... $ 5,039 $ 3,785 $2,247
Interest on other borrowed funds.......................... 569 648 536
------- ------- ------
Total Interest Expense............................ $ 5,608 $ 4,433 $2,783
------- ------- ------
NET INTEREST INCOME......................................... $ 6,525 $ 5,884 $4,512
PROVISION FOR LOAN LOSSES................................... 517 379 185
------- ------- ------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES............................................... $ 6,008 $ 5,505 $4,327
------- ------- ------
OTHER INCOME
Service charges, fees and commissions..................... $ 1,289 $ 1,308 $1,095
Securities gains (losses)................................. 91 (17) 7
Securities gains (losses) -- trading...................... (2) 24 (18)
Other..................................................... 228 165 179
------- ------- ------
Total other operating income...................... $ 1,606 $ 1,480 $1,263
------- ------- ------
OTHER EXPENSES
Salaries and employee benefits............................ $ 2,782 $ 2,581 $2,177
Occupancy expense -- net.................................. 876 635 624
Other operating expenses.................................. 1,880 1,811 1,488
------- ------- ------
Total other operating expenses.................... $ 5,538 $ 5,027 $4,289
------- ------- ------
INCOME BEFORE INCOME TAXES.................................. $ 2,076 $ 1,958 $1,301
------- ------- ------
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of this
statement.

F-4
<PAGE> 67

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
INCOME BEFORE INCOME TAXES (brought forward)................ $2,076 $1,958 $1,301
------ ------ ------
INCOME TAXES (Note 5)
Current................................................... $ 643 $ 601 $ 392
Deferred.................................................. 54 13 (20)
------ ------ ------
$ 697 $ 614 $ 372
------ ------ ------
INCOME BEFORE DEDUCTION OF MINORITY INTEREST................ $1,379 $1,344 $ 929
Minority interest......................................... 25 17 28
------ ------ ------
NET INCOME.................................................. $1,354 $1,327 $ 901
====== ====== ======
EARNINGS PER SHARE (Note 7)................................. $35.57 $35.13 $23.95
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of this
statement.

F-5
<PAGE> 68

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
NET
UNREALIZED
OUTSTANDING GAIN (LOSS) ON
CAPITAL AVAILABLE
-------------- UNDIVIDED FOR SALE TREASURY
SHARES STOCK SURPLUS PROFITS SECURITIES STOCK TOTAL
------ ----- ------- --------- -------------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE -- DECEMBER 31, 1993........ 37,540 $398 $1,496 $4,834 $ 0 $(169) $6,559
Net change in unrealized gain
(loss) on securities available
for sale -- net of taxes of
$(307)......................... (596) (596)
Stock compensation plan (Note
17)............................ 249 19 19
Dividend declared ($9.00 per
share)......................... (340) (340)
Net income (loss)................. 901 901
------ ---- ------ ------ ----- ----- ------
BALANCE -- DECEMBER 31, 1994........ 37,789 $398 $1,496 $5,395 $(596) $(150) $6,543
Net change in unrealized gain
(loss) on securities available
for sale -- net of taxes of
$(368)......................... 714 714
Stock compensation plan (Note
17)............................ 249 19 19
Dividend declared ($9.75 per
share)......................... (370) (370)
Net income (loss)................. 1,327 1,327
------ ---- ------ ------ ----- ----- ------
BALANCE -- DECEMBER 31, 1995........ 38,038 $398 $1,496 $6,352 $ 118 $(131) $8,233
Net change in unrealized gain
(loss) on securities available
for sale -- net of taxes of
$39............................ (75) (75)
Stock compensation plan (Note
17)............................ 249 19 19
Dividend declared ($9.75 per
share)......................... (374) (374)
Net income (loss)................. 1,354 1,354
------ ---- ------ ------ ----- ----- ------
BALANCE -- DECEMBER 31, 1996........ 38,287 $398 $1,496 $7,332 $ 43 $(112) $9,157
====== ==== ====== ====== ===== ===== ======
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of this
statement.

F-6
<PAGE> 69

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)......................................... $ 1,354 $ 1,327 $ 901
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses............................... 517 379 185
Write-down and losses on other real estate.............. 38 14 3
Gain on sale of other real estate....................... (27) (17)
Gain on sale of equipment............................... (4)
Provision for depreciation and amortization............. 409 300 214
Stock compensation plan................................. 19 19 19
Amortization of investment security premiums -- net of
accretion.............................................. 70 47 90
Realized investment security (gains) losses............. (91) 17 (7)
Deferred income taxes................................... 53 13 (20)
(Increase) Decrease in interest receivable.............. 49 (402) (341)
(Increase) Decrease in other assets..................... (168) (110) 172
Increase (Decrease) in interest payable................. (19) 402 114
Increase (Decrease) in other liabilities................ (112) (22) 34
Minority interest....................................... 25 17 28
Other................................................... (11)
-------- -------- --------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES............ $ 2,144 $ 1,970 $ 1,364
-------- -------- --------
INVESTING ACTIVITIES
Proceeds from sale of investment securities............... $ 15,816 $ 10,065 $ 25,170
Purchases of investment securities........................ (27,805) (10,046) (19,176)
(Increase) Decrease in loans.............................. (11,307) (21,072) (18,124)
Purchases of bank premises and equipment.................. (399) (591) (782)
Sale of equipment......................................... 13
Sale of loans............................................. 1,151
Sale of other real estate................................. 36 43 166
Recovery of charge-offs................................... 174 56 90
(Increase) Decrease in federal funds sold................. 3,875 (2,200) (2,225)
(Increase) Decrease in interest bearing deposits.......... (934) (864) 1,037
Other assets.............................................. (203)
Purchase goodwill......................................... (88)
-------- -------- --------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES............ $(20,544) $(24,799) $(12,781)
-------- -------- --------
FINANCING ACTIVITIES
Issuance of stock -- minority interest.................... $ $ 55 $ 15
Net increase (decrease) in deposit accounts............... 21,963 20,713 10,920
Acquisition of minority interest and dividends paid....... (381) (348) (342)
Proceeds from other borrowed funds........................ 1,544 11,034 10,560
Principal payments -- other borrowed funds................ (3,357) (9,628) (8,661)
Issuance of subordinated debentures....................... 1,000
Other liabilities......................................... (26)
-------- -------- --------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES............ $ 19,769 $ 21,800 $ 13,492
-------- -------- --------
INCREASE (DECREASE) IN CASH AND DUE FROM BANKS.............. $ 1,369 $ (1,029) $ 2,075
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR................ 7,001 8,030 5,955
-------- -------- --------
CASH AND DUE FROM BANKS AT END OF YEAR...................... $ 8,370 $ 7,001 $ 8,030
======== ======== ========
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of this
statement.

F-7
<PAGE> 70

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ACCOUNTING METHOD: First Republic Bancshares, Inc. and its subsidiaries use
the accrual method of accounting for both financial statement and income tax
purposes.

PRINCIPLES OF CONSOLIDATION: These financial statements present the
consolidated position of First Republic Bancshares, Inc. and its subsidiaries,
First Republic Bank, First Republic Agricultural Credit Corporation and Eagle
Premium Assistance Corporation.

As of December 31, 1996 and 1995, First Republic Bancshares, Inc. owned 100
percent, respectively, of the outstanding stock of First Republic Bank.

As of December 31, 1996 and 1995, First Republic Bank owned 91.12 percent,
respectively, of the outstanding stock of First Republic Agricultural Credit
Corporation.

As of December 31, 1996 and 1995, First Republic Bank owned 90.0 percent,
respectively, of the outstanding stock of Eagle Premium Assistance Corporation.

For purposes of these financial statements, intercompany transactions have
been eliminated and the interest of the minority shareholders in the equity and
the net income of the subsidiary companies are identified separately on both the
consolidated balance sheets and the consolidated statements of income.

NATURE OF OPERATIONS: First Republic Bancshares, Inc. operates as a
one-bank holding company organized under the laws of Louisiana and the Office of
Financial Institutions of the State of Louisiana. The Holding Company is subject
to regulation of the Office of Financial Institutions of the State of Louisiana
and the Federal Reserve Bank of Dallas, Texas.

First Republic Bank operates under a state bank charter and provides full
banking services. As a state bank, the Bank is subject to regulation of the
Office of Financial Institutions of the State of Louisiana and the Federal
Deposit Insurance Corporation. The area served by First Republic Bank is the
north central region of Louisiana and services are provided at six locations
within this region.

The Bank also owns the majority shares of two subsidiary companies, First
Republic Agricultural Credit Corporation and Eagle Premium Assistance
Corporation, which both are issued licenses by the Office of Financial
Institutions of the State of Louisiana and are regulated by this same office.
First Republic Agricultural Credit Corporation provides lending services for
agricultural related loans for Northeast Louisiana. Eagle Premium Assistance
Corporation provides financing of insurance premiums for insurance agencies
located in Louisiana, Arkansas and Mississippi.

ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure and contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

INVESTMENT SECURITIES: The Bank's investments in securities are classified
in two categories and accounted for as follows:

Trading Securities: Bonds, notes and debentures which are purchased
for the purpose of trading are classified in this account when purchased.
Unrealized gains and losses and realized gains and losses on trading
securities are included in other income.

Available for Sale: All other bonds, notes, debentures and equity
securities purchased are classified into this account. Unrealized holding
gains and losses, net of tax, on securities available for sale are

F-8
<PAGE> 71

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

reported as a net amount in a separate component of shareholders' equity
until realized. Realized gains and losses are determined using the
specific-identification method and are included in other income.

BANK PREMISES AND EQUIPMENT: Land is stated at cost and bank premises and
equipment are stated at cost less accumulated depreciation. Depreciation is
computed on the straight-line method over the estimated useful lives of the
assets. Maintenance and repairs are charged to expense as incurred and renewals
and betterments are capitalized. When assets are sold or otherwise disposed of,
the original cost of the asset and the related accumulated depreciation are
removed from the accounts, with the resulting gain or loss being recognized in
current income.

LOANS AND ALLOWANCE FOR CREDIT LOSSES: Loans are stated at the amount of
unpaid principal, reduced by unearned discount, unearned fees and allowance for
credit losses. Unearned discounts on installment loans are recognized as income
under the "Rule of 78s" as accrued. Interest on other loans is calculated by
using simple interest method on daily balances of principal amount outstanding.
The allowance for credit losses is established through a provision for credit
losses charged to expenses. Loans are charged against the allowance for credit
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 evaluation of the collectibility of loans and prior credit loss experience.
Accrual of interest on loans is discontinued when management believes that the
borrowers' financial condition is such that collection of interest is doubtful.

INCOME TAXES: For federal income tax purposes, the taxable incomes of First
Republic Bank, First Republic Agricultural Credit Corporation and Eagle Premium
Assistance Corporation are included in the consolidated income tax return of
First Republic Bancshares, Inc. Taxes or benefits have been allocated based on
the amount that would be associated with the respective entity if it were to
file a separate income tax return. Income tax effects of consolidation are thus
treated in such a manner as to preserve the appropriate minority interest in the
equity of the subsidiary companies.

OTHER REAL ESTATE: Other real estate, acquired through partial or total
satisfaction of loans, is carried at the lower of cost or fair market value. At
the date of acquisition, losses are charged to the allowance for credit losses.
Subsequent write downs to market value are charged to current expenses.

CASH AND CASH EQUIVALENTS: For purposes of presentation in the consolidated
statements of cash flows, cash and cash equivalents are defined as those amounts
included in the balance sheet caption "Cash and Due From Banks".

RECLASSIFICATION: Certain amounts have been reclassified in the 1995 and
1994 financial statements to conform with the 1996 presentation.

LOANS HELD FOR SALE: Loans held for sell are recorded at the lower of cost
or market. The market value of the loans are determined from commitment prices
under contractual agreements. The Bank also receives certain fees for release of
servicing and for servicing loans.

GOODWILL: Goodwill is stated at the purchased cost less accumulated
amortization. Amortization computed on the straight-line method over an
estimated period of 15 years. Amortization expense for 1996, 1995 and 1994 was
$29,000, $29,000 and $5,000, respectively.

F-9
<PAGE> 72

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FINANCIAL INSTRUMENTS: The Bank accounts for various financial instruments
to which it is a party in the following manner --

Off-Balance-Sheet Instruments

In the ordinary course of business the Bank has entered into off
balance sheet financial instruments consisting of commitments to extend
credit and standby letters of credit. Such financial instruments are
recorded in the financial statements when they are funded or related fees
are incurred or received.

Fair Values of Financial Instruments

The following methods and assumptions were used by the Bank in
estimating fair values of financial instruments as disclosed herein:

Cash and Cash Equivalents -- The carrying amounts of cash and
short-term instruments approximate their fair value.

Trading Securities -- Fair values for trading account securities,
which also are the amounts recognized in the consolidated balance sheet,
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.

Securities Available for Sale -- Fair values for investment securities
are based on quoted market prices. The carrying values of restricted equity
securities approximate fair values.

Loans Receivable -- For variable-rate loans that reprice frequently
and have no significant change in credit risk, fair values are based on
carrying values. Fair values for commercial real estate, commercial loans,
other consumer loans are estimated using discounted cash flow analyses,
using interest rates currently being offered for loans with similar terms
to borrowers of similar credit quality. Fair values for impaired loans are
estimated using discounted cash flow analyses or underlying collateral
values, where applicable.

Deposit Liabilities -- The fair values disclosed for demand deposits
are, by definition, equal to the amount payable on demand at the reporting
date (that is, their carrying amounts). The carrying amounts of
variable-rate certificates of deposit approximate their fair values at the
reporting date. Fair values for fixed-rate certificates of deposit are
estimated using a discounted cash flow calculation that applies interest
rates currently being offered on certificates to a schedule of average
annual maturities on time deposits.

Short-Term Borrowings -- The carrying amounts of federal funds
purchased, borrowings under repurchase agreements, and other short-term
borrowings maturing within 90 days approximate their fair values. Fair
values of other short-term borrowings are estimated using discounted cash
flow analyses based on the Bank's current incremental borrowing rates for
similar types of borrowing arrangements.

Long-Term Debt -- The fair values of the Bank's long-term debt are
estimated using discounted cash flow analyses based on the Bank's current
incremental borrowing rates for similar types of borrowing arrangements.

Accrued Interest -- The carrying amounts of accrued interest
approximate their fair values.

Off-Balance-Sheet Instruments -- Fair values for off-balance-sheet
lending commitments are typically based on fees currently charged to enter
into similar agreements, taking into account the remaining terms of the
agreements and the counterparties' credit standing when such terms exceed
one year in length.

F-10
<PAGE> 73

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2 INVESTMENT SECURITIES

Investment securities with a carrying value of $13,666,000 at December 31,
1996, were pledged to secure public funds on deposit, treasury tax and loan
accounts, and for other purposes required or permitted by law. Pledged
securities at December 31, 1995, had a carrying value of $17,135,000.

A comparison of the amortized cost and approximate market values of
investment securities follows:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED APPROXIMATE
DECEMBER 31, 1996 COST GAIN GAIN MARKET VALUE
----------------- --------- ---------- ---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE
U.S. Government and agencies......... $23,761 $ 94 $ 35 $23,820
Mortgage-backed securities........... 9,582 123 111 9,594
State and municipal securities....... 1,213 10 16 1,207
Other securities..................... 1,147 1,147
------- ---- ---- -------
$35,703 $227 $162 $35,768
======= ==== ==== =======
</TABLE>

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED APPROXIMATE
DECEMBER 31, 1996 COST GAIN GAIN MARKET VALUE
----------------- --------- ---------- ---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE
U.S. Government and agencies.......... $ 8,935 $ 95 $ 3 $ 9,027
Mortgage-backed securities............ 11,374 66 33 11,407
State and municipal securities........ 2,304 57 4 2,357
Other securities...................... 1,079 1,079
------- ---- --- -------
$23,692 $218 $40 $23,870
======= ==== === =======
</TABLE>

Securities for which no market values were obtainable are reflected at carrying
value.

During 1996, proceeds from the sales and maturities of securities were
$15,801,000 and transactions resulted in gross realized gain of $95,000 and
gross realized loss of $4,000.

Analysis of the investment portfolio by maturities are as follows as of
December 31, 1996:

<TABLE>
<CAPTION>
AVAILABLE FOR SALE
-------------------------
AMORTIZED APPROXIMATE
COST MARKET VALUE
--------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Due within one year......................................... $10,015 $10,008
Due in one to five years.................................... 15,200 15,276
Due in five to ten years.................................... 3,175 3,177
Due after ten years......................................... 6,166 6,160
Other securities............................................ 1,147 1,147
------- -------
$35,703 $35,768
======= =======
</TABLE>

Maturities of mortgage-backed securities are reported at their contractual
maturity date. Maturities may differ due to borrowers may have the right to
prepay obligations with or without penalty.

F-11
<PAGE> 74

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 3 BANK PREMISES AND EQUIPMENT

A summary of bank premises and equipment for the two years is shown below:

<TABLE>
<CAPTION>
1996
----------------------------------
ACCUMULATED
COST DEPRECIATION BOOK VALUE
------ ------------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Land.................................................. $ 366 $ $ 366
Buildings............................................. 2,469 659 1,810
Furniture and equipment............................... 2,317 1,156 1,161
------ ------ ------
$5,152 $1,815 $3,337
====== ====== ======
</TABLE>

<TABLE>
<CAPTION>
1995
----------------------------------
ACCUMULATED
COST DEPRECIATION BOOK VALUE
------ ------------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Land.................................................. $ 366 $ $ 366
Buildings............................................. 2,446 592 1,854
Furniture and equipment............................... 1,965 867 1,098
------ ------ ------
$4,777 $1,459 $3,318
====== ====== ======
</TABLE>

Depreciation expense computed on the straight-line basis amounted to
$379,000 in 1996, $270,000 in 1995 and $215,000 in 1994.

The Bank leases property under non-cancelable lease for locations in West
Monroe and Monroe. The West Monroe lease is with a related party and commenced
September 9, 1994 for a 5 year period ending August 8, 1999, the monthly lease
amount is $1,500 per month. September 7, 1995 the Bank entered a lease
commencing January 1, 1995 and terminating December 31, 2000 for a five year
term with monthly rental of $1,500 for two years and $1,750 for the remaining
three years. The rental expense was $36,000 and $24,750 for 1996 and 1995,
respectively. Future rental commitments under the non-cancelable lease
agreements are as follows:

NOTE 4 LOANS

Loans on which the accrual of interest has been discontinued amounted to
$724,000, and $342,000 at December 31, 1996 and 1995, respectively. Loans have
also been restructured with reduced interest rates amounting to $405,000 and
$450,000 at December 31, 1996 and 1995, respectively. If the above loans for
December 31, 1996 and 1995 were not placed on non-accrual, interest income would
have increased by approximately $54,000 and $72,000, respectively.

F-12
<PAGE> 75

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Major classification of loans are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
LOANS HELD FOR INVESTMENT
Commercial............................................... $13,741 $13,833
Real estate -- farm land................................. 5,598 7,260
Real estate -- residential............................... 22,750 18,102
Real estate -- commercial................................ 22,356 13,329
Production -- farmers.................................... 13,545 14,865
Loans to individuals..................................... 10,992 11,761
Overdrafts............................................... 26 63
------- -------
$89,008 $79,213
======= =======
Fixed rate loans......................................... $55,684 $57,104
Variable rate loans...................................... 33,324 22,109
------- -------
$89,008 $79,213
======= =======
LOANS HELD FOR SALE
Real estate -- residential............................... $ 1,118 $ 428
======= =======
</TABLE>

NOTE 5 INCOME TAXES

The total income taxes in the statements of income are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1996 1995 1994
----- ----- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Current tax expense (benefit)
Federal................................................... $621 $582 $374
State..................................................... 22 19 17
---- ---- ----
Currently payable (refund).................................. $643 $601 $391
Deferred taxes.............................................. 54 13 (19)
---- ---- ----
Income tax expense.......................................... $697 $614 $372
==== ==== ====
</TABLE>

Major components of deferred income taxes are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1995 1994
------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
TIMING DIFFERENCES
Provision for credit losses................................. $ 31 $(9) $(41)
Other real estate........................................... (10) 5 4
Depreciation................................................ 33 17 12
Other....................................................... 6
---- --- ----
$ 54 $13 $(19)
==== === ====
</TABLE>

The Company uses the flow-through method for tax credits.

F-13
<PAGE> 76

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The components of the deferred tax asset included in other assets are as
follows:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1996 1995
---- -----
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Deferred Tax Asset
Allowance for credit losses............................... $110 $ 141
Other real estate......................................... 35 25
Net unrealized loss on securities available for sale......
---- -----
Total Deferred Tax Asset.......................... $145 $ 166
---- -----
Deferred Tax Liability
Depreciation.............................................. $(77) $ (45)
Net unrealized gain on securities available for sale...... (22) (60)
---- -----
Total Deferred Tax Liability...................... $(99) $(105)
---- -----
Net Deferred Tax Asset...................................... $ 46 $ 61
==== =====
</TABLE>

The principal reasons for the differences in the effective tax rate and the
federal statutory rate are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1996 1995 1994
---- ----- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Statutory federal income tax rate........................... 34.0% 34.0% 34.0%
Effect on rate of
Tax exempt income......................................... (1.3) (2.6) (7.5)
Interest to carry tax exempt.............................. .2 1.1 .9
Other..................................................... (.6) (12.1) (1.6)
---- ----- ----
Tax rate based on reported income........................... 32.3% 30.4% 29.0%
==== ===== ====
</TABLE>

NOTE 6 EMPLOYEES' RETIREMENT TRUST

The First Republic Bank has a 401(k) profit sharing plan for the benefit of
substantially all of its employees with one year of service. The Subsidiaries's
annual contribution is determined by the Board of Directors. The Bank
contributed $97,000, $72,000 and $67,000 for 1996, 1995 and 1994, respectively.
The amount of contribution has amounted to approximately 5% of salaries for both
years.

NOTE 7 EARNINGS PER SHARE

Earnings per share were calculated using the weighted average number of
shares outstanding as of December 31, 1996, 1995 and 1994, of 38,048, 37,799 and
37,632 shares, respectively.

NOTE 8 COMMITMENTS AND CONTINGENT LIABILITIES

In the normal course of business First Republic Bank and First Republic
Agricultural Credit Corporation make various commitments and incur certain
contingent liabilities that are not presented in the consolidated financial
statements. At December 31, 1996 and 1995, standby letters of credit aggregated
$202,000 and $145,000, respectively. The Bank and subsidiary also had
commitments to extend credit of $7,625,000 at December 31, 1996.

F-14
<PAGE> 77

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Bank entered into contractual agreements in which to sell mortgage
loans. Under these agreements, there is a take back provision which states the
Bank must take back the loan if four installments are not received on the loan.
Otherwise the loans are sold without recourse.

The Bank is also subject to lawsuits which arise primarily in the ordinary
course of business. Based on information available and advice of legal counsel
representing the Bank in connection with such lawsuits, it is the opinion of
management that the disposition or ultimate determination of such lawsuits will
not have a material adverse effect on the financial position of the Bank.

The Bank is required to maintain reserves at Federal Reserve Bank and cash
on hand. These reserves were approximately $684,000 at December 31, 1996.

NOTE 9 RELATED PARTY TRANSACTIONS

At December 31, 1996 and 1995, certain officers and directors and companies
in which they have a beneficial ownership were directly and indirectly indebted
to the First Republic Bank in the aggregate amount of $1,190,000 and $3,036,000,
respectively and indebted to the First Republic Agricultural Credit Corporation
in the aggregate amount of $3,613,000 and $1,106,000, respectively.

Also, certain officers and directors and companies in which they have a
beneficial ownership, maintain deposit accounts with the Bank.

The Bank leases office space to the law firm of Cotton, Bolton, Hoychick &
Doughty. The lease commenced January 1, 1994 for a two year period ending
December 31, 1995. This lease was renewed January 1, 1995 for a three year term
ending December 31, 1998 for a monthly rental of $533. Certain members of the
law firm are stockholders and directors of the Bank. They also represent the
Bank on various legal matters.

The Bank entered into a lease agreement with Ware Oil Company, Inc. and
Ware Properties, L.L.C., the owner of which is a stockholder and director of the
Bank. The lease commenced September 9, 1994 for a five year period ending August
8, 1999, the monthly rental is $1,500 per month. The monthly rental paid for
1996 and 1995 was $18,000 and $18,000, respectively.

The Bank purchases various insurance policies for property, liability and
life insurance from State Farm Insurance Company. Sellers Aycock, Jr. is the
agent for State Farm and also a stockholder and director of the Bank.

Certain officers and employees receive commissions from the sale of credit
life insurance. In 1996 these commissions amounted to $2,000.

NOTE 10 ALLOWANCE FOR CREDIT LOSSES

A summary of transactions in the allowance for credit losses for the years
ended December 31, are as follows:

<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of period.............................. $1,151 $1,122 $1,003
Recoveries credit to allowance.............................. 175 56 90
Transfer to reserve from income............................. 517 379 185
------ ------ ------
Total available................................... $1,843 $1,557 $1,278
Losses charged to allowance................................. (784) (406) (156)
------ ------ ------
Balance at end of period.................................... $1,059 $1,151 $1,122
====== ====== ======
</TABLE>

F-15
<PAGE> 78

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 11 OTHER BORROWED FUNDS

On May 27, 1994, First Republic Agricultural Credit Corporation entered
into a financing agreement with the Farm Credit Bank of Columbia. This agreement
replaced all former agreements entered into between the parties, effective June
1, 1994. This agreement provides for a line of credit up to $10,000,000 and
expires June 1, 1998. Collateral security for the agreement shall consist of all
loans and participation certificates of First Republic Agricultural Credit
Corporation and a pledge of securities owned by First Republic Bank in an amount
of $600,000. The amount of borrowings as of December 31, consisted of the
following:

<TABLE>
<CAPTION>
RATE AMOUNT
------------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
December 31, 1996
Fixed rate................................................ 6.70% - 8.75% $ 218
Variable rate............................................. 6.53% 2,682
------
$2,900
======
December 31, 1995
Fixed rate................................................ 7.10% - 8.75% $ 68
Variable rate............................................. 6.95% 4,340
------
$4,408
======
</TABLE>

On October 19, 1994, Eagle Premium Assistance Corporation purchased all
loans, goodwill and certain equipment from Louisiana Premium Assurance Company.
In this transaction, the Company issued a note to the sellers for $359,000. This
note is non-interest bearing. (See Note 17)

The Bank entered into a contract to borrow funds from the Federal Home Loan
Bank of Dallas (FHLB) on March 6, 1995, whereby the Bank can borrow funds for
fixed rates and terms, pledging loans made for residential purposes and
securities. The collateral for the loans from FHLB includes a pledge by the Bank
of a security interest in first mortgage collateral of real estate loans,
capital stock of FHLB, deposit accounts at FHLB, and investment securities up to
the collateral maintenance requirement which can be determined by FHLB from time
to time. Interest rates on these loans range from a low of 5.170% to a high of
8.256%.

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1995
------ ------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Short-term debt............................................. $3,910 $4,128
------ ------
Long-term debt.............................................. $3,910 $4,128
====== ======
</TABLE>

F-16
<PAGE> 79

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Maturities of the above long-term advances for the next five years and
thereafter are as follows:

<TABLE>
<CAPTION>
FHLB OTHER
------ ------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
1998........................................................ $ 230 $ 88
1999........................................................ 244 96
2000........................................................ 1,373
2001........................................................ 577
2002........................................................ 535
Thereafter.................................................. 951
------
$3,910 $ 184
====== ======
</TABLE>

On October 10, 1995, First Republic Bank entered an agreement with First
National Banker's Bank for an unsecured federal funds purchased line amounting
to $1,250,000. The amount outstanding on this line as of December 31, 1995
amounted to $-0-. This line expired October 10, 1995. The Bank renewed this line
of credit January 14, 1996 for a period of one year.

On May 29, 1995, the Bank entered into a Federal Funds line with Commercial
National Bank for the amount of $2,000,000, expiring May 31, 1996. The Bank must
pledge securities prior to advancement of funds and funds will be advanced at
90% of the current market value of the securities. No amounts were outstanding
on this line at December 31, 1995.

On May 7, 1995, First Republic Bank entered into a loan participation
agreement with recourse with Rapides Bank & Trust Company in Alexandria,
Louisiana. This participation agreement required a pledge of securities
amounting to $400,000. The amount outstanding on this agreement as of December
31, 1996 amounted to $-0-.

NOTE 12 DEPOSITS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
--------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Interest bearing............................................ $105,285 $ 88,570
Non-interest bearing........................................ 20,658 15,410
-------- --------
$125,943 $103,980
======== ========
</TABLE>

NOTE 13 REGULATORY MATTERS

The Bank, a state bank, is limited to paying dividends under state law,
without prior approval of the Commissioner of Financial Institutions of the
State of Louisiana, to the amount of its current year net profits (as defined)
and the prior year net profits (as defined). The amount of dividends the Bank
could declare for 1996 without prior approval amounted to approximately
$2,381,000. The Bank paid a dividend for 1996 to First Republic Bancshares, Inc.
of $415,000.

The Bank is subject to various regulatory capital requirements administered
by the federal and state banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory -- and possibly additional
discretionary -- actions by regulations that, if undertaken, could have a direct
material effect on the Bank's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the Bank
must meet specific capital guidelines that involve quantitative measures of

F-17
<PAGE> 80

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the Bank's assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices. The Bank's capital amounts and
classifications are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of Total and Tier 1 Capital (as defined in the regulations) to
Risk-Weighted Assets (as defined), and of Tier 1 Capital (as defined) to Average
Assets (as defined). Management believes, as of December 31, 1996, the Bank
meets all capital adequacy requirements to which it is subject.

As of December 31, 1996, the most recent notification from the Office of
Financial Institutions of the State of Louisiana categorized the Bank as
adequately capitalized under the regulatory frame work for prompt corrective
action. To be categorized as adequately capitalized the Bank must maintain
minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set
forth in the table. There are no conditions or events since that notification
that management believes have changed the institution's category.

<TABLE>
<CAPTION>
TO BE WELL CAPITALIZED
PROMPT CORRECTIVE
ACTUAL FOR CAPITAL ADEQUACY ACTION
---------------- --------------------------------- ----------------------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ------ --------------- --------------- --------------- ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BANK SUBSIDIARY
AS OF DECEMBER 31, 1996
Total Capital (Risk-Weighted
Assets)............................. $11,014 11.84% > OR = $7,441 > OR = 8.00% > OR = $9,302 > OR = 10.00%
Tier 1 Capital (Risk-Weighted
Assets)............................. $ 9,954 10.70% > OR = $3,731 > OR = 4.00% > OR = $5,581 > OR = 6.00%
Tier 1 Capital (Average Assets)....... $ 9,954 7.14% > OR = $5,575 > OR = 4.00% > OR = $6,968 > OR = 5.00%
HOLDING COMPANY
AS OF DECEMBER 31, 1996
Total Capital (Risk-Weighted
Assets)............................. $10,057 10.81% > OR = $7,442 > OR = 8.00% > OR = $9,303 > OR = 10.00%
Tier 1 Capital (Risk-Weighted
Assets)............................. $ 8,997 9.670% > OR = $3,721 > OR = 4.00% > OR = $5,582 > OR = 6.00%
Tier 1 Capital (Average Assets)....... $ 8,997 6.46% > OR = $5,575 > OR = 4.00% > OR = $6,968 > OR = 5.00%
</TABLE>

NOTE 14 CONCENTRATIONS OF CREDIT RISK

The First Republic Bank, First Republic Agricultural Credit Corporation and
Eagle Premium Assistance Corporation make various loans to customers within its
market area. The types of loans by categories are disclosed in Note 4. The
companies also make various commitments to extend credit to customers which are
primarily agricultural and commercial related loans. These customers also have
deposits with the Bank.

The First Republic Bank maintains cash on deposit and amounts due from
other depository institutions, during the normal course of business, which
exceeds the amounts which would normally be insured.

F-18
<PAGE> 81

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 15 STATEMENT OF CASH FLOWS

Interest paid on deposit accounts and other borrowed funds amounted to
$5,627,000, $4,032,000 and $2,670,000 for December 31, 1996, 1995 and 1994,
respectively. Income taxes paid of $611,000, $646,000 and $305,000 for December
31, 1996, 1995 and 1994, respectively.

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1996 1995 1994
----- ----- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Non-cash Investing Activities
Charge-off of loans....................................... $784 $406 $155
Transfer of loans to other real estate.................... 21 107 148
---- ---- ----
$805 $513 $303
==== ==== ====
</TABLE>

NOTE 16 STOCK COMPENSATION PLAN

The Company entered into a plan to issue treasury stock purchased to
certain officers, through a stock compensation plan. The 2,767 shares of
treasury stock will be issued to the officers over a period of time based on the
performance of the Bank and subsidiaries.

NOTE 17 GOODWILL

As of October 19, 1994, Eagle Premium Assistance Corporation purchased all
loans, goodwill and certain equipment of Louisiana Premium Assurance Company.
Allocation of the purchase price was as follows:

<TABLE>
<S> <C>
Loans -- net............................................. $ 997,000
Equipment................................................ 16,000
Goodwill................................................. 446,000
----------
$1,459,000
==========
</TABLE>

The sellers accepted non-interest bearing notes of $358,000 and cash of
$1,101,000.

NOTE 18 SUBORDINATED DEBENTURES PAYABLE

December 1, 1994, First Republic Bancshares, Inc. issued debentures to its
shareholders. These debentures are for 12 years, with maturity being December
31, 2006. The debentures bear simple interest of 6.65% payable in cash
semi-annually. These debentures are subordinated to all senior indebtedness of
the Company, whether now outstanding are hereafter incurred. The principal
amounts of the debenture shall be convertible, at the option of the holder, into
common stock of the company on December 31, 2000, at the conversion rate of one
(1) share of common stock for every $105.83 of the principal amount of the
debenture.

NOTE 19 LOAN SERVICING

The Bank and its subsidiary, First Republic Agricultural Credit
Corporation, originate mortgage loans and agricultural loans which are sold in
secondary markets. Certain loans are sold with the servicing rights retained by
the Bank and its subsidiary. These loans are not included in the accompanying
consolidated financial statements. The unpaid principal balances of those loans
at December 31, 1996 were $7,820,000.

F-19
<PAGE> 82

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 20 FINANCIAL INSTRUMENTS

The Bank 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
and to reduce its own exposure to fluctuations in interest rates. These
financial instruments include commitments to extend credit, and futures
contracts. Those instruments involve, to varying degrees, elements of credit and
interest-rate risk in excess of the amount recognized in the statement of
financial position. The contract or notional amounts of those instruments
reflect the extent of the Bank's involvement in particular classes of financial
instruments.

The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and
standby letters of credit is represented by the contractual notional amount of
those instruments. The Bank uses the same credit policies in making commitments
and conditional obligations as it does for on-balance-sheet instruments.

Unless noted otherwise, the Bank does not require collateral or other
security to support financial instruments with off-balance-sheet credit risk.

Financial Futures -- Futures contracts include contracts for delayed
delivery of securities in which the seller agrees to make delivery at a
specified future date of a specified instrument, at a specified price or yield.
Risks arise from the possible inability of counterparties to meet the terms of
their contracts and from movements in securities values and interest rates.

Commitments to Extend Credit and Financial Guarantees -- At December 31,
1996, the Bank was exposed to credit risk on commitments to extend credit having
contract amounts of $7,625,000 and standby letters of credit written of
$202,000.

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 Bank evaluates each customer's credit
worthiness on a case-by-case basis. The amount of collateral obtained, if it is
deemed necessary by the Bank upon extension of credit, is based on management's
credit evaluation of the counterparty. Collateral held varies but may include
accounts receivable, inventory, real estate, equipment and growing or harvested
crops and instruments that are the products of such crops.

Standby letters of credit written are conditional commitments issued by the
Bank to guarantee the performance of a customer to a third party. The credit
risk involved in issuing letters of credit is essentially the same as that
involved in extending loan facilities to customers. The Bank holds collateral
supporting those commitments for which collateral is deemed necessary.

The Bank has not been required to perform on any financial guarantees
during the past two years. The Bank has not incurred any losses on its
commitments in either 1996 or 1995.

F-20
<PAGE> 83

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The estimated fair values of the Bank's financial instruments were as
follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------------- -----------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
--------- ---------- --------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Financial Assets:
Cash and due from banks,
interest-bearing deposits,
and federal fund sold.................. $ 13,694 $ 13,694 $ 15,265 $ 15,265
Securities available for sale............. 35,768 35,768 23,871 23,871
Securities to be held to maturity......... 0 0 0 0
Loans receivable.......................... 89,001 89,333 78,406 79,194
Accrued interest receivable............... 1,611 1,611 1,660 1,660
Financial Liabilities:
Deposit liabilities....................... (126,320) (128,270) (103,981) (104,102)
Other borrowed funds...................... (6,994) (6,930) (8,807) (8,830)
Subordinated debentures payable........... (1,000) (1,000) (1,000) (1,000)
Accrued interest payable.................. (728) (728) (747) (747)
Off-Balance-Sheet Instruments:
Commitments to extend credit.............. 0 0 0 0
Stand-by letters of credit................ 0 0 0 0
</TABLE>

A summary of the Bank's commitments and contingent liabilities at December
31, 1996 is as follows:

<TABLE>
<CAPTION>
NOTIONAL
AMOUNT
--------
<S> <C>
Commitments to extend credit................................ $7,625
Stand-by letters of credit.................................. 202
</TABLE>

F-21
<PAGE> 84

ACCOUNTANTS' COMPILATION REPORT

To the Board of Directors
First Republic Bancshares, Inc.
and Subsidiaries
Rayville, Louisiana

We have compiled the accompanying consolidated balance sheets of First
Republic Bancshares, Inc. and Subsidiaries as of September 30, 1997 and 1996,
and the related consolidated statements of income, changes in stockholders'
equity, and cash flows for each of the nine months ended September 30, 1997 and
1996, in accordance with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public Accountants.

A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and accordingly, do not express
an opinion or any other form of assurance on them.

Management has elected to omit all of the disclosures required by generally
accepted accounting principles. These financial statements should be read
together with the audited financial statements for the periods ended December
31, 1996 and 1995.

December 10, 1997

F-22
<PAGE> 85

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 (UNAUDITED) AND DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
(UNAUDITED)
<S> <C> <C>
CASH AND DUE FROM BANKS..................................... $ 4,446 $ 8,370
-------- --------
INTEREST-BEARING DEPOSITS IN BANKS.......................... $ 2,176 $ 2,074
-------- --------
INVESTMENT SECURITIES
Available for sale........................................ $ 26,981 $ 35,768
-------- --------
FEDERAL FUNDS SOLD.......................................... $ 5,595 $ 3,250
-------- --------
TRADING ACCOUNT SECURITIES.................................. $ 225 $ 0
-------- --------
LOANS AND DISCOUNTS
Loans held for investment................................. $104,166 89,008
Loans held for sale....................................... 759 1,118
Less: Unearned interest................................. (83) (66)
Allowance for credit losses........................ (1,031) (1,059)
-------- --------
$103,811 $ 89,001
-------- --------
BANK PREMISES AND EQUIPMENT -- NET.......................... $ 3,089 $ 3,337
-------- --------
OTHER ASSETS
Accrued interest
Loans................................................... $ 1,514 $ 1,256
Investments............................................. 280 355
Deferred income taxes..................................... 4 46
Other real estate......................................... 62 83
Other assets.............................................. 420 595
Goodwill -- net........................................... 359 382
-------- --------
$ 2,639 $ 2,717
-------- --------
TOTAL ASSETS................................................ $148,962 $144,517
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS
Demand.................................................... $ 17,486 $ 20,658
NOW accounts.............................................. 11,103 14,928
Savings................................................... 4,945 4,933
Time certificates -- $100,000 and over.................... 24,071 21,138
Other time deposits....................................... 67,329 64,286
-------- --------
$124,934 $125,943
-------- --------
OTHER LIABILITIES
Accrued interest
Time deposits........................................... $ 843 688
Other borrowed funds.................................... 57 40
Other liabilities......................................... 621 46
Dividends payable......................................... 0 383
Other borrowed funds...................................... 10,690 6,994
Subordinated debentures payable........................... 1,000 1,000
-------- --------
$ 13,211 $ 9,151
-------- --------
MINORITY INTEREST........................................... $ 281 $ 266
-------- --------
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY
Capital stock -- 1,000,000 shares authorized; 39,782
shares issued; 38,287 shares 1997,
38,287 shares 1996 outstanding; $10 par value........... $ 398 $ 398
Surplus................................................... 1,496 1,496
Retained earnings......................................... 8,645 7,332
Net unrealized gain on securities available for
sale -- net of tax of $56 in 1997
and $22 in 1996......................................... 109 43
-------- --------
$ 10,648 $ 9,269
Less: Treasury stock 1,495 shares 1997, 1,495 shares
1996 -- at cost......................................... (112) (112)
-------- --------
$ 10,536 $ 9,157
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.......... $148,962 $144,517
======== ========
</TABLE>

See Accountants' Compilation Report.

F-23
<PAGE> 86

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1997 1996
------ ------
(UNAUDITED)
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans................................ $8,210 $7,787
Interest on investment securities
U.S. Government Obligations............................ 1,051 612
Mortgaged backed securities............................ 236 457
State and municipal securities......................... 24 59
Interest on federal funds sold............................ 197 186
Interest on deposits in banks............................. 69 71
Other interest and dividend income........................ 57 64
------ ------
Total Interest Income............................. $9,844 $9,236
------ ------
INTEREST EXPENSE
Interest on deposits...................................... $4,001 $3,730
Interest on other borrowed funds.......................... 433 414
------ ------
Total Interest Expense............................ $4,434 $4,144
------ ------
NET INTEREST INCOME......................................... $5,410 $5,092
PROVISION FOR LOAN LOSSES................................... 322 496
------ ------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES......... $5,088 $4,596
------ ------
OTHER INCOME
Service charges, fees and commissions..................... $ 728 $ 583
Securities gains (losses)................................. 47 46
Other..................................................... 243 247
------ ------
Total other operating income...................... $1,018 $ 876
------ ------
OTHER EXPENSES
Salaries and employee benefits............................ $2,093 $2,025
Occupancy expense -- net.................................. 664 602
Other operating expenses.................................. 1,288 1,409
------ ------
Total other operating expenses.................... $4,045 $4,036
------ ------
INCOME BEFORE INCOME TAXES.................................. $2,061 $1,436
------ ------
INCOME BEFORE INCOME TAXES (brought forward)................ $2,061 $1,436
------ ------
INCOME TAXES (Note 5)
Current................................................... $ 728 $ 576
Deferred.................................................. 5
------ ------
$ 733 $ 576
------ ------
INCOME BEFORE DEDUCTION OF MINORITY INTEREST................ $1,328 $ 860
Minority interest......................................... 15 22
------ ------
NET INCOME.................................................. $1,313 $ 838
====== ======
EARNINGS PER SHARE.......................................... $34.29 $22.03
</TABLE>

See Accountants' Compilation Report.

F-24
<PAGE> 87

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
NET
UNREALIZED
OUTSTANDING GAIN ON
CAPITAL AVAILABLE
-------------- UNDIVIDED FOR SALE TREASURY
SHARES STOCK SURPLUS PROFITS SECURITIES STOCK TOTAL
------ ----- ------- --------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE -- DECEMBER 31,
1996.............................. 38,287 $398 $1,496 $7,332 $ 43 $(112) $ 9,157
Net change in unrealized gain on
securities available for
sale -- net of taxes of $34.... 66 66
Net income (loss)................. 1,313 1,313
------ ---- ------ ------ ---- ----- -------
BALANCE -- SEPTEMBER 30, 1997....... 38,287 $398 $1,496 $8,645 $109 $(112) $10,536
====== ==== ====== ====== ==== ===== =======
</TABLE>

See Accountants' Compilation Report.

F-25
<PAGE> 88

FIRST REPUBLIC BANCSHARES, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1997 1996
-------- --------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss)......................................... $ 1,313 $ 838
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses.............................. 322 496
Write-down and losses on other real estate............. 5 2
Gain on sale of equipment.............................. 316
Provision for depreciation and amortization............ 282
Amortization of investment security premiums -- net of
accretion............................................. (2) 69
Realized investment security (gains) losses............ (47) (46)
Deferred income taxes.................................. 5
(Increase) Decrease in interest receivable............. (183) (141)
(Increase) Decrease in other assets.................... 175 (648)
Increase (Decrease) in interest payable................ 172 103
Increase (Decrease) in other liabilities............... 576 969
Minority interest...................................... 15 22
-------- --------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES............ $ 2,667 $ 1,946
-------- --------
INVESTING ACTIVITIES
Proceeds from sale of investment securities............... $ 32,154 $ 14,306
Purchases of investment securities........................ (23,398) (20,876)
(Increase) Decrease in loans.............................. (15,276) (15,717)
Purchases of bank premises and equipment.................. (51) (331)
Sale of other real estate................................. 0 36
Recovery of charge-offs................................... 123 119
(Increase) Decrease in federal funds sold................. (2,345) 6,375
(Increase) Decrease in interest bearing deposits.......... (102) 935
-------- --------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES............ $ (8,895) (15,153)
-------- --------
FINANCING ACTIVITIES
Net increase (decrease) in deposit accounts............... $ (1,009) $ 12,633
Dividends paid............................................ (383) (381)
Proceeds from other borrowed funds........................ 4,375 1,544
Principal payments -- other borrowed funds................ (679) (2,181)
-------- --------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES............ $ 2,304 $ 11,615
-------- --------
INCREASE (DECREASE) IN CASH AND DUE FROM BANKS.............. $ (3,924) $ (1,592)
CASH AND DUE FROM BANKS AT BEGINNING OF PERIOD.............. 8,370 7,001
-------- --------
CASH AND DUE FROM BANKS AT END OF PERIOD.................... $ 4,446 $ 5,409
======== ========
</TABLE>

See Accountants' Compilation Report.

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<PAGE> 89

ANNEX I

AGREEMENT AND PLAN OF REORGANIZATION

This Agreement and Plan of Reorganization ("Agreement") is made as of
December , 1997 by and between First United Bancshares, Inc., an Arkansas
corporation ("Bancshares"), and First Republic Bancshares, Inc., a Louisiana
corporation ("Republic").

WHEREAS, Republic owns one hundred percent (100%) of the issued and
outstanding shares of capital stock of First Republic Bank, Rayville, Louisiana
("Bank"); and

WHEREAS, Bancshares desires to acquire one hundred percent (100%) of the
capital stock of Republic (the "Republic Common Stock") upon the terms and
conditions hereinafter set forth through the merger of Republic with and into
Bancshares, (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 Bancshares and Republic
believe that such proposed Merger and the issuance of shares of Bancshares Stock
(as defined in Section 2.01(a) hereof), pursuant and subject to the terms of
this Agreement and the Plan of Merger (collectively, the "Merger Agreements"),
is desirable and in the best interests of their respective corporations and
shareholders; and

WHEREAS, Bancshares and Republic 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:

ARTICLE I

THE MERGER

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

1.02. Effective Time of the Merger. Subject to the provisions of this
Agreement, articles of merger (the "Articles of Merger") and a certificate of
merger ("Certificate of Merger") shall be duly prepared and executed by
Bancshares and Republic and thereafter delivered to the Secretaries of State of
Arkansas and Louisiana, respectively, for filing, as provided in the ABCA and
LBCL, 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 Bancshares 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. Conversion of Republic Common Stock. (a) As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Republic Common Stock, but subject to the rights of dissenting
shareholders of Republic, all of the outstanding shares of Republic Common
Stock, including (i) 38,536 issued shares, (ii) shares issuable to persons
entitled to receive performance shares at the time of Closing (1,246 shares),
and (iii) shares issuable to holders of all outstanding subordinated debentures
("Republic Debentures") who are entitled to receive Republic common stock
pursuant to conversion rights at

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<PAGE> 90

the conversion ratio stated in the Republic Debentures (9,449.1165 shares),
shall be converted into an aggregate of Eight Hundred Thousand (800,000) shares
of fully paid and nonassessable Bancshares Common Stock, $1.00 par value (the
"Purchase Price" or "Bancshares Stock"). The Bancshares Stock shall be paid pro
rata to persons holding the issued shares, rights to receive performance shares
and subordinated debentures as described above. Such persons are referred to
collectively herein as the Republic Shareholders. The conversion ratio shall be
the quotient of 800,000 divided by 49,231.1165.

(b) Fractional Shares. Fractional shares of Bancshares Stock shall not be
issued. Any Republic 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 Bancshares Average Price. The Bancshares Average Price shall
be the average sales price per share of Bancshares common stock for all trades
occurring on NASDAQ during the period of 10 consecutive trading days on which
one or more trades actually takes place and which ends immediately prior to the
fifth trading day preceding the Closing Date.

(c) Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, shares of Republic Common Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by Republic
Shareholders who have voted such shares against the Merger and who shall have
delivered a written demand for payment of the fair value of such shares within
the time and in the manner described in Section 131 of the LBCL (the "Dissenting
Shares") shall not be converted into or exchangeable for the right to receive
part of the Purchase Price provided in Section 2.01(a) of this Agreement, and
such Republic Shareholders shall only be entitled to receive payment of the fair
cash value of such shares in accordance with the provisions of the LBCL unless
and until such holder shall have failed to perfect or shall have effectively
withdrawn or lost such right, at which time such holder's shares shall thereupon
be deemed to have been converted into and have become exchangeable for, as of
the Effective Time, the right to receive the Purchase Price without any interest
thereon.

(d) Cancellation of Shares. All shares of Republic Common Stock issued and
outstanding, all rights to receive performance shares, and all Republic
Debentures outstanding immediately prior to the Effective Time shall no longer
be outstanding and shall automatically be cancelled and retired and shall cease
to exist. At the Effective Time each holder of a certificate representing any
such shares or Republic Debentures and each person having any right to receive
performance shares shall cease to have any rights with respect thereto, except
the right to receive a pro rata number of shares of Bancshares Stock (or cash in
the case of Dissenting Shares or fractional shares) to be issued in
consideration therefor upon the surrender of such stock certificate or Republic
Debenture or delivery of a written agreement accepting the consideration
provided in Section 2.01(a) in full satisfaction of any right to performance
shares.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF REPUBLIC

Republic hereby represents and warrants to Bancshares the following:

3.01. Organization, Standing and Power of Republic. Republic is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Louisiana 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 Republic and the Republic Subsidiaries (as hereinafter defined),
taken as a whole. Republic is not qualified to do business in any other state or
foreign jurisdiction, and its ownership or leasing of property and the conduct
of its business does not require it to be so qualified, except where the failure
to be so qualified would not have a material adverse effect on Republic and the
Republic Subsidiaries taken as a whole. Republic is registered as a bank holding
company with the Federal Reserve Board ("FRB") under the Bank Holding Company
Act of 1956, as amended (the "BHC Act"). Republic has delivered to Bancshares
true, accurate and complete copies of its currently effective Articles of
Incorporation and Bylaws, including all amendments thereto.

A-I-2
<PAGE> 91

3.02. Ownership, Organization, Standing and Power of Republic
Subsidiaries. Republic directly and beneficially owns all of the shares of the
outstanding capital stock of Bank. Bank owns 91.12% and 90.0%, respectively, of
the outstanding capital stock of First Republic Agricultural Credit Corporation
("FRAC") and Eagle Premium Assistance Corporation ("EPAC"). Bank, FRAC and EPAC
are hereinafter called collectively the "Republic Subsidiaries" or individually
a "Republic Subsidiary". Bank, FRAC and EPAC are Republic's only subsidiaries.
Except as disclosed in Section 2.01(a), no equity securities of any Republic
Subsidiary are or may become required to be issued by reason of any option,
warrant, call, right or agreement of any character whatsoever; there are no
outstanding securities or rights convertible into or exchangeable for shares of
any capital stock of any Republic Subsidiary; and there are no other contracts,
commitments, understandings or arrangements by which any Republic Subsidiary 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 outstanding shares of capital stock of the Republic
Subsidiaries are fully paid and nonassessable and the shares owned by Republic
or Bank are owned free and clear of any claim, lien, encumbrance or agreement
with respect thereto. Each of the Republic Subsidiaries is a financial
institution duly organized, validly existing and in good standing under the laws
of Louisiana, 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
such Republic Subsidiary. Each of the Republic Subsidiaries is qualified to do
business in each state in which the conduct of its business requires it to be so
qualified, except where the failure to be so qualified would not have a material
adverse effect on the business, operations or financial condition of such
Republic Subsidiary. EPAC is qualified to do business in Arkansas and
Mississippi. The deposits of Bank are insured by the Federal Deposit Insurance
Corporation ("FDIC") to the extent allowed by law. Republic has delivered to
Bancshares true, accurate and complete copies of the currently effective
Articles of Organization or Incorporation and Bylaws of each of the Republic
Subsidiaries, including all amendments thereto. Except for securities held in
their capacities as fiduciaries or as disclosed in Exhibit 3.02A, the Republic
Subsidiaries 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 Bank consists of 45,000
shares of common stock, $10.00 par value, of which 23,694 shares are issued and
outstanding and are owned by Republic. The authorized capital stock of FRAC
consists of 1,000,000 shares of common stock, $50.00 par value, 21,950 of which
shares of common stock are issued and outstanding, 20,000 are owned by Republic
and 3,050 are treasury shares. The authorized capital stock of EPAC consists of
shares 1,000,000 of common stock, $50.00 par value, 20,000 of which shares of
common stock are issued and outstanding and 18,000 of which are owned by
Republic. The owners of all other outstanding shares of common stock of FRAC and
EPAC along with the number of shares owned by each are shown in Exhibit 3.02B.
Bank or its predecessor banks has been chartered as a banking institution for
more than 5 years.

3.03. Capital Structure of Republic. The authorized capital stock of
Republic consists of 1,000,000 shares of common stock, $10.00 par value, of
which 38,287 shares are issued and outstanding (38,536 as of December 31, 1997)
and 1,495 shares are held by Republic in its treasury (1,246 as of December 31,
1997). Except for the Republic Debentures neither Republic nor any Republic
Subsidiary 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 Republic 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
Republic or any Republic Subsidiary is a party or by which Republic or any
Republic Subsidiary 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 Republic or any Republic Subsidiary is obligated to
grant, extend or enter into any such option, warrant, call, right or agreement,
except as described in Section 2.01(a) above.

3.04. Authority. Republic 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
Republic, 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

A-I-3
<PAGE> 92

contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Republic's board of directors. This Agreement
and the Plan of Merger have been duly executed and delivered by Republic, and,
subject to such shareholder approval, each constitutes a valid and binding
obligation of Republic 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 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 Republic or any Republic Subsidiary 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 Republic or any
Republic Subsidiary 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 Republic and the Republic Subsidiaries taken as a
whole. Other than in connection or in compliance with the provisions of the
ABCA, the LBCL, 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 any consents, authorizations, approvals, notices or exemptions
required under the BHC Act, the National Bank Act, Arkansas banking laws, or
Louisiana Banking Laws, 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 Republic or
any Republic Subsidiary in connection with the execution and delivery of this
Agreement and the Plan of Merger by Republic or the consummation by Republic of
the transactions contemplated hereby and thereby.

3.05. Republic Financial Statements.

(a) The (i) consolidated balance sheets of Republic as of December 31, 1996
and 1995 and the related consolidated statements of income, consolidated
statements of cash flows and consolidated statements of shareholders equity for
the years then ended certified by Frazer, Minchew, Robinson, Gardner and
Langston, and (ii) the internally prepared and unaudited consolidated financial
statements for Republic and the Republic Subsidiaries dated September 30, 1997
(collectively, the "Republic Financial Statements"), copies of which have been
furnished by Republic to Bancshares, have been prepared in accordance with (A)
generally accepted accounting principles and practices with respect to item (i)
and (B) with respect to item (ii), 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 or adjustments described in Exhibit 3.05(a),
and present fairly the consolidated financial condition of Republic and the
financial condition of the Republic Subsidiaries, at the dates, and the results
of operations and cash flows for the periods, stated therein.

(b) Except as described in Exhibit 3.05(b), neither Republic nor any
Republic Subsidiary has any liability of any nature, whether direct, indirect,
accrued, absolute, contingent or otherwise, that is material to Republic and the
Republic Subsidiaries taken as a whole and that is not provided for or disclosed
in the Republic Financial Statements, other than such of the following
liabilities as were or 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,

A-I-4
<PAGE> 93

(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.

(c) Without limitation of the foregoing, Republic 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. Republic Reports. Republic and each of the Republic 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 FDIC, (iii) the Louisiana Office of Financial
Institutions ("LOFI") and (iv) any other applicable securities, banking or
regulatory authorities (all such reports and statements are collectively
referred to herein as the "Republic Reports"), except where such failure to file
would not have a material adverse effect on the business operations or financial
condition of Republic or such Republic Subsidiary. At the time they were filed
the Republic 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. The Republic Reports have been amended,
updated or supplemented whenever such amendment, updating or supplementation has
been necessary to remain in compliance.

3.07. Information Supplied. None of the information supplied or to be
supplied by Republic for inclusion or incorporation by reference in any document
to be filed with the Securities and Exchange Commission ("SEC"), the FRB, 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.

3.08. Authorizations; Compliance with Applicable Laws. Republic and each of
the Republic Subsidiaries hold all authorizations, permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities that are material
to the operations of its business (the "Republic Permits"), including
appropriate authorizations from the LOFI. Republic and the Republic Subsidiaries
are in compliance with the terms of the Republic Permits, except where the
failure so to comply would not have a material adverse effect on Republic and
the Republic Subsidiaries taken as a whole. The businesses of Republic and the
Republic 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 Republic and the Republic Subsidiaries taken as a
whole. Except for normal recurring regulatory examinations no investigation or
review by any Governmental Entity with respect to Republic or any Republic
Subsidiary 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, except as set forth on Exhibit 3.08 there have been no
acts or omissions by Republic or a Republic Subsidiary or, to Republic's
knowledge, any other person, occurring on or with respect to real estate
currently or previously owned, leased or otherwise used in the ordinary course
of business by Republic or any Republic Subsidiary or, to the best of their
knowledge, in which Republic or any Republic 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 Republic or
any Republic Subsidiary in its capacity as a trustee, or properties in which any
venture capital or similar unit of Republic or any Republic

A-I-5
<PAGE> 94

Subsidiary has or had an interest (the "Republic 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 Republic
Property (collectively, "Environmental Laws"), and as a result of which acts or
omissions Republic or any Republic Subsidiary is subject to or reasonably likely
to incur a material liability or suffer a diminution in value of any interest
exceeding $320,000.00. Neither Republic nor any Republic Subsidiary is subject
to or reasonably likely to incur a material liability or suffer a diminution in
value of any interest exceeding $320,000.00 as a result of its ownership, lease,
operation, or use of any Republic Property or as a result of its investment or
security interest (as described above) in any Republic 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 Republic or any Republic Subsidiary relating to the Republic
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 Republic or any Republic Subsidiary with respect thereto.

3.09. Litigation and Claims. Except as set forth in Exhibit 3.09 hereto,
(a) neither Republic nor any Republic 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 Republic or any
Republic Subsidiary pending or, to the best of their knowledge, threatened,
which will have or can reasonably be expected to have a material adverse effect
on Republic and the Republic Subsidiaries taken as a whole, 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
Republic or any Republic Subsidiary as a result of the examination by any bank
regulatory authority.

3.10. Taxes. Republic and the Republic Subsidiaries 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 Republic Financial Statements reflect an adequate
reserve for all taxes payable by Republic and the Republic Subsidiaries accrued
through the date of such financial statements. Since 1990 there has been no
examination by the United States Internal Revenue Service ("IRS") of Republic or
any Republic Subsidiary. There is no pending examination by the IRS with respect
to Republic or any Republic Subsidiary. Neither Republic nor any Republic
Subsidiary 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 Republic or any Republic Subsidiary. There are no material liens for
taxes upon the assets of Republic or any Republic Subsidiary, except for
statutory liens for taxes not yet delinquent. Neither Republic nor any Republic
Subsidiary 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, together with all interest, penalties and additions
imposed with respect to such amounts. Republic and the Republic Subsidiaries
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

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<PAGE> 95

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. (a) Except as set forth in Exhibit 3.11 or as
contemplated by this Agreement, neither Republic nor any Republic Subsidiary 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) 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, (iii) any stock option plan, stock appreciation rights plan,
restricted stock plan, stock purchase plan or similar plan granting rights to
acquire stock in Republic or any Republic Subsidiary, except as referred to in
Section 2.01(a), or (iv) any contract containing covenants which limit the
ability of Republic or any Republic Subsidiary 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, Republic or any Republic Subsidiary may carry
on its business (other than as may be required by law or applicable regulatory
authorities).

(b) Except as set forth on Exhibit 3.11, neither Republic nor any Republic
Subsidiary is a party to any oral or written union, guild or collective
bargaining agreement or to any conciliation agreement with the Department of
Labor, the Equal Employment Opportunity Commission or any federal, state or
local agency which requires equal employment opportunities or affirmative action
in employment. To the best of Republic's knowledge, there are no unfair labor
practice complaints pending against Republic or any Republic Subsidiary before
the National Labor Relations Board and there are no similar claims pending
before any similar state, local or foreign agency. There is no activity or
proceeding of any labor organization (or representative thereof) or employee
group to organize any employees of Republic or any Republic Subsidiary, nor any
strikes, slowdowns, work stoppages, lockouts or threats thereof, by or with
respect to any such employees. Republic and the Republic Subsidiaries are in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and neither
Republic nor any Republic Subsidiary is engaged in any unfair labor practice,
except in either case where any violation would not have a material adverse
effect on the business, operations or financial condition of Republic and the
Republic Subsidiaries taken as a whole.

3.12. Benefit Plans.

(a) With respect to any collective bargaining agreement or any bonus,
pension, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, retirement, vacation,
severance, disability, death benefit, hospitalization, medical or other plan,
policy, program, arrangement or understanding (whether or not legally binding)
including "employee pension benefit plans" (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
(sometimes referred to herein as "Pension Plans"), "employee welfare benefit
plans" (as defined in Section (3)(1) of ERISA) (sometimes referred herein as
"Welfare Plans")(collectively, "Plans") providing benefits to any current or
former employee, officer or director of Republic or any Republic Subsidiary that
are in effect on the date hereof, and all Plans currently maintained, or
contributed to, or required to be maintained or contributed to, by Republic or
any other person or entity that, together with Republic or any Republic
Subsidiary, is treated as a single employer under Section 414(b), (c), (m) or
(o) of the Internal Revenue Code of 1986, as amended (the "Code") or Section
4001(a) (14) or 4001(b) of ERISA (each a "Commonly Controlled Entity")
(including each Pension Plan of Republic or any Commonly Controlled Entity that
is, or within the last six years was, subject to Title IV of ERISA and for which
Republic or any Republic Subsidiary could have material liability) (all of the
foregoing such plans being herein referred to as the "Republic Benefit Plans"),
Republic has delivered, or caused to be delivered, to Bancshares true, complete
and correct copies of (i) each Republic Benefit Plan, (ii) annual reports (Forms
5500) and all schedules thereto filed with the IRS with respect to each Republic
Benefit Plan for the past five years (if any such report was required), (iii)
the most recent summary plan description for each Republic Benefit Plan for
which such summary plan description is required, (iv) each trust agreement,
group annuity contract, investment management agreement, and any other insurance
contract or funding arrange-

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ment relating to any Republic Benefit Plan; (v) the most recent determination
letter as to qualification of each Republic Benefit Plan and the forms and
attachments submitted to the IRS for such determination letter; (vi) a list of
the Republic Benefit Plans, attached as Exhibit 3.12(a) hereto; (vii) copies of
all tests for compliance for the most recent plan year under Code Sections
401(a)(4), 401(a)(26), 401(k), 401(m), 404, 410(b), 415, and 416, if applicable,
for the Republic Benefit Plans and a representation for the three most recent
plan years that the Republic Benefit Plans have complied with all of such Code
Sections; and (viii) copies of all closing agreements and documentation
regarding any IRS or Department of Labor audits or self-correction procedures
affecting the qualification and/or operation of each Republic Benefit Plan.

(b) Exhibit 3.12(b) lists each deferred compensation plan, bonus and
incentive arrangement, stock option plan, restricted stock arrangement,
"cafeteria plan" as described in Section 125 of the Code and any other "employee
welfare benefit plan" (as defined in Section 3(1) of ERISA) and each "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) maintained by
Republic or any Republic Subsidiary or to which Republic or any Republic
Subsidiary contributes or is required to contribute, and sets forth the amount
of any liability of Republic or any Republic Subsidiary for contributions more
than 30 days past due with respect to each as of the date hereof and as of the
end of any subsequent month ending prior to the Closing.

(c) Neither Republic nor any Commonly Controlled Entity nor any entity that
has ever been a Commonly Controlled Entity has ever maintained any Pension Plan
which is a defined benefit plan or which is subject to Code Section 412.

(d) No Welfare Plan provides for continuing benefits or coverage for any
participant, beneficiary or former employee after such participant's or former
employee's termination of employment except as may be required by Section 4980B
of the Code and Sections 601-608 of ERISA.

(e) Each Republic Benefit Plan has been administered in accordance with its
terms. Except as disclosed in Exhibit 3.12(e), all of the Republic Benefit Plans
and any related funding instruments comply, and have complied in the past, both
as to form and operation in all material respects (including, but not limited to
applicable reporting and disclosure requirements) with the provisions of ERISA,
the Code and with all other applicable laws, rules and regulations. Unless
otherwise listed in Exhibit 3.12(e), with respect to each Pension Plan that is
intended to be tax-qualified under Section 401(a) of the Code, a favorable
determination letter as to the qualification under the Code of each such Pension
Plan and each amendment thereto has been issued by the IRS, including any such
letter that covers the amendments required by the Tax Reform Act of 1986 (and
nothing has occurred since the date of the last such determination letter which
resulted in, or is likely to result in, the revocation of such determination).
No event or condition exists which could reasonably be expected to adversely
affect the qualified status of a Republic Benefit Plan that is a Pension Plan.

(f) Neither Republic nor any Commonly Controlled Entity, nor any plan
fiduciary of any Republic Benefit Plan or, to the best knowledge of Republic,
any other party in interest of any Republic Benefit Plan, has engaged in any
transaction in violation of Section 406 of ERISA (for which transaction no
exemption exists under Section 408 of ERISA) or in any "prohibited transaction"
as defined in Section 4975(c)(1) of the Code (for which no exemption exists
under Section 4975(c)(2) or 4975(d) of the Code) or engaged in any other breach
of fiduciary responsibility that could subject Republic or any Republic
Subsidiary or any officer of Republic or any Republic Subsidiary to tax or
penalty under ERISA, the Code or other applicable law. Except as disclosed in
Exhibit 3.12(a), neither any Republic Benefit Plan that is a Pension Plan or a
funded Welfare Plan nor any trust of such plan has been terminated, nor has
there been any "reportable event" (as that term is defined in Section 4043 of
ERISA) with respect to a Republic Benefit Plan that is a Pension Plan, as to
which Republic or any Republic Subsidiary could have any liability.

(g) Neither Republic nor any Commonly Controlled Entity has ever maintained
or contributed to, or has participated in or agreed to participate in, a
multi-employer plan (as defined in Section 3(37) of ERISA), and neither Republic
nor any Commonly Controlled Entity could have any liability under a
multi-employer plan.

(h) Except as set forth in Exhibit 3.12(h) there are no claims pending with
respect to, or under, any Republic Benefit Plan other than routine claims for
plan benefits, and there are no disputes or litigation

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pending or threatened with respect to any such plans, and no such claim, dispute
or litigation appears reasonably likely to arise.

(i) Except as set forth in Exhibit 3.12(i) or as contemplated by this
Agreement or disclosed to Bancshares, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (i)
result in any payment to be made by Republic, Bancshares, any Republic
Subsidiary, or any Commonly Controlled Entity including, without limitation,
severance, unemployment compensation, or otherwise becoming due to any employee,
or (ii) increase or vest any benefits otherwise payable under any Republic
Benefit Plan other than full vesting as a result of termination of the First
Republic Bank 401(k) Plan and Trust.

(j) With respect to any Republic Benefit Plan that is a Welfare Plan (i) no
such Benefit Plan is funded through a "welfare benefit fund," as such term is
defined in Section 419(e) of the Code, (ii) each such Republic Benefit Plan that
is a "group health plan," as such term is defined in Section 5000(b)(1) of the
Code, complies in all material respects with the applicable requirements of
Section 4980B of the Code and Sections 601-609 of ERISA, and (iii) each such
Republic Benefit Plan may be amended or terminated without any liability to
Republic or any Republic Subsidiary on or at any time after the consummation of
this Agreement.

(k) Neither Republic, any Republic Subsidiary, nor a Commonly Controlled
Entity has incurred any material liability with respect to a Pension Plan (other
than for contributions not yet due).

(l) Except as set forth in Exhibit 3.12(l) or as required by applicable
law, since June 30, 1996 there has not been any adoption of amendment in any
material respect of any Republic Benefit Plan. Except as disclosed in Exhibit
3.12(l) or elsewhere in this Agreement, there exist no employment, consulting,
severance, termination or indemnification agreements, arrangements or
understandings between Republic or any Republic Subsidiary and any current or
former employee, officer or director of Republic or any Republic Subsidiary.

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

3.14. Conduct of Republic to Date. Except as contemplated by this Agreement
and the Plan of Merger or as described in Exhibit 3.14, from and after December
31, 1996 through the date of this Agreement: (a) Republic and the Republic
Subsidiaries have carried on their respective businesses in the ordinary and
usual course consistent with past practices, (b) neither Republic nor any
Republic Subsidiary has issued or sold any capital stock or issued or sold any
corporate debt securities which would be classified as long term debt on the
consolidated balance sheet of Republic, (c) neither Republic nor any Republic
Subsidiary has granted any option for the purchase of capital stock, effected
any stock split, or otherwise changed its capitalization, (d) Republic has not
declared, set aside, or paid any cash or stock dividend or other distribution in
respect to its capital stock, (e) neither Republic nor any Republic Subsidiary
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 Republic nor any Republic Subsidiary 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 Republic nor any Republic Subsidiary 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 Republic nor any Republic Subsidiary 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 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
Republic Benefit Plan in respect

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of any of present or former directors, officers or other employees; or agreed to
do any of the foregoing, (i) neither Republic nor any Republic Subsidiary 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
Republic nor any Republic Subsidiary has cancelled or compromised any debt to an
extent exceeding $320,000.00 owed to Republic or any Republic Subsidiary or
claim to an extent exceeding $320,000.00 asserted by Republic or any Republic
Subsidiary, (k) neither Republic nor any Republic Subsidiary has entered into
any transaction, contract, or commitment outside the ordinary course of its
business, (1) neither Republic nor any Republic Subsidiary 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 Republic and the Republic Subsidiaries,
and (n) Republic and the Republic Subsidiaries 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, 1996, there has been no
material adverse change in the financial condition, results of operations or
business of Republic.

3.16. Properties, Leases and Other Agreements. Except (i) with respect to
debts reflected in the Republic 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 Republic Financial Statements or acquired since the
date of such Statements, Republic and the Republic Subsidiaries 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
Republic Financial Statements, and all personal and real property acquired since
the date of such Republic 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 Republic and
the Republic Subsidiaries have been reasonably maintained and are in good and
serviceable condition, reasonable wear and tear excepted. All leases material to
Republic and the Republic Subsidiaries pursuant to which Republic or any
Republic Subsidiary, 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 Republic or any Republic
Subsidiary, or to the knowledge of Republic or any Republic Subsidiary, 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 written leases govern the rights of the respective
landlords of Republic and the Republic Subsidiaries.

3.17. No Untrue Statements. No representation or warranty hereunder or
information contained in any financial statement or any other document delivered
to Bancshares 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. Proper Documentation. With respect to all loans to borrowers which
are payable to Republic or any Republic Subsidiary 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 Republic or any Republic Subsidiary
in excess of $320,000.00:

(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, reorganiza-

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tion, 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 Bancshares 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 Republic or any Republic Subsidiary to
secure each loan;

(d) Except as disclosed in Exhibit 3.18(d), Republic or a Republic
Subsidiary 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) Republic or a Republic Subsidiary holds validly perfected liens or
security interests in the collateral granted to them to secure all loans,
all with the intended priority, 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) All guaranties granted to Republic and the Republic Subsidiaries
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);

(g) With respect to any loans in which Republic or a Republic
Subsidiary has 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 Republic nor any Republic 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.

3.20. Brokers or Finders. Republic represents, as to itself, that no agent,
broker, investment banker, financial adviser 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,
except for fees due to Brown Burke Capital Partners, Inc. which shall be borne
solely by Republic.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BANCSHARES

Bancshares hereby represents and warrants to Republic as follows:

4.01. Organization, Standing and Power. Bancshares 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
Bancshares and its subsidiaries. Bancshares is not qualified to do business in
any other state or foreign jurisdiction, and its ownership or leasing of
property and the conduct of its business does not require it to be so qualified,
except where the failure to be so qualified would not have a material adverse
effect on Bancshares. Bancshares is registered as a bank holding company with
the FRB under the BHC Act.

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4.02. Authority. Subject to the approval of this Agreement and the Plan of
Merger by the shareholders of Bancshares, Bancshares 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 Bancshares' board of directors. This
Agreement and the Plan of Merger have been duly executed and delivered by
Bancshares and, subject to shareholder and regulatory approval, each constitutes
a valid and binding obligation of Bancshares 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 Bancshares or any of their 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 Bancshares or any of its subsidiaries or their respective
properties or assets. Other than as described below 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, Louisiana 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 Bancshares in connection with the execution and delivery of
this Agreement and the Plan of Merger by Bancshares or the consummation by
Bancshares of the transactions contemplated hereby and thereby, the failure to
obtain which would have a material adverse effect on Bancshares or any
Bancshares subsidiary.

4.03. Capital Structure of Bancshares. The authorized capital stock of
Bancshares consists of 24,000,000 shares of common stock, $1.00 par value, and
500,000 shares of preferred stock, $1.00 par value, of which 9,851,892 shares of
common stock are issued and outstanding. Bancshares has no issued and
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. All outstanding shares of Bancshares common stock
are validly issued, fully paid, nonassessable, and not subject to preemptive
rights. Except as described in Exhibit 4.03, there are no options, warrants,
calls, rights, or agreements of any character whatsoever to which Bancshares is
a party or by which Bancshares 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 Bancshares is obligated to grant, extend or
enter into any such option, warrant, call, right or agreement. Notwithstanding
the foregoing or any other provision of this Agreement, (i) the issuance of
options to purchase common stock of Bancshares to executive officers of
Bancshares and its subsidiaries, (ii) the issuance of shares of common stock
pursuant to the exercise of outstanding options, (iii) an increase in the
authorized common stock of Bancshares, (iv) an increase in the outstanding
common stock of Bancshares pursuant to a stock split or stock dividend, or (v) a
commitment to issue or the issuance of additional shares of Bancshares common
stock in connection with any acquisition by Bancshares of a bank or corporation
or business assets through merger or otherwise, shall not constitute
noncompliance with or a breach of any representation, warranty, or other
provision of this Agreement and, except in the case of a stock split or stock
dividend, shall not require any adjustment in the Purchase Price.

4.04. Bancshares Financial Statements. (a) The (i) consolidated balance
sheets of Bancshares as of December 31, 1996 and 1995 and the related
consolidated statements of income, consolidated statements of cash flows and
consolidated statements of shareholders equity for the years then ended
certified by Arthur Andersen LLP and (ii) the internally prepared and unaudited
consolidated financial statements for Bancshares and its subsidiaries dated
September 30, 1997 (collectively, the "Bancshares Financial Statements") copies
of which have been furnished by Bancshares to Republic, have been prepared in
accordance with (A) generally accepted accounting principles and practices with
respect to item (i) and (B) with respect to item (ii), 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

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of a non-material nature), and present fairly the consolidated financial
condition of Bancshares, at the dates, and the consolidated results of
operations and cash flows for the periods, stated therein.

(b) Neither Bancshares nor any Bancshares subsidiary has any liability of
any nature, whether direct, indirect, accrued, absolute, contingent or
otherwise, that is material to Bancshares, except as provided for or disclosed
in the Bancshares Financial Statements and except for such of the following
liabilities as were or 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. Bancshares Reports. Bancshares 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 "Bancshares Reports")
except where such failure to file would not have a material adverse effect on
the business operations or financial condition of Bancshares. At the time they
were filed the Bancshares 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. The Bancshares Reports
have been amended, updated or supplemented whenever such amendment, updating or
supplementation has been necessary to remain in compliance.

4.06. Authorizations; Compliance with Applicable Laws. Bancshares and its
subsidiaries hold all authorizations, permits, licenses, variances, exemptions,
orders and approvals of all Governmental Entities that are material to the
operations of the businesses of Bancshares and its subsidiaries (the "Bancshares
Permits"). Bancshares and its subsidiaries are in compliance with the terms of
the Bancshares Permits, except where the failure to comply would not have a
material adverse effect on Bancshares. The businesses of Bancshares and its
subsidiaries are not being conducted in violation of any 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 Bancshares.
Except for normal recurring regulatory examinations no investigation or review
by any Governmental Entity with respect to Bancshares 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 Bancshares or any Bancshares subsidiary or in
which Bancshares or any Bancshares 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 Bancshares or a
Bancshares subsidiary in its capacity as a trustee, or properties in which any
venture capital or similar unit of Bancshares or a Bancshares subsidiary has

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or had an interest (the "Bancshares 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
Bancshares or a Bancshares subsidiary is subject to or reasonably likely to
incur a material liability. Neither Bancshares nor any Bancshares subsidiary is
subject to or reasonably likely to incur a material liability as a result of its
ownership, lease, operation, or use of any Bancshares Property or as a result of
its investment or security interest (as described above) in any Bancshares
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 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 Bancshares or any Bancshares subsidiary relating
to the Bancshares 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 Bancshares or any Bancshares subsidiary with respect
thereto.

4.07. Litigation and Claims. Except as disclosed in Exhibit 4.07 (a)
neither Bancshares nor any Bancshares 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 Bancshares or
any Bancshares subsidiary pending or threatened, which will have or can
reasonably be expected to have a material adverse effect on Bancshares 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 Bancshares or any Bancshares subsidiary as a result of examination by any
bank regulatory authority.

4.08. Material Adverse Change. Since December 31, 1996, there has been no
material adverse change in the financial condition, results of operations or
business of Bancshares.

4.09. Not in Default. Neither Bancshares nor any Bancshares 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.

4.10. Legality of Bancshares Stock. The Bancshares Stock to be issued upon
consummation of the Merger, when issued and delivered in accordance with the
terms hereof, will be duly authorized, validly issued, fully paid and
non-assessable, and free of preemptive rights.

4.11. Brokers or Finders. Bancshares represents, as to itself, that no
agent, broker, investment banker, financial adviser 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.

ARTICLE V

COVENANTS OF REPUBLIC

5.01. Affirmative Covenants. Republic hereby covenants and agrees with
Bancshares that prior to the Effective Time, unless the prior written consent of
Bancshares shall have been obtained, which consent shall not be unreasonably
withheld, and except as otherwise contemplated herein, Republic will and will
cause each of the Republic Subsidiaries to:

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

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

(c) use reasonable efforts to maintain and keep its 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;

(e) perform in all material respects all obligations required to be
performed by it 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 Bancshares notice of all boards of directors meetings and,
except to the extent that Republic's legal counsel advises the directors
that provision of such information would constitute a breach of their
fiduciary duties, provide Bancshares with all minutes of all such meetings,
including materials and communications provided to the directors in
connection with such meetings and attachments to all minutes.

5.02. Negative Covenants. Except as specifically contemplated by this
Agreement, from the date hereof until the earlier of the termination of the
Agreement or the Effective Time, Republic shall not, and Republic will cause
each of the Republic Subsidiaries not to, without the prior written consent of
Bancshares, which consent shall not be unreasonably withheld, do 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) except as disclosed in Exhibit 3.14 and except in the ordinary
course of business, (i) grant any bonuses or increase in compensation to
its 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 its retirement benefit liabilities, (iii) adopt, enter into,
amend or modify any Republic Benefit Plan except as provided herein, or
(iv) hire any executive officer or elect any new director;

(c) declare or pay any dividend on, or make any other distribution in
respect of, its outstanding shares of capital stock, except dividends by
the Republic Subsidiaries and except for regular dividends payable in the
ordinary course of business consistent with past practices;

(d) (i) redeem, purchase or otherwise acquire any shares of its
capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, or any options, warrants,
conversion or other rights to acquire any shares of its 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
its 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 its
capital stock;

(e) except with respect to performance shares or conversion of
Republic Debentures, issue, deliver, award, grant or sell, or authorize or
propose the issuance, delivery, award, grant or sale of, any shares of its
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;

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(f) propose or adopt any amendments to its corporate charters or
bylaws except as provided in this Agreement;

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

(h) except in its fiduciary capacities, purchase any shares of
Bancshares common stock;

(i) except as described in Exhibit 5.02(i), change any method of
accounting in effect at December 31, 1996, 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, 1996, except as may be required by law or
generally accepted accounting principles;

(j) take action which would or is reasonably likely to (i) adversely
affect the ability of either of Bancshares or Republic to obtain any
necessary approvals of governmental authorities required for the
transactions contemplated hereby; (ii) adversely affect Republic'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;

(k) change in any material respect the lending, investment,
asset/liability management and other material policies concerning the
business of Republic or any Republic Subsidiary, unless required by Law or
order or unless such change does not cause a material adverse effect on
Republic or any Republic Subsidiary;

(l) 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";

(m) except in the ordinary course of business sell or dispose of any
real estate or other assets having a value in excess of $320,000.00; or

(n) agree in writing or otherwise to do any of the foregoing.

5.03. Access and Information. (a) Upon reasonable notice, each party shall
afford to the other party'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, Republic shall (and shall cause the Republic
Subsidiaries to) furnish promptly to Bancshares (i) a copy of each Republic
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 Republic and
the Republic Subsidiaries promptly after such financial statements are
available, (iii) a summary of any action taken by the Boards of Directors, or
any committee thereof, of Republic and the Republic Subsidiaries, and (iv) all
other information concerning its business, properties and personnel as
Bancshares may reasonably request.

(b) Neither party shall be required to provide access to or to disclose
information where such access or disclosure would violate or prejudice the
rights of any customer or other person, would jeopardize the attorney-client
privilege of the institution in possession or control of such information, or
would contravene any law, rule, regulation, order, judgment, decree or binding
agreement. The parties will make appropriate substitute disclosure arrangements
under circumstances in which the restrictions of the preceding sentence apply.

(c) All information furnished by either party shall be treated as the sole
property of the party furnishing the information until consummation of the
Merger contemplated hereby. If this Agreement is terminated prior to the
Effective Date, each party shall return, without retaining copies thereof, all
confidential or non-public documents, work papers and other materials obtained
from the other party or its employees, agents or representatives, in connection
with the transactions contemplated hereby and shall destroy any work papers,
analyses or other materials prepared based on such information, and for a period
of two years following such termination, shall keep such information
confidential, not disclose such information to any other person or

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entity except as may be required by law, and not use such information (including
any work papers, analyses and other materials prepared by it in reliance upon
such information) in its business for any competitive or other commercial
purpose and shall use its best efforts to cause its employees, agents and
representatives to do the same, in each case unless such party can establish by
convincing evidence that such information was then generally in the public
domain through no fault of such party.

(d) Republic shall disclose to Bancshares the results of the examination
report of the FDIC reporting the results of the FDIC's current examination of
Republic as soon as such report is available.

5.04. Update Disclosure. From and after the date hereof until the earlier
of the termination of this Agreement or the Effective Time, Republic and
Bancshares shall provide to the other party prompt notice of any matters which
have become known or 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.

5.05. Accounting. Republic will not, and will use its best efforts to cause
any of its affiliates to not, knowingly take any action that would, in the
reasonable opinion of Bancshares, prevent the Merger from qualifying for pooling
of interests accounting treatment.

5.06. Termination of Certain Agreements. Except for that certain agreement
between Republic and Brown Burke Capital Partners, Inc. and the employment
contract between Bank and Henry Logue and J. Bill Tubre, Republic and the
Republic Subsidiaries shall terminate all existing consulting, professional
services and employment contracts, other than at will employment contracts by no
later than the Closing Date.

5.07. Competing Transaction. Except pursuant to a written opinion of legal
counsel that failure to take such action would violate the directors' fiduciary
duties, Republic shall not and Republic shall cause each of its subsidiaries to
not initiate, solicit or encourage or take any other action to facilitate
(including by way of furnishing information or assistance) or negotiate with any
person in furtherance of 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 agree to or endorse any Competing
Transaction, or authorize any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by Republic or any Republic Subsidiary to take any such
action and, upon learning of such action by any representative, shall take
appropriate steps to terminate such action. Republic shall promptly notify
Bancshares orally 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 Republic or any Republic Subsidiary: 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; or 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).

5.08. Termination of 401(k) Plan. As soon as practicable after execution of
this Agreement, Republic shall make all filings, take all action and receive all
approvals necessary and appropriate to allow termination of the First Republic
Bank 401(k) Profit Sharing Plan and Trust (the "Bank Plan") immediately prior to
the Closing Date. Bancshares shall assist Republic in accomplishing the above
steps. Upon the issuance of a favorable determination letter by the Internal
Revenue Service as to the termination of the Bank Plan, participants in the Bank
Plan can elect a direct rollover of the taxable amount of their accounts in the
Bank Plan to the Bancshares 401(k) Profit Sharing Plan and Trust.

5.09. Additional Reserves. Republic shall cause Bank to increase its
allowance for loan losses by $600,000.00 by December 31, 1997. Republic shall,
through charges to income on Republic's or Bank's books, establish or cause to
be established the following reserves by December 31, 1997:

$906,632.00 for Republic Directors Retirement Plan;

$830,000.00 for performance share compensation; and

$320,000.00 for fee payable to Brown Burke Capital Partners, Inc.

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If as a result of the additional reserves created pursuant to this
Agreement, either Republic's or Bank's capital is inadequate, then Bancshares
shall lend to Republic or Bank an amount of subordinated debt that will qualify
as Tier 1 capital up to the amount of reserves required under this Agreement
that has affected Tier 1 capital. Said subordinated debt shall be repaid when it
is no longer required to satisfy regulatory concerns. This Section 5.09 shall
survive a termination of this Agreement.

ARTICLE VI

ADDITIONAL AGREEMENTS

6.01. Shareholders Approval. The Board of Directors of each of Bancshares
and Republic will (a) take all steps necessary to call, give notice of, convene
and hold a special meeting of its shareholders as soon as practicable for the
purpose of approving this Agreement and the transactions contemplated hereby and
for such other purposes as may be necessary or desirable, (b) vote as directors
in favor of approving this Agreement and recommend to its shareholders the
approval of this Agreement and the transactions contemplated hereby and such
other matters as may be submitted to its shareholders in connection with this
Agreement, and (c) cooperate and consult with each other with respect to each of
the foregoing matters.

6.02. Governmental and Other Approvals. Each of Republic and Bancshares
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 SEC 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 requirements imposed upon
either of them or any of their subsidiaries in connection with the Merger. Each
of Republic and Bancshares 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 Bancshares,
Republic 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, Republic and Bancshares shall
respectively, prepare and file as and when required all Republic Reports and
Bancshares Reports.

(b) Republic and Bancshares shall prepare such Republic Reports and
Bancshares 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
Republic Report or Bancshares Report containing financial information of the
type included in the Republic Financial Statements or the Bancshares Financial
Statements, the financial information (A) is prepared in accordance with
accounting principles and practices as utilized in the Republic Financial
Statements or the Bancshares Financial Statements, applied on a consistent basis
(except as stated therein or in the notes thereto) (B) presents fairly the
consolidated financial condition of Republic or Bancshares, 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. 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 Bancshares with full title
to all properties, assets, rights, approvals,

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immunities and franchises of Republic or any Republic Subsidiary, the proper
officers and directors of each party to this Agreement shall take all such
necessary action.

6.05. Indemnification. (a) Bancshares will indemnify and hold harmless
Republic, each of its directors, each of its officers and each person, if any,
who controls Republic within the meaning of the Securities Act against any
losses, claims, damages or liabilities, joint, several or solidary, to which
they or any of them may become subject, under the Securities Act, any state
securities or blue sky laws, or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in the registration statement filed with the SEC to register the
Bancshares Stock (the "Registration Statement"), or in any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each such person for any legal or
other expenses reasonably incurred, promptly as they are incurred, by such
person in connection with investigating or defending any such action or claim;
provided, however, that Bancshares shall not be liable in any case to the extent
that any such loss, claim, damage or liability (or action in respect thereof)
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in the Registration Statement or any such
amendment or supplement in reliance upon or in conformity with information
furnished to Bancshares by or on behalf of Republic for use therein.

(b) Republic will indemnify and hold harmless Bancshares, each of its
directors, each of its officers and each person, if any, who controls Bancshares
within the meaning of the Securities Act against any losses, claims, damages or
liabilities, joint, several or solidary, to which they or any of them may become
subject, under the Securities Act, any state securities or blue sky laws, or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, or
in any amendment or supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each such person for
any legal or other expenses reasonably incurred, promptly as they are incurred,
by such person in connection with investigating or defending any such action or
claim; provided, however, that Republic shall be liable in any case only to the
extent that any such loss, claim, damage or liability (or action in respect
thereof) arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement or
any such amendment or supplement in reliance upon or in conformity with
information furnished to Bancshares by or on behalf of Republic for use therein.

(c) Promptly after receipt by an indemnified party under subparagraph (a)
or (b) above of notice of the commencement of any action such indemnified party
shall, if a claim in respect thereof is to be made against an indemnifying party
under either such subparagraph, notify the indemnifying party in writing of the
commencement thereof. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it shall wish to assume the defense thereof, with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under such subparagraph for any legal expenses of other counsel or any other
expenses subsequently incurred by such indemnified party; provided, however, if
the indemnifying party elects not to assume such defense or counsel for the
indemnified parties advises in writing that there are material substantive
issues which raise conflicts of interest between the indemnifying party and the
indemnified party, such indemnified party may retain counsel satisfactory to
him, and the indemnifying party shall pay all reasonable fees and expenses of
such counsel for the indemnified party promptly as statements therefor are
received.

(d) Subsections (a) and (c) of this Section 6.05 shall survive Closing for
a period of three years.

6.06. Environmental Audits. Within sixty (60) days after the date of this
Agreement Bancshares will designate any real estate presently or formerly owned
by Republic for which Bancshares desires to obtain Phase I environmental audits
(the "Environmental Audits"). Bancshares shall promptly thereafter make
arrangements to obtain the Environmental Audits at Bancshares' expense.

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6.07. Benefits. From and after the Effective Time, Bancshares will, subject
to compliance with applicable legal and regulatory requirements, provide
coverage for all employees of Republic or any Republic Subsidiary under all
Bancshares employee benefit plans for which they are eligible, as soon as
practicable after the Effective Time. All prior years of service with Republic
or any Republic Subsidiary of such employees will be counted for eligibility
purposes under all Bancshares qualified employee pension benefit and welfare
benefit plans and will be counted for both eligibility and vesting purposes
under the Bancshares 401(k) Profit Sharing Plan and Trust.

6.08. Anti-Dilution. If prior to the Effective Time the outstanding shares
of Bancshares Stock shall be changed into a different number of shares or a
different class by reason of any reclassification, recapitalization, split-up,
combination, readjustment or similar transaction, or if a stock dividend shall
be declared, appropriate and proportionate adjustment or adjustments will be
made in the Purchase Price provided in Section 2.01(a).

6.09. Republic Directors Retirement Plan. The Republic Directors Retirement
Plan ("Directors Plan") shall be terminated immediately prior to Closing, and
Bank shall pay to participants $906,632.00 which amount represents the vested
obligations under the Directors Plan. Said amount shall be paid to participants
prior to Closing and in full satisfaction of all obligations under the Directors
Plan. Each participant in the Directors Plan shall contractually waive all
rights and claims to any benefits under the Directors Plan other than those
described herein at the time of such payments.

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 Republic Common Stock and the Bancshares 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 FRB and other necessary
banking authorities without any condition not acceptable to Bancshares, 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) State Banking Authority. The LOFI and Arkansas State Bank
Commissioner shall have approved the Merger without any condition not
acceptable to Bancshares.

(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 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 Bancshares, Republic or any affiliate,
subsidiary, 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 as soon as practicable
but in no event later than June 30, 1998 unless extended by Republic and
Bancshares.

(g) Consents Under Agreements. Bancshares, Republic 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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(h) Securities Laws. A registration statement for the Bancshares 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. Bancshares
shall have obtained all securities or "blue sky" permits and other
authorizations necessary under state securities laws for Bancshares to
issue the Bancshares Stock and consummate the Merger.

(i) Employment Agreement. Bancshares and Henry Logue shall have
executed an employment agreement in the form attached hereto as Exhibit
7.01(i).

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

(a) Representations and Warranties. Each of the representations and
warranties of Republic set forth in this Agreement shall be true and
correct in all material 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.

(b) Performance of Obligations of Republic. Republic 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 Bancshares shall have received a certificate signed
on behalf of Republic by the chief executive officer and by the chief
financial officer of Republic to such effect.

(c) Opinion of Counsel. Republic shall have delivered to Bancshares an
opinion of its counsel, Jones, Walker, Waechter, Poitevent, Carrere &
Denegre, L.L.P., dated as of the Closing Date and in form and substance
satisfactory to Bancshares, to the aggregate effect that: (i) Republic and
the Republic Subsidiaries have been duly incorporated and organized and
each is a corporation or financial institution validly existing in good
standing under the laws of Louisiana, (ii) Republic has full corporate
power and authority to enter into this Agreement and the Plan of Merger and
to consummate the transactions contemplated thereby; (iii) all corporate
proceedings and other actions on the part of Republic 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;
(iv) this Agreement and the Plan of Merger have been duly and validly
authorized, executed and delivered on behalf of Republic and constitute
(subject to standard exceptions to enforceability arising from the
bankruptcy laws and rules of equity) valid and binding agreements of
Republic; and (v) the execution, delivery and performance of the Agreement
by Republic and the consummation of the Merger (a) do not violate any
presently existing provision of any law, or, to counsel's actual knowledge,
any rule or regulation applicable to, or any judgment, order or decree
which is binding upon Republic or any Republic Subsidiary, (b) do not
conflict with any provisions of the articles of incorporation or by-laws of
Republic or any Republic Subsidiary, and (c) do not conflict with or
constitute a default under any material indenture or agreement which is, to
counsel's actual knowledge, binding upon Republic or any Republic
Subsidiary. In rendering such opinion, said counsel may rely upon
certificates of officers of Republic or any Republic Subsidiary, state
officials, and other regulatory authorities, and on opinions of other
counsel.

(d) No Material Adverse Change. There shall have been no material
adverse change since December 31, 1996 in the financial condition, results
of operations or business of Republic.

(e) Environmental Audits. The Environmental Audits shall, to
Bancshares's satisfaction, reflect no material problems under Environmental
Laws.

(f) Pooling Opinion. Bancshares shall have received an opinion from
Arthur Andersen LLP 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; provided, however, that this
condition shall not apply if Bancshares takes any action to intentionally
prevent fulfilment of this condition.

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(g) Affiliates. Each person who receives a portion of the Bancshares
Stock and who might reasonably be considered to be an affiliate of
Republic, as defined in paragraph (a) of Rule 144 of the Rules of the SEC
under the Securities Act, shall have executed and delivered at Closing a
letter substantially in the form set forth in Exhibit 7.02. A list of such
persons is attached hereto as Exhibit 7.02(g), which Exhibit shall be
updated on the Closing Date.

(i) Consents Under Agreements. Bancshares and its subsidiaries shall
have obtained the consent or approval of each person whose consent or
approval of any transaction contemplated herein is required under any loan
or credit agreement, note, mortgage, indenture, lease or other agreement or
instrument.

(j) Performance and Conversion Shares. Each person having a right to
receive performance shares from Republic at Closing and each holder of a
Republic Debenture shall have entered into a written agreement with
Bancshares and Republic providing that each such person will accept in full
satisfaction of all rights to performance shares or in full satisfaction of
all rights under the Republic Debentures, whichever is applicable, that
portion of the Purchase Price such person is entitled to under Section
2.01(a) hereof. Each holder of a Republic Debenture shall have surrendered
such Debenture at Closing for cancellation.

(k) Dissenting Shares. The number of Dissenting Shares shall not
exceed 10% of the Republic Common Stock.

(l) Examination Report. The report of the current examination of
Republic by the FDIC shall not contain any exception, condition,
requirement or recommendation that is not acceptable to Bancshares,
provided that Bancshares shall raise its objection to any such exception,
condition, requirement or recommendation within forty-five (45) days after
it is first given access to said report.

(m) Directors Plan. The Directors Plan shall have been terminated and
each participant shall have executed a waiver as provided in Section 6.09.

7.03. Conditions to Obligations of Republic. The obligation of Republic to
effect the Merger are subject to the satisfaction of the following conditions
unless waived in writing by Republic:

(a) Representations and Warranties. Each of the representations and
warranties of Bancshares set forth in this Agreement shall be true and
correct in all material 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 Republic shall have received a certificate signed on behalf of
Bancshares by the chief executive officer and by the chief financial
officer of Bancshares to such effect.

(b) Performance of Obligations of Bancshares. Bancshares 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 Republic shall have received a certificate signed on
behalf of Bancshares by the chief executive officer and by the chief
financial officer of Bancshares to such effect.

(c) Opinion of Counsel. Bancshares shall have delivered to Republic an
opinion of its counsel, Mitchell, Williams, Selig, Gates & Woodyard,
P.L.L.C., dated as of the Closing Date and in form and substance
satisfactory to Republic, to the aggregate effect that: (i) Bancshares has
been duly incorporated and organized and is a corporation validly existing
in good standing under the laws Arkansas, (ii) Bancshares has full
corporate power and authority to enter into this Agreement and the Plan of
Merger and to consummate the transactions contemplated thereby; (iii) all
corporate proceedings and other actions on the part of Bancshares necessary
to be taken in connection with the Merger and (except for the filing of the
Certificate of Merger and Articles of Merger) necessary to make same
effective have been duly and validly taken; (iv) this Agreement, the Plan
of Merger, the Articles of Merger and the Certificate of Merger have been
duly and validly authorized, executed and delivered on behalf of Bancshares
and constitute (subject to standard exceptions to enforceability arising
from the bankruptcy laws and rules of equity) valid and binding agreements
of Bancshares; (v) the execution, delivery and performance of the Agreement
by Bancshares and the consummation of the Merger (a) do not violate

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any presently existing provision of any law, or to counsel's actual
knowledge, any rule or regulation applicable to, or any judgment, order or
decree which is binding upon Bancshares or any Bancshares subsidiary, (b)
do not conflict with any provisions of the articles of incorporation or
by-laws of Bancshares or any Bancshares subsidiary, and (c) do not conflict
with or constitute a default under any material indenture or agreement
which is, to counsel's actual knowledge, binding upon Bancshares or any
Bancshares subsidiary, and (vi) the Bancshares Stock will, when issued, (a)
be registered under the Securities Act, (b) be validly issued, fully paid
and nonassessable, and (c) Bancshares will have made such filings or given
such notices as may be required by applicable "Blue Sky" laws. In rendering
such opinion, said counsel may rely upon certificates of officers of
Bancshares or any Bancshares subsidiary, state officials, and other
regulatory authorities, and on opinions of other counsel.

(d) No Material Adverse Change. There shall have been no material
adverse change since December 31, 1996 in the financial condition, results
of operations or business of Bancshares.

(e) Federal Income Tax Opinion. Republic shall have received an
opinion from counsel to Republic that, for federal income tax purposes, (i)
the Merger will constitute a reorganization within the meaning of Section
368(a) of the Code; (ii) no gain or loss will be recognized by holders of
Republic Common Stock or the Republic Debentures upon receipt of the
Bancshares Stock except for cash received in lieu of fractional shares or
accrued interest on the Republic Debentures, (iii) the aggregate tax basis
of the Bancshares Stock received by a Republic Shareholder will be the same
as the aggregate basis of the Republic Common Stock surrendered in exchange
therefor, and (iv) the holding period of the Bancshares Stock to be
received by each Republic Shareholder will include the period during which
the Shareholder held the Republic Common Stock surrendered in exchange
therefor, provided that the Republic Common Stock is held as a capital
asset as of the date of exchange.

(f) Fairness Opinion. Republic shall have received letters from Brown,
Burke Capital Partners, Inc. dated the date of the mailing of the Proxy
Statement to the Republic Shareholders and dated the date of the meeting of
Republic Shareholders, in each case in form and substance acceptable to
Republic, confirming such financial advisor's prior opinion to the Board of
Directors of Republic that the consideration to be paid in the Merger is
fair to the Republic Shareholders from a financial point of view.

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 Bancshares and the
Board of Directors of Republic;

(b) by either Bancshares or Republic (A) if there has been a breach in
any material respect of any representation, warranty, covenant or agreement
on the part of Republic, on the one hand, or Bancshares on the other hand,
respectively, set forth in this Agreement, or (B) if any representation or
warranty of Republic on the one hand, or Bancshares on the other hand,
respectively, shall be discovered to have become untrue in any material
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 Bancshares or Republic if any permanent Injunction
preventing the consummation of the Merger shall have become final and
nonappealable;

(d) by either Bancshares or Republic if the Merger shall not have been
consummated on or before June 30, 1998, for a reason other than the failure
of the terminating party to comply with its obligations under this
Agreement;

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(e) by either Bancshares or Republic if the FRB has denied approval of
the Merger and such denial has become final and nonappealable; or

(f) by Bancshares or Republic 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 Republic or Bancshares 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 Republic, Bancshares 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. 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 Bancshares and Republic at any time prior to the Closing Date only
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,
Bancshares, on the one hand, and Republic, 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 Bancshares, to

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

with a copy to:

Hermann Ivester, Esq.
Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C.
320 West Capitol Avenue, Suite 1000
Little Rock, Arkansas 72201

(b) if to Republic, to:

Mr. Henry Logue
First Republic Bancshares, Inc.
107 Glenda Street
P. O. Box 877
Rayville, Louisiana 71264

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with a copy to:

W. Philip Clinton, Esq.
Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P.
201 St. Charles Avenue, Suite 5100
New Orleans, Louisiana 70170-5100

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.

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. However, the determination by Bancshares
as to when and whether it will make a public statement and the contents of any
such public statement shall be final and binding.

9.07. 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
heirs, 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 Bancshares and Republic 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. Except as otherwise
provided in this Agreement, the representations and warranties contained in this
Agreement and all other terms, covenants and conditions hereof shall merge in
the closing documents and shall not survive Closing or, after Closing, be the
basis for any action by any party; provided, however, as to any matter which is
based upon willful fraud by a party the representations, warranties, terms,
covenants and conditions set forth in this Agreement shall expire only upon
expiration of the applicable statute of limitations.

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IN WITNESS WHEREOF, Republic and Bancshares 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
Chief Executive Officer

Attest:

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

FIRST REPUBLIC BANCSHARES, INC.

By: /s/ GEORGE W. BOLTON, JR.
----------------------------------
George W. Bolton, Jr.
Chairman and President

Attest:

/s/ HENRY LOGUE
- ----------------------------------
Henry Logue, Secretary

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EXHIBIT 7.02
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
First Republic Bancshares, Inc., a Louisiana Corporation ("Republic"). Pursuant
to the merger (the "Merger") of Republic 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 ,
1997, 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 Shares issued to me pursuant to the Merger
have been registered under the Act in the Registration Statement on SEC Form
S-4, as amended, Registration No. ("Registration Statement") as filed with the
SEC, receipt of a copy of the Proxy Statement/Prospectus included in said
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 unless (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 compliance with
Rule 145 or 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 and its counsel may
have a reasonable opportunity to review the documentation and form an opinion as
to the applicability 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 any of the Shares unless First United has made public
disclosure of financial results reflecting 30 days' of post-Merger combined
operations of Republic and First United within the meaning of Section 201.01 of
the SEC's Codification of Financial Reporting Policies. First United has agreed
to make the required public disclosure of financial results as set out above as
soon as feasible after the Merger is consummated. In addition, I hereby
represent and warrant to First United that I have not made any sales of Republic
or First 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 First United or Republic 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 Republic.

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 conformity with the volume
and other

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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 to 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 register 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 understand and agree that stop transfer instructions will be issued
with respect to the Shares and there will be placed on the certificates
representing such Shares, or any certificate delivered in substitution therefor,
a legend stating in substance:

"The shares represented by this Certificate were issued in a transaction to
which Rule 145 under the Securities Act of 1933, as amended, applied. The
shares represented by this certificate may be transferred only in
accordance with the terms of a letter agreement dated , 1998,
by the registered holder in favor of First United Bancshares, Inc., a copy
of which agreement is on file at the principal offices of First United
Bancshares, Inc."

I have been informed by First United that after the restrictions imposed by
Rule 145 have expired First United will, upon my request, reissue share
certificates for the shares which do not contain a restrictive legend.

6. I understand and agree that unless the transfer by me of Shares is a
sale made in compliance with the provisions of this letter, First United
reserves the right to place the following legend on any certificates issued to
my transferee:

"The shares represented by this Certificate have not been registered under
the Securities Act of 1933, as amended, and were acquired from a person who
received such shares in a transaction to which Rule 145 under the
Securities Act of 1933, as amended, applied. The shares have not been
acquired by the holder with a view to, or for resale in connection with,
any distribution thereof within the meaning of the Securities Act of 1933,
as amended, and may not be sold, pledged otherwise transferred unless the
shares have been registered under the Securities Act of 1933, as amended,
or an exemption from registration is available."

7. I understand and agree that the legends set forth in paragraphs 5 and 6
above shall be removed by delivery of substitute Certificates without any legend
if I deliver to First United a copy of a letter from the staff of the
Commission, or an opinion of counsel in form and substance reasonably
satisfactory to First United, to the effect that no such legend is required for
the purpose of the Securities Act.

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<PAGE> 117

8. 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

I have carefully read this letter and have had an adequate opportunity to
review the Merger Agreement and understand the requirements and the limitations
imposed upon the distribution, sale, transfer or other disposition of Republic
common stock or Shares of First United.

Very truly yours,

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EXHIBIT A

PLAN OF MERGER

This Plan of Merger, dated as of , 1997 ("Plan of Merger"), by
and between First United Bancshares, Inc., an Arkansas corporation
("Bancshares") and First Republic Bancshares, Inc., a Louisiana corporation
("Republic").

WHEREAS, Republic is a corporation with authorized capital stock consisting
of 1,000,000 shares of common stock, $10.00 par value of which 38,287 shares of
common stock ("Republic Common Stock") are validly issued and outstanding and
1,495 shares are held by Republic in its treasury on the date hereof;

WHEREAS, Bancshares is a corporation with authorized capital stock of
24,000,000 shares of common stock, $1.00 par value, of which 9,851,892 shares of
common stock are validly issued and outstanding on the date hereof;

WHEREAS, concurrently with the execution and delivery of this Plan of
Merger, Bancshares and Republic 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 Republic with and into
Bancshares (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") and the Louisiana Business Corporation Law (the "LBCL");

WHEREAS, the Boards of Directors of Bancshares and Republic deem it fair
and equitable to, and in the best interests of, their respective corporations
and shareholders that Republic be merged with and into Bancshares with
Bancshares 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 Republic's and
Bancshares' shareholders for approval, and has recommended that the shareholders
approve the Merger.

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, Republic will be merged with and into Bancshares , which will
continue as the surviving corporation, in accordance with and with the effect
provided in the ABCA.

1.02. Effective Time of the Merger. Subject to the provisions of the Merger
Agreements, articles of merger (the "Articles of Merger") and a certificate of
merger ("Certificate of Merger") shall be duly prepared and executed by
Bancshares and Republic and thereafter delivered to the Secretaries of State of
States of Arkansas and Louisiana, respectively, for filing as provided in the
ABCA and the LBCL 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 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 Republic shall cease and Republic shall be merged with and into
Bancshares ( Bancshares and Republic are sometimes referred to herein as the
"Constituent Corporations" and Bancshares is sometimes referred to herein as the
"Surviving Corporation"), (ii) the Articles of Incorporation of Bancshares in
effect as of the Effective Time (the "Articles") shall be the Articles of
Incorporation of the Surviving Corporation, and (iii) the Bylaws of Bancshares
in effect as of the Effective Time (the "Bylaws") shall be the Bylaws of the
Surviving Corporation.

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(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 THE COMMON STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES

2.01. Conversion of Republic 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 Republic Common Stock, but subject to the rights of dissenting
shareholders of Republic:

(a) Conversion of Republic Common Stock. The issued and outstanding
shares of Republic Common Stock and rights to acquire Republic Common Stock
pursuant to rights to performance shares and conversion rights under
certain convertible debentures 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 Republic Common Stock,
rights to performance shares and convertible debentures 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, rights or debentures 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, right or
debenture in accordance with the Plan of Merger.

2.02. Exchange of Certificates. (a) Exchange Agent. As of the Effective
Time, Bancshares 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 Bancshares (the "Exchange Agent") for exchange in accordance with this
Article II through the Exchange Agent, the number of shares of Bancshares common
stock and cash (the "Exchange Fund") to be paid pursuant to Section 2.01 of the
Agreement.

(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 Republic Common Stock, rights to
performance shares or convertible debentures (the "Certificates") whose
shares or rights were converted into the right to receive shares of
Bancshares common stock and cash 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 Bancshares may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for the Bancshares common stock and cash payment due. Upon
surrender of a Certificate for cancellation to the Exchange Agent or to
such other

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agent or agents as may be appointed by Bancshares, 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 Bancshares 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
Bancshares 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 Republic Common Stock. The
consideration paid upon the surrender of shares of Republic Common Stock,
rights to performance shares and convertible debentures, 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 Republic
Common Stock, convertible debentures, or rights to performance shares, and
there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation or issuance of shares of Republic Common
Stock. 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 Republic for six months
after the Effective Time shall be delivered to Bancshares, upon demand, and
any shareholders of Republic who have not theretofore complied with this
Section 2.02 shall thereafter look only to Bancshares for payment of the
Bancshares common stock and cash due for their Republic stock or rights to
acquire stock.

(f) No Liability. Neither Bancshares, Bancshares nor Republic shall be
liable to any holder of shares of Republic Common Stock or rights to
acquire stock for shares of Bancshares 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 Republic
and Bancshares at any time prior to the Effective Time. If the Agreement is
terminated in accordance with Article VIII thereof, then this Plan of Merger
will terminate simultaneously and the Merger will be abandoned without further
action by Republic 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, Bancshares
and Republic, 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.

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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 Bancshares, to:

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

with a copy to:

Hermann Ivester, Esq.
Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C.
320 West Capitol Avenue, Suite 1000
Little Rock, Arkansas 72201

(b) if to Republic, to:

Mr. Henry Logue
First Republic Bancshares, Inc.
107 Glenda Street
P. O. Box 877
Rayville, Louisiana 71264

with a copy to:

W. Philip Clinton, Esq.
Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P.
201 St. Charles Avenue, Suite 5100
New Orleans, Louisiana 70170-5100

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, Republic and Bancshares 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:
-----------------------------------
James V. Kelley
Chairman, President and Chief
Executive Officer

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Attest:

- ------------------------------
Robert G. Dudley, Secretary

FIRST REPUBLIC BANCSHARES, INC.

By:
-----------------------------------
George W. Bolton, Jr.
Chairman and President
Attest:

- ------------------------------
Henry Logue, Secretary

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EXHIBIT 7.01(i)

EMPLOYMENT AND
NONCOMPETITION AGREEMENT

THIS EMPLOYMENT AND NONCOMPETITION AGREEMENT ("Agreement") is made
effective , 1998 by and between First Republic Bank, Rayville,
Louisiana ("Bank"), and Henry Logue, an individual residing in ,
Louisiana ("Employee").

WITNESSETH:

WHEREAS, Republic Bancshares, Inc. ("Republic") has entered a certain
Agreement and Plan of Reorganization dated as of , 1997 (the
"Reorganization Agreement") among First United Bancshares, Inc. ("Bancshares")
and Republic, pursuant to which Bank would become a wholly-owned subsidiary of
Bancshares on the terms stated therein; and

WHEREAS, Bancshares entered into the Reorganization Agreement on the
condition that Employee would, in connection with the closing of the transaction
contemplated therein, enter into this Agreement in order to (i) cause the
effective transfer to Bancshares of all of the business and goodwill of Bank,
(ii) provide to Bancshares and Bank assurance that Employee will not compete
with Bancshares or Bank as provided herein and will not take any other action
that would frustrate or interfere with such transfer, and (iii) insure that
Employee will remain in an officer position with Bank for the periods stated
herein to insure that Bancshares obtains the benefits expected under the
Reorganization Agreement; and

WHEREAS, Bancshares would not have been willing to enter into the
Reorganization Agreement in the absence of Employee entering into this
Agreement.

NOW, THEREFORE, for and in consideration of the premises set forth above
and other good and valuable consideration, the receipt, adequacy, and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1. Definitions. For the purposes of this Agreement, the following
definitions shall apply:

Agreement Period means the period beginning on the date Bank becomes a
subsidiary of Bancshares and ending two years thereafter or, if the
Agreement is renewed as provided in Paragraph 7 below, ending four years
after said beginning date.

Change of Control means the occurrence of one or more of the following
events:

(i) Any person or entity (other than any employee benefit plan or
plans of Bancshares or its subsidiaries or any trustee of or fiduciary
with respect to such plan or plans when acting in such capacity) or
any group acting in concert, shall acquire or control twenty-five
percent (25%) or more of the outstanding voting shares of Bancshares;

(ii) Upon a merger, combination, consolidation or reorganization
of Bancshares, the voting securities of Bancshares outstanding
immediately prior thereto do not continue to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity) at least fifty-one percent (51%) of the combined
voting power of voting securities of Bancshares or such surviving
entity outstanding immediately thereafter, or

(iii) All or substantially all of the assets of First United
Bancshares, Inc. are sold or otherwise disposed of.

Competing Business means any state or federally chartered bank or
thrift institution or any group of persons that has applied or intends to
apply for a state or federal charter for a bank or thrift institution which
is engaged in or intends to engage in the provision of banking or thrift
services or products within the Territory.

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<PAGE> 124

Territory means the territory encompassed within Richland, Ouachita,
and Lincoln Parishes.

2. Agreement Not to Compete. During the time Employee is employed by Bank
or another subsidiary of Bancshares (and in the event employment is voluntarily
terminated by Employee for a period of two years after such employment ceases)
Employee will not, either directly or indirectly, (a) for Employee individually
or (b) as an officer, director, shareholder, owner, partner, joint venturer,
employee, promoter, consultant, manager, independent contractor, agent, or in
another similar capacity, participate in a Competing Business within the
Territory. Notwithstanding the preceding sentence to the contrary, Employee may
own 5% or less of a publicly held corporation engaged in a Competing Business.

3. Agreement Not to Solicit Employees. During the time Employee is employed
by Bank or another subsidiary of Bancshares (and in the event employment is
voluntarily terminated by Employee for a period of two years after Employee's
employment by Bank ceases) Employee will not, either directly or indirectly, on
Employee's own behalf or in the service of or on behalf of others, solicit,
divert, or recruit any employee of Bancshares or of any affiliate or subsidiary
of Bancshares to leave such employment or otherwise terminate his/her
employment, whether or not such employment is pursuant to a written contract or
at will.

4. Management Services. Employee agrees that he will continue to serve as
and perform on a full time basis the duties of President and Chief Executive
Officer of Bank for a minimum of two years following the acquisition of Bank by
Bancshares. Employee shall receive the salary in effect at the time of the
acquisition for such period of service, plus (a) merit increases, if any, given
by Bank, (b) a performance bonus equal to the average bonus paid to Employee
during the prior two years, if performance bonuses are given by Bank, and (c)
shall be afforded normal benefits provided to employees of Bancshares and it
subsidiaries. Employee further agrees to use his best efforts to actively
promote the business and best interests of Bancshares and Bank within the
Territory during such period of service as an officer of Bank.

5. Termination. Paragraphs 2, 3 and 4 of this Agreement shall terminate
automatically upon the first to occur of the expiration of the Agreement Period
as defined herein or the death of Employee. Bank may terminate Employee for
cause at any time. In the event Employee's employment is terminated for cause he
shall be paid his salary and other benefits up to the date of termination. In
the event Employee's employment is terminated without cause Employee shall be
paid his salary and other benefits for the remainder of the Agreement Period.
For purposes of this Agreement cause shall mean (a) breach of Employee's duties
under this Agreement, (b) Employee's commission of a dishonest act or act of
moral turpitude in the performance of his duties under this Agreement or (c)
conviction of Employee of a crime involving an act of moral turpitude.

6. Change of Control. If within twelve months from the date of a Change of
Control that occurs during the Agreement Period Employee's employment ceases for
any reason other than death or termination for cause, Employee shall receive a
lump sum payment equal to twice his then current annual salary.

7. Renewal. This Agreement shall automatically be renewed and the Agreement
Period extended for two years unless, pursuant to written notice given to
Employee no less than thirty (30) days prior to the expiration of the two year
period beginning on the date Bank becomes a subsidiary of Bancshares, Bancshares
elects not to renew.

8. Remedies. Employee acknowledges and agrees that Employee has acquired a
special knowledge of the affairs, business and customer operations of Bank and
Employee acknowledges and agrees that irreparable loss and damage will be
suffered by Bank and Bancshares if Employee should breach or violate any of the
covenants and agreements contained in this Agreement. Employee further
acknowledges and agrees that Bancshares would not have entered into the
Reorganization Agreement without this Agreement and that each of the covenants
herein contained is reasonably necessary to protect and preserve the interests
of Bancshares. Employee therefore agrees and consents that, in addition to any
other remedies available to Bank or Bancshares, to the extent permissible by
law, Bank and Bancshares shall be entitled to an injunction or other equitable
relief to prevent a breach by Employee of any of the covenants or agreements
contained in this Agreement.

9. Acknowledgment of Enforceability. Employee hereby acknowledges and
agrees that this Agreement (i) is supported by independent valuable
consideration, (ii) contains reasonable limitations as to time,

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geographical area, and scope of activity to be restrained that do not impose a
greater restraint than is necessary to protect the good will or other business
interests of Bank and Bancshares, and (iii) is entered into in connection with
the sale of a business.

10. Reconstruction of Covenants. Should a court of competent jurisdiction
declare any of the provisions of this Agreement unenforceable due to any
unreasonable restriction of duration, territorial coverage, scope of activity,
or otherwise, in lieu of declaring such provision unenforceable, the court, to
the extent permissible by law, may, at the Company's request, revise or
reconstruct such provisions in a manner sufficient to cause them to be
enforceable.

11. Notices. All notices, consents, demands or other communications
required or permitted to be given pursuant to this Agreement shall be deemed
sufficiently given when delivered personally or by confirmed emplacements during
business days to the appropriate location described below or three (3) business
days after the posting thereof by Bancshares States first-class, registered or
certified mail, return receipt requested, with postage fee prepaid and addressed
as follows:

(a) If to Bancshares:

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

with a copy to:

Hermann Ivester, Esquire
Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C.
320 West Capitol Avenue, Suite 1000
Little Rock, Arkansas 72201-3525

(b) If to Employee:
Mr. Henry Logue
First Republic Bank
107 Glenda Street
P. O. Box 877
Rayville, Louisiana 71264

with a copy to:

W. Philip Clinton, Esq.
Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P.
201 St. Charles Avenue, Suite 5100
New Orleans, Louisiana 70170-5100

12. Choice of Law. The validity, construction, and enforcement of this
Agreement shall be governed by the laws of the State of Louisiana, excluding any
conflict of laws, principles, or rules thereof.

13. Waiver. Any waiver to be enforceable must be in writing and executed by
the party against whom the waiver is sought to be enforced.

14. Severability. Each paragraph of this Agreement shall be viewed as
separate and divisible, and in the event that any paragraph shall be held to be
invalid, the remaining paragraphs shall continue to be in full force and effect.

15. Entire Agreement. This Agreement constitutes the entire agreement and
understanding among the parties hereto relating to the subject matter hereof and
supersedes all prior understandings, written or oral, with respect to the
subject matter hereof.

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<PAGE> 126

16. Amendments. This Agreement may be amended only by an instrument in
writing executed by the parties hereto.

17. Captions. The captions of the sections and paragraphs of this Agreement
are for convenience of reference only and shall not restrict or modify any of
the terms or provisions hereof.

18. Remedies Cumulative. The rights and remedies granted herein are
cumulative and not exclusive of any other right or remedy granted herein or
provided by law.

19. Counterparts. This Agreement may be executed in multiple original
counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same instrument.

IN WITNESS WHEREOF, the undersigned have executed this Agreement effective
as of the date first above written.

FIRST REPUBLIC BANK

By:
---------------------------------
Title:
------------------------------

EMPLOYEE

------------------------------------
Henry Logue

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<PAGE> 127

ANNEX II

RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES

4-27-1301. DEFINITIONS.

In this subchapter:

1. "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by
merger or share exchange of that issuer;

2. "Dissenter" means a shareholder who is entitled to dissent from
corporate action under sec. 4-27-1302 and who exercises that right when and
in the manner required by sec.sec. 4-27-1320 -- 4-27-1328;

3. "Fair value", with respect to a dissenter's shares, means the value
of the shares immediately before the effectuation of the corporate action
to which the dissenter objects, excluding any appreciation or depreciation
in anticipation of the corporate action unless exclusion would be
inequitable;

4. "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair
and equitable under all the circumstances;

5. "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on file
with a corporation;

6. "Beneficial shareholder" means the person who is a beneficial owner
of shares held in a voting trust or by a nominee as the record shareholder;

7. "Shareholder" means the record shareholder or the beneficial
shareholder.

HISTORY. Acts 1987, No. 958, sec. 64-1301; 1987 (1st Ex. Sess.), No. II, sec.
10.

4-27-1302. RIGHT OF DISSENT.

A. A shareholder is entitled to dissent from and obtain payment of the fair
value of his shares in the event of any of the following corporate actions:

1. Consummation of a plan of merger to which the corporation is a
party:

(i) If shareholder approval is required for the merger by sec.
4-27-1103 or the articles of incorporation and the shareholder is
entitled to vote on the merger; or

(ii) If the corporation is a subsidiary that is merged with its
parent under sec. 4-27-1104;

2. Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;

3. Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than in the usual and regular course
of business, if the shareholder is entitled to vote on the sale or
exchange, including a sale in dissolution, but not including a sale
pursuant to court order or a sale for cash pursuant to a plan by which all
or substantially all of the net proceeds of the sale will be distributed to
the shareholders within one (1) year after the date of sale;

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4. An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:

(i) Alters or abolishes a preferential right of the shares;

(ii) Creates, alters, or abolishes a right in respect of
redemption. including a provision respecting a sinking fund for the
redemption or repurchase, of the shares;

(iii) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;

(iv) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution
through issuance of shares or other securities with similar voting
rights; or

(v) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share so created is to be acquired
for cash under sec. 4-27-604; or

5. Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board
of directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.

B. A shareholder entitled to dissent and obtain payment for his shares
under this subchapter may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.

HISTORY. Acts 1987, No. 958, sec. 64-1302; 1987 (1st Ex. Sess.), No. 11, sec.
11.

4-27-1303. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.

A. A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one (1) person and notifies the corporation in writing
of the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares as to which he dissents and his other shares were registered in
the names of different shareholders.

B. A beneficial shareholder may assert dissenters' rights as to shares held
on his behalf only if:

1. He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and

2. He does so with respect to all shares of which he is the beneficial
shareholder or over which he has power to direct the vote.

HISTORY. Acts 1987, No. 958, sec. 64-1303.

4-27-1403 -- 4-27-1319. [RESERVED.]

PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS

4-27-1320. NOTICE OF DISSENTERS' RIGHTS.

A. If proposed corporate action creating dissenters' rights under sec.
4-27-1302 is submitted to a vote at a shareholders' meeting, the meeting notice
must state that shareholders are or may be entitled to assert dissenters' rights
under this chapter and be accompanied by a copy of this chapter.

B. If corporate action creating dissenters' rights under sec. 4-27-1302 is
taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was taken
and send them the dissenters' notice described in sec. 4-27-1322.

HISTORY. Acts 1987, No. 958, sec. 64-1304.

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4-27-1321. NOTICE OF INTENT TO DEMAND PAYMENT.

A. If proposed corporate action creating dissenters' rights under sec.
4-27-1302 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights:

(1) Must deliver to the corporation before the vote is taken written
notice of his intent to demand payment for his shares if the proposed
action is effectuated; and

(2) Must not vote his shares in favor of the proposed action.

B. A shareholder who does not satisfy the requirements of subsection A. of
this section is not entitled to payment for his shares under this subchapter.

HISTORY. Acts 1987, No. 958, sec. 64-1305.

4-27-1322. DISSENTERS' NOTICE.

A. If proposed corporate action creating dissenters' rights under sec.
4-27-1302 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders who satisfied the
requirements of sec. 4-27-1321.

B. The dissenters' notice must be sent no later than ten (10) days after
the corporate action was taken. and must:

1. State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;

2. Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;

3. Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting
dissenters' rights certify whether or not he acquired beneficial ownership
of the shares before that date;

4. Set a date by which the corporation must receive the payment
demand, which date may not be fewer than thirty (30) nor more than sixty
(60) days after the date the notice required by subsection A. of this
section is delivered; and

5. Be accompanied by a copy of this subchapter.

HISTORY. Acts 1987, No. 958, sec. 64-1306.

4-27-1323. DUTY TO DEMAND PAYMENT

A. A shareholder sent a dissenters' notice described in sec. 4-27-1322 must
demand payment, certify whether he acquired beneficial ownership of the shares
before the date required to be set forth in the dissenters' notice pursuant to
sec. 4-27-1322B.3., and deposit his certificates in accordance with the terms of
the notice.

B. The shareholder who demands payment and deposits his share certificates
under subsection A. of this section retains all other rights of a shareholder
until these rights are cancelled or modified by the takings of the proposed
corporate action.

C. A shareholder who does not demand payment or deposit his share
certificates where required. each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this subchapter.

HISTORY. Acts 1987, No. 958, sec. 64-1307.

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4-27-1324. SHARE RESTRICTIONS.

A. The corporation may restrict the transfer of uncertificated shares from
the date the payment is received until the proposed corporate action is taken or
the restrictions released under sec. 4-27-1326.

B. The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are
cancelled or modified by the taking of the proposed corporate action.

HISTORY. Acts 1987, No. 958, sec. 64-1308.

4-27-1325. PAYMENT.

A. Except as provided in sec. 4-27-1327, as soon as the proposed
corporation action is taken, or upon receipt of a payment demand, the
corporation shall pay each dissenter who complied with sec. 4-27-1323 the amount
the corporation estimates to be the fair value of his shares, plus accrued
interest.

B. The payment must be accompanied by:

1. The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen (16) months before the date of payment, an
income statement for that year, a statement of changes in shareholders'
equity for that year, and the latest available interim financial
statements, if any;

2. A statement of the corporations' estimate of the fair value of the
shares;

3. An explanation of how the interest was calculated;

4. A statement of the dissenter's right to demand payment under sec.
4-27-1328; and

5. A copy of this subchapter.

HISTORY. Acts 1987, No. 958, sec. 64-1309.

4-27-1326. FAILURE TO TAKE ACTION.

A. If the corporation does not take the proposed action within sixty (60)
days after the date set for demanding payment and depositing share certificates,
the corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.

B. If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under sec. 4-27-1322 and repeat the payment demand procedure.

HISTORY. Acts 1987, No. 958, sec. 64-1310.

4-27-1327. AFTER-ACQUIRED SHARES.

A. A corporation may elect to withhold payment required by sec. 4-27-1325
from a dissenter unless he was the beneficial owner of the shares before the
date set forth in the dissenters' notice as the date of the first announcement
to news media or to shareholders of the terms of the proposed corporate action.

B. To the extent the corporation elects to withhold payment under
subsection. A. of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of his demand. The corporation shall send with its offer a statement of its
estimate of the fair value of the shares, an explanation of how the interest was
calculated, and a statement of the dissenter's right to demand payment under
sec. 4-27-1328.

HISTORY. Acts 1987, No. 958, sec. 64-1311.

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4-27-1328. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.

A. A dissenter may notify the corporation in writing of his own estimate of
the fair value of his shares and amount of interest due, and demand payment of
his estimate (less any payment under sec. 4-27-1325), or reject the
corporation's offer under sec. 4-27-1327 and demand payment of the fair value of
his shares and interest due, if.

1. The dissenter believes that the amount paid under sec. 4-27-1325 or
offered under sec. 4-27-1327 is less than the fair value of his shares or
that the interest due is incorrectly calculated;

2. The corporation fails to make payment under sec. 4-27-1325 within
sixty (60) days after the date set for demanding payment; or

3. The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty (60) days after the date set
for demanding payment.

B. A dissenter waives his right to demand payment under this section unless
he notifies the corporation of his demand in writing under subsection A. of this
section within thirty (30) days after the corporation made or offered payment
for his shares.

HISTORY. Acts 1987, No. 958, sec. 64-1312.

4-27-1329. [RESERVED.]

JUDICIAL APPRAISAL OF SHARES

4-27-1330. COURT ACTION.

A. If a demand for payment under sec. 4-27-1328 remains unsettled, the
corporation shall commence a proceeding within sixty (60) days after receiving
the payment demand and petition the court to determine the fair value of the
shares and accrued interest. If the corporation does not commence the proceeding
within the sixty-day period, it shall pay each dissenter whose demand remains
unsettled the amount demanded.

B. The corporation shall commence the proceeding, in the circuit court of
the county where the corporation's principal office (or, if none in this state,
its registered office) is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic corporation
merged with or whose shares were acquired by the foreign corporation was
located.

C. The corporation shall make all dissenters (whether or nor residents of
this state) whose demands remain unsettled parties to the proceeding as in an
action a- against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.

D. The jurisdiction of the court in which the proceeding is commenced under
subsection B. of this section is plenary and exclusive. The court may appoint
one (1) or more persons as appraisers to receive evidence and recommend decision
on the question of fair value. The appraisers have the powers described in the
order appointing them, or in any amendment to it. The dissenters are entitled to
the same discovery rights as parties in other civil proceedings.

E. Each dissenter made a party to the proceeding is entitled to judgment:

(1) For the amount, if any, by which the court finds the fair value of
his shares. plus interest, exceeds the amount paid by the corporation: or

(2) For the fair value. plus accrued interest, of his after-acquired
shares for which the corporation elected to withhold payment under sec.
4-27-1327.

HISTORY. Acts 1987, No. 958, sec. 64-1313.

A-II-5
<PAGE> 132

4-27-1331. COURT COSTS AND COUNSEL FEES.

A. The court in an appraisal proceeding commenced under sec. 4-27-1330
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously, or not
in good faith in demanding payment under sec. 4-27-1328.

B. The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:

1. Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of sec.sec. 4-27-1320 -- 4-27-1328; or

2. Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by this chapter.

C. If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.

HISTORY. Acts 1987, No. 958, sec. 64-1314.

A-II-6
<PAGE> 133

ANNEX III

EXTRACT FROM SECTION 131 OF
THE LOUISIANA BUSINESS CORPORATION LAW

C. [A]ny shareholder electing to exercise such right of dissent shall file
with the corporation, prior to or at the meeting of shareholders at which such
proposed corporate action is submitted to a vote, a written objection to such
proposed corporate action, and shall vote his shares against such action. If
such proposed corporate action be taken by the required vote, but by less than
eighty percent of the total voting power, and the merger, consolidation or sale,
lease or exchange of assets authorized thereby be effected, the corporation
shall promptly thereafter give written notice thereof, by registered mail, to
each shareholder who filed such written objection to, and voted his shares
against, such action, at such shareholder's last address on the corporation's
records. Each such shareholder may, within twenty days after the mailing of such
notice to him, but not thereafter, file with the corporation a demand in writing
for the fair cash value of his shares as of the day before such vote was taken;
provided that he state in such demand the value demanded, and a post office
address to which the reply of the corporation may be sent, and at the same time
deposit in escrow in a chartered bank or trust company located in the parish of
the registered office of the corporation, the certificates representing his
shares, duly endorsed and transferred to the corporation upon the sole condition
that said certificates shall be delivered to the corporation upon payment of the
value of the shares determined in accordance with the provisions of this
section. With his demand the shareholder shall deliver to the corporation, the
written acknowledgment of such bank or trust company that it so holds his
certificates of stock. Unless the objection, demand and acknowledgment aforesaid
be made and delivered by the shareholder within the period above limited, he
shall conclusively be presumed to have acquiesced in the corporate action
proposed or taken. . . .

D. If the corporation does not agree to the value so stated and demanded,
or does not agree that a payment is due, it shall, within twenty days after
receipt of such demand and acknowledgment, notify in writing the shareholder, at
the designated post office address, of its disagreement, and shall state in such
notice the value it will agree to pay if any payment should be held to be due;
otherwise it shall be liable for, and shall pay to the dissatisfied shareholder,
the value demanded by him for his shares.

E. In case of disagreement as to such fair cash value, or as to whether any
payment is due, after compliance by the parties with the provisions of
subsections C and D of this section, the dissatisfied shareholder, within sixty
days after receipt of notice in writing of the corporation's disagreement, but
not thereafter, may file suit against the corporation, or the merged or
consolidated corporation, as the case may be, in the district court of the
parish in which the corporation or the merged or consolidated corporation, as
the case may be, has its registered office, praying the court to fix and decree
the fair cash value of the dissatisfied shareholder's shares as of the day
before such corporate action complained of was taken, and the court shall, on
such evidence as may be adduced in relation thereto, determine summarily whether
any payment is due, and, if so, such cash value, and render judgment
accordingly. Any shareholder entitled to file such suit may, within such
sixty-day period, but not thereafter, intervene as a plaintiff in such suit
filed by another shareholder, and recover therein judgment against the
corporation for the fair cash value of his shares. No order or decree shall be
made by the court staying the proposed corporate action, and any such corporate
action may be carried to completion notwithstanding any such suit. Failure of
the shareholder to bring suit, or to intervene in such a suit, within sixty days
after receipt of notice of disagreement by the corporation shall conclusively
bind the shareholder (1) by the corporation's statement that no payment is due,
or (2) if the corporation does not contend that no payment is due, to accept the
value of his shares as fixed by the corporation in its notice of disagreement.

F. When the fair value of the shares has been agreed upon between the
shareholder and the corporation, or when the corporation has become liable for
the value demanded by the shareholder because of failure to give notice of
disagreement and of the value it will pay, or when the shareholder has become
bound to accept the value the corporation agrees is due because of his failure
to bring suit within sixty days after receipt of

A-III-1
<PAGE> 134

notice of the corporation's disagreement, the action of the shareholder to
recover such value must be brought within five years from the date the value was
agreed upon, or the liability of the corporation became fixed.

G. If the corporation or the merged or consolidated corporation, as the
case may be, shall, in its notice of disagreement, have offered to pay the
dissatisfied shareholder on demand an amount in cash deemed by it to be the fair
cash value of his shares, and if, on the institution of a suit by the
dissatisfied shareholder claiming an amount in excess of the amount so offered,
the corporation, or the merged or consolidated corporation, as the case may be,
shall deposit in the registry of the court, there to remain until the final
determination of the cause, the amount so offered, then, if the amount finally
awarded such shareholder, exclusive of interest and costs, be more than the
amount offered and deposited as aforesaid, the costs of the proceeding shall be
taxed against the corporation, or the merged or consolidated corporation, as the
case may be; otherwise the costs of the proceeding shall be taxed against such
shareholder.

H. Upon filing a demand for the value of his shares, the shareholder shall
cease to have any of the rights of a shareholder except the rights accorded by
this section. Such a demand may be withdrawn by the shareholder at any time
before the corporation gives notice of disagreement, as provided in subsection D
of this section. After such notice of disagreement is given, withdrawal of a
notice of election shall require the written consent of the corporation. If a
notice of election is withdrawn, or the proposed corporate action is abandoned
or rescinded, or a court shall determine that the shareholder is not entitled to
receive payment for his shares, or the shareholder shall otherwise lose his
dissenter's rights, he shall not have the right to receive payment for his
shares, his share certificates shall be returned to him (and, on his request,
new certificates shall be issued to him in exchange for the old ones endorsed to
the corporation), and he shall be reinstated to all his rights as a shareholder
as of the filing of his demand for value, including any intervening preemptive
rights, and the right to payment of any intervening dividend or other
distribution, or, if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu thereof, at the
election of the corporation, the fair value thereof in cash as determined by the
board as of the time of such expiration or completion, but without prejudice
otherwise to any corporate proceedings that may have been taken in the interim.

A-III-2
<PAGE> 135

ANNEX IV

FAIRNESS OPINION OF BROWN, BURKE, CAPITAL PARTNERS, INC.

, 1998

Board of Directors
First Republic Bancshares, Inc.
1220 North 18th Street
2nd Floor
Monroe, LA 71201

Dear Members of the Board:

You have asked us to advise you with respect to the fairness to the
shareholders and convertible debt holders of First Republic Bancshares, Inc.
(the Company), from a financial point of view, of the per share purchase price
and terms (the "Per Share Purchase Price and Terms") provided for in the
Agreement and Plan of Reorganization (the "Merger Agreement") dated December 9,
1997 between the Company and First United Bankshares, Inc. ("First United"). The
Merger Agreement provides for a merger (the "Merger") of the Company and First
United pursuant to which the common shareholders, the convertible debt holders
and the holders of rights to receive certain shares of the Company will receive
800,000 First United common shares.

In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to First United and the Company. We
have also reviewed certain other information, including financial forecasts and
budgets, provided to us by First United and the Company, and have discussed with
the Company's management the business and prospects of the Company.

We have also considered certain financial and stock market data of First
United and the Company and we have compared that data with similar data for
other publicly held bank holding companies and we have considered the financial
terms of certain other comparable transactions which have recently been
effected. We also considered such other information, financial studies, analyses
and investigations and financial, economic and market criteria which we deemed
relevant. In connection with our review, we have not independently verified any
of the foregoing information and have relied on its being complete and accurate
in all material respects. With respect to the financial forecasts and budgets,
we have assumed that they have been reasonably prepared on bases reflecting the
best currently available estimates and judgments of First United's and the
Company's managements as to the future financial performance of First United and
the Company. In addition, we have not made an independent evaluation or
appraisal of the assets of First United or the Company and we have assumed that
the aggregate allowances for loan losses for First United and the Company are
adequate to cover such losses. We have solicited third party indications of
interest in acquiring the Company and have considered the results of that
solicitation in arriving at our opinion.

It should be noted that this opinion is based on market conditions and
other circumstances existing on the date hereof and this opinion does not
represent our view as to what the value of the First United common stock
necessarily will be when the First United common stock is issued to the
stockholders and convertible debt holders of the Company upon consummation of
the Merger.

We have acted as financial advisor to the Company in connection with the
Merger and will receive a fee for our services, a significant portion of which
is contingent upon the consummation of the Merger.

We agree to the inclusion of this opinion letter in the Proxy
Statement/Prospectus relating to the Merger. The opinion may not, however, be
summarized, excerpted from or otherwise publicly referred to without our prior
written consent.

A-IV-1
<PAGE> 136

Based upon and subject to the foregoing, it is our opinion that as of the
date hereof, the Per Share Purchase Price and Terms of the Merger are fair to
the common shareholders and convertible debt holders from a financial point of
view.

Very truly yours,

BROWN, BURKE CAPITAL PARTNERS, INC.

A-IV-2
<PAGE> 137

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Arkansas Business Corporation Act of 1987 (the "Act") codified at Ark.
Code Ann. sec. 4-27-101 et. seq. and more specifically at Ark. Code Ann.
sec. 4-27-850 permits an Arkansas Corporation to indemnify directors, officers,
employees and agents under some circumstances, and mandates indemnification
under certain limited circumstances. The Act permits a corporation to indemnify
a director, officer, employee, or agent for expenses (including attorneys'
fees), judgements, fines and amounts paid in settlement actually and reasonably
incurred if such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation.
Indemnification against expenses incurred by a director, officer, employee or
agent in connection with his defense of a proceeding against such person for
actions in such capacity is mandatory to the extent that such person has been
successful on the merits. If a director, officer, employee, or agent is
determined to be liable to the corporation, indemnification for expenses is not
allowable, subject to limited exceptions where a court deems the award of
expenses appropriate. The Act grants express power to an Arkansas corporation to
purchase liability insurance for its directors, officers, employees and agents,
regardless of whether any such person is otherwise eligible for indemnification
by the corporation. Advancement of expenses is permitted, but a person receiving
such advances must repay those expenses if it is ultimately determined that he
is not entitled to indemnifications.

The Amended and Restated Articles of Incorporation and the Bylaws of First
United provides that the directors, officers, employees and agents of First
United shall be indemnified as set forth below.

AMENDED AND RESTATED ARTICLES OF INCORPORATION

TWELFTH. The corporation may indemnify any person who was, or is, a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding to the fullest extent permitted by the Arkansas
Business Corporation Act as it now exists or may hereafter be amended.

BY-LAWS

Article VII, Section 6. INDEMNIFICATION. Every person who was or is a party
or is threatened to be made a party to or is involved in any action, suit,
proceeding, whether civil, criminal, administrative, or investigative, by reason
of the fact that he is or was a director or officer of the Corporation or is or
was serving at the request of the Corporation as a director or officer of
another corporation, or as its representative in a partnership, joint venture,
trust, or other enterprise, shall be indemnified and held harmless to the
fullest extent legally permissible under and pursuant to any procedure specified
in the Arkansas Business Corporation Act of the State of Arkansas, as amended
and as the same may be amended hereafter, against all expenses, liabilities, and
losses (including attorney's fees, judgments, fines and amounts paid or to be
paid in settlement) reasonably incurred or suffered by him in connection
therewith. Such right of indemnification shall be a contract right that may be
enforced in any lawful manner by such person. Such right of indemnification
shall not be exclusive of any other right which such director or officer may
have or hereafter acquire and, without limiting the generality of such
statement, he shall be entitled to his rights of indemnification under any
agreement, vote of stockholders, provisions of law, or otherwise, as well as his
rights under this paragraph.

The board of directors may cause the Corporation to purchase and maintain
insurance on behalf of any person who is or was a Director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred in any such capacity or arising out of
such status, whether or not the Corporation would have power to indemnify such
person.

II-1
<PAGE> 138

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C> <S>
2 -- Agreement and Plan of Reorganization Between First United
Bancshares, Inc. and First Republic Bancshares, Inc. and
Plan of Merger attached as Exhibit A thereto, (included
as Annex I of Prospectus/Proxy Statement).
3(a) -- Articles of Incorporation of First United Bancshares,
Inc., as amended and restated.
3(b) -- Bylaws of First United Bancshares, Inc. (filed as Exhibit
3(b) of the Annual Report of First United Bancshares,
Inc. on Form 10-K for the year ended December 31, 1995)
incorporated herein by reference.
5 -- Opinion of Mitchell, Williams, Selig, Gates & Woodyard,
P.L.L.C.
8 -- Tax Opinion of Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P.
21 -- Subsidiaries of First United Bancshares, Inc.
23(a) -- Consent of Arthur Andersen LLP
23(b) -- Consent of Frazer, Minchew, Robinson, Gardner and
Langston, CPAs
23(c) -- Consent of Brown, Burke, Capital Partners, Inc.
23(d) -- Consent of Mitchell, Williams, Selig, Gates & Woodyard,
P.L.L.C. (included in Exhibit 5)
23(e) -- Consent of Jones, Walker, Waechter, Poitevent, Carrere &
Denegre, L.L.P.
24 -- Power of Attorney -- Signature Page of the Registration
Statement
99(a) -- First United Bancshares, Inc. Form of Proxy
99(b) -- First Republic Bancshares, Inc. Form of Proxy
</TABLE>

ITEM 22. UNDERTAKINGS

(1) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(2) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.

(3) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (2) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

(4) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such

II-2
<PAGE> 139

indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

(5) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

(6) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.

II-3
<PAGE> 140

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of El Dorado, State of
Arkansas, on January 21, 1998.

FIRST UNITED BANCSHARES, INC.

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

/s/ JOHN E. BURNS
------------------------------------
John E. Burns
Vice President, Chief Financial
Officer
and Principal Accounting Officer

KNOW ALL MEN BY THESE PRESENTS: That the undersigned, a Director or
Officer, or both, of First United Bancshares, Inc. (the "Corporation"), acting
pursuant to authorization of the Board of Directors of the Corporation hereby
appoints James V. Kelley and John E. Burns, attorney-in-fact and agents for me
and in my name and on behalf, individually and as a Director or Officer, or
both, of the Corporation to sign a Registration Statement on Form S-4 and any
amendments (including post effective amendments) and supplements thereto, of the
Corporation to be filed with the Securities and Exchange Commission pursuant to
any applicable rule under the Securities Act of 1933, as amended (the "Act")
with respect to the issue and sale of not more than 800,000 shares of common
stock, par value $1.00 of the Corporation, said shares to be exchanged to the
shareholders of First Republic Bancshares, Inc. with respect to the merger of
First Republic Bancshares, Inc. with and into the Corporation, and generally to
do and perform all things necessary to be done in connection with the foregoing
as fully in all respects as I could do personally.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 21st day of January, 1998.

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>

/s/ JAMES V. KELLEY Chief Executive Officer and Director
- -----------------------------------------------------
James V. Kelley

/s/ JOHN E. BURNS Vice President, Chief Financial Officer and
- ----------------------------------------------------- Principal Accounting Officer
John E. Burns

/s/ E. LARRY BURROW Director
- -----------------------------------------------------
E. Larry Burrow

Director
- -----------------------------------------------------
Claiborne P. Deming

/s/ TOMMY HILLMAN Director
- -----------------------------------------------------
Tommy Hillman
</TABLE>

II-4
<PAGE> 141
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>

/s/ ROY E. LEDBETTER Director
- -----------------------------------------------------
Roy E. Ledbetter

/s/ MICHAEL F. MAHONY Director
- -----------------------------------------------------
Michael F. Mahony

/s/ RICHARD H. MASON Director
- -----------------------------------------------------
Richard H. Mason

/s/ GEORGE MIDDLEBROOK, III Director
- -----------------------------------------------------
George Middlebrook, III

/s/ JACK W. MCNUTT Director
- -----------------------------------------------------
Jack W. McNutt

/s/ R. MADISON MURPHY Director
- -----------------------------------------------------
R. Madison Murphy

/s/ ROBERT C. NOLAN Director
- -----------------------------------------------------
Robert C. Nolan

Director
- -----------------------------------------------------
Cal Partee, Jr.

/s/ CAROLYN TENNYSON Director
- -----------------------------------------------------
Carolyn Tennyson

/s/ JOHN D. TRIMBLE, JR. Director
- -----------------------------------------------------
John D. Trimble, Jr.
</TABLE>

II-5
<PAGE> 142

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 21, 1998
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

EXHIBITS

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

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

FIRST UNITED BANCSHARES, INC.
(Exact name of registrant as specified in its charter)

================================================================================
<PAGE> 143

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C> <S>
2 -- Agreement and Plan of Reorganization Between First United
Bancshares, Inc. and First Republic Bancshares, Inc. and
Plan of Merger attached as Exhibit A thereto, (included
as Annex II of Prospectus/Proxy Statement).
3(a) -- Articles of Incorporation of First United Bancshares,
Inc., as amended and restated.
3(b) -- Bylaws of First United Bancshares, Inc. (filed as Exhibit
3(b) of the Annual Report of First United Bancshares,
Inc. on Form 10-K for the year ended December 31, 1995)
incorporated herein by reference.
5 -- Opinion of Mitchell, Williams, Selig, Gates & Woodyard,
P.L.L.C.
8 -- Tax Opinion of Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P.
21 -- Subsidiaries of First United Bancshares, Inc.
23(a) -- Consent of Arthur Andersen LLP
23(b) -- Consent of Frazer, Minchew, Robinson, Gardner and
Langston, CPAs
23(c) -- Consent of Brown, Burke, Capital Partners, Inc.
23(d) -- Consent of Mitchell, Williams, Selig, Gates & Woodyard,
P.L.L.C. (included in Exhibit 5)
23(e) -- Consent of Jones, Walker, Waechter, Poitevent, Carrere &
Denegre, L.L.P.
24 -- Power of Attorney -- Signature Page of the Registration
Statement
99(a) -- First United Bancshares, Inc. Form of Proxy
99(b) -- First Republic Bancshares, Inc. Form of Proxy
</TABLE>

<PAGE> 1
EXHIBIT 3(a)

AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
FIRST UNITED BANCSHARES, INC.

FIRST. The name of the corporation is FIRST UNITED BANCSHARES, INC.

SECOND. The period of its duration is perpetual.

THIRD. The purpose or purposes for which the corporation is organized
are:

(a) To engage in all business activities allowable for a bank
holding company and to own and manage banks and other
businesses in the area of financial services.

(b) To acquire and own property, both real and personal, including
common stock or other beneficial interest in corporations,
associations, trusts and other forms of businesses whether
incorporated or unincorporated, and to provide services to or
for such businesses, and to engage in businesses related to
any such businesses, and to do any and all lawful acts
necessary, convenient, advisable or desirable which may be
incidental or pertinent to such businesses.

FOURTH. The total number of shares of authorized capital stock which
the corporation shall have the authority to issue shall be as follows:

<TABLE>
<CAPTION>
SHARES CLASS PAR VALUE PER SHARE
----------- ------- -------------------
<S> <C> <C>
24,000,000 Common $1.00
500,000 Preferred $1.00
</TABLE>

The board of directors may determine, in whole or in part, the preferences,
limitations, and relative rights of any class of stock, or one (1) or more
series within a class, before the issuance of such class or series,
respectively, and may amend The Articles of Incorporation to set forth such
preferences, limitations, and relative rights without shareholder's approval or
action.

FIFTH. Shareholders shall have no pre-emptive right to acquire
additional or treasury shares of the corporation.

SIXTH. All shareholders are entitled to cumulate their votes for the
election of directors.

SEVENTH. Except upon the approval of two-thirds (2/3) of all shares
issued and outstanding that are entitled to vote at a duly called shareholders
meeting, the corporation shall not:

(i) effect any transaction pursuant to which a purchaser would
acquire control of the corporation, whether by merger,
consolidation, purchase of stock or otherwise,

(ii) effect a merger or share exchange with another entity pursuant
to which the corporation would issue shares of common stock in
an amount greater than twenty percent (20%) of the number of
shares of common stock issued and outstanding immediately
prior to consummation of the transaction,

(iii) effect a merger or share exchange with another entity pursuant
to which the corporation would issue shares of common stock in
an amount that would cause the total number of shares issued
during any consecutive twelve month period in connection with
such transactions to exceed
<PAGE> 2
twenty percent (20%) of the number of shares of common stock
issued and outstanding immediately prior to consummation of
the transaction,

(iv) sell, exchange, lease or otherwise dispose of all or
substantially all of the corporation's assets and property
other than in the usual and regular course of business of the
corporation,

(v) effect a dissolution or liquidation of the corporation, or

(vi) amend these Articles of Incorporation.

EIGHTH. The internal affairs of the corporation shall be regulated in
accordance with the By-Laws duly adopted in accordance with the laws of the
State of Arkansas.

NINTH. The address of the registered office of the corporation is
First National Bank Building, Main at Washington Streets, El Dorado, Arkansas
71730. The name of its registered agent at such address is Robert G. Dudley.

TENTH. The number of directors that constitutes the Board of
Directors of the corporation shall not exceed twenty-five (25). The number of
directors shall be determined by the stockholders at each annual meeting or may
be determined at any special meeting. The Board of Directors may increase or
decrease by thirty percent (30%) or less the number of directors last fixed by
the stockholders, provided that the number of directors shall not be less than
three (3) nor more than twenty-five (25). The Board of Directors may fill a
vacancy created by the Board of Directors under this Article Tenth.

ELEVENTH. To the fullest extent permitted by the Arkansas Business
Corporation Act, as it now exists or may hereafter be amended, a director of
this corporation shall not be liable to the corporation or its shareholders for
monetary damages for breach of fiduciary duty as a director.

TWELFTH. The corporation may indemnify any person who was, or is, a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding to the fullest extent permitted by the
Arkansas Business Corporation Act as it now exists or may hereafter be amended.

THIRTEENTH. The corporation elects to be governed by the provisions
of the Arkansas Business Corporation Act of 1987 as it now exists or may
hereafter be amended from time to time.

FOURTEENTH. The name and address of the incorporator is:

Robert G. Dudley
Main at Washington Streets
El Dorado, Arkansas 71730

/s/ James V. Kelley
----------------------------
James V. Kelley, President

ATTEST:

/s/ Robert G. Dudley
- ----------------------------
Robert G. Dudley, Secretary

<PAGE> 1

Exhibit 5

January 21 1998

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

Gentlemen:

In connection with the registration under the Securities Act of 1933
(the "Act") of 800,000 shares (the "Securities") of Common Stock, $1.00 par
value, of First United Bancshares, Inc., an Arkansas corporation (the
"Company"), we, as your special counsel, have examined such corporate records,
certificates and other documents, and such questions of law, as we have
considered necessary or appropriate for the purposes of this opinion. Upon the
basis of such examination, we advise you that, in our opinion, when the
registration statement relating to the Securities (the "Registration
Statement") has become effective under the Act, the terms of the sale of the
Securities have been duly established in conformity with the Company's articles
of incorporation, and the Securities have been duly issued and sold as
contemplated by the Registration Statement and upon consummation of the merger
of First Republic Bancshares, Inc. with and into the Company, the Securities
will be validly issued, fully paid and nonassessable.

The foregoing opinion is limited to the Federal laws of the United
States and the laws of the State of Arkansas, and we are expressing no opinion
as to the effect of the laws of any other jurisdiction.

We have relied as to certain matters on information obtained from public
officials, officers of the Company and other sources believed by us to be
responsible.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to us under the heading "Legal
Opinions" in the Prospectus. In giving such consent, we do not thereby admit
that we are in the category of persons whose consent is required under Section
7 of the Act.

MITCHELL, WILLIAMS, SELIG, GATES & WOODYARD, P.L.L.C.

/s/ Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C.

<PAGE> 1
EXHIBIT 8

[JONES, WALKER WAECHTER, POITEVENT CARRERE & DENEGRE, L.L.P. LETTERHEAD]

January __, 1998

First Republic Bancshares, Inc.
Attention: Mr. Henry A. Logue
P. O. Box 877
Rayville, LA 71269-0877

Re: Tax Opinion on Merger of First Republic Bancshares, Inc. into
First United Bancshares, Inc.

Dear Mr. Logue:

You have requested our opinion pursuant to Section 7.03(e) of the
Agreement and Plan of Reorganization between First United Bancshares, Inc.
("Bancshares") and First Republic Bancshares, Inc. ("Republic") ("Agreement").

FACTS

Republic is a Louisiana business corporation and a bank holding company.
Bancshares is an Arkansas corporation and a bank holding company. Pursuant to
the Agreement, the Arkansas Business Corporation Act ("ABCA") and the Louisiana
Business Corporation Law ("LBCL"), Republic will be merged into Bancshares. A
maximum of 800,000 shares of Bancshares will be issued and cash will be paid
for fractional shares. The conversion ratio is 16.25 shares of Bancshares for
each Republic share. Bancshares' shares will be paid pro rata to (a) the
holders of the 38,536 shares of Republic common stock currently outstanding,
(b) the persons entitled to receive 1,246 Republic performance shares and (c)
the holders of the subordinated debentures of Republic ("Subordinated
Debentures") at the conversion ratio stated in the Subordinated Debentures,
which will result in the issuance of Bancshares shares in exchange for a
computed number of 9,449.1165 Republic shares.

At the end of December, 1994, Republic issued at par $1 million in
principal amount of 12 year 6.65% unsecured Subordinated Debentures convertible
into common stock of Republic at the end of the year 2000, at the option of the
holders. The conversion ratio was 1 share of Republic common stock for every
$105.83 of principal amount of debentures outstanding at the conversion. If
the Subordinated Debenture holders did not then convert, the Subordinated
Debentures would remain outstanding until their final maturity date at the end
of 2006. Under the Agreement, the Bancshares shares to be received by the
Subordinated Debenture holders will equal these exercised their conversion
right, received Republic common shares for the Subordinated Debentures and then
exchanged their common shares in Republic for common shares of Bancshares at
the same exchange ratio as all of the other Republic common shareholders.

The capital stock of Republic consists of 1,000,000 shares of common
stock, $10 par value, of which 39,782 shares are issued and outstanding and
1,246 are held by Republic in its treasury for future issuance in accordance
with its performance share compensation plan. The performance shares will be
issued and tendered into the merger at the closing.

<PAGE> 2
ASSUMPTIONS

In rendering the opinions set forth below, we have made the following
assumptions:

1. All legal entities involved are duly formed under applicable
state or federal law and are validly existing in good standing.

2. Bancshares will continue the historic businesses of Republic and
its subsidiary and will use a significant portion of its historic business
assets in those businesses.

3. No shareholder will exercise dissenter's rights.

DISCUSSION

Provided certain requirements are satisfied, the transaction will be
defined as a statutory merger under Section 368(a)(1)(A) of the Internal
Revenue Code of 1986 ("Code"). The exchange of Republic's common shares and
the Subordinated Debentures for Bancshares common shares will be tax-free under
Section 354(a)(1), except for cash paid in lieu of fractional shares and
accrued but unpaid interest on the Subordinated Debentures, if any.

The transaction will satisfy the requirement of Section 368(a)(1)(A)
that the transaction be a statutory merger under the ABCA and LBCA. It must
also satisfy 2 other doctrines, the continuity of business enterprise doctrine
and the continuity of shareholder interest doctrine.

The continuity of business enterprise doctrine requires that the
historic business of Republic and its subsidiaries be continued. That
requirement will be satisfied.

Under the continuity of shareholders interest doctrine, the historic
shareholders of Republic must receive shares of Bancshares equal to a
significant percentage of the value of the shares they had in Republic and must
have no intent in the future to sell or otherwise dispose of the shares at the
time of the merger. Under the terms of the Agreement, the historic
shareholders will clearly receive virtually 100% of the consideration for their
Republic shares in Bancshares shares, assuming no dissenter rights are
exercised. Furthermore, the Republic shareholders have represented that they
have no present plan or intention to dispose of the Bancshares shares received
in the merger in a manner that would cause the merger to violate the continuity
of shareholder interest requirement set forth in Reg. Section 1.368-1.
Accordingly, assuming the Republic shareholders comply with this
representation, the continuity of shareholder interest requirement should be
satisfied.

OPINIONS

Based upon the foregoing, it is our opinion that:

(1) The statutory merger of Republic into Bancshares will constitute
a type "A" reorganization under Section 368(a)(1)(A) of the Code.

(2) No gain or loss will be recognized by the holders of stock or
Subordinated Debentures of Republic which are exchanged solely for Bancshares'
common shares.

(3) The aggregate tax basis of the Bancshares' stock received by the
Republic shareholders and Subordinated Debenture holders will be the same as
the aggregate basis of the Republic common stock and Subordinated Debentures
surrendered in exchange therefor.

(4) The holding period of the Bancshares' stock to be received by
each Republic shareholder and Subordinated Debenture holder will include the
period during which such shareholder or Subordinated Debenture holder held the
Republic common shares or debentures surrendered in exchange therefor, provided
that the Republic common shares and debentures were held as capital assets as
of the date of the exchange.

(5) The payment of cash to Republic shareholders and debenture
holders in lieu of fractional shares will be a taxable transaction and will be
treated as if the fractional shares were distributed as part of the exchange
and then redeemed by Bancshares for cash under the provisions of Section 302 of
the Code.

2
<PAGE> 3
(6) Under Section 354(a)(2)(B) of the Code, gain will be recognized
by the Subordinated Debenture holders to the extent that Bancshares stock
received is attributable to accrued but unpaid interest on the Subordinated
Debentures, if any. Such gain will be ordinary income.

No opinion is expressed as to any aspect of the proposed transaction
other than the opinions set forth above. These opinions represent our
conclusions as to the application of existing law to the facts of the
transaction. The opinions are based upon the representations and assumptions
set forth herein and may not be relied on in the event such representations and
assumptions are not valid. There can be no assurance that contrary positions
may not be successfully asserted by the Internal Revenue Service, or that a
court considering any issue would not hold otherwise. Moreover, no opinion is
rendered with respect to the effect, if any, which pending or future
legislation may have on any of the foregoing matters.

These opinions are based on various statutory provisions, regulations
promulgated thereunder, and interpretations thereof by the Internal Revenue
Service and the courts having jurisdiction over such matters as of the date
hereof, any one or more of which are subject to change either prospectively or
retroactively.

These opinions are for the sole benefit of Republic and its common
shareholders, performance shareholders and Subordinated Debenture holders and
may not be relied upon by any other persons or entities.

Very truly yours,

Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P.

John C. Blackman

<PAGE> 1
EXHIBIT 21

FIRST UNITED BANCSHARES, INC.
Subsidiaries

Name Jurisdiction of Incorporation
- ---- ------------------------------

The First National Bank United States
of El Dorado, El Dorado
Arkansas

First United Trust Company, N.A. United States
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

The Bank of North Arkansas Arkansas
Melbourne, Arkansas

First United Bank Arkansas
Stuttgart, Arkansas

City Bank & Trust of Shreveport Louisiana
Shreveport, Louisiana

FirstBank Texas
Texarkana, Texas

Fredonia State Bank Texas
Nacogdoches, Texas

<PAGE> 1
EXHIBIT 23(a)

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement on Form S-4 of our
report dated January 22, 1997 included in First United Bancshares, Inc.'s Form
10-K for the year ended December 31, 1996 and our report dated October 3, 1997
included in First United Bancshares, Inc.'s Form 8-K filed on October 3, 1997
and to all references to our Firm included in this Registration Statement.

/s/ ARTHUR ANDERSEN LLP

ARTHUR ANDERSEN LLP

New Orleans, Louisiana
January 20, 1998

<PAGE> 1
EXHIBIT 23(b)

CONSENT OF FRAZER, MINCHEW, ROBINSON, GARDNER AND LANGSTON, CPAs

As certified public accountants, we hereby consent to the use of this
Registration Statement on Form S-4 of our reports dated February 14, 1997 and
December 10, 1997 and to the references by our Firm included in this
Registration Statement.

/s/ FRAZER, MINCHEW, ROBINSON, GARDNER AND LANGSTON

FRAZER, MINCHEW, ROBINSON, GARDNER AND LANGSTON, CPAs

Monroe, Louisiana
January 19, 1998

<PAGE> 1
EXHIBIT 23(c)

CONSENT OF FINANCIAL ADVISOR

We hereby consent to the use in this Registration Statement on Form S-4 of
First United Bancshares, Inc. of our letter to the Board of Directors of First
Republic Bancshares, Inc. included as Annex IV to the Proxy
Statement/Prospectus that is part of the Registration Statement, and to the
references to such letter and to our firm in the Proxy Statement/Prospectus.
In giving such consent we do not thereby admit that we come within the category
of persons whose consent is required under Section 7 of the Securities Act of
1933 or the rules and regulations of the Securities and Exchange Commission
thereunder.

- ----------------------------------
Brown, Burke Capital Partners, Inc.
January 19, 1998

<PAGE> 1
EXHIBIT 23(e)

CONSENT OF JONES, WALKER, WAECHTER, POITEVENT, CARRERE & DENEGRE, LLP

We hereby consent to the filing of our tax opinion as an exhibit to the
Registration Statement and the reference to us under the caption "The Republic
Merger--Federal Income Tax Consequences."

/s/ Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P.
Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P.

New Orleans, Louisiana
January 21, 1998

<PAGE> 1
EXHIBIT 99(a)

FIRST UNITED BANCSHARES, INC.

PROXY

The undersigned hereby appoints James V. Kelley and John E. Burns, or
either of them acting in the absence of the other, as attorneys and proxies of
the undersigned, to represent the undersigned at the Special Meeting of
Stockholders of First United Bancshares, Inc. ("First United") to be held on
__________, 1998 at 2:00 p.m. local time at the First National Bank Building,
Main and Washington Streets, El Dorado, Arkansas and at any adjournment or
adjournments thereof and to vote all shares of stock of First United held of
record by the undersigned:

1. Approval of the Agreement and Plan of Reorganization dated
December 9, 1997 which provides (a) for the merger of First
Republic Bancshares, Inc. ("Republic") with and into First United
("Republic Merger"), (b) that the separate existence of Republic
will cease, and (c) that First Republic Bank, the wholly-owned
subsidiary of Republic, will become a wholly-owned subsidiary of
First United.

FOR _____ AGAINST _____ ABSTAIN _____

2. In their discretion on such other matters as may properly come
before the meeting.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
(Continued and to be signed on other side)

THIS PROXY WILL BE VOTED AS DIRECTED BUT, WHERE NO DIRECTION IS GIVEN, IT WILL
BE VOTED "FOR" APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION, FOR THE
PROPOSED AMENDMENT TO ARTICLE SEVENTH OF FIRST UNITED'S ARTICLES OF
INCORPORATION AND FOR THE PROPOSED AMENDMENT TO ARTICLE TENTH OF FIRST UNITED'S
ARTICLES OF INCORPORATION. A COPY OF THE PROXY STATEMENT HAS BEEN RECEIVED BY
THE UNDERSIGNED.

DATED:
-------------------------- ----------------------------
Signature

----------------------------
Signature

Please sign exactly as name(s) appear(s) hereon and return promptly in the
enclosed envelope. When signing as attorney, executor, administrator, trustee,
guardian or corporate official, please give your title as such.

___ PLEASE CHECK IF YOU PLAN TO ATTEND THIS MEETING.

<PAGE> 1
EXHIBIT 99(b)

First Republic Bancshares, Inc.

PROXY

The undersigned hereby appoints George W. Bolton, Jr. and Henry Logue or
either of them acting in the absence of the other, as attorneys and proxies of
the undersigned, to represent the undersigned at the Special Meeting of
Stockholders of First Republic Bancshares, Inc. ("Republic") to be held on
__________, 1998 at _____ _.m. local time at 107 Glenda Street, Rayville,
Louisiana 71269 and at any adjournment or adjournments thereof and to vote all
shares of stock of Republic held of record by the undersigned on the following
matters:

1. Approval of the Agreement and Plan of Reorganization which
provides for the merger of First Republic Bancshares, Inc. into
First United Bancshares, Inc. pursuant to which (a) Republic will
merge with and into First United and the separate existence of
Republic will cease, (b) First Republic Bank, the wholly-owned
subsidiary of Republic, will become a wholly-owned subsidiary of
First United, and (c) upon consummation of the Republic Merger,
each outstanding share of Republic common stock (including shares
issuable to persons entitled to receive performance shares and
holders of Republic Debentures) will be converted into the right
to receive 16.2499 shares of First United Common Stock.

FOR _____ AGAINST _____ ABSTAIN _____

2. In their discretion on such other matters as may properly come
before the meeting.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
(Continued and to be signed on other side)

THIS PROXY WILL BE VOTED AS DIRECTED BUT, WHERE NO DIRECTION IS GIVEN, IT WILL
BE VOTED "FOR" APPROVAL OF THE AGREEMENT AND ELECTION. A COPY OF THE PROXY
STATEMENT HAS BEEN RECEIVED BY THE UNDERSIGNED.

DATED:
-------------------------- ----------------------------
Signature

----------------------------
Signature

___ PLEASE CHECK IF YOU PLAN TO ATTEND THIS MEETING.