FIRST AMERICAN CORP /TN/, S-4, 1996-11-15

FIRST AMERICAN CORP /TN/
S-4, 1996-11-15
NATIONAL COMMERCIAL BANKS

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<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 15, 1996

REGISTRATION NO. -------

===============================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
Form S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------
FIRST AMERICAN CORPORATION
(Exact name of registrant as specified in charter)

<TABLE>
<S> <C> <C>
Tennessee 6712 62-079975
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>

First American Center
Nashville, Tennessee 37237-0700
(615) 748-2000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

Martin E. Simmons, Esq.
Executive Vice President -- Administration, General Counsel, Secretary,
and Principal Financial Officer
First American Corporation
First American Center
Nashville, Tennessee 37237-0606
(615) 748-2049
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------
Copies to:
Mary Neil Price, Esq. Kathryn Reed Edge, Esq.
First American Corporation Miller & Martin
721 First American Center Suite 1225, SunTrust Center
Nashville, TN 37237 424 Church Street
(615) 736-6735 Nashville, TN 37219
(615) 244-3119
--------------

CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>

========================================================================================================================
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered registered(1) offering price per aggregate offering Registration Fee
share (2) price (2)
========================================================================================================================
<S> <C> <C> <C> <C>
Common Stock, $5.00 par value
(including rights to purchase shares
of common stock of Series A
Junior Preferred Stock) . . . . . . . . . . . 400,000 $39.26 $9,815,055 $3385
========================================================================================================================
</TABLE>

(1) Represents the maximum number of shares of common stock par value $5.00
per share ("FAC Common Stock") of First American Corporation ("FAC")
issuable upon consummation of the merger of Hartsville Bancshares, Inc.
("HBI") with and into FAC.
(2) Estimated solely for the purpose of calculating the registration fee.
The registration fee has been computed pursuant to Rules 457(f) (2)
under the Securities Act of 1933, as amended, based on the last
practicably available book value of shares of HBI Common Stock. The
proposed maximum aggregate offering price per share has been determined
by dividing the proposed maximum aggregate offering price by the number
of shares being registered.

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date of the Registration 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. [ ]

===============================================================================

<PAGE> 2

FIRST AMERICAN CORPORATION

CROSS REFERENCE SHEET

PURSUANT TO ITEM 501(B) OF REGULATION S-K

<TABLE>
<CAPTION>
ITEM OF FORM S-4 HEADING IN PROSPECTUS/PROXY STATEMENT
---------------- -------------------------------------
<S> <C> <C>
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus . . . . . . . . . . . . . Introduction
2. Inside Front and Outside Back Cover Pages of Prospectus . . Table of Contents; Available Information;
Incorporation of Certain Documents by
Reference

3. Risk Factors, Ratio of Earnings to Fixed Charges and Other
Information . . . . . . . . . . . . . . . . . . . . . . . Introduction; Proposal I -- The Merger Summary
4. Terms of the Transaction . . . . . . . . . . . . . . . . . Introduction; Summary; Proposal I - The Merger
5. Pro Forma Financial Information . . . . . . . . . . . . . . Not Applicable
6. Material Contracts with the Company Being Acquired . . . . Proposal I -- The Merger

7. Additional Information Required for Reoffering by Persons
and Persons and Parties Deemed to be Underwriters . . . . Not Applicable
8. Interests of Named Experts and Counsel . . . . . . . . . . Experts; Legal Opinions
9. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities . . . . . . . . . . . . . . . Undertakings

10. Information with Respect to S-3 Registrants Introduction; Available Information; Proposal I
The Merger
11. Incorporation of Certain Information by Reference . . . . . Available Information, 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
15. Information with Respect to S-3 Companies . . . . . . . . . Not Applicable
16. Information with Respect to S-2 or S-3 Companies . . . . . Not Applicable
17. Information with Respect to Companies Other Than
S-2 or S-3 Companies . . . . . . . . . . . . . . . . . . Information About Hartsville Bancshares, Inc.

18. Information if Proxies, Consents or Authorizations are
to be Solicited . . . . . . . . . . . . . . . . . . . . . Introduction; Available Information Summary;
Meeting Information; Proposal I -- The Merger
19. Information if Proxies, Consents or Authorizations are not
to be Solicited or in an Exchange Offer . . . . . . . . . Not Applicable
</TABLE>

<PAGE> 3

[LOGO] HARTSVILLE BANCSHARES, INC.

NOVEMBER__, 1996

Dear Shareholder:

We are pleased to enclose your Notice of Special Meeting and Proxy
Statement for the Special Meeting of Shareholders (the "Meeting") of HARTSVILLE
BANCSHARES, INC. ("HBI") to be held on December __, 1996, at 10:00 a.m., local
time, at HBI's main office, 328 Broadway, Hartsville, Tennessee.

At the Meeting, you will be asked to consider and vote on an Agreement
and Plan of Merger (the "Agreement"), between HBI and First American Corporation
("First American"), a corporation organized under the laws of the State of
Tennessee and a registered bank holding company, pursuant to which HBI will be
acquired by First American. The acquisition will be accomplished by the merger
("Merger") of HBI with and into First American, with First American as the
surviving entity. Immediately following the Merger, CommunityFIRST Bank,
Hartsville, Tennessee ("CFB"), a wholly owned subsidiary of HBI, will be merged
with and into First American National Bank, Nashville, Tennessee, a wholly owned
subsidiary of First American, with First American National Bank as the survivor.

The Agreement provides for a tax-free exchange in which HBI
shareholders will receive the number of fully paid and nonassessable FAC shares
rounded to the nearest thousandth of a share equal to the quotient obtained by
dividing $398.50 by the average closing sale price (the "FAC Average Closing
Price") of FAC Stock on The Nasdaq Stock Market (as reported in The Wall Street
Journal) for the twenty (20) consecutive trading days ending on and including
the fifth trading day immediately preceding, but not including, the Closing (the
"Exchange Ratio") and cash in lieu of any fractional share; however, if FAC
enters into a definitive agreement of merger or reorganization with another
entity as a result of which FAC is not the surviving entity and FAC's Chief
Executive Officer will not become the Chief Executive Officer of the surviving
entity, then the Exchange Ratio will be the greater of 8.955 or the quotient
obtained by dividing $398.50 by the FAC Average Closing Price. It is currently
anticipated the Closing will take place on December 31, 1996, and the last day
of the period for determining the Exchange Ratio will be December 23, 1996.

Consummation of the Merger is subject to certain conditions, including
the approval of the Agreement by the affirmative vote of the holders of a
majority of HBI stockholders and the approval of various regulatory agencies.

At the Meeting you also will be asked to approve the adjournment of the
Special Meeting to a later date, if necessary, to solicit additional proxies in
the event insufficient shares are present in person or by proxy to approve the
Agreement.

Your vote is important. ON BEHALF OF THE BOARD OF DIRECTORS, WE URGE
YOU TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD (AND YOUR HBI STOCK
CERTIFICATES IF YOU VOTE IN FAVOR OF THE MERGER) AS SOON AS POSSIBLE EVEN IF YOU
PLAN TO ATTEND THE MEETING. This will not prevent you from voting in person but
will assure that your vote is counted if you are unable to attend the Meeting.
Please note that the failure to vote will have the same effect as voting against
the Merger and the Agreement.

<PAGE> 4

The Board of Directors thanks you for your support and urges you to
vote FOR approval of the Merger and the Agreement and FOR approval of the
adjournment of the Meeting under the circumstances specified above.

Sincerely,

/s/ /s/
Ruby B. Thompson Joseph H. Crabtree, Sr.
President Secretary

<PAGE> 5

HARTSVILLE BANCSHARES, INC.
328 BROADWAY
HARTSVILLE, TENNESSEE 37074-0006
(615) 374-2116

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

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER __, 1996

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

NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of HARTSVILLE BANCSHARES, INC. ("HBI") will be held at HBI's Main
office, 328 Broadway, Hartsville, Tennessee, on December __, 1996, at
10:00 a.m., local time.

A Proxy Card and a Prospectus/Proxy Statement for the Meeting are
enclosed.

The Meeting is being held for the purpose of considering and acting
upon:

1. The approval of the Agreement and Plan of Merger (the
"Agreement") by and between HBI and First American Corporation ("First
American"); and

2. The adjournment of the Meeting to a later date, if
necessary, to solicit additional proxies in the event insufficient
shares to approve the Agreement are present in person or by proxy
at the Meeting.

A copy of the Agreement is attached hereto as Appendix A.

Any action may be taken on any one of the foregoing proposals at the
Meeting or on any date to which the Meeting may be adjourned. The Board of
Directors has fixed the close of business on December 12, 1996, as the record
date for determination of the shareholders entitled to vote at the Meeting and
any adjournments thereof.

Please fill in and sign the Proxy Card which is solicited by the Board
of Directors and mail it promptly in the enclosed envelope. The Proxy Card will
not be used if you attend and vote at the Meeting in person.

You may also send your HBI Stock Certificates to HBI by following the
enclosed instructions.

By Order of the Board of Directors

/s/
Joseph H. Crabtree, Sr.
Secretary
Hartsville, Tennessee
November __, 1996

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

YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU INTEND TO
ATTEND THE MEETING, PLEASE EXECUTE THE ENCLOSED FORM OF PROXY TO ENSURE THAT
YOUR VOTE WILL BE COUNTED. THE PROMPT RETURN OF PROXIES WILL SAVE US THE EXPENSE
OF FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE

<PAGE> 6

A QUORUM. A PRE-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES.

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

** IF YOU WOULD LIKE TO SEND IN YOUR STOCK CERTIFICATES WITH YOUR PROXY CARD,
PLEASE FOLLOW THE ENCLOSED INSTRUCTIONS**

<PAGE> 7

TABLE OF CONTENTS
<TABLE>
<CAPTION>

PAGE
<S> <C>
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Parties to the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
The Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
The Proposed Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Termination of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Recommendation of the HBI Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Conditions; Regulatory Approvals; Waiver; Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Certain Federal Income Tax Consequences of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Certain Differences in Rights of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Market Prices and Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
COMPARATIVE PER SHARE DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
MEETING INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Date, Place and Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Record Date; Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Voting and Revocation of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Solicitation of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
PROPOSAL I -- THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Background of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Recommendation of the Board of Directors; Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . 16
Terms of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Conversion of Shares; Procedures for Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . 17
Representations and Warranties; Conditions to the Merger; Waiver . . . . . . . . . . . . . . . . . . . . . . 17
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Business Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
No Solicitation of Competing Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Effective Time of the Merger; Termination; Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Management and Operations After the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Effect on Certain Employees and Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Interests of Certain Persons in The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Certain Federal Income Tax Consequences of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Certain Differences in Rights of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Resale of FAC Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Dividend Reinvestment and Stock Purchase Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
CERTAIN REGULATORY CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Acquisition and Expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

</TABLE>

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<TABLE>

<S> <C>
Bank Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
PROPOSAL II -- ADJOURNMENT OF THE SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
INFORMATION ABOUT HARTSVILLE BANCSHARES, INC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Business of HBI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Supervision and Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN OTHER ENTITIES . . . . . . . . . . . . . . . . . . . . . . . . . . 38
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
LEGAL OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF HARTSVILLE BANCSHARES, INC. AND SUBSIDIARY . . . . . . . . . . . F-1
REPORT OF INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
APPENDIX A -- EXECUTED DEFINITIVE AGREEMENT AND PLAN OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . A
APPENDIX B -- TENNESSEE DISSENTERS' RIGHTS STATUTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B
INDEX OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-6
</TABLE>

<PAGE> 9

HARTSVILLE BANCSHARES, INC.

PROXY STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER __, 1996

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

FIRST AMERICAN CORPORATION

PROSPECTUS

UP TO 400,000 SHARES OF COMMON STOCK
(PAR VALUE $5.00 PER SHARE)

INTRODUCTION

This Prospectus/Proxy Statement is being furnished to the holders of
the common stock, $10.00 par value ("HBI Stock"), of HARTSVILLE BANCSHARES, INC.
("HBI") in connection with the solicitation of proxies by the Board of Directors
of HBI for use at a Special Meeting of Shareholders, and any adjournment
thereof, to be held on December __, 1996 ("Meeting"). It is anticipated that the
mailing of this Prospectus/Proxy Statement and the enclosed proxy card will
commence on or about November __, 1996.

At the Meeting, shareholders of HBI will be asked to approve an
Agreement and Plan of Merger, dated as of October 11, 1996 ("Agreement")
providing for the acquisition of HBI by First American Corporation ("First
American" or "FAC") by means of the merger ("Merger") of HBI with and into First
American, with First American as the surviving entity. First American is a
Tennessee corporation and a registered bank holding company.

See "PROPOSAL I -- THE MERGER -- Certain Differences in Rights of
Shareholders -- Anti-Takeover Provisions; Shareholder Rights Plan".

Immediately following the Merger, CommunityFIRST Bank, Hartsville,
Tennessee ("CFB"), a wholly owned subsidiary of HBI, will be merged (the "Bank
Merger") with and into First American National Bank, Nashville, Tennessee
("FANB"), a wholly owned subsidiary of First American, with FANB as the
survivor.

THE FAC STOCK THAT WOULD BE ISSUED IN THE MERGER HAS NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
AUTHORITY NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY

<PAGE> 10

STATE SECURITIES AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

THE SHARES OF FAC STOCK OFFERED HEREBY ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK OR ASSOCIATION AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.

No person is authorized to give any information or to make any
representation not contained in this Prospectus/Proxy Statement and, if given or
made, such information or representation should not be relied upon as having
been authorized. This Prospectus/Proxy Statement does not constitute an offer to
sell, or a solicitation of an offer to purchase, the securities offered by this
Prospectus/Proxy Statement, in any jurisdiction, to any person to whom it is
unlawful to make such offer or solicitation of an offer in such jurisdiction.
Neither the delivery of this Prospectus/Proxy Statement nor any distribution of
securities made hereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of First American or HBI since the
date hereof.

The date of this Prospectus/Proxy Statement, which also constitutes the
prospectus of First American for up to 400,000 shares of FAC Stock to be issued
in connection with the Merger, is November __, 1996.

AVAILABLE INFORMATION

First American is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder ("Exchange Act"), and, in accordance therewith, files reports, proxy
statements and other information with the Securities and Exchange Commission
("SEC"). Such filings can be inspected and copied at the public reference
facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and the SEC's regional offices located at: 7 World Trade
Center, 13th Floor, New York, New York 10048; and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60611. Copies of such material can
be obtained at prescribed rates by writing to the SEC, Public Reference Section,
450 Fifth Street, N.W., Washington, D.C. 20549. In addition, materials filed by
First American are available for inspection at the offices of Nasdaq, 1735 K
Street, N.W., Washington, D.C. 20006. HBI is not subject to the informational
requirements of the Exchange Act.

First American has filed with the SEC a registration statement under
the Securities Act of 1933, as amended ("Securities Act"), relating to the
shares of FAC Stock that may be issued in connection with the Merger
("Registration Statement"). This Prospectus/Proxy Statement also constitutes the
prospectus of First American filed as part of the Registration Statement and
does not contain all of the information set forth in the Registration Statement
and exhibits thereto. The Registration Statement and the exhibits thereto may be
inspected and copied, at prescribed rates, at the public reference facilities
maintained by the SEC at the addresses set forth above. All information
concerning First American and its subsidiaries contained in this
Prospectus/Proxy Statement has been furnished by First American, and all
information concerning HBI and its subsidiary has been furnished by HBI.

THIS PROSPECTUS/PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. DOCUMENTS RELATING TO
FIRST AMERICAN ARE AVAILABLE WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST TO
CARROLL KIMBALL, DIRECTOR OF INVESTOR RELATIONS, FIRST AMERICAN CORPORATION,
FIRST AMERICAN CENTER, NASHVILLE, TENNESSEE 37237- 0708. TELEPHONE REQUESTS MAY
BE DIRECTED TO (615) 748-2455. DOCUMENTS RELATING TO HBI ARE AVAILABLE WITHOUT
CHARGE UPON WRITTEN OR ORAL REQUEST TO JOSEPH H. CRABTREE, SR., SECRETARY,
HARTSVILLE BANCSHARES, INC., 328 BROADWAY, HARTSVILLE, TENNESSEE 37074.
TELEPHONE REQUESTS MAY BE DIRECTED TO (615) 374-2116. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY DECEMBER 14, 1996.

<PAGE> 11

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed with the SEC by First American (File No.
0-6198) are incorporated herein by reference:

1. Annual Report on Form 10-K of First American for the year
ended December 31, 1995.

2. Quarterly Reports on Form 10-Q for the quarters ended March
31, 1996, June 30, 1996, and September 30, 1996.

3. The description of the FAC Stock contained in the
Registration Statement on Form 8-A dated April 24, 1972, as amended
January 31, 1983, May 14, 1986, and January 11, 1989, filed by First
American to register such securities under the Exchange Act, and any
amendment or report filed for the purpose of updating such description.

All documents filed by First American pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act subsequent to the date hereof until the
date of the Meeting shall be deemed to be incorporated herein by reference and
to be a part hereof from the date of such filing. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus/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 herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus/Proxy Statement.

<PAGE> 12

SUMMARY

This summary is necessarily general and abbreviated and has been
prepared to assist shareholders in their review of this Prospectus/Proxy
Statement. This summary is not intended to be a complete explanation of the
matters covered herein and is qualified in all respects by reference to the more
detailed information contained elsewhere herein, the Appendices hereto and the
documents incorporated herein by reference, which shareholders are urged to read
carefully.

PARTIES TO THE MERGER

First American Corporation. First American is a Tennessee corporation
registered as a bank holding company under the Bank Holding Company Act of 1956,
as amended ("BHCA"), and as a savings and loan holding company under the Home
Owner's Loan Act, as amended ("HOLA"). As of September 30, 1996, First American
had total consolidated assets of approximately $10.0 billion and shareholders'
equity of approximately $838 million. As of September 30, 1996, First American
estimates that it ranked, on the basis of aggregate deposits held by FANB, which
is First American's principal subsidiary, as the third largest bank holding
company headquartered in Tennessee.

In addition to FANB, First American owns all of the capital stock of
(i) First American National Bank of Kentucky ("FANBKY"), a national banking
association headquartered in Bowling Green, Kentucky; (ii) First American
Federal Savings Bank ("FAFSB"), a federal savings bank headquartered in Roanoke,
Virginia; and (iii) First American Enterprises, Inc. First American derives its
income from interest, dividends and management fees received from its
subsidiaries.

First American primarily has focused its business strategy on meeting
the banking needs of the retail and middle market commercial customers through
its branch network. The acquisition of HBI is designed to complement this
strategy.

The mailing address of the principal executive offices of First
American is 700 First American Center, Nashville, Tennessee 37237-0708, and the
telephone number is (615) 748-2000. For additional information concerning the
business of First American and its financial condition, reference should be made
to the First American documents incorporated herein by reference. See "AVAILABLE
INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."

HBI. HBI, a Tennessee corporation, serves as the holding company for,
and conducts its principal business through, its wholly-owned subsidiary, CFB.
As of September 30, 1996, HBI had total consolidated assets of approximately
$91.4 million and shareholders' equity of approximately $6.1 million.

HBI's principal business is to serve as the bank holding company of
CFB, a Tennessee chartered bank with its principal executive and administrative
offices in Hartsville, Tennessee. CFB is a full service commercial bank,
offering a variety of deposit and investment products as well as commercial,
consumer and real estate loans to customers in its markets. For additional
information regarding HBI, see "AVAILABLE INFORMATION" and "INFORMATION ABOUT
HARTSVILLE BANCSHARES, INC."

The mailing address of the principal executive offices of HBI is 328
Broadway, Hartsville, Tennessee 37074- 0006, and its main telephone number is
(615) 374-2116.

THE MEETING

The Special Meeting of Shareholders of HBI will be held on December __,
1996, at 10:00 a.m., local time, at HBI's Main office, 328 Broadway, Hartsville,
Tennessee. The purpose of the Meeting is to consider and vote

<PAGE> 13

upon a proposal to approve and adopt the Agreement and to approve the
adjournment of the Meeting if an insufficient number of votes to approve the
Agreement is received. Only holders of record of HBI Stock at the close of
business on December 12, 1996 (the "Record Date") will be entitled to notice of
and to vote at such Meeting. At such date, 24,630 shares of HBI common stock and
preferred stock (all of which are entitled to vote on the Merger) will be
outstanding and entitled to vote. For additional information with respect to the
Meeting and the voting rights of shareholders, see "MEETING INFORMATION."

THE PROPOSED MERGER

The Agreement provides for a tax-free exchange in which HBI
shareholders will receive the number of fully paid and nonassessable FAC shares
rounded to the nearest thousandth of a share equal to the quotient obtained by
dividing $398.50 by the average closing sale price (the "FAC Average Closing
Price") of FAC Stock on The Nasdaq Stock Market ("Nasdaq") (as reported in The
Wall Street Journal) for the twenty (20) consecutive trading days ending on and
including the fifth trading day immediately preceding, but not including, the
Closing (the "Exchange Ratio") and cash in lieu of any fractional share;
however, if FAC enters into a definitive agreement of merger or reorganization
with another entity as a result of which FAC is not the surviving entity and
FAC's Chief Executive Officer will not become the Chief Executive Officer of the
surviving entity, then the Exchange Ratio will be the greater of 8.955 or the
quotient obtained by dividing $398.50 by the FAC Average Closing Price. It is
currently anticipated the Closing will take place on December 31, 1996, and the
last day of the period for determining the Exchange Ratio will be December 23,
1996.

See "PROPOSAL I -- THE MERGER -- Terms of the Merger." See "PROPOSAL I
- -- THE MERGER -- Certain Differences in Rights of Shareholders -- Anti-Takeover
Provisions; Shareholder Rights Plan".

After the Merger, those persons serving as directors of First American
immediately prior to the Effective Time will continue as directors of First
American. Joseph H. Crabtree, Sr., Director and Secretary of HBI and Chairman,
Chief Executive Officer, and President of CFB, and Paul D. Alexander, Director
of HBI and Vice-Chairman of CFB, are expected to be named to FANB's Community
Board in Gallatin, Tennessee. The Agreement also contains provisions relating
to, among other things, employee benefits, indemnification of directors and
officers, and directors' and officers' liability insurance after the Merger. See
"PROPOSAL I -- THE MERGER -- Management and Operations After the Merger" and "--
Effect on Certain Employees and Benefit Plans."

EFFECTIVE TIME

The Merger will be consummated at a closing to be held on the last
business day of the month wherein the satisfaction of certain conditions
precedent to the Merger has occurred, or at such other time mutually agreed upon
by the parties. In the event that all conditions to the Merger have been
satisfied or waived, the Effective Time will be the date of filing of Articles
of Merger with the Secretary of State of Tennessee (or such later time as set
forth in such Articles). The parties currently intend that the Closing will be
held on December 31, 1996, and that the Effective Time will be 12:01 a.m.,
Central Time, January 1, 1997. See "PROPOSAL I -- THE MERGER -- Effective Time
of the Merger; Termination; Damages."

TERMINATION OF THE AGREEMENT

The Agreement may be terminated at any time prior to the Effective Time
by the mutual consent of HBI and First American and, by either of them
individually, under certain specified circumstances, including if the Merger has
not been consummated by April 30, 1997. Under certain circumstances, if the
Agreement is terminated by First American or HBI and the Board of Directors of
HBI has taken certain actions regarding its recommendation of the Merger to the
HBI shareholders or has taken certain actions regarding a possible transaction

<PAGE> 14

with a third party which would result in such third party acquiring a
significant portion of the assets or securities of HBI or CFB, HBI may be
required to pay First American liquidated damages of $1,300,000.

ACCOUNTING TREATMENT

The Merger is expected to be accounted for using the purchase method of
accounting. See "PROPOSAL I -- THE MERGER -- Accounting Treatment."

RECOMMENDATION OF THE HBI BOARD OF DIRECTORS

HBI's Board of Directors has unanimously approved the Merger and the
Agreement and has determined that the Merger is fair to, and in the best
interests of, HBI and its shareholders. The Board of Directors unanimously
recommends that HBI's shareholders vote FOR approval of the Merger and the
Agreement. HBI's Board of Directors believes that the Merger will provide
significant value to all HBI shareholders in relation to market value, book
value and earnings per share of the HBI Stock. See "PROPOSAL I -- THE MERGER --
Background of the Merger" and "-- Recommendation of the Board of Directors;
Reasons for the Merger." In considering this recommendation, shareholders should
be aware that certain members of the Board of Directors and the executive
officers of HBI have interests in the Merger in addition to their interests as
shareholders of HBI generally. See "PROPOSAL I -- THE MERGER -- Interests of
Certain Persons in the Merger."

VOTE REQUIRED

Approval of the Merger requires the affirmative vote of the holders of
a majority of the HBI Stock. Approval of an adjournment of the Meeting requires
the affirmative vote of a majority of the votes cast at the Meeting.

A FAILURE TO VOTE OR AN ABSTENTION WILL HAVE THE SAME EFFECT AS A VOTE
AGAINST APPROVAL OF THE MERGER.

Directors and executive officers of HBI and their affiliates had sole
or shared voting power with respect to 7,967* shares of HBI Stock, representing
32.35% of the HBI Stock outstanding as of the Record Date. First American has
entered into an agreement with each member of the Board of Directors of HBI,
whereby they agreed to vote their HBI Stock in favor of the Agreement. They also
agreed not to solicit, encourage or facilitate a proposal by any third party
(other than First American or its affiliates) to seek to acquire control of HBI
or its assets by tender offer, merger or otherwise. This commitment by the HBI
directors was an inducement to First American to enter into the Agreement. No
such person received any form of compensation from First American for making
this commitment beyond execution of the Agreement. Such persons had sole or
shared voting power with respect to 7,708 shares of HBI Stock, representing
31.30% of the HBI Stock outstanding as of the Record Date. See "MEETING
INFORMATION -- Voting and Revocation of Proxies."

DISSENTERS' RIGHTS

HBI shareholders will, under certain conditions and by complying with
specific procedures required by statute and described herein, have dissenters'
rights in connection with the Merger, in which event, if the Merger is
consummated, they may be entitled to receive in cash the fair value of their
shares of HBI Stock. See "PROPOSAL I -- THE MERGER -- Dissenters' Rights -- HBI
Stock Dissenter's Rights." A copy of Tennessee's Dissenters' Rights Statute is
attached hereto as Appendix B.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

* Shares held by executive officers exclude any shares to which such executive
officers may otherwise be entitled to as a participant in the HBI ESOP.

<PAGE> 15

Certain members of HBI's management and of the HBI Board of Directors
have certain interests in the Merger that are in addition to their interests as
shareholders of HBI generally. These interests include, among others, provisions
in the Agreement relating to liability insurance and indemnification,
anticipated membership on community boards of FANB and the continuation of
certain employee benefits. The Agreement also provides that, at the Effective
Time, FANB will enter into a consulting agreement with Joseph H. Crabtree, Sr.,
under which he will be paid $225,000 per year for his consulting services for a
five year term and a one-time signing bonus of $257,000. (The form of the
Consulting Agreement is Exhibit B to the Agreement, which is attached hereto as
Appendix A). See "PROPOSAL I -- THE MERGER -- Interests of Certain Persons in
the Merger."

The HBI Board of Directors was aware of these interests and considered
them among other matters in approving the Agreement and the transactions
contemplated thereby. See "PROPOSAL I -- THE MERGER -- Interests of Certain
Persons in the Merger."

CONDITIONS; REGULATORY APPROVALS; WAIVER; DAMAGES

Consummation of the Merger is subject to satisfaction of a number of
conditions, including approval of the Agreement by a majority of the HBI
shareholders, the approval of the Board of Governors of the Federal Reserve
System ("Federal Reserve Board") under the BHCA for the Merger, and approval of
the Office of the Comptroller of the Currency ("OCC") under the Bank Merger Act
for the Bank Merger. See "PROPOSAL I -- THE MERGER -- Representations and
Warranties; Conditions to the Merger; Waiver" and "-- Regulatory Approvals."

The conditions to consummation of the Merger (except for required
shareholder and regulatory approvals and the listing on Nasdaq of the FAC Stock
to be issued or as a result of the Merger) may be waived at any time by the
party for whose benefit they were created. In addition, the Agreement may be
terminated, either before or after shareholder approval, under certain
circumstances. See "PROPOSAL I -- THE MERGER -- Representations and Warranties;
Conditions to the Merger; Waiver" and "-- Effective Time of the Merger;
Termination; Damages."

The Agreement provides for payment of certain fees as liquidated
damages upon the occurrence of certain events leading to certain terminations of
the Agreement. See "PROPOSAL I -- THE MERGER -- Effective Time of the Merger;
Termination; Damages."

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

The Merger is intended to be a tax-free reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"). Generally, no gain or loss should be recognized for federal income tax
purposes by HBI shareholders as a result of the Merger, except a gain or loss
will be recognized with respect to cash received in lieu of the receipt of
fractional shares. A condition to the consummation of the Merger is the receipt
by HBI of an opinion of Miller & Martin as to the qualification of the Merger as
a tax-free reorganization and certain other federal income tax consequences of
the Merger. See "PROPOSAL I -- THE MERGER -- Certain Federal Income Tax
Consequences of the Merger."

BECAUSE THE TAX CONSEQUENCES MAY VARY DEPENDING UPON A SHAREHOLDER'S
INDIVIDUAL CIRCUMSTANCES OR TAX STATUS, IT IS RECOMMENDED THAT HBI SHAREHOLDERS
CONSULT THEIR TAX ADVISORS CONCERNING THE TAX CONSEQUENCES OF THE MERGER .

CERTAIN DIFFERENCES IN RIGHTS OF SHAREHOLDERS

<PAGE> 16

Upon completion of the Merger, HBI shareholders will become
shareholders of First American and their rights as such will be governed by
First American's charter and bylaws, and will continue to be governed by
Tennessee law. The rights of shareholders of First American are different in
certain respects from the current rights of HBI shareholders. For a summary of
these differences, see "PROPOSAL I -- THE MERGER -- Certain Differences in
Rights of Shareholders."

MARKET PRICES AND DIVIDENDS

FAC Stock is traded on Nasdaq under the symbol "FATN". HBI Stock is not
publicly traded. The information presented in the following table reflects the
closing price for FAC Stock on October 10, 1996, the last trading day for FAC
Stock preceding public announcement of the proposed Merger, and on November 13,
1996, and (2) the HBI Stock equivalent per share basis, calculated by
multiplying the closing price of FAC Stock on such dates by the Exchange Ratio
(as it would have been calculated as of such dates, assuming FAC Average Closing
Prices of $49.125 (the closing price of FAC Stock on October 10, 1996) and of
$52.50 respectively). No assurance can be given as to what the market price of
FAC Stock or the Exchange Ratio will be if and when the Merger is consummated.

<TABLE>
<CAPTION>
HBI
Equivalent
Per Share
Common Stock First American Basis
------------ -------------- -----------
<S> <C> <C>
October 10, 1996 Market Value . . . . . . . . . . $49.125 $398.50

November 13, 1996 Market Value . . . . . . . . . $52.50 $398.50

</TABLE>

First American

On September 30, 1996 there were approximately 10,166 record holders of
FAC Stock and 29,556,609 shares of FAC Stock issued and outstanding.

The following table sets forth the cash dividends declared by First
American on the FAC Stock and the range of high and low prices of the FAC Stock
during the fiscal years ended December 31, 1994, and 1995, and during the first
three quarters of fiscal year 1996. The table reflects high and low prices as
quoted on Nasdaq. Stock price data on Nasdaq reflects interdealer prices,
without retail mark-up, mark-down or commission, and may not necessarily
represent actual transactions.

<PAGE> 17

<TABLE>
<CAPTION>
PRICE
1994 CASH DIVIDEND
PER SHARE HIGH LOW
--------- ---- ---
<S> <C> <C> <C>
First Quarter . . . . . . . . . . . . . . . . . . . . . . . $0.21 $32 $29 1/8
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . 0.21 34 3/4 28 3/4
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . 0.21 35 31
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . 0.25 33 1/8 26 1/8

1995

First Quarter . . . . . . . . . . . . . . . . . . . . . . . 0.25 34 3/8 26 7/8
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . 0.25 36 33 1/4
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . 0.28 44 1/4 35 7/8
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . 0.28 50 1/4 42 1/8

1996

First Quarter . . . . . . . . . . . . . . . . . . . . . . . 0.28 48 42 3/4
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . 0.31 45 1/4 42 1/8
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . 0.31 48 1/16 41 1/8
</TABLE>
HBI

On the Record Date, there were 24,629 shares of HBI Stock issued and
outstanding (excluding 1,000 shares which were issued but not outstanding) and
one share of HBI's preferred stock issued and outstanding. During 1995, HBI
issued one share of its convertible preferred stock for one share of HBI Stock.
HBI's one share of issued and outstanding preferred stock is convertible into
one share of HBI Stock at any time at the option of the holder. Such preferred
stock pays dividends equal to the greater of: (1) the amount per share paid with
respect to HBI's Stock per share, or; (2) any additional amount declared, from
time to time, by the Board of Directors of HBI. The one issued and outstanding
share of preferred stock is held by the HBI ESOP, and dividends paid with
respect to the preferred stock are used by the HBI ESOP to pay principal and
interest with respect to the HBI ESOP's debt to HBI.

The following table sets forth the cash dividends declared by HBI on
the HBI stock during the fiscal years ended December 31, 1994 and 1995, and
during the first three calendar quarters of 1996 based on information obtained
by HBI.

<TABLE>
<CAPTION>
CASH DIVIDEND
PER SHARE
----------
Common Preferred
<S> <C> <C>
1994
First Quarter . . . . . . . . . $2.00 --
Second Quarter . . . . . . . . -- --
Third Quarter . . . . . . . . -- --
Fourth Quarter . . . . . . . . -- --

1995
First Quarter . . . . . . . . . $2.00 --
Second Quarter . . . . . . . . -- --
Third Quarter . . . . . . . . -- --
Fourth Quarter . . . . . . . . -- --

1996
First Quarter . . . . . . . . . $2.00 $2.00
Second Quarter . . . . . . . . -- --
Third Quarter . . . . . . . . -- $147,812.00
</TABLE>

<PAGE> 18

COMPARATIVE PER SHARE DATA

The following table presents at the dates and for the periods indicated
(i) historical consolidated per share data for FAC Stock and HBI Stock; (ii) pro
forma per share data for FAC Stock; and (iii) pro forma equivalent per share
data for HBI Stock. The First American pro forma with HBI data are presented
using the purchase method of accounting and the application of an assumed market
price of $48.00 per share of FAC Stock and an Exchange Ratio of 8.3021 shares of
FAC Stock for each share of HBI Stock. If the Exchange Ratio were to differ
because of the FAC Average Closing Price, the pro forma and equivalent share
data would differ from the data presented below. The First American pro forma
data with HBI represents the effect of the Merger on a share of FAC Stock. The
HBI equivalent pro forma presents the First American pro forma data with HBI
multiplied by the Exchange Ratio and thereby reflects the effect of the Merger
on a share of HBI Stock.

<TABLE>
<CAPTION>
FAC PRO HBI
FORMA EQUIVALENT
WITH HBI PRO FORMA
--------- ---------
HISTORICAL
----------
FAC HBI
--- ---

<S> <C> <C> <C> <C>
EARNINGS PER SHARE
Nine months ended September 30, 1996 . . . . . . . . . . . . . . $2.98 $8.03 $2.98 $24.74
Year ended December 31, 1995 . . . . . . . . . . . . . . . . . . $3.64 $24.53 $3.65 $30.30

CASH DIVIDENDS DECLARED PER COMMON SHARE
Nine months ended September 30, 1996 . . . . . . . . . . . . . . $0.90 $2.00 $0.90 $7.47
Year ended December 31, 1995 . . . . . . . . . . . . . . . . . . $1.06 $2.00 $1.06 $8.80
BOOK VALUE PER SHARE
At September 30, 1996 . . . . . . . . . . . . . . . . . . . . . . $28.35 $202.38 $28.35 $235.36
At December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . $26.93 $203.90 $26.93 $223.58
</TABLE>

<PAGE> 19

SELECTED FINANCIAL DATA

The following tables set forth certain historical financial data for
First American and HBI.

The selected financial data for the five years ended December 31, 1995
and for the nine months ended September 30, 1996, for First American and HBI
are derived from the consolidated financial statements of First American and the
consolidated financial statements of HBI, respectively. This summary should be
read in connection with First American's consolidated financial statements and
HBI's consolidated financial statements, and Management's Discussion and
Analysis of Results of Operations and Financial Condition, and other financial
information included in documents incorporated herein by reference or appended
hereto. See "AVAILABLE INFORMATION" and "CONSOLIDATED FINANCIAL STATEMENTS OF
HARTSVILLE BANCSHARES, INC. AND SUBSIDIARIES."

FIRST AMERICAN CORPORATION

<TABLE>
<CAPTION>
AS OF OR FOR THE
NINE MONTHS ENDED
SEPTEMBER 30 AS OF OR FOR THE YEAR ENDED DECEMBER 31
------------ ---------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Income Data (thousands)
Net interest income . . . . . . $258,336 $232,498 $312,310 $298,242 $287,200 $268,197 $229,980
Provision (credit) for loan
losses . . . . . . . . . . . 0 83 83 (9,919) (41,405) 39,249 53,066
Non-interest income . . . . . . 121,184 76,568 108,487 85,715 88,379 77,325 82,914
Non-interest expense . . . . . 237,286 184,258 252,448 239,270 248,227 240,099 232,774

Income tax (benefit) . . . . . 54,126 45,981 65,186 57,404 61,348 20,021 9,005
------ ------ ------ ------ ------ ------ -----
Income (loss) before cumulative
effect of changes in
accounting principles . . . . $88,108 $78,744 $103,080 $97,202 $107,409 $46,153 $18,049
======= ======= ======== ======= ======== ======= =======
End of Period Balance Sheet Items
(millions)
Assets . . . . . . . . . . . . $10,028 $8,970 $9,682 $8,279 $7,708 $7,257 $6,884
Total net loans . . . . . . . . 6,453 5,745 6,294 5,043 4,533 3,876 3,990
Deposits . . . . . . . . . . . 7,552 6,729 7,382 6,308 6,151 6,019 5,816
Long-term debt . . . . . . . . 340 278 422 271 77 19 18
Shareholders' equity . . . . . 838 694 796 668 624 504 402
Per Share Data
Income (loss) before cumulative
effect of changes in
accounting principles . . . . $2.98 $2.78 $3.64 $3.39 $3.79 $ 1.76(a) $ 0.73(b)
Cash dividends declared . . . . 0.90 0.78 1.06 0.88 0.55 0.20 0.00
Book value, end of period . . . 28.35 25.12 26.93 23.24 22.34 17.86 17.16(b)
Shares Outstanding (thousands)
Average . . . . . . . . . . . . 29,589 28,278 28,315 28,670 28,355 26,509 23,337(b)
End of period . . . . . . . . . 29,557 27,630 29,540 28,725 27,915 28,213 23,395(b)

</TABLE>
- ----------
(a) Income (loss) before cumulative effect of changes in accounting
principles per common share for the year ended December 31, 1992, is
computed by dividing the sum of FAC net income for 1992 of $42.0
million and net income of Heritage from the date of conversion from a
mutual savings bank to a capital stock savings back on March 30, 1992,
to the end of its fiscal year on June 30, 1992, of $1.4 million by the
sum of FAC's weighted average number of shares outstanding from March
30, 1992 to June 30, 1992 (adjusted for the number of days such shares
were outstanding during fiscal year 1992 (.6 million shares)).
(b) Since Heritage was a mutual savings bank prior to March 30, 1992,
income (loss) before cumulative effect of changes in accounting
principles per common share, book value per common share, average
shares outstanding and end of period shares outstanding as of or for
the years ended December 31, 1991 were calculated based on FAC
information only.

<PAGE> 20

HARTSVILLE BANCSHARES, INC.

<TABLE>
<CAPTION>
As of or for the nine months
ended September 30 As of or for the year ended December 31
--------------------------- -------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Income Data (Thousands)

Net interest income $2,958 $2,675 $3,703 $3,414 $3,193 $2,938 $2,433

Provision for loan losses 93 168 223 120 110 226 120

Non-interest income 632 560 702 632 681 581 472

Non-interest expense 2,735 2,186 3,042 2,891 2,684 2,362 1,924

Income tax 372 316 407 395 398 348 325

Income before cumulative
effect of changes in
accounting principles $390 $565 $734 $639 $681 $583 $537

End of Period Balance Sheet
Items (Millions)
Assets $91.4 $84.70 $92.5 $76.2 $73.9 $67.8 $54.6

Total net loans 58.3 49.10 49.5 43.8 42.2 35.5 28.5

Deposits 80.4 81.20 81.2 67.2 64.8 60.5 49.1

Long-term Debt 1.0 1.10 1.1 1.1 1.3 1.5 1.6
Shareholder's Equity 6.1 6.10 6.1 4.7 4.6 3.8 3.1

Per Share Data

Income before cumulative
effect of changes in
accounting principles

-- primary $8.03 $19.21 $24.53 $21.97 $23.69 $19.82 $18.01
--- fully diluted 8.03 19.21 24.53 21.97 23.69 19.82 18.01

Cash dividends declared 2.00 2.00 2.00 2.00 2.00 2.00 2.00

Book value 202.38 200.56 203.90 161.58 160.26 132.39 108.00

Shares Outstanding
Average -- primary 30,141 29,417 29,917 29,088 28,704 28,704 28,704

Average -- fully diluted 30,141 29,417 29,917 29,088 28,704 28,704 28,704

End of period* 24,629 24,629 24,629 24,630 24,630 24,630 24,630
</TABLE>

* Excluding 1,000 shares of HBI Stock which were issued but not outstanding.

<PAGE> 21

MEETING INFORMATION

DATE, PLACE AND TIME

The proxy card accompanying this Prospectus/Proxy Statement is
solicited by and on behalf of the Board of Directors of HBI to be used at the
Meeting, which will be held at the main offices of HBI at 328 Broadway,
Hartsville, Tennessee on December __, 1996, at 10:00 a.m., local time. The
Meeting has been called for the purpose of considering and voting upon (1)
approval of the Agreement and (2) approval of an adjournment of the Meeting to
a later date, if necessary, to solicit additional proxies if insufficient
shares are present in person or by proxy at the Meeting to approve the
Agreement. The accompanying Notice of Meeting and the Proxy Card and this
Prospectus/Proxy Statement are being first mailed to shareholders on or about
November __, 1996.

RECORD DATE; VOTING RIGHTS

The securities entitled to vote at the Meeting consist of HBI Common
Stock. Each share of HBI Stock entitles the record holder to one vote on each
matter presented at the Meeting. The close of business on December 12, 1996
(the "Record Date") has been fixed by the Board of Directors of HBI as the
record date for determining shareholders entitled to notice of and to vote at
the Meeting. As of the Record Date, HBI will have 24,630 shares of HBI common
and preferred Stock (all of which are entitled to vote on the Merger)
issued and outstanding and approximately 81 shareholders of record.

The affirmative vote of the holders of a majority of the outstanding
shares of HBI Stock is necessary to approve the Agreement.

VOTING AND REVOCATION OF PROXIES

Proxies solicited by the Board of Directors of HBI will be voted in
accordance with the directions given therein. Where no instructions are
indicated, proxies will be voted FOR approval of the Agreement and FOR approval
of an adjournment of the Meeting if necessary. The proxy also confers
discretionary authority on the persons named therein to vote with respect to
matters incident to the conduct of the Meeting. Proxies marked as abstentions
will not be counted as votes cast. Proxies marked as abstentions, however, will
be treated as shares present for purposes of determining whether a quorum is
present.

Shareholders who execute proxies retain the right to revoke them at
any time. Unless revoked, the shares represented by properly executed proxies
will be voted at the Meeting and all adjournments thereof. Proxies may be
revoked by sending written notice to the Secretary of HBI, 328 Broadway,
Hartsville, Tennessee 37074-0006, or by the filing of a later-dated proxy prior
to the closing of the polls at the Meeting. A proxy will not be voted if a
shareholder attends the Meeting and votes in person. The presence of a
shareholder alone at the Meeting will not revoke such shareholder's proxy.

The Board of Directors of HBI is not aware of any other business to be
acted upon at the Meeting other than as described herein. If, however, other
matters are duly brought before the Meeting, or any adjournment thereof, the
persons appointed as proxies will have discretion to vote or act thereon in
accordance with the determination of a majority of HBI's Board of Directors.

Directors and executive officers of HBI and their affiliates had sole
or shared voting power with respect to 7,967* shares of HBI Stock, representing
32.35% of the HBI Stock outstanding as of November 13, 1996. First American has
entered into an agreement with each member of the Board of Directors of HBI,
whereby they agreed to vote their HBI Stock in favor of the Agreement. They
also agreed not to solicit, encourage or facilitate a proposal by any third
party (other than First American or its affiliates) to seek to acquire control
of HBI or its assets by tender offer, merger or otherwise. This commitment by
the HBI directors was an inducement to First American to enter into the
Agreement. No such person received any form of compensation from First American
for making

* Shares held by executive officers exclude any shares to which such executive
officers may otherwise be entitled to as a participant in the HBI ESOP.

<PAGE> 22

this commitment beyond execution of the Agreement. Such persons had sole or
shared voting power with respect to 7,708 shares of HBI Stock, representing
31.30% of the HBI Stock outstanding as of November 13, 1996. See "MEETING
INFORMATION --Voting and Revocation of Proxies."

SOLICITATION OF PROXIES

The cost of soliciting proxies for the Meeting will be borne by HBI.
In addition to the use of the mails, proxies may be solicited personally or by
telephone or telegraph by directors, officers and other employees of HBI who
will not be specifically compensated for their solicitation activities.

** IF YOU WOULD LIKE TO SEND IN YOUR STOCK CERTIFICATES WITH YOUR PROXY CARD,
PLEASE FOLLOW THE ENCLOSED INSTRUCTIONS**

<PAGE> 23

PROPOSAL I -- THE MERGER

This section of the Prospectus/Proxy Statement describes the material
terms of the Agreement. The following description does not purport to be
complete and is qualified in its entirety by reference to the Agreement, which
is attached as Appendix A, and is incorporated herein by reference. All
shareholders are urged to read the Agreement in its entirety.

BACKGROUND OF THE MERGER

In April 1996, Joseph H. Crabtree, Sr., Secretary of the Board of HBI,
was approached by representatives of a Kentucky bank holding company concerning
a possible acquisition of HBI by such company. Preliminary discussions relative
to such an acquisition ensued and certain information concerning HBI and the
potential acquiror was exchanged, but no definitive offer for the purchase of
HBI was made. An acquisition by the Kentucky holding company was viewed by the
Board of Directors as not attractive because the shares of such company are not
widely traded and an acquisition of HBI for cash would have resulted in tax
liability to the HBI shareholders.

However, given the competitive nature of the markets served by HBI and
CFB and the substantial future capital expenditures necessary to maintain HBI's
position in such markets, the Board of Directors of HBI decided that it was its
duty to the shareholders to explore the possibility of a combination with a
larger financial institution already established in the Middle Tennessee
market. After discussions with Mr. Crabtree, Mr. Charles Welch, HBI's adviser
and former independent auditor, was directed to contact First American. Mr.
Welch approached First American in May, 1996.

Shortly thereafter, in May, 1996, the Chairman of the Board of First
American contacted Mr. Crabtree to inquire whether HBI would be interested in
conducting preliminary discussions concerning First American's acquisition of
HBI. An initial meeting among Crabtree, Welch, and First American's
representatives, Denny Bottorff and Terry Spencer, was held on June 7, 1996.
Several subsequent meetings occurred which involved Welch and various
representatives of First American. These negotiations resulted in an offer by
First American to acquire HBI in a non-taxable exchange of stock which valued
HBI at approximately $9,815,000 (or $398.50 per share of HBI Stock
outstanding). In addition, outstanding options of HBI were to be acquired or
exchanged for First American options at the same price for an aggregate value
of $3,586,500. The terms of the offer were set forth in a letter of intent
dated August 16, 1996 (the "Letter of Intent"). The Letter of Intent called
for First American to acquire HBI by exchanging 8.9551 shares of First
American's common stock (then trading at $44.50 per share) for each
outstanding share of HBI Stock. The transaction was conditioned upon, among
other things, First American's good faith determination that the costs of
converting HBI and CFB to its systems following the consummation of the
transaction would not exceed $1,500,000. The transaction, as outlined in the
Letter of Intent and draft definitive agreement, was further discussed at a
special board meeting of HBI held on September 18, 1996, at which time it was
unanimously approved subject to the resolution of several issues in the draft
definitive agreement.

First American began its due diligence investigation of HBI and CFB,
and, in the course of such investigation, determined that conversion costs to
First American's systems would cost well in excess of $1,500,000. Therefore, in
a meeting held on September 25, 1996, representatives of First American
proposed that the exchange ratio for each outstanding HBI share and stock
option be determined by dividing $398.50 by the average closing price of First
American Stock over the twenty trading days ending on the fifth day prior to,
but not including, the closing of the transaction, rather than fixing the
exchange ratio at 8.9551 as provided in the Letter of Intent. The effect of
this change was to fix the value of the acquisition at approximately
$9,815,000. In exchange for HBI's agreement to the change in the method of
calculating the Exchange Ratio, First American agreed to relinquish the
condition to its obligation to consummate the acquisition based on First
American's conversion costs. These modifications to the proposal set
forth in the Letter of Intent were approved by the HBI Board of Directors on
October 3, 1996. Thereafter, the Agreement, attached hereto as Appendix A, was
executed on October 11, 1996.

<PAGE> 24

RECOMMENDATION OF THE BOARD OF DIRECTORS; REASONS FOR THE MERGER

The HBI Board of Directors has determined that the Merger is in the
best interests of HBI and its shareholders. In evaluating the Merger, the Board
of Directors considered, among other things, its ability to continue to compete
in its primary markets, Sumner and Trousdale Counties, Tennessee. Competition
is particularly keen in Sumner County and, in order to maintain their
competitive positions, HBI and CFB were faced with the need to make extensive
capital expenditures in order to upgrade technology and equipment. First
American , which already has a significant presence in the Middle Tennessee
market, was perceived by the Board as being able to offer HBI's customers
enhanced services and products at lower costs. Additionally, an acquisition by
First American is viewed by the Board of Directors as being in the best
interests of HBI's employees in terms of continued employment and enhanced
benefits. Finally, HBI and First American have had a longstanding correspondent
relationship, and the Board of Directors is, therefore, quite familiar with,
and confident of, the management of First American.

As bank acquisition activity continues, HBI's Board of Directors also
believes that the acquisition price offered by First American, at approximately
two times book value and sixteen times HBI's prior twelve months earnings, is
attractive in comparison to other recent acquisitions of community banks in
Middle Tennessee. The tax free nature of the exchange of HBI Stock for First
American Stock is also a desirable feature of the transaction. The special
dividend of $15 per share of HBI Stock permitted by the Agreement also adds
significant value to HBI shareholders. Additionally, First American's current
dividend rate of $1.24 per share represents an increase of 400% over HBI's
present dividend rate, on an equivalent basis, assuming an average closing
price of $49.00 per share for First American stock.

TERMS OF THE MERGER

The Agreement provides for a tax-free exchange in which HBI
shareholders will receive the number of fully paid and nonassessable First
American shares rounded to the nearest thousandth of a share equal to the
quotient obtained by dividing $398.50 by the FAC Average Closing Price of First
American Stock on Nasdaq (as reported in The Wall Street Journal) for the
twenty (20) consecutive trading days ending on and including the fifth trading
day immediately preceding, but not including, the closing (the "Exchange
Ratio") and cash in lieu of any fractional share. If First American enters
into a definitive agreement of merger or reorganization with another entity as
a result of which First American is not the surviving entity and First
American's Chief Executive Officer will not become the Chief Executive Officer
of the surviving entity, then the Exchange Ratio will be the greater of 8.955
or the quotient obtained by dividing $398.50 by the First American Average
Closing Price. The Merger is subject to various conditions and the precise
number of shares of First American Stock into which each share of HBI Stock is
converted will depend on the FAC Average Closing Price. It is currently
anticipated the closing will take place on December 31, 1996, and the last day
of the period for determining the Exchange Ratio will be December 23, 1996.

See ("PROPOSAL I -- THE MERGER -- Certain Differences in Rights of
Shareholders -- Anti-Takeover Provisions; Shareholder Rights Plan").

HBI has issued options for the purchase of 9,000 shares of HBI
Class B Common Stock, non-voting, $0.01 par value ("HBI Class B Common Stock"),
to Joseph H. Crabtree, Sr., Director and Secretary of HBI and Chairman, Chief
Executive Officer, and President of CFB, pursuant to the terms of Mr.
Crabtree's employment agreement with HBI. Each share of HBI Class B Common
Stock is convertible into one share of HBI Stock. At the Effective Time, each
option to purchase shares of HBI Class B Common Stock (the "HBI Options")
issued and outstanding as of October 11, 1996, will be converted to options to
purchase shares of First American Stock at a price that is the economic value
equivalent to the exercise price of the HBI Options using the Exchange Ratio.

<PAGE> 25

CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES

HBI has agreed to cause each HBI shareholder who does not dissent to
deliver his or her stock certificates ("Certificate" or "Certificates") to HBI
prior to the Closing Date. HBI will keep such Certificates in escrow for the
benefit of each holder until the Closing Date. At Closing, HBI will deliver the
Certificates to First American.

Upon surrender of a Certificate for cancellation to the Exchange
Agent, as that term is defined in the Agreement, together with such
documentation as the Exchange Agent may reasonably require to effectuate the
exchange, the Exchange Agent will, at or after the Effective Time, deliver to
the holder of each such Certificate a certificate representing the number of
whole shares of First American Stock which such holder has the right to receive
in respect of the Certificate surrendered, and cash for fractional shares, if
any, and the Certificate so surrendered shall then be canceled.

In the event of a transfer of ownership of HBI Stock which is not
registered in the transfer records of HBI, a certificate representing the
proper number of shares of First American Stock may be issued to a transferee
if the Certificate representing such HBI Stock is presented to the Exchange
Agent, accompanied by all documents required by the Exchange Agent, in its sole
discretion, to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid.

Until surrendered to the Exchange Agent in the manner contemplated by
the Agreement, each Certificate will be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the certificate
representing shares of First American Stock and cash in lieu of any fractional
shares of First American Stock, without interest, as contemplated by the
Agreement.

** IF YOU WOULD LIKE TO SEND IN YOUR STOCK CERTIFICATES WITH YOUR PROXY CARD,
PLEASE FOLLOW THE ENCLOSED INSTRUCTIONS**

REPRESENTATIONS AND WARRANTIES; CONDITIONS TO THE MERGER; WAIVER

The Agreement contains representations and warranties by HBI
regarding, among other things, its organization, capitalization, its ownership
and the capitalization of CFB, authority to enter into the Agreement, certain
information supplied or to be supplied to FAC, compliance with laws, pending
and threatened litigation, tax matters, certain material agreements, employee
benefit plans, regulatory matters, absence of material adverse changes, the
vote required for approval of the Merger, title to its assets, ownership of FAC
Stock, allowance for loan losses, transactions with affiliated persons,
activities of HBI and CFB, environmental matters and certain provisions of
HBI's organizational documents, relevant state anti-takeover laws, and matters
concerning tax identification numbers and informational returns. The Agreement
also contains representations and warranties by First American regarding, among
other things, its organization, capitalization, its ownership and the
capitalization of FANB, authority to enter into the Agreement, filings with the
SEC, the absence of material changes, the absence of an approval requirement by
holders of FAC Stock of the Merger, and reservation of shares of FAC Stock.
These representations and warranties will not survive the Effective Time.

The respective obligations of First American and HBI to consummate the
Merger are conditioned upon, among other things: (i) approval of the Agreement
by the shareholders of HBI; (ii) that shares of FAC Stock to be issued in the
Merger having been registered with the SEC and approved for trading on Nasdaq;
(iii) the receipt of required regulatory approvals and the expiration of all
applicable waiting periods required after the granting of any such approvals;
(iv) the absence of a restraining order or injunction preventing the
consummation of the Merger, or the pendency of any proceeding by any
governmental entity seeking a restraining order or injunction, or the existence
of an applicable statute, rule, regulation or order making the consummation of
the Merger illegal; (v) the accuracy of the representations and warranties set
forth in the Agreement as of the Closing

<PAGE> 26

Date and the performance in all material respects of all obligations of the
other party as required to be performed by the other party at or prior to the
Closing Date by the parties to the Agreement; (vi) the receipt of the consent
or approval of each person (other than governmental entities) whose consent or
approvals is required in order to permit the succession of First American to
any obligation, right or interest of HBI or CFB under any loan or credit
agreement, note, mortgage, indenture, lease, license or other agreement or
instrument, except those for which failure to obtain such consents and
approvals would not, individually or in the aggregate, have a material adverse
effect on First American and its subsidiaries taken as a whole or upon the
consummation of the transaction contemplated by the Agreement; (vii) receipt by
each of First American and HBI of certain legal and tax opinions; (viii) the
absence of material adverse changes in the business, financial condition,
prospects or results of operations or prospects of HBI; (ix) the receipt by
First American of certain agreements from the "affiliates" of HBI; (x) receipt
by First American of a letter from Arthur Andersen LLP, dated as of the
Effective Time, providing an agreed upon procedure report as to certain of
HBI's financial information; (xi) receipt by First American of a certificate
from HBI as to the capitalization of HBI immediately prior to the Effective
Time; (xii) the execution and delivery of the consulting contract with Joseph
H. Crabtree, Sr. (attached to the Agreement as Exhibit B); (xiii) the
conversion of the one outstanding share of HBI Preferred Stock into one share
of HBI Stock; (xiv) the securing of an agreement by the trustees of the HBI
Employee Stock Ownership Plan ("HBI ESOP") to repay, as soon as practical after
the Effective Time, to FANB indebtedness owing under a loan agreement between
HBI and FANB, the proceeds of which are for the benefit of the HBI ESOP, and
certain other provisions relating to the termination of the HBI ESOP; and (xv)
HBI's having shareholders' equity of not less than $6,100,000 at Closing
(exclusive of certain expenses related to the negotiation and consummation of
the Merger).

Except for the approval by HBI's shareholders , the approval of FAC
stock for trading on Nasdaq of the shares of FAC Stock issued in the Merger,
and the receipt of all required regulatory approvals, the conditions to
consummation of the Merger may be waived at any time by the party for whose
benefit they were created.

REGULATORY APPROVALS

The Merger and the Bank Merger are subject to certain regulatory
approvals. The Merger is subject to the approval of the Federal Reserve Board
under Section 3 of the BHCA.

The Bank Merger is subject to approval by the OCC under the Bank
Merger Act. The Bank Merger Act provides that the Merger may not be consummated
until the thirtieth day after approval by the OCC, during which time the United
States Department of Justice ("DOJ") may challenge the transaction on antitrust
grounds; provided, however, that the OCC has the discretion, upon request, to
shorten the thirty day waiting period to fifteen days in the event the DOJ
indicates to the OCC that it will not object to the transaction on competitive
grounds.

Prior to the Effective Time, First American, FANB, HBI, and CFB, as
appropriate, will have received all of the foregoing regulatory approvals and
applicable waiting periods for the Merger and the Bank Merger will have passed.

First American and HBI are not aware of any other governmental
approvals or actions that are required for consummation of the Merger and the
Bank Merger. Should any other approval or action be required, it is presently
contemplated that such approval or action would be sought. There can be no
assurance that any such approval or action, if needed, could be obtained, or
that it would not delay consummation of the Merger and the Bank Merger and
would not be conditioned in a manner that would cause First American to abandon
the Merger and the Bank Merger.

BUSINESS PENDING THE MERGER

<PAGE> 27

The Agreement contains negative and affirmative covenants that are
customary in similar transactions. In addition, the Agreement provides that,
except as otherwise specifically contemplated or permitted thereby, HBI will,
and will cause CFB to, operate its business only in the usual, regular and
ordinary course and preserve intact its business organizations and assets and
maintain its rights and franchises. First American and HBI also agreed to take
no action which would materially adversely affect the ability of any party to
consummate the Merger or prevent or impede the transactions contemplated in the
Agreement from qualifying as a reorganization under Section 368 of the Code.
Without the prior written consent of First American, HBI generally may not, and
may not permit CFB to, incur new debt other than in the ordinary course of
business; declare or pay dividends other than a one time dividend of not more
than $15.00 per share of HBI Stock; increase compensation or benefits of
employees, officers or directors (except for previously budgeted bonuses,
including a bonus, payable to Joseph H. Crabtree, Sr., in an amount not to
exceed $98,000); or take certain other actions, other than in the ordinary
course of business or as described in the Agreement, that might impact the
financial condition or business of HBI. The Agreement also contains certain
other provisions pursuant to which HBI has agreed to take certain actions
relating to its lending, environmental and other policies with the purpose of
coordinating such policies with those of First American in anticipation of the
completion of the Merger.

NO SOLICITATION OF COMPETING TRANSACTIONS

HBI has agreed that it will not authorize or permit any officer,
director, employee, investment banker, financial consultant, attorney,
accountant or other representative of HBI or any subsidiary of HBI directly or
indirectly to initiate contact with any person or entity in an effort to
solicit, initiate or encourage any Competing Transaction (as defined below; see
"--Effective Time of the Merger; Termination; Damages"). Further, HBI has
agreed not to authorize or permit any officer, director, employee, investment
banker, financial consultant, attorney, accountant or other representative of
HBI or any subsidiary of HBI directly or indirectly, (A) to cooperate with, or
furnish or cause to be furnished any non-public information concerning its
business, properties or assets to, any person or entity in connection with any
Competing Transaction; (B) to negotiate any Competing Transaction with any
person or entity; or (C) to enter into any agreement, letter of intent or
agreement in principle as to any Competing Transaction. HBI has also agreed to
promptly give written notice to First American upon becoming aware of any
Competing Transaction.

EFFECTIVE TIME OF THE MERGER; TERMINATION; DAMAGES

After such time as the conditions to the closing of the Merger have
been satisfied or waived, the Merger shall become effective upon the filing of
Articles of Merger with the Secretary of State of Tennessee or at such time
thereafter as is provided in the Articles of Merger. The parties currently
intend that the Effective Time shall be 12:01 a.m., Central Time, on January 1,
1997.

The Agreement may be terminated, whether before or after shareholder
approval, in writing: (i) by mutual consent of First American and HBI; (ii) by
either party, if the Merger is not consummated on or before April 30, 1997
(provided that the terminating party shall not have breached in any material
respect its obligations under the Agreement in a manner that proximately
contributed to the failure to consummate the Merger by such date); (iii) by
either party, if any governmental regulatory body, the consent of which is a
condition to the obligations of First American and HBI to consummate the
transactions contemplated by the Agreement, has determined not to grant its
consent and all appeals of such determination have been taken and have been
unsuccessful; (iv) by either party, if any court of competent jurisdiction has
issued an order or judgment restraining, enjoining or otherwise prohibiting the
Merger and such order or judgment has become final and unappealable; (v) by
First American, if any event has occurred as a result of which certain
conditions are no longer capable of being satisfied, (vi) by First American, if
there has been a breach by HBI of any representation or warranty contained in
the Agreement which would have or would be reasonably likely to

<PAGE> 28

have a material adverse effect on the assets, liabilities, financial condition,
results of operations, business or prospects of HBI and CFB taken as a whole,
or there has been a material breach by HBI of a covenant or agreement set forth
in the Agreement; (vii) by First American, if HBI or its Board of Directors
shall have authorized, recommended, proposed or publicly announced its
intention to enter into a Competing Transaction (as defined below) which has
not been consented to in writing by First American; (viii) by First American,
if HBI's Board of Directors has failed to make or shall have withdrawn or
materially modified its recommendation to the HBI shareholders with respect to
the Merger or the Agreement; (ix) by HBI, if any event has occurred as a result
of which certain conditions are no longer capable of being satisfied; or (x) by
HBI, if there has been a breach by First American of any representation or
warranty contained in the Agreement which would have or would be reasonably
likely to have a material adverse effect on the assets, liabilities, financial
condition, results of operations, business or prospects of First American and
FANB taken as a whole, or there has been a material breach of any of the
covenants or agreements set forth in the Agreement on the part of First
American.

"Competing Transaction" is defined in the Agreement as one of the
following involving HBI or CFB (other than the transactions contemplated by the
Agreement): (i) any merger, consolidation, share exchange, business
combination, or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 15% or more of HBI Capital
Stock or the assets of HBI in a single transaction or series of transactions to
the same person, entity or group; or (iii) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.

The Agreement provides that HBI is required to pay liquidated damages
in the amount of $1,300,000 (the "Fee") to First American if (1) First American
terminates the Agreement by reason of a failure of HBI to meet certain
conditions due to HBI's knowing and intentional misrepresentation or knowing
and intentional breach of warranty or of any covenant or agreement, and, within
twelve (12) months after the date of such event or breach, HBI or CFB
made certain contacts regarding a Competing Transaction; (2) if First American
terminates the Agreement after the HBI Board of Directors has withdrawn or
materially modified its authorization, approval or recommendation to the
shareholders of HBI with respect to the Merger or the Agreement in a manner
adverse to First American or has failed to make a favorable recommendation to
the shareholders of HBI regarding the Merger and the Agreement; (3) if First
American terminates the Agreement because, without first obtaining First
American's consent, HBI or its Board of Directors has authorized, recommended,
proposed or publicly announced its intention to enter into a Competing
Transaction and within twelve (12) months from the date of such termination a
Competing Transaction is consummated or HBI has entered into an agreement
which, if consummated, would constitute a Competing Transaction; or (4) if HBI
terminates the Agreement because the Agreement did not receive the requisite
vote of the HBI shareholders and within twelve (12) months from the date of
such termination a Competing Transaction is consummated or HBI has entered
into an agreement which if consummated would constitute a Competing
Transaction. If First American is entitled to the Fee, HBI is also obligated to
pay to First American interest at the rate of 6% per annum on any amounts that
are not paid when due, plus all costs and expenses in connection with or
arising out of the enforcement of the obligation of HBI to pay the Fee or such
interest.

MANAGEMENT AND OPERATIONS AFTER THE MERGER

At the Effective Time, HBI will merge with and into First American,
and HBI thereafter will cease to exist as a separate corporate entity. In
addition, CFB will merge with and into FANB, and CFB thereafter will cease to
exist as a separate entity.

The Board of Directors of First American following the Merger will
consist of those persons serving as directors immediately prior thereto. It is
anticipated that Joseph H. Crabtree, Sr., Director and Secretary of HBI and
Chairman, CEO, and President of CFB, and Paul D. Alexander, Director of HBI and
Vice-Chairman of CFB, will serve as a member of FANB's Community Board in
Gallatin, Tennessee, following the Bank Merger.

EFFECT ON CERTAIN EMPLOYEES AND BENEFIT PLANS

<PAGE> 29

Employee Stock Ownership Plan. The Agreement provides that HBI and
First American will cooperate to cause the HBI Bank Employee Stock Ownership
Plan and Trust (the "ESOP" or the "HBI ESOP") to be amended (if necessary) and
other action taken in a manner reasonably acceptable First American to provide
that (i) at the Effective Time the current trustees of the ESOP will resign
and First American will appoint a successor trustee; (ii) the ESOP will be
terminated as soon as possible after the Effective Time, consistent with the
requirements of Section 415 of the Code and other applicable tax provisions;
and (iii) as soon as practicable after the Effective Time and conditioned upon
the receipt of a favorable determination letter from the IRS with respect to
the qualification of the ESOP upon its termination, HBI and First American
have agreed that the assets of the ESOP will be distributed to the
beneficiaries thereof. As a condition to Closing, the then current trustees of
the HBI shall have agreed to cause to be repaid to FANB all indebtedness
incurred by HBI for the benefit of the ESOP that is owed to FANB.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

Certain executive officers and directors of HBI have interests in the
Merger in addition to their interests as shareholders of HBI Stock generally.
The HBI Board was aware of these interests and considered them, among other
matters, in approving the Agreement and the transactions contemplated thereby.

Consulting Agreement. In order to maintain continuity of HBI's
business operations after the Effective Time, FANB will enter into a five-year
consulting agreement (attached to the Agreement as Exhibit B), commencing as of
the Effective Time, with Joseph H. Crabtree, Sr. Under the agreement, Mr.
Crabtree will render administrative, sales, marketing and other executive
services to FANB. For these services, Mr. Crabtree, Sr., will receive $225,000
per year and a one-time signing bonus of $257,000.

Board Membership. First American anticipates that Joseph H. Crabtree,
Sr., Director and Secretary of HBI and President of CFB, and Paul D. Alexander,
Director of HBI and Vice-Chairman of CFB, will be appointed as advisory
directors of FANB's Community Board in Gallatin, Tennessee, after the Effective
Time.

Broker's Fees. Charles Welch, who served as HBI's independent
accountant for 1993 and 1994, will receive $250,000 in consideration for his
efforts in negotiating the Merger, regardless of whether a majority of the
shareholders of HBI Stock approve the Merger or whether the Merger is
consummated.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

Set forth below is a discussion of certain federal income tax
consequences of the Merger to HBI and to HBI's shareholders who are citizens or
residents of the United States. THE FOLLOWING DISCUSSION DOES NOT PURPORT TO BE
A COMPLETE ANALYSIS OR LISTING OF ALL POTENTIAL TAX EFFECTS RELEVANT TO A
DECISION WHETHER TO VOTE IN FAVOR OR APPROVAL OF THE MERGER AND THE
TRANSACTIONS CONTEMPLATED THEREBY. FURTHER, THE DISCUSSION DOES NOT ADDRESS THE
TAX CONSEQUENCES THAT MAY BE RELEVANT TO A PARTICULAR HBI SHAREHOLDER SUBJECT
TO SPECIAL TREATMENT UNDER CERTAIN FEDERAL TAX LAWS, SUCH AS DEALERS IN
SECURITIES, BANKS, INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS, NON-UNITED
STATES PERSONS AND SHAREHOLDERS WHO ACQUIRED THEIR SHARES PURSUANT TO EMPLOYEE
STOCK OPTIONS OR OTHERWISE AS COMPENSATION OR SHAREHOLDERS WHO HOLD THEIR HBI
STOCK AS PART OF A "STRADDLE" OR "CONVERSION" TRANSACTION, NOR ANY
CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCALITY OR FOREIGN
JURISDICTION. THE DISCUSSION IS BASED UPON THE CODE, TREASURY

<PAGE> 30

REGULATIONS THEREUNDER AND ADMINISTRATIVE RULINGS AND COURT DECISIONS AS OF THE
DATE HEREOF. ALL OF THE FOREGOING ARE SUBJECT TO CHANGE, AND ANY SUCH CHANGE
COULD AFFECT THE CONTINUING VALIDITY OF THIS DISCUSSION.

HOLDERS OF HBI STOCK ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE
PARTICULAR EFFECT OF THEIR OWN PARTICULAR FACTS AND CIRCUMSTANCES ON THE
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO THEM, AND ALSO AS TO THE
EFFECT OF ANY STATE, LOCAL, FOREIGN AND OTHER FEDERAL TAX LAWS.

Under current federal income tax law, and based upon assumptions and
representations made or to be made by HBI and First American, and assuming that
the Merger is consummated in the manner set forth in the Agreement, it is
anticipated that the following federal income tax consequences will result: (i)
the Merger will constitute a reorganization, with each of HBI and First
American being a party to such reorganization within the meaning of Section
368(a) of the Code and neither party to the reorganization will recognize
gain or loss for federal income tax purposes upon the exchange in the Merger
of HBI Stock solely for FAC Stock; (ii) HBI shareholders will recognize no
gain or loss for federal income tax purposes upon the exchange of HBI Stock
solely for FAC Stock (except with respect to cash received in lieu of a
fractional share interest in FAC Stock); (iii) the tax basis in the FAC Stock
received by a HBI shareholder in the Merger (including the basis of any
fractional share interest in FAC Stock) will be the same as the tax basis in
the HBI Stock surrendered in exchange therefor; (iv) the holding period for
FAC Stock received in the Merger in exchange for HBI Stock will include the
period during which the shareholder held the HBI Stock (including the holding
period of any fractional share interest in FAC Stock) surrendered in exchange
therefor, provided that the HBI Stock was held as a capital asset at the
Effective Time; and (v) cash received by an HBI shareholder in lieu of a
fractional share interest of FAC Stock will be treated as having been
received as a distribution in full payment in exchange for the fractional share
interest of FAC Stock that such HBI shareholder would otherwise be entitled to
receive.

A condition to the consummation of the Merger is the receipt by HBI of
an opinion of Miller & Martin as to the qualification of the Merger as a
tax-free reorganization with the consequences set forth above. Such opinion
will be subject to various assumptions, qualifications, and representations,
including that the Merger is consummated in the manner and in accordance with
the terms of the Agreement. This opinion would be based entirely upon the Code,
regulations then in effect or proposed thereunder, then-current administrative
rulings and practice and judicial authority, all of which would be subject to
change, possibly with retroactive effect.

No ruling has been or will be requested from the IRS, including any
ruling as to federal income tax consequences of the Merger to First American,
HBI or HBI's shareholders. Unlike a ruling from the IRS, an opinion of tax
counsel is not binding on the IRS. There can be no assurance that the IRS will
not take a position contrary to the positions reflected in the tax opinions
noted above or that such opinions will be upheld by the courts if challenged.

CERTAIN DIFFERENCES IN RIGHTS OF SHAREHOLDERS

The present stockholders of HBI own voting common stock in a Tennessee
corporation which is subject to regulatory oversight by the Federal Reserve
Board. First American also is a Tennessee corporation, and shareholders of HBI
who receive FAC Stock will continue to be subject to the privileges and
restrictions provided by the Tennessee Business Corporation Act (the "TBCA"). In
addition, First American, like HBI, is a bank holding company subject to the
supervision of the Federal Reserve Board under the BHCA and is subject to
certain of the state banking laws of each state in which its subsidiary banks
are located. First American is also subject to regulatory oversight of the OTS
under HOLA. Shareholders of HBI who receive FAC Stock will also be subject to
the provisions of the charter and bylaws of First American, which differ in
certain respects from those contained in the charter and bylaws of HBI. Certain
of the differences are summarized below. This summary contains a list of the
material differences but is not meant to be relied upon as an exhaustive list
or a detailed description of the provisions discussed and is qualified in its
entirety by reference to the First American charter and bylaws and HBI's
charter and bylaws as well as the applicable statutes.

<PAGE> 31

Authorized Common Stock. First American is authorized to issue
50,000,000 shares of FAC Stock, of which 29,566,609 shares were outstanding as
of September 30, 1996, and 5,304,990 shares were reserved for issuance pursuant
to First American's Dividend Reinvestment and Stock Purchase Plan and various
employee benefit plans. HBI is authorized to issue 100,000 shares of HBI Stock,
24,630 shares of which will be issued and outstanding as of the Record Date
(after taking into account the conversion of one issued and outstanding share
of HBI's preferred stock into one share of HBI Stock on or before the Record
Date).

Authorized Preferred Stock. As of the Record Date, First American was
authorized to issue up to 2,500,000 shares of preferred stock, no par value
("FAC Preferred Stock"), none of which were issued or are outstanding. The
rights and preferences evidenced by shares of FAC Stock are limited or
qualified by the rights and preferences evidenced by shares of FAC Preferred
Stock. Information with respect to the relative rights and preferences of FAC
Stock and FAC Preferred Stock is included in the description of FAC Stock
incorporated herein by reference. See "AVAILABLE INFORMATION" and
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE." As provided in First
American's charter, the Board of Directors of First American is expressly
vested with the authority to amend such charter to establish and designate
additional series of FAC Preferred Stock and to fix and determine the terms
thereof, without the necessity of obtaining the approval of First American's
shareholders.

See "PROPOSAL I -- THE MERGER -- Terms of the Merger."

Shareholder Proposals. First American's bylaws provide that, in order
for a proposal to be submitted to a vote of the shareholders of First American
at an annual meeting of shareholders, such proposal must be made by a
shareholder delivering written notice to the Secretary of First American not
less than 120 calendar days in advance of the date of First American's proxy
statement released to security-holders in connection with the previous year's
annual meeting. The shareholder proposal notice must comply with the SEC's
Rule 14a-8 under the Exchange Act and must set forth: (i) a brief description
of the proposal and the reasons for its submission; (ii) the name and address
of the shareholder, as they appear on First American's books; (iii) the
classes and number of shares of First American stock owned by the shareholder;
and (iv) any financial interest of the shareholder in such proposal. The
Chairman of the meeting will, if the facts warrant, determine that any
proposal was not properly submitted in accordance with the provisions
prescribed by the bylaws and the defective proposal will not be submitted to
the meeting for a vote of the shareholders.

HBI's Bylaws contain no similar provisions with respect to shareholder
proposals.

Special and Annual Shareholders Meetings. Pursuant to the bylaws of
First American, written notices of the annual meeting of the shareholders of
First American are required to be mailed not less than ten (10) days nor more
than sixty (60) days before the meeting.

The bylaws of First American provide that a special meeting of
shareholders may be called at any time by the Board of Directors, the Chairman
of the Board, the President, the Vice Chairman of the Board or after the
receipt of a written demand for such a meeting from shareholders owning of
record 10% or more of the entire capital stock of First American issued and
outstanding and entitled to vote at such a meeting, together with a certified
check for fifty thousand dollars ($50,000) payable to First American to cover
First American's expenses in connection with such meeting. In any case in which
shareholders shall have properly called a special meeting of First American,
the special meeting shall be held no sooner than 75 and no later than 90 days
after the receipt of the written demand by the shareholders. Written notice of
special meetings of the shareholders called pursuant to the request of
shareholders owning 10% or more of the capital stock of First American shall be
given by First American to each shareholder of record entitled to vote at such
meeting not less than 45 days nor more than 60 days before the meeting. Written
notice of other special meetings of the shareholders shall be given not less
than 10 days nor more than 60 days before the meeting. First American's bylaws
provide that, if a quorum exists, approval of action on a matter (other than
election of directors) by a voting group entitled to vote thereon is received
if the votes cast within the voting group favoring the action exceeds the votes
cast disapproving the action.

<PAGE> 32

HBI's Bylaws provide that annual meetings of shareholders shall be
held on a date as determined by the Board of Directors and that the business to
be transacted at such meetings shall be the election of Directors and such
other businesses may properly be brought before the meeting.

A special meeting of HBI shareholders may be called at any time by the
Board of Directors, or, if the holders of at least 10% of all the votes
entitled to be cast upon any issue to be considered at the proposed special
meeting, sign, date and deliver to HBI's secretary one or more written demands
for the meeting describing a purpose or purposes for which such special meeting
is to be held. Only business within the purpose or purposes described in the
meeting notice may be conducted at a special meeting of shareholders.

For both special and annual meetings of shareholders, the Board may
designate any place, either in or outside the State of Tennessee, as the place
of the meeting. If no place is determined by the Board of Directors, the
meeting is held at the principal office of HBI. A notice outlining the date,
time and place of each annual and special meeting, and, in the case of a
special meeting the purpose or purposes for which the meeting is called, is
required to be given no fewer than ten days and no more than two months before
the date of the meeting, provided that shareholders may waive any notice
requirement in the HBI Bylaws or charter either before or after the date and
time stated in the notice.

Amendment of Charter. An amendment to First American's charter
generally requires the recommendation of the Board of Directors of First
American and the approval of a majority of all shares entitled to vote thereon.
In accordance with the TBCA, the Board of Directors of First American may
condition its submission of the proposed amendment on any basis.
Notwithstanding the foregoing, the repeal or amendment of certain articles of
First American's charter, including Article X which requires certain
supermajority votes for certain business combinations and Article XI which
contains certain provisions relating to the number of directors, filling of
director vacancies and removal of directors, requires the affirmative vote of
75% of the votes entitled to be cast by all holders of voting stock of First
American.

Similarly, an amendment to HBI's Charter generally requires the
recommendation of the Board of Directors of HBI, and the approval of a majority
of all shareholders entitled to vote on the amendment. The amendment of HBI's
Charter is also subject to the TBCA and is subject to the same statutory
provisions as is First American's Charter. HBI's Charter does not contain,
however, any supermajority voting provisions.

Amendment of Bylaws. An amendment to the bylaws of First American
generally requires the approval by either a majority vote of the Board of
Directors of First American or by the shareholders upon the affirmative vote of
a majority of the votes entitled to be cast by all holders of voting stock of
First American.

HBI's Bylaws provide that they may be altered, amended or repealed,
and new bylaws may be altered, amended or repealed, and new bylaws may be
adopted by a vote of the stockholders representing a majority of all the shares
issued and outstanding, at any annual or special meeting of shareholders when
the proposed amendment has been set out in the notice of such meeting. The
Board of Directors of HBI, by a two-third majority of the entire Board, has the
power to make, adopt, amend, and repeal the Bylaws; PROVIDED, HOWEVER, that the
stockholders may alter, amend, or repeal Bylaws made by the Board. The Board
does not have the authority to change the quorum for meetings of stockholders
or of the Board or to change any provision of the Bylaws with respect to the
removal of directors of the filling of vacancies in the Board resulting from
removal by the stockholders. If any Bylaw regulating an impending election is
adopted, amended, or repealed by the Board of Directors, a concise statement of
the proposed change must be made in the notice of the meeting of the
shareholders.

Acquisition of Capital Stock. Both First American and HBI are subject
to the Tennessee Control Share Acquisition Act, which restricts the voting
powers of shares acquired by a party once a specific level of control is
acquired, unless certain conditions are met.

<PAGE> 33

Antitakeover Provisions; Shareholder Rights Plan. The charter and
bylaws of First American, and certain provisions of the TBCA applicable to
First American, contain provisions that may have the effect of discouraging a
change in control that is not supported by First American's Board of Directors
or of making such a transaction more difficult to accomplish, even if such a
transaction is desired by a simple majority of First American's shareholders.
HBI's charter and bylaws contain certain similar provisions.

First American has in place a Rights Agreement, dated December 14,
1988, (the "Rights Agreement") under which holders of FAC Stock are issued
certain rights ("Rights") the effect of which may be to discourage coercive or
abusive takeover tactics. Pursuant to the Rights Agreement, the Board of
Directors of First American authorized and declared a distribution of one Right
for each outstanding share of FAC Stock to shareholders of record at the close
of business on December 27, 1988 (the "Record Date") and for each share of FAC
Stock issued by First American after the Record Date but prior to the
Distribution Date (described below). Accordingly, a Right will attach to each
share of FAC Stock issued in the Merger. Each Right entitles the registered
holder, subject to the terms of the Rights Agreement, to purchase from First
American one one-hundredth of a share (a "Unit") of Series A Junior Preferred
Stock (the "Preferred Stock"), at a purchase price of $80.00 per Unit, subject
to adjustment. The Rights attach to all certificates representing shares of
outstanding FAC Stock, and no separate Rights Certificates have been issued.
The Rights will separate from the FAC Stock, and the Distribution Date will
occur, upon the earlier of: (i) 10 days following public announcement (the date
of the announcement being the "Stock Acquisition Date") that a person or group
of affiliated or associated persons (other than First American, any subsidiary
of First American or any employee benefit plan of First American or such
subsidiary) has acquired, obtained the right to acquire, or otherwise obtained
the beneficial ownership of 20% or more of the then outstanding shares of the
FAC Stock, or (ii) 10 days following the commencement of a tender or exchange
offer that would result in a person or group beneficially owning 20% or more of
the then outstanding shares of the FAC Stock. As soon as practicable after the
Distribution Date, Rights Certificates would be mailed to holders of record of
the FAC Stock as of the close of business on the Distribution Date and,
thereafter, the separate Rights Certificates alone would represent the Rights.

Until a Right is exercised, the holder thereof has no rights as a
shareholder of First American, including the right to vote or to receive
dividends. Once the Right is exercised, however, each Unit of Preferred Stock
will have one vote, voting together with the FAC Stock.

Rights are not exercisable until the Distribution Date and will expire
at the close of business on December 27, 1998 (the "Final Expiration Date")
unless earlier redeemed by First American. They may be redeemed by First
American at its option, by action of a majority of the First American
independent directors, at any time prior to the earlier of (i) the close of
business on the Final Expiration Date or (ii) the close of business on the
tenth day following the Stock Acquisition Date. The Rights may only be redeemed
in whole, not in part, at a price of $.01 per Right (the "Redemption Price"),
payable, at the election of such majority of independent directors, in cash or
shares of FAC Stock.

The Rights Agreement also provides shareholders certain Rights in the
following situations. In the event that (i) a person becomes the beneficial
owner of 20% or more of the then outstanding shares of FAC Stock or (ii) during
the pendency of any tender or exchange offer for FAC Stock or prior to the
expiration of 20 business days (or such later date as a majority of the
independent directors may determine) after the date such tender or exchange
offer is terminated or expires, a person becomes the beneficial owner of 10% or
more of the then outstanding shares of FAC Stock (unless the 10% beneficial
ownership results from certain circumstances specified in the Rights
Agreement), then in each case, each holder of a Right will thereafter have the
right to receive, upon exercise, FAC Stock having a value equal to two times
the exercise price of the Right.

In addition, in the event that, at any time following the Stock
Acquisition Date, (i) First American is acquired in a merger or other business
combination transition (other than a merger described in the preceding
paragraph) and First American is not the surviving corporation; (ii) any person
effects a share exchange or merger of First American and all or part of the FAC
Stock is converted or exchanged for securities, cash or property of

<PAGE> 34

any other person; or (iii) 50% or more of First American's assets or earning
power is sold or transferred, each holder of a Right (except Rights which
previously have been voided pursuant to the "Beneficial Ownership" provision of
the Rights Agreement) shall thereafter have the right to receive, upon
exercise, common stock of the acquiring person having a value equal to two
times the exercise price of the Right.

Certain Business Combinations. First American's charter provides that
the affirmative vote of not less than 75% of the outstanding shares of all
voting stock and the affirmative vote of a majority of the outstanding shares
of voting stock held by shareholders other than an Interested Shareholder, as
defined below, is required for approval of any merger consolidation, the sale,
lease, exchange or other disposition of assets of First American with a value
of more than $1,000,000, the issuance of any securities of First American or
any subsidiary having an aggregate fair market value of $1,000,000, or the
adoption of a plan of liquidation or dissolution proposed by or on behalf of an
Interested Shareholder (as defined below), and any similar transaction, if any
such transaction involves any person or group of persons owning or controlling,
either directly or indirectly, 10% or more of the outstanding voting stock of
First American ("Interested Shareholder"). These voting requirements are not
applicable in such transactions (a) if approved by a majority of disinterested
directors or (b) if certain conditions set forth in First American's charter
relating to the fairness and form of the consideration have been met.

Liability of Directors; Indemnification. The charter of First American
provides for the discretionary indemnification of its directors and officers in
accordance with and to the full extent permitted by law as in effect at the
time of such indemnification. The bylaws of First American provide that no
indemnification of an officer or director shall be made by First American (i)
if a judgment or other final adjudication adverse to such person establishes
his liability for intentional misconduct or knowing violation of the law or for
unlawful distributions; (ii) if a judgment or other final adjudication adverse
to such person for breach of a duty of loyalty to First American is based upon
such person's gaining in fact personal profit or advantage to which he was not
entitled; (iii) in a proceeding by or in the right of the corporation, for any
amounts if such person is adjudged liable to the corporation, or for any
amounts paid to First American in settlement of such a proceeding by such
person; and (iv) in a proceeding by First American directly for expenses, unless
such proceeding is brought after a change in control of First American. First
American has purchased directors' and officers' liability insurance covering
certain liabilities which may be incurred by the officers and directors of
First American in connection with the performance of their duties.

The HBI Bylaws provide for the mandatory indemnification of and
advancement of expenses to each director and officer of HBI, or any person who
may have served at HBI's request as a director or officer of another company to
the full extent allowed by Tennessee laws in effect at the time of
indemnification. In addition, the HBI bylaws provide that HBI may indemnify and
advance expenses to any employee or agent of HBI who is not an officer or
director to the same extent as to an Officer or Director, if the Board of
Directors of HBI determines that it is in the best interest of HBI.

Both HBI and First American are subject to the provisions of the TBCA
which provides that a corporation may indemnify any of its directors and
officers against liability incurred in connection with the preceding if (i) the
director or officer acted in good faith; (ii) in the case of conduct in his or
her official capacity with the corporation, the director or officer reasonably
believed such conduct was in the corporation's best interest; (iii) in all
other cases the director or officer reasonably believed that his or her conduct
was not opposed to the best interest of the corporation; and (iv) in connection
with any criminal proceeding, the director or officer had no reasonable cause
to believe that his or her conduct was unlawful. In actions brought by or in
the right of the corporation, however, the TBCA provides that no
indemnification may be made if the director or officer was adjudged liable to
the corporation. In cases where the officer or director is wholly successful,
on the merits or otherwise, in the defense of any proceeding instigated because
of his or her status as an officer or director of a corporation, the TBCA
mandates that the corporation indemnify the director or officer against
reasonable expenses incurred in the proceeding. The TBCA also provides that in
connection with any proceeding charging improper personal benefit to an officer
or director, no indemnification may be made if such officer or director is
adjudged liable on the basis that personal benefit was improperly received.
Notwithstanding the foregoing, the TBCA provides that a court of

<PAGE> 35

competent jurisdiction, upon application, may order that an officer or director
be indemnified for reasonable expenses if, in consideration of all relevant
circumstances, the Court determines that such individual is fairly and
reasonably entitled to indemnification, whether or not the standard of conduct
set forth above was met.

RESALE OF FAC STOCK

The shares of FAC Stock issuable to shareholders of HBI upon
consummation of the Merger will have been registered under the Securities Act
and approved for trading on Nasdaq. Such shares may be traded freely by those
shareholders not deemed to be affiliates of HBI as that term is defined under
the Securities Act. The term "affiliate" generally means each person who (or is
a member of a group that) controls, is controlled by or is under common control
with, HBI, and for purposes hereof could be deemed to include all executive
officers, directors and 10% shareholders of HBI.

FAC Stock received and beneficially owned by those shareholders who
are deemed to be affiliates of HBI may be resold without registration as
provided by Rule 145, or as otherwise permitted, under the Securities Act. Such
affiliates, provided they are not affiliates of First American, may publicly
resell FAC Stock received by them in the Merger subject to certain limitations,
principally as to the number of shares and the manner of sale, during the two
years following the Effective Time. After the two-year period, such affiliates
may resell their shares without restriction.

The Agreement provides that HBI will cause each person identified by
HBI as an affiliate of HBI to deliver to First American, prior to the Meeting,
a written agreement providing that such person will not dispose of HBI Stock,
or any FAC Stock received in the Merger, except in compliance with the
Securities Act and the rules and regulations promulgated thereunder.

DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN

First American has a Dividend Reinvestment and Stock Purchase Plan,
which provides, for those FAC shareholders of record who elect to participate,
that dividends on FAC Stock may be invested in additional shares of FAC Stock
at a five percent (5%) discount from the then-current market price without
payment of brokerage commissions, fees or service charges. The plan also
permits participants to invest voluntary cash payments, within certain dollar
limitations, in additional shares of FAC Stock at the then-current market
price. It is anticipated that, after the Effective Time, First American will
continue to offer such a Dividend Reinvestment and Stock Purchase Plan and
shareholders of HBI who receive FAC Stock in the Merger will have the right to
participate therein if they are shareholders of record.

EXPENSES

All expenses incurred in connection with the Agreement and the
transactions contemplated thereby are to be paid by the party incurring such
expenses, except that First American and HBI will bear equally all expenses
associated with the printing and mailing of the Registration Statement and this
Prospectus/Proxy Statement.

ACCOUNTING TREATMENT

First American anticipates that it will account for the Merger using
the purchase method of accounting. Accordingly, at the Effective Time, all
assets and liabilities of HBI will be marked to market and recorded on First
American's books at fair market value.

DISSENTERS' RIGHTS

Common Stock Dissenters' Rights. The TBCA provides that with respect
to any class of securities not listed on a national stock exchange and that is
not a "national market system security", the shareholders of such

<PAGE> 36

security are entitled to dissent from and obtain payment of the fair value of
their shares in the event of certain corporate actions including the
consummation of a plan of merger to which the corporation is a party. If the
proposed corporate action creating dissenters' rights is submitted to a vote at
a shareholders meeting, the shareholder who wishes to assert dissenters' rights
must (i) prior to the time the vote is taken, provide the corporation with
written notice of his or her intent to demand payment for the shares if the
proposed action is effectuated, and (ii) not vote his or her shares in favor of
the proposed action. After receipt of the shareholder's notice of intent to
demand payment, the corporation must deliver a written dissenter's notice to
the shareholder stating where the payment demand must be sent and where
certificates for certificated shares must be deposited. As soon as the proposed
corporate action is taken or upon receipt of a payment demand, the corporation
must pay each dissenter who complied with requisite procedural requirements the
amount the corporation estimates to the fair value of the shares, plus accrued
interest. The shares of HBI Stock are entitled to vote as a class on the
Merger. Such shares are not "national market system securities" and are not
listed on a national stock exchange. HBI shareholders will therefore have the
right to dissent from, and obtain payment for the fair value of their shares of
Common Stock. A copy of Tennessee's Dissenters' Rights Statute is attached
hereto as Appendix B.

CERTAIN REGULATORY CONSIDERATIONS

First American and its subsidiaries are subject to extensive
regulation under state and federal statutes and regulations. The discussion in
this section, which summarizes certain of such statutes and regulations, does
not purport to be complete and is qualified in its entirety by reference to
such statutes and regulations, and in certain circumstances, proposed
regulations.

GENERAL

First American is a bank holding company subject to the supervision of
the Federal Reserve Board under the BHCA and a savings and loan holding company
subject to the supervision of the OTS under HOLA. FANB and FANBKY are national
banks and, as such, are subject to the supervision of, and are regularly
examined by, the OCC. FAFSB is a federal savings bank and, as such, is subject
to the supervision of, and is regularly examined by, the OTS. Each of First
American's depository institution subsidiaries is also insured by, and subject
to the regulations of, the Federal Deposit Insurance Corporation (the "FDIC"),
and is also affected significantly by the actions of the Federal Reserve Board
by virtue of its role in regulating money supply and credit availability, as
well as by the U.S. economy in general. Areas subject to regulation by federal
authorities include loan loss reserves, investments, loans, mergers, issuance
of securities, payment of dividends, establishment and closing of branches,
product offering and other aspects of operations.

First American's non-banking subsidiaries are subject to the
supervision of the Federal Reserve Board, and other non-banking subsidiaries
may be subject to the supervision of other regulatory agencies including the
SEC, the National Association of Securities Dealers, Inc. and state securities
regulators.

There are a number of obligations and restrictions imposed on bank
holding companies and their depository institution subsidiaries by federal law
and regulatory policy that are designed to reduce potential loss exposure to
the depositors of such depository institutions and to the FDIC insurance fund
in the event the depository institution becomes in danger of default or is in
default. For example, under Federal Reserve Board policy, First American is
expected to serve as a source of financial and managerial strength to each of
its subsidiary banks and to commit resources to support each of them. This
support may be required at times when First American would not otherwise be
inclined to provide it.

Under the "cross guarantee" provisions of the Federal Deposit
Insurance Act ("FDIA"), any FDIC-insured subsidiary of First American can be
held liable for any loss incurred by, or reasonably expected to be incurred by,
the FDIC in connection with (i) the default of a commonly controlled
FDIC-insured subsidiary or (ii) any assistance provided by the FDIC to any
commonly controlled FDIC-insured subsidiary "in danger of default." "Default"
is defined generally

<PAGE> 37

as the appointment of a conservator or receiver and "in danger of default" is
defined generally as the existence of certain conditions indicating that a
default is likely to occur in the absence of regulatory assistance. The FDIC
may decline to enforce the cross-guarantee provisions if it determines that a
waiver is in the best interest of the Savings Association Insurance Fund
("SAIF") or the Bank Insurance Fund ("BIF"), or both. The FDIC's claim for
damages is superior to claims of shareholders of the insured depository
institution or its holding company but is subordinate to claims of depositors,
secured creditors and holders of subordinated debt (other than affiliates) of
the commonly controlled insured depository institutions.

The FDIA also provides that amounts received from the liquidation or
other resolution of any insured depository institution by any receiver must be
distributed (after payment of secured claims) to pay the deposit liabilities of
the institution prior to payment of any other general or unsecured senior
liability, subordinated liability, general creditor or shareholder. This
provision would give depositors a preference over general and subordinated
creditors and shareholders in the event a receiver is appointed to distribute
the assets of any of the bank subsidiaries of First American.

CAPITAL

The Federal Reserve Board and the OCC have adopted substantially
similar risk-based capital and leverage guidelines applicable to U.S. banking
organizations. The minimum guideline for the ratio of total capital ("Total
Capital") to risk-weighted assets (including certain off-balance-sheet
activities, such as standby letters of credit) is 8.00%. At least half of the
Total Capital must be composed of common shareholders' equity, and to the
extent applicable, minority interests in the equity accounts of consolidated
subsidiaries, non-cumulative perpetual preferred stock and a limited amount of
cumulative perpetual preferred stock, less disallowed intangibles ("Tier 1
Capital"). The remainder, which is "Tier 2 Capital", may consist of
subordinated debt (or certain other qualifying debt issued prior to March 12,
1988), other preferred stock and a limited amount of loan loss reserves. In
addition, each of the federal bank regulatory agencies has established minimum
leverage capital ratio guidelines. These guidelines provide for a minimum Tier
1 leverage capital ratio (Tier 1 Capital to total assets, less disallowed
intangibles) of 3% for banks and bank holding companies that meet certain
specified criteria, including that such financial institutions have the highest
regulatory examination rating and are not contemplating significant growth or
expansion. All other institutions are expected to maintain a leverage ratio of
at least 100 to 200 basis points above the minimum. At September 30, 1996,
First American's Tier 1 risk-based capital and total risk-based capital ratios
were 9.66% and 12.21%, respectively, and its Tier 1 leverage capital ratio at
September 30, 1996 was 7.61%, each of which exceeded the minimum ratios
established by the Federal Reserve Board. On a pro forma basis assuming
consummation of the Merger, as of September 30, 1996, First American's Tier 1
risk-based capital and total risk-based capital ratios would be 9.38% and
11.93%, and its Tier 1 leverage capital ratio would be 7.31%, also in excess of
Federal Reserve Board minimums.

At September 30, 1996, FANB's Tier 1 risk-based, total risk-based and
Tier 1 leverage capital ratios were 10.29%, 11.54% and 8.28%, respectively and
FANBKY's were 15.77%, 16.44% and 9.83%, respectively, all of which exceeded the
minimum ratios established by the OCC.

FAFSB is subject to capital requirements adopted by the OTS, which are
similar but not identical to those issued by the Federal Reserve Board and the
OCC. Under the OTS' capital guidelines, a savings bank is required to maintain
tangible capital of at least 1.5% of tangible assets, core (leverage) capital
of at least 3% of the association's adjusted total assets and risk-based
capital of at least 8% of risk-weighted assets. At September 30, 1996, FAFSB's
tangible ratio was 7.51%, its core (leverage) capital ratio was 7.51%, Tier 1
capital ratio was 15.63% of risk-weighted assets and its total risk-based
capital ratio was 16.58%.

CFB is also subject to the capital requirements of the FDIC. At
September 30, 1996, CFB's Tier 1 risk-based, total risk-based and Tier 1
leverage capital ratios were 12.55%, 13.58% and 7.65%, respectively.

<PAGE> 38

In 1991, each federal banking agency was required to revise its
risk-based capital standards to ensure that those standards take adequate
account of interest rate risk, concentration of credit risk and the risks of
nontraditional activities. Each of the federal banking agencies subsequently
revised the risk-based capital guidelines described above to take account of
concentration of credit risk, risk of nontraditional activities, and a bank's
exposure to declines in the economic value of its capital due to changes in
interest rates. These guidelines do not codify a measurement framework for
assessing the level of a bank's interest rate exposure. On June 26, 1996, these
agencies adopted a joint policy statement requiring that banks adopt
comprehensive policies and procedures for managing interest rate risk, and this
statement sets forth the general standards that such policies and procedures
must meet. Unlike an earlier proposal, however, the statement does not contain
a standardized measure or explicit capital charge for interest rate risk.
Neither First American nor HBI believes that these agency actions concerning
the capital guidelines will materially impact its operations.

The OTS regulatory capital requirements which are applicable to FAFSB
already incorporate an interest rate risk component. Under the OTS regulation,
a savings institution's interest rate risk is measured by the decline in the
net portfolio value of its assets that would result form a hypothetical 200
basis point increase or decrease in interest rates, divided by the estimated
economic value of the institution's assets. A savings institution whose
interest rate risk exposure exceeds 2% would be required to deduct an amount
equal to one half of the difference between the institution's interest rate
risk and 2% multiplied by the estimated economic value of the institution's
assets. The OTS, however, has postponed requiring any such deductions form
capital until an appeals process is developed for the measurement of an
institution's interest rate risk.

ACQUISITION AND EXPANSION

The BHCA requires any bank holding company to obtain the prior
approval of the Federal Reserve Board before it may acquire all or
substantially all of the assets of any bank, or ownership or control of any
voting shares of any bank, if, after acquiring such shares, it would own or
control, directly or indirectly, more than 5% of the voting shares of such
bank.

The BHCA currently permits bank holding companies from any state to
acquire banks and bank holding companies located in any other state, subject to
certain conditions, including certain nationwide and state imposed
concentration limits. Under these concentration limits, a bank holding company
which controls more than 10% of the total amount of deposits of insured
depository institutions in the United States is prohibited from further
acquisitions; federal statewide concentration limits prohibit an acquisition
if, upon consummation of the transaction, a bank holding company would control
30% or more of the total amount of deposits of insured depository institutions
in the state which is the home state of the bank or bank holding company being
acquired. First American estimates that as of December 31, 1995, the latest
date for which such information is readily available, it held less than 11% of
all such deposits in Tennessee, less than 1.0% of all such deposits in Kentucky
and less than 1.0% of all such deposits in Virginia. Although individual state
deposit caps are not superseded by the legislation, the Tennessee General
Assembly, in its 1995 Session, adopted conforming legislation which adopts the
deposit caps enacted by Congress. The legislation also repeals, as of September
29, 1995, the Tennessee laws previously applicable to acquisitions by bank
holding companies, and reenacts in modified form one of these laws, the
Tennessee Bank Structure Act (the "TBSA"). Under the TBSA, as reenacted, no
bank holding company, whether a Tennessee or out-of-state company, may acquire
any bank in Tennessee that has been in operation less than five years or
organize a new bank in Tennessee except in the case of certain interim bank
mergers and acquisitions of banks in financial difficulty. Under the Tennessee
laws pertaining to bank mergers, which (with the exception of a merger between
a Tennessee bank and an out-of-state bank) were not directly affected by the
new legislation, banks in separate counties in Tennessee which have been in
operation at least five years may merge. Banks with principal offices in the
same county may merge, even if one or both have been in operation less than
five years. The effect of these provisions is that First American in the future
may acquire banks in Tennessee which have been in operation for over five years
but may not form or acquire a new bank in any Tennessee county other than
Davidson County, in which the main office of FANB is located.

<PAGE> 39

Under federal law, banks will be able to branch across state lines by
acquisition, merger or de novo, effective June 1, 1997 (unless state law would
permit such de novo interstate branching at an earlier date), provided certain
conditions are met, including that applicable state law must expressly permit
such de novo interstate branching. Tennessee has enacted a interstate branching
law in response to the federal law which is effective June 1, 1997. Tennessee
state law currently only allows interstate branching by acquisition or merger
and does not expressly permit de novo branching.

BANK REGULATION

Payment of Dividends. First American is a legal entity separate and
distinct from its subsidiary banks and its nonbank subsidiaries. First
American's revenues (on a parent company only basis) result, in part, from
dividends paid to First American by its subsidiaries. The right of First
American, and consequently the right of creditors and shareholders of First
American, to participate in any distribution of the assets or earnings of any
subsidiary through the payment of such dividends or otherwise is necessarily
subject to the prior claims of creditors of the subsidiary (including
depositors, in the case of banking subsidiaries), except to the extent that
claims of First American in its capacity as a creditor may be recognized.

There are statutory and regulatory restrictions applicable to the
payment of dividends by subsidiary banks to First American. National banks are
required to obtain the prior approval of the OCC for the payment of dividends
if the total of all dividends declared in any year exceeds the total of (i)
such bank's net profits (as defined by the OCC) for that year plus (ii) the
retained net profits (as defined by the OCC) for the preceding two years, less
any required transfers to surplus. In addition, national banks may only pay
dividends to the extent that retained net profits (including the portion
transferred to surplus) exceed statutory bad debts. In accordance with these
regulations, at September 30, 1996, FANB had approximately $176.2 million and
FANBKY had approximately $1.5 million available for distribution as dividends
to First American without the prior approval of the OCC.

OTS regulations also impose limitations on the payment of dividends
and other capital distributions (including stock repurchases and cash mergers)
by savings institutions, such as FAFSB. Under these regulations, a savings
bank, such as FAFSB, that exceeds its fully phased-in capital requirements,
both immediately prior to and on a pro forma basis after giving effect to, a
proposed capital distribution ("Tier 1 Association") is generally permitted
without prior approval of (but with prior notice to) the OTS to make a capital
distribution during a calendar year equal to the greater of (i) 100% of its net
earnings to date during the calendar year, plus the amount that would reduce by
one-half its "surplus capital ratio" (i.e., the excess capital over its fully
phased in capital requirements) at the beginning of the calendar year; or (ii)
75% of its net income for the previous four quarters. Restrictions on the
ability to make capital distributions would be imposed if the institution's
capital fell below its regulatory requirement or the OTS notified the
institution that it was in need of more than normal supervision, or that the
distribution would constitute an unsafe or unsound practice. Pursuant to this
regulation, as of September 30, 1996, FAFSB had approximately $7.9 million
available to distribution as dividends to shareholders.

First American is further restricted in paying dividends to
shareholders by the terms of its $70,000,000 revolving credit facility, for
which Chemical Bank serves as agent. Under the most restrictive debt covenant
currently in effect (contained in the revolving credit agreement),
approximately $130.3 million of First American's retained earnings were
available to pay dividends on September 30, 1996.

In addition to the foregoing, under the FDIA, insured depository
institutions are prohibited from making capital distributions, including the
payment of dividends, if, after making such distribution, the institutions
would become "undercapitalized" (as such term is used in the statute). Based on
the current financial condition of these institutions, First American does not
expect that this provision will have any impact on its ability to obtain
dividends from its bank subsidiaries.

FDIC Insurance. First American's subsidiary depository institutions
and CFB are subject to FDIC deposit insurance assessments. The FDIC has
promulgated risk-based deposit insurance assessment regulations which

<PAGE> 40

became effective in 1993. Under these regulations, insured institutions
(whether members of BIF or SAIF) are assigned assessment risk classifications
based upon capital levels and supervisory evaluations. Based on this system,
the assessment rate for insured institutions for the first semi-annual period
in 1996 ranged from 0.0% to 0.2670%, depending on the institution's assessment
risk classification. Under these regulations, FANB's and FANBKY's assigned
assessment rate for the first semi-annual period of 1996 was based on the legal
minimum amount for best rated institutions of $2000 per annum. FAFSB's assigned
assessment rate for the same period was 0.26%. CFB's assigned assessment amount
for the same period was $500 semiannually.

With the exception of deposits attributable to thrift acquisitions,
FANB pays its premiums at the BIF rate. As a former savings and loan
association, FANBKY pays its premiums at the SAIF rate. As a federal savings
bank, FAFSB pays its premiums at the SAIF rate. Thus, First American's overall
deposit insurance premium expenses are affected by changes in both the BIF and
the SAIF assessment rate. The FDIC set the BIF assessment for the 1996 fiscal
year to the legal minimum of $2,000 a year for the best rated institutions and
0.27% of insured deposits for the worst rated institutions because the BIF
reserve ratio exceeds the 1.25% of insured deposits required by federal law.

In contrast, current federal law requires that the SAIF assessment
rate may not be less than 0.18% of insured deposits through December 31, 1997
(the rate currently ranges from 0.23% to 0.31% of insured deposits). After
December 31, 1997, the SAIF assessment rate may not be less than 0.15%, or such
rate as is appropriate to increase the SAIF reserve ratio to 1.25% of insured
deposits.

On September 30, 1996, President Clinton signed into law the Deposit
Insurance Funds Act of 1996, which (i) recapitalized the SAIF to 1.25% of
insured deposits by imposing a special one-time assessment on SAIF-insured
deposits; (ii) from January 1, 1997 until December 31, 1999, requires BIF
members to pay one-fifth of the assessment rate imposed upon thrifts to cover
the annual Financing Corporation ("FICO") bond payments, and from January 1,
2000 until the FICO bonds are retired, will require banks and thrifts to pay
the assessment on a pro rata basis; (iii) stipulates that the BIF and SAIF will
be merged on January 1, 1999 into the new Deposit Insurance Fund, contingent
upon there being no federally insured savings associations or thrifts in
existence on that date. The effect on First American of this law was a special
one-time assessment on its third quarter 1996 earnings of approximately $8.1
million (before taxes) and $5.0 million (after taxes).

Community Reinvestment Act. First American's subsidiary depository
institutions, as well as CFB, also are subject to the requirements of the
Community Reinvestment Act of 1976 ("CRA"). The CRA imposes on financial
institutions an affirmative and ongoing obligation to meet the credit needs of
their local communities, including low- and moderate-income neighborhoods,
consistent with the safe and sound operation of those institutions. Each
financial institution's efforts in meeting community credit needs currently are
evaluated as part of the examination process, as well as when an institution
applies to undertake a merger, acquisition or to open a branch facility. Under
recently enacted revisions to the CRA regulations, the current CRA assessment
system is being replaced with a new evaluation system that would rate
institutions based on their actual performance (rather than efforts) in meeting
community credit needs. Under these new regulations, each institution would be
evaluated based on the degree to which it is providing loans (the lending
test), branches and other services (the service test) and investments (the
investment test) to low- and moderate income areas in the communities it
serves, based on the communities' demographics, characteristics and needs, the
institution's capacity, product offerings and business strategy. Each
depository institution would have to report to its federal supervisory agency
and make available to the public data on the geographic distribution of its
loan applications, denial, originations and purchases. Institutions would
continue to receive one of four composite ratings: Outstanding, Satisfactory,
Needs to Improve or Substantial Noncompliance. The new rules are going into
effect in stages from July 1995 to January 1997. First American does not
believe that the new CRA regulations will substantially change its programs and
policies designed to meet the needs of its communities.

<PAGE> 41

Certain Transactions with Affiliates. Provisions of the Federal
Reserve Act impose restrictions on the type, quantity and quality of
transactions between affiliates of an insured bank (including FAC and its
nonbank subsidiaries) and the insured bank (or savings institution) itself.
Under these restrictions, an insured bank (or savings institution) and its
subsidiaries are, among other things, limited in engaging in "covered
transactions" with any one affiliate to no more than 10% of the capital stock
and surplus of the insured bank (or savings institution); and with all
affiliates in the aggregate, to no more than 20% of the capital stock and
surplus of the bank (or savings institution). "Covered transactions" are
defined by statute to include a loan or extension of credit, as well as a
purchase of securities issued by an affiliate, a purchase of assets (unless
otherwise exempted by the Federal Reserve Board), the acceptance of securities
issued by the affiliate as collateral for a loan and the issuance of a
guarantee, acceptance, or letter of credit on behalf of an affiliate. In
addition, any transaction with an affiliate, including loans, contractual
arrangements and purchases, must be on terms and conditions that are
substantially the same or at least as favorable to the bank (or savings
institution) as those prevailing at the time for comparable transactions with
non-affiliated companies. The purpose of these restrictions is to prevent the
misuse of the resources of the bank by its uninsured affiliates. An exception
to the quantitative restrictions is provided for transactions between two
insured banks or savings institutions that are within the same holding company
structure where the holding company owns 80% or more of each institution.

Transactions with Insiders. Any loans made by First American's
depository institution subsidiaries or by CFB to their respective executive
officers, directors or 10% shareholders, as well as entities such persons
control, are required to be made on terms substantially the same as those
offered to unaffiliated individuals and to not involve more than the normal
risk of repayment, and are subject to individual and aggregate limits depending
on the person involved. Further, provisions of the BHCA prohibit a bank holding
company and its subsidiaries from engaging in certain tie-in arrangements in
connection with any extension of credit, lease or sale of property or
furnishing of services.

Other Safety and Soundness Regulations. The federal banking agencies
have broad powers under current federal law to take prompt corrective action to
resolve problems of insured depository institutions. The extent of these powers
depends upon whether the institutions in question are categorized as "well
capitalized", "adequately capitalized," "undercapitalized," "significantly
undercapitalized" or "critically undercapitalized," as such terms are defined
under uniform regulations defining such capital levels issued by each of the
federal banking agencies.

In addition, FDIC regulations require that management report on its
institution's responsibility for preparing financial statements, and
establishing and maintaining an internal control structure and procedures for
financial reporting and compliance with designated laws and regulations
concerning safety and soundness. Under these rules, independent auditors must
attest to and report separately on assertions in management's report
concerning the effectiveness of the internal control structure over financial
reporting, using FDIC-approved audit procedures.

The FDIA also requires each of the federal banking agencies to develop
regulations addressing certain safety and soundness standards for insured
depository institutions, including operational and managerial standards, asset
quality, earnings and stock valuation standards, as well as compensation
standards (but not dollar levels of compensation). Each of the federal banking
agencies has issued regulations and interagency guidelines implementing these
standards. The regulations and guidelines set forth general operational and
managerial standards in the areas of internal controls, information systems and
internal audit systems, loan documentation, credit underwriting, interest rate
exposure, asset growth and compensation, fees and benefits. Recently proposed
rules would add asset quality and earnings standards to the guidelines. The
current rules contemplate that each federal agency would determine compliance
with these standards through the examination process, and if necessary to
correct weaknesses, require an institution to file a written safety and
soundness compliance plan.

<PAGE> 42

PROPOSAL II -- ADJOURNMENT OF THE SPECIAL MEETING

Approval of the Agreement requires the affirmative vote of at least a
majority of the votes entitled to be cast by the holders of HBI Stock. In the
event there is an insufficient number of shares present in person or by proxy
at the Meeting to approve the Agreement, the Board of Directors intends to
adjourn the Meeting to a later date. The place and date to which the Meeting
would be adjourned would be announced at the Meeting. Under HBI's Bylaws, it is
not necessary to give any notice of the time and place of the adjourned meeting
other than by an announcement at the Meeting.

The effect of any such adjournment would be to permit HBI to solicit
additional proxies for approval of the Agreement. While such an adjournment
would not invalidate any proxies previously filed, including those filed by
shareholders voting against the Agreement, it would give HBI the opportunity to
solicit additional proxies in favor of the Agreement. Approval of the
adjournment requires the affirmative vote of the holders of a majority of the
shares of HBI Stock present in person or by proxy at the Meeting or the vote of
a majority of the shares of any voting group entitled to vote at the Meeting
for which a quorum is not present.

THE BOARD OF DIRECTORS OF HBI RECOMMENDS A VOTE "FOR" APPROVAL OF THE
ADJOURNMENT UNDER THE CIRCUMSTANCES DESCRIBED HEREIN.

<PAGE> 43

INFORMATION ABOUT HARTSVILLE BANCSHARES, INC.

BUSINESS OF HBI

General. Hartsville Bancshares, Inc. ("HBI") was incorporated on
October 25, 1982 and began operations on August 11, 1983 by acquiring all of
the issued and outstanding stock of CommunityFIRST Bank ("CFB") (formerly known
as the Bank of Hartsville). HBI thus became a one-bank holding company as a
result of its acquisition of CFB. HBI had total assets of $91.447 million at
September 30, 1996 . Other than its investment in CFB, HBI has no other
significant activities or other assets except that it serves as a conduit for
financing the HBI ESOP.

CFB was organized and began business in Hartsville, Trousdale County,
Tennessee in 1884 . CFB is a state chartered, nonmember, FDIC insured
commercial bank, offering a wide range of commercial banking services,
including checking, savings, money market deposit accounts, certificates of
deposit, and loans for consumer, commercial, agricultural and real estate
purposes. CFB considers its primary market for its products and services to be
individuals, professionals and small to medium size businesses located in
Trousdale and Sumner Counties, Tennessee. CFB's main office is in Hartsville,
Tennessee. CFB has four other full service banking locations: one each in
Bethpage and Westmoreland, Tennessee and two in Gallatin, Tennessee, all of
which are in Sumner County. Each full-service facility, except for the Public
Square, Gallatin branch, is equipped with an automated teller machine ("ATM")
for 24 hour banking. CFB also has a free standing ATM located in a grocery
store in Westmoreland, Tennessee.

Competition. CFB competes in Trousdale County with one locally owned
commercial banking organization. This institution had total assets of
approximately $44 million at December 31, 1995 (the latest date for which such
information is readily available). In Sumner County, CFB competes with
approximately 15 commercial banking organizations and two credit unions. Six of
the 15 commercial banking competitors are small banking organizations. The
remaining commercial bank competitors are all owned by large regional and
super-regional multibank holding companies.

Based on the 1990 census, Trousdale County had a population of
approximately 5,920 with average per capita income of $11,729 and average
household income of $24,180. Sumner County had a 1990 census population of
103,281 with per capita income of $18,469 and average household income of
$28,838. Sumner County is one of the fastest growing counties in Tennessee and
is considered a part of the Nashville Standard Metropolitan Statistical Area.

Loans and Loan Review. CFB offers various types of secured and
unsecured commercial, consumer, agricultural and real estate loans. Loans are
generally made to customers who also have other relationships with CFB. Most
loans made by CFB are secured. CFB also makes mortgage loans which are funded
by advances obtained from the Federal Home Loan Bank system which have similar
maturities as the loans originated. This funding helps CFB compete in the
mortgage loan origination business without incurring significant interest rate
risk normally associated with long maturity mortgage loans funded with
traditional bank deposits.

CFB has established written loan guidelines for loan officers
regarding the types, maturities, security requirements, pricing, and loan to
value ratios in the case of real estate loans, to which each loan officer is
expected to adhere. In addition, each loan officer is provided a maximum loan
limit authority. Loans for an amount in excess of an officer's authority or
those which would require an exception to CFB's loan policy must be approved by
higher authorities within the bank including other officers and the Board of
Directors.

Loans are reviewed periodically by personnel who have no authority
other than loan review. This process is utilized by CFB to grade the bank's
loans and determine the adequacy of CFB's loan loss reserve.

<PAGE> 44

Asset/Liability Management. The Asset/Liability management committee is
comprised of senior CFB officers who are charged with managing the bank's
assets and liabilities. This committee is responsible for providing reasonable
growth of assets, earnings, adequate liquidity and return on assets and
shareholders' equity as well as adequacy of capital resources at the level of
interest rate risk deemed acceptable . To meet these objectives, the committee
monitors CFB's progress with the annual budget approved by the Board of
Directors. The Committee reports monthly to the Board explaining variances
between budget and actual results and the reasons therefor as well as
management's course of action in light of any budget variances.

SUPERVISION AND REGULATION

General. HBI and CFB are subject to extensive regulation under state
and federal statutes and regulations. The discussion in this section, which
briefly summarizes certain of such statutes, does not purport to be complete,
and is qualified in its entirety by reference to such statutes. Other state and
federal legislation and regulations directly and indirectly affecting banks and
other financial institutions may be enacted or implemented in the future;
however, such legislation and regulations and their effect on the business of
HBI and CFB cannot be predicted.

Hartsville Bancshares, Inc. HBI is a bank holding company subject to
the supervision of Federal Reserve Board under the BHCA. As a bank holding
company, HBI is required to file annual reports with, and is subject to
examination by, the Federal Reserve Board.

CommunityFIRST Bank ("CFB"). CFB is incorporated under the banking
laws of the State of Tennessee, and as such, is subject to the provisions of
the Tennessee Banking Act and the supervision of and regular examination by the
Tennessee Department of Financial Institutions (the "Department"). CFB is a
member of the FDIC and, therefore, also are subject to the provisions of the
FDIA and to supervision and examination by the FDIC.

Payment of Dividends. HBI is a legal entity separate and distinct from
CFB. The principal source of HBI's revenues, however, is from dividends
declared by CFB. Under Tennessee law, CFB can only pay dividends out of its
undivided profits, which at September 30, 1996 was approximately $5,777,000.
This amount will he increased by CFB's net earnings and decreased by any loses.
Any transfer from CFB's surplus accounts to undivided profits requires the
prior approval of the Commissioner of the Department. CFB's ability to pay
dividends also may depend on its ability to meet recommended capital levels
established from time to time by FDIC.

Under Tennessee law, HBI may pay common stock dividends if, after
giving effect to the dividends, HBI can pay its debts as they become due in the
ordinary course of business and HBI's total assets exceed its total liabilities
plus the amount needed to satisfy the preferences of outstanding shares of
preferred stock. The payment of dividends by HBI also may be affected or
limited by certain factors, such as the requirements to maintain adequate
capital above regulatory guidelines. In addition, if, in the opinion of the
applicable regulatory authority, a bank holding company or a bank under its
jurisdiction is engaged or is about to engage in an unsafe or unsound practice
(which, depending on the financial condition of the bank, could include the
payment of dividends), such authority may take various supervisory actions to
prevent such action, including a cease and desist order prohibiting such
practice.

Capital. As discussed above under "CERTAIN REGULATORY CONSIDERATIONS
- -- Capital," the Federal Reserve Board has adopted final risk-based and
leverage capital guidelines for United States banking organizations. At
September 30, 1996, the leverage ratio, risk-based Tier 1 Capital and total
risk-based ratios for CFB at September 30, 1996 were 12.55%, 13.58% and 7.65%,
respectively. HBI is not required to compute such ratios.

Capital adequacy regulations and guidelines of the FDIC established a
minimum level of leverage ratio of 4%. For banks such as CFB, the minimum
risk-based capital ratio is 8.0%, of which 4.0% must be Tier 1 capital.

<PAGE> 45

HBI's Support of CFB. Under Federal Reserve Board policy, HBI is
expected to act as a source of financial strength and to commit resources to
CFB. Such support may be required at times when, absent such Federal Reserve
Board policy, HBI may not be inclined to provide it. HBI and its subsidiary is
also subject to the cross-guarantee liability provisions of the FDIA, described
above under "CERTAIN REGULATORY CONSIDERATIONS -- General."

Acquisition and Expansion. HBI and CFB are subject to rules and
regulations regarding acquisitions and expansion described above under "CERTAIN
REGULATORY CONSIDERATIONS -- Acquisition and Expansion."

Certain Transactions by HBI with its Affiliates. HBI and its nonbank
subsidiaries, if any, are subject to the various legal restrictions on the
extent to which they can borrow or otherwise obtain credit from HBI's bank
subsidiaries as described above under "CERTAIN REGULATORY CONSIDERATIONS --
Bank Regulation -- Certain Transaction with Affiliate."

FDIC Insurance Assessments. CFB is subject to FDIC deposit insurance
assessments as discussed above under "CERTAIN REGULATORY CONSIDERATIONS -- Bank
Regulation -- FDIC Insurance."

Interest Rate Limitations. The maximum permissible rates of interest
on most commercial and consumer loans made by CFB are governed by Tennessee's
general usury law and the Tennessee Industrial Loan and Thrift Companies Act
("Industrial Loan Act"). Certain other usury laws affect limited classes of
loans, but the laws referenced above are by far the most significant.
Tennessee's general usury law authorizes a floating rate of 4% per annum over
the average prime or bases commercial loan rate, as published by the Federal
Reserve Board from time to time, subject to an absolute 24% per annum limit.
The Industrial Loan Act authorizes an interest rate of 24% per annum and also
allows certain loan charges, generally on a more liberal basis than does the
general usury law.

Effect of Government Policies. The earnings and business of HBI are
and will be affected by the policies of various regulatory authorities of the
United States, especially by the Federal Reserve Board. The Federal Reserve
Board, among other functions, regulates the supply of credit and deals with
general economic conditions within the United States. The instruments of
monetary policy employed by the Federal Reserve Board for these purposes
influence in various ways the overall level of investments, loans, other
extensions of credit and deposits, and the interest rates paid on liabilities
and received on assets.

In 1994, the Congress enacted legislation that will generally ease the
ability of adequately or wellcapitalized banks holding companies to acquire
existing banks across state lines, subject to state restrictions on entry by
acquisition and concentration limits. The legislation will also permit bank
holding companies having subsidiary banks located in more than one state to
combine any or all of the interstate banks into a single branch network across
the state lines (except in states that have elected to "opt out" of interstate
banking). Finally, after a phase-in period, banks that are adequately or
well-capitalized and have sufficient management resources may branch across
state lines through the acquisition of existing banks or branches, subject to
concentration limits, unless a state takes action to "opt out" of interstate
branching. Tennessee state law allows interstate branching through acquisition
or merger, but does not expressly permit de novo branching.

<PAGE> 46

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN OTHER ENTITIES

The following table sets forth, as of the Record Date, certain
information as to the HBI Stock beneficially owned by (i) any HBI person or
group of persons who is known to HBI to be the beneficial owner of more than 5%
of the HBI Stock, and (ii) each of HBI's directors, each of HBI's executive
officers who are not directors and by all of HBI's directors and executive
officers as a group.

SHARES
BENEFICIALLY PERCENT
NAME OWNED OF CLASS
- ---- ----- --------
<S> <C> <C>
Directors and Executive Officers:
Paul D. Alexander 2,500 10.15
Ruby Thompson 2,500(1) 10.15
Charles A. Alexander 1,600 6.50
Paula Troutt 1,600 6.50
All directors and officers,
exclusive of ESOP holdings, as
a group (13 persons) 7,967 32.35

Other Significant Shareholders:
Charles A. Alexander 1,600 6.50
Paula Troutt 1,600 6.50
HBI Employee Stock Ownership Plan
("ESOP") 9,254(2) 37.57

</TABLE>

(1) Includes 1,894 shares held by Mrs. Thompson's spouse.

(2) All assets of the HBI ESOP are held by the ESOP's related trust (the
"Trust"). The Trust currently owns 9,254 shares of HBI Stock and one share
of HBI preferred stock (which will be converted to one share of HBI Stock
on or before the Record Date). Of the 9,255 shares of HBI voting stock
(which includes HBI Stock and the preferred stock) owned by the Trust at
December 31, 1995, 3,825.97 shares were allocated to participant accounts
and the remaining 5,429.03 shares were held by the Trust in a suspense
account pursuant to the terms of the HBI ESOP.

Individual participants are entitled to instruct the Trustees (consisting of
each person that is a member of the Board of Directors of HBI) as to how
shares allocated to their accounts are to be voted. Shares not
yet allocated to participants accounts will be voted by the Trustees in
accordance with their independent determination of the merits of the
transaction with consideration given only to their fiduciary obligations
pursuant to ERISA.

<PAGE> 47
EXPERTS

The consolidated financial statements of First American as of December
31, 1995 and 1994 and for each of the three years in the period ended December
31, 1995 included in the Annual Report on Form 10-K of First American for the
fiscal year ended December 31, 1995, incorporated by reference herein and in
this Registration Statement have been audited by KPMG Peat Marwick LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. The report of KPMG Peat Marwick LLP covering
the December 31, 1995 consolidated financial statements contains an explanatory
paragraph that refers to changes in accounting principles related to the
adoption in 1993 of the provisions of the Financial Accounting Standards Board's
Statements of Financial Accounting Standards No. 109, Accounting for Income
Taxes; No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions; No. 112, Employers' Accounting for Postemployment Benefits; and No.
115, Accounting for Certain Investments in Debt and Equity Securities. The
aforementioned consolidated financial statements have been incorporated by
reference herein and in this Registration Statement in reliance upon such report
and upon the authority of said firm as experts in accounting and auditing.

With respect to the unaudited interim financial information of First
American for the periods ended March 31, 1996 and 1995, June 30, 1996 and 1995,
and September 30, 1996 and 1995, incorporated by reference herein, KPMG Peat
Marwick LLP, the independent certified public accountants, have reported that
they applied limited procedures in accordance with professional standards for a
review of such information. However, their separate reports included in the
First American's quarterly reports on Form 10-Q for the quarters ended March
31, 1996, June 30, 1996 and September 30, 1996 and incorporated by reference
herein, state that they did not audit and they do not express an opinion on
that interim financial information. Accordingly, the degree of reliance on
their reports on such information should be restricted in light of the limited
nature of the review procedures applied. The accountants are not subject to the
liability provisions of Section 11 of the Securities Act of 1933 for their
reports on the unaudited interim financial information because the reports are
not a "report" or a "part" of the registration statement prepared or certified
by the accountants within the meaning of Sections 7 and 11 of the Securities
Act.

The consolidated balance sheets of HBI as of December 31, 1995 and
1994 and the related consolidated statements of income, changes in
shareholders' equity and cash flows for the years in the period ended
December 31, 1995, have been included in this Prospectus/Proxy Statement in
reliance on the report which includes an explanatory paragraph that refers to
Arthur Andersen, LLP, independent accountants, given on the authority of that
firm as experts in accounting and auditing.

Documents incorporated herein by reference in the future will include
financial statements, related schedules (if required) and auditors' reports,
which financial statements and schedules will have been audited to the extent
and for the periods set forth in such reports by the firm or firms rendering
such reports, and, to the extent so audited and consent to incorporation by
reference is given, will be incorporated herein by reference in reliance upon
such reports given upon the authority of such firms as experts in accounting
and auditing.

LEGAL OPINION

A legal opinion to the effect that the issuance of the shares of FAC
Stock offered hereby, when issued in accordance with the terms of the
Agreement, will be validly issued, fully paid and nonassessable, has been
rendered by Martin E. Simmons, Esquire, Executive Vice President --
Administration, Secretary, General Counsel and Principal Financial Officer of
First American. As of September 30, 1996, Mr. Simmons held options granted
under stock option plans covering 35,400 shares of FAC Stock, 14,240 of which
were currently exercisable. Mr. Simmons also holds 7,500 shares of FAC Stock
subject to restrictions under a First American stock incentive plan.

<PAGE> 48

INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS OF HARTSVILLE BANCSHARES,
INC. AND SUBSIDIARY

<TABLE>
<CAPTION>
Page
----
<S> <C>
Condensed Consolidated Balance Sheets as of
September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . F-2

Condensed Consolidated Income Statements
for the nine months ended September 30, 1996 and 1995 . . . . . . . . . . F-3

Condensed Consolidated Cash Flow Statements
for the nine months ended September 30, 1996 and 1995 . . . . . . . . . . F-4

Notes to Condensed Consolidated Financial
Statements as of and for the nine months
ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . F-5

Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . F-6

Consolidated Balance Sheets as of
December 31, 1995 and December 31, 1994 . . . . . . . . . . . . . . . . . F-7

Consolidated Income Statements for the
the years ended December 31, 1995 and 1994 . . . . . . . . . . . . . . . F-8

Consolidated Statement of Changes in Shareholders'
Equity for the years ended December 31, 1995 and 1994 . . . . . . . . . . F-9

Consolidated Statements of Cash Flows
for the years ended December 31, 1995 and 1994 . . . . . . . . . . . . . F-10

Notes to Consolidated Financial Statements as
of and for the years ended December 31, 1995 and 1994 . . . . . . . . . . F-12

Management's Discussion and Analysis of Financial
Condition and Results of Operations for the years ended
December 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . F-28

Management's Discussion and Analysis of Financial Condition
and Results of Operations for the nine months
ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . F-29
</TABLE>

F-1

<PAGE> 49

Hartsville Bancshares, Inc.
Condensed Consolidated Balance Sheets
September 30, 1996 and 1995
(000 Omitted)

<TABLE>
<CAPTION>
1996 1995
ASSETS (unaudited) (unaudited)
------ ----------- -----------
<S> <C> <C>
Cash and due from banks $ 3,464 $ 3,000
Investment securities available for sale (amortized cost
$25,513 and $22,385, respectively) 24,957 22,282
Investment securities held to maturity (estimated market
value $6,862) - 6,789
Loans, less allowance for loan losses of $571 and $551,
respectively 58,326 49,061
Accrued interest receivable 865 534
Premises and equipment, net 2,580 2,131
Intangible assets 827 197
Deferred income taxes 218 33
Other assets 210 660
----------------------------
Total assets $91,447 $84,687
============================

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Deposits:
Non-interest bearing $ 9,984 $ 8,489
Interest bearing 70,381 60,400
----------------------------
Total deposits 80,365 68,889
FHLB funds borrowed 3,185 3,557
Federal funds borrowed -- 1,300
Securities sold under repurchase agreements -- 2,000
Other short term borrowings -- 1,500
Note payable long term 962 1,050
Accrued interest payable 524 451
Other accrued taxes, expenses, and liabilities 320 82
----------------------------
Total liabilities 85,356 78,829
----------------------------
Stockholders' equity:

Common stock, $10 par value, 100,000 shares
authorized, 25,629 and 25,630 shares issued and
outstanding at December 31, 1995 and 1994,
respectively 256 256
Preferred stock, $1 stated value, one share issued and
outstanding at December 31, 1995 -- --
Additional paid-in capital 2,441 2,441
Retained earnings 4,866 4,440
Unrealized (loss) on securities available for sale, net (345) (64)
Treasury stock, at cost (165) (165)
Unearned compensation related to Company's ESOP (962) (1,050)
----------------------------
Total stockholders' equity 6,091 5,858
----------------------------
Total liabilities and stockholders' equity $91,447 $84,687
============================
</TABLE>

F-2

<PAGE> 50

Hartsville Bancshares, Inc.
Consolidated Income Statements
Nine Months Ended September 30, 1996 and 1995
(000 Omitted)

<TABLE>
<CAPTION>
1996 1995
(Unaudited) (Unaudited)
---------- ----------
<S> <C> <C>
Interest income:
Interest and fees on loans $ 4,198 $ 3,748

Interest on federal funds 20 54
Interest on investment securities:
Taxable 1,367 1,171
Exempt from Federal income tax 80 59
--------------------------
Total interest income 5,665 5,032
--------------------------

Interest expense:
Interest on deposits 2,493 2,118
Interest on other borrowed funds 214 239
--------------------------
Total interest expense 2,707 2,357
--------------------------
Net interest income 2,958 2,675
Provisions for possible loan losses 93 168
--------------------------
Net interest income after provision for possible loan loses 2,865 2,507
--------------------------

Non-interest income:
Service charges on deposits 428 387
Other fees and commissions 187 175
Securities gain (loss) 17 (2)
--------------------------
Total non-interest income 632 560
--------------------------

Non-interest expense:
Salaries and employee benefits 1,389 1,268
Occupancy expenses, net 433 326
Other non-interest expense 913 592
--------------------------
Total non-interest expense 2,735 2,186
--------------------------

Net earnings before income taxes 762 881

Income tax expense 372 316
--------------------------

Net income $ 390 $ 565
==========================
</TABLE>

F-3

<PAGE> 51

Hartsville Bancshares, Inc.
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1996 and 1995
(000 Omitted)

<TABLE>
<CAPTION>
1996 1995
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 390 $ 565
Adjustments to reconcile net income
to net cash provided by operating activities:
Provision for loan losses 93 168
Provision for depreciation and amortization 208 156
Deferred income taxes (3) --
Securities (gain) loss (17) 2
FHLB stock dividends (22) (19)
Decrease in interest receivable 3 121
(Increase) decrease in other assets 301 (461)
Increase (decrease) in other liabilities 299 108
--------------------------
Net cash provided by operating activities 1,252 640
--------------------------

Cash Flows from Investing Activities:
Purchase of investment securities held to maturity -- (2,698)
Proceeds from calls and maturity of held to maturity
securities -- 654
Purchase of investment securities available for sale (7,688) (7,347)
Proceeds from calls and maturities of available for sale
securities 5,063 3,237
Proceeds from sale of available for sale securities 10,999 2,927
Net (increase) in loans (8,926) (5,434)
Capital expenditures (223) (114)
--------------------------
Net cash (used) in investing activities (775) (8,775)
--------------------------

Cash Flows from Financing Activities:
Net increase (decrease) in demand deposits, NOW
accounts and savings accounts (1,440) (2,185)
Net increase in certificates of deposit 620 3,858
Net change in short term borrowings -- 1,500
Net change in FHLB funds borrowed (340) 876
Net change in federal funds borrowed -- 1,300
Net change in securities sold under repurchase
agreements -- 2,000
Repayment of long term debt (88) (81)
Reduction in unearned compensation attributable to ESOP 88 81
Dividends paid (137) (49)
--------------------------
Net cash provided by financing activities (1,297) 7,300
--------------------------
Increase (decrease) in cash and cash equivalents (820) (835)
Cash and cash equivalents beginning of period 4,284 3,835
--------------------------
Cash and cash equivalents end of period $ 3,464 $ 3,000
==========================

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest $ 2,607 $ 2,233
--------------------------
Income taxes $ 450 $ 330
==========================
</TABLE>

F-4

<PAGE> 52

Hartsville Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements
Nine Months Ended September 30, 1996 and 1995
(000 Omitted)
Unaudited

1. Management Opinion

In the opinion of management, the accompanying unaudited condensed
consolidated financial statements of Hartsville Bancshares, Inc. and
subsidiary contain all adjustments, consisting of only normal recurring
adjustments, except those related to certain acquisition expenses discussed
herein, necessary to fairly present the financial results for the interim
periods presented. The results of operations for any interim period is not
necessarily indicative of the results to be expected for the entire year.
These interim condensed consolidated financial statements should be read in
conjunction with the annual financial statements and noted thereto.

2. Acquisition of Company

The Company has entered into a definitive agreement dated October 11,
1996 with First American Corporation (FAC) to be acquired by FAC in
exchange for FAC stock as set forth in the agreement. Certain financial
advisor and legal expenses and fees related to the transaction incurred by
the Company prior to the execution of the definitive agreement and in
anticipation thereof have been accrued and expensed in these financial
statements.

3. Intangible Assets

Intangible assets of the Company increased from September 30, 1996
over September 30, 1995 due to a premium incurred in connection with the
acquisition of a branch facility and related deposits during the last
quarter of 1995. The branch is located in Westmoreland, Tennessee.

4. Other Liabilities and Non-interest Expense

Other liabilities and other non-interest expense include $275 accrued
in connection with advisory and legal fees incurred in anticipation of a
definitive agreement to acquire the Company. Such an agreement was executed
October 11, 1996.

5. Funding Sources

Deposits increased substantially at September 30, 1996 compared to
September 30, 1995 attributable primarily to the acquisition of branch
deposit liabilities of another financial institution in Westmoreland,
Tennessee. In anticipation of acquiring these deposits during the fourth
quarter of 1995, management pursued the strategy of increasing loans with
alternative funding sources such as federal funds borrowed, securities sold
under repurchase agreements and other short term borrowings. These
alternative funding sources were repaid upon the assumption of deposit
liabilities in connection with the branch acquisition in the fourth quarter
of 1995.

F-5
<PAGE> 53

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors of
Hartsville Bancshares, Inc. and Subsidiary

We have audited the accompanying consolidated balance sheet of HARTSVILLE
BANCSHARES, INC. AND SUBSIDIARY as of December 31, 1995, and the related
statements of income, stockholders' equity and cash flows for the year then
ended. These financial statements are the responsibility of the Bank's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. The consolidated financial statements of
Hartsville Bancshares, Inc. and Subsidiary as of December 31, 1994 and for the
year then ended were audited by other auditors whose report dated February 2,
1995, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hartsville Bancshares, Inc.
and Subsidiary as of December 31, 1995, and the results of its operations and
its cash flows for the year then ended, in conformity with generally accepted
accounting principles.

As discussed in Note 1 to the financial statements, effective January 1, 1994,
the Bank changed its method of accounting for investment securities.

/s/ ARTHUR ANDERSEN LLP

Nashville, Tennessee
November 8, 1996

F-6

<PAGE> 54

HARTSVILLE BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1995 AND 1994

<TABLE>
<CAPTION>
ASSETS 1995 1994
---- ----
<S> <C> <C>
Cash and due from banks $4,283,866 $2,907,422

Federal funds sold - 928,000
---------- ----------
Total cash and cash equivalents 4,283,866 3,835,422
Investment securities available for sale (amortized cost of
$33,847,903 and $21,184,387, respectively) 33,898,318 20,171,633
Investment securities held to maturity (estimated market value - 4,746,381
of $4,639,000)

Loans, less allowance for possible loan losses of $588,648 and
$555,676 in 1995 and 1994, respectively 49,492,569 43,795,288
Accrued interest receivable 867,692 671,822
Premises and equipment, net 2,778,547 2,153,870
Deferred income taxes - 378,102
Core deposit intangible 881,981 216,398
Other assets 243,516 181,605
----------- -----------
Total assets $92,446,489 $76,150,521
=========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:
Non-interest bearing $10,659,302 $9,363,562
Interest bearing 70,525,826 57,852,039
----------- -----------
Total deposits 81,185,128 67,215,601
----------- -----------

Federal Home Loan Bank funds borrowed 3,524,655 2,681,399
Accrued interest payable 424,397 327,242
Other accrued taxes, expenses and liabilities 120,935 98,369
Long-term debt 1,049,750 1,130,500
Deferred income taxes 15,010 -
----------- -----------
Total liabilities 86,319,875 71,453,111
----------- -----------

STOCKHOLDERS' EQUITY:
Common stock, $10.00 par value, 100,000 shares authorized, 25,629 shares
issued and outstanding at December 31,
1995, 25,630 shares issued and outstanding at 256,290 256,300
December 31, 1994
Preferred stock, $1.00 par value, 50,000 shares authorized, one
share issued and outstanding at December 31, 1995 1 -
Additional paid-in capital 2,440,479 2,440,470
Retained earnings 4,612,856 3,923,993
Unrealized gains (losses) on securities available for sale, net 31,278 (628,313)
of taxes
Treasury stock - 1,000 shares at cost (164,540) (164,540)
----------- -----------
7,176,364 5,827,910
Unearned compensation related to Company's ESOP (1,049,750) (1,130,500)
----------- -----------
Total stockholder's equity 6,126,614 4,697,410
----------- -----------
Total liabilities and stockholders' equity $92,446,489 $76,150,521
=========== ===========
</TABLE>

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

F-7

<PAGE> 55

HARTSVILLE BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994

<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $5,098,645 $4,210,051
Federal funds 75,865 49,763
Other interest and dividends 94,988 98,697
Investment securities:
Taxable 1,648,123 1,313,566
Exempt from federal income tax 87,253 5,313
---------- ----------
Total interest income 7,004,874 5,677,390
---------- ----------

INTEREST EXPENSE:
Interest on deposits 2,986,976 2,019,125
Interest on other borrowed funds 314,498 244,278
---------- ----------
Total interest expense 3,301,474 2,263,403
---------- ----------

Net interest income 3,703,400 3,413,987
Provision for possible loan losses 223,192 120,351
---------- ----------

Net interest income after provision for possible loan
losses 3,480,208 3,293,636
---------- ----------

NON-INTEREST INCOME:
Service charges on deposits 527,308 497,547
Fees and commissions 144,403 133,433
Securities gain (loss) 23,057 (2,152)
Other non-interest income 7,644 3,024
---------- ----------
Total non-interest income 702,412 631,852
---------- ----------

NON-INTEREST EXPENSE:
Salaries and employee benefits 1,697,234 1,693,097
Occupancy expenses, net 170,987 157,456
Other non-interest expense 1,173,808 1,040,643
---------- ----------
Total non-interest expense 3,042,029 2,891,196
---------- ----------

Income before income taxes 1,140,591 1,034,292
Income tax expense 406,969 395,448
---------- ----------
Net income $ 733,622 $ 638,844
========== ==========
</TABLE>

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

F-8

<PAGE> 56

HARTSVILLE BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994

COMMON STOCK PAR ADDITIONAL PAID- Retained
COMMON SHARES VALUE IN CAPITAL Earnings
------------- ---------------- ---------------- ----------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994 25,630 $256,300 $2,440,470 $3,330,309

Net income - - - 638,844
Reduction attributable to unallocated shares
released - - - -
Change in unrealized gains (losses) - - - -
Dividends paid - - - (45,160)
------ -------- ---------- ---------
BALANCE, DECEMBER 31, 1994 25,630 256,300 2,440,470 3,923,993

Net income - - - 733,622
Reduction attributable to unallocated shares
released - - - -
Change in unrealized gains (losses) - - - -
Dividends paid - - - (44,759)
Issue preferred stock in exchange for common
stock to Company's ESOP (1) (10) 9 -
------ -------- ---------- ----------
BALANCE DECEMBER 31, 1995 25,629 $256,290 $2,440,479 $4,612,856
====== ======== =========== ==========
</TABLE>

<TABLE>
<CAPTION>
UNREALIZED
GAINS (LOSSES) UNEARNED
ON SECURITIES COMPENSATION
TREASURY STOCK PREFERRED STOCK AVAILABLE FOR RELATED TO
AT COST STATED VALUE SALE COMPANY'S ESOP TOTAL
-------------- ---------------- ------------- -------------- ----
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994 $ (164,540) $ - $ - $(1,292,000) $4,570,539

Net income - - - - 638,844
Reduction attributable to unallocated shares
released - - - 161,500 161,500
Change in unrealized gains (losses) - - (628,313) - (628,313)
Dividends paid - - - - (45,160)
----------- ---------- --------- ----------- ----------
BALANCE, DECEMBER 31, 1994 $ (164,540) - (628,313) (1,130,500) 4,697,410

Net income - - - - 733,622
Reduction attributable to unallocated shares
released - - - 80,750 80,750
Change in unrealized gains (losses) - - 659,591 - 659,591
Dividends paid - - - - (44,759)
Issue preferred stock in exchange for common
stock to Company's ESOP - 1 - - -
----------- ---------- --------- ----------- ----------
BALANCE DECEMBER 31, 1995 $ (164,540) $ 1 $ 31,278 $ (1,049,750) $6,126,614
=========== ========== ========= ============ ==========
</TABLE>

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

F-9

<PAGE> 57

HARTSVILLE BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994

<TABLE>
<CAPTION>
1995 1994
----------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 733,622 $ 638,844
Adjustments to reconcile net income to net
cash provided by operating activities:
Deferred income taxes (10,466) (18,394)
Provision for loan losses 223,192 120,351
Provision for depreciation
and amortization 270,994 240,115
Securities (gain) loss (23,057) 2,152
FHLB stock dividends (25,800) (19,000)
Funding of loans held for resale (1,447,475) -
Proceeds from sale of loans held
for resale 1,268,475 -
(Increase) in interest receivable (195,870) (64,076)
(Increase) in other assets (57,410) (101,405)
Increase (decrease) in other liabilities 119,721 (297,138)
----------- ----------
Net cash provided by operating
activities 855,926 501,449
----------- ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities held to maturity (2,098,117) (2,045,923)
Proceeds from calls and maturity of held to
maturity securities 935,438 -
Purchase of investment securities available
for sale (19,086,706) (7,026,245)
Proceeds from calls and maturities of
available for sale securities 6,431,537 5,020,605
Proceeds from sales of investments
available for sale 5,949,570 1,221,089
Net (increase) in loans (5,741,473) (1,778,056)
Premium paid to acquire branch deposits (703,539) -
Capital expenditures (857,715) (302,215)
----------- ----------
Net cash used in investing activities (15,171,005) (4,910,745)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:

</TABLE>

F-10

<PAGE> 58

<TABLE>
<S> <C> <C>
Net increase in demand deposits, NOW accounts and savings accounts 3,402,749 992,618
Net increase in certificates of deposit 10,566,778 1,423,647
Proceeds from FHLB funds borrowed 2,271,000 378,000
Repayment of FHLB funds borrowed (1,427,744) (223,633)
Repayments of long-term debt (80,750) (161,500)
Reduction in unearned compensation attributable to ESOP 80,750 161,500
Dividends paid (49,260) (49,260)
----------- -----------
Net cash provided by financing activities 14,763,523 2,521,372
----------- -----------

Increase (decrease) in cash and cash equivalents 448,444 (1,887,924)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 3,835,422 5,723,346
----------- -----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 4,283,866 $ 3,835,422
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 3,204,319 $ 2,433,998
=========== ===========
Income taxes $ 427,208 $ 465,701
=========== ===========

</TABLE>

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

F-11

<PAGE> 59

HARTSVILLE BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1995 AND 1994

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF OPERATIONS - Hartsville Bancshares, Inc. consists of one
state chartered commercial bank which provides services to customers
primarily in Trousdale and Sumner counties of Middle Tennessee and
surrounding communities.

The following is a summary of the significant accounting policies:

Consolidation and Presentation Basis

The consolidated financial statements of Hartsville Bancshares, Inc. have
been prepared in conformity with generally accepted accounting principles
including the general practice of the banking industry. The consolidated
financial statements include the accounts of Hartsville Bancshares, Inc.
(the "Company") and its wholly owned subsidiary, CommunityFIRST Bank (the
"Bank"), and the Bank's wholly owned subsidiary, Old Hickory Credit
Corporation ("OHCC"), d/b/a Old Hickory Finance Company. During 1995, OHCC
ceased operations and its assets and liabilities were assumed by the Bank.
All significant intercompany accounts and transactions have been
eliminated in consolidation.

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include
cash and due from banks and federal funds sold.

Investment Securities

Effective January 1, 1994, the Bank adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments
In Debt And Equity Securities." SFAS No. 115 requires investments in
equity securities that have a readily determinable fair-value and
investments in debt securities to be classified into three categories, as
follows: "Held to Maturity debt securities, trading securities and
Available for Sale securities." In conjunction with the adoption of SFAS
No. 115 on January 1, 1994, the Bank reclassified $20,068,862 of
securities to the "Available for Sale" classification from the former
investment, now "Held to Maturity", category. There was no impact on the
Bank's net income as a result of the adoption of SFAS No. 115.

On December 26, 1995 the Bank transferred debt securities with an
amortized cost of $5,909,060 from "securities held to maturity" to
"securities available for sale." The transfer was accomplished under a
special one-time Financial Accounting Standards Board interpretation of
SFAS No. 115. This interpretation permitted entities to reconsider their
original allocations under SFAS No. 115 and make appropriate adjustments
if such adjustments or transfers were accomplished on or before December
31, 1995 without the risk of tainting securities which remain or future
decisions to place securities in the "Held to Maturity" category. The
transfer resulted in an increase in the unrealized gain on securities
available for sale, included as a component of stockholders' equity, of
$49,990 net of applicable deferred taxes.

F-12

<PAGE> 60

Bank Premises and Equipment

Bank premises and equipment are stated at cost, less accumulated
depreciation. Depreciation is computed using the straight-line method for
financial reporting purposes and accelerated depreciation methods are used
for income tax purposes.

Renewals and betterments are capitalized and depreciated over their
estimated useful lives, whereas repair and maintenance expenditures are
charged to operating expense. When property is replaced or sold, the cost
and related accumulated depreciation amounts are removed from the
accounts. The resulting gain or loss is included in income.

Loans and Interest Income

Loans are stated at the principal balance outstanding, net of unearned
interest. Interest on loans is based upon the principal balance
outstanding, except interest on some consumer installment loans, which is
recognized on the sum-of-the-years-digits method, and does not differ
materially from the interest method.

The accrual of interest income is generally reviewed for discontinuance
when a loan becomes 90 days past due as to principal or interest. When
interest is discontinued, all unpaid accrued interest is reversed.
Management may elect to continue the accrual of interest when the
estimated net realizable value of collateral is sufficient to cover the
principal balance and accrued interest or, in the opinion of management,
the interest in collectible.

Allowance for Loan Losses

The allowance for loan losses is based upon estimates determined by past
experience and management's evaluation of the loan portfolio under
existing economic conditions. These estimates are reviewed periodically
and are adjusted as necessary in the periods during which they become
known through charges to earnings.

Although management believes it uses the best information available to
make determinations with respect to the Corporation's allowances, future
adjustments may be necessary if economic or other conditions differ
substantially from the economic and other conditions in the assumptions
used in making the initial determinations, and such adjustments could be
material.

Effective January 1, 1995, the Corporation adopted SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan" as amended by SFAS No.
118 "Accounting by Creditors for Impairment of a Loan-Income Recognition
and Disclosures." These pronouncements required that impaired loans be
measured based upon the present value of expected future cash flows,
discounted at the loans' effective interest rate or at the loans' market
price or fair value of collateral, if the loan is collateral dependent.
When the measure of the impaired loan is less than the recorded investment
in the loan, the impairment is recorded through a valuation allowance that
is included in the allowance for loan losses. The adoption of these
pronouncements did not have a material impact on the Corporation's
consolidated financial statements.

The Corporation's impaired loans are generally measured on a loan by loan
basis. Interest payments received on impaired loans are recorded as
interest income unless collection of the loan is doubtful, in which case
payments are recorded as a reduction of principal.

Loans are charged off when deemed to be uncollectible by management and
approved by the Board of Directors.

See Note 4 for an analysis of the allowance for loan losses.

F-13

<PAGE> 61

Unearned Interest

Unearned interest, recorded as a reduction of loans in the accompanying
balance sheets, relates primarily to installment loans and is recognized
as income using the sum-of-the-months digits method.

Loan Fees

Loan fees are credited to income at the time of loan origination. Direct
origination costs for loans are charged to expenses when incurred. The
results of using this accounting method do not differ materially from
generally accepted accounting principles requiring the use of the level
interest yield method.

Income Taxes

Certain income and expense items are accounted for on a different basis
for income tax purposes and financial reporting purposes in accordance
with Financial Accounting Standards No. 109 "Accounting for Income Taxes."
An appropriate provision is made in the accompanying financial statements
for deferred income taxes in recognition of these differences. (See Note
5.)

The Company and the Bank file consolidated income tax returns. Therefore,
the provision arising from the operations of the Bank is payable to the
Company as the amounts are utilized in the consolidated income tax
returns. The amount due the Company was $11,105 and $37 at December 31,
1995 and 1994, respectively.

Employee Stock Ownership Plan Accounting

As more fully described in note 6, the Company adopted an ESOP effective
January 1, 1990. The Company is accounting for the plan in accordance with
the provisions of the American Institute of Certified Public Accountants
(AICPA) SOP 76-3, "Accounting Practices for Certain Employee Stock
Ownership Plan." The AICPA has issued SOP 93-6, "Employer's Accounting for
Employee Stock Ownership Plans," which substantially alters the accounting
for ESOP plans for shares acquired by plans subsequent to December 31,
1992. In accordance with SOP 93-6 the Company has elected to not apply the
provision of SOP 93-6 for plan shares held on December 31, 1992.
Accordingly, Company contributions to the plan are recorded at cost as a
charge against income. Payments by the plan on its securities acquisition
loan are utilized by the Company to reduce its outstanding debt. Unearned
compensation related to the Company's ESOP is shown as a reduction of
stockholders' equity. The tax benefits attributable to the Company's
deduction for dividends paid on unallocated Company shares held by the
ESOP are shown as a reduction of dividends in accordance with SFAS No.
109.

Core Deposit Intangible

The core deposit intangible represents the premiums paid related to the
acquisition of branch deposits and is being amortized over 15 years
straight line.

Use of 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 of 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.

F-14

<PAGE> 62

2. INVESTMENT SECURITIES

Securities Available for Sale

The amortized cost, gross unrealized gains and losses and approximate
market values of Securities Available for Sale at December 31, 1995 and
1994 are as follows:

<TABLE>
<CAPTION> UNREALIZED
AMORTIZED ------------------------- MARKET
COST GAINS LOSSES VALUE
----------- -------- ----------- -----------
<S> <C> <C> <C>
DECEMBER 31, 1995
U.S. Treasury $ 4,346,093 $ 45,893 $ (4,704) $ 4,387,282
U.S. Government Agencies 27,929,574 149,098 (135,683) 27,942,989
Obligations of states and
political subdivisions 1,166,236 - (4,189) 1,162,047
FHLB Stock 406,000 - - 406,000
----------- -------- ----------- -----------
$33,847,903 $194,991 $ (144,576) $33,898,318
=========== ======== =========== ===========

DECEMBER 31, 1994
U.S. Treasury $ 2,383,790 $ - $ (34,384) $ 2,349,406
U.S. Government Agencies 18,420,397 5,131 (983,501) 17,442,027
FHLB stock 380,200 - - 380,200
----------- -------- ----------- -----------
$21,184,387 $ 5,131 $(1,017,885) $20,171,633
=========== ======== =========== ===========
</TABLE>

Securities Held to Maturity

The amortized cost, gross unrealized gains and losses approximate market
value of investment securities classified as held to maturity at December
31, 1994 are as follows:

<TABLE>
<CAPTION> UNREALIZED
AMORTIZED ----------------------- MARKET
COST GAINS LOSSES VALUE
---------- ------ --------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury $3,171,490 $ - $ (90,068) $3,081,422
U.S. Government Agencies 1,449,891 - (6,650) 1,443,241
Obligations of states and political
subdivisions 125,000 - (10,663) 114,337
---------- ------ --------- ----------
$4,746,381 $ - $(107,381) $4,639,000
========== ====== ========= ==========
</TABLE>

F-15

<PAGE> 63

Total Investment Securities

The amortized cost and approximate market value of investment securities
at December 31, 1995, by contractual maturity are shown below:

<TABLE>
<CAPTION>
AVAILABLE FOR SALE
------------------------------
AMORTIZED MARKET
COST VALUE
----------- -----------
<S> <C> <C>
Due in one year or less $ 2,367,336 $ 2,371,266
Due after one year through five years 20,567,077 20,661,810
Due after five years through ten years 3,724,024 3,707,120
Due after ten years 6,783,466 6,752,122
----------- -----------
$33,441,903 $33,492,318
=========== ===========
</TABLE>

Investment securities with an amortized cost of approximately $3,854,000
and market value of approximately $3,889,000 at December 31, 1995 were
pledged to secure public deposits and for other purposes required or
permitted by law. At December 31, 1994, investment securities with an
amortized cost of approximately $3,884,000 and market value of
approximately $3,731,000 were pledged.

3. BANK PREMISES AND EQUIPMENT

A summary of Bank premises and equipment, at cost, as of December 31, 1995
and 1994 is as follows:

<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Land $ 354,439 $ 279,439
Buildings and improvements 2,079,260 1,597,174
Furniture, fixtures and equipment 1,660,693 1,360,990
---------- ----------
4,094,392 3,237,603
Less accumulated depreciation (1,315,845) (1,083,733)
---------- ----------
$2,778,547 $2,153,870
========== ==========
</TABLE>

The charge to expense for depreciation was $233,038 in 1995 and $216,909
in 1994.

F-16

<PAGE> 64

4. LOAN DATA

Allowance for Loan Losses

An analysis of the allowance for loan losses for the years ended December
31, 1995 and 1994, is as follows:

<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Balance, beginning of period $555,676 $516,802
Provision charged to operating expense 223,192 120,351
Recoveries of loans charged off 42,088 72,882
Loans charged off (232,308) (154,359)
-------- --------
Balance, end of period $588,648 $555,676
======== ========
</TABLE>

Loans to Related Parties

It is the Bank's policy to extend loans to directors, officers and
employees subject to regulatory requirements, established internal
guidelines and according to the same basic terms as loans to other
customers. However, each specific director, officer or employee loan must
be submitted to and approved by the Bank's Board of Directors. The amount
of outstanding loans to directors, officers, and employees at December 31,
1995 and 1994 totaled approximately $644,000 and $982,000, respectively
and commitments to extend credit totaled $1,055,000 and $472,000,
respectively.

Loan Concentrations

The Bank grants residential, commercial and consumer loans primarily to
customers in Trousdale, Sumner and surrounding counties. Although the Bank
has a diversified loan portfolio, the debtors ability to honor their
contracts is to an extent dependent upon the economic conditions within
these areas. A summary of loans by type as of December 31, 1995 and 1994,
is shown below:

<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Real Estate
- Construction $ 2,647,142 $ 1,432,237
- Mortgage 32,138,655 29,028,817
Commercial, financial and agricultural 5,499,218 5,000,646
Loans to individuals for household, family and other
consumer expenditures 9,989,818 9,476,365
Other 437,852 116,233
----------- -----------
Total loans 50,712,685 45,054,298

Unearned interest (631,468) (703,334)
Allowance for loan losses (588,648) (555,676)
----------- -----------
Net loans $49,492,569 $43,795,288
=========== ===========
</TABLE>

F-17

<PAGE> 65

Commitments and Contingencies

The Bank is party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of its
customers. For some instruments, namely commitments to extend credit and
letters of credit, exposure to credit loss is limited to the contractual
amount of the instrument.

Commitments to extend credit are agreements to lend to a customer. Since
many of the commitments are expected to expire without being drawn upon,
the total commitment amounts do no necessarily represent future cash
requirements. The Bank subjects such activity to the same credit quality
and monitoring controls as its lending activities.

Letters of credit 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 evaluates
each customer's creditworthiness on a case-by-case basis.

The amount of collateral obtained if deemed necessary by the Bank upon the
extension of credit under these instruments, is based on management's
credit evaluation of the counterparty. Collateral held varies but may
include marketable securities, accounts receivable, property, plant and
equipment, income-producing commercial properties, and other real estate.
Access to collateral is maintained in various ways, mainly through the
holding of notes, deeds, titles and receipts. UCC filings and dual control
over access to certain pledged marketable securities.

As of December 31, 1995, the contractual amount of financial instruments
with off-balance sheet credit risk is as follows:

<TABLE>
<S> <C>
Commitments to extend credit $4,842,000
Credit cards $1,200,000
Letters of credit $ 66,000
</TABLE>

5. INCOME TAXES

The provisions (benefits) for income taxes for the years ended December
31, 1995 and 1994, include the following:

<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Current $417,435 $413,842
Deferred benefit (10,466) (18,394)
-------- --------
$406,969 $395,448
======== ========
</TABLE>

Deferred income taxes related primarily to differences in book and tax
depreciation.

F-18

<PAGE> 66

The income tax provisions varied from the amounts computed by multiplying
income before taxes by the statutory federal income tax rate. The reasons
for the differences are as follows:

<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Tax at statutory rate $388,829 $351,659
Increase (decrease) resulting from tax effect of:
Tax exempt interest (30,522) (5,337)
State taxes, net of federal income tax benefit 49,515 42,481
Other, net (853) 6,645
-------- --------
$406,969 $395,448
======== ========
</TABLE>

Included in the accompanying balance sheet at December 31, 1995 is a
deferred tax liability of $19,137 for the tax effect of the unrealized
gains on Securities Available for Sale and at December 31, 1994 a deferred
tax benefit of $384,441 for the tax effect of the unrealized losses on
Securities Available for Sale.

6. EMPLOYEE BENEFIT PLANS AND EMPLOYMENT CONTRACTS

Employee Stock Ownership Plan

On January 1, 1990, the Company established an Employee Stock Ownership
Plan (ESOP) to provide participants with an opportunity to acquire
beneficial stock ownership interests in the Company and/or its subsidiary.
Consequently, trust assets under the plan will be invested primarily in
the Company stock. The ESOP has purchased 9,500 shares of the Company's
stock at a price of $170 per share. During 1995, one share of the
Company's common stock was exchanged for one share of the Company's
preferred stock. Such preferred stock pays dividends in such amount as
the Board of Directors determines from time to time but in no event less
than the dividend payable with respect to a common share. The one share of
preferred stock is convertible into one share of Company common stock at
any time in the discretion of the Trustee's of the ESOP. The ESOP financed
the original purchase of these shares with a $1,615,000 interest bearing
promissory note issued to the Company. The Company itself incurred a
$1,615,000 debt to finance this transaction which, accordingly, is
recorded in the liability section of the Company's consolidated balance
sheet with a corresponding offset to the ESOP capital stock and additional
paid-in capital. The Company will contribute sufficient funds each year
which, when combined with any dividends paid on the ESOP's stock, will be
used to meet the ESOP's debt service requirements. The 1995 allocation of
shares to participants has not yet been performed. As of December 31, 1995
the ESOP has incurred interest expense of $60,044 on its outstanding note
payable.

In connection with the pending sale of the Company discussed in note 15,
all participants of the ESOP will become fully vested and the remaining
debt will be paid in full.

F-19

<PAGE> 67

Shares of the ESOP stock are held by the ESOP trustee (Trust) with the
number of shares allocated to each employee determined annually in
accordance with a method approved by the Internal Revenue Service. Shares
allocated to employees generally may not be withdrawn until the employee's
termination, disability, retirement, or death.

Company stock purchased by the Trust through a transaction in which the
Trust incurs a debt obligation shall be added to and maintained in a
suspense account and withdrawn from the suspense account and allocated to
the Company stock accounts of participants as Company contributions in
cash (or any cash dividends on such stock) are applied by the Trust to the
repayment of debt principal and interest. The number of shares of Company
stock to be so allocated shall be based upon the ratio of the actual
payments of principal and interest for each plan year to the total
projected payments of principal and interest over the duration of the debt
repayment period without regard to extensions or renewals.

Payments by the Company to the plan are recorded as a charge against
income at cost. Company dividends paid on unallocated shares are utilized
by the plan to reduce indebtedness. Dividends on allocated shares are
accumulated by the plan in individual accounts for the benefit of
participants.

Compensation cost attributable to the plan recognized by the Company was
$118,812 and $231,830 in 1995 and 1994, respectively.

Suspense account shares were 5,929.43 at December 31, 1994 while 635.45
shares were released for the 1994 plan year. The plan expects to release
approximately 495 common shares for the 1995 plan year. No new shares have
been acquired by the ESOP during 1995.

The Company is exempt from any repurchase obligation with respect to
distributed Company shares by the ESOP until such time as the ESOP's
securities acquisition loan is repaid.

Each employee of the Company and/or its subsidiary, except certain
officers, will become a participant on the first entry date following the
date on which he completes one year of credited service and attains the
age of 18. The entry dates are January 1 and July 1 of each year.
Contributions are paid to the Trust by the Company and/or its subsidiary
in such amounts as may be determined by the Company's Board of Directors
and may be paid in cash or in shares of the Company stock.

F-20

<PAGE> 68

Stock Options

The Company has issued two stock options to an officer of the Company. The
first option issued in 1985 is for the purchase of 2,000 shares of common
stock at a purchase price of $100 per share and expires on November 26,
1998. The second option issued in 1990 is for the purchase of 7,000 shares
of common stock at a purchase price of $170 per share and expires on
November 26, 1998. The option prices on the issue date approximated the
estimated market value of the related Company stock on the issue date.
Accordingly, no related compensation was recorded by the Company. In order
to avoid voting dilution to current shareholders, a provision is included
that calls for the 7,000 shares to be issued under this option to be
non-voting common stock as authorized by the shareholders at the 1991
annual meeting of shareholders. No options have been exercised at December
31, 1995.

Employment Contract

An officer of the Company has an employment contract that extends through
November 1998. Additionally, the contract provides for continued health
insurance for the officer and family and a personal automobile for 10
years after termination.

7. LONG-TERM DEBT

Long-term debt consists of a note payable to a bank, secured by 34,150
shares of common stock of the Bank. Effective September 27, 1993, the note
was modified to fix the rate of interest charged on the loan to 6.25%
through September 7, 1996. Subsequent to September 7, 1996 the loan
interest rate reverts to the floating "index rate" unless the bank and
Company otherwise agree at such time. Effective August 3, 1995, the note
was modified to change the principal payment to $87,479, due in twelve
annual installments beginning July 15, 1996. Final maturity is July 15,
2007. In the event of prepayment of any or all of the debt prior to
September 7, 1996, the prepaid amount would be subject to a prepayment
penalty. The balance on this notes of December 31, 1995 and 1994 was
$1,049,750 and $1,130,500, respectively.

YEAR PRINCIPLE DUE
---------- -------------
<S> <C>
1996 $ 87,479
1997 87,479
1998 87,479
1999 87,479
Thereafter 699,834
----------
$1,049,750
==========
</TABLE>

F-21

<PAGE> 69

8. FEDERAL HOME LOAN BANK FUNDS BORROWED

The Bank has an agreement with the Federal Home Loan Bank (FHLB) whereby
some of the Bank's loans secured by first mortgages on one to four family
residential properties are pledged as collateral on advances made to the
Bank from the FHLB. The advances are made at fixed rates amortizing over
five to fifteen years.

The Bank is required to maintain eligible collateral representing 150
percent of the current outstanding balances on all advances. At December
31, eligible collateral was pledged to secure the advances as follows:

<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
FHLB funds borrowed $3,524,655 $2,681,399

Pledged collateral $5,286,983 $4,022,099
</TABLE>

At December 31, 1995, the FHLB funds borrowed are scheduled to mature as
follows:

<TABLE>
<S> <C>
1996 $ 463,029
1997 500,611
1998 519,037
1999 511,097
2000 359,755
Thereafter 1,171,126
----------
$3,524,655
==========
</TABLE>

I. RESTRICTED CASH

The Bank is required to maintain a minimum cash reserve with correspondent
banks or vault cash. The minimum requirement at December 31, 1995 and 1994
was approximately $441,000 and $380,000, respectively.

10. STOCK REDEMPTION AGREEMENTS

During May 1995, the Company entered into two stock redemption agreements.
The agreements provide for the purchase of 1,257 and 3,078 shares of
common stock by the Company upon the death of the shareholder at 110% of
its book value at that time. Additionally, an officer of the Company has a
lifetime purchase option should these shareholders decide to sell any
shares.

F-22

<PAGE> 70

11. PREFERRED STOCK

Shares of preferred stock may be divided into and issued in one or more
series at such time or times and for such consideration as the Board of
Directors may determine. All shares of any one series will be of equal
rank and identical in all respects.

The holders of a particular series of preferred stock are entitled to
receive dividends when and as declared by the Board of Directors and in
such amount as the Board shall determine without regard to the payment of
any dividends to shareholders of any other class of common stock or series
of preferred stock, provided however that in no event shall the dividend
on any series of preferred stock per share be less than the per share
dividend on the Company's common stock.

Any series of preferred stock may be redeemable at the Company's option in
exchange for an equivalent number of Company common shares. In addition,
for the purpose of calculating liquidation preferences, preferred shares
shall be deemed to have a par value equal to that of a common share.

12. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Bank's estimates of fair value of its financial instruments on
December 31, 1995 as follows:

<TABLE>
<CAPTION>
1995
---------------------------------
Carrying Fair
Value Value
----------- -----------
<S> <C> <C>
FINANCIAL ASSETS:
Cash and cash equivalents $ 4,283,866 $ 4,283,866
Investment Securities 33,898,318 33,898,318
Net Loans 49,492,569 49,238,649
FINANCIAL LIABILITIES:
Deposits 81,185,128 81,238,997
FHLB funds borrowed 3,524,655 3,718,104
Long-term debt 1,049,750 1,034,746

</TABLE>

F-23

<PAGE> 71

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:

Cash and Cash Equivalents

The carrying amount is the fair value.

Investment Securities

Securities are held as investments. Fair value equals quoted market price,
if available. If a quoted market price is not available, fair value is
estimated using quoted market prices for similar securities.

Loans

The fair value of fixed loans is estimated by discounting the future cash
flows using the current market rates at which similar loans would be made
to borrowers with similar credit ratings and for the same remaining
maturities. The carrying value of variable rate loans is assumed to
approximate fair value.

Deposits

The fair value of demand deposits, savings accounts, and certain money
market deposits is the amount payable on demand at the reporting date. The
fair value of fixed-maturity certificates of deposit is estimated using
the rates currently offered for deposits of similar remaining maturities.

FHLB Funds Borrowed

Rates currently available to the Company for debt with similar terms and
maturities are used to estimate fair value of existing debt using a
discounted cash flow method.

Long-Term Debt

Rates currently available to the Company for debt with similar terms and
maturities are used to estimate fair value of existing debt using a
discounted cash flow method.

F-24

<PAGE> 72

13. CONDENSED FINANCIAL INFORMATION

Following is condensed financial information of Hartsville Bancshares,
Inc. (parent company only):

Condensed Balance Sheets

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1994
---------- ----------
<S> <C> <C>
ASSETS:
Cash $ 105 $ 3,450
Investment in subsidiary 7,194,845 5,864,775
Cash surrender value of live insurance 51,956 44,312
Other assets 42,081 35,660
---------- ----------
$7,288,987 $5,948,197
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Long-term debt $1,049,750 $1,130,500
Accrued interest payable 30,982 35,622
Excess of acquired net assets over consideration
thereon 81,641 84,665
Stockholders' equity 6,126,614 4,697,410
---------- ----------
$7,288,987 $5,948,197
========== ==========

Condensed Statements of Income

YEARS ENDED DECEMBER 31,
----------------------------
1995 1994
---------- ----------
INCOME:
Dividends from subsidiary $ 127,968 $ 101,677
Interest income 69,044 79,362
Other income 7,644 1
---------- ----------
Total income 204,656 181,040
---------- ----------

EXPENSES:
Salaries and benefits 94,343 75,693
Interest 69,044 79,362
Other expenses 24,233 25,688
---------- ----------
Total expense 187,620 180,743
---------- ----------

Income before tax benefit and equity in undistributed
subsidiary income 17,036 297
Tax benefit 46,107 39,909
Equity in undistributed subsidiary income 670,479 598,638
---------- ----------
Net income $ 733,622 $ 638,844
========== ==========
</TABLE>

F-25

<PAGE> 73

Condensed Statement of Cash Flows

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1995 1994
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $733,622 $638,844
Adjustment to reconcile net income to net cash
provided by operating activities:
Equity in undistributed subsidiary earnings
(670,479) (598,638)
Amortization (3,024) (3,024)
(Increase) decrease in other assets (9,563) 22,946
(Decrease) in other liabilities (4,641) (8,661)
-------- --------
Net cash provided by operating activities
45,915 51,467
-------- --------

FINANCING ACTIVITIES:
Repayment of long-term debt (80,750) (161,500)
Reduction in unearned compensation attributable to
ESOP 80,750 161,500
Dividends paid (49,260) (49,260)
-------- --------
Net cash (used) by financing activities
(49,260) (49,260)
-------- --------

Change in cash (3,345) 2,207

CASH, BEGINNING OF YEAR 3,450 1,243
-------- --------
CASH, END OF YEAR $ 105 $ 3,450
======== ========
</TABLE>

The Company is a legal entity separate and distinct from its banking
subsidiary. The principal sources of cash flow for the Company, to pay
dividends and service Company debt, are dividends from its banking
subsidiary. There are statutory and regulatory limitations on the payment
of dividends from banking subsidiaries to their parent companies as well
as statutory and regulatory restrictions on the payment of dividends by
the Company.

14. RECLASSIFICATIONS

Certain reclassifications have been made to the December 31, 1994
consolidated financial statements in order to conform with the
presentation of the December 31, 1995 consolidated financial statements.

F-26

<PAGE> 74

15. SUBSEQUENT EVENT (UNAUDITED)

On October 11, 1996, the Company entered into an agreement and plan of
merger to sell the stock of Hartsville Bancshares, Inc. to First American
Corporation. Consummation of this transaction is subject to a number of
conditions including regulatory approval.

F-27

<PAGE> 75

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

OPERATING RESULTS

The Company had net income of $733,622 for the year ended December 31, 1995
compared to $638,844 for the year ended December 31, 1994 and $664,372 for the
year ended December 31, 1993. This represents an increase of $94,778 in net
income for 1995 as compared to 1994, a decrease of $(25,528) in net income for
1994 as compared to 1993 and an increase of $81,368 in net income for 1993 as
compared to 1992. Return on average assets was 0.87%, 0.85% and 0.94% for 1995,
1994 and 1993, respectively. Return on average equity was 13.56%, 13.79% and
15.89% for 1995, 1994 and 1993, respectively.

Net interest income for 1995 was $3,703,400 or $ 289,413 greater than net
interest income for 1994 of $3,413,987. Net interest income for 1994 was $
221,475 greater than net interest income of $3,192,512 for 1993. While net
interest income for 1993 increased by $ 254,060 as compared to 1992.

Net interest income represented 84.06% of total revenues for 1995, 84.38%% of
total revenues for 1994 and 82.42% of revenues for 1993. For purposes of this
discussion, total revenue consists of the sum of net interest income and
non-interest income. Net interest income is the difference between total
interest income earned on loans, securities and other earning assets and total
interest expense incurred on deposits and other interest-bearing liabilities.

Interest income, interest expense and the resulting net interest income are
impacted by fluctuations in the volume and mix of earnings assets and
interest-bearing liabilities as well as the corresponding interest yields
earned on earning assets and rates paid on interest-bearing liabilities. In
general, external interest rates were higher in 1995 than in 1994 and slightly
higher in 1994 than in 1993.

Interest income was $7,004,874 for 1995 or 23.4% greater than interest income
of $5,677,390 for 1994 which was $166,248 greater than interest income of
$5,501,142 for 1993. The Company's earning assets consists primarily of loans
and securities. Interest income and fees on loans was $5,098,645 for 1995 or
72.8% of total interest income. Interest income and fees on loans was
$4,210,051 or 74.2% of total interest income for 1994 and for 1993, interest
income and fees on loans was 72.2% of total interest income or $3,970,813.
Interest income on securities and other earning assets represented 27.2%, 25.8%
and 27.8% of total interest income for 1995, 1994 and 1993, respectively.

Yield on average earning assets was 9.14% for 1995, 8.23% for 1994 and 8.43%
for 1993. The average cost of interest-bearing liabilities was 4.21% for 1995,
3.31% for 1994 and 4.83% for 1993. Net interest spread, which is the difference
between the average yield on earning assets and the average rate on
interest-bearing liabilities, was 4.93% for 1995, 4.92% for 1994 and 3.60% for
1993. The net interest margin, which is net interest income expressed as a
percentage of average earning assets, was 4.83% for 1995, 4.95% for 1994 and
4.89% for 1993.

The increase in net interest income for 1995 over 1994 was primarily due to an
increase in the volume of interest earning assets in 1995 over 1994 while the
increase in net interest income for 1994 over 1993 was attributable to an
increase in interest earning assets in 1994 over 1993 and an increase of 132
basis points in the net interest spread in 1994 over 1993. Net interest margin
decreased 12 basis points in 1995 compared to 1994 and increased 6 basis points
in 1994 as compared to 1993.

The provision for possible loan losses was $223,192, $120,351 and $110,250, for
1995, 1994 and 1993, respectively. Net charge-off were $190,220 for 1995,
$81,477 for 1994 and $33,826 for 1993.

NON-INTEREST INCOME AND EXPENSE

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<PAGE> 76

Non-interest income was $702,412 for 1995, $631,852 for 1994 and $680,969 for
1993. Non-interest income consists primarily of service charges on deposit
accounts and other fees and commissions such as commissions on credit life
insurance. Securities gains and losses as well as other miscellaneous income
comprise an insignificant part of non-interest income. The increase in
non-interest income of 1995 compared to 1994 consisted primarily of increases
in service charges on deposit accounts and the decrease in non-interest income
for 1994 compared to 1993 consisted primarily of decreases in other fees and
commissions.

Non-interest expense consists primarily of salaries and employee benefits,
occupancy expense and other non-interest expenses. Non-interest expense was
$3,042,029 for 1995, $2,891,196 for 1994 and $2,683,801 for 1993. The increase
in non-interest expense in 1995 compared to 1994 consisted almost entirely of
increases in other non-interest expenses for 1995 such as costs incurred in
connection with a branch acquisition in 1995 and costs related to changing the
subsidiary bank's name in 1995. Approximately 70% of the increase in
non-interest expense in 1994 compared to 1993 is attributable to increases in
salaries and employee benefits while the remainder of the increase is primarily
related to increases in other non-interest expenses.

INCOME TAXES

Income tax expense was $406,969 for 1995 resulting in an effective rate of
35.68%. Income tax expense for 1994 was $395,448 or 38.23% of pre-tax income.
The decrease in effective rate for 1995 as compared to 1994 was primarily
attributable to the increase in the level of tax-exempt income on securities
derived by the Company in 1995 compared to 1994. Income tax expense for 1993
was $398,431 or an effective rate of 36.9%.

ASSET QUALITY

The ratio of net charge-offs to average loans was .40%, .19% and .09% for 1995,
1994 and 1993, respectively. The relative low levels of net charge-offs to
average loans reflects managements' adherence to strict collection policies and
procedures. The increase in net charge-offs to loans in 1995 and 1994 was
primarily attributable to higher levels of personal bankruptcies in those
years. At December 31, 1995, loans on which the accrual of interest had been
discontinued or reduced were approximately $185,000. Impaired loans at such
time amounted to approximately $216,959. Impaired loans are those identified by
management that are not paying in accordance with their original contractual
terms. However, management does not believe that any valuation allowance is
necessary, at this time, for any loans identified as impaired. The Company held
no other real estate acquired in settlement of loans previously contracted in
1995 or 1994 and held OREO of approximately $20,000 at December 31, 1993.

Non-performing loans to gross loans were approximately .34% or approximately
$145 thousand at December 31, 1995, .15% at December 31, 1994 and .02% at
December 31, 1993.

No securities held by the Company in 1995, 1994 or 1993 were considered
non-performing.

The allowance for loan and lease losses is maintained at a level that in
management's opinion is sufficient to absorb possible loan losses on existing
loans that may become uncollectible. The allowance is evaluated periodically by
management taking into account such factors as management's experience with its
customer base, the composition of the loan portfolio, the relationship of the
allowance for losses to outstanding loans and current economic conditions that
may effect a borrower's ability to repay. The allowance for possible loan
losses was $588,648, $555,676 and $516,802 at December 31, 1995, 1994 and 1993,
respectively. The allowance for loan losses to loans was 1.18%, 1.25% and 1.21%
at December 31, 1995, 1994 and 1993, respectively.

LIQUIDITY

Liquidity management involves maintaining sufficient cash levels to fund
operations and meet the requirements of borrowers, depositors and other
creditors. Liquid assets include cash and cash equivalents (less Federal
Reserve reserve requirements), money market instruments and all securities
available for sale. Management believes that the Company has

F-29

<PAGE> 77

reasonable liquidity to meet all foreseeable needs in the next 12 months and
the reasonable foreseeable future under current economic conditions and those
reasonably foreseeable. The Company has no special cash needs other than to
meet normal operations in the foreseeable future.

SECURITIES

At December 31, 1995 the Company had $33,898,318 in approximate market value
securities with a cost of $33,847,903. The Company reclassified all its
securities not otherwise already classified as available for sale to available
for sale in 1995 as permitted by the Financial Accounting Standards Board. This
reclassification, the Company believes, permits the Company greater latitude in
managing its securities portfolio and permits the use of its entire portfolio
for liquidity purposes as necessary.

LOANS

Loans grew from $44,350,964 at December 31, 1994 to $50,081,217 at December 31,
1995, an increase of $5,730,253, or 12.9%. Loans at December 31, 1993 were
$42,756,035. The increase in loans from 1993 to 1994 was $1,594,929 or 3.73%.
Real estate loans grew from $30,461,054 at the end of 1994 to $34,785,797 at
the end of 1995. Real estate loans were 69.5% of total loans at December 31,
1995, 68.68% at December 31, 1994 and 59.66% at December 31, 1993. The growth
in real estate loans accounted for 75.5% of the total growth of $5,730,253 in
loans for 1995 as compared to 1994.Commercial and agricultural loans decreased
$2,067,151 from 1993 to a level of $5,116,879 at the end of 1994. Real estate
loans increased during 1994 by $3,161,074.

DEPOSITS

Deposits increased from $67,215,601 at the end of 1994 to $81,185,128 by
December 31, 1995. This increase of $13,969,527 or 20.78% was primarily
attributable to an acquisition of a branch facility and related deposits from
another financial institution in 1995. Deposits at December 31, 1994 were 3.73%
or $2,416,265 higher than those at December 31, 1993.

OTHER BORROWED MONEY

Other borrowed money consisted of Federal Home Loan Bank advances of
$3,524,655, $2,681,399, and $2,527,032 at December 31, 1995, 1994 and 1993,
respectively. Federal Home Loan Bank advances are utilized by the Company as a
funding source for similar maturity mortgage loan originations and as part of
the Company's asset/liability strategy to not fund long term assets with short
term deposits. Long term debt consisted of a single note used to fund the
Company's related employee stock ownership plan which was $1,049,750,
$1,130,000, and $1,292,000 at December 31, 1995, 1994 and 1993, respectively.

CAPITAL POSITION

Because the Company is a "small one-bank holding company" as that phrase is
used in applicable regulations of the Federal Reserve Board, capital adequacy
is generally determined with reference to the capital adequacy of the
subsidiary bank and not with respect to the capital adequacy of the Company on
a consolidated basis. Generally, CommunityFirst must satisfy three capital
adequacy measures: (1) the leverage ratio which measures tangible capital as at
percentage of total tangible assets which was 7.01% as of December 31, 1995;
(2) the core ratio to risk adjusted assets, 13.1% at December 31, 1995, which
measures the ratio of primary capital instruments to risk weighted assets, and;
(3) the risk adjusted capital ratio, 14.33% at December 31, 1995, which
measures the ratio of all permitted capital components to risk weighted assets.
CommunityFirst is considered "well-capitalized" within the meaning of
applicable regulatory standards.

F-30

<PAGE> 78

OTHER

In December 1995, the Private Securities Litigation Reform Act of 1995 (the
"Act") was enacted. The Act contains amendments to the Securities Act of 1933
and the Securities Exchange Act of 1934 which provide protection from liability
in private lawsuits for "forward-looking" statements made by persons specified
in the Act. HBI desires to take advantage of the "safe-harbor" provision of the
Act.

HBI wishes to caution readers that with the exception of historical matters,
the matters discussed in this Management's Discussion and Analysis may contain
forward-looking statements that involve risks and uncertainties, including but
not limited to, factors related to the highly competitive nature of financial
services industry and its sensitivity to changes in general economic
conditions, the movement of interest rates which may affect CFB's net interest
spread and margins, deterioration of the credit quality of CFB's assets and
other factors generally affecting the banking industry. Such factors could
affect HBI's actual results and could cause HBI's actual results during 1996
and beyond to differ materially from those expressed in any forward-looking
statement made by or on behalf of HBI.

MANAGEMENT'S DISCUSSION AND ANALYSIS AS OF AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

OPERATING RESULTS

The Company had net income of $390 thousand for the nine months ended September
30, 1996 compared to $565 thousand for the nine months ended September 30,
1995. Return on average assets (annualized) was 0.57% and 0.94% for the nine
months ended September 30, 1996 and 1995, respectively. Return on average
equity (annualized) was 8.51% and 14.27% for the nine months ended September
30, 1996 and 1995, respectively. Unusual non-interest expenses in the
approximate amount of $275 thousand were incurred for the nine months ended
September 30, 1996 compared to the nine months ended September 30, 1995. Such
expenses were incurred in connection with advisory and legal fees related to an
acquisition of the Company by First American Corporation. The terms of the
acquisition are set forth in a definitive agreement dated October 11, 1996.
The fees were incurred in anticipation of entering into a definitive agreement.

Net interest income for the first nine months of 1996 was $2,958 thousand or
$283 thousand greater than net interest income for the same period of 1995 of
$2,675 thousand. Net interest income is the difference between total interest
income earned on loans, securities and other earning assets and total interest
expense incurred on deposits ans other interest-bearing liabilities.

Interest income was $5,665 thousand for the first nine months of 1996 or 12.6%
greater than interest income of $5,032 for the same period of 1995. The
Company's earning assets consists primarily of loans and securities. Interest
income and fees on loans was $4,198 for the nine months ended September 30,
1996 compared to $3,478 for the same period of 1995. Interest income on
securities and other earning assets represented 25.9% and 25.5% of total
interest income for the first three quarters of 1996 compared to the same
quarters of 1995, respectively.

Yield on average earning assets was 9.00% for the first nine months of 1996
compared to 9.01% for 1995. The average cost of interest-bearing liabilities
for the first nine months of 1996 was 4.24% compared to 4.78% for the same
period of 1995. Net interest spread, which is the difference between the
average yield on earning assets and the average rate on interest-bearing
liabilities, was 4.76% for the first nine months of 1996 compared to 4.23% for
the same period of 1995. The net

F-31

<PAGE> 79

interest margin, which is net interest income expressed as a percentage of
average earning assets was 4.70% for the first nine months of 1996 and 4.79%
for the same period of 1995.

The provision for possible loan losses was $93 thousand compared to $168
thousand for the first nine months of 1996 and 1995, respectively.

Non-interest income for the first nine months of 1996 was $632 thousand
compared to $560 thousand in 1995. Non-interest income consists primarily of
service charges on deposit accounts and other fees and commissions such as
commissions on credit life insurance. Securities gains and losses as well as
other miscellaneous income are also part of non-interest income. The increase
in non-interest income for the first nine months of 1996 compared to the same
period for 1995 of $72 thousand consisted primarily of increases in service
charges on deposit accounts ($41 thousand), an increase of $12 thousand in
other commissions and realization of securities gains of $17 thousand in 1996
compared to securities losses of $2 thousand for the same period of 1995.

Non-interest expense consists primarily of salaries and employee benefits,
occupancy expense and other operating expenses. Non-interest expense was $2,735
thousand for the first nine months of 1996 compared to $2,186 thousand for the
same period of 1995. The increase in non-interest expense in 1996 compared to
1995 consisted of an increase of $121 thousand in salaries and employee
benefits, an increase of $107 thousand in occupancy expenses and an increase of
$321 thousand in other non-interest expenses. The increases in occupancy
expense were attributable primarily to acquisition of branch facilities in
Westmoreland from an unrelated financial institution. The increases in other
non-interest expenses for 1996 were attributable primarily to $275 thousand in
advisory and legal fees incurred in anticipation of entering into a definitive
agreement to acquire the Company and an increase in deposit insurance premiums
due to a one-time special assessment on all insured depository institutions.

Income tax expense was $372 thousand for the first nine months of 1996
resulting in an effective tax rate on income of 48.8%. Income tax expense for
the first nine months of 1995 was $316 thousand or 35.8% of pre-tax income. The
increase in effective rate for 1996 as compared to 1995 was primarily
attributable to the treating the fees incurred in connection with an
anticipated acquisition of the Company as nondeductible.

ASSET QUALITY

Loans grew from $49,061 thousand at September 30, 1995 to $58,897 thousand at
September 30, 1996 an increase in loans of $9,285 thousand or 18.79%. The
growth in loans was attributable to management's effort to increase loans as
compared to securities in order to realize the higher yields on loans. Loan
reserves to total loans was 0.97% at September 30, 1996 and 1.11% at September
30, 1995. The decrease in the reserve to loans ratio was primarily attributable
to the increase in outstanding loans without, in management's judgement, a
corresponding increase in the level of risks inherent in the loan portfolio.

Deposits increased from $68,889 thousand at December 30, 1995 to $80,365
thousand at September 30, 1996. This increase of $11,476 thousand or 16.6% was
primarily attributable to an acquisition of branch facilities and related
deposits from another financial institution in the fourth quarter of 1995. At
September 30, 1995 the Company relied for funding, in part, upon federal funds
borrowed ($1.3 million), securities sold under repurchase agreements ($2
million) and other short term borrowing ($1.5 million). This reliance was in
anticipation of acquiring deposits in a branch acquisition during the fourth
quarter of 1995 and management's strategy to increase loans when available
pending acquisition of the branch deposits. The branch deposits were acquired
during the fourth quarter of 1995 and these funding sources were repaid.

OTHER

F-32

<PAGE> 80

F-33

<PAGE> 81

APPENDIX A

AGREEMENT AND PLAN OF MERGER

DATED AS OF OCTOBER 11, 1996

BETWEEN

FIRST AMERICAN CORPORATION

AND

HARTSVILLE BANCSHARES, INC.

<PAGE> 82

TABLE OF CONTENTS

<TABLE>
<S> <C>
ARTICLE I
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

1.1 Effective Time of the Merger . . . . . . . . . . . . . A-1
1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . A-2
1.3 Effects of the Merger . . . . . . . . . . . . . . . . . A-2

ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates . . . . . . . . . . A-2

2.1 Effect on Capital Stock . . . . . . . . . . . . . . . . A-2
2.2 Exchange of Certificates . . . . . . . . . . . . . . . A-5

ARTICLE III
Representations and Warranties. . . . . . . . . . . . . . . . . . . . . A-7

3.1 Representations and Warranties of HBI. . . . . . . . . A-7
3.2 Representations and Warranties of FAC . . . . . . . . .A-18

ARTICLE IV
Covenants Relating to Conduct of Business . . . . . . . . . . . . . . .A-20

4.1 Certain Covenants of HBI and FAC . . . . . . . . . . .A-20
4.2 Additional Covenants of HBI . . . . . . . . . . . . . .A-20
4.3 Adverse Changes in Condition . . . . . . . . . . . . .A-22
4.4 Reports . . . . . . . . . . . . . . . . . . . . . . . .A-22
4.5 Affirmative Covenants of HBI . . . . . . . . . . . . .A-22
4.6 No Solicitation . . . . . . . . . . . . . . . . . . . .A-24
4.7 Monthly Status Reports . . . . . . . . . . . . . . . .A-24

ARTICLE V
Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . .A-25
</TABLE>

<PAGE> 83

<TABLE>
<S> <C>
5.1 Preparation of the Offering Statement and/or Registration Statement . . . A-25
5.2 Letter of HBI's Accountants . . . . . . . . . . . . . . . . . . . . . . . A-26
5.3 Access to Information. . . . . . . . . . . . . . . . . . . . . . . . . . A-26
5.4 HBI Stockholders' Meeting . . . . . . . . . . . . . . . . . . . . . . . . A-26
5.5 Legal Conditions to Merger . . . . . . . . . . . . . . . . . . . . . . . A-26
5.6 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27
5.7 NASDAQ Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27
5.8 Transition of Certain Employee Benefit Plans; Employment Matters. . . . . A-27
5.9 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28
5.10 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28
5.11 HBI Accruals and Reserves . . . . . . . . . . . . . . . . . . . . . . . . A-29
5.12 Bank Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-29
5.13 Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . A-29
5.14 Cooperation Generally . . . . . . . . . . . . . . . . . . . . . . . . . . A-29

ARTICLE VIConditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-30

6.1 Conditions to Each Party's Obligation To Effect the Merger . . . . . . . A-30
6.2 Conditions to Obligations of FAC . . . . . . . . . . . . . . . . . . . . A-31
6.3 Conditions to Obligations of HBI . . . . . . . . . . . . . . . . . . . . A-35

ARTICLE VII
Termination and Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-37

7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-37
7.2 Rights and Obligations Upon Termination . . . . . . . . . . . . . . . . . A-38
7.3 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-39
7.4 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . A-40

ARTICLE VIII
General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-40

8.1 Nonsurvival of Representations, Warranties, and Agreements . . . . . . . A-40
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-40
8.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-41
8.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-41
8.5 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership. . . A-41
8.6 Governing Law; Choice of Forum . . . . . . . . . . . . . . . . . . . . . A-42
</TABLE>

A-ii

<PAGE> 84

<TABLE>
<S> <C> <C>
8.7 Injunctive Relief; Limitations on Remedies . . . . . . . . . . . . . . A-42
8.8 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-42
8.9 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-42
8.10 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-42
8.11 Disclosures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-42
</TABLE>

A-iii

<PAGE> 85

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER dated as of October 11, 1996
(the "Agreement"), between First American Corporation, a Tennessee corporation
("FAC"), and Hartsville Bancshares, Inc., a Tennessee corporation ("HBI").

W I T N E S S E T H:

WHEREAS, the Boards of Directors of FAC and HBI have approved,
and deem it advisable and in the best interests of their respective
stockholders, to consummate, the business combination transaction provided for
herein in which HBI would merge with and into FAC (the "Merger"); and

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

WHEREAS, as soon as practicable after the execution and
delivery of this Agreement, it is contemplated that First American National
Bank, a national bank and a wholly owned subsidiary of FAC ("FANB"), and
CommunityFIRST Bank, a Tennessee state chartered bank and wholly owned
subsidiary of HBI ("CFB"), will enter into a bank plan of merger under which
CFB will be merged with and into FANB (the "Bank Plan of Merger"), and it is
intended that the Bank Plan of Merger will be consummated immediately after
consummation of the Merger; and

WHEREAS, for federal income tax purposes, it is intended that
the Merger and the Bank Plan of Merger shall qualify as a reorganization under
the provisions of Section 368 of the Internal Revenue Code of 1986, as amended
(the "Code").

NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:

ARTICLE I

The Merger

1.1 Effective Time of the Merger. Subject to the provisions of
this Agreement, articles of merger (the "Articles of Merger") including a plan
of merger consistent with this Agreement shall be duly prepared, executed and
acknowledged by the Surviving Corporation (as defined in Section 1.3 hereof),
and thereafter delivered to the Secretary of State of the State of Tennessee,
for filing, as provided in the Tennessee Business Corporation Act (the "TBCA"),
as soon as

A-1

<PAGE> 86

practicable on or after the Closing Date (as defined in Section 1.2 hereof).
The Merger shall become effective upon the filing of the Articles of Merger
with the Secretary of State of the State of Tennessee or at such time
thereafter as is provided in the Articles of Merger (the "Effective Time"),
but, in any event, the parties intend that the Effective Time shall be 12:01
a.m. Central Time of the first calendar day of the month immediately following
the month in which the Closing occurs.

1.2 Closing. The closing of the Merger (the "Closing") will
take place at 10:00 a.m. Central Time on the last business day of November
1996, or succeeding calendar months thereafter, and at least two business days
after satisfaction or waiver of each of the conditions set forth in Sections
6.1, 6.2 and 6.3 (other than the delivery of the officers' certificate referred
to in Sections 6.2 and 6.3 provided that the other closing conditions set forth
in Article VI hereof have been met or waived as provided in Article VI at or
prior to the Closing (the "Closing Date")), at the offices of FAC, First
American Center, Nashville, Tennessee 37237, unless another time, date or place
is agreed to in writing by the parties hereto.

1.3 Effects of the Merger.
(a) At the Effective Time, (i) the separate existence of HBI
shall cease and HBI shall be merged with and into FAC, (ii) the charter of FAC
as in effect immediately prior to the Effective Time shall be the charter of
the Surviving Corporation, (iii) the By-laws of FAC as in effect immediately
prior to the Effective Time shall be the By-laws of the Surviving Corporation,
and (iv) CFB will be merged directly with and into FANB.

As used in this Agreement, "Constituent Corporation" shall mean
FAC and HBI and "Surviving Corporation" shall mean FAC.

(b) At and after the Effective Time, the Merger will have
the effects set forth in Section 48-21- 108 of the TBCA.

ARTICLE II

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

2.1 Effect on Capital 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 HBI Common Stock:

(a) Cancellation of Stock. All shares of the $10.00 par value
voting common stock of HBI (the "HBI Common Stock") that are owned by FAC or
any Subsidiary of FAC (other than shares in trust accounts, managed accounts,
custodial accounts and the like that are beneficially owned by third parties
(any such shares, "trust account

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shares")) shall be canceled and retired and shall cease to exist and no stock
of FAC or other consideration shall be delivered in exchange therefor. All
shares of $5.00 par value common stock of FAC (the "FAC Common Stock") that are
owned by HBI or CFB (other than trust account shares) shall become authorized
but unissued stock of FAC. As used in this Agreement, the word "Subsidiary",
when used with respect to any party, means any corporation or other
organization, whether incorporated or unincorporated, of which such party or
any other Subsidiary of such party is a general partner or of which at least a
majority of the securities or other interests having by their terms ordinary
voting power to elect a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party and/or by any one or
more of its Subsidiaries.

(b) Conversion of HBI Common Stock. Subject to Section 2.2(a)
hereof, each issued and outstanding share of HBI Common Stock (other than
shares to be canceled in accordance with Section 2.1(a) hereof) shall, by
virtue of this Agreement and without any action on the part of the holder
thereof, be converted into and exchangeable for the right to receive the number
of fully paid and nonassessable FAC shares rounded to the nearest thousandth of
a share equal to the quotient obtained by dividing $398.50 by the FAC Average
Closing Price, as that term is defined herein (the "Exchange Ratio"); provided,
however, that if FAC enters into a definitive agreement of merger or
reorganization with another entity as a result of which FAC is not the
surviving entity and FAC's Chief Executive Officer will not become the Chief
Executive Officer of the surviving entity, then the Exchange Ratio shall be the
greater of 8.955 or the quotient obtained by dividing $398.50 by the FAC
Average Closing Price. The FAC Average Closing Price, for purposes of this
Section 2.1(b) only, shall mean the average closing price per share of FAC
Common Stock on The Nasdaq Stock Market (as reported by The Wall Street Journal
or, if not reported thereby, any other authoritative source) for the twenty
(20) consecutive trading days ending on and including the fifth trading day
immediately preceding the Closing Date.

All such shares of HBI Common Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each certificate previously representing any such shares shall
thereafter represent the shares of FAC Common Stock into which HBI Common Stock
has been converted and the right to cash payment for fractional shares, if any.
Certificates previously representing shares of HBI Common Stock shall be
exchanged for certificates representing whole shares of FAC Common Stock issued
in consideration therefor and cash for fractional shares, if any, upon the
surrender of such certificates in accordance with Section 2.2 hereof.

In the event that prior to the Effective Time the outstanding
shares of FAC Common Stock have been increased, decreased, changed into or
exchanged for a different number or kind of shares through a reorganization,
reclassification, stock

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dividend, stock split, reverse stock split or other similar change applicable
adjustments shall be made to the Exchange Ratio and the number of shares to be
exchanged.

(c) Conversion of HBI Stock Options. Each option to purchase
shares of HBI Class B Common Stock (the "Options") issued and outstanding as of
the date hereof shall be converted to options, pursuant to the same terms and
conditions, except for the Exercise Price, as defined herein, as apply to the
Options as of the date of this Agreement, to purchase at or after the Effective
Time the number of shares of FAC Common Stock pursuant to the following
formula: the product of the number of shares of HBI Class B Common Stock
subject to the Options multiplied by the Exchange Ratio. For purposes of the
immediately preceding sentence, the "Exercise Price" of each Option converted
hereby shall mean the exercise price per share for that Option as set forth in
the Third Amendment dated May 15, 1990, to the Crabtree Employment Agreement,
as defined below, multiplied by the reciprocal of the Exchange Ratio.

(d) Dissenters' Rights. Notwithstanding anything in this
Agreement to the contrary, and only to the extent required by TBCA Section
48-23-101 et seq. ("TBCA Dissenters' Provisions"), shares of HBI Common Stock
which are issued and outstanding immediately prior to the Effective Time and
which are held by stockholders who shall not have voted such shares in favor of
the Merger and the transactions related thereto and who shall have delivered to
HBI a written demand for appraisal of such shares of HBI Common Stock
(collectively, "Dissenting Shares") in the manner provided by the TBCA
Dissenters' Provisions shall not be entitled to the right to receive FAC shares
in accordance with Section 2.1(b) hereof, but the holders of the Dissenting
Shares shall be entitled to the appraised value of such shares in accordance
with the TBCA Dissenters' Provisions; provided, however, that (a) if any holder
of Dissenting Shares shall subsequently deliver a written withdrawal of his or
her demand for appraisal of such shares or (b) if any holder fails to establish
his or her entitlement to appraisal rights as provided in the TBCA Dissenters'
Provisions or (c) if any holder of Dissenting Shares has filed a petition
demanding a determination of the value of all Dissenting Shares within the time
provided in the TBCA Dissenters' Provisions, such holder or holders shall
forfeit the right to appraisal of such shares and such shares shall thereupon
be deemed to have been converted into and to have become exchangeable for, as
of the Effective Time, the right to receive FAC shares solely in accordance
with Section 2.1(b) hereof. HBI shall give FAC prompt written notice of any
demand received by HBI from holders of Dissenting Shares, and FAC shall have
the right to participate in all negotiations and proceeding with respect to
such dissent. HBI shall not purport to make any determination of fair value,
make any payment with respect to, or settle or offer to settle any matter
arising out of such dissent.

(e) Shares of FAC Common Stock. Each share of FAC Common Stock
issued and outstanding immediately prior to the Effective Time shall remain
issued and outstanding from and after the Effective Time.

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2.2 Exchange of Certificates. (a) Exchange Agent. As of the
Effective Time, FAC shall deposit with its transfer agent (the "Exchange
Agent"), for the benefit of the holders of shares of HBI Common Stock
certificates representing the shares of FAC Common Stock (such certificates for
shares of FAC Common Stock together with any dividends or distributions with
respect thereto, being hereinafter referred to as the "Exchange Fund") issuable
pursuant to Section 2.1 hereof in exchange for outstanding shares of HBI Common
Stock and cash for fractional shares.

(b) Exchange Procedures. HBI shall use its best efforts to
cause each holder of record of HBI Common Stock, whose shares are to be
converted into shares of FAC Common Stock pursuant to Section 2.1 hereof and
who does not dissent pursuant to the TBCA Dissenters' Provisions, to deliver
the certificates representing shares of HBI Common Stock ("Certificate" or
"Certificates") to HBI; and HBI shall keep such Certificates in escrow for the
benefit of each holder until the Closing Date. At Closing, HBI shall deliver to
FAC the Certificates. Upon surrender of a Certificate for cancellation to the
Exchange Agent together with such documentation as the Exchange Agent may
reasonably require to effectuate the exchange, the Exchange Agent shall, at or
after the Effective Time, deliver to the holder of each such Certificate a
certificate representing that number of whole shares of FAC Common Stock which
such holder has the right to receive in respect of the Certificate surrendered
pursuant to the provisions of this Article II (after taking into account all
shares of HBI Common Stock then held by such holder), and cash for fractional
shares, if any, and the Certificate so surrendered shall thereupon be canceled.
In the event of a transfer of ownership of HBI Common Stock which is not
registered in the transfer records of HBI, a certificate representing the
proper number of shares of FAC Common Stock may be issued to a transferee if
the Certificate representing such HBI Common Stock is presented to the Exchange
Agent, accompanied by all documents required by the Exchange Agent, in its sole
discretion, to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered to the
Exchange Agent in the manner contemplated by this Section 2.2, each Certificate
shall be deemed at any time after the Effective Time to represent only the
right to receive upon such surrender the certificate representing shares of FAC
Common Stock and cash in lieu of any fractional shares of FAC Common Stock,
without interest, as contemplated by this Section 2.2.

(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to FAC Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to the
shares of FAC Common Stock represented thereby, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 2.2(e)
hereof until the holder of such Certificate shall surrender such Certificate.
Subject to the effect of applicable laws, following proper surrender of any
such Certificate, there shall be paid to the holder of the certificates
representing whole shares of FAC Common Stock issued in exchange therefor,
without interest, (i) at the time of such

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surrender, the amount of any cash payable with respect to a fractional share of
FAC Common Stock to which such holder is entitled pursuant to Section 2.2(e)
hereof and the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole shares of
FAC Common Stock, and, if necessary, (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of FAC Common Stock.

(d) No Further Ownership Rights in HBI Common Stock. All shares
of FAC Common Stock issued upon conversion of shares of HBI Common Stock in
accordance with the terms hereof (including any cash paid pursuant to Section
2.2(e) hereof) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of HBI Common Stock, subject, however, to the
Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have
been declared or made by HBI on such shares of HBI Common Stock in accordance
with the terms of this Agreement on or prior to the Effective Time and which
remain unpaid at the Effective Time, and there shall be no further registration
of transfers on the stock transfer books of the Surviving Corporation of the
shares of HBI Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article II.

(e) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of FAC Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests
will not entitle the owner thereof to vote or to any rights of a stockholder of
FAC including, without limitation, the right to receive dividends. Each holder
of HBI Common Stock who would otherwise have been entitled to receive a
fraction of a share of FAC Common Stock (after taking into account all
Certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of FAC
Common Stock multiplied by the market value of one share of FAC Common Stock on
the fifth trading day immediately prior to the Effective Time. For purposes of
the immediately preceding sentence only, the market value of one share of FAC
Common Stock on the fifth trading day immediately prior to the Effective Time
shall be the closing price of FAC Common Stock on The Nasdaq Stock Market (as
reported in The Wall Street Journal or, if not reported thereby, any other
authoritative source) on the fifth trading day preceding the Effective Time. As
soon as practicable after the determination of the amount of cash, if any, to
be paid to holders of HBI Common Stock with respect to any fractional share
interests, the Exchange Agent shall make available such amounts to such holders
of HBI Common Stock subject to and in accordance with the terms of this Article
II.

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(f) No Liability. Neither FAC nor HBI shall be liable to any
holder of shares of HBI Common Stock , HBI Preferred Stock or FAC Common Stock,
as the case may be, for such shares (or dividends or distributions with respect
thereto) delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.

ARTICLE III

Representations and Warranties

3.1 Representations and Warranties of HBI. HBI represents and
warrants to FAC as follows :

(a) Organization, Standing and Power. HBI is a Tennessee
corporation and a bank holding company registered under the Bank Holding Company
Act of 1956, as amended (the "BHC Act"). CFB is a Tennessee state chartered bank
and is a wholly owned subsidiary of HBI. Each of HBI and CFB is, respectively, a
corporation or bank, duly organized, validly existing and in good standing under
the laws of Tennessee, has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary.

(b) Capital Structure. (i) As of the date hereof, the
authorized capital stock of HBI ("HBI Capital Stock") consists solely of the
following: 100,000 shares of HBI Common Stock, $10.00 par value ("HBI Common
Stock"); 25,000 shares of Class B Common Stock, non-voting, $0.01 par value
("HBI Class B Common Stock"); and 50,000 shares of preferred stock, no par
value, $1.00 stated value per share ("HBI Preferred Stock"). There are 24,629
shares of HBI Common Stock issued and outstanding, no shares of HBI Class B
Common Stock issued and outstanding, one share of HBI Preferred Stock issued and
outstanding, options for 9,000 shares of HBI Class B Common Stock are
outstanding; and 1000 shares of HBI Common Stock, no shares of HBI Class B
Common Stock, and no shares of HBI Preferred Stock are held by HBI in treasury
or by CFB. All outstanding shares of HBI Capital Stock are validly issued, fully
paid and nonassessable and not subject to preemptive rights.

(ii) As of the date hereof, no bonds, debentures, notes or other
indebtedness having the right to vote (or convertible into or exercisable for
securities having the right to vote) on any matters on which stockholders may
vote ("Voting Debt") of HBI or CFB were issued or outstanding.

(iii) As of the date of this Agreement, except for this
Agreement, the Hartsville Bancshares, Inc. Employee Stock Ownership Plan (the
"ESOP") and the Options

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for HBI Class B Common Stock referenced in Section 3.1(b)(i) hereof, and except
as disclosed in the HBI Disclosure Schedules as Schedule 3.1(b)(iii), there are
no options, warrants, calls, rights, commitments or agreements of any character
to which HBI or CFB is a party or by which it is bound obligating HBI or CFB to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or any Voting Debt of HBI or of CFB or obligating HBI or
CFB to grant, extend or enter into any such option, warrant, call, right,
commitment or agreement. After the Closing Date and until the Effective Time,
there will be no other option, warrant, call, right or agreement obligating HBI
or CFB to issue, deliver or sell, or cause to be issued, delivered or sold, any
shares of capital stock or any Voting Debt of HBI or CFB, or obligating HBI or
CFB to grant, extend or enter into any such option, warrant, call, right or
agreement. As of the date hereof, except as set forth in this section, there are
no outstanding contractual obligations of HBI or CFB to repurchase, redeem or
otherwise acquire any shares of HBI Capital Stock or the capital stock of CFB.

(iv) Since December 31, 1995, except as specifically permitted
by this Agreement and except as disclosed in the HBI Disclosure Schedules as
Schedule 3.1(b)(iv), HBI has not (A) issued or permitted to be issued any shares
of HBI Capital Stock or securities exercisable for or convertible into shares of
HBI Capital Stock or the capital stock of CFB; (B) repurchased, redeemed or
otherwise acquired, directly or indirectly through CFB any shares of HBI Capital
Stock or the capital stock of CFB (other than the acquisition of trust account
shares); or (C) declared, set aside, made or paid to the stockholders of HBI
dividends or other distributions on the outstanding shares of HBI Capital Stock;
provided, however, prior to the Closing Date, HBI shall be permitted to
declare a one-time dividend not to exceed $15.00 for each share of HBI Common
Stock issued and outstanding as of the record date of the dividend.

(c) Authority. (i) HBI has all requisite corporate power
and authority to enter into this Agreement and, subject to approval of this
Agreement by the stockholders of HBI, to consummate the transactions
contemplated hereby. CFB has all requisite corporate power and authority to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of HBI,
subject in the case of this Agreement to approval of this Agreement by the
stockholders of HBI. This Agreement has been duly executed and delivered by HBI
and constitutes the valid and binding obligation of HBI, enforceable in
accordance with its terms.

(ii) The execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby will not, (A) 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, charge or other

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encumbrance on assets (any such conflict, violation, default, right of
termination, cancellation or acceleration, loss or creation, a "Violation")
pursuant to, any provision of the charter or by-laws of HBI or CFB or (B)
subject to obtaining or making the consents, approvals, orders, authorizations,
registrations, declarations and filings referred to in paragraph (iii) below,
result in any Violation of any loan or credit agreement, note, mortgage,
indenture, lease, Benefit Plan (as defined in Section 3.1(j) hereof) or other
agreement, obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to HBI or CFB or their respective properties or assets which Violation would
have a material adverse effect on HBI and CFB, individually or in the aggregate.

(iii) 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 (a "Governmental
Entity"), is required by or with respect to HBI or CFB in connection with the
execution and delivery of this Agreement and the transactions contemplated
hereby the failure to obtain which would have a material adverse effect on HBI
or CFB, except for (A) the filing of applications with the Board of Governors of
the Federal Reserve System (the "Federal Reserve") under the BHC Act and the
Federal Deposit Insurance Act ("FDIA") and with the U. S. Comptroller of the
Currency (the "OCC") and approval of same, (B) the filing with the U.S.
Securities and Exchange Commission ("SEC") or an applicable state securities
Governmental Entity of a proxy statement or offering statement in definitive
form relating to the meeting of HBI's stockholders to be held in connection with
the Merger (the "Statement"), (C) the filing of Articles of Merger with the
Secretary of State of the State of Tennessee and appropriate documents with the
relevant authorities of other states in which HBI is qualified to do business,
(D) the filing of such applications, filings, authorizations, orders and
approvals as may be required under Tennessee banking laws, with and of state
banking authorities and approval of same ("State Banking Approval") and pursuant
to state takeover or change in control laws ("State Takeover Approval"), (E)
consents, authorizations, approvals, filings or exemptions in connection with
compliance with the applicable provisions of federal and state securities laws
relating to the regulation of broker-dealers or investment advisers, and federal
commodities laws relating to the regulation of future commission merchants and
the rules and regulations thereunder and of any applicable industry
self-regulatory organization, and the rules of The Nasdaq Stock Market, or which
are required under consumer finance, mortgage banking and other similar laws,
and (F) such filings, notifications and approvals as are required in order to
terminate the ESOP and other HBI Benefit Plans as hereinafter defined and
described.

(d) Reporting Requirements. Included in the HBI
Disclosure Schedules as Schedule 3.1(d) is a true and complete copy of each
report, schedule, registration statement and definitive proxy statement filed by
HBI with any regulatory agency since December 31, 1994 (as such documents have
since the time of their filing been amended, the "HBI Reporting Documents"),
which are all the documents that HBI was required to file

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with any regulatory agency since such date. Also included in HBI Disclosure
Schedule 3.1(d) are true and complete copies of the most recent annual and
quarterly Consolidated Report of Condition and Income ("Call Reports") of CFB
filed with the FDIC and the Tennessee Department of Financial Institutions (the
"Department"). As of their respective dates, the HBI Reporting Documents
complied in all material respects with the requirements of the rules and
regulations applicable to such HBI Reporting Documents, and none of the HBI
Reporting Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements of HBI included in the HBI
Reporting Documents comply with applicable accounting requirements and with the
published rules and regulations with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved ("GAAP") (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of HBI and
CFB at the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended. All material agreements, contracts and
other documents required to be filed as exhibits to any of the HBI Reporting
Documents have been so filed. Except as specifically listed in HBI Disclosure
Schedule 3.1(d), neither HBI nor CFB has any off-balance sheet financial
instruments or derivative securities including, but not limited to, letters of
credit, unfunded commitments and derivative financial instruments. There are no
unasserted claims that are not disclosed in the HBI Reporting Documents that
would reasonably be expected to have, a material adverse effect on HBI and CFB,
either individually or in the aggregate.

(e) Information Supplied. None of the information
supplied pursuant to this Agreement or to be supplied by HBI for inclusion or
incorporation by reference in (i) the registration statement on Form S-3, Form
S-4 or other applicable form to be filed, as appropriate, with the SEC and any
applicable state securities Governmental Entity by FAC in connection with the
issuance of shares of FAC Common Stock in the Merger (the "Registration
Statement") will, at the time the Registration Statement is filed with the
appropriate Governmental Entities, and at the time it becomes effective under
the Securities Act of 1933 (the "Securities Act") or any applicable state law,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and (ii) the Statement, as defined below, will, at the date of
mailing to stockholders and at the time of the meeting of stockholders to be
held in connection with the Merger, contain any untrue statement of a material
fact or omit to state any 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 Statement will comply as to form
in all material respects with all rules and regulations applicable thereto.

(f) Compliance with Applicable Laws. HBI and CFB hold all
permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities which

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are material to the operation of the businesses of HBI and CFB, either
individually or in the aggregate (the "HBI Permits"). HBI and CFB are in
compliance with the terms of the HBI Permits. The businesses of HBI and CFB are
not being conducted in violation of any law, ordinance or regulation of any
Governmental Entity. Except for routine examinations by federal or state
Governmental Entities charged with the supervision or regulation of banks or
bank holding companies or engaged in the insurance of bank deposits ("Bank
Regulators"), as of the date of this Agreement, to the knowledge of HBI, no
investigation by any Governmental Entity with respect to HBI or CFB is in
progress or is pending or threatened.

(g) Litigation. Included in the HBI Disclosure Schedules
as Schedule 3.1(g) is a list and description of all pending and threatened
litigation and administrative proceedings involving HBI, CFB or any of their
properties or assets. As of the date of this Agreement, there is no suit, action
or proceeding, pending or threatened, to the knowledge of each of HBI and CFB,
against or affecting HBI or CFB, that would reasonably be expected to have,
individually or in the aggregate, a material adverse effect on HBI or CFB,
either individually or in the aggregate, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against HBI or CFB having, or which would reasonably be expected to have, any
such effect.

(h) Taxes. HBI and CFB have filed all tax returns
required to be filed by any of them and have paid (or HBI has paid on their
behalf), 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 consolidated
financial statements contained in the HBI Reporting Documents reflect an
adequate provision for current and deferred taxes payable by HBI and CFB accrued
through the date of such consolidated financial statements. No deficiencies for
any taxes have been proposed, asserted or assessed against HBI or CFB that are
not adequately reserved for. The federal income tax returns of HBI and CFB,
consolidated or otherwise, have been examined by and settled with the U.S.
Internal Revenue Service (the "IRS"), or the statute of limitations with respect
to such years has expired (and no waiver extending the statute of limitations
has been requested or granted), for all years through 1992. To the knowledge of
each of HBI or CFB, no federal income tax returns of HBI or CFB, consolidated or
otherwise, are currently under examination by the IRS or any state, local, or
foreign taxing authority. For the purpose of this Agreement, the term "tax"
(including, with correlative meaning, the terms "taxes" and "taxable") shall
include, except where the context otherwise requires, all federal, state, local
and foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy and other taxes,
duties or assessments of any nature whatsoever, together with all interest,
penalties and additions imposed with respect to such amounts.

(i) Certain Agreements. Except as set forth in the HBI
Disclosure Schedule as Schedule 3.1(i), and except for this Agreement, as of the
date hereof, neither

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HBI nor CFB is a party to any oral or written agreement not terminable on 30
days' or less notice or involving the payment of more than $10,000 per annum.

(j) Benefit Plans. (i) HBI has disclosed to FAC in
Schedule 3.1(j) of the HBI Disclosure Schedules and has delivered or made
available to FAC prior to the execution of this Agreement correct and complete
copies in each case of, all pension, retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership (including the ESOP),
severance pay, vacation, bonus, or other incentive plans, all other written
employee programs or agreements, all medical, vision, dental, or other health
plans, all life insurance plans, and all other employee benefit plans or fringe
benefit plans, including, without limitation, "employee benefit plans" as that
term is defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), currently or previously adopted, maintained by,
sponsored in whole or in part by, or contributed to by HBI or CFB for the
benefit of employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries and under which employees, retirees,
dependents, spouses, directors, independent contractors, or other beneficiaries
are eligible to participate (collectively, the "HBI Benefit Plans"). Any of the
HBI Benefit Plans which is an "employee welfare benefit plan," as that term is
defined in Section 3(1) of ERISA, or an "employee pension benefit plan," as that
term is defined in Section 3(2) of ERISA, is referred to herein as a "HBI ERISA
Plan."

(ii) HBI has delivered or made available to FAC prior to the
execution of this Agreement correct and complete copies of the following
documents: (a) all trust agreements or other funding arrangements for such HBI
Benefit Plans (including insurance contracts), and all amendments thereto, (b)
with respect to any such HBI Benefit Plans or amendments, all determination
letters, rulings, opinion letters, information letters, or advisory opinions
issued by the IRS, the United States Department of Labor, or the Pension Benefit
Guaranty Corporation after December 31, 1974, (c) annual reports or returns,
audited or unaudited financial statements, actuarial valuations and reports, and
summary annual reports prepared for any HBI Benefit Plan with respect to the
most recent three plan years, and (d) the most recent summary plan descriptions
and any modifications thereto.

(iii) The form of all HBI Benefit Plans is in compliance with
the applicable terms of ERISA, the Code, and any other applicable laws and such
plans have been operated in compliance with such laws and the written HBI
Benefit Plan documents. Each HBI ERISA Plan which is intended to be qualified
under Section 401(a) of the Code has received a current favorable determination
letter from the IRS evidencing compliance with the Tax Reform Act of 1986, and
HBI is not aware of any circumstances which will or could result in revocation
of any such favorable determination letter; provided, however, that such
a favorable determination letter regarding the tax-qualification of the ESOP can
be obtained from the IRS in a reasonable manner pursuant to a voluntary
application under the Employee Plans Closing Agreement Program established by
the IRS and described

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in Revenue Procedure 94-16, such letter covering the compliance of the ESOP with
the requirements of the Unemployment Compensation Amendments of 1992 and the
Omnibus Budget Reconciliation Act of 1993, and obtainable at a cost to HBI for
sanctions and expenses imposed by the IRS that does not exceed $10,000. Each
trust created under any HBI ERISA Plan has been determined to be exempt from
taxation under Section 501(a) of the Code and HBI is not aware of any
circumstance which will or could result in a revocation of such exemption. With
respect to each HBI Benefit Plan, no event has occurred which will or could give
rise to a loss of any intended tax consequence or to any tax under Section 511
of the Code. There is no material pending or threatened litigation or
administrative proceeding relating to any HBI Benefit Plan. Neither HBI, CFB
nor, to the knowledge of HBI, any fiduciary of an HBI Benefit Plan have engaged
in a transaction with respect to any HBI Benefit Plan that, assuming the taxable
period of such transaction expired as of the date hereof, could subject HBI or
CFB to a tax or penalty imposed by either Section 4975 of the Code or Section
502(l) of ERISA. The transaction contemplated hereunder will not result in the
assessment of a tax or penalty under Section 4975 of the Code or Section 502(l)
of ERISA.

(iv) Neither HBI, CFB, nor any of their affiliates have ever
sponsored or been liable for contributions to a plan subject to Title IV of
ERISA or to the funding requirements of Section 302 of ERISA or Section 412 of
the Code.

(v) HBI, CFB and their affiliates have complied with the
continuation coverage provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") with respect to all current employees and
former employees. HBI's procedures and sample notice documents for compliance
with COBRA are disclosed on Schedule 3.1(j).

(vi) Except as required by law, the consummation of the
transactions contemplated by this Agreement will not accelerate the time of
vesting, of payment, or increase the amount, of compensation due to any
employee, officer, former employee or former officer of HBI or CFB. There are no
contracts or arrangements providing for payments that could subject any person
to liability for tax under Section 4999 of the Code.

(vii) Full payment has been made of all amounts which are
required under the terms of each HBI Benefit Plan to have been paid as
contributions as of the last day of the most recent fiscal year of such HBI
Benefit Plan ended on or before the date of this Agreement. The assets of each
HBI Benefit Plan are sufficient to provide the benefits under such plan and are
also sufficient to provide all other benefits, vested (including benefits that
become vested due to the transactions contemplated under this Agreement) and
nonvested, accrued under such HBI Benefit Plan.

(viii) Except for the continuation coverage requirements under
COBRA, as set forth in Schedule 3.1(j)(viii) of the HBI Disclosure Schedules,
which shall contain the

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name of each person for which HBI or CFB provides COBRA continuation coverage
and shall also contain the date that such coverage terminates, neither HBI nor
CFB have any obligations or potential liability for benefits to employees or
other persons following termination of employment or retirement under any of the
HBI Benefit Plans that are "welfare benefit plans" described in Section 3(2) of
ERISA.

(ix) Except as required to comply with ERISA or to maintain
qualification under Section 401(a) of the Code, or as is expressly required
herein, neither HBI or CFB will amend, modify, or terminate any of the HBI
Benefit Plans without the express written consent of FAC, except that an
amendment to the ESOP may be adopted by HBI prior to the Effective Time, if,
prior to becoming effective, FAC has approved of the terms of such amendment.
Otherwise, none of the transactions contemplated under this Agreement will
result in an amendment, modification or termination of any of the HBI Benefit
Plans. Except as required under the provisions of any HBI Benefit Plan and
except as necessary to provide funding that is required to timely service any
contractual or loan obligations of an HBI Benefit Plan (e.g., the exempt
loan payments due under the ESOP), neither HBI nor CFB will make any
contributions to or with respect to any HBI Benefit Plan without the express
written consent of FAC.

(x) No oral or written representation or communication with
respect to any aspect of the HBI Benefit Plans has been made to current or
former employees of HBI or CFB prior to the date hereof which is not in
accordance with the written or otherwise preexisting terms and provisions of
such plans. All HBI Benefit Plan documents and annual reports or returns,
audited or unaudited financial statements, actuarial valuations, summary annual
reports, and summary plan descriptions issued with respect to the HBI Benefit
Plans are correct and complete and there have been no changes in the information
set forth therein.

(xi) There are no issues or disputes with respect to any HBI
Benefit Plans, or the administration thereof, currently between any trustee or
other fiduciary thereunder, HBI or CFB and any governmental agency, employee,
former employee or beneficiary.

(k) Subsidiaries. The only Subsidiary of HBI as of the
date of this Agreement is CFB. Neither HBI nor CFB owns any equity interest in
any other corporation, association, partnership or other entity. CFB is an
"insured depository institution" as defined in the FDIA and applicable
regulations thereunder. All of the shares of capital stock of CFB held by HBI
are fully paid and nonassessable and are owned by HBI free and clear of any
claim, lien or encumbrance except as disclosed on Schedule 3.1(k) of the HBI
Disclosure Schedules.

(l) Agreement with Bank Regulators. As of the date of this
Agreement, neither HBI nor CFB is a party to any written agreement or memorandum
of understanding with, or a party to any commitment letter or similar
undertaking to, or is subject to any

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condition imposed in writing, order or directive by, or is a recipient of any
extraordinary supervisory letter from, any Bank Regulator which restricts the
conduct of its business, or in any manner relates to its capital adequacy, its
credit policies or its management, nor has HBI or CFB been advised by any Bank
Regulator that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, condition,
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter or similar submission.

(m) Absence of Certain Changes or Events. Since June 30,
1995, HBI and CFB have not incurred any liability, except in the ordinary course
of their business consistent with their past practices, nor has there been any
change, nor has there occurred any event involving a prospective change, in the
business, assets, financial condition or results of operations of HBI or CFB
which has had, or is reasonably likely to have, a material adverse effect on
HBI.

(n) Vote Required. The affirmative vote of the holders
of not more than a majority of the issued and outstanding shares of HBI Common
Stock are the only votes of the holders of any class or series of HBI Capital
Stock necessary to approve this Agreement and the transactions contemplated
hereby.

(o) Properties. Except as disclosed in the HBI
Disclosure Schedules as Schedule 3.1(o), HBI or CFB (i) has good, clear and
marketable title to all the properties and assets which are reflected in the
latest audited consolidated balance sheet of HBI as being owned by HBI or CFB or
acquired after the date thereof, free and clear of all claims, liens, charges,
security interests or encumbrances of any nature whatsoever except statutory
liens securing payments not yet due and such imperfections or irregularities of
title or encumbrances as do not affect the use of the properties or assets
subject thereto or affected thereby or otherwise impair business operations at
such properties, and (ii) is the lessee of all leasehold estates which are
reflected in the latest audited consolidated financial statements of HBI or
acquired after the date thereof and is in possession of the properties purported
to be leased thereunder, and each such lease is valid without default thereunder
by the lessee or, to HBI's knowledge, the lessor.

(p) Ownership of FAC Common Stock. As of the date
hereof, neither HBI nor any of its affiliates or associates (as such terms are
defined under the Securities Exchange Act of 1934 (the "Exchange Act"), (i)
beneficially owns, directly or indirectly, or (ii) are parties to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of, in each case, shares of capital stock of FAC, which in the
aggregate, represent ten percent (10%) or more of the outstanding shares of

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capital stock of FAC entitled to vote generally in the election of directors
(other than trust account shares).

(q) Allowance for Possible Loan Losses. The allowance
for possible loan losses shown on the statement of financial condition of HBI
and CFB as of June 30, 1996, was, in the opinion of management of HBI,
consistent with applicable regulations and adequate in all material respects to
provide for all known and reasonably anticipated possible losses, on loans and
leases outstanding and accrued interest receivable on non-performing loans as of
June 30, 1996, and as of the Effective Time will be in the opinion of management
of HBI, consistent with applicable regulations and adequate in all material
respects to provide for all known and reasonably anticipated possible losses, on
loans and leases outstanding and accrued interest receivable on non-performing
loans as of the Effective Time.

(r) Certain Transactions with Affiliated Persons. Except
as disclosed in the HBI Disclosure Schedules as Schedule 3.1(r), there are no
transactions to which HBI or CFB was a party in which any officer or director of
HBI or CFB or any other entity controlled by, under common control with or in
control of HBI had a direct or indirect interest.

(s) Permissible Activities. Except as set forth in the
HBI Disclosure Schedules as Schedule 3.1(s), all of the business activities
conducted by HBI and CFB as of the date hereof are business activities in which
a bank holding company is permitted to engage under the BHC Act and Regulation Y
promulgated thereunder and all business activities conducted by HBI and CFB as
of the date hereof are business activities in which national banks are permitted
to engage under the rules and regulations of the OCC.

(t) Environmental Matters. Except as set forth in the HBI
Disclosure Schedules as Schedule 3.1(t) :

(i) The operations of HBI and CFB have been in the past and are
now in compliance in all material respects with all federal, state and local
laws, rules and regulations and other governmental restrictions relating to
pollution or protection of the environment or public or employee health and
safety (collectively, the "Environmental Laws") including, without limitation,
those relating to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et
seq. ("CERCLA"); the Resource Conservation and Recovery Act of 1976, 42
U.S.C. Section 6901 et seq. ("RCRA"), the Hazardous Materials
Transportation Act, as amended by the Solid Waste Disposal Act and as further
amended, 49 U.S.C. Section 6901 et seq.; the Federal Water

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Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq., the Safe
Water Drinking Act, 42 U.S.C. Section 300f-300j; the Clean Air Act, 42 U.S.C.
Section 7401 et seq.; and the Occupational Safety and Health Act.

(ii) Neither HBI nor CFB have been notified of an Environmental
Laws violation and are not otherwise aware that it is considered potentially
liable under the Environmental Laws; and neither HBI nor CFB have received any
requests for information or other correspondence (including, without limitation,
consent orders, consent decrees, judgments, orders, injunctions, or complaints)
by or from any governmental authority or private party concerning any site,
facility or operation relating to (x) the Environmental Laws, (y) environmental
protection and health or safety matters, or (z) any statutory or common law
theory of liability involving environmental or health and safety matters.

(iii) No use, disposal, releases, burial or placement of any
material regulated under or defined by any Environmental Law, including, without
limitation, asbestos (collectively, "Hazardous Materials") has occurred on, in,
at, under or about any of the property owned, leased or operated at any time by
HBI or CFB.

(iv) There has been no disposal, release, burial or placement of
Hazardous Materials on any real property now owned, leased or operated by HBI or
CFB which may result or has resulted in contamination of or beneath the property
owned, leased or operated at any time by HBI or CFB.

(v) All of the above-ground and underground storage tanks
presently on any real property owned, leased or operated by HBI or CFB have been
properly registered.

(vi) No audit or investigation has been conducted as to
environmental matters relating to any property owned, leased or operated by HBI
or CFB by any governmental agency.

(vii) There are no administrative, civil or criminal actions,
suits or proceedings, or demands, claims, notices or investigations (including,
without limitation, notices, demand letters or requests for information from any
environmental agency) instituted or pending, or threatened relating to the
liability of any properties owned or operated by HBI or CFB under any
Environmental Law.

(u) Charter Provisions and State Anti-Takeover Laws. HBI
and CFB have taken or will take all actions necessary so that the entering into
this Agreement and the consummation of the transactions contemplated hereby (i)
are exempt from any applicable

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state takeover law and (ii) do not and will not result in the grant of any
rights to any person under the charter, bylaws or other governing instrument of
HBI or CFB or restrict or impair the right of FAC to vote or otherwise to
exercise the rights of a shareholder with respect to shares of HBI or CFB that
may be acquired or controlled by FAC pursuant to this Agreement or the
consummation of the transactions contemplated hereby.

For purposes of this Section 3.1, with respect to HBI and CFB,
the term "knowledge" as used with respect to any person shall mean the knowledge
after due inquiry of the chairman, vice-chairman, president, chief or principal
financial officer, chief credit officer, general counsel, any executive
vice-president, any vice-president, and any assistant vice-president of HBI or
CFB. The term "person" shall mean a natural person or any legal, commercial, or
Governmental Entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company or
partnership, trust, business association, group acting in concert, or any person
acting in a representative capacity.

(v) Taxpayer Identification Numbers and Information
Returns. To HBI's and CFB's knowledge, all tax information returns have been
timely filed by HBI and CFB. Further, there have been no assessments or
penalties, as of the date of the Agreement or that are pending or, to their
respective knowledge, threatened, with respect to tax information returns.
Further, to HBI's and CFB's knowledge, each tax identification number relating
to an interest-bearing account at CFB has been obtained and is correct, and
where such tax identification number is missing or incorrect, HBI and CFB have
taken all necessary steps, pursuant to and in accordance with applicable
requirements under the Internal Revenue Code, to obtain or correct the relevant
information.

3.2. Representations and Warranties of FAC. FAC represents and
warrants to HBI as follows:

(a) Organization, Standing and Power. FAC is a Tennessee
corporation and a bank holding company registered under the BHC Act. FANB is a
national banking association and a wholly owned Subsidiary of FAC. Each of FAC
and FANB is a corporation or national bank duly organized, in good standing
under the laws of its jurisdiction of incorporation or organization, has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted, and is duly qualified and
in good standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary other than in such jurisdictions where the failure so to qualify would
not have a material adverse effect on FAC and FANB.

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(b) Capital Structure. (i) As of the date hereof, the
authorized capital stock of FAC consists of 50,000,000 shares of FAC Common
Stock $5.00 par value ("FAC Common Stock") and 2,500,000 shares of preferred
stock without par value (the "FAC Preferred"). As of the close of business on
September 30, 1996, 29,559,009 shares of FAC Common Stock were outstanding and
no shares of FAC Preferred Stock were outstanding.

(ii) As of the date hereof, no Voting Debt of FAC was issued or
outstanding. All outstanding shares of FAC capital stock are, and the shares of
FAC Common Stock (A) to be issued pursuant to or as specifically contemplated by
this Agreement and (B) when issued in accordance with this Agreement upon
exercise of the HBI Options, as set forth in Section 3(b)(ii) hereof will be
validly issued, fully paid and nonassessable and not subject to preemptive
rights.

(c) Authority. FAC has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. FANB has all requisite corporate power and authority to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of FAC. This
Agreement has been duly executed and delivered by FAC and constitutes a valid
and binding obligation of FAC, enforceable in accordance with its terms.

(d) SEC Documents. FAC has made available to HBI a true
and complete copy of each report, schedule, registration statement and
definitive proxy statement filed by FAC with the SEC (other than reports filed
pursuant to Section 13(d) or 13(g) of the Exchange Act) since December 31, 1995
(the "FAC SEC Documents"), which are all the documents (other than preliminary
material and reports required pursuant to Section 13(d) or 13(g) of the Exchange
Act) that FAC was required to file with the SEC since such date. As of their
respective dates, the FAC SEC Documents complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the SEC thereunder applicable to such FAC SEC
Documents. The consolidated financial statements of FAC included in the FAC SEC
Documents comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP (except as may be
indicated in the notes thereto or, in the case of the unaudited statements, as
permitted by Form 10-Q of the SEC or normal recurring year-end adjustments) and
fairly present the consolidated financial position of FAC and its

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consolidated Subsidiaries as at the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended.

(e) Absence of Certain Changes or Events. Except as
disclosed in the FAC SEC Documents filed prior to the date of this Agreement,
since December 31, 1995, there has not been any change or any event involving a
prospective change, in the business, assets, financial condition or results of
operations of FAC which has had, or is reasonably likely to have, a material
adverse effect on FAC.

(f) No Vote Required. Under Section 48-21-103 of the
TBCA, no vote of the stockholders of FAC is required in order to enter into this
Agreement or to consummate the Merger.

(g) Consideration. FAC has reserved or will reserve for
issuance sufficient shares of FAC Common Stock for issuance in the Merger; FAC
reserves the right to repurchase up to 100% of such number of shares prior to or
substantially concurrent with the consummation of the Merger pursuant to Rule
10b-18 of the SEC and in a manner which does not prohibit FAC from entering into
pooling transactions within two years from such repurchases.

ARTICLE IV

Covenants Relating to Conduct of Business

4.1 Certain Covenants of HBI and FAC. Without the prior
written consent of the other party, except as otherwise expressly contemplated
by this Agreement, prior to the Effective Time, HBI shall, and shall cause, CFB
to (a) operate its business only in the usual, regular, and ordinary course and
(b) preserve intact its business organizations and assets and maintain its
rights and franchises. Each of HBI and FAC shall take no action which would
materially (i) adversely affect the ability of any party to obtain any consents
required for the transactions contemplated hereby; (ii) adversely affect the
ability of any party to perform its covenants and agreements under this
Agreement in all material respects and to consummate the Merger; or (iii)
prevent or impede the transactions contemplated herein from qualifying as a
reorganization under Section 368 of the Code; provided, that the
foregoing shall not prevent FAC or any of its Subsidiaries from acquiring
additional assets or businesses or discontinuing or disposing of any of its
assets or businesses if such action is, in the judgment of FAC, desirable in the
conduct of the business of FAC and its Subsidiaries. Neither FAC nor HBI shall
intentionally take or

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cause to be taken any action, that would disqualify the Merger as a
"reorganization" within the meaning of Section 368(a) of the Code.

4.2 Additional Covenants of HBI. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, HBI covenants and agrees that it will not do or agree or commit to
do, or permit CFB to do or agree or commit to do, any of the following:

(a) amend the charter, bylaws, articles of association or other
governing instruments of HBI or CFB;

(b) incur, guarantee, or otherwise become responsible for, any
additional debt obligation or other obligation for borrowed money (other than
indebtedness between HBI or CFB) except in the ordinary course of the business
of HBI and CFB consistent with past practices, or impose or suffer the
imposition, on any share of capital stock held by HBI or CFB of any lien or
encumbrance or except to the extent such liens or encumbrances exist on the date
hereof, permit any such lien or encumbrance to exist;

(c) repurchase, redeem, or otherwise acquire or exchange,
directly or indirectly, any shares, or any securities convertible into any
shares, of the HBI Capital Stock or the capital stock of CFB, or declare or pay
any dividend or make any other distribution in respect of the HBI Capital Stock
or the capital stock of CFB except as specifically permitted by this Agreement;

(d) except for this Agreement, issue, sell, pledge, encumber,
authorize the issuance of, enter into any contract to issue, sell, pledge,
encumber, or authorize the issuance of, or otherwise permit to become
outstanding, any additional shares of HBI Common Stock or any other capital
stock of HBI or CFB, or any stock appreciation rights, or any option, warrant,
conversion, or other right to acquire any such stock, or any security
convertible into any such stock;

(e) adjust, split, combine, or reclassify any capital stock of
HBI or CFB or issue or authorize the issuance of any other securities in respect
of or in substitution for shares of HBI Capital Stock or the capital stock of
CFB or sell, lease, mortgage, or otherwise dispose of or otherwise encumber any
shares of capital stock of HBI or CFB or any assets thereof;

(f) acquire direct or indirect control over, or invest in equity
securities of, any person, other than in connection with foreclosures in the
ordinary course of business;

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(g) grant any increase in compensation or benefits to the
employees or officers of HBI or CFB, pay any bonus (except for previously
budgeted bonuses, including a bonus, payable based on salary through December
31, 1996, to Joseph H. Crabtree, Sr. in an amount not to exceed $98,000.00, in
the ordinary and customary course of business of HBI and CFB), enter into or
amend any severance agreements with officers of HBI or CFB, grant any increase
in fees or other increases in compensation or other benefits to directors of HBI
or CFB;

(h) enter into or amend any employment contract between HBI or
CFB and any person except for the termination of the employment agreement
between HBI and Joseph H. Crabtree, Sr. dated as of April 12, 1983, and amended
as of May 14, 1985, October 11, 1988, and May 15, 1990 ("Crabtree Employment
Agreement"), prior to the Closing Date;

(i) adopt any new employee benefit plan or program or make any
change in or to any existing employee benefit plans or programs of HBI or CFB
except as may be required by law, or make any discretionary matching
contributions or discretionary contributions to any employee benefit plan of HBI
or CFB;

(j) commence or appeal any litigation, settle any litigation
involving any liability of HBI or CFB for damages or property in excess of
$5,000 or involving any restrictions upon the operations of HBI or CFB, or
modify, amend, or terminate any material contract or waive, release, compromise,
or assign any material rights or claims except with the prior written consent of
FAC;

(k) enter into or terminate any material contract or make any
change in any material lease or contract except as specifically permitted by
this Agreement or except with the prior written consent of FAC;

(l) change its methods of accounting in effect at December 31,
1994, except as required by changes in GAAP concurred in by HBI's independent
auditors or except as specifically permitted by Section 5.11 hereof or change
its fiscal year; or

(m) issue any letters of credit or incur any unfunded
commitments other than in the ordinary course of business or acquire any
off-balance sheet or derivative financial instruments.

4.3 Adverse Changes in Condition. HBI agrees to give prompt
written notice promptly to FAC upon becoming aware of the occurrence or
impending occurrence

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of any event or circumstance which (i) is reasonably likely to have,
individually or in the aggregate, a material adverse effect on it or (ii) would
cause or constitute a material breach of any of its representations, warranties,
or covenants contained herein, and to use its reasonable efforts to prevent or
promptly to remedy the same.

4.4 Reports. HBI and CFB shall file all reports required
to be filed by it with Regulatory Authorities between the date of this Agreement
and the Effective Time and shall deliver to FAC copies of all such reports
promptly after the same are filed. If financial statements are contained in any
such reports filed with the Department or any other Regulatory Authority, such
financial statements will fairly present the consolidated financial position of
the entity filing such statements as of the dates indicated and the consolidated
results of operations, changes in shareholders' equity, and cash flows for the
periods then ended in accordance with GAAP (subject in the case of interim
financial statements to normal recurring year-end adjustments that are not
material). As of their respective dates, such reports filed with Regulatory
Authorities will comply in all material respects with applicable laws and will
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. Any financial statements contained in any other reports to another
Regulatory Authority shall be prepared in accordance with laws, rules and
regulations applicable to such reports.

4.5 Affirmative Covenants of HBI. HBI agrees to take or
cause to be taken commencing as soon as practicable following the execution of
this Agreement, and continuing thereafter as appropriate, the following
affirmative actions prior to the Effective Time:

(a) HBI agrees to cooperate and coordinate with FAC in good
faith to adopt and implement policies and procedures pursuant to action plans
acceptable to FAC with respect to CRA, HMDA, and compliance consistent with
those of FAC and FAC's Subsidiaries and in accordance with guidelines previously
provided by FAC to HBI.

(b) No later than fifteen (15) calendar days after the date of
this Agreement, HBI shall, at its cost and expense, obtain title opinions of the
real property of each branch owned by HBI or CFB and each branch leased by HBI
or CFB (the "HBI Properties"), and HBI shall promptly forward such title
opinions to FAC. If requested by FAC, HBI, at its cost and expense, agrees
promptly to obtain and provide to FAC a Phase I environmental assessment of any
or all of the HBI Properties. Such assessments shall include a recommendation as
to whether a Phase II assessment should be prepared. If any of the Phase I
assessments recommends the undertaking of a Phase II assessment, HBI

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agrees promptly to obtain and provide to FAC such Phase II assessments at HBI's
cost and expense. Should the cost of taking all remedial and corrective actions
and measures required by applicable law, health or safety concerns exceed an
amount which would have a material adverse effect on HBI, or if the cost of such
actions and measures cannot be reasonably estimated with any reasonable degree
of certainty that they would not exceed an amount which would have such an
effect on HBI, FAC shall have the right to terminate this Agreement upon written
notice to HBI.

(c) HBI agrees to maintain in effect all existing insurance
coverage including, without limitation, such coverage with respect to existing
or threatened litigation.

(d) Each of HBI and CFB agrees to use their respective best
efforts to ensure that any restrictive covenants against each of them or against
FAC, after the Effective Time, including, without limitation, noncompetition
agreements relating to the sale, marketing, or promotion of securities,
insurance products, mutual funds, and annuities, are terminated and of no force
and effect on or before the Closing Date.

(e) HBI shall use its best efforts to pay FANB all amounts owed
by HBI under the Loan Agreement between HBI and FANB dated as of September 7,
1990 and as amended from time to time thereafter.

(f) Each of HBI and CFB, and any director or officer thereof,
shall provide to FAC information requested by FAC concerning any agreement or
arrangement regarding HBI's or CFB's sale, marketing or promotion of
credit-based insurance, and, upon prior written notice to FAC, may terminate any
such agreement or arrangement.

(g) HBI shall terminate all agreements relating to the
redemption of HBI Capital Stock .

(h) HBI agrees to cooperate and coordinate with FAC in good
faith to ensure that there will be no liabilities to FAC, at and after the
Effective Time, arising from or related to any former subsidiary of HBI or CFB,
wholly owned or otherwise, that is no longer in existence as of the date of this
Agreement, whether by merger, sale, dissolution, administrative dissolution, or
divestiture.

(i) HBI agrees that it shall provide to the shareholders of HBI
Capital Stock all information and forms, including, without limitation, IRS Form
1099, necessary to reflect ownership, and the benefits attendant thereto, of
such stock as required by any Governmental Entity, in the manner or medium
required by such Governmental Entity or

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by FAC, or by FAC. Further, HBI agrees to use its best efforts to cooperate with
FAC, in a manner that FAC may require, to effectuate each of the provisions of
Section 2.2 hereof.

(j) HBI agrees that it shall provide FAC information regarding
the status of each contract to which HBI or CFB is a party at the time of the
Agreement that FAC may require.

4.6 No Solicitation. HBI will not authorize or permit
any officer, director, employee, investment banker, financial consultant,
attorney, accountant or other representative of HBI or CFB, directly or
indirectly, to initiate contact with any person or entity in an effort to
solicit, initiate or encourage any Competing Transaction (as defined in Article
VII herein). HBI will not authorize or permit any officer, director, employee,
investment banker, financial consultant, attorney, accountant or other
representative of HBI or CFB, directly or indirectly, (a) to cooperate with, or
furnish or cause to be furnished any non-public information concerning its
business, properties or assets to, any person or entity in connection with any
Competing Transaction; (b) to negotiate any Competing Transaction with any
person or entity; or (c) to enter into any agreement, letter of intent or
agreement in principle as to any Competing Transaction. HBI will promptly give
written notice to FAC upon becoming aware of any Competing Transaction.

4.7 Monthly Status Reports. Within ten (10) calendar
days after the end of each month commencing October 1, 1996, and continuing to
the Effective Time, HBI will provide to FAC a written description of (a) the
actions taken during the preceding month with respect to its compliance or
non-compliance with the terms of this Article IV, together with its then current
estimate of the out-of-pocket costs and expenses incurred or reasonably
accruable to accomplish the above items, (b) the status, as of the date of the
report, of all existing or threatened litigation, and (c) the status, as of the
date of the report, of CFB'S compliance with the Home Mortgage Disclosure Act
and shall also provide CFB's Loan Application Register ("LAR"). The monthly
status reports shall also include copies of minutes of meetings of HBI's and
CFB's Boards of Directors, and all committees thereof, occurring in the month
for which such report is made and shall also include all documents presented to
the directors of HBI and CFB related to such meetings.

ARTICLE V

Additional Agreements

5.1 Preparation of Offering Statement and/or Registration
Statement.

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(a) For purposes of (i) holding the HBI shareholders' meeting to
vote on the Merger and other matters contemplated herein, and (ii) registering
the FAC Common Stock in connection with the Merger with the SEC and with
applicable state securities Governmental Entities, the parties hereto shall
cooperate in the preparation of an offering statement and/or registration
statement, satisfying all applicable requirements of applicable state laws, and
of the Securities Act and the Exchange Act and the rules and regulations
thereunder (the "Statement").

(b) FAC shall furnish such information concerning FAC as is
necessary in order to cause the Statement, insofar as it relates to FAC, to
comply with Section 5.1(a) hereof. FAC agrees promptly to advise HBI if at any
time prior to the Effective Time any information provided by FAC in the
Statement becomes incorrect or incomplete in any material respect and to provide
the information needed to correct such inaccuracy or omission. FAC shall furnish
HBI with such supplemental information as may be necessary in order to cause the
Statement, insofar as it relates to FAC, to comply with Section 5.1(a).

(c) HBI shall furnish FAC with such information concerning HBI
as is necessary in order to cause the Statement, insofar as it relates to the
HBI, to comply with Section 5.1(a) hereof, including, without limitation, all
required audited financial statements for HBI and CFB, consolidated or
otherwise, prepared by an independent accountant who shall be satisfactory to
FAC. HBI agrees promptly to advise FAC if at any time prior to the Effective
Time any information provided by HBI in the Statement becomes incorrect or
incomplete in any material respect and to provide FAC with the information
needed to correct such inaccuracy or omission. HBI shall furnish FAC with such
supplemental information as may be necessary in order to cause the Statement,
insofar as it relates to HBI, to comply with Section 5.1(a).

(d) FAC and HBI, as the case may be, shall file the Statement
with all required Regulatory Authorities. FAC shall use all reasonable efforts
to have the Registration Statement declared effective under any applicable
securities laws as promptly as practicable after such filing. FAC shall also
take any action (other than qualifying to do business in any jurisdiction in
which it is now not so qualified) required to be taken under any applicable
state securities laws in connection with the issuance of FAC Common Stock in the
Merger, and HBI shall furnish all information concerning HBI and the holders of
HBI Common Stock as may be reasonably requested in connection with any such
action. FAC shall advise HBI promptly when the Statement has become effective
and of any supplements or amendments thereto, and FAC shall furnish HBI with
copies of all such documents.

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5.2 Letter of HBI's Accountant. HBI shall use all
reasonable efforts to cause to be delivered to FAC a consent letter of an
independent accountant (such accountant being satisfactory to FAC), dated a date
within two business days before the date on which the Registration Statement
shall become effective, in form and substance reasonably satisfactory to FAC,
and in scope and substance consistent with applicable professional standards for
letters delivered by independent public accountants in connection with
registration statements similar to Form S-3 or Form S-4.

5.3 Access to Information. Upon reasonable notice, HBI
shall (and shall cause CFB to) afford to the officers, employees, accountants,
counsel and other representatives of FAC, access, during normal business hours,
including each weekday which is not a legal holiday as defined by the state of
Tennessee during the period prior to the Effective Time, to all its properties,
books, contracts, commitments and records and, during such period, HBI shall
(and shall cause CFB to) make available to the other (a) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal or state securities
laws or federal or state banking laws (other than reports or documents which it
is not permitted to disclose under applicable law) and (b) all other information
concerning its business, properties and personnel as FAC may reasonably request.
No investigation by FAC shall affect the representations and warranties of HBI.
HBI agrees to work with FAC from the execution of this Agreement until the
Effective Time to develop plans, financial and otherwise, and to communicate
those plans as FAC deems appropriate, so as to afford maximum effectiveness in
the transition contemplated by this Agreement with respect to HBI's and CFB's
customers, employees, communities and shareholders.

5.4 HBI Stockholders' Meeting. HBI shall call a meeting
of its stockholders to be held as promptly as practicable on a mutually
agreeable date for the purpose of voting upon the approval of this Agreement.
HBI will, through its Board of Directors, recommend to its stockholders, and
each of the Directors has individually agreed to vote his or her shares for,
approval of this Agreement and all related matters necessary to the consummation
of the transactions contemplated hereby. HBI and FAC shall coordinate and
cooperate with respect to the timing of such meeting and HBI shall use its best
efforts to hold such meeting as soon as practicable after the date on which the
Statement becomes effective.

5.5 Legal Conditions to Merger. Each of HBI and FAC
shall, and shall cause its Subsidiaries to, use all reasonable efforts (i) to
take, or cause to be taken, all actions necessary to comply promptly with all
legal requirements which may be imposed on such party or its Subsidiaries with
respect to the Merger and to consummate the

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transactions contemplated by this Agreement and (ii) to obtain (and to cooperate
with the other party to obtain) any consent, authorization, order or approval
of, or any exemption by, any Governmental Entity or any other public or private
third party which is required to be obtained or made by such party or any of its
Subsidiaries in connection with the Merger, and the transactions contemplated by
this Agreement. Each of HBI and FAC will promptly cooperate with and furnish
information to the other in connection with any such burden suffered by, or
requirement imposed upon, any of them or any of their Subsidiaries in connection
with the foregoing. FAC shall, as soon as practicable following execution of
this Agreement, prepare and file with appropriate authorities, including
Regulatory Authorities, such documents as may be necessary in order to
consummate the transactions contemplated hereby.

5.6 Affiliates. No later than thirty (30) calendar days
prior to the HBI shareholders' meeting regarding the Merger, HBI shall deliver
to FAC a letter identifying all persons who are, at the time this Agreement is
submitted for approval to the stockholders of HBI, "affiliates" of HBI for
purposes of Rule 145 under the Securities Act. HBI shall use its best efforts to
cause each person named in the letter delivered by it to deliver to FAC fifteen
(15) calendar days prior to the shareholders' meeting a written "affiliates"
agreement, in the form attached hereto as Exhibit A, restricting the
disposition by such person of the FAC Common Stock to be received by such person
in the Merger.

5.7 Nasdaq Stock Market Listing. FAC shall use all
reasonable efforts to cause the shares of FAC Common Stock to be issued in the
Merger to be approved for listing on The Nasdaq Stock Market prior to the
Closing Date.

5.8 Transition of Certain Employee Benefit Plans; Employment
Matters.

(a) FAC and HBI shall cooperate after the execution of this
Agreement and the Plan of Merger so that, as soon as practicable after the
Effective Time, FAC will become the sponsor of the ESOP and will be empowered to
appoint successor trustees of the ESOP. It is the intention of FAC and HBI that,
as soon as practicable after the Effective Time, the ESOP be terminated or
otherwise amended in a manner so that (i) only employees of HBI prior to the
Effective Time shall be eligible to receive ESOP benefits, (ii) FAC will not be
required to make contributions to the ESOP, (iii) all expenses of administering
the ESOP that are legally chargeable to the ESOP shall be paid out of the assets
of the ESOP, and (iv) any shares of employer securities released from the
collateral suspense account of the ESOP, after repayment of the exempt loan owed
by the ESOP, will be allocated to participant accounts in a manner that is
permissible under Section 415 of the Code. FAC shall only be obligated to take
actions with respect to the ESOP that it determines to be consistent with ERISA
and the Code and that are otherwise prudent and

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appropriate, as advised by its legal counsel. Furthermore, FAC may condition any
such actions upon obtaining prior approval from the Internal Revenue Service or
the U.S. Department of Labor. After all amounts have been allocated to
participant accounts pursuant to Section 415 of the Code, FAC may, at its
discretion, (i) merge the assets of the ESOP with any defined contribution plan
of FAC in a manner that complies with Section 414(l) of the Code, or (ii) amend
the ESOP to permit distributions to participants pursuant to a termination of
the ESOP or another distribution event. Nothing herein shall require FAC to
register the shares of FAC stock held by the ESOP for resale or to provide for
distributions from the ESOP that are not registered for resale or otherwise
exempt from registration under federal and state securities laws.

(b) FAC will take appropriate actions so that any amounts that
cannot be allocated to participant accounts upon the repayment of the ESOP loan
because of the limits of Section 415 of the Code will be allocated to such
participant accounts in succeeding limitation years. FAC will not take any
action to terminate the ESOP until all such amounts have been so allocated to
participant accounts, except as necessary to comply with ERISA or the Code.

(c) HBI shall take all actions necessary to terminate all HBI
Benefit Plans that are "welfare benefit plans" within the meaning of Section
3(2) of ERISA as of or prior to the Effective Time. However, FAC and HBI may
otherwise agree on or before the Effective Time to cause any HBI Benefit Plan to
remain in effect for a period of time after the Effective Time in order to allow
for an orderly and reasonable transition of welfare benefits under the FAC
benefit plans.

(d) HBI, CFB, and the executive officers of HBI or CFB shall not
communicate with employees of HBI or CFB concerning the matters set forth in
this Section 5.8 except with the prior written consent of FAC. The actions
prescribed by this Section 5.8 are all contingent upon obtaining appropriate
determinations and rulings from the IRS and, if necessary, other governmental
agencies as to the effect of such actions on the qualification of the plans
involved and the compliance of such actions with other applicable law.

5.9 Expenses. Whether or not the Merger is consummated,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby and thereby shall be paid by the party
incurring such expense; provided that FAC and HBI shall equally share
all expenses connected with the printing and mailing of the Statement; and,
provided, further, that in the event a majority vote of the HBI
shareholders to approve the Merger is not obtained and that this Agreement is
terminated by FAC as a

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result thereof, HBI shall bear all of the expenses incurred by FAC in connection
with the preparation, printing, or mailing of the Offering Statement to HBI
shareholders, the registration of FAC Common Stock hereunder through the
Registration Statement or other out-of-pocket expenses incurred by FAC
hereunder.

5.10 Brokers or Finders. Each of FAC and HBI represents,
as to itself, its Subsidiaries and its affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement except
as contemplated by Section 6.2(b) hereof and except as disclosed in the
Statement, and each party agrees to indemnify the other party and hold the other
party

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harmless from and against any and all claims, liabilities or obligations with
respect to any other fees, commissions or expenses asserted by any person on the
basis of any act or statement alleged to have been made by such first party or
its affiliate.

5.11 HBI Accruals and Reserves. No later than five (5)
business days prior to the Closing Date, HBI shall review and, to the extent
determined necessary or advisable, consistent with GAAP, modify and change its
loan, accrual and reserve policies and practices (including loan classifications
and levels of reserves and accruals and reserves to (i) reflect the Surviving
Corporation's plans with respect to the conduct of HBI's business following the
Merger and (ii) make adequate provision and accrue for the costs and expenses
relating thereto including, without limitation, expenses relating to taxes,
stock option plans, employment agreements, severance benefits and split dollar
insurance premiums) so as to be applied consistently on a basis with those of
FAC. HBI shall also adjust loan loss and OREO reserves as may be appropriate,
consistent with GAAP and the accounting rules, regulations and interpretations
of the SEC and its staff, in light of the then anticipated post-Closing
disposition of certain HBI assets. HBI shall promptly send to FAC a summary of
the accruals, reserves, and provisions made pursuant to this Section 5.11.

5.12 Bank Merger. The parties hereto agree to use their
reasonable efforts between the date of this Agreement and the Closing Date to
take all actions necessary or desirable, including the filing of any regulatory
applications, so that the merger (the "Bank Merger") of CFB with and into FANB,
with FANB being the surviving depository institution, will occur as soon as
practicable after the Effective Time. As soon as practicable after the execution
and delivery of this Agreement, HBI shall cause CFB and FAC shall cause FANB to
enter into a Bank Plan of Merger, mutually agreeable to the parties and
consistent with the terms of this Agreement.

5.13 Additional Agreements. In case at any time after
the Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and franchises of
either of the Constituent Corporations, the proper officers and directors of
each party to this Agreement shall take all such necessary action.

5.14 Cooperation Generally. Between the date of this
Agreement and the Effective Time, FAC, HBI and their Subsidiaries shall use
their best efforts, and to take all actions necessary or appropriate, to
consummate the Merger and the other transactions contemplated by this Agreement.

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ARTICLE VI

Conditions Precedent

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

(a) HBI Stockholder Approval. This Agreement shall have
been approved and adopted by the affirmative vote of the holders of not less
than a majority of the issued and outstanding shares of HBI Common Stock
entitled to vote thereon and no more than five percent (5%) of the issued and
outstanding shares of HBI Common Stock eligible to vote are Dissenting Shares as
defined in Article II hereof. HBI shall, upon such approval and adoption,
immediately provide to FAC a written certificate attesting to the shareholders'
adoption and approval. In addition, if required by FAC, commencing three (3)
business days after the date of mailing the Statement to the holders of HBI
Common Stock and continuing to the date of the stockholders' meeting referred to
in Section 5.4 hereof, HBI shall forward to FAC, on a daily basis, (i) a written
report concerning the number and percentage of shares of HBI Common Stock voted
in favor of the Merger and the other transactions contemplated by this
Agreement, and (ii) the number and percentage of Dissenting Shares.

(b) Other Approvals. Other than the filing provided for
by Section 1.1, all authorizations, consents, orders or approvals of, or
declarations or filings with, and all expirations of waiting periods imposed by,
any Governmental Entity (all the foregoing, "Consents") which are necessary for
the consummation of the Merger, other than Consents the failure to obtain which
would have no material adverse effect on the consummation of the Merger or on
the Surviving Corporation and its Subsidiaries, taken as a whole, shall have
been filed, occurred or been obtained (all such permits, approvals, filings and
consents and the lapse of all such waiting periods being referred to as the
"Requisite Regulatory Approvals") and all such Requisite Regulatory Approvals
shall be in full force and effect. FAC shall have received all state securities
or blue sky permits and other authorizations necessary to issue the FAC Common
Stock in exchange for HBI Common Stock and to consummate the Merger.

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(c) Registration Statement. The Statement shall have
become effective under the Securities Act and shall not be the subject of any
stop order or proceedings seeking a stop order.

(d) No Injunctions or Restraints: Illegality. No
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition (an "Injunction") preventing the consummation of the Merger shall be
in effect, nor shall any proceeding by any Governmental Entity seeking any of
the foregoing be pending. There shall not be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to the
Merger which makes the consummation of the Merger illegal.

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

(a) Representations and Warranties. The representations
and warranties of HBI 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 as otherwise
contemplated by this Agreement, and FAC shall have received a certificate signed
on behalf of HBI by Joseph H. Crabtree, Sr., in his capacity as Director and
Secretary of HBI and as Chairman, President and Chief Executive Officer of CFB,
to such effect.

(b) HBI's Shareholders' Equity. As of the Closing Date
and continuing until the Effective Time, the shareholders' equity of HBI,
calculated on a consolidated basis in accordance with GAAP, shall not be less
than $6,100,000, exclusive of amounts accrued or paid by HBI relating to the
conversion of CFB's operations into those of FANB's, fees for HBI's legal and
other professional advisory services related to the consummation of the Merger
and the transactions related thereto in an amount not to exceed $300,000, the
preparation of the financial statements contemplated by Section 5.1(c) hereof,
and the one-time dividend permitted by Section 3.1(b)(iv) hereof to be paid by
HBI to holders of HBI Common Stock prior to Closing, and FAC shall have received
a certificate signed on behalf of HBI by its Chief Financial Officer and by
Joseph H. Crabtree, Sr., in his capacity as Director and Secretary of HBI and as
Chairman, President and Chief Executive Officer of CFB, to such effect.

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(c) Performance of Obligations of HBI. HBI shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and FAC shall have
received a certificate signed on behalf of HBI by Joseph H. Crabtree, Sr., in
his capacity as Director and Secretary of HBI and Chairman, President, and Chief
Executive Officer of CFB, to such effect.

(d) Consents Under Agreements. Prior to or on the
Closing Date, HBI shall have obtained the consent or approval of each person
(other than the Governmental Entities referred to in Section 6.1(b) hereof)
whose consent or approval, to HBI's knowledge after due inquiry, shall be
required in order to permit the succession by the Surviving Corporation pursuant
to the Merger to any obligation, right or interest of HBI or CFB under any loan
or credit agreement, note, mortgage, indenture, lease, license or other
agreement or instrument, and FAC shall have received a certificate on behalf of
HBI signed by Joseph H. Crabtree, Sr., in his capacity as Director and Secretary
of HBI and Chairman, President, and Chief Executive Officer of CFB, to such
effect.

(e) Opinions. FAC shall have received the opinion of the
law firm of Miller & Martin, counsel to HBI, dated as of the Closing Date, to
the effect that the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and that FAC
and HBI will each be a party to that reorganization within the meaning of
Section 368(b) of the Code.

FAC also shall have received the opinion of the law firm of
Miller & Martin, counsel to HBI, dated as of the Closing Date, in form
reasonably satisfactory to FAC, which shall cover the following matters:

(i) HBI is a corporation duly organized, validly existing and in
good standing under the laws of the State of Tennessee;

(ii) CFB is a Tennessee state chartered bank duly incorporated,
organized, validly existing, and in good standing under the laws of the State of
Tennessee;

(iii) The Agreement and Plan of Merger has been duly and validly
authorized, executed and delivered by HBI (assuming that this Agreement is a
binding obligation of FAC) constitutes a valid and binding obligation of HBI
enforceable in accordance with its terms, subject as to enforceability to
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and to the application
of equitable principles and judicial discretion;

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(iv) The execution and delivery of this Agreement and the
consummation of the Merger and the Bank Merger have been duly and validly
authorized by the shareholders of HBI Common Stock and the Boards of Directors
of HBI and CFB and no other corporate action is necessary to authorize the
Agreement or to consummate the Merger and the Bank Merger by HBI or CFB. No
consent or approval, which has not already been obtained, from any governmental
authority is required for execution and delivery by HBI of the Agreement or any
of the documents to be executed and delivered by HBI in connection therewith and
the consummation of the Merger and the Bank Merger;

(v) Immediately prior to the Effective Time (1) the authorized
and issued capital stock of HBI consists solely of 24,630 shares of HBI Common
Stock and no other shares of capital stock of HBI or CFB are issued or
outstanding; (2) there are no agreements or understandings by HBI with respect
to the voting, sale or transfer of any shares of capital stock of HBI or CFB
other than as contemplated by this Agreement; (3) CFB is wholly owned by HBI;
(4) except for the shares of HBI Common Stock and the Options for 9,000 shares
of HBI Class B Common Stock referred to in Section 3.1(a)(iii) hereof, there are
no shares of capital stock or securities convertible into or evidencing the
right to purchase shares of HBI Capital Stock outstanding; and (5) all shares of
HBI Common Stock outstanding were duly authorized, and nonassessable and were
free of the preemptive right of any shareholder;

(vi) Neither the execution, delivery and performance of this
Agreement by HBI nor the consummation of the Merger and the Bank Merger will (a)
conflict with or result in a breach of any provision of the respective charters,
articles of association or bylaws of HBI or CFB, (b) constitute or result in the
breach of any term, condition, provision of or constitute a default under, or
give rise to any right of termination, cancellation, or acceleration with
respect to, or result in the creation of any lien, charge or encumbrance upon,
any property or assets of HBI or CFB pursuant to any note, bond, mortgage,
indenture, license, agreement, lease or other instrument or obligation included
in the HBI Disclosure Schedules to which HBI or CFB is a party or by which HBI
or CFB is bound or to which any of their properties or assets may be subject, or
(c) violate any order, judgment or decree to which HBI or CFB is a party or by
which any of them or any of their properties or assets is bound;

(vii) Except as set forth in the HBI Disclosure Schedules, there
is no litigation, proceeding or governmental investigation pending or threatened
against HBI or CFB, their properties, businesses or assets that would reasonably
be expected to have, individually or in the aggregate, a material adverse effect
on HBI or CFB and neither HBI nor CFB has received any notification by any
regulatory agency asserting that it is not in

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compliance with any applicable laws, statutes or regulations or that seeks to
revoke any license, franchise, permit or other governmental authorization which
is necessary to conduct their businesses as presently conducted.

Such opinion (i) may expressly rely as to matters of fact upon
certificates furnished by appropriate officers of HBI, CFB or appropriate
government officials and (ii) shall incorporate, be guided by, and be
interpreted in accordance with, the Legal Opinion Accord of the American Bar
Association Section of Business Law (1991).

(f) Conversion of HBI Preferred Stock to HBI Common
Stock. Prior to the Closing Date, the one (1) issued and outstanding share
of HBI Preferred Stock shall have been converted into one (1) share of HBI
Common Stock.

(g) No Material Adverse Change. There shall have been no
material adverse change in the business, financial condition, prospects or
results of operations or prospects of HBI and CFB from that reflected in the HBI
Reporting Documents or the HBI Disclosure Schedules and HBI or CFB shall not
have suffered any substantial loss or damage to their respective properties, or
assets whether or not insured that would materially adversely affect or impair
the ability of HBI or CFB to conduct their business and operations except for
such changes that result from changes contemplated by this Agreement.

(h) Affiliate Agreements. FAC shall have received written
affiliates agreements as provided in Section 5.6 hereof.

(i) Accountant's Letter. FAC shall have received a
letter from an independent auditor, (such accountant being satisfactory to FAC)
dated as of the Closing Date, in form and substance satisfactory to FAC, stating
in effect in respect of HBI and CFB that: (1) they have examined the
consolidated financial statements of HBI as of December 31, 1995, and December
31, 1994, and for each of the years then ended and have made a limited review in
accordance with the standards established by the American Institute of Certified
Public Accountants of the latest available unaudited consolidated interim
financial statements of HBI available after December 31, 1995; (2) on the basis
of reading the latest available unaudited consolidated interim financial
statements of HBI; reading the minutes of the meetings of the stockholders and
the Board of Directors and committees thereof of HBI and CFB for the period from
December 31, 1995, to the Closing Date, and inquiries of officers of HBI and CFB
having responsibility for financial and accounting matters as to whether the
unaudited consolidated financial statements referred to in (1) above are stated
on a basis substantially consistent with that of the audited

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consolidated financial statements as of December 31, 1995, and December 31,
1994, and for the years then ended, nothing came to their attention which caused
them to believe that during the period from December 31, 1995, to the Effective
Time there were any changes in the capital stock or the long term debt of HBI
and CFB or any decreases in interest income, net earnings or net assets of HBI
have occurred or are expected to occur (except for changes or decreases
resulting from securities portfolio gains or losses, the effect of transaction
costs and other costs incurred upon consummation of the Merger); and (3) on the
basis of (i) reading the latest available interim consolidated financial
statements which are referred to above and (ii) inquiries of certain officials
of HBI and CFB having responsibility for financial and accounting matters
concerning whether the unaudited consolidated interim financial statements
referred to in (1) above are presented fairly, nothing came to their attention
which caused them to believe that the latest available consolidated interim
financial statements are not fairly presented in conformity with GAAP applied on
a basis consistent with that followed in the audited consolidated financial
statements dated December 31, 1995, and December 31, 1994, and for the years
then ended.

(j) FAC shall have received a certificate of the Secretary of
HBI certifying to FAC immediately prior to the Effective Time (1) the number of
shares of HBI Common Stock issued and outstanding; (2) that there are no shares
of HBI Class B Common Stock and HBI Preferred Stock issued and outstanding; (3)
that there are no options for HBI Common Stock outstanding; (4) the number of
Options for HBI Class B Common Stock outstanding; (5) that no other shares of
capital stock or securities convertible into or evidencing the right to purchase
or subscribe for any shares of HBI Capital Stock are outstanding and that there
are no other outstanding warrants, calls, subscriptions, rights, commitments,
stock appreciation rights, phantom stock or similar rights or any other
agreements of any character obligating HBI or CFB to issue any shares of capital
stock or securities convertible into or evidencing the right to purchase such
stock; and (6) 1000 shares of HBI Common Stock, no shares of HBI Class B Common
Stock, and no shares of HBI Preferred Stock are held by HBI in treasury or by
CFB.

(k) Consultant Agreement. The Consultant Agreement with
Joseph H. Crabtree, Sr., substantially in the form of Exhibit B,
attached hereto, shall been executed and delivered by Mr. Crabtree, and the
Crabtree Employment Agreement shall have been terminated by HBI pending
occurrence of the Effective Time, prior to or on the Closing Date, and shall be
of no force and effect on and after the effective time.

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(l) Final Monthly Status Report. At Closing, CFB shall
provide to FAC a statement, dated on and as of the Closing Date, concerning the
status of each of the items required by Section 4.7 hereof.

(m) ESOP. FAC shall be satisfied that the trustee of the
ESOP has fulfilled its obligations under ERISA and Section 409 of the Code with
respect to the voting of shares of HBI Common Stock held by the ESOP. FAC may
require that HBI provide reasonable evidence that the ESOP trustee has complied
with such requirements and FAC may inspect all (i) solicitation materials,
including, without limitation, "pass-through" voting instructions, provided by
the trustee to ESOP participants, and (ii) legal and expert opinions relied on
by the trustee in determining its response to the transactions contemplated in
the Plan of Merger. Further, the trustee of the ESOP shall have agreed to use
any proceeds received by the ESOP in connection with the Merger to prepay the
exempt loan owed to HBI by the ESOP as soon as practicable following the
Effective Time.
(n) Determination Letter. HBI shall, upon consultation
and prior written approval of FAC, have promptly taken all reasonable and
necessary actions to apply for a favorable determination letter from the IRS
with respect to tax-qualification of the ESOP pursuant to the relief available
under the Employee Plans Closing Agreement Program established by the IRS and
described in Revenue Procedure 94-16, such application having been accepted
under such program as "voluntary" and the relief requested thereunder
specifically addressing the failure of the ESOP to comply timely with the
provisions of the Omnibus Budget Reconciliation Act of 1993, and a favorable
determination letter covering the requirements of such Act and the Unemployment
Compensation Amendments of 1992 shall have been issued or shall be pending
issuance by the IRS with no additional action by HBI.

6.3 Conditions to Obligations of HBI. The obligation of HBI to
effect the Merger is subject to the satisfaction of the following conditions
unless waived by HBI:

(a) Representations and Warranties. The representations
and warranties of FAC 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 speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date, except as otherwise contemplated by
this Agreement, and HBI shall have received a certificate signed on behalf of
FAC by its Chairman, President, and Chief Executive Officer or a Vice Chairman
and by its Chief Accounting Officer to such effect.

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(b) Performance of Obligations of FAC. FAC shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and HBI shall have
received a certificate signed on behalf of FAC by its Chairman, President and
Chief Executive Officer or a Vice Chairman and by its Chief Accounting Officer
to such effect.

(c) Opinion. HBI shall have received the opinion of
Martin E. Simmons, Esq., General Counsel to FAC, dated as of the Closing Date,
in form reasonably satisfactory to HBI, which shall cover the following matters:

(i) FAC is a corporation duly organized, validly existing and in
good standing under the laws of the State of Tennessee;

(ii) FANB is a national banking association duly organized,
validly existing, and in good standing under the laws of the United States of
America;

(iii) The Agreement and Plan of Merger has been duly and validly
authorized, executed and delivered by FAC (assuming that this Agreement is a
binding obligation of HBI) constitutes a valid and binding obligation of FAC
enforceable in accordance with its terms, subject as to enforceability to
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and to the application
of equitable principles and judicial discretion;

(iv) The execution and delivery of this Agreement and the
consummation of the Merger and the Bank Merger have been duly and validly
authorized by the joint Board of Directors of FAC and FANB and no other
corporate action is necessary to authorize the Agreement or to consummate the
Merger and the Bank Merger by FAC or FANB. To the actual knowledge of such
counsel, no consent or approval, which has not already been obtained, from any
governmental authority is required for execution and delivery by FAC of the
Agreement or any of the documents to be executed and delivered by FAC in
connection therewith and the consummation of the Merger and the Bank Merger; and

(v) Immediately prior to the Effective Time (1) the authorized
capital stock of FAC consists of 50,000,000 shares of FAC Common Stock and
2,500,000 shares of FAC Preferred Stock; and there were sufficient shares of FAC
Common Stock reserved for issuance to HBI shareholders upon consummation of the
Merger; and the shares of FAC Common Stock to be issued to the holders of HBI
Common Stock and HBI Options pursuant hereto have been duly authorized and when
issued will be non-assessable.

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Such opinion (i) may expressly rely as to matters of fact upon
certificates furnished by appropriate officers of FAC, FANB or appropriate
government officials and (ii) shall incorporate, be guided by, and be
interpreted in accordance with, the Legal Opinion Accord of the American Bar
Association Section of Business Law (1991).

(d) No Material Adverse Change. There shall have been no
material adverse change in the business, financial condition, prospects or
results of operations or prospects of FAC from that reflected in the FAC SEC
Documents and FAC or FANB shall not have suffered any substantial loss or damage
to their respective properties, or assets whether or not insured that would
materially adversely affect or impair the ability of FAC or FANB to conduct
their business and operations taken as a whole.

ARTICLE VII

Termination and Amendment

7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
shareholders of HBI:

(a) by mutual written consent of FAC and HBI; or

(b) by either FAC or HBI if (i) the Merger shall not have been
consummated on or before April 30, 1997 (the "Termination Date"),
provided the terminating party shall not have breached in any material
respect its obligations under this Agreement in a manner that proximately
contributed to the failure to consummate the Merger by such date, (ii) any
governmental or regulatory body, the consent of which is a condition to the
obligations of FAC and HBI to consummate the transactions contemplated hereby or
by the Merger Plan, shall have determined not to grant its consent and all
appeals of such determination shall have been taken and have been unsuccessful,
or (iii) any court of competent jurisdiction in the United States or any State
shall have issued an order, judgment or decree (other than a temporary
restraining order) restraining, enjoining or otherwise prohibiting the Merger
and such order, judgment or decree shall have become final and nonappealable.

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(i) if any event shall have occurred as a result of which any
condition set forth in Sections 6.1 or 6.2 is no longer capable
of being satisfied;

(ii) if there has been a material breach by HBI of any
representation or warranty contained in this Agreement, or there
has been a breach of any of the covenants or agreements set
forth in this Agreement on the part of HBI;

(iii) If HBI (or its Board of Directors) shall have authorized,
recommended, proposed or publicly announced its intention to
enter into a Competing Transaction (as herein defined);

(iv) if the Board of Directors of HBI shall have withdrawn or
materially modified its authorization, approval or
recommendation to the stockholders of HBI with respect to the
Merger or this Agreement or shall have failed to make the
favorable recommendation required by Section 5.5; or

(v) as provided in Section 4.6(b).

(d) By HBI:

(i) if any event shall have occurred as a result of which any
condition set forth in Sections 6.1 or 6.3 is no longer capable
of being satisfied; or

(ii) if there has been a breach by FAC of any representation or
warranty contained in this Agreement which would have or would
be reasonably likely to have a material adverse effect on the
assets, liabilities, financial condition, results of operations,
business or prospects of FAC and FANB, taken as a whole, or
there has been a material breach of any of the covenants or
agreements set forth in this Agreement on the part of FAC.

For purposes of this Agreement, the term "Competing Transaction"
means any of the following involving HBI or CFB (other than the transactions
contemplated by this Agreement): (x) any merger, consolidation, share exchange,
business combination, or other similar transaction; (y) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 10% or more of the
HBI Capital Stock or assets of HBI in a single transaction or series of
transactions to the same person, entity or group; or (z) any public announcement
of a proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.

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7.2 Rights and Obligations Upon Termination. If this
Agreement is terminated as provided herein, each party will deliver all
documents, work papers, and other materials of any other party relating to the
transactions contemplated hereby, whether obtained before or after the execution
hereof, to the party furnishing the same including using its best efforts to
obtain and deliver all such documents, work papers and materials, except to the
extent previously delivered to third parties in connection with the transactions
contemplated hereby, and all information received by any party hereto with
respect to the business of any other party shall not at any time be used for the
advantage of, or disclosed to third parties by, such party to the detriment of
the party furnishing such information; provided, however, that
this Section 7.2 shall not apply to any documents, work papers, material, or
information which is a matter of public knowledge or which heretofore has been
or hereafter is published in any publication for public distribution or filed as
public information with any governmental agency.

7.3 Fees and Expenses. HBI acknowledges that FAC has
spent, and will be required to spend, substantial time and effort in examining
the business, properties, affairs, financial condition and prospects of HBI and
CFB, has incurred, and will continue to incur, substantial fees and expenses in
connection with such examination, the preparation of this Agreement and the
accomplishment of the transactions contemplated hereunder, and will be unable to
evaluate and, possibly, make investments in or acquire other entities due to the
limited number of personnel available for such purpose and the constraints of
time. Therefore, to induce FAC to enter this Agreement,

(a) If FAC terminates this Agreement pursuant to:

(i) Sections 7.1(c)(i) or (c)(ii) by reason of the failure to
meet any condition contained in Section 6.2(a) or (b) due to
HBI's knowing and intentional misrepresentation or knowing and
intentional breach of warranty or breach of any covenant or
agreement and within twelve (12) months from the date of
termination a Competing Transaction is consummated or HBI shall
have directly or indirectly solicited bids for a Competing
Transaction or shall have entered into an agreement or an
agreement in principle which if consummated would constitute a
Competing Transaction;

(ii) Section 7.1(c)(iv);

(iii) Section 7.1(c)(iii) and within twelve (12) months from the
date of termination a Competing Transaction is consummated or
HBI shall have

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entered into an agreement which if consummated would constitute
a Competing Transaction; or

(b) if HBI terminates this Agreement pursuant to Section 7.1(d)
because this Agreement did not receive the requisite vote of the HBI
stockholders and within twelve (12) months from the date of termination a
Competing Transaction is consummated or HBI shall have entered into an agreement
which if consummated would constitute a Competing Transaction; then HBI shall
pay to FAC a fee in the amount of $1.3 million (the "Fee"), which amount is
inclusive of the FAC Expenses, not as a penalty but as full and complete
liquidated damages. Any payment required pursuant to this Section 7.3 shall be
made no later than two business days after the date due and shall be made by
wire transfer of immediately available funds to an account designated by FAC. In
the event that FAC is entitled to the Fee, HBI shall also pay to FAC interest at
the rate of 6% per year on any amounts that are not paid when due, plus all
costs and expenses in connection with or arising out of the enforcement of the
obligation of HBI to pay the Fee or such interest.

7.4 Effect of Termination. Except for such provisions of
this Agreement which by their terms expressly survive the termination hereof and
the provisions of Sections 7.2, 7.3, and this Section 7.4, which shall survive
any termination of this Agreement, no other provision shall survive the
termination hereof. In the event of a termination of this Agreement pursuant to
Section 7.1, this Agreement shall forthwith become void and have no further
effect.

ARTICLE VIII

General Provisions

8.1 Nonsurvival of Representations, Warranties, and Agreements.
None of the representations, warranties and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for those agreements and covenants which by their terms apply or
are intended to be performed in whole or in part after the Effective Time.

8.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with prior telephonic confirmation) or mailed by registered or
certified mail or sent by a nationally recognized expedited courier (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):

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(a) if to FAC, to

First American Corporation
615 First American Center
Nashville, Tennessee 37237-0615
Attention: Denny Bottorff, Chairman and Chief Executive Officer

with a copy to

Martin E. Simmons, Esq.
Executive Vice President-Administration,
General Counsel and Secretary
606 First American Center
Nashville, Tennessee 37237-0606

and

(b) if to HBI, to

Hartsville Bancshares, Inc.
328 Broadway
Hartsville, TN 37738
Attention: Joseph H. Crabtree, Sr., Director and Secretary

with a copy to

Kathryn R. Edge, Esq.
Miller & Martin
Suite 1225
Suntrust Center
Nashville, TN 37219

8.3 Interpretation. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of or Exhibit or Schedule to 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. The phrases "the date of this
Agreement, "the date hereof" and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to October 11, 1996.

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8.4 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.

8.5 Entire Agreement; No Third Party Beneficiaries; Rights
of Ownership. This Agreement (including the documents and the instruments
referred to herein) (a) constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof, and (b) except as expressly provided
herein, is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder. The parties hereby acknowledge that, except as
hereinafter agreed upon in writing, no party shall have the right to acquire or
shall be deemed to have acquired shares of common stock of the other party
pursuant to the Merger until consummation thereof.

8.6 Governing Law; Choice of Forum. This Agreement shall
be governed and construed in accordance with the laws of the State of Tennessee,
without regard to any applicable conflicts of law. All matters arising out of
this Agreement and the transactions contemplated hereby shall be heard before a
federal or Tennessee state court with competent jurisdiction residing in
Davidson County, Tennessee.

8.7 Injunctive Relief; Limitations on Remedies. The
parties hereto acknowledge and agree that since a remedy at law for any breach
or attempted breach of the provisions hereof shall be inadequate, the parties
shall be entitled to specific performance and injunctive or other equitable
relief in case of any such breach or attempted breach, in addition to whatever
other remedies may exist at law. The parties hereto also waive any requirement
for the securing or posting of any bond in connection with the obtaining of any
such injunctive or other equitable relief. Each party further agrees that,
should any court or other competent authority hold any provision of this
Agreement or part hereof to be null, void or unenforceable, or order any party
to take any action inconsistent herewith or not to take any action required
herein, the other party shall not be entitled to specific performance of such
provision or part hereof or thereof or to any other remedy, including but not
limited to money damages, for breach hereof or thereof or of any other provision
of this Agreement or parts hereof as a result of such holding or order. This
provision is not intended to render null or unenforceable any obligation
hereunder that would be valid and enforceable if this provision were not in this
Agreement.

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8.8 Publicity. Except as otherwise required by law, HBI
shall not, and shall not permit CFB to, issue or cause the publication of any
press release or other public announcement with respect to the transactions
contemplated by this Agreement without the prior written consent of FAC.

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

8.10 Consents. For purposes of any provision of this
Agreement requiring, permitting or providing for the consent of FAC or HBI, the
written consent of the Chief Executive Officer of FAC or the President of CFB,
as the case may be, shall be sufficient to constitute such consent.

8.11 Disclosures. No fact or event shall be deemed to
have been disclosed by one party to the other party for purposes of this
Agreement unless such fact or event is disclosed in a writing delivered to such
party.

IN WITNESS WHEREOF, FAC and HBI have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of October
11, 1996.

FIRST AMERICAN CORPORATION

BY: /s/ Dennis C. Bottorff
-------------------------------------
DENNIS C. BOTTORFF
CHAIRMAN AND CHIEF EXECUTIVE OFFICER

ATTEST:

/s/ Mary Neil Price
- -----------------------------

Title: EVP and Assistant Secretary
----------------------------

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HARTSVILLE BANCSHARES, INC.

BY: /s/ Joseph H. Crabtree, Sr.
-----------------------------------
JOSEPH H. CRABTREE, SR.
DIRECTOR AND SECRETARY

ATTEST:

/s/ Joyce Mungle
- --------------------------------

Title: CFO
--------------------------

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<PAGE> 132

EXHIBIT A

, 1996
-----------------

FIRST AMERICAN CORPORATION
615 First American Center
Nashville, Tennessee 37237-0615

Ladies and Gentlemen:

1. I have been advised that I might be considered to be an "affiliate," as
that term is defined for purposes of paragraphs (c) and (d) of Rule 145 ("Rule
145") promulgated by the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Securities Act"), of
Hartsville Bancshares, Inc., a Tennessee corporation ("HBI").

2. Pursuant to an Agreement and Plan of Merger dated October 11, 1996 (the
"Agreement"), among First American Corporation, a Tennessee corporation ("FAC")
and HBI, it is contemplated that HBI will merge with and into FAC and that all
of the outstanding common stock, $10.00 par value, of HBI ("HBI Common Stock")
will be converted into common stock, par value $5.00 per share, of FAC ("FAC
Commmon Stock") as set forth in the Agreement (the "Merger"). In connection with
the Merger, I will receive upon conversion of the shares of HBI Common Stock
then owned by me shares of FAC Common Stock pursuant to the provisions of the
Agreement.

3. I hereby agree as follows:

I will not offer to sell, transfer or otherwise dispose of any of the
shares of FAC Common Stock distributed to me pursuant to the Merger (the
"Stock") except (a) in compliance with the applicable provisions of Rule
145, (b) in a transaction that is otherwise exempt from the registration
requirements of the Securities Act, or (c) in an offering registered under
the Securities Act.

4. I consent to the endorsement of the certificates for the Stock to be
issued to me pursuant to the Merger with a restrictive legend which will read
substantially as follows:

"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act of 1933,
as amended (the "Act"), applies,

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<PAGE> 133

and may be sold or otherwise transferred only in compliance with the
limitations of such Rule 145, or upon receipt by First American Corporation
of an opinion of counsel reasonably satisfactory to it that some other
exemption from registration under the Act is available, or pursuant to a
registration statement under the Act.

FAC's transfer agent shall be given an appropriate stop transfer order and
shall not be required to register any attempted transfer of the shares of the
Stock, unless the transfer has been effected in compliance with the terms of
this letter agreement.

5. It is understood and agreed that this letter agreement shall terminate
as to shares of Stock and be of no further force and effect and the legend set
forth in 3 above shall be removed by delivery of substitute certificates without
such legend, and the related stop transfer of restrictions shall be lifted
forthwith, if (i) any such shares of Stock shall have been registered under the
Securities Act for sale, transfer or other disposition by me or on my behalf and
are sold, trasferred or otherwise disposed of, or (ii) the shares of Stock are
sold in accordance with the provisions of paragraphs (c), (e), (f), and (g) of
Rule 144 promulgated under the Securities Act, or (iii) I am not at the time an
affiliate of FAC and have been the beneficial owner of the Stock for at least
two years (or such other period as may be prescribed by the Securities Act and
the rules and regulations promulgated thereunder) and FAC has filed with the
Commission all of the reports it is required to file under the Securities
Exchange Act of 1934, as amended, during the preceding twelve months, or (iv) I
am not and have not been for at least three months an affiliate of FAC and have
been the beneficial owner of the Stock for at least three years (or such period
as may be prescribed by the Securities Act and the rules and regulations
promulgated thereunder), or (v) FAC shall have received a letter from the staff
of the Commission, or an opinion of counsel reasonably acceptable to FAC, to the
effect that the stock transfer restrictions and the legend are not required.

6. I hereby agree that, for a period of two (2) years following the
effective date of the Agreement, if I transfer the Stock in a transaction other
than a registered public offering or a sale pursuant to Rule 145, I will obtain
an agreement similar to this from each transferee.

7. I have carefully read this letter agreement and the Agreement and have
discussed their requirements and other applicable limitations upon my ability to
offer to sell, transfer or otherwise dispose of shares of Stock, to the extent I
felt necessary, with my counsel or counsel for HBI.

----------------------------------
NAME

-----------------------------
PRINT NAME

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<PAGE> 134

Agreed and accepted this day
------
of , 1996 by
--------------
FIRST AMERICAN CORPORATION

By:
--------------------------------

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<PAGE> 135

EXHIBIT B

CONSULTING AGREEMENT

This CONSULTING AGREEMENT (the "Agreement") dated as of ______, 1996 by and
between First American National Bank, having its principal offices in Nashville,
Tennessee (hereinafter "FANB") and Joseph H. Crabtree, Sr. (hereinafter
"Consultant");

W I T N E S S E T H:

WHEREAS, FANB is regularly engaged in the business of banking and the
providing of financial services; and

WHEREAS, Hartsville Bancshares, Inc. ("HBI") has merged with and into First
American Corporation ("FAC") and HBI's wholly-owned subsidiary, CommunityFIRST
Bank ("CFB"), has merged with and into FANB; and

WHEREAS, Consultant formerly served as a Director and Secretary of HBI and
as the Chairman, President and CEO of CFB and was a principal shareholder of HBI
and has significant experience and expertise in the businesses of banking and
providing of financial services; and

WHEREAS, FANB wishes to engage Consultant to provide his assistance and
services to FANB for their mutual benefit and profit; and

WHEREAS, Consultant is willing to provide assistance and services to FANB
on the terms set out herein.

NOW, THEREFORE, premises considered, in consideration of the mutual
covenants set out below, and for other good and valuable consideration, the
receipt and sufficiency of which are acknowledged, the parties hereto intending
to be legally bound agree as follows:

1. Engagement. FANB hereby retains Consultant for a
term commencing on the date hereof and ending on _____ 1, 2002 (the "Term") on
the terms and conditions set out in this Agreement; provided, however,
that this Agreement shall be of no force and effect until the occurence of the
Effective Time of the merger of HBI with and into FAC pursuant to the Agreement
and Plan of Merger by and between FAC and HBI dated as of October 11, 1996.

2. Services. Throughout the Term and in a manner
commensurate with his previous position with CFB, Consultant undertakes to
provide his personal advice and counsel to FANB and/or its affiliates, including
without limitation, FAC, in connection with the business of banking and
financial services. Specifically, Consultant agrees to provide his advice and
counsel to FANB in connection with the ongoing operations of CFB as one or more
branches of FANB.

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Consultant further agrees to perform certain duties in respect to the transition
of CFB into one or more branches of FANB, to assist in maintaining and
developing customer relationships, as well as Board, employee and community
relationships, particularly including those originating in Trousdale and Sumner
Counties, and Middle Tennessee in general, and such other projects as may from
time to time be identified by FANB. Such duties may include, without limitation,
counsel and advice in connection with acquisitions or potential acquisitions to
be made by FANB or FAC and/or their affiliates, and, if requested, service on
one or more Advisory Boards of FANB. Consultant also agrees to serve in such
additional capacities as may be mutually agreed between Consultant and FANB.
Consultant shall provide up to an average of twenty-four (24) hours of service
per month for the first six (6) calendar months of the Term, and, thereafter,
shall provide up to an average of twelve (12) hours of service per month for the
remainder of the Term. In no event shall Consultant's performance under this
Agreement be based upon the performance, profitability or deposits of FAC, FANB,
or with regard to the converted operations of CFB as one or more branches of
FANB.

3. Scope of Service. The duties and obligations of Consultant
under this Agreement are neither exclusive nor full-time. Subject to the
provisions of Section 7 hereof, Consultant shall be free to pursue and conduct
all other business activities.

4. Remuneration and Insurance.

(a) In consideration of the services to be rendered by
Consultant pursuant to this Agreement, FANB shall pay Consultant annual fees of
Two Hundred Twenty-Five Thousand Dollars ($225,000.00). FANB shall pay one
twelfth (1/12) of such annual fees to Consultant monthly, on or before the last
day of each calendar month, throughout the Term. In addition, FANB shall pay
Consultant a one-time signing bonus upon execution of this Agreement equal to
Two Hundred Fifty Seven Thousand Dollars ($257,000.00). Consultant agrees that
he will not exercise any of the HBI Options prior to the Effective Time, as each
of those terms are defined in the Agreement and Plan of Merger by and between
FAC and HBI dated as of October 11, 1996. FANB shall also reimburse Consultant
for his reasonable and appropriate out-of-pocket travel and business expenses
incurred in rendering services hereunder in accordance with FANB's policies and
procedures relating to the reimbursement of such expenses.

(b) FANB agrees to provide access to health/major medical
insurance coverage substantially comparable to such insurance provided to FANB's
employees, at the expense of the Consultant, to the Consultant and the person
who is Consultant's spouse at the time of this Agreement (namely, Mary Chappell
Crabtree) until each of the Consultant or Consultant's spouse respectively
reaches the age of 65.

5. Termination. This Agreement, the Term hereof, and FANB's
duty to pay Consultant the remuneration set out herein may be terminated:

a. Upon the written mutual agreement of Consultant
and FANB;

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b. For Cause, as that term is defined herein, but
only at the election of FANB. For these purposes, "Cause" shall mean a good
faith determination by the Board of Directors of FANB that (i) Consultant has
been convicted of a crime involving fraud, theft, embezzlement, or other felony,
(ii) Consultant knowingly or intentionally has breached any of the material
terms of this Agreement, or (iii) Consultant has committed a material violation
of any laws and/or regulations applicable to FANB and/or its affiliates; or

(c) By FANB upon the death or total disability of
Consultant; provided, that in the event of the death or disability of Consultant
prior to the expiration of the Term, FANB agrees to pay to Consultant's estate
or designated beneficiary, as the case may be, the annual fee as provided in
Section 4 above through the end of the Term and that FANB's obligation as set
forth in Paragraph 4(b) hereof shall not terminate in the case of the death or
disability of the Consultant.

6. Confidential Information. Consultant acknowledges
that in the course of his engagement by FANB he will have access to confidential
proprietary information and data concerning the business of FANB and its
affiliates, collectively, the "Information", which FANB desires to protect.
Consultant understands that the Information, to the extent not otherwise
published or known generally, is confidential and proprietary, and agrees not to
reveal such Information to persons outside FANB; provided, however, that
Consultant may reveal, utilize, and otherwise employ the Information in any
manner required by law or as may be necessary in carrying out his duties
hereunder. If this Agreement is terminated for any reason, the obligations
contained in this Section 6 shall survive forever such termination.

7. Restrictions. During the Term of this Agreement and
for a period of one (1) year thereafter, Consultant shall not, directly or
indirectly, participate or be actively involved in, own, manage, operate,
control or participate in the ownership, management, operation or control of, or
be connected as an officer, employee, partner, director or otherwise with, or
have any financial interest in, or aid or assist anyone else in the conduct of,
any business which is in competition with FANB, FAC, or any subsidiary of either
FAC or FANB, in any geographic area where such business is now or hereafter
conducted; provided, that passive ownership of one percent (1%) or less
of the outstanding voting stock of any publicly held or publicly traded
corporation or that passive ownership of five percent (5%) or less of the
outstanding voting stock of any non-publicly held or non-publicly traded
corporation shall not constitute a violation hereof.

8. Entire Agreement. This Agreement sets forth the
entire understanding between Consultant and FANB with respect to the subject
matter hereof. There are no covenants, agreements, understandings,
representations or warranties, oral or written, between Consultant and FANB
relating to the subject matter of this Agreement other than those set forth
herein.

9. Waiver. No waiver of any right or remedy under any term of
this Agreement shall in any event be deemed to apply to any subsequent default
under the same or any other term contained herein.

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10. Severability. If any term or provision of this
Agreement shall be held invalid or unenforceable, the remainder of this
Agreement, shall be construed in all respects as if such invalid or
unenforceable term or provision were omitted. If it is determined that any term
of this Agreement is uneforceable because of the duration or the geographic
scope of this term, the duration or geographic scope of such term shall be
reduced to the maximum time and geographic scope permitted by applicable law,
and as so reduced, such term shall then be enforced.

11. Notices. Any notice or other communication required
or permitted to be given under this Agreement shall be in writing and deemed to
be properly given when delivered in person or three days after being sent by
certified or registered United States mail, return receipt required, postage
prepaid, addressed:

If to Consultant:

Joseph H. Crabtree, Sr.
340 River Street
Hartsville, Tennessee 37074

If to FANB:

First American National Bank
First American Center
Nashville, Tennessee 37237
Attn: President

with a copy to:

First American National Bank
First American Center
Nashville, Tennessee 37237
Attn: General Counsel

Either party may change his or its address for notices hereunder from time to
time in the manner set forth above.

12. Joint Preparation. This Agreement is to have been
prepared jointly by Consultant and FANB, and any uncertainty or ambiguity
existing herein shall not be interpreted against either party, but shall be
interpreted according to the rules of interpretation for arms-length agreements.

13. Rules of Construction. Unless the context otherwise
requires, words in the singular number include the plural, and in the plural
include the singular, words of the masculine

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gender include the feminine and the neuter, and when the sense so indicates,
words of the neuter gender may refer to any gender. The names of the parties,
the date, and the recitals set out above written are all a part of this
Agreement. The captions and section numbers appearing in this Agreement are
inserted only as a matter of convenience; they do not define, limit, construe,
or describe the scope or intent of the provisions of this Agreement.

14. Counterparts. This Agreement may be executed in any number
of counterparts, all of which shall constitute one and the same instrument, and
either party hereto may execute this Agreement by signing one or more
counterparts.

15. Actions Contrary to Law. Nothing contained in this
Agreement shall require Consultant or FANB to engage in any conduct or perform
any act contrary to law.

16. Costs. In the event of a dispute between Consultant
and FANB involving the terms of this Agreement which results in the filing of
suit, the prevailing party shall be paid and reimbursed by the other for all
costs and expenses, including all defense costs, investigation costs, and
reasonable attorneys' fees, paid or incurred by such prevailing party in
connection with such dispute.

17. Choice of Law, Jurisdiction, Venue. This Agreement
is entered into and is intended to be performed in the State of Tennessee and
shall be governed by the laws of this State. Any action, claim, or dispute
relating to the terms of this Agreement shall be brought in the appropriate
state or federal court physically located in Tennessee.

18. Amendment. This Agreement may be modified or amended only
upon the written agreement of Consultant and FANB.

19. Independent Contractor. The parties hereto
acknowledge that Consultant will be an independent contractor of FANB retained
to perform the services described herein, and that, as such, FANB shall not be
responsible for the withholding of income taxes, FICA or other taxes. The
parties hereto further acknowledge that Consultant will not be deemed an
employee of FANB for any reason and that Consultant will not be entitled to
participate in or receive benefits under any employee benefit plans available to
employees of FANB.

20. Assignment. This Agreement shall be binding upon, inure to
the benefit of and be enforceable by each of FANB and its successors and
assigns.

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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first mentioned above.

FIRST AMERICAN NATIONAL BANK

BY:
-----------------------------
ATTEST:
---------------------
TITLE:
--------------------------

CONSULTANT

ATTEST:
--------------------- ---------------------------------
JOSEPH H. CRABTREE, SR.

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APPENDIX B

TENNESSEE CODE ANNOTATED

TITLE 48. CORPORATIONS AND ASSOCIATIONS
FOR-PROFIT BUSINESS CORPORATIONS
CHAPTER 23. DISSENTERS' RIGHTS

PART 1.

RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES

48-23-101. DEFINITIONS

As used in this chapter, unless the context otherwise requires:

(1) "Beneficial shareholder" means the person who is a
beneficial owner of shares held by a nominee as the record shareholder;

(2) "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;

(3) "Dissenter" means a shareholder who is entitled to dissent
from corporate action under Section 48- 23-102 and who exercises that
right when and in the manner required by part 2 of this chapter;

(4) "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;

(5) "Interest" means interest from the effective date of the
corporate action that gave rise to the shareholder's right to dissent
until the date of payment, at the average auction rate paid on United
States treasury bills with a maturity of six (6) months (or the closest
maturity thereto) as of the auction date for such treasury bills
closest to such effective date;

(6) "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; and

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

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48-23-102. RIGHT TO DISSENT

(a) A shareholder is entitled to dissent from, and obtain payment of
the fair value of the shareholder's 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:

(A) If shareholder approval is required for the
merger by Section 48-21-104 or the charter and the shareholder
is entitled to vote on the merger; or

(B) If the corporation is a subsidiary that is merged
with its parent under Section 48-21-105;

(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 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;

(4) An amendment of the charter that materially and adversely
affects rights in respect of a dissenter's shares because it:

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

(B) 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;

(D) 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 of other
securities with similar voting rights; or

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(E) Reduces the number of shares owned by the
shareholder to a fraction of a share, if the fractional share
is to be acquired for cash under Section 48-16-104; or

(5) Any corporate action taken pursuant to a shareholder vote
to the extent the charter, 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 the
shareholder's shares under this chapter may not challenge the corporate action
creating the shareholder's entitlement unless the action is unlawful or
fraudulent with respect to the shareholder or the corporation.

(c) Notwithstanding the provisions of subsection (a), no shareholder
may dissent as to any shares of a security which, as of the date of the
effectuation of the transaction which would otherwise give rise to dissenters'
rights, is listed on an exchange registered under Section 6 of the Securities
Exchange Act of 1934, as amended, or is a "national market system security," as
defined in rules promulgated pursuant to the Securities Exchange Act of 1934, as
amended.

48-23-103. DISSENT BY NOMINEES AND BENEFICIAL OWNERS

(a) A record shareholder may assert dissenters' rights as to fewer than
all the shares registered in the record shareholder's name only if the record
shareholder 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 the record shareholder asserts dissenters' rights.
The rights of a partial dissenter under this subsection are determined as if the
shares as to which the partial dissenter dissents and the partial dissenter's
other shares were registered in the names of different shareholders.

(b) A beneficial shareholder may assert dissenters' rights as to shares
of any one (1) or more classes held on the beneficial shareholder's behalf only
if the beneficial shareholder:

(1) 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) Does so with respect to all shares of the same class of
which the person is the beneficial shareholder or over which the person
has power to direct the vote.

48-23-201. NOTICE OF DISSENTERS' RIGHTS

(a) If proposed corporate action creating dissenters' rights under
Section 48-23-102 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.

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(b) If corporate action creating dissenter' rights under Section
48-23-102 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 Section
8-23-203.

48-23-202. NOTICE OF INTENT TO DEMAND PAYMENT

(a) If proposed corporate action creating dissenters' rights under
Section 48-23-102 is submitted to a vote at a shareholder's meeting, a
shareholder who wishes to assert dissenters' rights must:

(1) Deliver to the corporation, before the vote is taken,
written notice of the shareholder's intent to demand payment for the
shareholder's shares if the proposed action is effectuated; and

(2) Not vote the shareholder's shares in favor of the proposed
action. No such written notice of intent to demand payment is required
of any shareholder to whom the corporation failed to provided the
notice required by Section 48-23-101.

(b) A shareholder who does not satisfy the requirements of subsection
(a) is not entitled to payment for the shareholder's shares under this chapter.

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48-23-203. DISSENTERS' NOTICE

(a) If proposed corporate action creating dissenters' rights under
Section 48-23-102 is authorized at a shareholders' meeting, the corporation
shall deliver a written dissenters' notice to all shareholders who satisfied the
requirements of Section 48-23-202.

(b) The dissenters' notice must be sent no later than ten (10) days
after the corporate action was authorized by the shareholders of effectuated,
whichever is the first to occur, 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
principal terms of the proposed corporate action and requires that the
person asserting dissenters' rights certify whether or not the person
asserting dissenters' rights 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 one (1) nor more that
two (2) months after the date the subsection (a) notice is delivered;
and

(5) Be accompanied by a copy of this chapter if the
corporation has not previously sent a copy of this chapter to the
shareholder pursuant to Section 48-23-201.

48-203-204. DUTY TO DEMAND PAYMENT

(a) A shareholder sent a dissenters' notice described in Section
48-23-203 must demand payment, certify whether the shareholder acquired
beneficial ownership of the shares before the date required to be set forth in
the dissenters' notice pursuant to Section 48-23-203(B)(3), and deposit the
shareholder's certificates in accordance with the terms of the notice.

(b) The shareholder who demands payment and deposits the shareholder's
share certificates under subsection (a) retains all other rights of a
shareholder until these rights are canceled or modified by the effectuation of
the proposed corporate action.

(c) A shareholder who does not demand payment or deposit the
shareholder's share certificates where required, each by the date set in the
dissenters' notice, is not entitled to payment for the shareholder's shares
under this chapter.

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(d) A demand for payment filed by a shareholder may not be withdrawn
unless the corporation with which it was filed, or the surviving corporation,
consents thereto.

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48-23-205. SHARE RESTRICTIONS

(a) The corporation may restrict the transfer of uncertificated shares
from the date the demand for their payment is received until the proposed
corporate action is effectuated or the restrictions released under Section 48-
23-207.

(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are canceled or modified by the effectuation of the proposed corporate
action.

48-23-206. PAYMENT

(a) Except as provided in Section 48-23-208, as soon as the proposed
corporate action is effectuated, or upon receipt of a payment demand, whichever
is later, the corporation shall pay each dissenter who complied with Section
48-23-204 the amount the corporation estimates to be the fair value of each
dissenter's 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 that 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 corporation's 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 Section 48-23-209; and

(5) A copy of this chapter if the corporation has not
previously sent a copy of this chapter to the shareholder pursuant to
Section 48-23-201 or Section 48-23-203.

48-23-207. FAILURE TO TAKE ACTION

(a) If the corporation does not effectuate the proposed action that
gave rise to the dissenters' rights within two (2) months 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.

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(b) If, after returning deposited certificates and releasing transfer
restrictions, the corporation effectuates the proposed action, it must send a
new dissenters' notice under Section 48-23-203 and repeat the payment demand
procedure.

48-23-208. AFTER-ACQUIRED SHARES

(a) A corporation may elect to withdraw payment required by Section
48-23-206 from a dissenter unless the dissenter was the beneficial owner of the
shares before the date set forth in the dissenters' notice to news media or to
shareholders of the principal terms of the proposed corporate action.

(b) To the extent the corporation elects to withhold payment under
subsection (a), after effectuating the proposed corporate action, it shall
estimate the fair value of the shares, plus accrued interests, and shall pay
this amount to each dissenters who agrees to accept it in full satisfaction of
the dissenter's 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
Section 48-23-209.

48-23-209. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER

(a) A dissenter may notify the corporation in writing of the
dissenter's own estimate of the fair value of the dissenter's shares and amount
of interest due, and demand payment of the dissenter's estimate (less any
payment under Section 48-23-206), or reject the corporation's offer under
Section 48-23-208 and demand payment of the fair value of the dissenter's shares
and interest due, if:

(1) The dissenter believes that the amount paid under Section
48-23-206 or offered under Section 48-23-208 is less than the fair
value of the dissenter's shares or that the interest due is incorrectly
calculated;

(2) The corporation fails to make payment under Section
48-23-206 within two (2) months after the date set for demanding
payment; or

(3) The corporation, having failed to effectuate the proposed
action, does not return the deposited certificates or release the
transfer restrictions imposed on uncertificated shares within two (2)
months after the date set for demanding payment.

(b) A dissenter waives the dissenter's right to demand payment under
this section unless the dissenter notifies the corporation of the dissenter's
demand in writing under subsection (a) within one (1) month after the
corporation made or offered payment for the dissenter's shares.

48-23-301. COURT ACTION

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(a) If a demand for payment under Section 48-23-209 remains unsettled,
the corporation shall commence a proceeding within two (2) months 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 two-month period, it shall pay each dissenter whose demand
remains unsettled the amount demanded.

(b) The corporation shall commence the proceeding in a court of record
having equity jurisdiction in 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 not residents
of this state) whose demands remain unsettled, parties to the proceeding as in
an action 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) is plenary and exclusive. The court may appoint one (1) or
more persons as appraisers to receive evidence and recommended 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 the dissenter's shares, plus accrued interest, exceeds the
amount paid by the corporation; or

(2) For the fair value, plus accrued interest, of the
dissenter's after-acquired shares for which the corporation elected to
withhold payment.

48-23-302. COURT COSTS AND COUNSEL FEES

(a) The court in an appraisal proceeding commenced under Section
48-23-301 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 Section 48-23-209.

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(b) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable
against:

(1) The corporation and in favor of any of all dissenters if
the court finds the corporation did not substantially comply with the
requirements of part 2 of this chapter; or

(2) 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 asserted against the corporation, the
court may award to these counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefitted.

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Sections 48-18-501 through 48-18-507 of the Tennessee Business
Corporation Act ("TBCA") provide that a business corporation may indemnify
directors and officers against liabilities they may incur in such capacities
provided certain standards are met, including good faith and the belief that the
particular action is in the best interests of the corporation. In general, this
power to indemnify does not exist in the case of actions against a director or
officer by or in the right of the corporation if the person entitled to
indemnification shall have been adjudged to be liable to the corporation. A
corporation is required to indemnify directors and officers against expenses
they may incur in defending actions against them in such capacities if they are
successful on the merits or otherwise in the defense of such actions.

Section 48-18-507 of the TBCA provides that the foregoing provisions
shall not be deemed exclusive of any other rights to which a person seeking
indemnification may be entitled, consistent with public policy, pursuant to any
provision of a corporation's charter, bylaws, general or specific action of its
board of directors, or contract, provided that no indemnification may be made in
connection with any proceeding charging improper personal benefit to an officer
or director, where such officer or director is adjudged liable on the basis that
personal benefit was improperly received.

The charter of First American provides for the mandatory
indemnification of directors and officers in accordance with and to the full
extent permitted by the laws of Tennessee as in effect at the time of such
indemnification. The bylaws of First American provide that no indemnification of
an officer or director shall be made by First American (i) if a judgment or
other final adjudication adverse to such person establishes his liability for
intentional misconduct or knowing violation of the law or for unlawful
distributions, (ii) if a judgment or other final adjudication adverse to such
person for breach of a duty of loyalty to First American is based upon such
person's gaining in fact personal profit or advantage to which he was not
entitled; and (iii) in a proceeding by or in the right of the corporation, for
any amounts if such person is adjudged liable to the corporation, or for any
amounts paid to First American in settlement of such a proceeding by such
person. First American has purchased directors' and officers' liability
insurance covering certain liabilities which may be incurred by the officers and
directors of First American in connection with the performance of their duties.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

An index of exhibits appears at page II-7.

ITEM 22. UNDERTAKINGS

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The undersigned Registrant hereby undertakes:

1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:

(a) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended ("Securities Act").

(b) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.

(c) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.

2. That, for the purpose of determining any liability under the
Securities Act, 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.

3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.

The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus/Proxy
Statement 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.

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities

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offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

The undersigned Registrant hereby undertakes to supply 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.

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.

The Registrant undertakes that every prospectus (i) that is filed
pursuant to the paragraph immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities 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, 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.

Insofar as indemnification for liabilities arising under the Securities
Act 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 Commission such indemnification is
against public policy as expressed in the Securities 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 the
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 whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

II-3

<PAGE> 154

SIGNATURES

Pursuant to the requirements of the Securities Act and of 1933, the
Registrant has duly caused this Registration Statement (File No. 33-_____) to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Nashville, State of Tennessee, on the 15th day of November, 1996.

FIRST AMERICAN CORPORATION

By /s/ DENNIS C. BOTTORFF
---------------------------------
Dennis C. Bottorff,
Chairman, President and Chief
Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:

<TABLE>
<S> <C> <C>
PRINCIPAL OFFICERS:

/s/ DENNIS C. BOTTORFF Chairman, President, Chief November 15, 1996
---------------------------- Executive Officer and Director
Dennis C. Bottorff (Principal Executive Officer)

/s/ MARTIN E. SIMMONS Executive Vice President November 15, 1996
---------------------------- Administration, General
Martin E. Simmons Counsel, Secretary and
Principal Financial Officer

/s/ L. DYANN CORRIGAN Senior Vice President and Acting November 15, 1996
---------------------------- Principal Accounting Officer
L. Dyann Corrigan

DIRECTORS:

/s/ SAM H. ANDERSON, JR.* November 15, 1996
--------------------------
Sam H. Anderson, Jr.

/s/ DENNIS C. BOTTORFF November 15, 1996
----------------------------
Dennis C. Bottorff

/s/ EARNEST W. DEAVENPORT, JR.* November 15, 1996
--------------------------------
Earnest W. Deavenport, Jr.

/s/ REGINALD D. DICKSON* November 15, 1996
-------------------------
Reginald D. Dickson

/s/ T. SCOTT FILLEBROWN, JR.* November 15, 1996
------------------------------
T. Scott Fillebrown, Jr.

</TABLE>

II-4

<PAGE> 155

/s/ JAMES A. HASLAM II* November 15, 1996
-------------------------
James A. Haslam II

/s/ MARTHA R. INGRAM* November 15, 1996
----------------------
Martha R. Ingram

/s/ WALTER G. KNESTRICK* November 15, 1996
-------------------------
Walter G. Knestrick

/s/ GENE C. KOONCE* November 15, 1996
--------------------
Gene C. Koonce

/s/ JAMES R. MARTIN* November 15, 1996
---------------------
James R. Martin

/s/ ROBERT A. McCABE, Jr. November 15, 1996
----------------------------
Robert A. McCabe, Jr.

/s/ DALE W. POLLEY November 15, 1996
----------------------------
Dale W. Polley

/s/ ROSCOE R. ROBINSON, M.D.* November 15, 1996
------------------------------
Roscoe R. Robinson, M.D.

/s/ JAMES F. SMITH, JR.* November 15, 1996
-------------------------
James F. Smith, Jr.

/s/ CAL TURNER, JR.* November 15, 1996
---------------------
Cal Turner, Jr

/s/ CELIA A. WALLACE*
---------------------
Celia A. Wallace

/s/ TED H. WELCH* November 15, 1996
------------------
Ted H. Welch

/S/ DAVID K. WILSON*
---------------------
David K. Wilson

/s/ TOBY S. WILT* November 15, 1996
------------------
Toby S. Wilt

/s/ WILLIAM S. WIRE II* November 15, 1996
------------------------
William S. Wire II

*By: /s/ MARY NEIL PRICE November 15, 1996
--------------------------
Mary Neil Price
Attorney in Fact

II-5

<PAGE> 156

INDEX OF EXHIBITS

<TABLE>
<S> <C>
Exhibit 2.1 -- Agreement and Plan of Merger and Amendment to the Agreement and Plan of
Merger, included as Appendix A to the Prospectus/Proxy Statement and
incorporated herein by reference.

Exhibit 3.1 -- Charter of First American, as amended, incorporated herein by reference
to Exhibit 1 to First American's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1991 (Commission File No. 0-6198).

Exhibit 3.2 -- Bylaws of First American, as amended incorporated herein by reference to Exhibit 3.2 to
First American's Annual Report on Form 10-K for the year ended December 31, 1995 (Commission File No.
0-6198).

Exhibit 4.1 -- Rights Agreement, dated December 14, 1988, between First American Corporation
and First American Trust Company, N.A. (previously filed as Exhibit 1 to First
American's Current Report on Form 8-K dated December 14, 1988, and
incorporated herein by reference).

Exhibit 5 -- Opinion of Martin E. Simmons, Esq., regarding validity of FAC Stock
being registered.

Exhibit 8 -- Opinion of Miller & Martin as to certain tax consequences of the Merger.

Exhibit 11 -- Calculation of earnings per share (previously filed as Exhibit 11 to First American's
Annual Report on Form 10-K for the year ended December 31, 1995 and
incorporated herein by reference).

Exhibit 15 -- Letter of KPMG Peat Marwick LLP Regarding Unaudited interim Financial
Information for First American, filed herewith.

Exhibit 23.1 -- Consent of KPMG Peat Marwick LLP, independent accountants for First
American, filed herewith.

Exhibit 23.2 -- Consent of Arthur Andersen LLP, independent auditors for Hartsville Bancshares, Inc., filed
herewith.

Exhibit 23.3 -- Consent of Martin E. Simmons, Esq., contained in the opinion filed as Exhibit 5, filed
herewith.

Exhibit 23.5 -- Consent of Miller & Martin contained in the opinion filed as Exhibit 8.

Exhibit 24 -- Powers of Attorney of certain directors and officers of First American, filed herewith.

Exhibit 99.1 - Form of Proxy Card
</TABLE>

<PAGE> 1

EXHIBIT 5

[MARTIN E. SIMMONS LETTERHEAD]

November 15, 1996

First American Corporation
First American Center
Nashville, TN 37237

RE: 400,000 shares of the Common Stock, $5.00 Par Value Per Share,
of First American Corporation ("FAC")

Gentlemen:

The undersigned has participated in the preparation of a registration
statement on Form S-4 (the "Registration Statement") for filing with the
Securities and Exchange Commission with respect to shares of FAC's Common Stock
(the "Shares") which may be exchanged and issued by FAC pursuant to the terms
and conditions of an Agreement and Plan of Merger dated as of October 11, 1996
by and between Hartsville Bancshares, Inc. And FAC (the "Agreement").

For purposes of rendering the opinion expressed herein, the undersigned
has examined FAC's charter and all amendments thereto; FAC's bylaws and
amendments thereto; the Agreement and such of FAC's corporate records as the
undersigned has deemed necessary and material to rendering the undersigned's
opinion. The undersigned has assumed that all documents examined by the
undersigned as originals are authentic, that all documents submitted to the
undersigned as photocopies are exact duplicates of original documents, and that
all signatures on all documents are genuine.

Further, the undersigned is familiar with and has supervised all
corporate action taken in connection with the authorization of the issuance of
the subject securities pursuant to the Agreement.

Based upon and subject to the foregoing and subsequent assumptions,
qualifications and exceptions, it is the undersigned's opinion that the Shares
have been duly authorized and when issued by FAC in accordance with the
Agreement, the Shares will be legally issued, fully paid and nonassessable.

The opinion expressed above is limited by the following assumptions,
qualifications and expectations:

<PAGE> 2

(a) The undersigned is licensed to practice law only in the
States of Tennessee and Virginia, and expresses no opinion
with respect of the effect of any laws other than those of the
State of Tennessee and the United States of America.

(b) The opinion stated herein is based upon the statutes,
regulations, rules, court decisions and other authorities
existing and effective as of the date of this opinion, and the
undersigned undertakes no responsibility to update or
supplement said opinion in the event of or in response to any
subsequent changes in the law or said authorities, or upon the
occurrence after the date hereof of events or circumstances
that, if occurring prior to the date hereof, might have
resulted in different opinion.

(c) This opinion is limited to the legal matters expressly set
forth herein, and no opinion is to be implied or inferred
beyond the legal matters expressly so addressed.

The undersigned hereby consents to the undersigned being named as a
party rendering a legal opinion under the caption "Legal Opinion" in the
Prospectus constituting part of the Registration Statement and to the filing of
this opinion with the Securities and Exchange Commission as well as all state
regulatory bodies and jurisdictions where qualification is sought for the sale
of the subject securities.

The undersigned is an officer of and receives compensation from FAC and
is therefore not independent from FAC.

Sincerely yours,

/s/ Martin E. Simmons
Martin E. Simmons
Executive Vice President - Administration,
General Counsel, Secretary and
Principal Financial Officer

MES/prw

<PAGE> 1

EXHIBIT 8

[MILLER & MARTIN LETTERHEAD]

November 14, 1996

Hartsville Bancshares, Inc.
P.O. Box 6
Hartsville, TN 37073-0006

Ladies and Gentlemen:

We have acted as special counsel to Hartsville Bancshares, Inc., a
corporation organized under the laws of Tennessee ("HBI"), in connection with
the planned acquisition of HBI by First American Corporation, a corporation
organized under the laws of Tennessee ("First American"), accomplished by means
of a merger of HBI with and into First American (the "Merger"), pursuant to the
Agreement and Plan of Merger, dated as of the 11th day of October, 1996, by and
among HBI and First American (the "Merger Agreement"). Capitalized terms used
but not defined herein shall have the meanings specified in the Proxy
Statement-Prospectus pertaining to the Merger.

We have assumed with your consent that:

(a) the Merger will be effected in accordance with the Merger
Agreement, and

(b) the representations contained in the letters of representation from
HBI and First American to us dated ______________, 1996, will be true on the
Effective Date.

On the basis of the foregoing, and our consideration of such other
matters of fact and law as we have deemed necessary or appropriate, it is our
opinion, under presently applicable federal income tax law, that the Merger will
constitute a reorganization under Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code"), and that:

(i) HBI and First American will each be "a party to a
recoganization" as that term is defined in Section 368(b)
of the Code;

(ii) HBI shareholders will recognize no gain or loss for
federal income tax purposes upon the exchange in the Merger
of HBI Stock solely for FAC Stock (except with respect to cash
received in lieu of a fractional share interest in FAC Stock);

(iii) First American will recognize no gain or loss for
federal income tax purposes upon the exchange in the Merger of
HBI Stock solely for FAC Stock;

(iv) the tax basis in the FAC Stock received in the Merger by a
HBI shareholder (including the basis of any fractional share
interest in FAC Stock) will be the same as the basis of the
shares of HBI Stock surrendered in exchange therefor;

(v) the holding period for the Merger by an HBI shareholder
(including the holding period of any fractional share interest
in FAC Stock) will include the period

<PAGE> 2

during which the shareholder held the HBI Stock surrendered in
exchange therefor, provided that the HBI Stock was held as a
capital asset at the Effective Date; and

(vi) cash received in the Merger by an HBI shareholder in lieu
of a fractional share interest in FAC Stock will be treated as
having been received for the fractional share interest of FAC
Stock that such HBI shareholder would otherwise be entitled to
receive in the Merger.

The tax consequences described above may not be applicable to HBI
shareholders that (i) acquired their HBI Stock pursuant to the exercise of an
employee stock option or right or otherwise as compensation, (ii) hold HBI Stock
as part of a "straddle" or "conversion transaction" or (iii) are insurance
companies, securities dealers, financial institutions or foreign persons.

The foregoing opinion is addressed only to certain consequences of a
nontaxable reorganization for federal income tax purposes. We have not
considered the effect on this transaction, if any, of state and local taxes,
sales and use taxes, or any other taxes.

The foregoing opinion is intended for and may be relied upon solely by
the addressees and the shareholders of HBI.

We hereby consent to the reference to us under the heading "PROPOSAL I
- -- THE MERGER -- Certain Federal Income Tax Consequences of the Merger" in the
Proxy Statement - Prospectus pertaining to the Merger and to the filing of this
opinion as an exhibit to the related Registration Statement on Form S-4 filed
with the Securities and Exchange Commission. In giving this consent, we do not
hereby admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission thereunder.

Very truly yours,

/s/ MILLER & MARTIN

<PAGE> 1

EXHIBIT 15

First American Corporation
Nashville, Tennessee

Ladies and Gentlemen:

Re: Registration Statement on Form S-4

With respect to the subject registration statement, we acknowledge our
awareness of the use therein of our report dated April 18, 1996, our report
dated July 18, 1996, and our report dated October 17, 1996, related to our
reviews of interim financial information.

Pursuant to Rule 436(c) under the Securities Act of 1933, such reports are not
considered part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the
meaning of sections 7 and 11 of the Act.

Very truly yours,

/s/ KPMG Peat Marwick LLP

Nashville, Tennessee
November 13, 1996

<PAGE> 1

EXHIBIT 23.1

ACCOUNTANTS' CONSENT

The Board of Directors
First American Corporation:

We consent to the use of our audit report dated January 19, 1996, on the
consolidated financial statements of First American Corporation and
subsidiaries as of December 31, 1995 and 1994, and for each of the years in the
three-year period ended December 31, 1995, contained in First American
Corporation's 1995 Annual Report on Form 10-K incorporated herein by reference.
Our report dated January 19, 1996 contains an explanatory paragraph that refers
to changes in accounting principles related to the adoption in 1993 of the
provisions of the Financial Accounting Standards Board's Statements of
Financial Accounting Standards No. 109, Accounting for Income Taxes; No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions; No. 112,
Employer's Accounting for Postemployment Benefits; and No. 115, Accounting for
Certain Investments in Debt and Equity Securities. We also consent to the
reference to our firm under the heading "Experts" in the prospectus.

/s/ KPMG Peat Marwick LLP

Nashville, Tennessee
November 13, 1996

<PAGE> 1

EXHIBIT 23.2

ACCOUNTANTS' CONSENT

As independent public accountants, we hereby consent to the use of our
report on Hartsville Bancshares, Inc., dated November 8, 1996, (and to all
references to our Firm) included in or made a part of this S-4 registration
statement.

/s/ ARTHUR ANDERSEN LLP

Nashville, Tennessee
November 14, 1996

<PAGE> 1

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of First American Corporation, a corporation organized under the laws of
the State of Tennessee ("Company"), hereby constitutes and appoints MARY NEIL
PRICE and MARTIN E. SIMMONS and each of them (with full power of each of them to
act alone), his/her true and lawful attorney-in-fact and agent for him/her and
on his/her behalf and in his/her name, place and stead, in any and all
capacities, to sign, execute and file with the Securities and Exchange
Commission, or any other governmental or regulatory authority, one or more
Registration Statements on Form S-4, S-8 or such other appropriate form (as any
of such attorneys may determine) and all amendments (including post-effective
amendments) thereto, with all exhibits and any and all documents required to be
filed with respect thereto, relating to the registration of shares of the
Company's common stock in connection with the Company's acquisition of
Hartsville Bancshares, Inc. ("HBI") or in connection with an option to purchase
the Company's common stock by Joseph H. Crabtree, Sr., a principal of HBI,
granting unto said attorneys and each of them full power and authority to do and
to perform each and every act and thing requisite and necessary to be done in
order to effectuate the same as fully to all intents and purposes as he/she
himself/herself might or could do if personally present, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.